G.R. No.
173088 June 25, 2008 engineer’s certificate and the report by the Community Environment and Natural Resources
REPUBLIC OF THE PHILIPPINES, petitioner,
vs.
IMPERIAL CREDIT CORPORATION, respondent.
DECISION
TINGA, J.:
This is a petition for review on certiorari under Rule 45 of the 1997 Rules of Court, assailing
the Decision1 of the Court of Appeals in CA-G.R. CV No. 78240. The Court of Appeals’
Decision affirmed the Decision of the Regional Trial Court (RTC), Branch 74, Antipolo City
which granted respondent’s application for land registration in LRC Case No. 00-2493.
The following factual antecedents are matters of record.
Herein respondent Imperial Credit Corporation is a corporation duly organized and existing
under the laws of the Philippines. On 07 March 1966, respondent purchased from a certain
Jose Tajon a parcel of land situated in Barrio Colaique (now Barangay San Roque), Antipolo
City, Rizal for the sum of P17,986.00 as evidenced by a Deed of Sale with Mortgage. Upon full
payment of the balance of P1,909.00 through judicial consignation, ownership of the property
was consolidated in the name of respondent and the mortgage constituted thereon released in
December 1997. The property was thereafter privately surveyed under PSU-178075 and
approved on 25 January 2000.
On 14 February 2000, respondent filed before the RTC of Antipolo City an application for
registration of a parcel of land, as shown on Plan PSU-178075 containing an area of 8,993
square meters. The application was docketed as LRC Case No. 00-2493 and raffled off to
Branch 74 of said RTC. The application alleged, among others, that respondent "subrogated
former owner Jose Tajon, who has been in open, continuous, exclusive and notorious
possession and occupation of the parcel of land, being a part of the alienable and disposable
lands of the public domain, under a bona fide claim of ownership since 12 June 1945, by virtue
of Deed of Sale with Mortgage executed on 07 March 1966,
After respondent presented evidence establishing the jurisdiction facts, the RTC issued an
order of general default against the whole world allowing respondent to present its evidence ex
parte.
At the hearing, Ricardo Santos, respondent’s legal researcher and duly authorized attorney-in-
fact, testified on the fact of respondent’s actual possession through its caretaker, Teodisia
Palapus, who had been overseeing said property since its acquisition from Jose Tajon. Palapus
also corroborated Santos’ testimony and added that except for some trespassers, no one else
had laid possessory claim on the property. Aside from the transfer documents, the other
documentary evidence submitted consisted of a 1993 tax declaration, the tracing cloth plan,
survey description, a certification from the Land Management Sector in lieu of the geodetic
Office that the property falls within the alienable and disposable zone.
On 21 November 2002, the RTC rendered judgment granting respondent’s application for
registration. The dispositive portion of the Decision reads:
WHEREFORE, from the evidence presented both testimonial and documentary, the Court is
satisfied that the applicant has a registerable title over the parcel of land applied for and after
affirming the order of general default against the whole world, hereby adjudicates the parcel of
land more specifically identified in Plan Psu 178075 containing an area of EIGHT THOUSAND
NINE HUNDRED NINETY THREE (8,993) SQUARE METERS in favor of the applicant
IMPERIAL CREDIT CORPORATION with business address at Unit 3-C-2, JMT Corporate
Condominium, ADB Ave., Ortigas Center, Pasig City, Metro Manila.
Once this decision becomes final, let an Order issue directing the Administrator of the Land
Registration Authority, Quezon City, to issue the corresponding Decree of Registration.
SO ORDERED.2
Petitioner Republic of the Philippines, through the Office of the Solicitor General (OSG),
seasonably appealed from the RTC’s Decision to the Court of Appeals, contending that
respondent failed to present incontrovertible evidence that respondent and its predecessor-in-
interest have been in open continuous, exclusive and notorious possession and occupation of
the property since 12 June 1945 or earlier.
The Court of Appeals rendered a Decision on 02 June 2006, dismissing the appeal by the OSG.
Hence, the instant petition, assigning the lone error, to wit:
THE COURT OF APPEALS ERRED IN AFFIRMING THE RTC DECISION WHICH GRANTED
RESPONDENT’S APPLICATION FOR ORIGINAL REGISTRATION OF TITLE, HOLDING AS
BASIS THEREOF PARAGRAPHS (2) AND (4) OF SECTION 14 OF PD 1529 ("THE
PROPERTY REGISTRATION DECREE").3
Petitioner argues that contrary to the Court of Appeals’ ruling that respondent was able to prove
its claim under paragraphs (2) and (4) of Section 14, Presidential Decree (P.D.) No. 1529,
respondent’s application for registration was actually based on paragraph (1) of Section 14,
P.D. No. 1529, the conditions under which were not sufficiently established by respondent’s
evidence. Although petitioner concedes that respondent was able to show that the land applied
for has been declassified from the forest or timber zone and is an alienable public agricultural
land, respondent’s evidence failed to satisfy the requirement under paragraph (1) of Section
14, P.D. No. 1529, that is, respondent’s possession and occupation of the property for the
length of time and in the manner required by law.
The petition is meritorious.
Under the Regalian doctrine, the State is the source of any asserted right to ownership of land.
This is premised on the basic doctrine that all lands not otherwise appearing to be clearly within
private ownership are presumed to belong to the State. Any applicant for confirmation of
imperfect title bears the burden of proving that he is qualified to have the land titled in his
name.4
The reckoning date under the Public Land Act for the acquisition of ownership of public lands
is June 12, 1945 or earlier, and that evidence of possession from that date or earlier is essential
for a grant of an application for judicial confirmation of imperfect title.5
While a tax declaration by itself is not sufficient to prove ownership, it may serve as sufficient
basis for inferring possession.6 However,
WHEREFORE, the instant petition for review on certiorari is GRANTED and the Decision of
the Court of Appeals in CA-G.R. CV No. 78240 is REVERSED and SET ASIDE.
G.R. No. 164823 August 31, 2005
MARIA CARLOS, represented by
TERESITA CARLOS VICTORIA, Petitioners,
vs.
REPUBLIC OF THE PHILIPPINES, Respondent.
DECISION
Puno, J.:
This is a petition for review on certiorari to annul the decision of the Court of Appeals in CA-
G.R. CV No. 76824 entitled "Re: Application for Land Registration of a Parcel of Land in Taguig,
Metro Manila, Maria Carlos represented by Teresita Carlos Victoria, Applicant-Appellee vs.
Republic of the Philippines through the Office of the Solicitor General, Oppositor-Appellant."
On December 19, 2001, petitioner Maria Carlos, represented by her daughter, Teresita Carlos
Victoria, filed an application for registration and confirmation of title over a parcel of land with
an area of 3,975 square meters located at Pusawan, Ususan, Taguig, Metro Manila, covered
by Plan Psu-244418. Petitioner alleged, among others, that she is the owner of said parcel of
land which she openly, exclusively and notoriously possessed and occupied since July 12,
1945 or earlier under a bona fide claim of ownership; that there is no mortgage or encumbrance
affecting said property, nor is it part of any military or naval reservation; that the property is
being used for industrial purposes; and that there are no tenants or lessees on the property.
Petitioner further claimed that she has been in possession of the subject land in the concept of
an owner; that her possession has been peaceful, public, uninterrupted and continuous since
1948 or earlier; and tacking her possession with that of her predecessors-in-interest, petitioner
has been in possession of the land for more than 50 years.1
The Republic of the Philippines, represented by the Director of Lands, filed an opposition to
petitioner’s application.2
During the initial hearing, however, only petitioner and her counsel appeared. They presented
documentary evidence to prove the jurisdictional
requirements.3
Petitioner later presented testimonial evidence consisting of the testimonies of her neighbors,
Sergio Cruz and Daniel Castillo, and Teresita Carlos Victoria herself.4
Sergio Cruz, 83 years old, a native of Ususan, Taguig, and neighbor of Maria Carlos, testified
that the property subject of the application was previously owned and possessed by Jose
Carlos. He planted it with palay and sold the harvest. Everyone in the community knew him as
the owner of said parcel of land. He also paid the taxes thereon. After the death of Jose Carlos
in 1948, his daughter, Maria Carlos, inherited the property and immediately took possession
thereof. Her possession was peaceful, open, public, continuous, uninterrupted, notorious,
adverse and in the concept of an owner. When Maria Carlos died, her heirs took over the
property.5
Cruz’s testimony was corroborated by Daniel Castillo, 76 years old, Barangay Captain of
Ususan, Taguig.6
Teresita Carlos Victoria stated on the witness stand that her mother, Maria Carlos, was in
possession of the subject property until she passed away on January 6, 2001. Upon the demise
of Maria Carlos, Victoria took possession of the property with the consent of her brothers and
sisters. She characterized Maria Carlos’s possession as peaceful, open, public, continuous,
adverse, notorious and in the concept of an owner. She has never been disturbed in her
possession; the whole community recognized her as the owner of the land; she declared the
land for tax purposes; and she paid the taxes thereon. In addition, Victoria informed the court
that the heirs of Maria Carlos have not yet instituted a settlement of her estate. However, they
have agreed to undertake the titling of the property and promised to deliver the certificate of
title to Ususan Development Corporation which bought the property from Maria Carlos. Victoria
admitted that her mother had sold the land to Ususan Development Corporation in 1996 but
failed to deliver the title. Hence, the heirs of Maria Carlos made a commitment to the
corporation to deliver the certificate of title so that they could collect the unpaid balance of the
purchase price.7
Petitioner also presented in court the concerned officers of the Department of Environment and
Natural Resources (DENR) to establish that the land in question is alienable and disposable.
Elvira R. Reynaldo, Records Officer, DENR – Lands Management Bureau, appeared to certify
that their office "has no record of any kind of public land application/land patent covering the
parcel of land situated at
Ususan, Taguig, Rizal, identified/described in Plan Psu-244418."8
Ulysses Sigaton, Land Management Inspector, DENR – National Capital Region, stated that
he conducted an ocular inspection of the subject property and found that it is within the
alienable and disposable area under Project No. 27-B, LC Map No. 2623, certified by the
Bureau of Forest Development on January 4, 1968. He also noted that the land is being used
for industrial purposes. It had several warehouses, four big water tanks and is enclosed by a
fence.9
The trial court granted the application in its decision dated October 24, 2002. It held:
After considering the applicant’s evidence ex-parte which is based on factual and meritorious
grounds, and considering that the applicant acquired the property under registration through
inheritance from her father, Jose Carlos, and considering further that her possession thereof,
tacked with that of her predecessor-in-interest, is open, continuous, exclusive, notorious and
undisturbed, under claim of ownership since time immemorial up to the present time; and
considering further that the subject parcel of land is part of the disposable and alienable land
(Tsn, July 3, 2002, p.6) and considering further that the realty taxes due thereon have been
religiously paid (Exhs. "HH," "II," "JJ," and "JJ-1"), and considering finally that the subject parcel
of land belong[s] to the applicant and that she possess[es] a perfect title thereto which may be
confirmed and registered in her name under the (P)roperty Registration Decree (P.D. 1529),
the herein application is hereby GRANTED.10
On appeal, the Court of Appeals reversed and set aside the decision of the trial court. It noted
that:
In the instant case, the applicant at the time she filed her application for registration of title was
no longer in possession and occupation of the land in question since on October 16, 1996, the
applicant’s mother and predecessor-in-interest sold the subject land to Ususan Development
Corporation. This was admitted by witness Teresita Carlos Victoria x x x
Clearly, as early as 1996, possession and occupation of the land in question pertains not to the
applicant but to Ususan Development Corporation, thus it can be said that the applicant has
no registrable title over the land in question.11
Hence, this petition.
We affirm the findings of the appellate court.
Applicants for confirmation of imperfect title must prove the following: (a) that the land forms
part of the disposable and alienable agricultural lands of the public domain; and (b) that they
have been in open, continuous, exclusive, and notorious possession and occupation of the
same under a bona fide claim of ownership either since time immemorial or since June 12,
1945.12
As found by the Court of Appeals, petitioner has met the first requirement but not the second.
The Court held in Republic vs. Alconaba13 that the applicant must show that he is in actual
possession of the property at the time of the application, thus:
The law speaks of possession and occupation. Since these words are separated by the
conjunction ["]and["], the clear intention of the law is not to make one synonymous with the
other. Possession is broader than occupation because it includes constructive possession.
When, therefore, the law adds the word occupation, it seeks to delimit the all-encompassing
effect of constructive possession. Taken together with the words open, continuous, exclusive
and notorious, the word occupation serves to highlight the fact that for an applicant to qualify,
his possession must not be a mere fiction. Actual possession of a land consists in the
manifestation of acts of dominion over it of such a nature as a party would naturally exercise
over his own property.
It is clear in the case at bar that the applicant, Maria Carlos, no longer had possession of the
property at the time of the application for the issuance of a certificate of title. The application
was filed in court on December 19, 2001. Teresita Carlos Victoria, the daughter of Maria Carlos,
admitted during the hearing that her mother had sold the property to Ususan Development
Corporation in 1996. They also presented as evidence the deed of absolute sale executed by
and between Maria Carlos and Ususan Development Corporation on October 16, 1996.14 The
document states, among others:
4. That the VENDOR, by this Deed hereby transfer(s) possession of the property to the
VENDEE.15
This contradicts petitioner’s claim that she was in possession of the property at the time that
she applied for confirmation of title.
Nonetheless, even if it were true that it was petitioner who had actual possession of the land
at that time, such possession was no longer in the concept of an owner. Possession may be
had in one of two ways: possession in the concept of an owner and possession of a holder. A
possessor in the concept of an owner may be the owner himself or one who claims to be so.
On the other hand, one who possesses as a mere holder acknowledges in another a superior
right which he believes to be ownership, whether his belief be right or wrong.16 Petitioner
herein acknowledges the sale of the property to Ususan Development Corporation in 1996 and
in fact promised to deliver the certificate of title to the corporation upon its obtention. Hence, it
cannot be said that her possession since 1996 was under a bona fide claim of ownership.
Under the law, only he who possesses the property under a bona fide claim of ownership is
entitled to confirmation of title.
We therefore find that the Court of Appeals did not err in denying the issuance of a certificate
of title to petitioner.
IN VIEW WHEREOF, the petition is DENIED.
SO ORDERED.
G.R. No. 153625 July 31, 2006
Heirs of MARCELINO CABAL, represented by VICTORIA CABAL, petitioner,
vs.
Spouses LORENZO CABAL1 and ROSITA CABAL, respondents.
DECISION
AUSTRIA-MARTINEZ, J.:
Before the Court is a petition for review on certiorari under Rule 45 of the 1997 Rules of Civil
Procedure assailing the Decision2 of the Court of Appeals (CA) dated September 27, 2001 in
CA-G.R. SP No. 64729 which affirmed in toto the Decision of the Regional Trial Court, Branch
70, Iba, Zambales (RTC) dated August 10, 2000 in Civil Case No. RTC-1489-I; and the CA
Resolution3 dated May 22, 2002 which denied the Motion for Reconsideration of Marcelino
Cabal (Marcelino).
The factual background of the case is as follows:
During his lifetime, Marcelo Cabal (Marcelo) was the owner of a 4,234-square meter parcel of
land situated at Barrio Palanginan, Iba, Zambales, described as Lot G and covered by Original
Certificate of Title (OCT) No. 29 of the Registry of Deeds of Zambales.
Sometime in August 1954,4 Marcelo died, survived by his wife Higinia Villanueva (Higinia) and
his children: Marcelino, Daniel, Cecilio, Natividad, Juan, Margarita, Lorenzo, Lauro and
Anacleto.5 It appears that sometime in 1949, five years before he died, Marcelo allowed his
son, Marcelino, to build his house on a portion of Lot G, now the southernmost portion of Lot
1-E of Transfer Certificate of Title (TCT) No. 43419.6 Since then, Marcelino resided thereon.7
Later, Marcelino's son also built his house on the disputed property.8
On August 17, 1964, Marcelo's heirs extra-judicially settled among themselves Lot G into
undivided equal shares of 423.40-square meters each and Transfer Certificate of Title (TCT)
No. T-8635 was issued in their names.9
On September 17, 1973, Daniel sold 380 square meters of his 423.40-square meter undivided
share to spouses Oscar Merete and Clarita Ebue.10
On September 12, 1976, the heirs subdivided Lot G into Lot G-1 in favor of Marcelino, resulting
in the issuance of TCT No. T-22656;11 and Lot G-2 in favor of Higinia, Daniel, Natividad, Juan,
Cecilio, Margarita, Lorenzo, Lauro and Anacleto, resulting in the issuance of TCT No. 22657.12
On March 1, 1977, Marcelino mortgaged his share, as described under TCT No. 22656, to the
Rural Bank of San Antonio (Zambales), Inc.13 The mortgage on the property was subsequently
released on December 19, 1983.14
In the interim, based on consolidated subdivision plan (LRC) Pcd-24078, Lot G-2 was further
subdivided and the remaining portion, known as Lot 1 of the subdivision plan, comprising
3387.20 square meters, became subject of TCT No. T-24533 with Higinia, Margarita, Natividad,
Lorenzo, Daniel, Oscar Merete, Cecilio, Carmelita C. Pagar, and Anacleto as co-owners.
On August 3, 1978, the co-owners of Lot 1 executed a Deed of Agreement of Partition with
Sale. Lot 1 was subdivided among the co-owners with Higinia, Margarita, Natividad, Lorenzo,
Cecilio, Carmelita C. Pagar and Anacleto, receiving 423.40 square meters each; Daniel, with
43.4 square meters; and Oscar Merete, with 380 square meters.15 In the same deed, Lorenzo
bought the shares of Higinia, Margarita, Daniel and Natividad.16 Thus, Lorenzo's share in the
co-ownership amounted to 1,737 square meters. Likewise, in the same deed, Cecilio sold his
share to a certain Marcela B. Francia.17
On January 13, 1982, a land survey was conducted on Lot 1 by Geodetic Engineer Dominador
L. Santos and Junior Geodetic Engineer Eufemio A. Abay and based on the survey, they
submitted subdivision survey plan (LRC) Psd-307100, designating the shares of Carmelita C.
Pagar, Marcela B. Francia, spouses Oscar Merete and Clarita Ebue, Anacleto, and Lorenzo as
Lots 1-A, 1-B, 1-C, 1-D and 1-E, respectively.18 The subdivision survey plan of Lot 1 was
approved by the Director of the Bureau of Lands on May 7, 1982.19 On June 7, 1990, the co-
owners of Lot 1 executed a Subdivision Agreement designating their shares based on the
approved subdivision plan.20 On July 13, 1993, TCT No. 43419 covering Lot 1-E was issued
in the name of Lorenzo.21
In the meantime, since the subdivision plan revealed that Marcelino and his son occupied and
built their houses on a 423-square meter area located on the southernmost portion of Lot 1-E
and not the adjacent lot designated as Lot G-1 under TCT No. T-22656,22 the spouses Lorenzo
and Rosita Cabal (respondents) confronted Marcelino on this matter which resulted to an
agreement on March 1, 1989 to a re-survey and swapping of lots for the purpose of
reconstruction of land titles.23 However, the agreed resurvey and swapping of lots did not
materialize24 and efforts to settle the dispute in the barangay level proved futile.25
Hence, on August 10, 1994, respondents filed a complaint for Recovery of Possession with
Damages against Marcelino before the Municipal Trial Court of Iba, Zambales (MTC), docketed
as Civil Case No. 735. They alleged that Marcelino introduced improvements in bad faith on
their land with knowledge that the adjacent lot is titled in his name.26
On August 26, 1994, Marcelino filed his Answer with Counterclaim, contending that
respondents have no cause of action against him because he has been in possession in good
faith since 1949 with the respondents' knowledge and acquiescence. He further avers that
acquisitive prescription has set in.27
On January 24, 1997, during the pendency of the trial of the case, Lorenzo died. Following trial
on the merits, the MTC rendered on November 19, 1997 its Decision28 in favor of Marcelino,
the dispositive portion of which reads:
WHEREFORE, on the basis of the foregoing premises as adduced by this Court the plaintiff or
their representatives are hereby directed to relinquish the possession of said property subject
matter of this case and deliver the peaceful possession of the same to the herein defendant or
his authorized representatives, to remove the improvements made thereon within fifteen (15)
days from the receipt of this decision, otherwise, this Court would remove and/or destroy the
same with cost against the plaintiff, further the plaintiff is hereby ordered to pay the amount of
Ten Thousand Pesos (P10,000.00), Philippine Currency representing moral damages and
exemplary damages in the amount of Five Thousand Pesos (P5,000.00), Philippine Currency,
and the amount of Twenty Thousand Pesos (P20,000.00), Philippine Currency, representing
attorney's fees.
SO ORDERED.29
The MTC reasoned that prescription or the length of time by which Marcelino has held or
possessed the property has barred the respondents from filing a claim.
On December 12, 1997, respondents filed a Motion for Reconsideration30 but the MTC denied
it in its Order dated February 5, 1998.31
Dissatisfied, respondents filed an appeal with the RTC Branch 70, Iba, Zambales, docketed as
RTC-1489-I. On August 10, 2000, the RTC rendered its Decision setting aside the Decision of
the MTC.32 The dispositive portion of the Decision states:
WHEREFORE, the appealed Decision of the Municipal Trial Court is hereby REVERSED and
SET ASIDE ordering the defendant Marcelino Cabal and all other persons claiming interest
under him to vacate and deliver peaceful possession of the disputed area of 423 sq. m. within
Lot 1-E embraced in TCT No. T-43419 to the plaintiffs-appellants; to remove all improvements
therein introduced by said defendant or by persons under his direction and authority; to pay the
plaintiffs-appellants P10,000.00 and P5,000.00 by way of moral and exemplary damages,
respectively; to pay plaintiff-appellants attorney's fee in the sum of P20,000.00 and cost of this
suit.
SO ORDERED.33
In reversing the MTC, the RTC held that Marcelino's possession was in the concept of a co-
owner and therefore prescription does not run in his favor; that his possession, which was
tolerated by his co-owners, does not ripen into ownership.
On August 30, 2000, Marcelino filed a Motion for Reconsideration34 but the RTC denied it in
its Order dated May 3, 2001.35
On May 18, 2001, Marcelino filed a petition for review with the CA, docketed as CA-G.R. SP
No. 64729.36 Marcelino, however, died during the pendency of the case. On September 27,
2001, the CA rendered its Decision affirming in toto the Decision of the RTC.37
In sustaining the RTC, the CA held that Marcelino may have been in good faith when he started
to occupy the disputed portion in 1949 but his occupation in good faith diminished after Lot G
was surveyed when he was apprised of the fact that the portion he was occupying was not the
same as the portion titled in his name; that from the tenor of the petition for review Marcelino
would like to hold on to both the lot he occupies and Lot G-1, which cannot be allowed since it
will double his inheritance to the detriment of his brother Lorenzo.
On November 13, 2001, Marcelino's counsel filed a Motion for Reconsideration38 but the CA
denied it in its Resolution dated May 22, 2002.39
On June 6, 2002, the heirs of Marcelino (petitioners), represented by his widow, Victoria Cabal,
filed the present petition anchored on the following grounds:
I. CONTRARY TO THE COURT OF APPEALS' FINDINGS AND CONCLUSION, PETITIONER
NEVER INTENDED AND NEITHER DOES HE INTEND TO HOLD ON TO BOTH THE 423
SQUARE METER WITHIN LOT 1-E WHICH HE IS OCCUPYING AND LOT 1-G (sic).
PETITIONER IS ONLY INTERESTED IN THE DISPUTED PROPERTY, THAT IS, A PORTION
OF LOT 1-E BECAUSE THIS IS WHERE HE INTRODUCED CONSIDERABLE
IMPROVEMENTS IN GOOD FAITH.
II. THE HONORABLE COURT OF APPEALS COMMITTED A REVERSIBLE ERROR WHEN
IT RULED THAT THE GOOD FAITH OF PETITIONER ON THE DISPUTED PROPERTY
BEGAN TO DIMINISH AFTER LOT-G WAS SURVEYED.40
Anent the first ground, petitioners contend that since 1949 Marcelino has claimed no other
portion as his inheritance from Marcelo, except the disputed lot; that Marcelino believed in good
faith that the disputed lot is Lot G-1; that Marcelino never intended to hold on to both lots since
he did not introduce any improvement on Lot G-1 and he even agreed to a resurvey, swapping
of lots and reconstruction of title after discovery of the mistake in 1989; that Marcelino wanted
the disputed lot because he has introduced considerable improvements thereon.
On the second ground, petitioners maintain that Marcelino became aware of the flaw in his title
only before the execution of the swapping agreement in March 1, 1989, long after he had
introduced considerable improvements in the disputed lot; that Marcelino should not be faulted
for believing that the disputed lot is his titled property because he is a layman, not versed with
the technical description of properties; that Marcelino should be adjudged a builder in good
faith of all the improvements built on the disputed property immediately prior to the execution
of the swapping agreement and accorded all his rights under the law or, alternatively, the
swapping of lots be ordered since no improvements have been introduced on Lot G-1.
Respondents, on the other hand, submit that Marcelino cannot be adjudged a builder in good
faith since he exhibited blatant and deliberate bad faith in dealing with respondents.
The Court rules in favor of the petitioners.
As a general rule, in petitions for review, the jurisdiction of this Court in cases brought before it
from the CA is limited to reviewing questions of law which involves no examination of the
probative value of the evidence presented by the litigants or any of them.41 The Supreme
Court is not a trier of facts; it is not its function to analyze or weigh evidence all over again.42
Accordingly, findings of fact of the appellate court are generally conclusive on the Supreme
Court.43
Nevertheless, jurisprudence has recognized several exceptions in which factual issues may be
resolved by this Court, such as: (1) when the findings are grounded entirely on speculation,
surmises or conjectures; (2) when the inference made is manifestly mistaken, absurd or
impossible; (3) when there is grave abuse of discretion; (4) when the judgment is based on a
misapprehension of facts; (5) when the findings of facts are conflicting; (6) when in making its
findings the CA went beyond the issues of the case, or its findings are contrary to the
admissions of both the appellant and the appellee; (7) when the findings are contrary to the
trial court; (8) when the findings are conclusions without citation of specific evidence on which
they are based; (9) when the facts set forth in the petition as well as in the petitioner's main
and reply briefs are not disputed by the respondent; (10) when the findings of fact are premised
on the supposed absence of evidence and contradicted by the evidence on record; (11) when
the CA manifestly overlooked certain relevant facts not disputed by the parties, which, if
properly considered, would justify a different conclusion.44 The Court finds that exceptions (1),
(2), (4) and (11) apply to the present petition.
It is undisputed that Marcelino built his house on the disputed property in 1949 with the consent
of his father. Marcelino has been in possession of the disputed lot since then with the
knowledge of his co-heirs, such that even before his father died in 1954, when the co-ownership
was created, his inheritance or share in the co-ownership was already particularly designated
or physically segregated. Thus, even before Lot G was subdivided in 1976, Marcelino already
occupied the disputed portion and even then co-ownership did not apply over the disputed lot.
Elementary is the rule that there is no co-ownership where the portion owned is concretely
determined and identifiable, though not technically described,45 or that said portion is still
embraced in one and the same certificate of title does make said portion less determinable or
identifiable, or distinguishable, one from the other, nor that dominion over each portion less
exclusive, in their respective owners.46
Thus, since Marcelino built a house and has been occupying the disputed portion since 1949,
with the consent of his father and knowledge of the co-heirs,47 it would have been just and
equitable to have segregated said portion in his favor and not one adjacent to it. Undoubtedly,
the subdivision survey effected in 1976 spawned the dilemma in the present case. It designated
Lot G-1 as Marcelino's share in the inheritance notwithstanding his possession since 1949 of
a definite portion of Lot G, now the southernmost portion of Lot 1-E.
Marcelino raised the defense of acquisitive prescription, in addition to possession in good faith,
in his Answer to the Complaint in the MTC. Prescription, in general, is a mode of acquiring or
losing ownership and other real rights through the lapse of time in the manner and under
conditions laid down by law, namely, that the possession should be in the concept of an owner,
public, peaceful, uninterrupted and adverse.48 Acquisitive prescription is either ordinary or
extraordinary.49 Ordinary acquisitive prescription requires possession in good faith and with
just title50 for ten years.51 In extraordinary prescription ownership and other real rights over
immovable property are acquired through uninterrupted adverse possession thereof for thirty
years, without need of title or of good faith.52
In the present case, the evidence presented during the trial proceedings in the MTC were sorely
insufficient to prove that acquisitive prescription has set in with regards to the disputed lot. The
tax declaration53 and receipts54 presented in evidence factually established only that
Marcelino had been religiously paying realty taxes on Lot G-1. Tax declarations and receipts
can only be the basis of a claim of ownership through prescription when coupled with proof of
actual possession.55 Evidently, Marcelino declared and paid realty taxes on property which he
did not actually possess as he took possession of a lot eventually identified as the
southernmost portion of Lot 1-E of subdivision plan (LRC) Psd-307100.
Furthermore, the Court notes that Marcelino no longer invoked prescription in his pleadings
before the RTC56 and CA;57 neither did herein petitioners raise prescription in their petition58
and memorandum59 before this Court. They only extensively discussed the defense of
possession in good faith. They are thus deemed to have abandoned the defense of
prescription.
The Court shall now delve on the applicability of the principle of possession in good faith.
It has been said that good faith is always presumed, and upon him who alleges bad faith on
the part of the possessor rests the burden of proof.60 Good faith is an intangible and abstract
quality with no technical meaning or statutory definition, and it encompasses, among other
things, an honest belief, the absence of malice and the absence of design to defraud or to seek
an unconscionable advantage. An individual's personal good faith is a concept of his own mind
and, therefore, may not conclusively be determined by his protestations alone. It implies
honesty of intention, and freedom from knowledge of circumstances which ought to put the
holder upon inquiry.61 The essence of good faith lies in an honest belief in the validity of one's
right, ignorance of a superior claim, and absence of intention to overreach another.62 Applied
to possession, one is considered in good faith if he is not aware that there exists in his title or
mode of acquisition any flaw which invalidates it.63
In the present case, Marcelino's possession of the disputed lot was based on a mistaken belief
that Lot G-1 is the same lot on which he has built his house with the consent of his father. There
is no evidence, other than bare allegation, that Marcelino was aware that he intruded on
respondents' property when he continued to occupy and possess the disputed lot after
partition was effected in 1976.
Moreover, the fact that in 1977 Marcelino mortgaged Lot G-1 subject of TCT No. 22656 is not
an indication of bad faith since there is no concrete evidence that he was aware at that time
that the property covered by the title and the one he was occupying were not the same. There
is also no evidence that he introduced improvements on Lot G-1. In fact, the agreement on
March 1, 1989 to a resurvey and swapping of lots for the purpose of reconstructing the land
titles is substantial proof of Marcelino's good faith, sincerity of purpose and lack of intention to
hold on to two lots.
Thus, the CA's conclusion that Marcelino intended to hold on to both the disputed lot and Lot
G-1 is pure speculation, palpably unsupported by the evidence on record. Marcelino is deemed
a builder in good faith64 at least until the time he was informed by respondents of his
encroachment on their property.65
When a person builds in good faith on the land of another, the applicable provision is Article
448, which reads:
Article 448. The owner of the land on which anything has been built, sown or planted in good
faith, shall have the right to appropriate as his own the works, sowing or planting, after payment
of the indemnity provided for in Articles 54666 and 548,67 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.
Thus, 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 building, planting or sowing, after payment to
the builder, planter or sower of the necessary and useful expenses, and in the proper case,
expenses for pure luxury or mere pleasure. The owner of the land may also oblige the builder,
planter or sower to purchase and pay the price of the land. If the owner chooses to sell his
land, the builder, planter or sower must purchase the land, otherwise 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
stands to the builder, planter or sower, is given to the owner of the land.68
In accordance with Depra v. Dumlao, 69 this case must be remanded to the trial court to
determine matters necessary for the proper application of Article 448 in relation to Articles 546
and 548. Such matters include the option that respondents would take and the amount of
indemnity that they would pay, should they decide to appropriate the improvements on the lots.
The Court notes that petitioners' alternative prayer that swapping of lots be ordered because
no improvements have been introduced on Lot G-1. This cannot be granted. Respondents and
Marcelino, petitioners' predecessor-in-interest, did not pray for swapping of lots in all their
pleadings below. Both parties also did not allege the existence of a swapping agreement in
their initial pleadings, much less pursue the enforcement of the swapping agreement. They are
deemed to have renounced or abandoned any enforceable right they had under the swapping
agreement and the parties cannot be compelled to a swapping of lots.
WHEREFORE, the instant petition is GRANTED. The assailed Decision and Resolution of the
Court of Appeals in CA-G.R. SP No. 64729 are REVERSED and SET ASIDE. The case is
REMANDED to the court of origin for further proceedings to determine the facts essential to
the proper application of Article 448 in relation to Articles 546 and 548 of the Civil Code.
No pronouncement as to costs.
SO ORDERED.
Panganiban, C.J., Ynares-Santiago, Callejo, Sr., Chico-Nazario, J.J., concur.
G.R. Nos. L-20300-01 April 30, 1965
ANTONINO DIZON, ADELAIDA D. REYES, CONSOLACION DEGOLLACION, ET AL.,
petitioners,
vs.
HON. JUAN DE G. RODRIGUEZ, as Secretary of Agriculture & Natural Resources,
HERACLITO MONTALBAN, as Acting Director of Fisheries,
MIGUEL TOLENTINO, REPUBLIC OF THE PHILIPPINES, ET AL., respondents.
-----------------------------
G.R. Nos. L-20355-56 April 30, 1965
REPUBLIC OF THE PHILIPPINES, THE SECRETARY OF AGRICULTURE & NATURAL
RESOURCES, DIRECTOR OF FISHERIES, MIGUEL TOLENTINO, and CLEMENCIA
TOLENTINO, petitioners,
vs.
HON. COURT OF APPEALS, ANTONINO DIZON, ADELAIDA D. REYES, CONSOLACION
DE DEGOLLACION, ARTEMIO DIZON, AMORANDO DIZON, REMEDIOS MANAPAT SY-
JUCO, and LEONILA SIOCHI GOCO, respondents.
Jalandoni and Jamir for petitioners Antonino Dizon, et al.
Office of the Solicitor General for respondents Republic, et al.
Miguel Tolentino for and in his own behalf.
BARRERA, J.:
These are separate appeals instituted by Antonino Dizon, et al. (G.R. Nos. L-20300-01) and
the Republic of the Philippines, et al. (G.R. Nos. L-20355-56), from a single decision of the
Court of Appeals, as modified by its resolution of August 20, 1962, holding that Lots Nos. 49
and 1 of subdivision plan Psd.-27941 are parts of the navigable boundary of the Hacienda
Calatagan, covered by Transfer Certificate of Title No. T-722, and declaring the occupants
Dizon, et al. possessors in good faith, entitled to remain therein until reimbursed, by the
intervenor Republic of the Philippines, of the necessary expenses made on the lots in the sum
of P40,000.00 and P25,000.00, respectively.
The facts of these cases, briefly stated, are as follows:
Hacienda Calatagan owned by Alfonso and Jacobo Zobel was originally covered by TCT No.
T-722. In 1938, the Hacienda constructed a pier, called "Santiago Landing," about 600 meters
long from the shore into the navigable waters of the Pagaspas Bay, to be used by vessels
loading sugar produced by the Hacienda sugar mill. When the sugar mill ceased its operation
in 1948, the owners of the Hacienda converted the pier into a fishpond dike and built additional
strong dikes enclosing an area of about 30 hectares (of the Bay) and converted the same into
a fishpond. The Hacienda owners also enclosed a similar area of about 37 hectares of the Bay
on the other side of the pier which was also converted into a fishpond.
In 1949, the Zobels ordered the subdivision of the Hacienda by ordering the preparation of the
subdivision plan Psd-27941 wherein fishpond No. 1 (with 30 hectares) was referred to as Lot
No. 1 and fishpond No. 2 (with 37 hectares) was referred to as Lot No. 49. The plan was
approved by the Director of Lands, and the Register of Deeds issued, from TCT No. T-722,
TCT No. 2739 for lots 49 and 1 in the name of Jacobo Zobel.
In 1950, Jacobo Zobel sold to Antonino Dizon, et al. Lot 49 for which said purchasers obtained
at first TCT No. T-2740 and later T-4718, Lot 1, on the other hand, was purchased by Carlos
Goco, et al., who, in turn, sold one-half thereof to Manuel Sy-Juco, et al. Transfer Certificate of
Title No. 4159 was issued in the names of the Gocos and Sy-Jucos.
On May 24, 1952, Miguel Tolentino filed with the Bureau of Fisheries an application for ordinary
fishpond permit or lease for Lot 49, and an application for a similar permit, for Lot 1, was filed
by his daughter Clemencia Tolentino.
The Dizons, Sy-Jucos, and Gocos filed a protest with the Bureau of Fisheries, claiming the
properties to be private land covered by a certificate of title. This protest was dismissed by the
Director of Fisheries, on the ground that the areas applied for are outside the boundaries of
TCT No. T-722 of Hacienda Calatagan. This ruling was based upon the findings of the
committee created by the Secretary of Agriculture and Natural Resources to look into the
matter, that Lots 1 and 49 are not originally included within the boundaries of the hacienda.
On October 1, 1954, the protestants Dizons, Sy-Jucos, and Gocos filed an action in the Court
of First Instance of Manila (Civ. Case No. 24237) to restrain the Director of Fisheries from
issuing the fishpond permits applied for by the Tolentinos. The court dismissed this petition for
non-exhaustion of administrative remedy, it appearing that petitioners had not appealed from
the decision of the Director of Fisheries to the Secretary of Agriculture and Natural Resources.
On appeal to this Court, the decision of the lower court was sustained (G.R. No. L-8654,
promulgated April 28, 1956). The protestants then filed an appeal with the Secretary of
Agriculture and Natural Resources. This time, the same was dismissed for being filed out of
time.1äwphï1.ñët
On August 16, 1956, the Dizons filed Civil Case 135 and the Sy-Jucos and Gocos, Civil Case
136, in the Court of First Instance of Batangas, to quiet their titles over Lots 49 and 1. Named
defendants were the Secretary of Agriculture and Natural Resources and applicants
Tolentinos. The Republic of the Philippines was allowed to intervene in view of the finding by
the investigating committee created by the respondent Secretary, that the lots were part of the
foreshore area before their conversion into fishponds by the hacienda-owners.
On January 30, 1958, after due hearing, the Court of First Instance of Batangas promulgated
a joint decision making the finding, among others, that the subdivision plan Psd-27941 was
prepared in disregard of the technical description stated in TCT No. T-722, because the
surveyor merely followed the existing shoreline and placed his monuments on the southwest
lateral of Lot 49, which was the pier abutting into the sea; and made the conclusion that Lots 1
and 49 of Psd-27941 were part of the foreshore lands. As the certificate of title obtained by
petitioners covered lands not subject to registration, the same were declared null and void, and
Lots 1 and 49 were declared properties of the public domain. Petitioners appealed to the Court
of Appeals.
In its decision of October 31, 1961, as well as the resolution of August 20, 1962, the appellate
court adopted the findings of the lower court, that the lots in question are part of the foreshore
area and affirmed the ruling cancelling the titles to plaintiffs. Although in the decision of October
31, 1961, the Court of Appeals awarded to applicants Tolentinos damages in the amount of
P200.00 per hectare from October 1, 1954, when plaintiffs were notified of the denial of their
protest by the Director of Fisheries, such award was eliminated in the resolution of August 20,
1962, for the reason that plaintiffs, who relied on the efficacy of their certificates of title, cannot
be considered possessors in bad faith until after the legality of their said titles has been finally
determined. Appellants were thus declared entitled to retention of the properties until they are
reimbursed by the landowner, the Republic of the Philippines, of the necessary expenses made
on the lands, in the sums of P40,000.00 (for Lot 49) and P25,000.00 (for Lot 1). It is from this
portion of the decision as thus modified that defendants Tolentinos and the intervenor Republic
of the Philippines appealed (in G.R. Nos. L-20355-56), claiming that plaintiffs' possession
became in bad faith when their protest against the application for lease was denied by the
Director of Fisheries. In addition, the intervenor contends that being such possessors in bad
faith, plaintiffs are not entitled to reimbursement of the expenses made on the properties.
In G.R. Nos. L-20300-01, plaintiffs Dizon, et al., claim that the finding that the Lots in question
are part of the seashore or foreshore area was erroneous, because from defendants' own
evidence, the same appear to be marshland before their conversion into fishponds.
It is noteworthy in connection with the appeal of plaintiffs, that they do not contest the existence
of the pier that was used by the hacienda owners in the loading of their manufactured sugar to
vessels. The fact that said pier jutted out 600 meters to the sea indicates that the area over
which such cemented structure spanned was part of the sea or at least foreshore land. And,
plaintiffs were not able to disprove the testimonial evidence that the fishponds in question were
constructed by enclosing the areas with dikes, using the pier as one of the ends of the
fishponds. It is clear that the areas thus enclosed and converted into fishponds were really part
of the foreshore. This, and the fact that the subdivision plan Psd-27941 was found to have been
prepared not in accordance with the technical descriptions in TCT No. T-722 but in disregard
of it, support the conclusion reached by both the lower court and the Court of Appeals that Lots
49 and 1 are actually part of the territorial waters and belong to the State. And, it is an
elementary principle that the incontestable and indefeasible character of a Torrens certificate
of title does not operate when the land thus covered is not capable of registration.
On the matter of possession of plaintiffs-appellants, the ruling of the Court of Appeals must be
upheld. There is no showing that plaintiffs are not purchasers in good faith and for value. As
such title-holders, they have reason to rely on the indefeasible character of their certificates.
On the issue of good faith of the plaintiffs, the Court of Appeals reasoned out:
The concept of possessors in good faith given in Art. 526 of the Civil Code and when said
possession loses this character under Art. 528, needs to be reconciled with the doctrine of
indefeasibility of a Torrens Title. Such reconciliation can only be achieved by holding that the
possessor with a Torrens Title is not aware of any flaw in his Title which invalidates it until his
Torrens Title is declared null and void by final judgment of the Courts.
Even if the doctrine of indefeasibility of a Torrens Title were not thus reconciled, the result
would be the same, considering the third paragraph of Art. 526 which provides that:
ART. 526. ...
Mistake upon a doubtful or difficult question of law may be the basis of good faith.
The legal question whether plaintiffs-appellants' possession in good faith, under their Torrens
Titles acquired in good faith, does not lose this character except in the case and from the
moment their Titles are declared null and void by the Courts, a difficult one. Even the members
of this Court were for a long time divided, two to one, on the answer. It was only after several
sessions, where the results of exhaustive researches on both sides were thoroughly discussed,
that an undivided Court finally found the answer given in the next preceding paragraph. Hence,
even if it be assumed for the sake of argument that the Supreme Court would find that the law
is not as we have stated it in the next preceding paragraph and that the plaintiffs-appellants
made a mistake in relying thereon, such mistake on a difficult question of law may be the basis
of good faith. Hence, their possession in good faith does not lose this character except in the
case and from the moment their Torrens Titles are declared null and void by the Courts.
Under the circumstances of the case, especially where the subdivision plan was originally
approved by the Director of Lands, we are not ready to conclude that the above reasoning of
the Court of Appeals on this point is a reversible error. Needless to state, as such occupants
in good faith, plaintiffs have the right to the retention of the property until they are reimbursed
the necessary expenses made on the lands.
With respect to the contention of the Republic of the Philippines that the order for the
reimbursement by it of such necessary expenses constitutes a judgment against the
government in a suit not consented to by it, suffice it to say that the Republic, on its own
initiative, asked and was permitted to intervene in the case and thereby submitted itself
voluntarily to the jurisdiction of the court.
IN VIEW OF THE FOREGOING CONSIDERATIONS, the decision appealed from is hereby
affirmed in all respects, without costs. So ordered.
Bengzon, C.J., Bautista Angelo, Concepcion, Reyes, J.B.L., Paredes, Dizon, Regala,
Makalintal and Bengzon, J.P., JJ., concur.
G.R. No. 97761 April 14, 1999
AGUEDA DE VERA, MARIO DE LA CRUZ, EVANGELINE DELA CRUZ, and EDRONEL DE
LA CRUZ, petitioners,
vs.
HON. COURT OF APPEALS, and RICARDO RAMOS, respondents.
PURISIMA, J
At bar is a Petition for Review on Certiorari under Rule 45 of the Revised Rules of Court,
seeking to reverse and set aside the Decision1 of the Court of Appeals 2 in CA-GR CV No.
21507 affirming with modification the Decision3 dated August 2, 1988 of the Regional Trial
Court, Branch 19, 4 Cauayan, Isabela, in Civil Case No. Br. II-1861.
From the records on hand, it appears that:
On January 14, 1983, private respondent Ricardo Ramos filed, a Complaint5 against the herein
petitioners for recovery of property with damages, docketed as Civil Case No. Br. II-1861 before
the said court of origin. On June 29, 1983, an Amended Complaint6 was presented the
pertinent portion of which alleged:
xxx xxx xxx
2. That the plaintiff is the legal and absolute owner of a certain parcel of land known as Lot 2,
H-4-617, and particularly described as follows:
Bounded on the NE., by Road; on the SW, by Provincial Road, and on the SW, by National
Road, containing an area of 3,670 square meters, more or less.
his title thereto being evidenced by Original Certificate of Title No. P-5619 of the Register of
Deeds of Isabela;
3. That the defendants are occupying a triangular portion of the above-described property
containing an area of 22 square meters, more or less, and which is bounded as follows:
On the NE., by the Road; on the SE., by Lot 3841-B of the subdivision plan, Psd 2-02-013907.
wherein they have constructed a house of strong and permanent material this year 1983 after
removing their previous building of light materials in January or February of 1970;
4. That the plaintiff has demanded that the defendants remove their improvement thereon and
vacate the said portion, . . . but the defendants have refused and failed, without any just or
lawful cause to do so, to the present time; . . .
In their Answer,7 the herein petitioners theorized, inter alia, that they have been in possession
not only of 22 square meters but 70 square meters of land through their predecessor-in-interest,
Teodoro de la Cruz (husband of defendant-appellant Agueda De Vera and father of the rest of
the defendants-appellants) and subsequently by themselves, as owners, before 1956; that said
70 square meter area occupied by them is a portion of Lot 7005, Cad 211, over which their
predecessor-in-interest, Teodoro de la Cruz, had, during his lifetime, a pending Miscellaneous
Sales Application which was given due course and favorably recommended by the District Land
Officer for Isabela to the Director of Lands; that Teodoro de la Cruz also declared the said land
for taxation purposes and after his death, by his heirs, and that plaintiff-appellee's cause of
action is already barred by prescription and/or laches.
During the pre-trial conference on November 15, 1983, as agreed upon by the parties, the trial
court appointed the Chief of the Survey Party of the Bureau of Lands in Cauayan, Isabela, as
Commissioner of the court to conduct a relocation survey of subject property and to indicate in
the survey returns or commissioner's report whether or not the land in dispute forms part of the
property and road-right-of-way of the private respondent.
On April 30, 1984, the said Commissioner submitted his Report On The Result Of The
Relocation Survey,8 relevant portion of which, stated:
III. RESULT OF THE RELOCATION SURVEY
Attached herewith, which is made part of this report, is a Relocation Survey Plan No. 2-02-
000160 duly approved by the Regional Director, Region II, Bureau of Lands, Tuguegarao,
Cagayan, showing the result of the relocation survey, to wit;
1. Area bounded by black lines designated as Lot 9841-A, Psd-2-02-013907 a portion of Lot
7004, Cad. 211 with an area of 22 Sq. Meters represents the land being covered by Transfer
Certificate of Title No. T-133705 of the Plaintiff Ricardo Ramos;
xxx xxx xxx
4. Area designated as portions "A," "B" and "C," represent the land in question between the
parties in Civil Case No. Br. II-1861, which portions are respectively describes, to wit:
a. Portion "A" with an area of 51 Square Meters, which is a portion of Lot 7005, Cad. 211,
represents the land being claimed by the defendants Agueda de Vera, Et al, said area allegedly
being covered by Miscellaneous Sales Application of their predecessor-in-interest the late
Teodoro de la Cruz;
b. Portion "B" with an area of 5 Square Meters, represents that part of Lot 9841-B, Psd-2-02-
013905 of Ricardo Ramos, being occupied by the house of defendants Agueda de Vera, Et al;
c. Portion "C" with an area of 18 Square Meters, represents that part of Lot 9841-B, Psd-2-02-
013907 of Ricardo Ramos, being occupied by the house of defendants, Agueda de Vera, Et al;
5. Portion "A" being a part of Lot 7005, Cad. 211, is separate and distinct from the 22 Square
Meters lot covered by Transfer Certificate of Title No. T-133705 of the plaintiff Ricardo Ramos,
said 22 Sq. Meters lot being a part of Lot 7004, Cad. 211;
xxx xxx xxx
7. That the adjoining boundary of Lot 9841-A, Psd-2-02-013907 on the Northwest, which
appears as National Road in Transfer Certificate of Title No. T-133705 is erroneous,
considering that there is still a gap (designated as Portion "A" in the attached Relocation Plan)
between said Lot 9841-A and that of the 60 meters National Road-right-of-way;
xxx xxx xxx
On October 24, 1984, the private respondent sent in his Opposition9 to the aforesaid Report,
branding the same as erroneous. On March 4, 1985, after the filing of private respondent's
Reply 10 to petitioners' Rejoinder, 11 the court of origin issued an Order, 12 holding thus:
Since the purpose of the appointment of the Court Commissioner is to determine whether or
not the area occupied by the defendants is within the titled property of the plaintiff, the relocation
of the land in question became imperative. As a matter of fact, the record shows that both
parties agreed to said relocation (See order of November 15, 1983). It must be noticed that the
report of the Commissioner is adverse to the plaintiff as the former's finding show that only a
portion of 22 square meters of the plaintiff's lot is occupied by the defendants and that between
the National Road and the plaintiff's property is an area of 51 square meters (portion A) which
the Commissioner found to be part of Lot 7005, Cad. 211.
Inasmuch as the plaintiff was given the full opportunity to check the accurateness of
Commissioner's Report and there being no proof adduced by him that the same is erroneous,
except the blue print plan of the subdivision survey Psd-2-02-013907, the execution of which,
the defendants had no participation whatsoever, the Court has no other alternative but to reject
the plaintiff's objection to said report.
WHEREFORE, in view of the foregoing considerations and finding no error in the report of the
Commissioner, the Court hereby approves the same.
SO ORDERED. (Underline supplied)
After trial on the merits, or on August 2, 1988, to be precise, the same trial court promulgated
its Decision, 13 the decretal portion of which is to the following effect:
WHEREFORE, in view of the foregoing considerations, judgment is hereby rendered:
(1) DECLARING the plaintiff the owner of all lands adjoining Lot 9841-A in the West up to the
National Road, and ORDERING the defendants, their agents, representatives, or any person
or persons acting on their authority, to vacate the same and to deliver the possession thereof
to the plaintiff;
(2) ORDERING the defendants (sic) to remove, at their expense, all improvements they have
constructed or erected thereon within thirty (30) days from the finality of this decision;
(3) ORDERING the defendants, jointly and severally, to pay the plaintiff a monthly rent of
P273.70 from April 27, 1981, and an additional P724.70 a month from receipt of this decision
until the possession of said land (sic) is delivered to the plaintiff;
(4) ORDERING the defendants, jointly and severally, to pay the plaintiff the sum of P5,000.00
as attorney's fees; and
(5) ORDERING the defendants, jointly and severally, to pay the costs.
SO ORDERED.
Not satisfied with the judgment below, petitioners elevated the case to the Court of Appeals,
arguing, among others, that: (1) the trial court erred in not dismissing the complaint on the
ground of laches; (2) the trial court erred in holding that defendants-appellants are possessors
in bad faith and (3) that defendants-appellants cannot be made liable to plaintiff-appellee for
rental payments for the use of the disputed property, for attorney's fees and the costs of suit.
On March 21, 1991, the Court of Appeals decided the case, modifying the Decision below and
disposing thus:
CONFORMABLY TO THE FOREGOING, the judgment appealed from is hereby MODIFIED,
dismissing plaintiff-appellee's complaint as regards Portion "A", consequently deleting the
monthly rents decreed by the lower court in favor of plaintiff-appellee as regards said portion,
and is AFFIRMED in all other respects.
No pronouncement as to costs.
SO ORDERED.
Undaunted, petitioners have come to this Court via the present petition; contending that:
THE DECISION DATED 13 MARCH 1991 (ANNEX "A") RENDERED WITH GRAVE ABUSE
OF DISCRETION BY RESPONDENT HONORABLE COURT OF APPEALS, INSOFAR AS IT
AFFIRMS THE DECISION DATED 02 AUGUST 1988 OF THE LOWER COURT, WAS
PASSED ON A QUESTION OF SUBSTANCE IN A WAY NOT IN ACCORD WITH LAW AND
WITH THE APPLICABLE DECISIONS OF THIS HONORABLE COURT, CONSIDERING
THAT:
I
LACHES CAN DEFEAT THE TITLE OF PRIVATE RESPONDENT OVER THE PROPERTIES
DESCRIBED BY RESPONDENT HONORABLE COURT OF APPEALS AS PORTIONS "B"
AND "C" OF THE DISPUTED PROPERTY CONSIDERING THAT SAID PRIVATE
RESPONDENT HAD KNOWLEDGE OF THE PRESENCE OF THE PETITIONERS ON SAID
PORTIONS OF THE PROPERTY EVEN BEFORE HE APPLIED IN 1947 FOR A HOMESTEAD
PATENT THEREFOR.
II
PETITIONERS WERE NOT POSSESSORS IN BAD FAITH OF PORTIONS "B" AND "C" OF
THE DISPUTED PROPERTY: THUS, THEY CANNOT BE MADE LIABLE TO PRIVATE
RESPONDENT FOR THEIR USE THEREOF.
The pivotal issue for determination here is: whether or not the Court of Appeals erred in
adjudging the herein petitioners as possessors and builders in bad faith of Portions "B" and "C"
of the property under controversy.
Germane records on hand disclose that on September 20, 1947, private respondent Ricardo
Ramos filed a homestead application for the parcel of land in litigation here. His Homestead
Application No. 4-617 was approved by the District Land Officer on November 22, 1947. In
1949, the said private respondent had fully complied with the cultivation and residence
requirements of the public Land Act. Thus, on December 15, 1955, Homestead Patent No. V-
62617 14 was issued to homestead applicant Ricardo Ramos, on the basis of which Original
Certificate of Title No. P-5619 15 was issued by the Register of Deeds of Isabela, covering an
area of 9 hectares, 28 acres and 20 centares.
After the issuance of his Homestead Patent No. V-62617, Ricardo Ramos brought a complaint
for recovery of possession against several people before the then Court of First Instance of
Isabela, docketed as Civil Case No. Br. II-162, entitled "Ricardo Ramos vs. Eleuterio Viernes,
et al." Therein, a decision for the ejectment of the said defendants was rendered. 16
However, a protracted litigation between Ricardo Ramos and the defendants in Civil Case No.
Br. II-162, led by Jose Ganadin, ensued with the latter averring that Homestead Patent No. V-
62617 and Original Certificate No. P-5619 were obtained in violation of Section 19 of the Public
Land Law, as amended by Act No 456, and consequently, null and void. The case eventually
reached this Court which, on January 27, 1981, came out with a decision adjudging the validity
of the title of the private respondent, Ricardo Ramos. 17
On April 27, 1981, private respondent wrote petitioners reminding them that their house is on
his titled property, and asking them, (de Veras) whether they were going to buy the portion
occupied by them (de Veras) or to lease the same on a yearly or monthly basis; otherwise, he
(Ricardo Ramos) would be constrained to proper legal action against them. But the letter of
private respondent was ignored by petitioners.
In light of the factual background of the case, the Court is of their irresistible conclusion that
the principle of laches finds no application under the premises.
Laches is "the failure of or neglect for an unreasonable and unexplained length of time to do
that which by exercising due diligence, could or should have been done earlier, or to assert a
right within reasonable time, warranting a presumption that the party entitled thereto has either
abandoned it or declined to assert it. 18
Fundamentally, "laches is an equitable doctrine, its application is controlled by equitable
considerations." 19 Concomitantly, "it is a better rule that courts, under the principle of equity,
will not be guided or bound strictly by the statute of limitations or the doctrine of laches when
to do so, manifest wrong or injustice would result." 20
Under the factual milieu of the case at bar, private respondent's failure to assert his rights over
subject parcel of land 23 years (1958-81) was due to the prolonged litigation he was embroiled
with the herein petitioners, in Civil Case No. Br. II-162. As the validity of his patent itself was
being questioned, the cause of action of private respondent vis-a-vis the land he acquired by
homestead patent had to be kept dormant, pending determination of the validity of the said
homestead patent. Therefore, the delay is not unreasonable and considering that the essence
of laches is the unreasonableness of the delay in the prosecution or institution of a case, the
principle of laches finds no room for application here. The Court of Appeals explained thus:
. . . . It is iniquitous for Us to consider said 23 years period, on which plaintiff-appellee's
ownership over said portions still hanged as a big question, as part of plaintiff-appellee's
alleged delay in enforcing his rights where the pendency of said question precisely crippled his
actions. Sans said 23 year period, plaintiff-appellee, far from being neglectful, has been vigilant
over his rights, as evidenced by his letter (1981) and the ultimate filing of the instant complaint
(1983). 21
Furthermore the question of laches is addressed to the sound discretion of the court, and we
find no fact or circumstance of such substance as to disturb the lower court's finding on this
point. Thus, from the foregoing, laches cannot defeat private respondent's ownership and
recovery of possession of Portions "B" and "C."
In theorizing that their possession of the land in litigation could not have been in bad faith,
petitioners alleged that their possession over Portions "B" and "C" was by virtue of a valid title,
viz: the Miscellaneous Sales Application, and in possessing the said Portions "B" and "C", they
honestly believed that the same formed part of the lot with an area of 70 square meters covered
by their Miscellaneous Sales Application; private respondent's knowledge that they
(petitioners) had been occupying the said portions for several years prior to his filing of the
application for a homestead patent, opens to question the validity of his homestead patent and
the title derived therefrom; petitioners reasoned out.
Art. 526 of the New Civil Code, provides:
Art. 526 — He is deemed a possessor in good faith who is not aware that there exist in his title
or mode of acquisition any flaw which invalidates it.
He is deemed a possessor in bad faith who possesses in any case contrary to the foregoing.
Mistake upon a doubtful or difficult question of law may be the basis of good faith.
In his Commentaries and Jurisprudence on the Civil Code of the Philippines, Vol. II, 1993 ed.,
Dr. Arturo Tolentino opines:
In distinguishing good faith and bad faith possession, the Code refers to the manner of
acquisition in general. A possessor in good faith is one who is unaware that there exists a flaw
which invalidates his acquisition of the thing, Good faith consists in the possessor's belief that
the persons from whom he received a thing was the owner of the same and could convey his
title. It consists in an honest intention to abstain from taking any unconscientious advantage of
another, and is the opposite of fraud. Since good faith is a state of the mind, and is not a visible,
tangible fact that can be seen or touched, it can only be determined by outward acts and proven
conduct. It implies freedom from knowledge and circumstances which ought to put a person on
inquiry.. . . . 22
Records disclose that prior to the construction in 1983 of petitioners' house on the land under
controversy (Portions "B" and "C'), a demand letter dated April 27, 1981 was sent by private
respondent to the petitioners, informing them that the land they were possessing and occupying
is within his (private respondent's) titled property.
In the same letter, the private respondent gave petitioner Agueda de Vera the option to either
pay him the value of the property or lease the same on a yearly or monthly basis. However, the
contending parties failed to reach a compromise agreement. The lower court found, "that the
defendants (herein petitioners) are occupying . . . an area of 22 square meters (Portions "B"
and "C"), . . . , in which land, defendants constructed a house of strong materials in 1983 after
dismantling heir (sic) previous building erected thereon on or about January or February, 1970.
23
The facts and circumstances aforestated are "outward acts and proven conduct" indicating bad
faith of petitioners as possessor and builder.
Articles 449, 450 and 451 of the New Civil Code, read:
Art. 449 — He who builds . . . in bad faith on the land of another, losses what in built, . . . without
right to indemnity.
xxx xxx xxx
Art. 450 — The owner of the land of which anything has been built, . . . in bad faith may demand
the demolition of the work, . . . in order to replace things in their former condition at the expense
of the former condition at the expense of the person who built . . . or he may comple the builder
. . . to pay the price of the land, . . .
— and —
Art. 451 — In the cases of the two preceding articles, the landowner is entitled to damages
from the builder . . .
Under the aforecited Articles 449 and 450, the landowner has three alternative rights, either:
1. to appropriate what has been built without any obligation to pay indemnity therefor; or
2. to demand the builder to remove what he had built; or
3. to compel the builder to pay the value of the land.
In any event, he (landowner) is entitled to be indemnified by the builder in bad faith, pursuant
to Article 451 supra.
In the case under consideration, private respondent Ricardo Ramos availed of the second
alternative, 24 which option is legally feasible under the attendant facts and circumstances.
Lastly, the land titles relied upon by herein petitioners do not suffice to establish good faith on
their part. Even the action on their public land application is only recommendatory and not yet
final, as it was still subject to the approval of the Director of Lands. The tax declarations prove
only the de Veras' claim of ownership, and when not supported by other effective evidence, are
no proof of the right of possession of subject realty. 25
In contrast, Portions "B" and "C" are covered by Original Certificate of Title No. P-5619 and
Transfer Certificate Title No. T-133705, issued in the name of private respondent Ricardo
Ramos, which is conclusive as to all matters therein contained, particularly, the identity of the
owner of the land covered thereby.
All things studiedly considered, the court believes, and so holds, that the respondent court
erred not in modifying the decision of the trial court of origin in Civil Case No. Br. II-861.
WHEREFORE; for lack of merit, the Petition is hereby DENIED and the Decision of the Court
of Appeals in CA GR CV No. 21507 AFFIRMED in toto. No pronouncement as to
costs.1âwphi1.nêt
SO ORDERED.
Romero, Vitug, Panganiban and Gonzaga-Reyes, JJ., concur.
G.R. No. 111737 October 13, 1999
DEVELOPMENT BANK OF THE PHILIPPINES, petitioner,
vs.
THE HONORABLE COURT OF APPEALS AND SPOUSES TIMOTEO and SELFIDA S.
PIÑEDA, respondents.
GONZAGA-REYES, J.:
Before us is a Petition for Review on Certiorari of the decision of the Court of Appeals 1 in CA-
G.R. CV No. 28549 entitled "SPOUSES TIMOTEO PIÑEDA, ET. AL. vs. DEVELOPMENT
BANK OF THE PHILIPPINES" which affirmed the decision of the Regional Trial Court (RTC),
Branch 16 2, Roxas City in Civil Case No. V-4590, for cancellation of certificate of title and/or
specific performance, accounting and damages with a prayer for the issuance of a writ of
preliminary injunction.1âwphi1.nêt
The records show that respondent spouses Piñeda (PIÑEDAS) are the registered owners of a
parcel of land (Lot 11-14-1-14) situated at barangay Astorga Dumarao, Capiz containing an
area of 238,406 square meters, more or less, and covered by Homestead Patent No. 0844 and
Original Certificate of Title No. P-1930. On March 7, 1972, the PIÑEDAS mortgaged the above
described parcel of land to petitioner, Development Bank of the Philippines (DBP) to secure
their agricultural loan in the amount of P20,000.00. The PIÑEDAS failed to comply with the
terms and conditions of the mortgage compelling DBP to extrajudicially foreclose on February
2, 1977. In the foreclosure sale, DBP was the highest bidder and a Sheriff Certificate of Sale
was executed in its favor. In the corresponding Certificate of Sale, the sheriff indicated that
"This property is sold subject to the redemption within five (5) years from the date of registration
of this instrument and in the manner provided for by law applicable to this case". The certificate
of sale was registered in the Register of Deeds of Capiz on April 25, 1977. On March 10, 1978,
after the expiration of the one-year redemption period provided for under Section 6, ACT 3135,
DBP consolidated its title over the foreclosed property by executing an Affidavit of
Consolidation of Ownership. Subsequently, a Final Deed of Sale was executed in DBP's favor,
which was registered together with the Affidavit of Consolidation of Ownership with the Register
of Deeds of Capiz on May 30, 1978. Consequently, Original Certificate of Title No. P-1930 was
cancelled and TCT No. T-15559 was issued in the name of DBP. Thereafter, DBP took
possession of the foreclosed property and appropriated the produce thereof.
On July 5, 1978, the Ministry of Justice issued Opinion No. 92, Series of 1978 3 which declared
that lands covered by P.D. No. 27 4 , like the herein subject property, may not be the object of
foreclosure proceedings after the promulgation of said decree on Oct. 21, 1972.
On August 24, 1981, the PIÑEDAS offered to redeem the foreclosed property by offering
P10,000.00 as partial redemption payment. This amount was accepted by DBP who issued
O.R. No. 1665719 and through a letter, conditionally approved the offer of redemption
considering the P10,000.00 as down payment. 5 However, on November 11, 1981, DBP sent
the PIÑEDAS another letter informing them that pursuant to P.D. 27, their offer to redeem
and/or repurchase the subject property could not be favorably considered for the reason that
said property was tenanted. 6 On November 16, 1981, in deference to the above-mentioned
opinion, DBP through Ramon Buenaflor sent a letter to the Acting Register of Deeds of Capiz
requesting the latter to cancel TCT No. T-15559 and to restore Original Certificate of Title No.
P-1930 in the name of the PIÑEDAS. The Acting Register of Deeds, in reply to such request,
suggested that DBP file a petition in court pursuant to Section 108 of Presidential Decree 1529
7. In compliance with said suggestion, DBP petitioned for the cancellation of TCT No. T-15559
with then Court of First Instance of Capiz, Branch II, docketed as Special Case No. 2653. The
petition was favorably acted upon on February 22, 1982. Thus, the foreclosure proceeding
conducted on February 2, 1977 was declared null and void and the Register of Deeds of Capiz
was ordered to cancel TCT No. 15559; OCT No. 1930 was ordered revived.
Meanwhile, on December 21, 1981, the PIÑEDAS filed the instant complaint against DBP for
cancellation of certificate of title and/or specific performance, accounting and damages with a
prayer for the issuance of a writ of preliminary injunction averring that DBP, in evident bad faith,
caused the consolidation of its title to the parcel of land in question in spite of the fact that the
5-year redemption period expressly stated in the Sheriff's Certificate of Sale had not yet lapsed
and that their offer to redeem the foreclosed property was made well within said period of
redemption. 8
After trial, the RTC ruled in favor of the PIÑEDAS stating that DBP violated the stipulation in
the Sheriff's Certificate of Sale which provided that the redemption period is five (5) years from
the registration thereof in consonance with Section 119 9 of CA No. 141 10. DBP should
therefore assume liability for the fruits that said property produced from said land considering
that it prematurely took possession thereof. The dispositive portion of the decision reads:
WHEREFORE, judgment is hereby rendered in favor of plaintiffs and against the defendant
Development Bank of the Philippines as follows:
1. Condemning the defendant DBP to pay the plaintiffs P201,138.28 less whatever amount the
plaintiffs still have to pay the said defendant DBP as balance of their loan account reckoned up
to the date of this decision; P20,000.00 as attorney's fees; P5,000.00 as litigation expenses
and costs.
SO ORDERED. 11
DBP appealed to the Court of Appeals, which affirmed the decision of the RTC. The Court of
Appeals stated that since DBP was in evident bad faith when it unlawfully took possession of
the property subject of the dispute and defied what was written on the Sheriff's Certificate of
Sale, the PIÑEDAS were entitled to recover the fruits produced by the property or its equivalent
valued at P72,000.00 per annum or a total of P216,000.00 for the three-year period.
Respondent court stated that said amount was not rebutted by DBP and was fair considering
the size of the land in question. The court added that any discussion with respect to the
redemption period was of little significance since the foreclosure proceeding was declared null
and void in Special Civil Case No. 2653 12 on February 22, 1982. Thus, the right of the
PIÑEDAS to redeem the property has become moot and academic. Finally, the award of
attorney's fees amounting to P10,000.00 13 was justified considering that the PIÑEDAS were
compelled to protect their interests. 14
DBP's Motion for Reconsideration 15 was denied; hence this petition where it assigns the
following errors:
Ground No. 1 — The Honorable Court Of Appeals Gravely Erred In Affirming The Court A
Quo's Decision Awarding Actual Damages In The Amount Of P216,000.00 In Favor Of The
Private Respondents Notwithstanding The Absence Of Evidence Substantiating Said Award.
Thus, The Honorable Court Of Appeals Had Decided This Instant Case In A Way Not In Accord
With Applicable Law And Jurisprudence.
2. Ground No. 2 — The Honorable Court Of Appeals Gravely Erred In Affirming The Court A
Quo's Finding That DBP Was In Bad Faith When It Took Possession Of The Property In
Question Notwithstanding the Contrary Evidence Adduced By Petitioner DBP. Thus, The
Honorable Court Of Appeals Departed From The Accepted And Usual Course f Judicial
Proceedings.
3. Ground No. 3 — The Honorable Court Of Appeals Gravely Erred In Affirming The Court A
Quo's Decision Awarding Attorney's Fees And Litigation Costs In Favor Of The Private
Respondents Notwithstanding Absence Of Evidence Proving The Same. Clearly, The Lower
Court Be Committed Misapprehension Of Facts That Can Be Considered A Question Of Law.
16
DBP maintains that the valuation of the income derived from the property in dispute allegedly
amounting to P216,000.00 was not proven by the PIÑEDAS. DBP argues that they granted the
PIÑEDAS a loan of P20,000.00 in March 7, 1972 and up to the time of the foreclosure of the
property, the PIÑEDAS have paid only P2,000.00 on their principal. The failure of the PIÑEDAS
to pay this loan is attributable to the fact that said property did not produce income amounting
to P72,000.00 per annum. According to DBP, in the absence of receipts or other evidence to
support such a claim, the Court of Appeals should not have granted said amount considering
that the PIÑEDAS had the burden of proving actual damages. Furthermore, Selfida Piñeda
herself admitted that the property never produced income amounting to P72,000.00 per annum.
At any rate, the actual amount earned by the property in terms of rentals turned over by the
tenant-farmers or caretakers of the land were duly receipted and were duly accounted for by
the DBP.
DBP also alleges that the mere fact that DBP took possession and administration of the
property does not warrant a finding that DBP was in bad faith. First, records show that the
PIÑEDAS consented to and approved the takeover of DBP. Second, Sec. 7 17 of Act No. 3135
18 allows the mortgagee-buyer to take possession of the mortgaged property even during the
redemption period. Third, DBP's act of consolidating the title of the property in its name does
not constitute bad faith as there is no law which prohibits the purchaser at public auction from
consolidating title in its name after the expiration of the one (1) year redemption period
reckoned from the time the Certificate of Sale was registered; and neither is there any law or
jurisprudence which prohibits the PIÑEDAS from exercising their right of redemption over said
property within five (5) years even if title is consolidated in the name of the purchaser. When
DBP consolidated title over the property in its name, the new TCT issued in its favor was subject
to the lien i.e. the right of redemption of the PIÑEDAS; if there was a failure to register this in
the TCT, DBP should not be faulted. Besides, even if the five (5) year period of redemption
was not indicated therein, Sec. 44 19 and 46 20 of Presidential Decree No. 1529 21 attaches
such lien by operation of law even in the absence of an annotation in the title. Moreover, Sec.
119 of CA No. 141 also makes said right of redemption a statutory lien, which subsists and
binds the whole world despite the absence of registration.
DBP also could not have been in bad faith when it denied the PIÑEDAS' offer to redeem the
property since the denial was premised on Opinion No. 92 of the Minister of Justice series of
1978 which stated that said land was covered under P.D. 27 and could not be the subject of
foreclosure proceedings. For this reason, DBP immediately filed a petition to nullify the
foreclosure proceedings which was favorably acted upon prior to the service of summons and
the complaint in the present case on DBP on June 30, 1982. If DBP was really in bad faith, it
would not have filed said petition for said petition was against its own interests.
Further, DBP asserts that PIÑEDAS appointed DBP as their attorney-in-fact or agent in case
of foreclosure of the property under Section 4 of the mortgage contract, which provides:
4. . . . In case of foreclosure, the Mortgagor hereby consents to the appointment of the
mortgagee or any of its employees as receiver, without any bond, to take charge of the
mortgage property at once, and to hold possession of the case and the rents and profits derived
from the mortgaged property before the sale. . . . 22
DBP was therefore entitled to take possession of the property pursuant to the mortgage
contract.
Finally, considering that DBP lawfully had material possession of the property after it
consolidated its title, DBP was entitled to the fruits and income thereof pursuant to Section 34,
Rule 39 of the Rules of Court:
Sec. 34. Rents and Profits Pending Redemption. Statement thereof and credit therefor on
redemption. — The purchaser, from the time of the sale until a redemption, and a redemptioner,
from the time of his redemption until another redemption, is entitled to receive the rents of the
property sold or the value of the use or occupation thereof when such property is in the
possession of a tenant. . . .
Taking all this into consideration, DBP cannot be faulted for taking over possession of the
property in question.
The core issue in this case is whether DBP was in bad faith when it took possession of the
disputed lot.
We rule in the negative and find DBP's contentions meritorious.
A possessor in good faith is one who is not aware that there exists in his title or mode of
acquisition any flaw, which invalidates it. 23 Good faith is always presumed, and upon him who
alleges bad faith on the part of a possessor rests the burden of proof. 24 It was therefore
incumbent on the PIÑEDAS to prove that DBP was aware of the flaw in its title i.e. the nullity
of the foreclosure. This, they failed to do.
Respondent PIÑEDAS argue that DBP's bad faith stems from the fact that DBP consolidated
title over the disputed property despite the statement in the Sheriff's Certificate of Sale to the
effect that said land was subject to a five year redemption period. The period of redemption of
extrajudicially foreclosed land is provided under Section 6 of ACT No. 3135 to wit:
Sec. 6. In all cases in which an extrajudicial sale is made under the special power hereinbefore
referred to, the debtor, his successors in interest or any judicial creditor or judgment creditor of
said debtor, or any person having a lien on the property subsequent to the mortgage or deed
of trust under which the property is sold, may redeem the same at any time within the term of
one year from and after the date of sale; and such redemption shall be governed by the
provisions of section four hundred and sixty-four to four hundred and sixty-six, inclusive, of the
Code of Civil Procedure, 25 in so far as these are not inconsistent with the provisions of this
Act.
If no redemption is made within one year, the purchaser is entitled as a matter of right to
consolidate 26 and to possess 27 the property. 28 Accordingly, DBP's act of consolidating its
title and taking possession of the subject property after the expiration of the period of
redemption was in accordance with law. Moreover, it was in consonance with Section 4 of the
mortgage contract between DBP and the PIÑEDAS where they agreed to the appointment of
DBP as receiver to take charge and to hold possession of the mortgage property in case of
foreclosure. DBP's acts cannot therefore be tainted with bad faith.
The right of DBP to consolidate its title and take possession of the subject property is not
affected by the PIÑEDAS' right to repurchase said property within five years from the date of
conveyance granted by Section 119 of CA No. 141. In fact, without the act of DBP consolidating
title in its name, the PIÑEDAS would not be able to assert their right to repurchase granted
under the aforementioned section. Respondent PIÑEDAS are of the erroneous belief that said
section prohibits a purchaser of homestead land in a foreclosure sale from consolidating his
title over said property after the one-year period to redeem said property has expired. Section
119 does not contain any prohibition to convey homestead land but grants the homesteader,
his widow or legal heirs a right to repurchase said land within a period of five years in the event
that he conveys said land. This is in consonance with the policy of homestead laws to distribute
disposable agricultural lands of the State to land-destitute citizens for their home and
cultivation. 29 The right to repurchase under Section 119 aims to preserve and keep in the
family of the homesteader that portion of public land which the State had gratuitously given
him. 30 Such right is based on the assumption that the person under obligation to reconvey the
property has the full title to the property because it was voluntarily conveyed to him or that he
consolidated his title thereto by reason of a redemptioner's failure to exercise his right of
redemption. 31 It is also settled that "the five-year period of redemption fixed in Section 119 of
the Public Land Law of homestead sold at extrajudicial foreclosure begins to run from the day
after the expiration of the one-year period of repurchase allowed in an extrajudicial foreclosure".
32 Thus DBP's consolidation of title did not derogate from or impair the right of the PIÑEDAS
to redeem the same under C.A. No. 141.
It may be argued that P.D. 27 was already in effect when DBP foreclosed the property.
However, the legal propriety of the foreclosure of the land was put into question only after
Opinion No. 92 series of 1978 of the Ministry of Justice declared that said land was covered by
P.D. 27 and could not be subject to foreclosure proceedings. The Opinion of the Ministry of
Justice was issued on July 5, 1978 or almost two months after DBP consolidated its title to the
property on March 10, 1978. By law and jurisprudence, a mistake upon a doubtful or difficult
question of law may properly be the basis of good faith. 33
In the case of Maneclang vs. Baun, 34 we held that when a contract of sale is void, the
possessor is entitled to keep the fruits during the period for which it held the property in good
faith. Good faith of the possessor ceases when an action to recover possession of the property
is filed against him and he is served summons therefore. 35 In the present case, DBP was
served summons on June 30, 1982. 36 By that time, it was no longer in possession of the
disputed land as possession thereof was given back to the PIÑEDAS after the foreclosure of
DBP was declared null and void on February 22, 1982. Therefore, any income collected by
DBP after it consolidated its title and took possession of the property on May 30, 1978 up to
February 22, 1982 belongs to DBP as a possessor in good faith since its possession was never
legally interrupted.
Finally, we delete the award for attorney's fees. Although attorney's fees may be awarded if the
claimant is compelled to litigate with third persons or to incur expenses to protect his interest
by reason of an unjustified act or omission of the party from whom it is sought 37, we hold that
DBP's acts were clearly not unjustified.
WHEREFORE, the instant petition is hereby GRANTED, and the appealed decision of the
Court of Appeals is REVERSED. The Development Bank of the Philippines is absolved from
any liability to Timoteo and Selfida Piñeda in so far as it orders the DBP to pay the PIÑEDAS
P216,000.00 as annual produce value of the land; P20,000.00 in attorney's fees, P5,000.00 in
litigation expenses and the costs of the suit. This decision is without prejudice to whatever
liability the PIÑEDAS may still have to the DBP with respect to their loan.
SO ORDERED.
Melo, Vitug, Panganiban and Purisima, JJ., concur.
G.R. No. 124699 July 31, 2003
BOGO-MEDELLIN MILLING CO., INC., Petitioner,
vs.
COURT OF APPEALS AND HEIRS OF MAGDALENO VALDEZ SR., Respondents.
DECISION
CORONA, J.:
This is an appeal by certiorari under Rule 45 of the Rules of Court seeking to annul and set
aside the decision1 dated November 17, 1995 of the Court of Appeals, Tenth Division, which
reversed the decision2 dated November 27, 1991 of the Regional Trial Court of Cebu City,
Branch IX, which ruled in favor of herein petitioner, Bogo-Medellin Milling Company, Inc. and
dismissed herein private respondents' complaint for payment of compensation and/or recovery
of possession of real property and damages with application for restraining order or preliminary
injunction; and its resolution dated March 2, 1996 denying petitioner's motion for
reconsideration.
The antecedent facts follow.
Magdaleno Valdez, Sr., father of herein private respondents Sergio Valdez, Angelina Valdez-
Novabos, Teresita Argawanon-Mangubat and Daylinda Argawanon-Melendres (hereafter the
heirs), purchased from Feliciana Santillan, on December 9, 1935, a parcel of unregistered land
covered by Tax Declaration No. 3935 with an area of one hectare, 34 ares and 16 centares,
located in Barrio Dayhagon, Medellin, Cebu.3 He took possession of the property and declared
it for tax purposes in his name.4
Prior to the sale, however, the entire length of the land from north to south was already
traversed in the middle by railroad tracks owned by petitioner Bogo-Medellin Milling Co., Inc.
(hereafter Bomedco). The tracks were used for hauling sugar cane from the fields to petitioner’s
sugar mill.
When Magdaleno Valdez, Sr. passed away in 1948, herein private respondents inherited the
land. However, unknown to them, Bomedco was able to have the disputed middle lot which
was occupied by the railroad tracks placed in its name in the Cadastral Survey of Medellin,
Cebu in 1965. The entire subject land was divided into three, namely, Cadastral Lot Nos. 953,
954 and 955. Lot Nos. 953 and 955 remained in the name of private respondents. However,
Lot No. 954, the narrow lot where the railroad tracks lay, was claimed by Bomedco as its own
and was declared for tax purposes in its name. 5
It was not until 1989 when private respondents discovered the aforementioned claim of
Bomedco on inquiry with the Bureau of Lands. Through their lawyer, they immediately
demanded the legal basis for Bomedco's claim over Cadastral Lot No. 954 but their letter of
inquiry addressed to petitioner went unheeded, as was their subsequent demand for payment
of compensation for the use of the land.6

On June 8, 1989, respondent heirs filed a "Complaint for Payment of Compensation and/or
Recovery of Possession of Real Property and Damages with Application for Restraining
Order/Preliminary Injunction" against Bomedco before the Regional Trial Court of Cebu.7
Respondent heirs alleged that, before she sold the land to Valdez, Sr. in 1935, Santillan granted
Bomedco, in 1929, a railroad right of way for a period of 30 years. When Valdez, Sr. acquired
the land, he respected the grant. The right of way expired sometime in 1959 but respondent
heirs allowed Bomedco to continue using the land because one of them was then an employee
of the company.8
In support of the complaint, they presented an ancient document ― an original copy of the
deed of sale written in Spanish and dated December 9, 19359 ― to evidence the sale of the
land to Magdaleno Valdez, Sr.; several original real estate tax receipts10 including Real
Property Tax Receipt No. 393511 dated 1922 in the name of Graciano de los Reyes, husband
of Feliciana Santillan, and Real Property Tax Receipt No. 0949112 dated 1963 in the name of
Magdaleno Valdez, Sr. Magdaleno Valdez, Jr. also testified for the plaintiffs during the trial.
On the other hand, Bomedco’s principal defense was that it was the owner and possessor of
Cadastral Lot No. 954, having allegedly bought the same from Feliciana Santillan in 1929, prior
to the sale of the property by the latter to Magdaleno Valdez, Sr. in 1935. It also contended that
plaintiffs’ claim was already barred by prescription and laches because of Bomedco’s open and
continuous possession of the property for more than 50 years.
Bomedco submitted in evidence a Deed of Sale13 dated March 18, 1929; seven real estate
tax receipts14 for the property covering the period from 1930 to 1985; a 1929 Survey Plan of
private land for Bogo-Medellin Milling Company;15 a Survey Notification Card;16 Lot Data
Computation for Lot No. 954;17 a Cadastral Map for Medellin Cadastre18 as well as the
testimonies of Vicente Basmayor, Geodetic Engineer and property custodian for Bomedco, and
Rafaela A. Belleza, Geodetic Engineer and Chief of the Land Management Services of the
DENR, Region VIII.
In its decision dated November 27, 1991, the trial court19 rejected Bomedco's defense of
ownership on the basis of a prior sale, citing that its evidence – a xerox copy of the Deed of
Sale dated March 18, 1929 – was inadmissible and had no probative value. Not only was it not
signed by the parties but defendant Bomedco also failed to present the original copy without
valid reason pursuant to Section 4, Rule 130 of the Rules of Court.20
Nonetheless, the trial court held that Bomedco had been in possession of Cadastral Lot No.
954 in good faith for more than 10 years, thus, it had already acquired ownership of the property
through acquisitive prescription under Article 620 of the Civil Code. It explained:
Under Article 620 of the Civil Code, CONTINUOUS and APPARENT easements can be
acquired by prescription after ten (10) years. The "apparent" characteristic of the questioned
property being used by defendant as an easement is no longer at issue, because plaintiffs
themselves had acknowledged that the existence of the railway tracks of defendant Bomedco
was already known by the late Magdaleno Valdez, herein plaintiffs’ predecessor-in-interest,
before the late Magdaleno Valdez purchased in 1935 from the late Feliciana Santillan the land
described in the Complaint where defendant’s railway tracks is traversing [sic] (TSN of
February 5, 1991, pp. 7-8). As to the continuity of defendant’s use of the strip of land as
easement is [sic] also manifest from the continuous and uninterrupted occupation of the
questioned property from 1929 up to the date of the filing of the instant Complaint. In view of
the defendant’s UNINTERRUPTED possession of the strip of land for more than fifity (50)
years, the Supreme Court’s ruling in the case of Ronquillo, et al. v. Roco, et al. (103 Phil 84) is
not applicable. This is because in said case the easement in question was a strip of dirt road
whose possession by the dominant estate occurs only everytime said dirt road was being used
by the dominant estate. Such fact would necessarily show that the easement’s possession by
the dominant estate was never continuous. In the instant case however, there is clear continuity
of defendant’s possession of the strip of land it had been using as railway tracks. Because the
railway tracks which defendant had constructed on the questioned strip of land had been
CONTINUOUSLY occupying said easement. Thus, defendant Bomedco’s apparent and
continuous possession of said strip of land in good faith for more than ten (10) years had made
defendant owner of said strip of land traversed by its railway tracks. Because the railway tracks
which defendant had constructed on the questioned strip of land had been continuously
occupying said easement [sic]. Thus, defendant Bomedco’s apparent and continuous
possession of said strip of land in good faith for more than ten (10) years had made defendant
owner of said strip of land traversed by its railway tracks.
Respondent heirs elevated the case to the Court of Appeals which found that Bomedco did not
acquire ownership over the lot. It consequently reversed the trial court. In its decision dated
November 17, 1995, the appellate court held that Bomedco only acquired an easement of right
of way by unopposed and continuous use of the land, but not ownership, under Article 620 of
the Civil Code.
The appellate court further ruled that Bomedco’s claim of a prior sale to it by Feliciana Santillan
was untrue. Its possession being in bad faith, the applicable prescriptive period in order to
acquire ownership over the land was 30 years under Article 1137 of the Civil Code. Adverse
possession of the property started only in 1965 when Bomedco registered its claim in the
cadastral survey of Medellin. Since only 24 years from 1965 had elapsed when the heirs filed
a complaint against Bomedco in 1989, Bomedco’s possession of the land had not yet ripened
into ownership.
And since there was no showing that respondent heirs or their predecessor-in-interest was
ever paid compensation for the use of the land, the appellate court awarded compensation to
them, to be computed from the time of discovery of the adverse acts of Bomedco.
Its motion for reconsideration having been denied by the appellate court in its resolution dated
March 22, 1996, Bomedco now interposes before us this present appeal by certiorari under
Rule 45, assigning the following errors:
I
THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR WHEN IT REVERSED AND
SET ASIDE THE TRIAL COURT’S DECISION DISMISSING PRIVATE RESPONDENT’S
COMPLAINT.
II
THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR WHEN IT ORDERED THE
PETITIONER TO PAY THE PRIVATE RESPONDENT THE REASONABLE VALUE OF LOT
954 AND THE AMOUNT OF TEN THOUSAND (₱10,000.00) PESOS AS REASONABLE
ATTORNEY’S FEES.
Petitioner Bomedco reiterates its claim of ownership of the land through extraordinary
acquisitive prescription under Article 1137 of the Civil Code and laches to defeat the claim for
compensation or recovery of possession by respondent heirs. It also submits a third ground
originally tendered by the trial court ― acquisition of the easement of right of way by
prescription under Article 620 of the Civil Code.
Extraordinary Acquisitive Prescription
Under Art. 1137 of the Civil Code
Petitioner’s claim of ownership through extraordinary acquisitive prescription under Article 1137
of the Civil Code cannot be sustained.
There is no dispute that the controversial strip of land has been in the continuous possession
of petitioner since 1929. But possession, to constitute the foundation of a prescriptive right,
must be possession under a claim of title, that is, it must be adverse.21 Unless coupled with
the element of hostility towards the true owner, possession, however long, will not confer title
by prescription.22
After a careful review of the records, we are inclined to believe the version of respondent heirs
that an easement of right of way was actually granted to petitioner for which reason the latter
was able to occupy Cadastral Lot No. 954. We cannot disregard the fact that, for the years
1930, 1937, 1949, 1962 and 1963, petitioner unequivocally declared the property to be a
"central railroad right of way" or "sugar central railroad right of way" in its real estate tax receipts
when it could have declared it to be "industrial land" as it did for the years 1975 and 1985.23
Instead of indicating ownership of the lot, these receipts showed that all petitioner had was
possession by virtue of the right of way granted to it. Were it not so and petitioner really owned
the land, petitioner would not have consistently used the phrases "central railroad right of way"
and "sugar central railroad right of way" in its tax declarations until 1963. Certainly an owner
would have found no need for these phrases. A person cannot have an easement on his own
land, since all the uses of an easement are fully comprehended in his general right of
ownership.24
While it is true that, together with a person’s actual and adverse possession of the land, tax
declarations constitute strong evidence of ownership of the land occupied by him,25 this legal
precept does not apply in cases where the property is declared to be a mere easement of right
of way.
An easement or servitude is a real right, constituted on the corporeal immovable property of
another, by virtue of which the owner has to refrain from doing, or must allow someone to do,
something on his property, for the benefit of another thing or person. It exists only when the
servient and dominant estates belong to two different owners. It gives the holder of the
easement an incorporeal interest on the land but grants no title thereto. Therefore, an
acknowledgment of the easement is an admission that the property belongs to another.26
Having held the property by virtue of an easement, petitioner cannot now assert that its
occupancy since 1929 was in the concept of an owner. Neither can it declare that the 30-year
period of extraordinary acquisitive prescription started from that year.
Petitioner, however, maintains that even if a servitude was merely imposed on the property in
its favor, its possession immediately became adverse to the owner in the late 1950’s when the
grant was alleged by respondent heirs to have expired. It stresses that, counting from the late
1950’s (1959 as found by the trial court), the 30-year extraordinary acquisitive prescription had
already set in by the time respondent heirs made a claim against it in their letters dated March
1 and April 6, 1989.
We do not think so. The mere expiration of the period of easement in 1959 did not convert
petitioner’s possession into an adverse one. Mere material possession of land is not adverse
possession as against the owner and is insufficient to vest title, unless such possession is
accompanied by the intent to possess as an owner.27 There should be a hostile use of such a
nature and exercised under such circumstances as to manifest and give notice that the
possession is under a claim of right.
In the absence of an express grant by the owner, or conduct by petitioner sugar mill from which
an adverse claim can be implied, its possession of the lot can only be presumed to have
continued in the same character as when it was acquired (that is, it possessed the land only by
virtue of the original grant of the easement of right of way),28 or was by mere license or
tolerance of the owners (respondent heirs).29 It is a fundamental principle of law in this
jurisdiction that acts of possessory character executed by virtue of license or tolerance of the
owner, no matter how long, do not start the running of the period of prescription.30
After the grant of easement expired in 1959, petitioner never performed any act incompatible
with the ownership of respondent heirs over Cadastral Lot No. 954. On the contrary, until 1963,
petitioner continued to declare the "sugar central railroad right of way" in its realty tax receipts,
thereby doubtlessly conceding the ownership of respondent heirs. Respondents themselves
were emphatic that they simply tolerated petitioner’s continued use of Cadastral Lot No. 954
so as not to jeopardize the employment of one of their co-heirs in the sugar mill of petitioner.31
The only time petitioner assumed a legal position adverse to respondents’ was when it filed a
claim over the property in 1965 during the cadastral survey of Medellin. Since then (1965) and
until the filing of the complaint for the recovery of the subject land before the RTC of Cebu in
1989, only 24 years had lapsed. Since the required 30-year extraordinary prescriptive period
had not yet been complied with in 1989, petitioner never acquired ownership of the subject
land.
Laches
Neither can petitioner find refuge in the principle of laches. It is not just the lapse of time or
delay that constitutes laches. The essence of laches is the failure or neglect, for an
unreasonable and unexplained length of time, to do that which, through due diligence, could or
should have been done earlier, thus giving rise to a presumption that the party entitled to assert
it had either abandoned or declined to assert it.32
Its essential elements are: (a) conduct on the part of the defendant, or of one under whom he
claims, giving rise to the situation complained of; (b) delay in asserting complainant’s rights
after he had knowledge of defendant’s acts and after he has had the opportunity to sue; (c)
lack of knowledge or notice by defendant that the complainant will assert the right on which he
bases his suit; and (d) injury or prejudice to the defendant in the event the relief is accorded to
the complainant.33
The second element (which in turn has three aspects) is lacking in the case at bar. These
aspects are: (a) knowledge of defendant's action, (b) opportunity to sue defendant after
obtaining such knowledge and (c) delay in the filing of such suit.34
Records show that respondent heirs only learned about petitioner’s claim on their property
when they discovered the inscription for the cadastral survey in the records of the Bureau of
Lands in 1989. Respondents lost no time in demanding an explanation for said claim in their
letters to the petitioner dated March 1, 1989 and April 6, 1989. When petitioner ignored them,
they instituted their complaint before the Regional Trial Court of Cebu City on June 8, 1989.
Petitioner’s reliance on Caro vs. Court of Appeals 35 and Vda. de Alberto vs. Court of Appeals
36 is misplaced. There, laches was applied to bar petitioners from questioning the ownership
of the disputed properties precisely because they had knowledge of the adverse claims on their
properties yet tarried for an extraordinary period of time before taking steps to protect their
rights.
Further, there is no absolute rule on what constitutes laches. It is a rule of equity and applied
not to penalize neglect or sleeping on one’s rights but rather to avoid recognizing a right when
to do so would result in a clearly unfair situation. The question of laches is addressed to the
sound discretion of the court and each case must be decided according to its particular
circumstances.37 It is the better rule that courts, under the principle of equity, should not be
guided or bound strictly by the statute of limitations or the doctrine of laches if wrong or injustice
will result.
It is clear that petitioner never acquired ownership over Cadastral Lot No. 954 whether by
extraordinary acquisitive prescription or by laches.
Acquisition of Easement of Right of Way By
Prescription Under Art. 620 of the Civil Code
Petitioner contends that, even if it failed to acquire ownership of the subject land, it nevertheless
became legally entitled to the easement of right of way over said land by virtue of prescription
under Article 620 of the Civil Code:
Continuous and apparent easements are acquired either by virtue of a title or by prescription
of ten years.
The trial court and the Court of Appeals both upheld this view for the reason that the railroad
right of way was, according to them, continuous and apparent in nature. The more or less
permanent railroad tracks were visually apparent and they continuously occupied the subject
strip of land from 1959 (the year the easement granted by Feliciana Santillan to petitioner
expired). Thus, with the lapse of the 10-year prescriptive period in 1969, petitioner supposedly
acquired the easement of right of way over the subject land.
Following the logic of the courts a quo, if a road for the use of vehicles or the passage of
persons is permanently cemented or asphalted, then the right of way over it becomes
continuous in nature. The reasoning is erroneous.
Under civil law and its jurisprudence, easements are either continuous or discontinuous
according to the manner they are exercised, not according to the presence of apparent signs
or physical indications of the existence of such easements. Thus, an easement is continuous
if its use is, or may be, incessant without the intervention of any act of man, like the easement
of drainage;38 and it is discontinuous if it is used at intervals and depends on the act of man,
like the easement of right of way.39
The easement of right of way is considered discontinuous because it is exercised only if a
person passes or sets foot on somebody else’s land. Like a road for the passage of vehicles
or persons, an easement of right of way of railroad tracks is discontinuous because the right is
exercised only if and when a train operated by a person passes over another's property. In
other words, the very exercise of the servitude depends upon the act or intervention of man
which is the very essence of discontinuous easements.
The presence of more or less permanent railroad tracks does not in any way convert the nature
of an easement of right of way to one that is continuous. It is not the presence of apparent
signs or physical indications showing the existence of an easement, but rather the manner of
exercise thereof, that categorizes such easement into continuous or discontinuous. The
presence of physical or visual signs only classifies an easement into apparent or non-apparent.
Thus, a road (which reveals a right of way) and a window (which evidences a right to light and
view) are apparent easements, while an easement of not building beyond a certain height is
non-apparent.40
In Cuba, it has been held that the existence of a permanent railway does not make the right of
way a continuous one; it is only apparent. Therefore, it cannot be acquired by prescription.41
In Louisiana, it has also been held that a right of passage over another's land cannot be claimed
by prescription because this easement is discontinuous and can be established only by title.42
In this case, the presence of railroad tracks for the passage of petitioner’s trains denotes the
existence of an apparent but discontinuous easement of right of way. And under Article 622 of
the Civil Code, discontinuous easements, whether apparent or not, may be acquired only by
title. Unfortunately, petitioner Bomedco never acquired any title over the use of the railroad
right of way whether by law, donation, testamentary succession or contract. Its use of the right
of way, however long, never resulted in its acquisition of the easement because, under Article
622, the discontinuous easement of a railroad right of way can only be acquired by title and not
by prescription.1âwphi1
To be sure, beginning 1959 when the original 30-year grant of right of way given to petitioner
Bomedco expired, its occupation and use of Cadastral Lot No. 954 came to be by mere
tolerance of the respondent heirs. Thus, upon demand by said heirs in 1989 for the return of
the subject land and the removal of the railroad tracks, or, in the alternative, payment of
compensation for the use thereof, petitioner Bomedco which had no title to the land should
have returned the possession thereof or should have begun paying compensation for its use.
But when is a party deemed to acquire title over the use of such land (that is, title over the
easement of right of way)? In at least two cases, we held that if: (a) it had subsequently entered
into a contractual right of way with the heirs for the continued use of the land under the
principles of voluntary easements or (b) it had filed a case against the heirs for conferment on
it of a legal easement of right of way under Article 629 of the Civil Code, then title over the use
of the land is deemed to exist. The conferment of a legal easement of right of way under Article
629 is subject to proof of the following:
(1) it is surrounded by other immovables and has no adequate outlet to a public highway;
(2) payment of proper indemnity;
(3) the isolation is not the result of its own acts; and
(4) the right of way claimed is at the point least prejudicial to the servient estate, and, insofar
as consistent with this rule, the distance from the dominant estate to the highway is the
shortest.43
None of the above options to acquire title over the railroad right of way was ever pursued by
petitioner despite the fact that simple resourcefulness demanded such initiative, considering
the importance of the railway tracks to its business. No doubt, it is unlawfully occupying and
using the subject strip of land as a railroad right of way without valid title yet it refuses to vacate
it even after demand of the heirs. Furthermore, it tenaciously insists on ownership thereof
despite a clear showing to the contrary.
We thus uphold the grant by the Court of Appeals of attorney’s fees in the amount of ₱10,000
considering the evident bad faith of petitioner in refusing respondents’ just and lawful claims,
compelling the latter to litigate.44
WHEREFORE, the petition is DENIED. The appealed decision dated November 17, 1995 and
resolution dated March 2, 1996 of the Court of Appeals are AFFIRMED with MODIFICATION.
Petitioner Bogo-Medellin Milling Company, Inc. is hereby ordered to vacate the subject strip of
land denominated as Cadastral Lot No. 954, remove its railway tracks thereon and return its
possession to the private respondents, the heirs of Magdaleno Valdez, Sr. It is also hereby
ordered to pay private respondents attorney's fees in the amount of ₱10,000.
SO ORDERED.
Puno, (Chairman), Panganiban, and Carpio-Morales, JJ., concur.
Sandoval-Gutierrez, J., on official leave.
G.R. No. 136438 November 11, 2004
TEOFILO C. VILLARICO, petitioner,
vs.
VIVENCIO SARMIENTO, SPOUSES BESSIE SARMIENTO-DEL MUNDO & BETH DEL
MUNDO, ANDOK’S LITSON CORPORATION and MARITES’ CARINDERIA, respondents.
DECISION
SANDOVAL-GUTIERREZ, J.:
Before us is a petition for review on certiorari of the Decision1 of the Court of Appeals dated
December 7, 1998 in CA-G.R. CV No. 54883, affirming in toto the Decision2 of the Regional
Trial Court (RTC) of Parañaque City, Branch 259, dated November 14, 1996, in Civil Case No.
95-044.
The facts of this case, as gleaned from the findings of the Court of Appeals, are:
Teofilo C. Villarico, petitioner, is the owner of a lot in La Huerta, Parañaque City, Metro Manila
with an area of sixty-six (66) square meters and covered by Transfer Certificate of Title (T.C.T.)
No. 95453 issued by the Registry of Deeds, same city.
Petitioner’s lot is separated from the Ninoy Aquino Avenue (highway) by a strip of land
belonging to the government. As this highway was elevated by four (4) meters and therefore
higher than the adjoining areas, the Department of Public Works and Highways (DPWH)
constructed stairways at several portions of this strip of public land to enable the people to have
access to the highway.

Sometime in 1991, Vivencio Sarmiento, his daughter Bessie Sarmiento and her husband Beth
Del Mundo, respondents herein, had a building constructed on a portion of said government
land. In November that same year, a part thereof was occupied by Andok’s Litson Corporation
and Marites’ Carinderia, also impleaded as respondents.
In 1993, by means of a Deed of Exchange of Real Property, petitioner acquired a 74.30 square
meter portion of the same area owned by the government. The property was registered in his
name as T.C.T. No. 74430 in the Registry of Deeds of Parañaque City.
In 1995, petitioner filed with the RTC, Branch 259, Parañaque City, a complaint for accion
publiciana against respondents, docketed as Civil Case No. 95-044. He alleged inter alia that
respondents’ structures on the government land closed his "right of way" to the Ninoy Aquino
Avenue; and encroached on a portion of his lot covered by T.C.T. No. 74430.
Respondents, in their answer, specifically denied petitioner’s allegations, claiming that they
have been issued licenses and permits by Parañaque City to construct their buildings on the
area; and that petitioner has no right over the subject property as it belongs to the government.
After trial, the RTC rendered its Decision, the dispositive portion of which reads:
"WHEREFORE, premises considered, judgment is hereby rendered:
1. Declaring the defendants to have a better right of possession over the subject land except
the portion thereof covered by Transfer Certificate of Title No. 74430 of the Register of Deeds
of Parañaque;
2. Ordering the defendants to vacate the portion of the subject premises described in Transfer
Certificate of Title No. 74430 and gives its possession to plaintiff; and
3. Dismissing the claim for damages of the plaintiff against the defendants, and likewise
dismissing the claim for attorney’s fees of the latter against the former.
Without pronouncement as to costs.
SO ORDERED."3
The trial court found that petitioner has never been in possession of any portion of the public
land in question. On the contrary, the defendants are the ones who have been in actual
possession of the area. According to the trial court, petitioner was not deprived of his "right of
way" as he could use the Kapitan Tinoy Street as passageway to the highway.
On appeal by petitioner, the Court of Appeals issued its Decision affirming the trial court’s
Decision in toto, thus:
"WHEREFORE, the judgment hereby appealed from is hereby AFFIRMED in toto, with costs
against the plaintiff-appellant.
SO ORDERED."4
In this petition, petitioner ascribes to the Court of Appeals the following assignments of error:
"I
THE FINDINGS OF FACT OF THE HON. COURT OF APPEALS CONTAINED A
CONCLUSION WITHOUT CITATION OF SPECIFIC EVIDENCE ON WHICH THE SAME WAS
BASED.
II
THE HON. COURT OF APPEALS ERRED IN CONSIDERING THAT THE ONLY ISSUE IN
THIS CASE IS WHETHER OR NOT THE PLAINTIFF-APPELLANT HAS ACQUIRED A RIGHT
OF WAY OVER THE LAND OF THE GOVERNMENT WHICH IS BETWEEN HIS PROPERTY
AND THE NINOY AQUINO AVENUE.
III
THE HON. COURT OF APPEALS ERRED IN CONCLUDING THAT ACCION PUBLICIANA IS
NOT THE PROPER REMEDY IN THE CASE AT BAR.
IV
THE HON. COURT OF APPEALS ERRED IN CONCLUDING THAT THE EXISTENCE OF
THE PLAINTIFF-APPELLANT’S RIGHT OF WAY DOES NOT CARRY POSSESSION OVER
THE SAME.
V
THE HON. COURT OF APPEALS ERRED IN NOT RESOLVING THE ISSUE OF WHO HAS
THE BETTER RIGHT OF POSSESSION OVER THE SUBJECT LAND BETWEEN THE
PLAINTIFF-APPELLANT AND THE DEFENDANT-APPELLEES."5
In their comment, respondents maintain that the Court of Appeals did not err in ruling that
petitioner’s action for accion publiciana is not the proper remedy in asserting his "right of way"
on a lot owned by the government.
Here, petitioner claims that respondents, by constructing their buildings on the lot in question,
have deprived him of his "right of way" and his right of possession over a considerable portion
of the same lot, which portion is covered by his T.C.T. No. 74430 he acquired by means of
exchange of real property.
It is not disputed that the lot on which petitioner’s alleged "right of way" exists belongs to the
state or property of public dominion. Property of public dominion is defined by Article 420 of the
Civil Code as follows:
"ART. 420. The following things are property of public dominion:
(1) Those intended for public use such as roads, canals, rivers, torrents, ports and bridges
constructed by the State, banks, shores, roadsteads, and other of similar character.
(2) Those which belong to the State, without being for public use, and are intended for some
public service or for the development of the national wealth."
Public use is "use that is not confined to privileged individuals, but is open to the indefinite
public."6 Records show that the lot on which the stairways were built is for the use of the people
as passageway to the highway. Consequently, it is a property of public dominion.
Property of public dominion is outside the commerce of man and hence it: (1) cannot be
alienated or leased or otherwise be the subject matter of contracts; (2) cannot be acquired by
prescription against the State; (3) is not subject to attachment and execution; and (4) cannot
be burdened by any voluntary easement.7
Considering that the lot on which the stairways were constructed is a property of public
dominion, it can not be burdened by a voluntary easement of right of way in favor of herein
petitioner. In fact, its use by the public is by mere tolerance of the government through the
DPWH. Petitioner cannot appropriate it for himself. Verily, he can not claim any right of
possession over it. This is clear from Article 530 of the Civil Code which provides:
"ART. 530. Only things and rights which are susceptible of being appropriated may be the
object of possession."
Accordingly, both the trial court and the Court of Appeals erred in ruling that respondents have
better right of possession over the subject lot.
However, the trial court and the Court of Appeals found that defendants’ buildings were
constructed on the portion of the same lot now covered by T.C.T. No. 74430 in petitioner’s
name. Being its owner, he is entitled to its possession.
WHEREFORE, the petition is DENIED. The assailed Decision of the Court of Appeals dated
December 7, 1998 in CA-G.R. CV No. 54883 is AFFIRMED with MODIFICATION in the sense
that neither petitioner nor respondents have a right of possession over the disputed lot where
the stairways were built as it is a property of public dominion. Costs against petitioner.
SO ORDERED.
Panganiban, (Chairman), Carpio Morales and Garcia, JJ., concur.
Corona, J., on leave.
G.R. No. 167195 May 8, 2009
ASSET PRIVATIZATION TRUST, Petitioner,
vs.
T.J. ENTERPRISES, Respondent.
DECISION
TINGA, J.:
This is a Rule 45 petition1 which seeks the reversal of the Court of Appeals’ decision2 and
resolution3 affirming the RTC’s decision4 holding petitioner liable for actual damages for
breach of contract.
Petitioner Asset Privatization Trust5 (petitioner) was a government entity created for the
purpose to conserve, to provisionally manage and to dispose assets of government
institutions.6 Petitioner had acquired from the Development Bank of the Philippines (DBP)
assets consisting of machinery and refrigeration equipment which were then stored at Golden
City compound, Pasay City. The compound was then leased to and in the physical possession
of Creative Lines, Inc., (Creative Lines). These assets were being sold on an as-is-where-is
basis.
On 7 November 1990, petitioner and respondent entered into an absolute deed of sale over
certain machinery and refrigeration equipment identified as Lots Nos. 2, 3 and 5. Respondent
paid the full amount of ₱84,000.00 as evidenced by petitioner’s Receipt No. 12844. After two
(2) days, respondent demanded the delivery of the machinery it had purchased. Sometime in
March 1991, petitioner issued Gate Pass No. 4955. Respondent was able to pull out from the
compound the properties designated as Lots Nos. 3 and 5. However, during the hauling of Lot
No. 2 consisting of sixteen (16) items, only nine (9) items were pulled out by respondent. The
seven (7) items that were left behind consisted of the following: (1) one (1) Reefer Unit 1; (2)
one (1) Reefer Unit 2; (3) one (1) Reefer Unit 3; (4) one (1) unit blast freezer with all
accessories; (5) one (1) unit chest freezer; (6) one (1) unit room air-conditioner; and (7) one (1)
unit air compressor. Creative Lines’ employees prevented respondent from hauling the
remaining machinery and equipment.
Respondent filed a complaint for specific performance and damages against petitioner and
Creative Lines.7 During the pendency of the case, respondent was able to pull out the
remaining machinery and equipment. However, upon inspection it was discovered that the
machinery and equipment were damaged and had missing parts.
Petitioner argued that upon the execution of the deed of sale it had complied with its obligation
to deliver the object of the sale since there was no stipulation to the contrary. It further argued
that being a sale on an as-is-where-is basis, it was the duty of respondent to take possession
of the property. Petitioner claimed that there was already a constructive delivery of the
machinery and equipment.
The RTC ruled that the execution of the deed of absolute sale did not result in constructive
delivery of the machinery and equipment. It found that at the time of the sale, petitioner did not
have control over the machinery and equipment and, thus, could not have transferred
ownership by constructive delivery. The RTC ruled that petitioner is liable for breach of contract
and should pay for the actual damages suffered by respondent.
On petitioner’s appeal, the Court of Appeals affirmed in toto the decision of the RTC.
Hence this petition.
Before this Court, petitioner raises issues by attributing the following errors to the Court of
Appeals, to wit:
I.
The Court of Appeals erred in not finding that petitioner had complied with its obligation to make
delivery of the properties subject of the contract of sale.
II.
The Court of Appeals erred in not considering that the sale was on an "as-is-where-is" basis
wherein the properties were sold in the condition and in the place where they were located.
III.
The Court of Appeals erred in not considering that respondent’s acceptance of petitioner’s
disclaimer of warranty forecloses respondent’s legal basis to enforce any right arising from the
contract.
IV.
The reason for the failure to make actual delivery of the properties was not attributable to the
fault and was beyond the control of petitioner. The claim for damages against petitioner is
therefore bereft of legal basis.8
The first issue hinges on the determination of whether there was a constructive delivery of the
machinery and equipment upon the execution of the deed of absolute sale between petitioner
and respondent.
The ownership of a thing sold shall be transferred to the vendee upon the actual or constructive
delivery thereof.9 The thing sold shall be understood as delivered when it is placed in the
control and possession of the vendee.10
As a general rule, when the sale is made through a public instrument, the execution thereof
shall be equivalent to the delivery of the thing which is the object of the contract, if from the
deed the contrary does not appear or cannot clearly be inferred. And with regard to movable
property, its delivery may also be made by the delivery of the keys of the place or depository
where it is stored or kept.11 In order for the execution of a public instrument to effect tradition,
the purchaser must be placed in control of the thing sold.12
However, the execution of a public instrument only gives rise to a prima facie presumption of
delivery. Such presumption is destroyed when the delivery is not effected because of a legal
impediment.13 It is necessary that the vendor shall have control over the thing sold that, at the
moment of sale, its material delivery could have been made.14 Thus, a person who does not
have actual possession of the thing sold cannot transfer constructive possession by the
execution and delivery of a public instrument.15
In this case, there was no constructive delivery of the machinery and equipment upon the
execution of the deed of absolute sale or upon the issuance of the gate pass since it was not
petitioner but Creative Lines which had actual possession of the property. The presumption of
constructive delivery is not applicable as it has to yield to the reality that the purchaser was not
placed in possession and control of the property.
On the second issue, petitioner posits that the sale being in an as-is-where-is basis, respondent
agreed to take possession of the things sold in the condition where they are found and from
the place
where they are located. The phrase as-is where-is basis pertains solely to the physical
condition of the thing sold, not to its legal situation.16 It is merely descriptive of the state of the
thing sold. Thus, the as-is where-is basis merely describes the actual state and location of the
machinery and equipment sold by petitioner to respondent. The depiction does not alter
petitioner’s responsibility to deliver the property to respondent.1awphi1.zw+
Anent the third issue, petitioner maintains that the presence of the disclaimer of warranty in the
deed of absolute sale absolves it from all warranties, implied or otherwise. The position is
untenable.
The vendor is bound to transfer the ownership of and deliver, as well as warrant the thing which
is the object of the sale.17 Ownership of the thing sold is acquired by the vendee from the
moment it its delivered to him in any of the ways specified in articles 1497 to 1501, or in any
other manner signifying an agreement that the possession is transferred from the vendor to the
vendee.18 A perusal of the deed of absolute sale shows that both the vendor and the vendee
represented and warranted to each other that each had all the requisite power and authority to
enter into the deed of absolute sale and that they shall perform each of their respective
obligations under the deed of absolute in accordance with the terms thereof.19 As previously
shown, there was no actual or constructive delivery of the things sold. Thus, petitioner has not
performed its obligation to transfer ownership and possession of the things sold to respondent.
As to the last issue, petitioner claims that its failure to make actual delivery was beyond its
control. It posits that the refusal of Creative Lines to allow the hauling of the machinery and
equipment was unforeseen and constituted a fortuitous event.
The matter of fortuitous events is governed by Art. 1174 of the Civil Code which provides that
except in cases expressly specified by the law, or when it is otherwise declared by stipulation,
or when the nature of the obligation requires assumption of risk, no person shall be responsible
for those events which could not be foreseen, or which though foreseen, were inevitable. The
elements of a fortuitous event are: (a) the cause of the unforeseen and unexpected occurrence,
must have been independent of human will; (b) the event that constituted the caso fortuito must
have been impossible to foresee or, if foreseeable, impossible to avoid; (c) the occurrence must
have been such as to render it impossible for the debtors to fulfill their obligation in a normal
manner, and; (d) the obligor must have been free from any participation in the aggravation of
the resulting injury to the creditor.20
A fortuitous event may either be an act of God, or natural occurrences such as floods or
typhoons, or an act of man such as riots, strikes or wars.21 However, when the loss is found
to be partly the result of a person’s participation–whether by active intervention, neglect or
failure to act—the whole occurrence is humanized and removed from the rules applicable to a
fortuitous event.22
We quote with approval the following findings of the Court of Appeals, to wit:
We find that Creative Lines’ refusal to surrender the property to the vendee does not constitute
force majeure which exculpates APT from the payment of damages. This event cannot be
considered unavoidable or unforeseen. APT knew for a fact that the properties to be sold were
housed in the premises leased by Creative Lines. It should have made arrangements with
Creative Lines beforehand for the smooth and orderly removal of the equipment. The principle
embodied in the act of God doctrine strictly requires that the act must be one occasioned
exclusively by the violence of nature and all human agencies are to be excluded from creating
or entering into the cause of the mischief. When the effect, the cause of which is to be
considered, is found to be in part the result of the participation of man, whether it be from active
intervention or neglect, or failure to act, the whole occurrence is thereby humanized, as it were,
and removed from the rules applicable to the acts of God.23
Moreover, Art. 1504 of the Civil Code provides that where actual delivery has been delayed
through the fault of either the buyer or seller the goods are at the risk of the party in fault. The
risk of loss or deterioration of the goods sold does not pass to the buyer until there is actual or
constructive delivery thereof. As previously discussed, there was no actual or constructive
delivery of the machinery and equipment. Thus, the risk of loss or deterioration of property is
borne by petitioner. Thus, it should be liable for the damages that may arise from the
delay.1avvphi1
Assuming arguendo that Creative Lines’ refusal to allow the hauling of the machinery and
equipment is a fortuitous event, petitioner will still be liable for damages. This Court agrees with
the appellate court’s findings on the matter of damages, thus:
Article 1170 of the Civil Code states: "Those who in the performance of their obligations are
guilty of fraud, negligence, or delay and those who in any manner contravene the tenor thereof
are liable for damages." In contracts and quasi-contracts, the damages for which the obligor
who acted in good faith is liable shall be those that are the natural and probable consequences
of the breach of the obligation, and which the parties have foreseen or could have reasonably
foreseen at the time the obligation was constituted.24 The trial court correctly awarded actual
damages as pleaded and proven during trial.25
WHEREFORE, the Court AFFIRMS in toto the Decision of the Court of Appeals dated 31
August 2004. Cost against petitioner.
SO ORDERED.
G.R. No. 175746 March 12, 2008
CHARLES L. ONG, Petitioner,
vs.
REPUBLIC OF THE PHILIPPINES, Respondent.
DECISION
YNARES-SANTIAGO, J.:
This petition for review on certiorari assails the April 25, 2006 Decision1 of the Court of Appeals
in CA-G.R. CV No. 76085, which reversed and set aside the January 16, 2002 Decision2 of
the Municipal Trial Court of Mangaldan, Pangasinan in Land Registration Case No. 99-023,
and the November 20, 2006 Resolution3 which denied petitioner’s motion for reconsideration.
The antecedent facts are as follows.
On July 1, 1999, petitioner Charles L. Ong (petitioner) in his behalf and as duly authorized
representative of his brothers, namely, Roberto, Alberto and Cesar, filed an Application for
Registration of Title4 over Lot 15911 (subject lot) situated in Barangay Anolid, Mangaldan,
Pangasinan with an area of five hundred seventy four (574) square meters, more or less. They
alleged that they are the co-owners of the subject lot; that the subject lot is their exclusive
property having acquired the same by purchase from spouses Tony Bautista and Alicia Villamil
on August 24, 1998; that the subject lot is presently unoccupied; and that they and their
predecessors-in-interest have been in open, continuous and peaceful possession of the subject
lot in the concept of owners for more than thirty (30) years.
After due notice and publication, only respondent Republic of the Philippines (respondent),
represented by the Office of the Solicitor General, opposed the application for registration of
title. Respondent asserted that neither applicants nor their predecessors-in-interest have been
in open, continuous, exclusive and notorious possession and occupation of the subject lot since
June 12, 1945 or earlier as required by Section 48(b) of Commonwealth Act No. 141, as
amended by Presidential Decree (P.D.) No. 1073; that applicants failed to adduce any
muniment of title to prove their claims; that the tax declaration appended to the application does
not appear genuine and merely shows pretended possession of recent vintage; that the
application was filed beyond the period allowed under P.D. No. 892; and that the subject lot is
part of the public domain which cannot be the subject of private appropriation.
On January 16, 2002, the trial court rendered a Decision in favor of petitioner and his brothers,
viz:
The foregoing evidences presented by the applicant indubitably established sufficient basis to
grant the applicant (sic) for registration. Originally, the whole parcel of land was owned by
spouses Teofilo Abellara and Abella Charmine who acquired the same by virtue of a Deed of
Sale from Cynthia Cacho, Agustin Cacho, Jr., Jasmin Cacho, Jover Cacho and Lauro Cacho.
Later, they sold the same parcel of land to spouses Tony C. Villamil and Alicia Bautista, who
in turn sold the same land to herein applicants.
The same parcel of land has been declared in the name of the applicant and her predecessors-
in-interest and its taxes has (sic) been religiously paid.
The said circumstances further show that the possession and ownership of the applicant and
her (sic) predecessors-in-interest over the same parcel of land has (sic) been continuous and
peaceful under bona fide claim of ownership before the filing of the instant application for
registration on [July 1, 1999].
WHEREFORE, after confirming the Order of General Default, the Court hereby orders and
decrees the registration of a parcel of land as shown on plan ap-01-004897 approved by the
Bureau of Land(s) situated in Barangay Anolid, Mangaldan, Pangasinan, containing an area of
Five Hundred Seventy Four (574) square meters, subject of the application for registration of
title, in accordance with Presidential Decree No. 1529, in favor of CHARLIE L. ONG in his
behalf and as representative of his brothers namely, ROBERTO L. ONG, ALBERTO L. ONG
and CESAR L. ONG.
Furnish copies of this Decision to the Office of the Solicitor General, Makati City, Metro Manila,
the Office of the Provincial Prosecutor, Dagupan City, Atty. Celestino Domingo Jr., the Office
of the Land Registration Authority, Quezon City, as well as the applicant.
SO ORDERED.5
Aggrieved, respondent appealed to the Court of Appeals which rendered the assailed Decision,
the dispositive portion of which reads:
WHEREFORE, the instant appeal is GRANTED. Accordingly, the decision of the court a quo
granting the application for registration of title of applicants-appellees is REVERSED and SET
ASIDE. No pronouncement as to costs.
SO ORDERED.6
In reversing the decision of the trial court, the Court of Appeals found that the subject lot is part
of the alienable and disposable lands of the public domain. Thus, it was incumbent upon
petitioner to prove that they possessed the subject lot in the nature and for the duration required
by law. However, petitioner failed to prove that he or his predecessors-in-interest have been in
adverse possession of the subject lot in the concept of owner since June 12, 1945 or earlier as
mandated by Section 14(1) of P.D. 1529. It noted that the earliest tax declaration which
petitioner presented is dated 1971. Consequently, petitioner could not fairly claim possession
of the land prior to 1971. Neither was petitioner able to prove that he or his predecessors-in-
interest actually occupied the subject lot prior to the filing of the application. Thus, the trial court
erred in granting the application for registration of title over the subject lot.
Hence, this petition raising the following issues:
1. WHETHER OR NOT PETITIONER, TOGETHER WITH HIS BROTHERS, NAMELY,
ROBERTO L. ONG, ALBERTO L. ONG AND CEZAR L. ONG, HAVE REGISTRABLE
OWNERSHIP OVER THE REAL PROPERTY SUBJECT MATTER OF LAND REGISTRATION
CASE NO. 99-023, AND
2. WHETHER OR NOT THE FINDINGS AND CONCLUSION OF THE FORMER SPECIAL
FOURTH DIVISION OF THE COURT OF APPEALS THAT THE SUBJECT REAL PROPERTY
IS A PUBLIC LAND IS CORRECT.7
The petition lacks merit.
Section 14(1) of P.D. 1529 ("Property Registration Decree"), as amended, provides —
SEC. 14. Who may apply. –The following persons may file in the proper Court of First Instance
an application for registration of title to land, whether personally or through their duly authorized
representatives:
(1) Those who by themselves or through their predecessors-in-interest have been in open,
continuous, exclusive and notorious possession and occupation of alienable and disposable
lands of the public domain under a bona fide claim of ownership since June 12, 1945, or earlier.
Thus, pursuant to the aforequoted provision of law, applicants for registration of title must
prove: (1) that the subject land forms part of the disposable and alienable lands of the public
domain, and (2) that they have been in open, continuous, exclusive and notorious possession
and occupation of the same under a bona fide claim of ownership since June 12, 1945, or
earlier.8 These requisites involve questions of fact which are not proper in a petition for review
on certiorari. Factual findings of the court a quo are generally binding on this Court except for
certain recognized exceptions, as is the case here, where the trial court and the Court of
Appeals arrived at conflicting findings.9 After a careful review of the records, we sustain the
findings and conclusions of the Court of Appeals.
There is no dispute that the subject lot is classified as alienable and disposable land of the
public domain. The Report10 dated January 17, 2000 of the Bureau of Lands stated that the
subject lot is "within the alienable and disposable zone as classified under Project 50 L.C. Map
No. 698 and released and classified as such on November 21, 1927."11 This finding is,
likewise, embodied in the Report12 dated January 7, 1999 of the Department of Environment
and Natural Resources Community Environment and Natural Resources Office (DENR-
CENRO) and the blue print Copy13 of the plan covering the subject lot. However, petitioner
failed to prove that he or his predecessors-in-interest have been in open, continuous, exclusive
and notorious possession and occupation of the subject lot since June 12, 1945 or earlier.
The records show that petitioner and his brothers bought the subject lot from spouses Tony
Bautista and Alicia Villamil on August 24, 1998,14 who in turn purchased the same from
spouses Teofilo Abellera and Abella Sarmen on January 16, 1997.15 The latter bought the
subject lot from Cynthia, Agustin Jr., Jasmin, Omir and Lauro, all surnamed Cacho, on July 10,
1979.16 The earliest tax declaration which was submitted in evidence was Tax Declaration No.
2560617 issued in 1971 in the names of spouses Agustin Cacho and Eufrosinia Baustista.
While tax declarations are not conclusive proof of ownership, they constitute good indicia of
possession in the concept of owner and a claim of title over the subject property.18 Even if we
were to tack petitioner’s claim of ownership over the subject lot to that of their alleged
predecessors-in-interest, spouses Agustin Cacho and Eufrosinia Baustista in 1971, still this
would fall short of the required possession from June 12, 1945 or earlier.1avvphi1
Further, as correctly pointed by the Court of Appeals, possession alone is not sufficient to
acquire title to alienable lands of the public domain because the law requires possession and
occupation. As held in Republic v. Alconaba:19
The law speaks of possession and occupation. Since these words are separated by the
conjunction and, the clear intention of the law is not to make one synonymous with the other.
Possession is broader than occupation because it includes constructive possession. When,
therefore, the law adds the word occupation, it seeks to delimit the all encompassing effect of
constructive possession. Taken together with the words open, continuous, exclusive and
notorious, the word occupation serves to highlight the fact that for an applicant to qualify, his
possession must not be a mere fiction. Actual possession of a land consists in the manifestation
of acts of dominion over it of such a nature as a party would naturally exercise over his own
property.20
Petitioner admitted that after he and his brothers bought the subject lot from spouses Tony
Bautista and Alicia Villamil in 1998, neither he nor his brothers actually occupied the subject
lot.21 No improvements were made thereon and the most that they did was to visit the lot on
several occasions.22 Petitioner’s predecessor-in-interest, Tony Bautista testified that he and
his wife never actually occupied the subject lot from the time they bought the same from
spouses Teofilo Abellera and Abella Sarmen in 1997.23 Aside from these two testimonies, no
other evidence was presented to establish the character of the possession of the subject lot by
petitioner’s other alleged predecessors-in-interest. Clearly, petitioner’s evidence failed to
establish specific acts of ownership to substantiate the claim that he and his predecessors-in-
interest possessed and occupied the subject lot in the nature and duration required by law.
The burden of proof in land registration cases rests on the applicant who must show by clear,
positive and convincing evidence that his alleged possession and occupation of the land is of
the nature and duration required by law.24 Unfortunately, petitioner’s evidence do not
constitute the "well-nigh incontrovertible" evidence necessary in cases of this nature.25
Accordingly, the Court of Appeals did not err in reversing the Decision of the trial court and in
denying his application for registration of title over the subject lot.
WHEREFORE, in view of the foregoing, the petition is DENIED. The April 25, 2006 Decision
of the Court of Appeals in CA-G.R. CV No. 76085 which reversed and set aside the January
16, 2002 Decision of the Municipal Trial Court of Mangaldan, Pangasinan in Land Registration
Case No. 99-023, and the November 20, 2006 Resolution denying the motion for
reconsideration, are AFFIRMED.
Costs against petitioner.
SO ORDERED.
G.R. No. 137944 April 6, 2000
FERNANDA MENDOZA CEQUEÑA and RUPERTA MENDOZA LIRIO, petitioners,
vs.
HONORATA MENDOZA BOLANTE, respondent.
PANGANIBAN, J.:
Tax receipts and declarations are prima facie proofs of ownership or possession of the property
for which such taxes have been paid. Coupled with proof of actual possession of the property,
they may become the basis of a claim for ownership. By acquisitive prescription, possession in
the concept of owner — public, adverse, peaceful and uninterrupted — may be converted to
ownership. On the other hand, mere possession and occupation of land cannot ripen into
ownership.
The Case
Before us is a Petition for Review on Certiorari of the March 19, 1999 Decision 1 of the Court
of Appeals 2 (CA) in CA-GR CV No. 43423. The assailed Decision disposed as follows: 3
WHEREFORE, for all the foregoing, the decision of the trial court appealed from is REVERSED
and SET ASIDE. In lieu thereof, judgment is hereby rendered declaring . . . Honorata Mendoza
Bolante the rightful owner and possessor of the parcel of land which is the subject of this
appeal.
The Facts
The Petition herein refers to a parcel of land situated in Barangay Bangad, Binangonan,
Province of Rizal, having an area of 1,728 square meters and covered by Tax Declaration No.
26-0027. The undisputed antecedents of this case are narrated by the Court of Appeals as
follows: 4

The facts not disputed revealed that prior to 1954, the land was originally declared for taxation
purposes in the name of Sinforoso Mendoza, father of [respondent] and married to Eduarda
Apiado. Sinforoso died in 1930. [Petitioners] were the daughters of Margarito Mendoza. On the
basis of an affidavit, the tax declaration in the name of Sinforoso Mendoza of the contested lot
was cancelled and subsequently declared in the name of Margarito Mendoza. Margarito and
Sinforoso are brothers. [Respondent] is the present occupant of the land. Earlier, on October
15, 1975, [respondent] and Miguel Mendoza, another brother of [petitioners], during the
cadastral survey had a dispute on [the] ownership of the land.1âwphi1.nêt
During the pre-trial conference, parties stipulated the following facts:
1) The land subject of the case was formerly declared for taxation purposes in the name of
Sinforoso Mendoza prior to 1954 but is now declared in the name of Margarito Mendoza.
2) The parties agree[d] as to the identity of the land subject of instant case.
3) [Petitioners] are the daughters of Margarito Mendoza while the [respondent] is the only
daughter of Sinforoso Mendoza.
4) Margarito Mendoza and Sinforoso Mendoza [were] brothers, now deceased.
5) During the cadastral survey of the property on October 15, 1979 there was already a dispute
between Honorata M. Bolante and Miguel Mendoza, brother of [petitioners].
6) [Respondent was] occupying the property in question.
The only issue involved [was] who [was] the lawful owner and possessor of the land subject of
the case.
After trial, the court a quo rendered its judgment in favor of [petitioners], the dispositive portion
of which reads as follows:
Wherefore, in view of the foregoing considerations, judgment is hereby rendered for the
[petitioners] and against the [respondent]:
1. Declaring that the parcel of land situated in Bangad, Binangonan, Rizal covered by tax
declaration no. 26-0027 in the name of Margarito Mendoza belong to his heirs, the [petitioners]
herein;
2. Ordering [respondent] to vacate the property subject of the case and deliver possession
thereof to the heirs of Margarito Mendoza.
3. Ordering the [respondent] to indemnify the [petitioners] in the sum of P10,000.00, as actual
damages.
4. Ordering the [respondent] to pay the costs.
Ruling of the Court of Appeals
The Court of Appeals reversed the trial court because the genuineness and the due execution
of the affidavit allegedly signed by the respondent and her mother had not been sufficiently
established. The notary public or anyone else who had witnessed the execution of the affidavit
was not presented. No expert testimony or competent witness ever attested to the genuineness
of the questioned signatures.
The CA further ruled that the affidavit was insufficient to overcome the denial of respondent
and her mother. The former testified that the latter, never having attended school, could neither
read nor write. Respondent also said that she had never been called "Leonor," which was how
she was referred to in the affidavit.
Moreover, the appellate court held that the probative value of petitioners' tax receipts and
declarations paled in comparison with respondent's proof of ownership of the disputed parcel.
Actual, physical, exclusive and continuous possession by respondent since 1985 indeed gave
her a better title under Article 538 of the Civil Code.
Hence, this Petition. 5
Issues
Insisting that they are the rightful owners of the disputed land, the petitioners allege that the
CA committed these reversible errors: 6
1. . . . [I]n not considering the affidavit as an exception to the general rule that an affidavit is
classified as hearsay evidence, unless the affiant is placed on the witness stand;
2. . . . [I]n holding that respondent has been in actual and physical possession, coupled with .
. . exclusive and continuous possession of the land since 1985, which are evidence of the best
kind of circumstance proving the claim of the title of ownership and enjoys the presumption of
preferred possessor.
The Court's Ruling
The Petition has no merit.
First Issue:
Admissibility of the Affidavit
Petitioners dispute the CA's ruling that the affidavit was not the best evidence of their father's
ownership of the disputed land, because the "affiant was not placed on the witness stand."
They contend that it was unnecessary to present a witness to establish the authenticity of the
affidavit because it was a declaration against respondent's interest and was an ancient
document. As a declaration against interest, it was an exception to the hearsay rule. As a
necessary and trustworthy document, it was admissible in evidence. And because it was
executed on March 24, 1953, it was a self-authenticating ancient document.
We quote below the pertinent portion of the appellate court's ruling: 7
While it is true that the affidavit was signed and subscribed before a notary public, the general
rule is that affidavits are classified as hearsay evidence, unless affiants are placed on the
witness stand (People's Bank and Trust Company vs. Leonidas, 207 SCRA 164). Affidavits are
not considered the best evidence, if affiants are available as witnesses (Vallarta vs. Court of
Appeals, 163 SCRA 587). The due execution of the affidavit was not sufficiently established.
The notary public or others who saw that the document was signed or at least [could] confirm
its recitals [were] not presented. There was no expert testimony or competent witness who
attested to the genuineness of the questioned signatures. Worse, [respondent] denied the
genuineness of her signature and that of her mother . . . [Respondent] testified that her mother
was an illiterate and as far as she knew her mother could not write because she had not
attended school (p. 7, ibid). Her testimony was corroborated by Ma. Sales Bolante Basa, who
said the [respondent's] mother was illiterate.
The petitioners’ allegations are untenable. Before a private document offered as authentic can
be received in evidence, its due execution and authenticity must be proved first. 8 And before
a document is admitted as an exception to the hearsay rule under the Dead Man's Statute, the
offeror must show (a) that the declarant is dead, insane or unable to testify; (b) that the
declaration concerns a fact cognizable by the declarant; (c) that at the time the declaration was
made, he was aware that the same was contrary to his interest; and (d) that circumstances
render improbable the existence of any motive to falsify. 9
In this case, one of the affiants happens to be the respondent, who is still alive and who testified
that the signature in the affidavit was not hers. A declaration against interest is not admissible
if the declarant is available to testify as a witness. 10 Such declarant should be confronted with
the statement against interest as a prior inconsistent statement.
The affidavit cannot be considered an ancient document either. An ancient document is one
that is (1) more than 30 years old, (2) found in the proper custody, and (3) unblemished by any
alteration or by any circumstance of suspicion. 11 It must on its face appear to be genuine. The
petitioners herein failed, however, to explain how the purported signature of Eduarda Apiado
could have been affixed to the subject affidavit if, according to the witness, she was an illiterate
woman who never had any formal schooling. This circumstance casts suspicion on its
authenticity.
Not all notarized documents are exempted from the rule on authentication. Thus, an affidavit
does not automatically become a public document just because it contains a notarial jurat.
Furthermore, the affidavit in question does not state how the ownership of the subject land was
transferred from Sinforoso Mendoza to Margarito Mendoza. By itself, an affidavit is not a mode
of acquiring ownership.
Second Issue:
Preference of Possession
The CA ruled that the respondent was the preferred possessor under Article 538 of the Civil
Code because she was in notorious, actual, exclusive and continuous possession of the land
since 1985. Petitioners dispute this ruling. They contend that she came into possession through
force and violence, contrary to Article 536 of the Civil Code.
We concede that despite their dispossession in 1985, the petitioners did not lose legal
possession because possession cannot be acquired through force or violence. 12 To all intents
and purposes, a possessor, even if physically ousted, is still deemed the legal possessor.13
Indeed, anyone who can prove prior possession, regardless of its character, may recover such
possession. 14
However, possession by the petitioners does not prevail over that of the respondent.1âwphi1
Possession by the former before 1985 was not exclusive, as the latter also acquired it before
1985. The records show that the petitioners' father and brother, as well as the respondent and
her mother were simultaneously in adverse possession of the land.
Before 1985, the subject land was occupied and cultivated by the respondent's father
(Sinforoso), who was the brother of petitioners' father (Margarito), as evidenced by Tax
Declaration No. 26425. 15 When Sinforoso died in 1930, Margarito took possession of the land
and cultivated it with his son Miguel. At the same time, respondent and her mother continued
residing on the lot.
When respondent came of age in 1948, she paid realty taxes for the years 1932-1948. 16
Margarito declared the lot for taxation in his name in 1953 17 and paid its realty taxes beginning
1952. 18 When he died, Miguel continued cultivating the land. As found by the CA, the
respondent and her mother were living on the land, which was being tilled by Miguel until 1985
when he was physically ousted by the respondent. 19
Based on Article 538 of the Civil Code, the respondent is the preferred possessor because,
benefiting from her father's tax declaration of the subject lot since 1926, she has been in
possession thereof for a longer period. On the other hand, petitioners' father acquired joint
possession only in 1952.
Third Issue:
Possession of Better Right
Finally, the petitioners challenge the CA ruling that "actual and physical coupled with the
exclusive and continuous possession [by respondent] of the land since 1985" proved her
ownership of the disputed land. The respondent argues that she was legally presumed to
possess the subject land with a just title since she possessed it in the concept of owner. Under
Article 541 of the Code, she could not be obliged to show or prove such title.
The respondent's contention is untenable. The presumption in Article 541 of the Civil Code is
merely disputable; it prevails until the contrary is proven. 20 That is, one who is disturbed in
one's possession shall, under this provision, be restored thereto by the means established by
law. 21 Article 538 settles only the question of possession, and possession is different from
ownership. Ownership in this case should be established in one of the ways provided by law.
To settle the issue of ownership, we need to determine who between the claimants has proven
acquisitive prescription. 22
Ownership of immovable property is acquired by ordinary prescription through possession for
ten years.23 Being the sole heir of her father, respondent showed through his tax receipt that
she had been in possession of the land for more than ten years since 1932. When her father
died in 1930, she continued to reside there with her mother. When she got married, she and
her husband engaged in kaingin inside the disputed lot for their livelihood. 24
Respondent's possession was not disturbed until 1953 when the petitioners' father claimed the
land. But by then, her possession, which was in the concept of owner — public, peaceful, and
uninterrupted 25 — had already ripened into ownership. Furthermore she herself, after her
father's demise, declared and paid realty taxes for the disputed land. Tax receipts and
declarations of ownership for taxation, when coupled with proof of actual possession of the
property, can be the basis of a claim for ownership through prescription. 26
In contrast, the petitioners, despite thirty-two years of farming the subject land, did not acquire
ownership. It is settled that ownership cannot be acquired by mere occupation. 27 Unless
coupled with the element of hostility toward the true owner, 28 occupation and use, however
long, will not confer title by prescription or adverse possession. Moreover, the petitioners
cannot claim that their possession was public, peaceful and uninterrupted. Although their father
and brother arguably acquired ownership through extraordinary prescription because of their
adverse possession for thirty-two years (1953-1985), 29 this supposed ownership cannot
extend to the entire disputed lot, but must be limited to the portion that they actually farmed.
We cannot sustain the petitioners' contention that their ownership of the disputed land was
established before the trial court through the series of tax declarations and receipts issued in
the name of Margarito Mendoza. Such documents prove that the holder has a claim of title over
the property. Aside from manifesting a sincere desire to obtain title thereto, they announce the
holder's adverse claim against the state and other interested parties. 30
However, tax declarations and receipts are not conclusive evidence of ownership. 31 At most,
they constitute mere prima facie proof of ownership or possession of the property for which
taxes have been paid. 32 In the absence of actual public and adverse possession, the
declaration of the land for tax purposes does not prove ownership.33 In sum, the petitioners'
claim of ownership of the whole parcel has no legal basis.1âwphi1.nêt
WHEREFORE, the Petition is DENIED and the assailed Decision and Resolution AFFIRMED.
Costs against petitioners.
SO ORDERED.
Melo, Vitug, Purisima and Gonzaga-Reyes, JJ., concur.
G.R. No. 176667 November 22, 2007
ERICSSON TELECOMMUNICATIONS, INC., petitioner,
vs.
CITY OF PASIG, represented by its City Mayor, Hon. Vicente P. Eusebio, et al.*,
respondents.
DECISION
AUSTRIA-MARTINEZ, J.:
Ericsson Telecommunications, Inc. (petitioner), a corporation with principal office in Pasig City,
is engaged in the design, engineering, and marketing of telecommunication facilities/system.
In an Assessment Notice dated October 25, 2000 issued by the City Treasurer of Pasig City,
petitioner was assessed a business tax deficiency for the years 1998 and 1999 amounting to
P9,466,885.00 and P4,993,682.00, respectively, based on its gross revenues as reported in its
audited financial statements for the years 1997 and 1998. Petitioner filed a Protest dated
December 21, 2000, claiming that the computation of the local business tax should be based
on gross receipts and not on gross revenue.
The City of Pasig (respondent) issued another Notice of Assessment to petitioner on November
19, 2001, this time based on business tax deficiencies for the years 2000 and 2001, amounting
to P4,665,775.51 and P4,710,242.93, respectively, based on its gross revenues for the years
1999 and 2000. Again, petitioner filed a Protest on January 21, 2002, reiterating its position
that the local business tax should be based on gross receipts and not gross revenue.
Respondent denied petitioner's protest and gave the latter 30 days within which to appeal the
denial. This prompted petitioner to file a petition for review1 with the Regional Trial Court (RTC)
of Pasig, Branch 168, praying for the annulment and cancellation of petitioner's deficiency local
business taxes totaling P17,262,205.66.
Respondent and its City Treasurer filed a motion to dismiss on the grounds that the court had
no jurisdiction over the subject matter and that petitioner had no legal capacity to sue. The RTC
denied the motion in an Order dated December 3, 2002 due to respondents' failure to include
a notice of hearing. Thereafter, the RTC declared respondents in default and allowed petitioner
to present evidence ex- parte.
In a Decision2 dated March 8, 2004, the RTC canceled and set aside the assessments made
by respondent and its City Treasurer. The dispositive portion of the RTC Decision reads:
WHEREFORE, premises considered, judgment is hereby rendered in favor of the plaintiff and
ordering defendants to CANCEL and SET ASIDE Assessment Notice dated October 25, 2000
and Notice of Assessment dated November 19, 2001.
SO ORDERED.3
On appeal, the Court of Appeals (CA) rendered its Decision4 dated November 20, 2006, the
dispositive portion of which reads:
WHEREFORE, the decision appealed from is hereby ordered SET ASIDE and a new one
entered DISMISSING the plaintiff/appellee's complaint WITHOUT PREJUDICE.
SO ORDERED.5
The CA sustained respondent's claim that the petition filed with the RTC should have been
dismissed due to petitioner's failure to show that Atty. Maria Theresa B. Ramos (Atty. Ramos),
petitioner's Manager for Tax and Legal Affairs and the person who signed the Verification and
Certification of Non-Forum Shopping, was duly authorized by the Board of Directors.
Its motion for reconsideration having been denied in a Resolution6 dated February 9, 2007,
petitioner now comes before the Court via a Petition for Review on Certiorari under Rule 45 of
the Rules of Court, on the following grounds:
(1) THE COURT OF APPEALS ERRED IN DISMISSING THE CASE FOR LACK OF
SHOWING THAT THE SIGNATORY OF THE VERIFICATION/ CERTIFICATION IS NOT
SPECIFICALLY AUTHORIZED FOR AND IN BEHALF OF PETITIONER.
(2) THE COURT OF APPEALS ERRED IN GIVING DUE COURSE TO RESPONDENT'S
APPEAL, CONSIDERING THAT IT HAS NO JURISDICTION OVER THE SAME, THE
MATTERS TO BE RESOLVED BEING PURE QUESTIONS OF LAW, JURISDICTION OVER
WHICH IS VESTED ONLY WITH THIS HONORABLE COURT.
(3) ASSUMING THE COURT OF APPEALS HAS JURISDICTION OVER RESPONDENT'S
APPEAL, SAID COURT ERRED IN NOT DECIDING ON THE MERITS OF THE CASE FOR
THE SPEEDY DISPOSITION THEREOF, CONSIDERING THAT THE DEFICIENCY LOCAL
BUSINESS TAX ASSESSMENTS ISSUED BY RESPONDENT ARE CLEARLY INVALID AND
CONTRARY TO THE PROVISIONS OF THE PASIG REVENUE CODE AND THE LOCAL
GOVERNMENT CODE.7
After receipt by the Court of respondent's complaint and petitioner's reply, the petition is given
due course and considered ready for decision without the need of memoranda from the parties.
The Court grants the petition.
First, the complaint filed by petitioner with the RTC was erroneously dismissed by the CA for
failure of petitioner to show that its Manager for Tax and Legal Affairs, Atty. Ramos, was
authorized by the Board of Directors to sign the Verification and Certification of Non-Forum
Shopping in behalf of the petitioner corporation.
Time and again, the Court, under special circumstances and for compelling reasons,
sanctioned substantial compliance with the rule on the submission of verification and
certification against non-forum shopping.8
In General Milling Corporation v. National Labor Relations Commission,9 the Court deemed as
substantial compliance the belated attempt of the petitioner to attach to the motion for
reconsideration the board resolution/secretary's certificate, stating that there was no attempt
on the part of the petitioner to ignore the prescribed procedural requirements.
In Shipside Incorporated v. Court of Appeals,10 the authority of the petitioner's resident
manager to sign the certification against forum shopping was submitted to the CA only after
the latter dismissed the petition. The Court considered the merits of the case and the fact that
the petitioner subsequently submitted a secretary's certificate, as special circumstances or
compelling reasons that justify tempering the requirements in regard to the certificate of non-
forum shopping.11
There were also cases where there was complete non-compliance with the rule on certification
against forum shopping and yet the Court proceeded to decide the case on the merits in order
to serve the ends of substantial justice.12
In the present case, petitioner submitted a Secretary's Certificate signed on May 6, 2002,
whereby Atty. Ramos was authorized to file a protest at the local government level and to "sign,
execute and deliver any and all papers, documents and pleadings relative to the said protest
and to do and perform all such acts and things as may be necessary to effect the foregoing."13
Applying the foregoing jurisprudence, the subsequent submission of the Secretary's Certificate
and the substantial merits of the petition, which will be shown forthwith, justify a relaxation of
the rule.
Second, the CA should have dismissed the appeal of respondent as it has no jurisdiction over
the case since the appeal involves a pure question of law. The CA seriously erred in ruling that
the appeal involves a mixed question of law and fact necessitating an examination and
evaluation of the audited financial statements and other documents in order to determine
petitioner's tax base.
There is a question of law when the doubt or difference is on what the law is on a certain state
of facts. On the other hand, there is a question of fact when the doubt or difference is on the
truth or falsity of the facts alleged.14 For a question to be one of law, the same must not involve
an examination of the probative value of the evidence presented by the litigants or any of them.
The resolution of the issue must rest solely on what the law provides on the given set of
circumstances. Once it is clear that the issue invites a review of the evidence presented, the
question posed is one of fact. Thus, the test of whether a question is one of law or of fact is not
the appellation given to such question by the party raising the same; rather, it is whether the
appellate court can determine the issue raised without reviewing or evaluating the evidence, in
which case, it is a question of law; otherwise it is a question of fact.15
There is no dispute as to the veracity of the facts involved in the present case. While there is
an issue as to the correct amount of local business tax to be paid by petitioner, its determination
will not involve a look into petitioner's audited financial statements or documents, as these are
not disputed; rather, petitioner's correct tax liability will be ascertained through an interpretation
of the pertinent tax laws, i.e., whether the local business tax, as imposed by the Pasig City
Revenue Code (Ordinance No. 25-92) and the Local Government Code of 1991, should be
based on gross receipts, and not on gross revenue which respondent relied on in computing
petitioner's local business tax deficiency. This, clearly, is a question of law, and beyond the
jurisdiction of the CA.
Section 2(c), Rule 41 of the Rules of Court provides that in all cases where questions of law
are raised or involved, the appeal shall be to this Court by petition for review on certiorari under
Rule 45.
Thus, as correctly pointed out by petitioner, the appeal before the CA should have been
dismissed, pursuant to Section 5(f), Rule 56 of the Rules of Court, which provides:
Sec. 5. Grounds for dismissal of appeal.- The appeal may be dismissed motu proprio or on
motion of the respondent on the following grounds:
xxxx
(f) Error in the choice or mode of appeal.
xxxx
Third, the dismissal of the appeal, in effect, would have sustained the RTC Decision ordering
respondent to cancel the Assessment Notices issued by respondent, and therefore, would have
rendered moot and academic the issue of whether the local business tax on contractors should
be based on gross receipts or gross revenues.
However, the higher interest of substantial justice dictates that this Court should resolve the
same, to evade further repetition of erroneous interpretation of the law,16 for the guidance of
the bench and bar.
As earlier stated, the substantive issue in this case is whether the local business tax on
contractors should be based on gross receipts or gross revenue.
Respondent assessed deficiency local business taxes on petitioner based on the latter's gross
revenue as reported in its financial statements, arguing that gross receipts is synonymous with
gross earnings/revenue, which, in turn, includes uncollected earnings. Petitioner, however,
contends that only the portion of the revenues which were actually and constructively received
should be considered in determining its tax base.
Respondent is authorized to levy business taxes under Section 143 in relation to Section 151
of the Local Government Code.
Insofar as petitioner is concerned, the applicable provision is subsection (e), Section 143 of the
same Code covering contractors and other independent contractors, to wit:
SEC. 143. Tax on Business. - The municipality may impose taxes on the following businesses:
xxxx
(e) On contractors and other independent contractors, in accordance with the following
schedule:
With gross receipts for the preceding calendar year in the amount of:
xxxx
(Emphasis supplied)
Amount of Tax Per Annum
The above provision specifically refers to gross receipts which is defined under Section 131 of
the Local Government Code, as follows:
xxxx
(n) "Gross Sales or Receipts" include the total amount of money or its equivalent representing
the contract price, compensation or service fee, including the amount charged or materials
supplied with the services and the deposits or advance payments actually or constructively
received during the taxable quarter for the services performed or to be performed for another
person excluding discounts if determinable at the time of sales, sales return, excise tax, and
value-added tax (VAT);
xxxx
The law is clear. Gross receipts include money or its equivalent actually or constructively
received in consideration of services rendered or articles sold, exchanged or leased, whether
actual or constructive.
In Commissioner of Internal Revenue v. Bank of Commerce,17 the Court interpreted gross
receipts as including those which were actually or constructively received, viz.:
Actual receipt of interest income is not limited to physical receipt. Actual receipt may either be
physical receipt or constructive receipt. When the depository bank withholds the final tax to pay
the tax liability of the lending bank, there is prior to the withholding a constructive receipt by the
lending bank of the amount withheld. From the amount constructively received by the lending
bank, the depository bank deducts the final withholding tax and remits it to the government for
the account of the lending bank. Thus, the interest income actually received by the lending
bank, both physically and constructively, is the net interest plus the amount withheld as final
tax.
The concept of a withholding tax on income obviously and necessarily implies that the amount
of the tax withheld comes from the income earned by the taxpayer. Since the amount of the
tax withheld constitutes income earned by the taxpayer, then that amount manifestly forms part
of the taxpayer's gross receipts. Because the amount withheld belongs to the taxpayer, he can
transfer its ownership to the government in payment of his tax liability. The amount withheld
indubitably comes from income of the taxpayer, and thus forms part of his gross receipts.
(Emphasis supplied)
Further elaboration was made by the Court in Commissioner of Internal Revenue v. Bank of
the Philippine Islands,18 in this wise:
Receipt of income may be actual or constructive. We have held that the withholding process
results in the taxpayer's constructive receipt of the income withheld, to wit:
By analogy, we apply to the receipt of income the rules on actual and constructive possession
provided in Articles 531 and 532 of our Civil Code.
Under Article 531:
"Possession is acquired by the material occupation of a thing or the exercise of a right, or by
the fact that it is subject to the action of our will, or by the proper acts and legal formalities
established for acquiring such right."
Article 532 states:
"Possession may be acquired by the same person who is to enjoy it, by his legal representative,
by his agent, or by any person without any power whatever; but in the last case, the possession
shall not be considered as acquired until the person in whose name the act of possession was
executed has ratified the same, without prejudice to the juridical consequences of negotiorum
gestio in a proper case."
The last means of acquiring possession under Article 531 refers to juridical acts—the
acquisition of possession by sufficient title—to which the law gives the force of acts of
possession. Respondent argues that only items of income actually received should be included
in its gross receipts. It claims that since the amount had already been withheld at source, it did
not have actual receipt thereof.
We clarify. Article 531 of the Civil Code clearly provides that the acquisition of the right of
possession is through the proper acts and legal formalities established therefor. The
withholding process is one such act. There may not be actual receipt of the income withheld;
however, as provided for in Article 532, possession by any person without any power
whatsoever shall be considered as acquired when ratified by the person in whose name the
act of possession is executed.
In our withholding tax system, possession is acquired by the payor as the withholding agent of
the government, because the taxpayer ratifies the very act of possession for the government.
There is thus constructive receipt. The processes of bookkeeping and accounting for interest
on deposits and yield on deposit substitutes that are subjected to FWT are indeed—for legal
purposes—tantamount to delivery, receipt or remittance.19
Revenue Regulations No. 16-2005 dated September 1, 200520 defined and gave examples of
"constructive receipt", to wit:
SEC. 4. 108-4. Definition of Gross Receipts. -- x x x
"Constructive receipt" occurs when the money consideration or its equivalent is placed at the
control of the person who rendered the service without restrictions by the payor. The following
are examples of constructive receipts:
(1) deposit in banks which are made available to the seller of services without restrictions;
(2) issuance by the debtor of a notice to offset any debt or obligation and acceptance thereof
by the seller as payment for services rendered; and
(3) transfer of the amounts retained by the payor to the account of the contractor.
There is, therefore, constructive receipt, when the consideration for the articles sold,
exchanged or leased, or the services rendered has already been placed under the control of
the person who sold the goods or rendered the services without any restriction by the payor.
In contrast, gross revenue covers money or its equivalent actually or constructively received,
including the value of services rendered or articles sold, exchanged or leased, the payment of
which is yet to be received. This is in consonance with the International Financial Reporting
Standards,21 which defines revenue as the gross inflow of economic benefits (cash,
receivables, and other assets) arising from the ordinary operating activities of an enterprise
(such as sales of goods, sales of services, interest, royalties, and dividends),22 which is
measured at the fair value of the consideration received or receivable.23
As aptly stated by the RTC:
"[R]evenue from services rendered is recognized when services have been performed and are
billable." It is "recorded at the amount received or expected to be received." (Section E [17] of
the Statements of Financial Accounting Standards No. 1).24
In petitioner's case, its audited financial statements reflect income or revenue which accrued
to it during the taxable period although not yet actually or constructively received or paid. This
is because petitioner uses the accrual method of accounting, where income is reportable when
all the events have occurred that fix the taxpayer's right to receive the income, and the amount
can be determined with reasonable accuracy; the right to receive income, and not the actual
receipt, determines when to include the amount in gross income.25
The imposition of local business tax based on petitioner's gross revenue will inevitably result in
the constitutionally proscribed double taxation – taxing of the same person twice by the same
jurisdiction for the same thing26 – inasmuch as petitioner's revenue or income for a taxable
year will definitely include its gross receipts already reported during the previous year and for
which local business tax has already been paid.
Thus, respondent committed a palpable error when it assessed petitioner's local business tax
based on its gross revenue as reported in its audited financial statements, as Section 143 of
the Local Government Code and Section 22(e) of the Pasig Revenue Code clearly provide that
the tax should be computed based on gross receipts.
WHEREFORE, the petition is GRANTED. The Decision dated November 20, 2006 and
Resolution dated February 9, 2007 issued by the Court of Appeals are SET ASIDE, and the
Decision dated March 8, 2004 rendered by the Regional Trial Court of Pasig, Branch 168 is
REINSTATED.
SO ORDERED.
Ynares-Santiago, Chairperson, Chico-Nazario, Nachura, Reyes, JJ., concur.
G.R. No. 71283 November 12, 1987
MIGUEL ESCRITOR, JR., ANGEL ESCRITOR, RAMON ESCRITOR, JUANA ESCRITOR,
CONCORDIA ESCRITOR, IRENE ESCRITOR, MATILDE ESCRITOR, MERCEDES
ESCRITOR, HEIRS OF LUIS ESCRITOR, represented by RUPERTO ESCRITOR, HEIRS
OF PEDO ESCRITOR, represented by SUSANA VILLAMENA, LINA ESCRITOR,
WENDELINA ESCRITOR, ALFREDO ESCRITOR, SUSANA ESCRITOR and CARMEN
ESCRITOR, petitioners,
vs.
INTERMEDIATE APPELLATE COURT and SIMEON ACUNA, respondents.
GANCAYCO, J.:
This is a petition for review on certiorari seeking the reversal of the decision of the Intermediate
Appellate Court in AC-G.R. No. CV-01264-R entitled "Simeon Acuna vs. Miguel Escritor, Jr.,
et al," a case which originated from the Court of First Instance of Quezon.
The record of the case discloses the following facts:
Lot No. 2749, located at Atimonan, Quezon, was the subject of cadastral proceedings in the
Court of First Instance of Quezon, Gumaca Branch, Miguel Escritor, as claimant, filed an
answer thereto declaring his ownership over the lot alleging that he acquired it by inheritance
from his deceased father. 1 As required, a notice of hearing was duly published, after which an
order of general default was entered. 2 The lot having become uncontested, only Miguel
Escritor appeared in order to adduce his evidence of ownership.
On May 15, 1958, the Court rendered a decision in the abovementioned case, Cadastral Case
No. 72, adjudicating the lot with its improvements in favor of claimant Escritor and confirming
his title thereto. 3 Immediately thereafter, Escritor took possession of the property. On July 15,
1958, the Court, in an Order, directed the Chief of the General Land Registration Office to issue
the corresponding decree of registration in favor of Escritor, the decision in Cadastral Case No.
72 having become final. 4
On August 2, 1958, Simeon S. Acuna, the herein respondent, filed a petition for review of the
above-mentioned decision contending that it was obtained by claimant Escritor through fraud
and misrepresentation. 5 The petition was granted on July 18, 1960 and a new hearing was
set for September 13, 1960. 6 While the proceedings were going on, claimant Escritor died.
His heirs, the petitioners in this case, took possession of the property.
On February 16, 1971 or thirteen years after the disputed decision was rendered, the Court
adjudicated Lot No. 2749 in favor of respondent Acuna, ordering petitioners to vacate the land.
7 A writ of possession was later issued and petitioners voluntarily gave up their possession. 8
More than four years later, or on October 13, 1975 respondent Acuna filed with the same Court
in Civil Case No. 1138-G, a complaint for recovery of damages against petitioners for the fruits
of lot No. 2749 which was allegedly possessed by the latter unlawfully for thirteen years.
According to respondent Acuña, the registration of the said lot was effectuated by the deceased
claimant Escritor through fraud, malice, and misrepresentation. The lower court, however,
rendered a decision dismissing Acuña's complaint for damages, finding that though petitioners
enjoyed the fruits of the property, they were in good faith possessing under a just title, and the
cause of action, if there was any, has already prescribed. 9
On Appeal to the Intermediate Appellate Court, the judgment of the lower court was reversed
in a decision promulgated on October 31, 1984, the dispositive portion of which reads:
WHEREFORE, in view of the foregoing considerations, the decision appealed from is hereby
REVERSED and set aside and another one entered herein, ordering the defendants-appellees
jointly and severally (a) to pay the plaintiff- appellant the sum of P10,725.00 representing the
value of the fruits appellees received for the 13 years they have been in unlawful possession
of the land subject-matter; (b) to pay plaintiff-appellant the sum of P3,000.00 for attorney's fees
and expenses of litigation, and (c) to pay the costs.
Hence this petition.
The main issue that has to be resolved in this case is whether or not petitioners should be held
liable for damages.
Contrary to the finding of the trial court, the Intermediate Appellate Court made the
pronouncement that petitioners were possessors in bad faith from 1958 up to 1971 and should
be held accountable for damages. This conclusion was based on the statement of the cadastral
court in its August 21, 1971 decision, readjudicating Lot No. 2749 to respondent Simeon Acuna,
that "Miguel Escritor forcibly took possession of the land in May, 1958, and benefited from the
coconut trees thereon. 10 The Intermediate Appellate Court observed that on the basis of the
unimpeached conclusion of the cadastral court, it must be that the petitioners have wrongfully
entered possession of the land. 11 The Intermediate Appellate Court further explains that as
such possessors in bad faith, petitioners must reimburse respondent Acuna for the fruits of the
land they had received during their possession. 12
We cannot affirm the position of the Intermediate Appellate Court. It should be remembered
that in the first decision of the cadastral court dated May 15, 1958, Lot No. 2749 was
adjudicated in favor of claimant Escritor, petitioners' predecessor-in-interest. In this decision,
the said court found to its satisfaction that claimant Escritor acquired the land by inheritance
from his father who in turn acquired it by purchase, and that his open, public, continuous,
adverse, exclusive and notorious possession dated back to the Filipino-Spanish Revolution. 13
It must also be recalled that in its Order for the issuance of decrees dated July 15, 1958, the
same Court declared that the above-mentioned decision had become final. Significantly,
nowhere during the entire cadastral proceeding did anything come up to suggest that the land
belonged to any person other than Escritor.
On the basis of the aforementioned favorable judgment which was rendered by a court of
competent jurisdiction, Escritor honestly believed that he is the legal owner of the land. With
this well-grounded belief of ownership, he continued in his possession of Lot No. 2749. This
cannot be categorized as possession in bad faith.
As defined in the law, a possessor in bad faith is one in possession of property knowing that
his title thereto is defective. 14 Here, there is no showing that Escritor knew of any flaw in his
title. Nor was it proved that petitioners were aware that the title of their predecessor had any
defect.
Nevertheless, assuming that claimant Escritor was a possessor in bad faith, this should not
prejudice his successors-in-interest, petitioners herein, as the rule is that only personal
knowledge of the flaw in one's title or mode of acquisition can make him a possessor in bad
faith, for bad faith is not transmissible from one person to another, not even to an heir. 15 As
Article 534 of the Civil Code explicitly provides, "one who succeeds by hereditary title shall not
suffer the consequences of the wrongful possession of the decedent, if it is not shown that he
was aware of the flaws affecting it; ..." The reason for this article is that bad faith is personal
and intransmissible. Its effects must, therefore, be suffered only by the person who acted in
bad faith; his heir should not be saddled with such consequences. 16
Under Article 527 of the Civil Code, good faith is always presumed, and upon him who alleges
bad faith on the part of a possessor rests the burden of proof. If no evidence is presented
proving bad faith, like in this case, the presumption of good faith remains.
Respondent Acuna, on the other hand, bases his complaint for damages on the alleged fraud
on the part of the petitioners' predecessor in having the land registered under his (the
predecessor's) name. A review of the record, however, does not indicate the existence of any
such fraud. It was not proven in the cadastral court nor was it shown in the trial court.
Lot No. 2749 was not awarded to Escritor on the basis of his machinations. What is clear is
that in the hearing of January 22, 1958, the Court permitted Escritor to adduce his evidence of
ownership without opposing evidence as the lot had become uncontested. 17 Respondent
Acuna himself failed to appear in this hearing because of a misunderstanding with a lawyer. 18
There is no finding that such failure to appear was caused by petitioners in this case. On the
contrary, all the requirements of publication were followed. Notice of hearing was duly
published. Clearly then, the allegation of fraud is without basis.
Respondent having failed to prove fraud and bad faith on the part of petitioners, We sustain
the trial court's finding that petitioners were possessors in good faith and should, therefore, not
be held liable for damages.
With the above pronouncement, the issue of prescription of cause of action which was also
presented need not be passed upon.
WHEREFORE, the petition is GRANTED and the decision appealed from is hereby
REVERSED and SET ASIDE and another decision is rendered dismissing the complaint. No
pronouncement as to costs.
SO ORDERED.
Teehankee, C.J., Narvasa, Cruz and Paras, JJ., concur.
G.R. No. 135385 December 6, 2000
ISAGANI CRUZ and CESAR EUROPA, petitioners,
vs.
SECRETARY OF ENVIRONMENT AND NATURAL RESOURCES, SECRETARY OF
BUDGET AND MANAGEMENT and CHAIRMAN and COMMISSIONERS OF THE
NATIONAL COMMISSION ON INDIGENOUS PEOPLES, respondents.
HON. JUAN M .FLAVIER, HON. PONCIANO BENNAGEN, BAYANI ASCARRAGA, EDTAMI
MANSAYANGAN, BASILIO WANDAG, EVELYN DUNUAN, YAOM TUGAS, ALFREMO
CARPIANO, LIBERATO A. GABIN, MATERNIDAD M. COLAS, NARCISA M. DALUPINES,
BAI KIRAM-CONNIE SATURNO, BAE MLOMO-BEATRIZ T. ABASALA, DATU
BALITUNGTUNG-ANTONIO D. LUMANDONG, DATU MANTUMUKAW TEOFISTO
SABASALES, DATU EDUAARDO BANDA, DATU JOEL UNAD, DATU RAMON BAYAAN,
TIMUAY JOSE ANOY, TIMUAY MACARIO D. SALACAO, TIMUAY EDWIN B. ENDING,
DATU SAHAMPONG MALANAW VI, DATU BEN PENDAO CABIGON, BAI NANAPNAY-
LIZA SAWAY, BAY INAY DAYA-MELINDA S. REYMUNDO, BAI TINANGHAGA HELINITA
T. PANGAN, DATU MAKAPUKAW ADOLINO L. SAWAY, DATU MAUDAYAW-CRISPEN
SAWAY, VICKY MAKAY, LOURDES D. AMOS, GILBERT P. HOGGANG, TERESA
GASPAR, MANUEL S. ONALAN, MIA GRACE L. GIRON, ROSEMARIE G. PE, BENITO
CARINO, JOSEPH JUDE CARANTES, LYNETTE CARANTES-VIVAL, LANGLEY
SEGUNDO, SATUR S. BUGNAY, CARLING DOMULOT, ANDRES MENDIOGRIN,
LEOPOLDO ABUGAN, VIRGILIO CAYETANO, CONCHITA G. DESCAGA, LEVY ESTEVES,
ODETTE G. ESTEVEZ, RODOLFO C. AGUILAR, MAURO VALONES, PEPE H. ATONG,
OFELIA T. DAVI, PERFECTO B. GUINOSAO, WALTER N. TIMOL, MANUEL T. SELEN,
OSCAR DALUNHAY, RICO O. SULATAN, RAFFY MALINDA, ALFREDO ABILLANOS,
JESSIE ANDILAB, MIRLANDO H. MANGKULINTAS, SAMIE SATURNO, ROMEO A.
LINDAHAY, ROEL S. MANSANG-CAGAN, PAQUITO S. LIESES, FILIPE G. SAWAY,
HERMINIA S. SAWAY, JULIUS S. SAWAY, LEONARDA SAWAY, JIMMY UGYUB,
SALVADOR TIONGSON, VENANCIO APANG, MADION MALID, SUKIM MALID, NENENG
MALID, MANGKATADONG AUGUSTO DIANO, JOSEPHINE M. ALBESO, MORENO
MALID, MARIO MANGCAL, FELAY DIAMILING, SALOME P. SARZA, FELIPE P. BAGON,
SAMMY SALNUNGAN, ANTONIO D. EMBA, NORMA MAPANSAGONOS, ROMEO
SALIGA, SR., JERSON P. GERADA, RENATO T. BAGON, JR., SARING MASALONG,
SOLEDAD M. GERARDA, ELIZABETH L. MENDI, MORANTE S. TIWAN, DANILO M.
MALUDAO, MINORS MARICEL MALID, represented by her father CORNELIO MALID,
MARCELINO M. LADRA, represented by her father MONICO D. LADRA, JENNYLYN
MALID, represented by her father TONY MALID, ARIEL M. EVANGELISTA, represented
by her mother LINAY BALBUENA, EDWARD M. EMUY, SR., SUSAN BOLANIO, OND,
PULA BATO B'LAAN TRIBAL FARMER'S ASSOCIATION, INTER-PEOPLE'S EXCHANGE,
INC. and GREEN FORUM-WESTERN VISAYAS, intervenors.
COMMISSION ON HUMAN RIGHTS, intervenor.
IKALAHAN INDIGENOUS PEOPLE and HARIBON FOUNDATION FOR THE
CONSERVATION OF NATURAL RESOURCES, INC., intervenor.
RESOLUTION
PER CURIAM:
Petitioners Isagani Cruz and Cesar Europa brought this suit for prohibition and mandamus as
citizens and taxpayers, assailing the constitutionality of certain provisions of Republic Act No.
8371 (R.A. 8371), otherwise known as the Indigenous Peoples Rights Act of 1997 (IPRA), and
its Implementing Rules and Regulations (Implementing Rules).
In its resolution of September 29, 1998, the Court required respondents to comment.1 In
compliance, respondents Chairperson and Commissioners of the National Commission on
Indigenous Peoples (NCIP), the government agency created under the IPRA to implement its
provisions, filed on October 13, 1998 their Comment to the Petition, in which they defend the
constitutionality of the IPRA and pray that the petition be dismissed for lack of merit.
On October 19, 1998, respondents Secretary of the Department of Environment and Natural
Resources (DENR) and Secretary of the Department of Budget and Management (DBM) filed
through the Solicitor General a consolidated Comment. The Solicitor General is of the view that
the IPRA is partly unconstitutional on the ground that it grants ownership over natural resources
to indigenous peoples and prays that the petition be granted in part.
On November 10, 1998, a group of intervenors, composed of Sen. Juan Flavier, one of the
authors of the IPRA, Mr. Ponciano Bennagen, a member of the 1986 Constitutional
Commission, and the leaders and members of 112 groups of indigenous peoples (Flavier, et.
al), filed their Motion for Leave to Intervene. They join the NCIP in defending the
constitutionality of IPRA and praying for the dismissal of the petition.
On March 22, 1999, the Commission on Human Rights (CHR) likewise filed a Motion to
Intervene and/or to Appear as Amicus Curiae. The CHR asserts that IPRA is an expression of
the principle of parens patriae and that the State has the responsibility to protect and guarantee
the rights of those who are at a serious disadvantage like indigenous peoples. For this reason
it prays that the petition be dismissed.
On March 23, 1999, another group, composed of the Ikalahan Indigenous People and the
Haribon Foundation for the Conservation of Natural Resources, Inc. (Haribon, et al.), filed a
motion to Intervene with attached Comment-in-Intervention. They agree with the NCIP and
Flavier, et al. that IPRA is consistent with the Constitution and pray that the petition for
prohibition and mandamus be dismissed.
The motions for intervention of the aforesaid groups and organizations were granted.
Oral arguments were heard on April 13, 1999. Thereafter, the parties and intervenors filed their
respective memoranda in which they reiterate the arguments adduced in their earlier pleadings
and during the hearing.
Petitioners assail the constitutionality of the following provisions of the IPRA and its
Implementing Rules on the ground that they amount to an unlawful deprivation of the State’s
ownership over lands of the public domain as well as minerals and other natural resources
therein, in violation of the regalian doctrine embodied in Section 2, Article XII of the Constitution:
"(1) Section 3(a) which defines the extent and coverage of ancestral domains, and Section 3(b)
which, in turn, defines ancestral lands;
"(2) Section 5, in relation to section 3(a), which provides that ancestral domains including
inalienable public lands, bodies of water, mineral and other resources found within ancestral
domains are private but community property of the indigenous peoples;
"(3) Section 6 in relation to section 3(a) and 3(b) which defines the composition of ancestral
domains and ancestral lands;
"(4) Section 7 which recognizes and enumerates the rights of the indigenous peoples over the
ancestral domains;
(5) Section 8 which recognizes and enumerates the rights of the indigenous peoples over the
ancestral lands;
"(6) Section 57 which provides for priority rights of the indigenous peoples in the harvesting,
extraction, development or exploration of minerals and other natural resources within the areas
claimed to be their ancestral domains, and the right to enter into agreements with
nonindigenous peoples for the development and utilization of natural resources therein for a
period not exceeding 25 years, renewable for not more than 25 years; and
"(7) Section 58 which gives the indigenous peoples the responsibility to maintain, develop,
protect and conserve the ancestral domains and portions thereof which are found to be
necessary for critical watersheds, mangroves, wildlife sanctuaries, wilderness, protected areas,
forest cover or reforestation."2
Petitioners also content that, by providing for an all-encompassing definition of "ancestral
domains" and "ancestral lands" which might even include private lands found within said areas,
Sections 3(a) and 3(b) violate the rights of private landowners.3
In addition, petitioners question the provisions of the IPRA defining the powers and jurisdiction
of the NCIP and making customary law applicable to the settlement of disputes involving
ancestral domains and ancestral lands on the ground that these provisions violate the due
process clause of the Constitution.4
These provisions are:
"(1) sections 51 to 53 and 59 which detail the process of delineation and recognition of ancestral
domains and which vest on the NCIP the sole authority to delineate ancestral domains and
ancestral lands;
"(2) Section 52[i] which provides that upon certification by the NCIP that a particular area is an
ancestral domain and upon notification to the following officials, namely, the Secretary of
Environment and Natural Resources, Secretary of Interior and Local Governments, Secretary
of Justice and Commissioner of the National Development Corporation, the jurisdiction of said
officials over said area terminates;
"(3) Section 63 which provides the customary law, traditions and practices of indigenous
peoples shall be applied first with respect to property rights, claims of ownership, hereditary
succession and settlement of land disputes, and that any doubt or ambiguity in the
interpretation thereof shall be resolved in favor of the indigenous peoples;
"(4) Section 65 which states that customary laws and practices shall be used to resolve
disputes involving indigenous peoples; and
"(5) Section 66 which vests on the NCIP the jurisdiction over all claims and disputes involving
rights of the indigenous peoples."5
Finally, petitioners assail the validity of Rule VII, Part II, Section 1 of the NCIP Administrative
Order No. 1, series of 1998, which provides that "the administrative relationship of the NCIP to
the Office of the President is characterized as a lateral but autonomous relationship for
purposes of policy and program coordination." They contend that said Rule infringes upon the
President’s power of control over executive departments under Section 17, Article VII of the
Constitution.6
Petitioners pray for the following:
"(1) A declaration that Sections 3, 5, 6, 7, 8, 52[I], 57, 58, 59, 63, 65 and 66 and other related
provisions of R.A. 8371 are unconstitutional and invalid;
"(2) The issuance of a writ of prohibition directing the Chairperson and Commissioners of the
NCIP to cease and desist from implementing the assailed provisions of R.A. 8371 and its
Implementing Rules;
"(3) The issuance of a writ of prohibition directing the Secretary of the Department of
Environment and Natural Resources to cease and desist from implementing Department of
Environment and Natural Resources Circular No. 2, series of 1998;
"(4) The issuance of a writ of prohibition directing the Secretary of Budget and Management to
cease and desist from disbursing public funds for the implementation of the assailed provisions
of R.A. 8371; and
"(5) The issuance of a writ of mandamus commanding the Secretary of Environment and
Natural Resources to comply with his duty of carrying out the State’s constitutional mandate to
control and supervise the exploration, development, utilization and conservation of Philippine
natural resources."7
After due deliberation on the petition, the members of the Court voted as follows:
Seven (7) voted to dismiss the petition. Justice Kapunan filed an opinion, which the Chief
Justice and Justices Bellosillo, Quisumbing, and Santiago join, sustaining the validity of the
challenged provisions of R.A. 8371. Justice Puno also filed a separate opinion sustaining all
challenged provisions of the law with the exception of Section 1, Part II, Rule III of NCIP
Administrative Order No. 1, series of 1998, the Rules and Regulations Implementing the IPRA,
and Section 57 of the IPRA which he contends should be interpreted as dealing with the large-
scale exploitation of natural resources and should be read in conjunction with Section 2, Article
XII of the 1987 Constitution. On the other hand, Justice Mendoza voted to dismiss the petition
solely on the ground that it does not raise a justiciable controversy and petitioners do not have
standing to question the constitutionality of R.A. 8371.
Seven (7) other members of the Court voted to grant the petition. Justice Panganiban filed a
separate opinion expressing the view that Sections 3 (a)(b), 5, 6, 7 (a)(b), 8, and related
provisions of R.A. 8371 are unconstitutional. He reserves judgment on the constitutionality of
Sections 58, 59, 65, and 66 of the law, which he believes must await the filing of specific cases
by those whose rights may have been violated by the IPRA. Justice Vitug also filed a separate
opinion expressing the view that Sections 3(a), 7, and 57 of R.A. 8371 are unconstitutional.
Justices Melo, Pardo, Buena, Gonzaga-Reyes, and De Leon join in the separate opinions of
Justices Panganiban and Vitug.
As the votes were equally divided (7 to 7) and the necessary majority was not obtained, the
case was redeliberated upon. However, after redeliberation, the voting remained the same.
Accordingly, pursuant to Rule 56, Section 7 of the Rules of Civil Procedure, the petition is
DISMISSED.
Attached hereto and made integral parts thereof are the separate opinions of Justices Puno,
Vitug, Kapunan, Mendoza, and Panganiban.
SO ORDERED.
Davide, Jr., C.J., Bellosillo, Melo, Quisumbing, Pardo, Buena, Gonzaga-Reyes, Ynares-
Santiago, and De Leon, Jr., JJ., concur.
Puno, Vitug, Kapunan, Mendoza and Panganiban JJ., see separate opinion
Footnotes
1 Rollo, p. 114.
2 Petition, Rollo, pp. 16-23.
3 Id. at 23-25.
4 Section 1, Article III of the Constitution states: "No person shall be deprived of life, liberty or
property without due process of law, nor shall any person be denied the equal protection of the
laws."
5 Rollo, pp. 25-27.
6 Id. at 27-28.
7 Transcript of Stenographic Notes of the hearing held on April 13, 1999, pp. 5-6.
The Lawphil Project - Arellano Law Foundation
SEPARATE OPINION
PUNO, J.:
PRECIS
A classic essay on the utility of history was written in 1874 by Friedrich Nietzsche entitled "On
the Uses and Disadvantages of History for Life." Expounding on Nietzsche's essay, Judge
Richard Posner1 wrote:2
"Law is the most historically oriented, or if you like the most backward-looking, the most 'past-
dependent,' of the professions. It venerates tradition, precedent, pedigree, ritual, custom,
ancient practices, ancient texts, archaic terminology, maturity, wisdom, seniority, gerontocracy,
and interpretation conceived of as a method of recovering history. It is suspicious of innovation,
discontinuities, 'paradigm shifts,' and the energy and brashness of youth. These ingrained
attitudes are obstacles to anyone who wants to re-orient law in a more pragmatic direction. But,
by the same token, pragmatic jurisprudence must come to terms with history."
When Congress enacted the Indigenous Peoples Rights Act (IPRA), it introduced radical
concepts into the Philippine legal system which appear to collide with settled constitutional and
jural precepts on state ownership of land and other natural resources. The sense and subtleties
of this law cannot be appreciated without considering its distinct sociology and the labyrinths
of its history. This Opinion attempts to interpret IPRA by discovering its soul shrouded by the
mist of our history. After all, the IPRA was enacted by Congress not only to fulfill the
constitutional mandate of protecting the indigenous cultural communities' right to their ancestral
land but more importantly, to correct a grave historical injustice to our indigenous people.
This Opinion discusses the following:
I. The Development of the Regalian Doctrine in the Philippine Legal System.
A. The Laws of the Indies
B. Valenton v. Murciano 2. The right of ICCs/IPs to develop lands and natural resources within the ancestral domains
does not deprive the State of ownership over the natural resources, control and supervision in
C. The Public Land Acts and the Torrens System their development and exploitation.

D. The Philippine Constitutions (a) Section 1, Part II, Rule III of the Implementing Rules goes beyond the parameters of Section
7(a) of the law on ownership of ancestral domains and is ultra vires.
II. The Indigenous Peoples Rights Act (IPRA).
(b) The small-scale utilization of natural resources in Section 7 (b) of the IPRA is allowed under
A. Indigenous Peoples Paragraph 3, Section 2, Article XII of the 1987 Consitution.

1. Indigenous Peoples: Their History (c) The large-scale utilization of natural resources in Section 57 of the IPRA may be harmonized
with Paragraphs 1 and 4, Section 2, Article XII of the 1987 Constitution.
2. Their Concept of Land
V. The IPRA is a Recognition of Our Active Participation in the International Indigenous
III. The IPRA is a Novel Piece of Legislation. Movement.

A. Legislative History DISCUSSION

IV. The Provisions of the IPRA Do Not Contravene the Constitution. I. THE DEVELOPMENT OF THE REGALIAN DOCTRINE IN THE PHILIPPINE LEGAL
SYSTEM.
A. Ancestral domains and ancestral lands are the private property of indigenous peoples and
do not constitute part of the land of the public domain. A. The Laws of the Indies

1. The right to ancestral domains and ancestral lands: how acquired The capacity of the State to own or acquire property is the state's power of dominium.3 This
was the foundation for the early Spanish decrees embracing the feudal theory of jura regalia.
2. The concept of native title The "Regalian Doctrine" or jura regalia is a Western legal concept that was first introduced by
the Spaniards into the country through the Laws of the Indies and the Royal Cedulas. The Laws
(a) Cariño v. Insular Government of the Indies, i.e., more specifically, Law 14, Title 12, Book 4 of the Novisima Recopilacion de
Leyes de las Indias, set the policy of the Spanish Crown with respect to the Philippine Islands
(b) Indian Title to land in the following manner:

(c) Why the Cariño doctrine is unique
3. The option of securing a torrens title to the ancestral land
B. The right of ownership and possession by the ICCs/IPs to their ancestral domains is a limited
form of ownership and does not include the right to alienate the same.
1. The indigenous concept of ownership and customary law
C. Sections 7 (a), 7 (b) and 57 of the IPRA do not violate the Regalian Doctrine enshrined in
Section 2, Article XII of the 1987 Constitution.
1. The rights of ICCs/IPs over their ancestral domains and lands
"We, having acquired full sovereignty over the Indies, and all lands, territories, and possessions
not heretofore ceded away by our royal predecessors, or by us, or in our name, still pertaining
to the royal crown and patrimony, it is our will that all lands which are held without proper and
true deeds of grant be restored to us as they belong to us, in order that after reserving before
all what to us or to our viceroys, audiencias, and governors may seem necessary for public
squares, ways, pastures, and commons in those places which are peopled, taking into
consideration not only their present condition, but also their future and their probable increase,
and after distributing to the natives what may be necessary for tillage and pasturage, confirming
them in what they now have and giving them more if necessary, all the rest of said lands may
remain free and unencumbered for us to dispose of as we may wish.
We therefore order and command that all viceroys and presidents of pretorial courts designate
at such time as shall to them seem most expedient, a suitable period within which all
possessors of tracts, farms, plantations, and estates shall exhibit to them and to the court
officers appointed by them for this purpose, their title deeds thereto. And those who are in
possession by virtue of proper deeds and receipts, or by virtue of just prescriptive right shall be
protected, and all the rest shall be restored to us to be disposed of at our will."4
The Philippines passed to Spain by virtue of "discovery" and conquest. Consequently, all lands
became the exclusive patrimony and dominion of the Spanish Crown. The Spanish
Government took charge of distributing the lands by issuing royal grants and concessions to
Spaniards, both military and civilian.5 Private land titles could only be acquired from the
government either by purchase or by the various modes of land grant from the Crown.6
The Laws of the Indies were followed by the Ley Hipotecaria, or the Mortgage Law of 1893.7
The Spanish Mortgage Law provided for the systematic registration of titles and deeds as well
as possessory claims. The law sought to register and tax lands pursuant to the Royal Decree
of 1880. The Royal Decree of 1894, or the "Maura Law," was partly an amendment of the
Mortgage Law as well as the Laws of the Indies, as already amended by previous orders and
decrees.8 This was the last Spanish land law promulgated in the Philippines. It required the
"adjustment" or registration of all agricultural lands, otherwise the lands shall revert to the state.
Four years later, by the Treaty of Paris of December 10, 1898, Spain ceded to the government
of the United States all rights, interests and claims over the national territory of the Philippine
Islands. In 1903, the United States colonial government, through the Philippine Commission,
passed Act No. 926, the first Public Land Act.
B. Valenton v. Murciano
In 1904, under the American regime, this Court decided the case of Valenton v. Murciano.9
Valenton resolved the question of which is the better basis for ownership of land: long-time
occupation or paper title. Plaintiffs had entered into peaceful occupation of the subject land in
1860. Defendant's predecessor-in-interest, on the other hand, purchased the land from the
provincial treasurer of Tarlac in 1892. The lower court ruled against the plaintiffs on the ground
that they had lost all rights to the land by not objecting to the administrative sale. Plaintiffs
appealed the judgment, asserting that their 30-year adverse possession, as an extraordinary
period of prescription in the Partidas and the Civil Code, had given them title to the land as
against everyone, including the State; and that the State, not owning the land, could not validly
transmit it.
The Court, speaking through Justice Willard, decided the case on the basis of "those special
laws which from earliest time have regulated the disposition of the public lands in the
colonies."10 The question posed by the Court was: "Did these special laws recognize any right
of prescription as against the State as to these lands; and if so, to what extent was it
recognized?"
Prior to 1880, the Court said, there were no laws specifically providing for the disposition of
land in the Philippines. However, it was understood that in the absence of any special law to
govern a specific colony, the Laws of the Indies would be followed. Indeed, in the Royal Order
of July 5, 1862, it was decreed that until regulations on the subject could be prepared, the
authorities of the Philippine Islands should follow strictly the Laws of the Indies, the Ordenanza
of the Intendentes of 1786, and the Royal Cedula of 1754.11
Quoting the preamble of Law 14, Title 12, Book 4 of the Recopilacion de Leyes de las Indias,
the court interpreted it as follows:
"In the preamble of this law there is, as is seen, a distinct statement that all those lands belong
to the Crown which have not been granted by Philip, or in his name, or by the kings who
preceded him. This statement excludes the idea that there might be lands not so granted, that
did not belong to the king. It excludes the idea that the king was not still the owner of all
ungranted lands, because some private person had been in the adverse occupation of them.
By the mandatory part of the law all the occupants of the public lands are required to produce
before the authorities named, and within a time to be fixed by them, their title papers. And those
who had good title or showed prescription were to be protected in their holdings. It is apparent
that it was not the intention of the law that mere possession for a length of time should make
the possessors the owners of the land possessed by them without any action on the part of the
authorities."12
The preamble stated that all those lands which had not been granted by Philip, or in his name,
or by the kings who preceded him, belonged to the Crown.13 For those lands granted by the
king, the decree provided for a system of assignment of such lands. It also ordered that all
possessors of agricultural land should exhibit their title deed, otherwise, the land would be
restored to the Crown.14
The Royal Cedula of October 15, 1754 reinforced the Recopilacion when it ordered the Crown's
principal subdelegate to issue a general order directing the publication of the Crown's
instructions:
"x x x to the end that any and all persons who, since the year 1700, and up to the date of the
promulgation and publication of said order, shall have occupied royal lands, whether or not x x
x cultivated or tenanted, may x x x appear and exhibit to said subdelegates the titles and
patents by virtue of which said lands are occupied. x x x. Said subdelegates will at the same
time warn the parties interested that in case of their failure to present their title deeds within the
term designated, without a just and valid reason therefor, they will be deprived of and evicted
from their lands, and they will be granted to others."15
On June 25, 1880, the Crown adopted regulations for the adjustment of lands "wrongfully
occupied" by private individuals in the Philippine Islands. Valenton construed these regulations
together with contemporaneous legislative and executive interpretations of the law, and
concluded that plaintiffs' case fared no better under the 1880 decree and other laws which
followed it, than it did under the earlier ones. Thus as a general doctrine, the Court stated:
"While the State has always recognized the right of the occupant to a deed if he proves a
possession for a sufficient length of time, yet it has always insisted that he must make that
proof before the proper administrative officers, and obtain from them his deed, and until he did
that the State remained the absolute owner."16

In conclusion, the Court ruled: "We hold that from 1860 to 1892 there was no law in force in
these Islands by which the plaintiffs could obtain the ownership of these lands by prescription,
without any action by the State."17 Valenton had no rights other than those which accrued to
mere possession. Murciano, on the other hand, was deemed to be the owner of the land by
virtue of the grant by the provincial secretary. In effect, Valenton upheld the Spanish concept
of state ownership of public land.
As a fitting observation, the Court added that "[t]he policy pursued by the Spanish Government
from earliest times, requiring settlers on the public lands to obtain title deeds therefor from the
State, has been continued by the American Government in Act No. 926."18
C. The Public Land Acts and the Torrens System
Act No. 926, the first Public Land Act, was passed in pursuance of the provisions of the the
Philippine Bill of 1902. The law governed the disposition of lands of the public domain. It
prescribed rules and regulations for the homesteading, selling, and leasing of portions of the
public domain of the Philippine Islands, and prescribed the terms and conditions to enable
persons to perfect their titles to public lands in the Islands. It also provided for the "issuance of
patents to certain native settlers upon public lands," for the establishment of town sites and
sale of lots therein, for the completion of imperfect titles, and for the cancellation or confirmation
of Spanish concessions and grants in the Islands." In short, the Public Land Act operated on
the assumption that title to public lands in the Philippine Islands remained in the government;19
and that the government's title to public land sprung from the Treaty of Paris and other
subsequent treaties between Spain and the United States.20 The term "public land" referred
to all lands of the public domain whose title still remained in the government and are thrown
open to private appropriation and settlement,21 and excluded the patrimonial property of the
government and the friar lands.22
Act No. 926 was superseded in 1919 by Act 2874, the second Public Land Act. This new law
was passed under the Jones Law. It was more comprehensive in scope but limited the
exploitation of agricultural lands to Filipinos and Americans and citizens of other countries
which gave Filipinos the same privileges.23 After the passage of the 1935 Constitution, Act
2874 was amended in 1936 by Commonwealth Act No. 141. Commonwealth Act No. 141
remains the present Public Land Law and it is essentially the same as Act 2874. The main
difference between the two relates to the transitory provisions on the rights of American citizens
and corporations during the Commonwealth period at par with Filipino citizens and
corporations.24
Grants of public land were brought under the operation of the Torrens system under Act 496,
or the Land Registration Law of 1903. Enacted by the Philippine Commission, Act 496 placed
all public and private lands in the Philippines under the Torrens system. The law is said to be
almost a verbatim copy of the Massachussetts Land Registration Act of 1898,25 which, in turn,
followed the principles and procedure of the Torrens system of registration formulated by Sir
Robert Torrens who patterned it after the Merchant Shipping Acts in South Australia. The
Torrens system requires that the government issue an official certificate of title attesting to the
fact that the person named is the owner of the property described therein, subject to such liens
and encumbrances as thereon noted or the law warrants or reserves.26 The certificate of title
is indefeasible and imprescriptible and all claims to the parcel of land are quieted upon issuance
of said certificate. This system highly facilitates land conveyance and negotiation.27
D. The Philippine Constitutions
The Regalian doctrine was enshrined in the 1935 Constitution. One of the fixed and dominating
objectives of the 1935 Constitutional Convention was the nationalization and conservation of
the natural resources of the country.28 There was an overwhelming sentiment in the
Convention in favor of the principle of state ownership of natural resources and the adoption of
the Regalian doctrine.29 State ownership of natural resources was seen as a necessary
starting point to secure recognition of the state's power to control their disposition, exploitation,
development, or utilization.30 The delegates to the Constitutional Convention very well knew
that the concept of State ownership of land and natural resources was introduced by the
Spaniards, however, they were not certain whether it was continued and applied by the
Americans. To remove all doubts, the Convention approved the provision in the Constitution
affirming the Regalian doctrine.31
Thus, the 1935 Constitution, in Section 1 of Article XIII on "Conservation and Utilization of
Natural Resources," reads as follows:
"Sec. 1. All agricultural, timber, and mineral lands of the public domain, waters, minerals, coal,
petroleum, and other mineral oils, all forces of potential energy, and other natural resources of
the Philippines belong to the State, and their disposition, exploitation, development, or
utilization shall be limited to citizens of the Philippines, or to corporations or associations at
least sixty per centum of the capital of which is owned by such citizens, subject to any existing
right, grant, lease, or concession at the time of the inauguration of the Government established
under this Constitution. Natural resources, with the exception of public agricultural land, shall
not be alienated, and no license, concession, or lease for the exploitation, development, or
utilization of any of the natural resources shall be granted for a period exceeding twenty-five
years, except as to water rights for irrigation, water supply, fisheries, or industrial uses other
than the development of water power, in which cases beneficial use may be the measure and
the limit of the grant."
The 1973 Constitution reiterated the Regalian doctrine in Section 8, Article XIV on the "National
Economy and the Patrimony of the Nation," to wit:
"Sec. 8. All lands of the public domain, waters, minerals, coal, petroleum and other mineral oils,
all forces of potential energy, fisheries, wildlife, and other natural resources of the Philippines
belong to the State. With the exception of agricultural, industrial or commercial, residential, and
resettlement lands of the public domain, natural resources shall not be alienated, and no
license, concession, or lease for the exploration, development, exploitation, or utilization of any
of the natural resources shall be granted for a period exceeding twenty-five years, renewable
for not more than twenty-five years, except as to water rights for irrigation, water supply,
fisheries, or industrial uses other than the development of water power, in which cases
beneficial use may be the measure and the limit of the grant."
The 1987 Constitution reaffirmed the Regalian doctrine in Section 2 of Article XII on "National
Economy and Patrimony," to wit:
"Sec. 2. All lands of the public domain, waters, minerals, coal, petroleum, and other mineral
oils, all forces of potential energy, fisheries, forests or timber, wildlife, flora and fauna, and other
natural resources are owned by the State. With the exception of agricultural lands, all other
natural resources shall not be alienated. The exploration, development and utilization of natural
resources shall be under the full control and supervision of the State. The State may directly
undertake such activities or it may enter into co-production, joint venture, or production-sharing
agreements with Filipino citizens, or corporations or associations at least sixty per centum of
whose capital is owned by such citizens. Such agreements may be for a period not exceeding
twenty-five years, renewable for not more than twenty-five years, and under such terms and
conditions as may be provided by law. In cases of water rights for irrigation, water supply,
fisheries, or industrial uses other than the development of water power, beneficial use may be
the measure and limit of the grant.
x x x."
Simply stated, all lands of the public domain as well as all natural resources enumerated
therein, whether on public or private land, belong to the State. It is this concept of State
ownership that petitioners claim is being violated by the IPRA.
II. THE INDIGENOUS PEOPLES RIGHTS ACT.
Republic Act No. 8371 is entitled "An Act to Recognize, Protect and Promote the Rights of
Indigenous Cultural Communities/ Indigenous Peoples, Creating a National Commission on
Indigenous Peoples, Establishing Implementing Mechanisms, Appropriating Funds Therefor,
and for Other Purposes." It is simply known as "The Indigenous Peoples Rights Act of 1997"
or the IPRA.
The IPRA recognizes the existence of the indigenous cultural communities or indigenous
peoples (ICCs/IPs) as a distinct sector in Philippine society. It grants these people the
ownership and possession of their ancestral domains and ancestral lands, and defines the
extent of these lands and domains. The ownership given is the indigenous concept of
ownership under customary law which traces its origin to native title.
Other rights are also granted the ICCs/IPs, and these are:
- the right to develop lands and natural resources;
- the right to stay in the territories;
- the right in case of displacement;
- the right to safe and clean air and water;
- the right to claim parts of reservations;
- the right to resolve conflict;32
- the right to ancestral lands which include
a. the right to transfer land/property to/among members of the same ICCs/IPs, subject to
customary laws and traditions of the community concerned;
b. the right to redemption for a period not exceeding 15 years from date of transfer, if the
transfer is to a non-member of the ICC/IP and is tainted by vitiated consent of the ICC/IP, or if
the transfer is for an unconscionable consideration.33
Within their ancestral domains and ancestral lands, the ICCs/IPs are given the right to self-
governance and empowerment,34 social justice and human rights,35 the right to preserve and
protect their culture, traditions, institutions and community intellectual rights, and the right to
develop their own sciences and technologies.36
To carry out the policies of the Act, the law created the National Commission on Indigenous
Peoples (NCIP). The NCIP is an independent agency under the Office of the President and is
composed of seven (7) Commissioners belonging to ICCs/IPs from each of the ethnographic
areas- Region I and the Cordilleras; Region II; the rest of Luzon; Island groups including
Mindoro, Palawan, Romblon, Panay and the rest of the Visayas; Northern and Western
Mindanao; Southern and Eastern Mindanao; and Central Mindanao.37 The NCIP took over the
functions of the Office for Northern Cultural Communities and the Office for Southern Cultural
Communities created by former President Corazon Aquino which were merged under a
revitalized structure.38
Disputes involving ICCs/IPs are to be resolved under customary laws and practices. When still
unresolved, the matter may be brought to the NCIP, which is granted quasi-judicial powers.39
The NCIP's decisions may be appealed to the Court of Appeals by a petition for review.
Any person who violates any of the provisions of the Act such as, but not limited to,
unauthorized and/or unlawful intrusion upon ancestral lands and domains shall be punished in
accordance with customary laws or imprisoned from 9 months to 12 years and/or fined from
₱100,000.00 to ₱500,000.00 and obliged to pay damages.40
A. Indigenous Peoples
The IPRA is a law dealing with a specific group of people, i.e., the Indigenous Cultural
Communities (ICCs) or the Indigenous Peoples (IPs). The term "ICCs" is used in the 1987
Constitution while that of "IPs" is the contemporary international language in the International
Labor Organization (ILO) Convention 16941 and the United Nations (UN) Draft Declaration on
the Rights of Indigenous Peoples.42
ICCs/IPs are defined by the IPRA as:
"Sec. 3 [h]. Indigenous Cultural Communities/ Indigenous Peoples- refer to a group of people
or homogeneous societies identified by self-ascription and ascription by others, who have
continuously lived as organized community on communally bounded and defined territory, and
who have, under claims of ownership since time immemorial, occupied, possessed and utilized
such territories, sharing common bonds of language, customs, traditions and other distinctive
cultural traits, or who have, through resistance to political, social and cultural inroads of
colonization, non-indigenous religions and cultures, became historically differentiated from the
majority of Filipinos. ICCs/IPs shall likewise include peoples who are regarded as indigenous
on account of their descent from the populations which inhabited the country, at the time of
conquest or colonization, or at the time of inroads of non-indigenous religions and cultures, or
the establishment of present state boundaries, who retain some or all of their own social,
economic, cultural and political institutions, but who may have been displaced from their
traditional domains or who may have resettled outside their ancestral domains."
Indigenous Cultural Communities or Indigenous Peoples refer to a group of people or
homogeneous societies who have continuously lived as an organized community on
communally bounded and defined territory. These groups of people have actually occupied,
possessed and utilized their territories under claim of ownership since time immemorial. They
share common bonds of language, customs, traditions and other distinctive cultural traits, or,
they, by their resistance to political, social and cultural inroads of colonization, non-indigenous
religions and cultures, became historically differentiated from the Filipino majority. ICCs/IPs
also include descendants of ICCs/IPs who inhabited the country at the time of conquest or
colonization, who retain some or all of their own social, economic, cultural and political
institutions but who may have been displaced from their traditional territories or who may have
resettled outside their ancestral domains.
1. Indigenous Peoples: Their History
Presently, Philippine indigenous peoples inhabit the interiors and mountains of Luzon,
Mindanao, Mindoro, Negros, Samar, Leyte, and the Palawan and Sulu group of islands. They
are composed of 110 tribes and are as follows:
1. In the Cordillera Autonomous Region- Kankaney, Ibaloi, Bontoc, Tinggian or Itneg, Ifugao,
Kalinga, Yapayao, Aeta or Agta or Pugot, and Bago of Ilocos Norte and Pangasinan; Ibanag
of Isabela, Cagayan; Ilongot of Quirino and Nueva Vizcaya; Gaddang of Quirino, Nueva
Vizcaya, Itawis of Cagayan; Ivatan of Batanes, Aeta of Cagayan, Quirino and Isabela.
2. In Region III- Aetas.
3. In Region IV- Dumagats of Aurora, Rizal; Remontado of Aurora, Rizal, Quezon; Alangan or
Mangyan, Batangan, Buid or Buhid, Hanunuo and Iraya of Oriental and Occidental Mindoro;
Tadyawan of Occidental Mindoro; Cuyonon, Palawanon, Tagbanua and Tao't bato of Palawan.
4. In Region V- Aeta of Camarines Norte and Camarines Sur; Aeta-Abiyan, Isarog, and Kabihug
of Camarines Norte; Agta, and Mayon of Camarines Sur; Itom of Albay, Cimaron of Sorsogon;
and the Pullon of Masbate and Camarines Sur.
5. In Region VI- Ati of Negros Occidental, Iloilo and Antique, Capiz; the Magahat of Negros
Occidental; the Corolano and Sulod.
6. In Region VII- Magahat of Negros Oriental and Eskaya of Bohol.
7. In Region IX- the Badjao numbering about 192,000 in Tawi-Tawi, Zamboanga del Sur; the
Kalibugan of Basilan, the Samal, Subanon and Yakat.
8. Region X- Numbering 1.6 million in Region X alone, the IPs are: the Banwaon, Bukidnon,
Matigsalog, Talaanding of Bukidnon; the Camiguin of Camiguin Island; the Higa-unon of
Agusan del Norte, Agusan del Sur, Bukidnon and Misamis Occidental; the Tigwahanon of
Agusan del Sur, Misamis Oriental and and Misamis Occidental, the Manobo of the Agusan
provinces, and the Umayamnon of Agusan and Bukidnon.
9. In Region XI- There are about 1,774,065 IPs in Region XI. They are tribes of the Dibabaon,
Mansaka of Davao del Norte; B'laan, Kalagan, Langilad, T'boli and Talaingod of Davao del Sur;
Mamamanua of Surigao del Sur; Mandaya of the Surigao provinces and Davao Oriental;
Manobo Blit of South Cotabato; the Mangguangon of Davao and South Cotabato; Matigsalog
of Davao del Norte and Del Sur; Tagakaolo, Tasaday and Ubo of South Cotabato; and Bagobo
of Davao del sur and South Cotabato.
10. In Region XII- Ilianen, Tiruray, Maguindanao, Maranao, Tausug, Yakan/Samal, and
Iranon.43
How these indigenous peoples came to live in the Philippines goes back to as early as 25,000
to 30,000 B.C.
Before the time of Western contact, the Philippine archipelago was peopled largely by the
Negritos, Indonesians and Malays.44 The strains from these groups eventually gave rise to
common cultural features which became the dominant influence in ethnic reformulation in the
archipelago. Influences from the Chinese and Indian civilizations in the third or fourth millenium
B.C. augmented these ethnic strains. Chinese economic and socio-cultural influences came by
way of Chinese porcelain, silk and traders. Indian influence found their way into the religious-
cultural aspect of pre-colonial society.45
The ancient Filipinos settled beside bodies of water. Hunting and food gathering became
supplementary activities as reliance on them was reduced by fishing and the cultivation of the
soil.46 From the hinterland, coastal, and riverine communities, our ancestors evolved an
essentially homogeneous culture, a basically common way of life where nature was a primary
factor. Community life throughout the archipelago was influenced by, and responded to,
common ecology. The generally benign tropical climate and the largely uniform flora and fauna
favored similarities, not differences.47 Life was essentially subsistence but not harsh.48
The early Filipinos had a culture that was basically Malayan in structure and form. They had
languages that traced their origin to the Austronesian parent-stock and used them not only as
media of daily communication but also as vehicles for the expression of their literary moods.49
They fashioned concepts and beliefs about the world that they could not see, but which they
sensed to be part of their lives.50 They had their own religion and religious beliefs. They
believed in the immortality of the soul and life after death. Their rituals were based on beliefs
in a ranking deity whom they called Bathalang Maykapal, and a host of other deities, in the
environmental spirits and in soul spirits. The early Filipinos adored the sun, the moon, the
animals and birds, for they seemed to consider the objects of Nature as something to be
respected. They venerated almost any object that was close to their daily life, indicating the
importance of the relationship between man and the object of nature.51
The unit of government was the "barangay," a term that derived its meaning from the Malay
word "balangay," meaning, a boat, which transported them to these shores.52 The barangay
was basically a family-based community and consisted of thirty to one hundred families. Each
barangay was different and ruled by a chieftain called a "dato." It was the chieftain's duty to
rule and govern his subjects and promote their welfare and interests. A chieftain had wide
powers for he exercised all the functions of government. He was the executive, legislator and
judge and was the supreme commander in time of war.53
Laws were either customary or written. Customary laws were handed down orally from
generation to generation and constituted the bulk of the laws of the barangay. They were
preserved in songs and chants and in the memory of the elder persons in the community.54
The written laws were those that the chieftain and his elders promulgated from time to time as
the necessity arose.55 The oldest known written body of laws was the Maragtas Code by Datu
Sumakwel at about 1250 A.D. Other old codes are the Muslim Code of Luwaran and the
Principal Code of Sulu.56 Whether customary or written, the laws dealt with various subjects,
such as inheritance, divorce, usury, loans, partnership, crime and punishment, property rights,
family relations and adoption. Whenever disputes arose, these were decided peacefully
through a court composed by the chieftain as "judge" and the barangay elders as "jury."
Conflicts arising between subjects of different barangays were resolved by arbitration in which
a board composed of elders from neutral barangays acted as arbiters.57
Baranganic society had a distinguishing feature: the absence of private property in land. The
chiefs merely administered the lands in the name of the barangay. The social order was an
extension of the family with chiefs embodying the higher unity of the community. Each
individual, therefore, participated in the community ownership of the soil and the instruments
of production as a member of the barangay.58 This ancient communalism was practiced in
accordance with the concept of mutual sharing of resources so that no individual, regardless
of status, was without sustenance. Ownership of land was non-existent or unimportant and the
right of usufruct was what regulated the development of lands.59 Marine resources and fishing
grounds were likewise free to all. Coastal communities depended for their economic welfare
on the kind of fishing sharing concept similar to those in land communities.60 Recognized
leaders, such as the chieftains and elders, by virtue of their positions of importance, enjoyed
some economic privileges and benefits. But their rights, related to either land and sea, were
subject to their responsibility to protect the communities from danger and to provide them with
the leadership and means of survival.61
Sometime in the 13th century, Islam was introduced to the archipelago in Maguindanao. The
Sultanate of Sulu was established and claimed jurisdiction over territorial areas represented
today by Tawi-tawi, Sulu, Palawan, Basilan and Zamboanga. Four ethnic groups were within
this jurisdiction: Sama, Tausug, Yakan and Subanon.62 The Sultanate of Maguindanao spread
out from Cotabato toward Maranao territory, now Lanao del Norte and Lanao del Sur.63
The Muslim societies evolved an Asiatic form of feudalism where land was still held in common
but was private in use. This is clearly indicated in the Muslim Code of Luwaran. The Code
contains a provision on the lease of cultivated lands. It, however, has no provision for the
acquisition, transfer, cession or sale of land.64
The societies encountered by Magellan and Legaspi therefore were primitive economies where
most production was geared to the use of the producers and to the fulfillment of kinship
obligations. They were not economies geared to exchange and profit.65 Moreover, the family
basis of barangay membership as well as of leadership and governance worked to splinter the
population of the islands into numerous small and separate communities.66
When the Spaniards settled permanently in the Philippines in 1565, they found the Filipinos
living in barangay settlements scattered along water routes and river banks. One of the first
tasks imposed on the missionaries and the encomenderos was to collect all scattered Filipinos
together in a reduccion.67 As early as 1551, the Spanish government assumed an unvarying
solicitous attitude towards the natives.68 The Spaniards regarded it a sacred "duty to
conscience and humanity to civilize these less fortunate people living in the obscurity of
ignorance" and to accord them the "moral and material advantages" of community life and the
"protection and vigilance afforded them by the same laws."69
The Spanish missionaries were ordered to establish pueblos where the church and convent
would be constructed. All the new Christian converts were required to construct their houses
around the church and the unbaptized were invited to do the same.70 With the reduccion, the
Spaniards attempted to "tame" the reluctant Filipinos through Christian indoctrination using the
convento/casa real/plaza complex as focal point. The reduccion, to the Spaniards, was a
"civilizing" device to make the Filipinos law-abiding citizens of the Spanish Crown, and in the
long run, to make them ultimately adopt Hispanic culture and civilization.71
All lands lost by the old barangays in the process of pueblo organization as well as all lands
not assigned to them and the pueblos, were now declared to be crown lands or realengas,
belonging to the Spanish king. It was from the realengas that land grants were made to non-
Filipinos.72
The abrogation of the Filipinos' ancestral rights in land and the introduction of the concept of
public domain were the most immediate fundamental results of Spanish colonial theory and
law.73 The concept that the Spanish king was the owner of everything of value in the Indies or
colonies was imposed on the natives, and the natives were stripped of their ancestral rights to
land.74
Increasing their foothold in the Philippines, the Spanish colonialists, civil and religious,
classified the Filipinos according to their religious practices and beliefs, and divided them into
three types . First were the Indios, the Christianized Filipinos, who generally came from the
lowland populations. Second, were the Moros or the Muslim communities, and third, were the
infieles or the indigenous communities.75
The Indio was a product of the advent of Spanish culture. This class was favored by the
Spaniards and was allowed certain status although below the Spaniards. The Moros and
infieles were regarded as the lowest classes.76
The Moros and infieles resisted Spanish rule and Christianity. The Moros were driven from
Manila and the Visayas to Mindanao; while the infieles, to the hinterlands. The Spaniards did
not pursue them into the deep interior. The upland societies were naturally outside the
immediate concern of Spanish interest, and the cliffs and forests of the hinterlands were difficult
and inaccessible, allowing the infieles, in effect, relative security.77 Thus, the infieles, which
were peripheral to colonial administration, were not only able to preserve their own culture but
also thwarted the Christianization process, separating themselves from the newly evolved
Christian community.78 Their own political, economic and social systems were kept constantly
alive and vibrant.
The pro-Christian or pro-Indio attitude of colonialism brought about a generally mutual feeling
of suspicion, fear, and hostility between the Christians on the one hand and the non-Christians
on the other. Colonialism tended to divide and rule an otherwise culturally and historically
related populace through a colonial system that exploited both the virtues and vices of the
Filipinos.79
President McKinley, in his instructions to the Philippine Commission of April 7, 1900, addressed
the existence of the infieles:
"In dealing with the uncivilized tribes of the Islands, the Commission should adopt the same
course followed by Congress in permitting the tribes of our North American Indians to maintain
their tribal organization and government, and under which many of those tribes are now living
in peace and contentment, surrounded by civilization to which they are unable or unwilling to
conform. Such tribal government should, however, be subjected to wise and firm regulation;
and, without undue or petty interference, constant and active effort should be exercised to
prevent barbarous practices and introduce civilized customs."80
Placed in an alternative of either letting the natives alone or guiding them in the path of
civilization, the American government chose "to adopt the latter measure as one more in accord
with humanity and with the national conscience."81
The Americans classified the Filipinos into two: the Christian Filipinos and the non-Christian
Filipinos. The term "non-Christian" referred not to religious belief, but to a geographical area,
and more directly, "to natives of the Philippine Islands of a low grade of civilization, usually
living in tribal relationship apart from settled communities."82
Like the Spaniards, the Americans pursued a policy of assimilation. In 1903, they passed Act
No. 253 creating the Bureau of Non-Christian Tribes (BNCT). Under the Department of the
Interior, the BNCT's primary task was to conduct ethnographic research among unhispanized
Filipinos, including those in Muslim Mindanao, with a "special view to determining the most
practicable means for bringing about their advancement in civilization and prosperity." The
BNCT was modeled after the bureau dealing with American Indians. The agency took a keen
anthropological interest in Philippine cultural minorities and produced a wealth of valuable
materials about them.83
The 1935 Constitution did not carry any policy on the non-Christian Filipinos. The raging issue
then was the conservation of the national patrimony for the Filipinos.
In 1957, the Philippine Congress passed R.A. No. 1888, an "Act to effectuate in a more rapid
and complete manner the economic, social, moral and political advancement of the non-
Christian Filipinos or national cultural minorities and to render real, complete, and permanent
the integration of all said national cultural minorities into the body politic, creating the
Commission on National Integration charged with said functions." The law called for a policy of
integration of indigenous peoples into the Philippine mainstream and for this purpose created
the Commission on National Integration (CNI).84 The CNI was given, more or less, the same
task as the BNCT during the American regime. The post-independence policy of integration
was like the colonial policy of assimilation understood in the context of a guardian-ward
relationship.85
The policy of assimilation and integration did not yield the desired result. Like the Spaniards
and Americans, government attempts at integration met with fierce resistance. Since World
War II, a tidal wave of Christian settlers from the lowlands of Luzon and the Visayas swamped
the highlands and wide open spaces in Mindanao.86 Knowledge by the settlers of the Public
Land Acts and the Torrens system resulted in the titling of several ancestral lands in the settlers'
names. With government initiative and participation, this titling displaced several indigenous
peoples from their lands. Worse, these peoples were also displaced by projects undertaken by
the national government in the name of national development.87
It was in the 1973 Constitution that the State adopted the following provision:
"The State shall consider the customs, traditions, beliefs, and interests of national cultural
communities in the formulation and implementation of State policies."88
For the first time in Philippine history, the "non-Christian tribes" or the "cultural minorities" were
addressed by the highest law of the Republic, and they were referred to as "cultural
communities." More importantly this time, their "uncivilized" culture was given some recognition
and their "customs, traditions, beliefs and interests" were to be considered by the State in the
formulation and implementation of State policies. President Marcos abolished the CNI and
transferred its functions to the Presidential Adviser on National Minorities (PANAMIN). The
PANAMIN was tasked to integrate the ethnic groups that sought full integration into the larger
community, and at the same time "protect the rights of those who wish to preserve their original
lifeways beside the larger community."89 In short, while still adopting the integration policy, the
decree recognized the right of tribal Filipinos to preserve their way of life.90
In 1974, President Marcos promulgated P.D. No. 410, otherwise known as the Ancestral Lands
Decree. The decree provided for the issuance of land occupancy certificates to members of
the national cultural communities who were given up to 1984 to register their claims.91 In 1979,
the Commission on the Settlement of Land Problems was created under E.O. No. 561 which
provided a mechanism for the expeditious resolution of land problems involving small settlers,
landowners, and tribal Filipinos.92
Despite the promulgation of these laws, from 1974 to the early 1980's, some 100,000 Kalingas
and Bontoks of the Cordillera region were displaced by the Chico River dam project of the
National Power Corporation (NPC). The Manobos of Bukidnon saw their land bulldozed by the
Bukidnon Sugar Industries Company (BUSCO). In Agusan del Sur, the National Development
Company was authorized by law in 1979 to take approximately 40,550 hectares of land that
later became the NDC-Guthrie plantation in Agusan del Sur. Most of the land was possessed
by the Agusan natives.93 Timber concessions, water projects, plantations, mining, and cattle
ranching and other projects of the national government led not only to the eviction of the
indigenous peoples from their land but also to the reduction and destruction of their natural
environment.94
The Aquino government signified a total shift from the policy of integration to one of
preservation. Invoking her powers under the Freedom Constitution, President Aquino created
the Office of Muslim Affairs, Office for Northern Cultural Communities and the Office for
Southern Cultural Communities all under the Office of the President.95
The 1987 Constitution carries at least six (6) provisions which insure the right of tribal Filipinos
to preserve their way of life.96 This Constitution goes further than the 1973 Constitution by
expressly guaranteeing the rights of tribal Filipinos to their ancestral domains and ancestral
lands. By recognizing their right to their ancestral lands and domains, the State has effectively
upheld their right to live in a culture distinctly their own.
2. Their Concept of Land
Indigenous peoples share distinctive traits that set them apart from the Filipino mainstream.
They are non-Christians. They live in less accessible, marginal, mostly upland areas. They
have a system of self-government not dependent upon the laws of the central administration
of the Republic of the Philippines. They follow ways of life and customs that are perceived as
different from those of the rest of the population.97 The kind of response the indigenous
peoples chose to deal with colonial threat worked well to their advantage by making it difficult
for Western concepts and religion to erode their customs and traditions. The "infieles societies"
which had become peripheral to colonial administration, represented, from a cultural
perspective, a much older base of archipelagic culture. The political systems were still
structured on the patriarchal and kinship oriented arrangement of power and authority. The
economic activities were governed by the concepts of an ancient communalism and mutual
help. The social structure which emphasized division of labor and distinction of functions, not
status, was maintained. The cultural styles and forms of life portraying the varieties of social
courtesies and ecological adjustments were kept constantly vibrant.98
Land is the central element of the indigenous peoples' existence. There is no traditional concept
of permanent, individual, land ownership. Among the Igorots, ownership of land more
accurately applies to the tribal right to use the land or to territorial control. The people are the
secondary owners or stewards of the land and that if a member of the tribe ceases to work, he
loses his claim of ownership, and the land reverts to the beings of the spirit world who are its
true and primary owners. Under the concept of "trusteeship," the right to possess the land does
not only belong to the present generation but the future ones as well.99
Customary law on land rests on the traditional belief that no one owns the land except the gods
and spirits, and that those who work the land are its mere stewards.100 Customary law has a
strong preference for communal ownership, which could either be ownership by a group of
individuals or families who are related by blood or by marriage,101 or ownership by residents
of the same locality who may not be related by blood or marriage. The system of communal
ownership under customary laws draws its meaning from the subsistence and highly
collectivized mode of economic production. The Kalingas, for instance, who are engaged in
team occupation like hunting, foraging for forest products, and swidden farming found it natural
that forest areas, swidden farms, orchards, pasture and burial grounds should be communally-
owned.102 For the Kalingas, everybody has a common right to a common economic base.
Thus, as a rule, rights and obligations to the land are shared in common.
Although highly bent on communal ownership, customary law on land also sanctions individual
ownership. The residential lots and terrace rice farms are governed by a limited system of
individual ownership. It is limited because while the individual owner has the right to use and
dispose of the property, he does not possess all the rights of an exclusive and full owner as
defined under our Civil Code.103 Under Kalinga customary law, the alienation of individually-
owned land is strongly discouraged except in marriage and succession and except to meet
sudden financial needs due to sickness, death in the family, or loss of crops.104 Moreover,
and to be alienated should first be offered to a clan-member before any village-member can
purchase it, and in no case may land be sold to a non-member of the ili.105
Land titles do not exist in the indigenous peoples' economic and social system. The concept of
individual land ownership under the civil law is alien to them. Inherently colonial in origin, our
national land laws and governmental policies frown upon indigenous claims to ancestral lands.
Communal ownership is looked upon as inferior, if not inexistent.106
III. THE IPRA IS A NOVEL PIECE OF LEGISLATION.
A. The Legislative History of the IPRA

It was to address the centuries-old neglect of the Philippine indigenous peoples that the Tenth
Congress of the Philippines, by their joint efforts, passed and approved R.A. No. 8371, the
Indigenous Peoples Rights Act (IPRA) of 1997. The law was a consolidation of two Bills- Senate
Bill No. 1728 and House Bill No. 9125.
Principally sponsored by Senator Juan M. Flavier,107 Senate Bill No. 1728 was a consolidation
of four proposed measures referred to the Committees on Cultural Communities, Environment
and Natural Resources, Ways and Means, as well as Finance. It adopted almost en toto the
comprehensive version of Senate Bill Nos. 1476 and 1486 which was a result of six regional
consultations and one national consultation with indigenous peoples nationwide.108 At the
Second Regular Session of the Tenth Congress, Senator Flavier, in his sponsorship speech,
gave a background on the situation of indigenous peoples in the Philippines, to wit:
"The Indigenous Cultural Communities, including the Bangsa Moro, have long suffered from
the dominance and neglect of government controlled by the majority. Massive migration of their
Christian brothers to their homeland shrunk their territory and many of the tribal Filipinos were
pushed to the hinterlands. Resisting the intrusion, dispossessed of their ancestral land and with
the massive exploitation of their natural resources by the elite among the migrant population,
they became marginalized. And the government has been an indispensable party to this
insidious conspiracy against the Indigenous Cultural Communities (ICCs). It organized and
supported the resettlement of people to their ancestral land, which was massive during the
Commonwealth and early years of the Philippine Republic. Pursuant to the Regalian Doctrine
first introduced to our system by Spain through the Royal Decree of 13 February 1894 or the
Maura Law, the government passed laws to legitimize the wholesale landgrabbing and provide
for easy titling or grant of lands to migrant homesteaders within the traditional areas of the
ICCs."109
Senator Flavier further declared:
"The IPs are the offsprings and heirs of the peoples who have first inhabited and cared for the
land long before any central government was established. Their ancestors had territories over
which they ruled themselves and related with other tribes. These territories- the land- include
people, their dwelling, the mountains, the water, the air, plants, forest and the animals. This is
their environment in its totality. Their existence as indigenous peoples is manifested in their
own lives through political, economic, socio-cultural and spiritual practices. The IPs culture is
the living and irrefutable proof to this.
Their survival depends on securing or acquiring land rights; asserting their rights to it; and
depending on it. Otherwise, IPs shall cease to exist as distinct peoples."110
To recognize the rights of the indigenous peoples effectively, Senator Flavier proposed a bill
based on two postulates: (1) the concept of native title; and (2) the principle of parens patriae.
According to Senator Flavier, "[w]hile our legal tradition subscribes to the Regalian Doctrine
reinstated in Section 2, Article XII of the 1987 Constitution," our "decisional laws" and
jurisprudence passed by the State have "made exception to the doctrine." This exception was
first laid down in the case of Cariño v. Insular Government where:
"x x x the court has recognized long occupancy of land by an indigenous member of the cultural
communities as one of private ownership, which, in legal concept, is termed "native title." This
ruling has not been overturned. In fact, it was affirmed in subsequent cases."111
Following Cariño, the State passed Act No. 926, Act No. 2874, C.A. No. 141, P.D. 705, P.D.
410, P.D. 1529, R.A. 6734 (the Organic Act for the Autonomous Region of Muslim Mindanao).
These laws, explicitly or implicitly, and liberally or restrictively, recognized "native title" or
"private right" and the existence of ancestral lands and domains. Despite the passage of these
laws, however, Senator Flavier continued:
"x x x the executive department of government since the American occupation has not
implemented the policy. In fact, it was more honored in its breach than in its observance, its
wanton disregard shown during the period unto the Commonwealth and the early years of the
Philippine Republic when government organized and supported massive resettlement of the
people to the land of the ICCs."
Senate Bill No. 1728 seeks to genuinely recognize the IPs right to own and possess their
ancestral land. The bill was prepared also under the principle of parens patriae inherent in the
supreme power of the State and deeply embedded in Philippine legal tradition. This principle
mandates that persons suffering from serious disadvantage or handicap, which places them in
a position of actual inequality in their relation or transaction with others, are entitled to the
protection of the State.
Senate Bill No. 1728 was passed on Third Reading by twenty-one (21) Senators voting in favor
and none against, with no abstention.112
House Bill No. 9125 was sponsored by Rep. Zapata, Chairman of the Committee on Cultural
Communities. It was originally authored and subsequently presented and defended on the floor
by Rep. Gregorio Andolana of North Cotabato.113
Rep. Andolana's sponsorhip speech reads as follows:
"This Representation, as early as in the 8th Congress, filed a bill of similar implications that
would promote, recognize the rights of indigenous cultural communities within the framework
of national unity and development.
Apart from this, Mr. Speaker, is our obligation, the government's obligation to assure and
ascertain that these rights shall be well-preserved and the cultural traditions as well as the
indigenous laws that remained long before this Republic was established shall be preserved
and promoted. There is a need, Mr. Speaker, to look into these matters seriously and early
approval of the substitute bill shall bring into reality the aspirations, the hope and the dreams
of more than 12 million Filipinos that they be considered in the mainstream of the Philippine
society as we fashion for the year 2000." 114

Rep. Andolana stressed that H.B. No. 9125 is based on the policy of preservation as mandated
in the Constitution. He also emphasized that the rights of IPs to their land was enunciated in
Cariño v. Insular Government which recognized the fact that they had vested rights prior to the
establishment of the Spanish and American regimes.115
After exhaustive interpellation, House Bill No. 9125, and its corresponding amendments, was
approved on Second Reading with no objections.
IV. THE PROVISIONS OF THE IPRA DO NOT CONTRAVENE THE CONSTITUTION.
A. Ancestral Domains and Ancestral Lands are the Private Property of Indigenous Peoples and
Do Not Constitute Part of the Land of the Public Domain.
The IPRA grants to ICCs/IPs a distinct kind of ownership over ancestral domains and ancestral
lands. Ancestral lands are not the same as ancestral domains. These are defined in Section 3
[a] and [b] of the Indigenous Peoples Right Act, viz:
"Sec. 3 a) Ancestral Domains. - Subject to Section 56 hereof, refer to all areas generally
belonging to ICCs/IPs comprising lands, inland waters, coastal areas, and natural resources
therein, held under a claim of ownership, occupied or possessed by ICCs/IPs by themselves
or through their ancestors, communally or individually since time immemorial, continuously to
the present except when interrupted by war, force majeure or displacement by force, deceit,
stealth or as a consequence of government projects or any other voluntary dealings entered
into by government and private individuals/corporations, and which are necessary to ensure
their economic, social and cultural welfare. It shall include ancestral lands, forests, pasture,
residential, agricultural, and other lands individually owned whether alienable and disposable
or otherwise, hunting grounds, burial grounds, worship areas, bodies of water, mineral and
other natural resources, and lands which may no longer be exclusively occupied by ICCs/IPs
but from which they traditionally had access to for their subsistence and traditional activities,
particularly the home ranges of ICCs/IPs who are still nomadic and/or shifting cultivators;
b) Ancestral Lands.- Subject to Section 56 hereof, refers to land occupied, possessed and
utilized by individuals, families and clans who are members of the ICCs/IPs since time
immemorial, by themselves or through their predecessors-in-interest, under claims of individual
or traditional group ownership, continuously, to the present except when interrupted by war,
force majeure or displacement by force, deceit, stealth, or as a consequence of government
projects and other voluntary dealings entered into by government and private
individuals/corporations, including, but not limited to, residential lots, rice terraces or paddies,
private forests, swidden farms and tree lots."
Ancestral domains are all areas belonging to ICCs/IPs held under a claim of ownership,
occupied or possessed by ICCs/IPs by themselves or through their ancestors, communally or
individually since time immemorial, continuously until the present, except when interrupted by
war, force majeure or displacement by force, deceit, stealth or as a consequence of
government projects or any other voluntary dealings with government and/or private individuals
or corporations. Ancestral domains comprise lands, inland waters, coastal areas, and natural
resources therein and includes ancestral lands, forests, pasture, residential, agricultural, and
other lands individually owned whether alienable or not, hunting grounds, burial grounds,
worship areas, bodies of water, mineral and other natural resources. They also include lands
which may no longer be exclusively occupied by ICCs/IPs but from which they traditionally had
access to for their subsistence and traditional activities, particularly the home ranges of
ICCs/IPs who are still nomadic and/or shifting cultivators.116
Ancestral lands are lands held by the ICCs/IPs under the same conditions as ancestral domains
except that these are limited to lands and that these lands are not merely occupied and
possessed but are also utilized by the ICCs/IPs under claims of individual or traditional group
ownership. These lands include but are not limited to residential lots, rice terraces or paddies,
private forests, swidden farms and tree lots.117
The procedures for claiming ancestral domains and lands are similar to the procedures
embodied in Department Administrative Order (DAO) No. 2, series of 1993, signed by then
Secretary of the Department of Environment and Natural Resources (DENR) Angel Alcala.118
DAO No. 2 allowed the delineation of ancestral domains by special task forces and ensured
the issuance of Certificates of Ancestral Land Claims (CALC's) and Certificates of Ancestral
Domain Claims (CADC's) to IPs.
The identification and delineation of these ancestral domains and lands is a power conferred
by the IPRA on the National Commission on Indigenous Peoples (NCIP).119 The guiding
principle in identification and delineation is self-delineation.120 This means that the ICCs/IPs
have a decisive role in determining the boundaries of their domains and in all the activities
pertinent thereto.121
The procedure for the delineation and recognition of ancestral domains is set forth in Sections
51 and 52 of the IPRA. The identification, delineation and certification of ancestral lands is in
Section 53 of said law.
Upon due application and compliance with the procedure provided under the law and upon
finding by the NCIP that the application is meritorious, the NCIP shall issue a Certificate of
Ancestral Domain Title (CADT) in the name of the community concerned.122 The allocation of
lands within the ancestral domain to any individual or indigenous corporate (family or clan)
claimants is left to the ICCs/IPs concerned to decide in accordance with customs and
traditions.123 With respect to ancestral lands outside the ancestral domain, the NCIP issues a
Certificate of Ancestral Land Title (CALT).124
CADT's and CALT's issued under the IPRA shall be registered by the NCIP before the Register
of Deeds in the place where the property is situated.125
(1) Right to Ancestral Domains and Ancestral Lands: How Acquired
The rights of the ICCs/IPs to their ancestral domains and ancestral lands may be acquired in
two modes: (1) by native title over both ancestral lands and domains; or (2) by torrens title
under the Public Land Act and the Land Registration Act with respect to ancestral lands only.
(2) The Concept of Native Title
Native title is defined as:
"Sec. 3 [l]. Native Title- refers to pre-conquest rights to lands and domains which, as far back
as memory reaches, have been held under a claim of private ownership by ICCs/IPs, have
never been public lands and are thus indisputably presumed to have been held that way since
before the Spanish Conquest."126
Native title refers to ICCs/IPs' preconquest rights to lands and domains held under a claim of
private ownership as far back as memory reaches. These lands are deemed never to have
been public lands and are indisputably presumed to have been held that way since before the
Spanish Conquest. The rights of ICCs/IPs to their ancestral domains (which also include
ancestral lands) by virtue of native title shall be recognized and respected.127 Formal
recognition, when solicited by ICCs/IPs concerned, shall be embodied in a Certificate of
Ancestral Domain Title (CADT), which shall recognize the title of the concerned ICCs/IPs over
the territories identified and delineated.128
Like a torrens title, a CADT is evidence of private ownership of land by native title. Native title,
however, is a right of private ownership peculiarly granted to ICCs/IPs over their ancestral lands
and domains. The IPRA categorically declares ancestral lands and domains held by native title
as never to have been public land. Domains and lands held under native title are, therefore,
indisputably presumed to have never been public lands and are private.
(a) Cariño v. Insular Government129
The concept of native title in the IPRA was taken from the 1909 case of Cariño v. Insular
Government.130 Cariño firmly established a concept of private land title that existed
irrespective of any royal grant from the State.
In 1903, Don Mateo Cariño, an Ibaloi, sought to register with the land registration court 146
hectares of land in Baguio Municipality, Benguet Province. He claimed that this land had been
possessed and occupied by his ancestors since time immemorial; that his grandfather built
fences around the property for the holding of cattle and that his father cultivated some parts of
the land. Cariño inherited the land in accordance with Igorot custom. He tried to have the land
adjusted under the Spanish land laws, but no document issued from the Spanish Crown.131
In 1901, Cariño obtained a possessory title to the land under the Spanish Mortgage Law.132
The North American colonial government, however, ignored his possessory title and built a
public road on the land prompting him to seek a Torrens title to his property in the land
registration court. While his petition was pending, a U.S. military reservation133 was
proclaimed over his land and, shortly thereafter, a military detachment was detailed on the
property with orders to keep cattle and trespassers, including Cariño, off the land.134
In 1904, the land registration court granted Cariño's application for absolute ownership to the
land. Both the Government of the Philippine Islands and the U.S. Government appealed to the
C.F.I. of Benguet which reversed the land registration court and dismissed Cariño's application.
The Philippine Supreme Court135 affirmed the C.F.I. by applying the Valenton ruling. Cariño
took the case to the U.S. Supreme Court.136 On one hand, the Philippine government invoked
the Regalian doctrine and contended that Cariño failed to comply with the provisions of the
Royal Decree of June 25, 1880, which required registration of land claims within a limited period
of time. Cariño, on the other, asserted that he was the absolute owner of the land jure gentium,
and that the land never formed part of the public domain.
In a unanimous decision written by Justice Oliver Wendell Holmes, the U.S. Supreme Court
held:
"It is true that Spain, in its earlier decrees, embodied the universal feudal theory that all lands
were held from the Crown, and perhaps the general attitude of conquering nations toward
people not recognized as entitled to the treatment accorded to those in the same zone of
civilization with themselves. It is true, also, that in legal theory, sovereignty is absolute, and
that, as against foreign nations, the United States may assert, as Spain asserted, absolute
power. But it does not follow that, as against the inhabitants of the Philippines, the United States
asserts that Spain had such power. When theory is left on one side, sovereignty is a question
of strength, and may vary in degree. How far a new sovereign shall insist upon the theoretical
relation of the subjects to the head in the past, and how far it shall recognize actual facts, are
matters for it to decide."137
The U.S. Supreme Court noted that it need not accept Spanish doctrines. The choice was with
the new colonizer. Ultimately, the matter had to be decided under U.S. law.
The Cariño decision largely rested on the North American constitutionalist's concept of "due
process" as well as the pronounced policy "to do justice to the natives."138 It was based on
the strong mandate extended to the Islands via the Philippine Bill of 1902 that "No law shall be
enacted in said islands which shall deprive any person of life, liberty, or property without due
process of law, or deny to any person therein the equal protection of the laws." The court
declared:
"The acquisition of the Philippines was not like the settlement of the white race in the United
States. Whatever consideration may have been shown to the North American Indians, the
dominant purpose of the whites in America was to occupy land. It is obvious that, however
stated, the reason for our taking over the Philippines was different. No one, we suppose, would
deny that, so far as consistent with paramount necessities, our first object in the internal
administration of the islands is to do justice to the natives, not to exploit their country for private
gain. By the Organic Act of July 1, 1902, chapter 1369, section 12 (32 Statutes at Large, 691),
all the property and rights acquired there by the United States are to be administered 'for the
benefit of the inhabitants thereof.' It is reasonable to suppose that the attitude thus assumed
by the United States with regard to what was unquestionably its own is also its attitude in
deciding what it will claim for its own. The same statute made a bill of rights, embodying the
safeguards of the Constitution, and, like the Constitution, extends those safeguards to all. It
provides that 'no law shall be enacted in said islands which shall deprive any person of life,
liberty, or property without due process of law, or deny to any person therein the equal
protection of the laws.' In the light of the declaration that we have quoted from section 12, it is
hard to believe that the United States was ready to declare in the next breath that "any person"
did not embrace the inhabitants of Benguet, or that it meant by "property" only that which had
become such by ceremonies of which presumably a large part of the inhabitants never had
heard, and that it proposed to treat as public land what they, by native custom and by long
association,- of the profoundest factors in human thought,- regarded as their own."139
The Court went further:
"Every presumption is and ought to be against the government in a case like the present. It
might, perhaps, be proper and sufficient to say that when, as far back as testimony or memory
goes, the land has been held by individuals under a claim of private ownership, it will be
presumed to have been held in the same way from before the Spanish conquest, and never to
have been public land. Certainly in a case like this, if there is doubt or ambiguity in the Spanish
law, we ought to give the applicant the benefit of the doubt."140
The court thus laid down the presumption of a certain title held (1) as far back as testimony or
memory went, and (2) under a claim of private ownership. Land held by this title is presumed
to "never have been public land."
Against this presumption, the U.S. Supreme Court analyzed the Spanish decrees upheld in the
1904 decision of Valenton v. Murciano. The U.S. Supreme Court found no proof that the
Spanish decrees did not honor native title. On the contrary, the decrees discussed in Valenton
appeared to recognize that the natives owned some land, irrespective of any royal grant. The
Regalian doctrine declared in the preamble of the Recopilacion was all "theory and discourse"
and it was observed that titles were admitted to exist beyond the powers of the Crown, viz:
"If the applicant's case is to be tried by the law of Spain, we do not discover such clear proof
that it was bad by that law as to satisfy us that he does not own the land. To begin with, the
older decrees and laws cited by the counsel for the plaintiff in error seem to indicate pretty
clearly that the natives were recognized as owning some lands, irrespective of any royal grant.
In other words, Spain did not assume to convert all the native inhabitants of the Philippines into
trespassers or even into tenants at will. For instance, Book 4, title 12, Law 14 of the the
Recopilacion de Leyes de las Indias, cited for a contrary conclusion in Valenton v. Murciano, 3
Philippine 537, while it commands viceroys and others, when it seems proper, to call for the
exhibition of grants, directs them to confirm those who hold by good grants or justa
prescripcion. It is true that it begins by the characteristic assertion of feudal overlordship and
the origin of all titles in the King or his predecessors. That was theory and discourse. The fact
was that titles were admitted to exist that owed nothing to the powers of Spain beyond this
recognition in their books." (Emphasis supplied).141
The court further stated that the Spanish "adjustment" proceedings never held sway over
unconquered territories. The wording of the Spanish laws were not framed in a manner as to
convey to the natives that failure to register what to them has always been their own would
mean loss of such land. The registration requirement was "not to confer title, but simply to
establish it;" it was "not calculated to convey to the mind of an Igorot chief the notion that
ancient family possessions were in danger, if he had read every word of it."
By recognizing this kind of title, the court clearly repudiated the doctrine of Valenton. It was
frank enough, however, to admit the possibility that the applicant might have been deprived of
his land under Spanish law because of the inherent ambiguity of the decrees and
concomitantly, the various interpretations which may be given them. But precisely because of
the ambiguity and of the strong "due process mandate" of the Constitution, the court validated
this kind of title.142 This title was sufficient, even without government administrative action,
and entitled the holder to a Torrens certificate. Justice Holmes explained:
"It will be perceived that the rights of the applicant under the Spanish law present a problem
not without difficulties for courts of a legal tradition. We have deemed it proper on that account
to notice the possible effect of the change of sovereignty and the act of Congress establishing
the fundamental principles now to be observed. Upon a consideration of the whole case we
are of the opinion that law and justice require that the applicant should be granted what he
seeks, and should not be deprived of what, by the practice and belief of those among whom
he lived, was his property, through a refined interpretation of an almost forgotten law of
Spain."143
Thus, the court ruled in favor of Cariño and ordered the registration of the 148 hectares in
Baguio Municipality in his name.144
Examining Cariño closer, the U.S. Supreme Court did not categorically refer to the title it upheld
as "native title." It simply said:
"The Province of Benguet was inhabited by a tribe that the Solicitor-General, in his argument,
characterized as a savage tribe that never was brought under the civil or military government
of the Spanish Crown. It seems probable, if not certain, that the Spanish officials would not
have granted to anyone in that province the registration to which formerly the plaintiff was
entitled by the Spanish Laws, and which would have made his title beyond question good.
Whatever may have been the technical position of Spain it does not follow that, in the view of
the United States, he had lost all rights and was a mere trespasser when the present
government seized his land. The argument to that effect seems to amount to a denial of native
titles through an important part of the Island of Luzon, at least, for the want of ceremonies which
the Spaniards would not have permitted and had not the power to enforce."145
This is the only instance when Justice Holmes used the term "native title" in the entire length
of the Cariño decision. It is observed that the widespread use of the term "native title" may be
traced to Professor Owen James Lynch, Jr., a Visiting Professor at the University of the
Philippines College of Law from the Yale University Law School. In 1982, Prof. Lynch published
an article in the Philippine Law Journal entitled Native Title, Private Right and Tribal Land
Law.146 This article was made after Professor Lynch visited over thirty tribal communities
throughout the country and studied the origin and development of Philippine land laws.147 He
discussed Cariño extensively and used the term "native title" to refer to Cariño's title as
discussed and upheld by the U.S. Supreme Court in said case.
(b) Indian Title
In a footnote in the same article, Professor Lynch stated that the concept of "native title" as
defined by Justice Holmes in Cariño "is conceptually similar to "aboriginal title" of the American
Indians.148 This is not surprising, according to Prof. Lynch, considering that during the
American regime, government policy towards ICCs/IPs was consistently made in reference to
native Americans.149 This was clearly demonstrated in the case of Rubi v. Provincial Board of
Mindoro.150
In Rubi, the Provincial Board of Mindoro adopted a Resolution authorizing the provincial
governor to remove the Mangyans from their domains and place them in a permanent
reservation in Sitio Tigbao, Lake Naujan. Any Mangyan who refused to comply was to be
imprisoned. Rubi and some Mangyans, including one who was imprisoned for trying to escape
from the reservation, filed for habeas corpus claiming deprivation of liberty under the Board
Resolution. This Court denied the petition on the ground of police power. It upheld government
policy promoting the idea that a permanent settlement was the only successful method for
educating the Mangyans, introducing civilized customs, improving their health and morals, and
protecting the public forests in which they roamed.151 Speaking through Justice Malcolm, the
court said:
"Reference was made in the President's instructions to the Commission to the policy adopted
by the United States for the Indian Tribes. The methods followed by the Government of the
Philippine Islands in its dealings with the so-called non-Christian people is said, on argument,
to be practically identical with that followed by the United States Government in its dealings
with the Indian tribes. Valuable lessons, it is insisted, can be derived by an investigation of the
American-Indian policy.
From the beginning of the United States, and even before, the Indians have been treated as
"in a state of pupilage." The recognized relation between the Government of the United States
and the Indians may be described as that of guardian and ward. It is for the Congress to
determine when and how the guardianship shall be terminated. The Indians are always subject
to the plenary authority of the United States.152
x x x.
As to the second point, the facts in the Standing Bear case and the Rubi case are not exactly
identical. But even admitting similarity of facts, yet it is known to all that Indian reservations do
exist in the United States, that Indians have been taken from different parts of the country and
placed on these reservations, without any previous consultation as to their own wishes, and
that, when once so located, they have been made to remain on the reservation for their own
good and for the general good of the country. If any lesson can be drawn from the Indian policy
of the United States, it is that the determination of this policy is for the legislative and executive
branches of the government and that when once so decided upon, the courts should not
interfere to upset a carefully planned governmental system. Perhaps, just as many forceful
reasons exist for the segregation of the Manguianes in Mindoro as existed for the segregation
of the different Indian tribes in the United States."153
Rubi applied the concept of Indian land grants or reservations in the Philippines. An Indian
reservation is a part of the public domain set apart by proper authority for the use and
occupation of a tribe or tribes of Indians.154 It may be set apart by an act of Congress, by
treaty, or by executive order, but it cannot be established by custom and prescription.155
Indian title to land, however, is not limited to land grants or reservations. It also covers the
"aboriginal right of possession or occupancy."156 The aboriginal right of possession depends
on the actual occupancy of the lands in question by the tribe or nation as their ancestral home,
in the sense that such lands constitute definable territory occupied exclusively by the particular
tribe or nation.157 It is a right which exists apart from any treaty, statute, or other governmental
action, although in numerous instances treaties have been negotiated with Indian tribes,
recognizing their aboriginal possession and delimiting their occupancy rights or settling and
adjusting their boundaries.158
American jurisprudence recognizes the Indians' or native Americans' rights to land they have
held and occupied before the "discovery" of the Americas by the Europeans. The earliest
definitive statement by the U.S. Supreme Court on the nature of aboriginal title was made in
1823 in Johnson & Graham's Lessee v. M'Intosh.159
In Johnson, the plaintiffs claimed the land in question under two (2) grants made by the chiefs
of two (2) Indian tribes. The U.S. Supreme Court refused to recognize this conveyance, the
plaintiffs being private persons. The only conveyance that was recognized was that made by
the Indians to the government of the European discoverer. Speaking for the court, Chief Justice
Marshall pointed out that the potentates of the old world believed that they had made ample
compensation to the inhabitants of the new world by bestowing civilization and Christianity
upon them; but in addition, said the court, they found it necessary, in order to avoid conflicting
settlements and consequent war, to establish the principle that discovery gives title to the
government by whose subjects, or by whose authority, the discovery was made, against all
other European governments, which title might be consummated by possession.160 The
exclusion of all other Europeans gave to the nation making the discovery the sole right of
acquiring the soil from the natives and establishing settlements upon it. As regards the natives,
the court further stated that:
"Those relations which were to exist between the discoverer and the natives were to be
regulated by themselves. The rights thus acquired being exclusive, no other power could
interpose between them.
In the establishment of these relations, the rights of the original inhabitants were, in no instance,
entirely disregarded; but were necessarily, to a considerable extent, impaired. They were
admitted to be the rightful occupants of the soil, with a legal as well as just claim to retain
possession of it, and to use it according to their own discretion; but their rights to complete
sovereignty, as independent nations, were necessarily diminished, and their power to dispose
of the soil at their own will, to whomsoever they pleased, was denied by the fundamental
principle that discovery gave exclusive title to those who made it.
While the different nations of Europe respected the right of the natives as occupants, they
asserted the ultimate dominion to be in themselves; and claimed and exercised, as a
consequence of this ultimate dominion, a power to grant the soil, while yet in possession of the
natives. These grants have been understood by all to convey a title to the grantees, subject
only to the Indian right of occupancy."161
Thus, the discoverer of new territory was deemed to have obtained the exclusive right to
acquire Indian land and extinguish Indian titles. Only to the discoverer- whether to England,
France, Spain or Holland- did this right belong and not to any other nation or private person.
The mere acquisition of the right nonetheless did not extinguish Indian claims to land. Rather,
until the discoverer, by purchase or conquest, exercised its right, the concerned Indians were
recognized as the "rightful occupants of the soil, with a legal as well as just claim to retain
possession of it." Grants made by the discoverer to her subjects of lands occupied by the
Indians were held to convey a title to the grantees, subject only to the Indian right of occupancy.
Once the discoverer purchased the land from the Indians or conquered them, it was only then
that the discoverer gained an absolute title unrestricted by Indian rights.
The court concluded, in essence, that a grant of Indian lands by Indians could not convey a
title paramount to the title of the United States itself to other parties, saying:
"It has never been contended that the Indian title amounted to nothing. Their right of possession
has never been questioned. The claim of government extends to the complete ultimate title,
charged with this right of possession, and to the exclusive power of acquiring that right."162
It has been said that the history of America, from its discovery to the present day, proves the
universal recognition of this principle.163
The Johnson doctrine was a compromise. It protected Indian rights and their native lands
without having to invalidate conveyances made by the government to many U.S. citizens.164
Johnson was reiterated in the case of Worcester v. Georgia.165 In this case, the State of
Georgia enacted a law requiring all white persons residing within the Cherokee nation to obtain
a license or permit from the Governor of Georgia; and any violation of the law was deemed a
high misdemeanor. The plaintiffs, who were white missionaries, did not obtain said license and
were thus charged with a violation of the Act.
The U.S. Supreme Court declared the Act as unconstitutional for interfering with the treaties
established between the United States and the Cherokee nation as well as the Acts of
Congress regulating intercourse with them. It characterized the relationship between the United
States government and the Indians as:
"The Indian nations were, from their situation, necessarily dependent on some foreign
potentate for the supply of their essential wants, and for their protection from lawless and
injurious intrusions into their country. That power was naturally termed their protector. They
had been arranged under the protection of Great Britain; but the extinguishment of the British
power in their neighborhood, and the establishment of that of the United States in its place, led
naturally to the declaration, on the part of the Cherokees, that they were under the protection
of the United States, and of no other power. They assumed the relation with the United States
which had before subsisted with Great Britain.
This relation was that of a nation claiming and receiving the protection of one more powerful,
not that of individuals abandoning their national character, and submitting as subjects to the
laws of a master."166
It was the policy of the U.S. government to treat the Indians as nations with distinct territorial
boundaries and recognize their right of occupancy over all the lands within their domains. Thus:
"From the commencement of our government Congress has passed acts to regulate trade and
intercourse with the Indians; which treat them as nations, respect their rights, and manifest a
firm purpose to afford that protection which treaties stipulate. All these acts, and especially that
of 1802, which is still in force, manifestly consider the several Indian nations as distinct political
communities, having territorial boundaries, within which their authority is exclusive, and having
a right to all the lands within those boundaries, which is not only acknowledged, but guaranteed
by the United States.
x x x.
"The Indian nations had always been considered as distinct, independent political communities,
retaining their original natural rights, as the undisputed possessors of the soil from time
immemorial, with the single exception of that imposed by irresistible power, which excluded
them from intercourse with any other European potentate than the first discoverer of the coast
of the particular region claimed: and this was a restriction which those European potentates
imposed on themselves, as well as on the Indians. The very term "nation," so generally applied
to them, means "a people distinct from others." x x x.167
The Cherokee nation, then, is a distinct community, occupying its own territory, with boundaries
accurately described, in which the laws of Georgia can have no force, and which the citizens
of Georgia have no right to enter but with the assent of the Cherokees themselves or in
conformity with treaties and with the acts of Congress. The whole intercourse between the
United States and this nation is, by our Constitution and laws, vested in the government of the
United States."168
The discovery of the American continent gave title to the government of the discoverer as
against all other European governments. Designated as the naked fee,169 this title was to be
consummated by possession and was subject to the Indian title of occupancy. The discoverer
acknowledged the Indians' legal and just claim to retain possession of the land, the Indians
being the original inhabitants of the land. The discoverer nonetheless asserted the exclusive
right to acquire the Indians' land- either by purchase, "defensive" conquest, or cession- and in
so doing, extinguish the Indian title. Only the discoverer could extinguish Indian title because it
alone asserted ultimate dominion in itself. Thus, while the different nations of Europe respected
the rights of the natives as occupants, they all asserted the ultimate dominion and title to be in
themselves.170
As early as the 19th century, it became accepted doctrine that although fee title to the lands
occupied by the Indians when the colonists arrived became vested in the sovereign- first the
discovering European nation and later the original 13 States and the United States- a right of
occupancy in the Indian tribes was nevertheless recognized. The Federal Government
continued the policy of respecting the Indian right of occupancy, sometimes called Indian title,
which it accorded the protection of complete ownership.171 But this aboriginal Indian interest
simply constitutes "permission" from the whites to occupy the land, and means mere
possession not specifically recognized as ownership by Congress.172 It is clear that this right
of occupancy based upon aboriginal possession is not a property right.173 It is vulnerable to
affirmative action by the federal government who, as sovereign, possessed exclusive power to
extinguish the right of occupancy at will.174 Thus, aboriginal title is not the same as legal title.
Aboriginal title rests on actual, exclusive and continuous use and occupancy for a long time.175
It entails that land owned by Indian title must be used within the tribe, subject to its laws and
customs, and cannot be sold to another sovereign government nor to any citizen.176 Such title
as Indians have to possess and occupy land is in the tribe, and not in the individual Indian; the
right of individual Indians to share in the tribal property usually depends upon tribal
membership, the property of the tribe generally being held in communal ownership.177
As a rule, Indian lands are not included in the term "public lands," which is ordinarily used to
designate such lands as are subject to sale or other disposal under general laws.178 Indian
land which has been abandoned is deemed to fall into the public domain.179 On the other
hand, an Indian reservation is a part of the public domain set apart for the use and occupation
of a tribe of Indians.180 Once set apart by proper authority, the reservation ceases to be public
land, and until the Indian title is extinguished, no one but Congress can initiate any preferential
right on, or restrict the nation's power to dispose of, them.181
The American judiciary struggled for more than 200 years with the ancestral land claims of
indigenous Americans.182 And two things are clear. First, aboriginal title is recognized.
Second, indigenous property systems are also recognized. From a legal point of view, certain
benefits can be drawn from a comparison of Philippine IPs to native Americans.183 Despite
the similarities between native title and aboriginal title, however, there are at present some
misgivings on whether jurisprudence on American Indians may be cited authoritatively in the
Philippines. The U.S. recognizes the possessory rights of the Indians over their land; title to the
land, however, is deemed to have passed to the U.S. as successor of the discoverer. The
aboriginal title of ownership is not specifically recognized as ownership by action authorized by
Congress.184 The protection of aboriginal title merely guards against encroachment by
persons other than the Federal Government.185 Although there are criticisms against the
refusal to recognize the native Americans' ownership of these lands,186 the power of the State
to extinguish these titles has remained firmly entrenched.187
Under the IPRA, the Philippine State is not barred form asserting sovereignty over the ancestral
domains and ancestral lands.188 The IPRA, however, is still in its infancy and any similarities
between its application in the Philippines vis-à-vis American Jurisprudence on aboriginal title
will depend on the peculiar facts of each case.
(c) Why the Cariño doctrine is unique
In the Philippines, the concept of native title first upheld in Cariño and enshrined in the IPRA
grants ownership, albeit in limited form, of the land to the ICCs/IPs. Native title presumes that
the land is private and was never public. Cariño is the only case that specifically and
categorically recognizes native title. The long line of cases citing Cariño did not touch on native
title and the private character of ancestral domains and lands. Cariño was cited by the
succeeding cases to support the concept of acquisitive prescription under the Public Land Act
which is a different matter altogether. Under the Public Land Act, land sought to be registered
must be public agricultural land. When the conditions specified in Section 48 [b] of the Public
Land Act are complied with, the possessor of the land is deemed to have acquired, by operation
of law, a right to a grant of the land.189 The land ceases to be part of the public domain,190
ipso jure,191 and is converted to private property by the mere lapse or completion of the
prescribed statutory period.
It was only in the case of Oh Cho v. Director of Lands192 that the court declared that the rule
that all lands that were not acquired from the government, either by purchase or grant, belong
to the public domain has an exception. This exception would be any land that should have been
in the possession of an occupant and of his predecessors-in-interest since time immemorial. It
is this kind of possession that would justify the presumption that the land had never been part
of the public domain or that it had been private property even before the Spanish conquest.193
Oh Cho, however, was decided under the provisions of the Public Land Act and Cariño was
cited to support the applicant's claim of acquisitive prescription under the said Act.
All these years, Cariño had been quoted out of context simply to justify long, continuous, open
and adverse possession in the concept of owner of public agricultural land. It is this long,
continuous, open and adverse possession in the concept of owner of thirty years both for
ordinary citizens194 and members of the national cultural minorities195 that converts the land
from public into private and entitles the registrant to a torrens certificate of title.
(3) The Option of Securing a Torrens Title to the Ancestral Land Indicates that the Land is
Private.
The private character of ancestral lands and domains as laid down in the IPRA is further
strengthened by the option given to individual ICCs/IPs over their individually-owned ancestral
lands. For purposes of registration under the Public Land Act and the Land Registration Act,
the IPRA expressly converts ancestral land into public agricultural land which may be disposed
of by the State. The necessary implication is that ancestral land is private. It, however, has to
be first converted to public agricultural land simply for registration purposes. To wit:
"Sec. 12. Option to Secure Certificate of Title Under Commonwealth Act 141, as amended, or
the Land Registration Act 496- Individual members of cultural communities, with respect to
their individually-owned ancestral lands who, by themselves or through their predecessors-in-
interest, have been in continuous possession and occupation of the same in the concept of
owner since time immemorial or for a period of not less than thirty (30) years immediately
preceding the approval of this Act and uncontested by the members of the same ICCs/IPs shall
have the option to secure title to their ancestral lands under the provisions of Commonwealth
Act 141, as amended, or the Land Registration Act 496.
For this purpose, said individually-owned ancestral lands, which are agricultural in character
and actually used for agricultural, residential, pasture, and tree farming purposes, including
those with a slope of eighteen percent (18%) or more, are hereby classified as alienable and
disposable agricultural lands.
The option granted under this section shall be exercised within twenty (20) years from the
approval of this Act."196
ICCs/IPs are given the option to secure a torrens certificate of title over their individually-owned
ancestral lands. This option is limited to ancestral lands only, not domains, and such lands
must be individually, not communally, owned.
Ancestral lands that are owned by individual members of ICCs/IPs who, by themselves or
through their predecessors-in-interest, have been in continuous possession and occupation of
the same in the concept of owner since time immemorial197 or for a period of not less than 30
years, which claims are uncontested by the members of the same ICCs/IPs, may be registered
under C.A. 141, otherwise known as the Public Land Act, or Act 496, the Land Registration
Act. For purposes of registration, the individually-owned ancestral lands are classified as
alienable and disposable agricultural lands of the public domain, provided, they are agricultural
in character and are actually used for agricultural, residential, pasture and tree farming
purposes. These lands shall be classified as public agricultural lands regardless of whether
they have a slope of 18% or more.
The classification of ancestral land as public agricultural land is in compliance with the
requirements of the Public Land Act and the Land Registration Act. C.A. 141, the Public Land
Act, deals specifically with lands of the public domain.198 Its provisions apply to those lands
"declared open to disposition or concession" x x x "which have not been reserved for public or
quasi-public purposes, nor appropriated by the Government, nor in any manner become private
property, nor those on which a private right authorized and recognized by this Act or any other
valid law x x x or which having been reserved or appropriated, have ceased to be so."199 Act
496, the Land Registration Act, allows registration only of private lands and public agricultural
lands. Since ancestral domains and lands are private, if the ICC/IP wants to avail of the benefits
of C.A. 141 and Act 496, the IPRA itself converts his ancestral land, regardless of whether the
land has a slope of eighteen per cent (18%) or over,200 from private to public agricultural land
for proper disposition.
The option to register land under the Public Land Act and the Land Registration Act has
nonetheless a limited period. This option must be exercised within twenty (20) years from
October 29, 1997, the date of approval of the IPRA.
Thus, ancestral lands and ancestral domains are not part of the lands of the public domain.
They are private and belong to the ICCs/IPs. Section 3 of Article XII on National Economy and
Patrimony of the 1987 Constitution classifies lands of the public domain into four categories:
(a) agricultural, (b) forest or timber, (c) mineral lands, and (d) national parks. Section 5 of the
same Article XII mentions ancestral lands and ancestral domains but it does not classify them
under any of the said four categories. To classify them as public lands under any one of the
four classes will render the entire IPRA law a nullity. The spirit of the IPRA lies in the distinct
concept of ancestral domains and ancestral lands. The IPRA addresses the major problem of
the ICCs/IPs which is loss of land. Land and space are of vital concern in terms of sheer survival
of the ICCs/IPs.201
The 1987 Constitution mandates the State to "protect the rights of indigenous cultural
communities to their ancestral lands" and that "Congress provide for the applicability of
customary laws x x x in determining the ownership and extent of ancestral domain."202 It is
the recognition of the ICCs/IPs distinct rights of ownership over their ancestral domains and
lands that breathes life into this constitutional mandate.
B. The right of ownership and possession by the ICCs/IPs of their ancestral domains is a limited
form of ownership and does not include the right to alienate the same.
Registration under the Public Land Act and Land Registration Act recognizes the concept of
ownership under the civil law. This ownership is based on adverse possession for a specified
period, and harkens to Section 44 of the Public Land Act on administrative legalization (free
patent) of imperfect or incomplete titles and Section 48 (b) and (c) of the same Act on the
judicial confirmation of imperfect or incomplete titles. Thus:
"Sec. 44. Any natural-born citizen of the Philippines who is not the owner of more than twenty-
four hectares and who since July fourth, 1926 or prior thereto, has continuously occupied and
cultivated, either by himself or through his predecessors-in-interest, a tract or tracts of
agricultural public lands subject to disposition, or who shall have paid the real estate tax thereon
while the same has not been occupied by any person shall be entitled, under the provisions of
this chapter, to have a free patent issued to him for such tract or tracts of such land not to
exceed twenty-four hectares.
A member of the national cultural minorities who has continuously occupied and cultivated,
either by himself or through his predecessors-in-interest, a tract or tracts of land, whether
disposable or not since July 4, 1955, shall be entitled to the right granted in the preceding
paragraph of this section: Provided, That at the time he files his free patent application he is
not the owner of any real property secured or disposable under the provision of the Public Land
Law.203
x x x.
"Sec. 48. The following described citizens of the Philippines, occupying lands of the public
domain or claiming to own any such lands or an interest therein, but whose titles have not been
perfected or completed, may apply to the Court of First Instance of the province where the land
is located for confirmation of their claims and the issuance of a certificate of title therefor, under
the Land Registration Act, to wit:
(a) [perfection of Spanish titles] xxx.
(b) Those who by themselves or through their predecessors-in-interest have been in open,
continuous, exclusive, and notorious possession and occupation of agricultural lands of the
public domain, under a bona fide claim of acquisition or ownership, for at least thirty years
immediately preceding the filing of the application for confirmation of title except when
prevented by war or force majeure. These shall be conclusively presumed to have performed
all the conditions essential to a Government grant and shall be entitled to a certificate of title
under the provisions of this Chapter.
(c) Members of the national cultural minorities who by themselves or through their
predecessors-in-interest have been in open, continuous, exclusive and notorious possession
and occupation of lands of the public domain suitable to agriculture, whether disposable or not,
under a bona fide claim of ownership for at least 30 years shall be entitled to the rights granted
in sub-section (b) hereof."204
Registration under the foregoing provisions presumes that the land was originally public
agricultural land but because of adverse possession since July 4, 1955 (free patent) or at least
thirty years (judicial confirmation), the land has become private. Open, adverse, public and
continuous possession is sufficient, provided, the possessor makes proper application therefor.
The possession has to be confirmed judicially or administratively after which a torrens title is
issued.
A torrens title recognizes the owner whose name appears in the certificate as entitled to all the
rights of ownership under the civil law. The Civil Code of the Philippines defines ownership in
Articles 427, 428 and 429. This concept is based on Roman Law which the Spaniards
introduced to the Philippines through the Civil Code of 1889. Ownership, under Roman Law,
may be exercised over things or rights. It primarily includes the right of the owner to enjoy and
dispose of the thing owned. And the right to enjoy and dispose of the thing includes the right to
receive from the thing what it produces,205 the right to consume the thing by its use,206 the
right to alienate, encumber, transform or even destroy the thing owned,207 and the right to
exclude from the possession of the thing owned by any other person to whom the owner has
not transmitted such thing.208
1. The Indigenous Concept of Ownership and Customary Law.
Ownership of ancestral domains by native title does not entitle the ICC/IP to a torrens title but
to a Certificate of Ancestral Domain Title (CADT). The CADT formally recognizes the
indigenous concept of ownership of the ICCs/IPs over their ancestral domain. Thus:
"Sec. 5. Indigenous concept of ownership.- Indigenous concept of ownership sustains the view
that ancestral domains and all resources found therein shall serve as the material bases of
their cultural integrity. The indigenous concept of ownership generally holds that ancestral
domains are the ICCs/IPs private but community property which belongs to all generations and
therefore cannot be sold, disposed or destroyed. It likewise covers sustainable traditional
resource rights."
The right of ownership and possession of the ICCs/IPs to their ancestral domains is held under
the indigenous concept of ownership. This concept maintains the view that ancestral domains
are the ICCs/IPs private but community property. It is private simply because it is not part of
the public domain. But its private character ends there. The ancestral domain is owned in
common by the ICCs/IPs and not by one particular person. The IPRA itself provides that areas
within the ancestral domains, whether delineated or not, are presumed to be communally
held.209 These communal rights, however, are not exactly the same as co-ownership rights
under the Civil Code.210 Co-ownership gives any co-owner the right to demand partition of the
property held in common. The Civil Code expressly provides that "no co-owner shall be obliged
to remain in the co-ownership." Each co-owner may demand at any time the partition of the
thing in common, insofar as his share is concerned.211 To allow such a right over ancestral
domains may be destructive not only of customary law of the community but of the very
community itself.212
Communal rights over land are not the same as corporate rights over real property, much less
corporate condominium rights. A corporation can exist only for a maximum of fifty (50) years
subject to an extension of another fifty years in any single instance.213 Every stockholder has
the right to disassociate himself from the corporation.214 Moreover, the corporation itself may
be dissolved voluntarily or involuntarily.215
Communal rights to the land are held not only by the present possessors of the land but extends
to all generations of the ICCs/IPs, past, present and future, to the domain. This is the reason
why the ancestral domain must be kept within the ICCs/IPs themselves. The domain cannot
be transferred, sold or conveyed to other persons. It belongs to the ICCs/IPs as a community.
Ancestral lands are also held under the indigenous concept of ownership. The lands are
communal. These lands, however, may be transferred subject to the following limitations: (a)
only to the members of the same ICCs/IPs; (b) in accord with customary laws and traditions;
and (c) subject to the right of redemption of the ICCs/IPs for a period of 15 years if the land
was transferred to a non-member of the ICCs/IPs.
Following the constitutional mandate that "customary law govern property rights or relations in
determining the ownership and extent of ancestral domains,"216 the IPRA, by legislative fiat,
introduces a new concept of ownership. This is a concept that has long existed under
customary law.217
Custom, from which customary law is derived, is also recognized under the Civil Code as a
source of law.218 Some articles of the Civil Code expressly provide that custom should be
applied in cases where no codal provision is applicable.219 In other words, in the absence of
any applicable provision in the Civil Code, custom, when duly proven, can define rights and
liabilities.220
Customary law is a primary, not secondary, source of rights under the IPRA and uniquely
applies to ICCs/IPs. Its recognition does not depend on the absence of a specific provision in
the civil law. The indigenous concept of ownership under customary law is specifically
acknowledged and recognized, and coexists with the civil law concept and the laws on land
titling and land registration.221
To be sure, the indigenous concept of ownership exists even without a paper title. The CADT
is merely a "formal recognition" of native title. This is clear from Section 11 of the IPRA, to wit:
"Sec. 11. Recognition of Ancestral Domain Rights.- The rights of ICCs/IPs to their ancestral
domains by virtue of Native Title shall be recognized and respected. Formal recognition, when
solicited by ICCs/IPs concerned shall be embodied in a Certificate of Ancestral Domain Title,
which shall recognize the title of the concerned ICCs/IPs over the territories identified and
delineated."
The moral import of ancestral domain, native land or being native is "belongingness" to the
land, being people of the land- by sheer force of having sprung from the land since time beyond
recall, and the faithful nurture of the land by the sweat of one's brow. This is fidelity of
usufructuary relation to the land- the possession of stewardship through perduring, intimate
tillage, and the mutuality of blessings between man and land; from man, care for land; from the
land, sustenance for man.222
C. Sections 7 (a), 7 (b) and 57 of the IPRA Do Not Violate the Regalian Doctrine Enshrined in
Section 2, Article XII of the 1987 Constitution.
1. The Rights of ICCs/IPs Over Their Ancestral Domains and Lands
The IPRA grants the ICCs/IPs several rights over their ancestral domains and ancestral lands.
Section 7 provides for the rights over ancestral domains:
"Sec. 7. Rights to Ancestral Domains.- The rights of ownership and possession of ICCs/IPs to
their ancestral domains shall be recognized and protected. Such rights include:
a) Right of Ownership.- The right to claim ownership over lands, bodies of water traditionally
and actually occupied by ICCs/IPs, sacred places, traditional hunting and fishing grounds, and
all improvements made by them at any time within the domains;
b) Right to Develop Lands and Natural Resources.- Subject to Section 56 hereof, the right to
develop, control and use lands and territories traditionally occupied, owned, or used; to manage
and conserve natural resources within the territories and uphold the responsibilities for future
generations; to benefit and share the profits from allocation and utilization of the natural
resources found therein; the right to negotiate the terms and conditions for the exploration of
natural resources in the areas for the purpose of ensuring ecological, environmental protection
and the conservation measures, pursuant to national and customary laws; the right to an
informed and intelligent participation in the formulation and implementation of any project,
government or private, that will affect or impact upon the ancestral domains and to receive just
and fair compensation for any damages which they may sustain as a result of the project; and
the right to effective measures by the government to prevent any interference with, alienation
and encroachment upon these rights;"
c) Right to Stay in the Territories.- The right to stay in the territory and not to be removed
therefrom. No ICCs/IPs will be relocated without their free and prior informed consent, nor
through any means other than eminent domain. x x x;
d) Right in Case of Displacement.- In case displacement occurs as a result of natural
catastrophes, the State shall endeavor to resettle the displaced ICCs/IPs in suitable areas
where they can have temporary life support systems: x x x;
e) Right to Regulate the Entry of Migrants.- Right to regulate the entry of migrant settlers and
organizations into their domains;
f) Right to Safe and Clean Air and Water.-For this purpose, the ICCs/IPs shall have access to
integrated systems for the management of their inland waters and air space;
g) Right to Claim Parts of Reservations.- The right to claim parts of the ancestral domains which
have been reserved for various purposes, except those reserved and intended for common
and public welfare and service;
h) Right to Resolve Conflict.- Right to resolve land conflicts in accordance with customary laws
of the area where the land is located, and only in default thereof shall the complaints be
submitted to amicable settlement and to the Courts of Justice whenever necessary."
Section 8 provides for the rights over ancestral lands:
"Sec. 8. Rights to Ancestral Lands.- The right of ownership and possession of the ICCs/IPs to
their ancestral lands shall be recognized and protected.
a) Right to transfer land/property.- Such right shall include the right to transfer land or property
rights to/among members of the same ICCs/IPs, subject to customary laws and traditions of
the community concerned.
b) Right to Redemption.- In cases where it is shown that the transfer of land/property rights by
virtue of any agreement or devise, to a non-member of the concerned ICCs/IPs is tainted by
the vitiated consent of the ICCs/IPs, or is transferred for an unconscionable consideration or
price, the transferor ICC/IP shall have the right to redeem the same within a period not
exceeding fifteen (15) years from the date of transfer."
Section 7 (a) defines the ICCs/IPs the right of ownership over their ancestral domains which
covers (a) lands, (b) bodies of water traditionally and actually occupied by the ICCs/IPs, (c)
sacred places, (d) traditional hunting and fishing grounds, and (e) all improvements made by
them at any time within the domains. The right of ownership includes the following rights: (1)
the right to develop lands and natural resources; (b) the right to stay in the territories; (c) the
right to resettlement in case of displacement; (d) the right to regulate the entry of migrants; (e)
the right to safe and clean air and water; (f) the right to claim parts of the ancestral domains as
reservations; and (g) the right to resolve conflict in accordance with customary laws.
Section 8 governs their rights to ancestral lands. Unlike ownership over the ancestral domains,
Section 8 gives the ICCs/IPs also the right to transfer the land or property rights to members
of the same ICCs/IPs or non-members thereof. This is in keeping with the option given to
ICCs/IPs to secure a torrens title over the ancestral lands, but not to domains.
2. The Right of ICCs/IPs to Develop Lands and Natural Resources Within the Ancestral
Domains Does Not Deprive the State of Ownership Over the Natural Resources and Control
and Supervision in their Development and Exploitation.
The Regalian doctrine on the ownership, management and utilization of natural resources is
declared in Section 2, Article XII of the 1987 Constitution, viz:
"Sec. 2. All lands of the public domain, waters, minerals, coal, petroleum, and other mineral
oils, all forces of potential energy, fisheries, forests or timber, wildlife, flora and fauna, and other
natural resources are owned by the State. With the exception of agricultural lands, all other
natural resources shall not be alienated. The exploration, development, and utilization of
natural resources shall be under the full control and supervision of the State. The State may
directly undertake such activities, or, it may enter into co-production, joint venture, or
production-sharing agreements with Filipino citizens, or corporations or associations at least
sixty per centum of whose capital is owned by such citizens. Such agreements may be for a
period not exceeding twenty-five years, renewable for not more than twenty-five years, and
under such terms and conditions as may be provided by law. In cases of water rights for
irrigation, water supply, fisheries, water supply, fisheries, or industrial uses other than the
development of water power, beneficial use may be the measure and limit of the grant.
The State shall protect the nation's marine wealth in its archipelagic waters, territorial sea, and
exclusive economic zone, and reserve its use and enjoyment exclusively to Filipino citizens.
The Congress may, by law, allow small-scale utilization of natural resources by Filipino citizens,
as well as cooperative fish farming, with priority to subsistence fishermen and fishworkers in
rivers, lakes, bays, and lagoons.
The President may enter into agreements with foreign-owned corporations involving either
technical or financial assistance for large-scale exploration, development, and utilization of
minerals, petroleum, and other mineral oils according to the general terms and conditions
provided by law, based on real contributions to the economic growth and general welfare of the
country. In such agreements, the state shall promote the development and use of local scientific
and technical resources.
The President shall notify the Congress of every contract entered into in accordance with this
provision, within thirty days from its execution."223
All lands of the public domain and all natural resources- waters, minerals, coal, petroleum, and
other mineral oils, all forces of potential energy, fisheries, forests or timber, wildlife, flora and
fauna, and other natural resources- are owned by the State. The Constitution provides that in
the exploration, development and utilization of these natural resources, the State exercises full
control and supervision, and may undertake the same in four (4) modes:
1. The State may directly undertake such activities; or
2. The State may enter into co-production, joint venture or production-sharing agreements with
Filipino citizens or qualified corporations;
3. Congress may, by law, allow small-scale utilization of natural resources by Filipino citizens;
4. For the large-scale exploration, development and utilization of minerals, petroleum and other
mineral oils, the President may enter into agreements with foreign-owned corporations
involving technical or financial assistance.
As owner of the natural resources, the State is accorded primary power and responsibility in
the exploration, development and utilization of these natural resources. The State may directly
undertake the exploitation and development by itself, or, it may allow participation by the private
sector through co-production,224 joint venture,225 or production-sharing agreements.226
These agreements may be for a period of 25 years, renewable for another 25 years. The State,
through Congress, may allow the small-scale utilization of natural resources by Filipino citizens.
For the large-scale exploration of these resources, specifically minerals, petroleum and other
mineral oils, the State, through the President, may enter into technical and financial assistance
agreements with foreign-owned corporations.
Under the Philippine Mining Act of 1995, (R.A. 7942) and the People's Small-Scale Mining Act
of 1991 (R.A. 7076) the three types of agreements, i.e., co-production, joint venture or
production-sharing, may apply to both large-scale227 and small-scale mining.228 "Small-scale
mining" refers to "mining activities which rely heavily on manual labor using simple implements
and methods and do not use explosives or heavy mining equipment."229
Examining the IPRA, there is nothing in the law that grants to the ICCs/IPs ownership over the
natural resources within their ancestral domains. The right of ICCs/IPs in their ancestral
domains includes ownership, but this "ownership" is expressly defined and limited in Section 7
(a) as:
"Sec. 7. a) Right of ownership- The right to claim ownership over lands, bodies of water
traditionally and actually occupied by ICCs/IPs, sacred places, traditional hunting and fishing
grounds, and all improvements made by them at any time within the domains;"
The ICCs/IPs are given the right to claim ownership over "lands, bodies of water traditionally
and actually occupied by ICCs/IPs, sacred places, traditional hunting and fishing grounds, and
all improvements made by them at any time within the domains." It will be noted that this
enumeration does not mention bodies of water not occupied by the ICCs/IPs, minerals, coal,
wildlife, flora and fauna in the traditional hunting grounds, fish in the traditional fishing grounds,
forests or timber in the sacred places, etc. and all other natural resources found within the
ancestral domains. Indeed, the right of ownership under Section 7 (a) does not cover "waters,
minerals, coal, petroleum and other mineral oils, all forces of potential energy, fisheries, forests
or timber, wildlife, flora and fauna and all other natural resources" enumerated in Section 2,
Article XII of the 1987 Constitution as belonging to the State.
The non-inclusion of ownership by the ICCs/IPs over the natural resources in Section 7(a)
complies with the Regalian doctrine.
(a) Section 1, Part II, Rule III of the Implementing Rules Goes Beyond the Parameters of Sec.
7 (a) of the IPRA And is Unconstitutional.
The Rules Implementing the IPRA230 in Section 1, Part II, Rule III reads:
"Section 1. Rights of Ownership. ICCs/IPs have rights of ownership over lands, waters, and
natural resources and all improvements made by them at any time within the ancestral
domains/ lands. These rights shall include, but not limited to, the right over the fruits, the right
to possess, the right to use, right to consume, right to exclude and right to recover ownership,
and the rights or interests over land and natural resources. The right to recover shall be
particularly applied to lands lost through fraud or any form or vitiated consent or transferred for
an unconscionable price."
Section 1 of the Implementing Rules gives the ICCs/IPs rights of ownership over "lands, waters
and natural resources." The term "natural resources" is not one of those expressly mentioned
in Section 7 (a) of the law. Our Constitution and jurisprudence clearly declare that the right to
claim ownership over land does not necessarily include the right to claim ownership over the
natural resources found on or under the land.231 The IPRA itself makes a distinction between
land and natural resources. Section 7 (a) speaks of the right of ownership only over the land
within the ancestral domain. It is Sections 7 (b) and 57 of the law that speak of natural
resources, and these provisions, as shall be discussed later, do not give the ICCs/IPs the right
of ownership over these resources.
The constitutionality of Section 1, Part II, Rule III of the Implementing Rules was not specifically
and categorically challenged by petitioners. Petitioners actually assail the constitutionality of
the Implementing Rules in general.232 Nevertheless, to avoid any confusion in the
implementation of the law, it is necessary to declare that the inclusion of "natural resources" in
Section 1, Part II, Rule III of the Implementing Rules goes beyond the parameters of Section 7
(b) of the law and is contrary to Section 2, Article XII of the 1987 Constitution.
(b) The Small-Scale Utilization of Natural Resources In Sec. 7 (b) of the IPRA Is Allowed Under
Paragraph 3, Section 2 of Article XII of the Constitution.
Ownership over natural resources remain with the State and the IPRA in Section 7 (b) merely
grants the ICCs/IPs the right to manage them, viz:
"Sec. 7 (b) Right to Develop Lands and Natural Resources.- Subject to Section 56 hereof, right
to develop, control and use lands and territories traditionally occupied, owned, or used; to
manage and conserve natural resources within the territories and uphold the responsibilities
for future generations; to benefit and share the profits from allocation and utilization of the
natural resources found therein; the right to negotiate the terms and conditions for the
exploration of natural resources in the areas for the purpose of ensuring ecological,
environmental protection and the conservation measures, pursuant to national and customary
laws; the right to an informed and intelligent participation in the formulation and implementation
of any project, government or private, that will affect or impact upon the ancestral domains and
to receive just and fair compensation for any damages which they may sustain as a result of
the project; and the right to effective measures by the government to prevent any interference
with, alienation and encroachment upon these rights;"
The right to develop lands and natural resources under Section 7 (b) of the IPRA enumerates
the following rights:
a) the right to develop, control and use lands and territories traditionally occupied;
b) the right to manage and conserve natural resources within the territories and uphold the
responsibilities for future generations;
c) the right to benefit and share the profits from the allocation and utilization of the natural
resources found therein;
d) the right to negotiate the terms and conditions for the exploration of natural resources for the
purpose of ensuring ecological, environmental protection and the conservation measures,
pursuant to national and customary laws;
e) the right to an informed and intelligent participation in the formulation and implementation of
any project, government or private, that will affect or impact upon the ancestral domains and
to receive just and fair compensation for any damages which they may sustain as a result of
the project;
f) the right to effective measures by the government to prevent any interference with, alienation
and encroachment upon these rights.233
Ownership over the natural resources in the ancestral domains remains with the State and the
ICCs/IPs are merely granted the right to "manage and conserve" them for future generations,
"benefit and share" the profits from their allocation and utilization, and "negotiate the terms and
conditions for their exploration" for the purpose of "ensuring ecological and environmental
protection and conservation measures." It must be noted that the right to negotiate the terms
and conditions over the natural resources covers only their exploration which must be for the
purpose of ensuring ecological and environmental protection of, and conservation measures in
the ancestral domain. It does not extend to the exploitation and development of natural
resources.
Simply stated, the ICCs/IPs' rights over the natural resources take the form of management or
stewardship. For the ICCs/IPs may use these resources and share in the profits of their
utilization or negotiate the terms for their exploration. At the same time, however, the ICCs/IPs
must ensure that the natural resources within their ancestral domains are conserved for future
generations and that the "utilization" of these resources must not harm the ecology and
environment pursuant to national and customary laws.234
The limited rights of "management and use" in Section 7 (b) must be taken to contemplate
small-scale utilization of natural resources as distinguished from large-scale. Small-scale
utilization of natural resources is expressly allowed in the third paragraph of Section 2, Article
XII of the Constitution "in recognition of the plight of forest dwellers, gold panners, marginal
fishermen and others similarly situated who exploit our natural resources for their daily
sustenance and survival."235 Section 7 (b) also expressly mandates the ICCs/IPs to manage
and conserve these resources and ensure environmental and ecological protection within the
domains, which duties, by their very nature, necessarily reject utilization in a large-scale.
(c) The Large-Scale Utilization of Natural Resources In Section 57 of the IPRA Is Allowed
Under Paragraphs 1 and 4, Section 2, Article XII of the 1987 Constitution.
Section 57 of the IPRA provides:
"Sec. 57. Natural Resources within Ancestral Domains.- The ICCs/IPs shall have priority rights
in the harvesting, extraction, development or exploitation of any natural resources within the
ancestral domains. A non-member of the ICCs/IPs concerned may be allowed to take part in
the development and utilization of the natural resources for a period of not exceeding twenty-
five (25) years renewable for not more than twenty-five (25) years: Provided, That a formal and
written agreement is entered into with the ICCs/IPs concerned or that the community, pursuant
to its own decision-making process, has agreed to allow such operation: Provided finally, That
the NCIP may exercise visitorial powers and take appropriate action to safeguard the rights of
the ICCs/IPs under the same contract."
Section 57 speaks of the "harvesting, extraction, development or exploitation of natural
resources within ancestral domains" and "gives the ICCs/IPs 'priority rights' therein." The terms
"harvesting, extraction, development or exploitation" of any natural resources within the
ancestral domains obviously refer to large-scale utilization. It is utilization not merely for
subsistence but for commercial or other extensive use that require technology other than
manual labor.236 The law recognizes the probability of requiring a non-member of the ICCs/IPs
to participate in the development and utilization of the natural resources and thereby allows
such participation for a period of not more than 25 years, renewable for another 25 years. This
may be done on condition that a formal written agreement be entered into by the non-member
and members of the ICCs/IPs.
Section 57 of the IPRA does not give the ICCs/IPs the right to "manage and conserve" the
natural resources. Instead, the law only grants the ICCs/IPs "priority rights" in the development
or exploitation thereof. Priority means giving preference. Having priority rights over the natural
resources does not necessarily mean ownership rights. The grant of priority rights implies that
there is a superior entity that owns these resources and this entity has the power to grant
preferential rights over the resources to whosoever itself chooses.
Section 57 is not a repudiation of the Regalian doctrine. Rather, it is an affirmation of the said
doctrine that all natural resources found within the ancestral domains belong to the State. It
incorporates by implication the Regalian doctrine, hence, requires that the provision be read in
the light of Section 2, Article XII of the 1987 Constitution. Interpreting Section 2, Article XII of
the 1987 Constitution237 in relation to Section 57 of IPRA, the State, as owner of these natural
resources, may directly undertake the development and exploitation of the natural resources
by itself, or in the alternative, it may recognize the priority rights of the ICCs/IPs as owners of
the land on which the natural resources are found by entering into a co-production, joint
venture, or production-sharing agreement with them. The State may likewise enter into any of
said agreements with a non-member of the ICCs/IPs, whether natural or juridical, or enter into
agreements with foreign-owned corporations involving either technical or financial assistance
for the large-scale exploration, development and utilization of minerals, petroleum, and other
mineral oils, or allow such non-member to participate in its agreement with the ICCs/IPs. If the
State decides to enter into an agreement with a non-ICC/IP member, the National Commission
on Indigenous Peoples (NCIP) shall ensure that the rights of the ICCs/IPs under the agreement
shall be protected. The agreement shall be for a period of 25 years, renewable for another 25
years.
To reiterate, in the large-scale utilization of natural resources within the ancestral domains, the
State, as owner of these resources, has four (4) options: (1) it may, of and by itself, directly
undertake the development and exploitation of the natural resources; or (2) it may recognize
the priority rights of the ICCs/IPs by entering into an agreement with them for such development
and exploitation; or (3) it may enter into an agreement with a non-member of the ICCs/IPs,
whether natural or juridical, local or foreign; or (4) it may allow such non-member to participate
in the agreement with the ICCs/IPs.
The rights granted by the IPRA to the ICCs/IPs over the natural resources in their ancestral
domains merely gives the ICCs/IPs, as owners and occupants of the land on which the
resources are found, the right to the small-scale utilization of these resources, and at the same
time, a priority in their large-scale development and exploitation. Section 57 does not mandate
the State to automatically give priority to the ICCs/IPs. The State has several options and it is
within its discretion to choose which option to pursue. Moreover, there is nothing in the law that
gives the ICCs/IPs the right to solely undertake the large-scale development of the natural
resources within their domains. The ICCs/IPs must undertake such endeavour always under
State supervision or control. This indicates that the State does not lose control and ownership
over the resources even in their exploitation. Sections 7 (b) and 57 of the law simply give due
respect to the ICCs/IPs who, as actual occupants of the land where the natural resources lie,
have traditionally utilized these resources for their subsistence and survival.
Neither is the State stripped of ownership and control of the natural resources by the following
provision:
"Section 59. Certification Precondition.- All departments and other governmental agencies shall
henceforth be strictly enjoined from issuing, renewing or granting any concession, license or
lease, or entering into any production-sharing agreement. without prior certification from the
NCIP that the area affected does not overlap with any ancestral domain. Such certification shall
only be issued after a field-based investigation is conducted by the Ancestral Domains Office
of the area concerned: Provided, That no certification shall be issued by the NCIP without the
free and prior informed and written consent of the ICCs/IPs concerned: Provided, further, That
no department, government agency or government-owned or -controlled corporation may issue
new concession, license, lease, or production sharing agreement while there is a pending
application for a CADT: Provided, finally, That the ICCs/IPs shall have the right to stop or
suspend, in accordance with this Act, any project that has not satisfied the requirement of this
consultation process."
Concessions, licenses, lease or production-sharing agreements for the exploitation of natural
resources shall not be issued, renewed or granted by all departments and government
agencies without prior certification from the NCIP that the area subject of the agreement does
not overlap with any ancestral domain. The NCIP certification shall be issued only after a field-
based investigation shall have been conducted and the free and prior informed written consent
of the ICCs/IPs obtained. Non-compliance with the consultation requirement gives the ICCs/IPs
the right to stop or suspend any project granted by any department or government agency.
As its subtitle suggests, this provision requires as a precondition for the issuance of any
concession, license or agreement over natural resources, that a certification be issued by the
NCIP that the area subject of the agreement does not lie within any ancestral domain. The
provision does not vest the NCIP with power over the other agencies of the State as to
determine whether to grant or deny any concession or license or agreement. It merely gives
the NCIP the authority to ensure that the ICCs/IPs have been informed of the agreement and
that their consent thereto has been obtained. Note that the certification applies to agreements
over natural resources that do not necessarily lie within the ancestral domains. For those that
are found within the said domains, Sections 7(b) and 57 of the IPRA apply.
V. THE IPRA IS A RECOGNITION OF OUR ACTIVE PARTICIPATION IN THE INDIGENOUS
INTERNATIONAL MOVEMENT.
The indigenous movement can be seen as the heir to a history of anti-imperialism stretching
back to prehistoric times. The movement received a massive impetus during the 1960's from
two sources. First, the decolonization of Asia and Africa brought into the limelight the possibility
of peoples controlling their own destinies. Second, the right of self-determination was enshrined
in the UN Declaration on Human Rights.238 The rise of the civil rights movement and anti-
racism brought to the attention of North American Indians, Aborigines in Australia, and Maori
in New Zealand the possibility of fighting for fundamental rights and freedoms.
In 1974 and 1975, international indigenous organizations were founded,239 and during the
1980's, indigenous affairs were on the international agenda. The people of the Philippine
Cordillera were the first Asians to take part in the international indigenous movement. It was
the Cordillera People's Alliance that carried out successful campaigns against the building of
the Chico River Dam in 1981-82 and they have since become one of the best-organized
indigenous bodies in the world.240
Presently, there is a growing concern for indigenous rights in the international scene. This came
as a result of the increased publicity focused on the continuing disrespect for indigenous human
rights and the destruction of the indigenous peoples' environment, together with the national
governments' inability to deal with the situation.241 Indigenous rights came as a result of both
human rights and environmental protection, and have become a part of today's priorities for
the international agenda.242
International institutions and bodies have realized the necessity of applying policies, programs
and specific rules concerning IPs in some nations. The World Bank, for example, first adopted
a policy on IPs as a result of the dismal experience of projects in Latin America.243 The World
Bank now seeks to apply its current policy on IPs to some of its projects in Asia. This policy
has provided an influential model for the projects of the Asian Development Bank.244
The 1987 Philippine Constitution formally recognizes the existence of ICCs/IPs and declares
as a State policy the promotion of their rights within the framework of national unity and
development.245 The IPRA amalgamates the Philippine category of ICCs with the international
category of IPs,246 and is heavily influenced by both the International Labor Organization (ILO)
Convention 169 and the United Nations (UN) Draft Declaration on the Rights of Indigenous
Peoples.247
ILO Convention No. 169 is entitled the "Convention Concerning Indigenous and Tribal Peoples
in Independent Countries"248 and was adopted on June 27, 1989. It is based on the Universal
Declaration of Human Rights, the International Covenant on Economic, Social and Cultural
Rights, the International Covenant on Civil and Political Rights, and many other international
instruments on the prevention of discrimination.249 ILO Convention No. 169 revised the
"Convention Concerning the Protection and Integration of Indigenous and Other Tribal and
Semi-Tribal Populations in Independent Countries" (ILO No. 107) passed on June 26, 1957.
Developments in international law made it appropriate to adopt new international standards on
indigenous peoples "with a view to removing the assimilationist orientation of the earlier
standards," and recognizing the aspirations of these peoples to exercise control over their own
institutions, ways of life and economic development."250
CONCLUSION
The struggle of the Filipinos throughout colonial history had been plagued by ethnic and
religious differences. These differences were carried over and magnified by the Philippine
government through the imposition of a national legal order that is mostly foreign in origin or
derivation.251 Largely unpopulist, the present legal system has resulted in the alienation of a
large sector of society, specifically, the indigenous peoples. The histories and cultures of the
indigenes are relevant to the evolution of Philippine culture and are vital to the understanding
of contemporary problems.252 It is through the IPRA that an attempt was made by our
legislators to understand Filipino society not in terms of myths and biases but through common
experiences in the course of history. The Philippines became a democracy a centennial ago
and the decolonization process still continues. If the evolution of the Filipino people into a
democratic society is to truly proceed democratically, i.e., if the Filipinos as a whole are to
participate fully in the task of continuing democratization,253 it is this Court's duty to
acknowledge the presence of indigenous and customary laws in the country and affirm their
co-existence with the land laws in our national legal system.
With the foregoing disquisitions, I vote to uphold the constitutionality of the Indigenous Peoples
Rights Act of 1997.
G.R. No. 127382 August 17, 2004
DR. JESUS SERIÑA and ENRIQUETA SERIÑA (deceased), represented by DR. JESUS
SERIÑA, JR., ANTONIO SERIÑA, VIOLETA SERIÑA TAN, REYNALDO SERIÑA and
EMMANUEL SERIÑA, petitioners,
vs.
VICTOR CABALLERO, TEODORO DONELA, OLIVER DONELA, COURT OF APPEALS,
and THE HONORABLE REGIONAL TRIAL COURT, BRANCH 20, MISAMIS ORIENTAL,
respondents.
DECISION
CALLEJO, SR., J.:
Before us is a petition for review on certiorari of the Decision1 of the Court of Appeals (CA)
dated August 23, 1996, affirming the dismissal of the complaint for quieting of title, recovery of
possession, and damages by the Regional Trial Court (RTC) of Misamis Oriental, Cagayan de
Oro City, in Civil Case No. 8716.
The Antecedents
On August 11, 1982, Dr. Jesus Seriña and his wife, Enriqueta Seriña filed a Complaint for
quieting of title, recovery of possession, and damages with a prayer for a writ of preliminary
mandatory injunction against respondents Victor Caballero and his tenants, Teodoro Donela
and Oliver Donela. When Dr. Seriña died on August 6, 1983, he was substituted by his children,
petitioners Jesus, Jr., Antonio, Violeta, Reynaldo and Emmanuel.2
The petitioners alleged in their complaint that they are the absolute owners and have been in
actual and constructive possession for thirty-five (35) years of a parcel of land described as
follows:
Lot No. 3533-A, Cad-237, Cagayan Cadastre
Tax Declaration No. 02161
Location - Mantadiao, Opol,
Misamis Oriental
Area - 2.5000 has.
Boundaries:
North - Alejo Seriña
South - T. Sabornido
East - A. Seriña & T. Sabornido
West - F. Caballero3
The petitioners averred that sometime in March 1982, they discovered that respondent
Caballero was claiming ownership over the said land and offering it for sale or mortgage to
third parties. They also discovered that the respondents Donelas were occupying the land as
tenants and caretakers of the land. 4
The petitioners claimed that their father, Dr. Seriña, bought the land from Lucia Vda. de
Marbella who inherited it from her father, Ramon Neri.5 They presented a Deed of Sale6 dated
August 23, 1947 showing that Dr. Seriña bought 5 hectares of ricefield, bounded on the North
by Raymundo Seriña, on the East by Teofilo Saburnido, on the South by Obdelio Caballero,
on the West by Obdullo Caballero, from Lucia Vda. de Marbella. Dr. Seriña was issued Tax
Declaration No. 4029 allegedly for the said property. As indicated in the tax declaration and
subsequent tax declarations issued in the name of Dr. Seriña, they were issued for Cadastral
Lot No. 3533 and covered a 2.5-hectare ricefield with the same boundary owners as those in
the complaint.7 The petitioners also averred that they regularly paid taxes thereon since 1947
up to the present.8
In his answer, respondent Caballero alleged that he was the lawful owner, and had been in
actual physical possession of the disputed land since time immemorial. He averred that the
disputed land is part of Cadastral Lot No. 3533, C-7 of the Cagayan Cadastre and originally
owned by his grandfather, Eustaquio Caballero.9
The respondents averred that Eustaquio Caballero declared the entire parcel of land for tax
purposes even before the war. Tax Declaration No. 2442 was issued in lieu of the records that
were destroyed during the war.
This tax declaration indicated that the 119,490 square-meter parcel of land was located at
Pontacon, Iponan, Cagayan de Oro City, bounded on North by Rustico Dablio, on the East by
J. Seriña and T. Saburnido, on the South by Victor Obsioma, and on the West by Victorino
Caballero.10

Emiliana Ibarat, respondent Caballero’s sister, testified that when Eustaquio Caballero died in
1944, the land was divided among his three children, Vicenta, Benita and Victorino, the father
of respondent Caballero. Lot A, with an area of 39,625 square meters, was given to Victorino,
which was later inherited by the respondent. Lot B, with an area of 71, 450 square meters, was
given to Benita; and Lot C, with only 7,938 square meters was given to Vicenta. Lots B and C
were, thereafter, sold to one Gaga Yasay. Because of the trouble between the petitioners and
the respondents, Yasay agreed to buy only a portion of Lot A.11
The land was surveyed during the trial and it was determined that it now consisted of only
23,373 square meters,12 and not 25,000 square meters as claimed by the petitioners. Gliceria
Legaspi, respondent Caballero’s other sister, also testified that the disputed land was now
bounded on the North by Seriña and Nangcas, on the East by Teofilo Saburnido, on the South
by Gaga Yasay, and on the West by Nangcas.13
The RTC rendered judgment14 on January 21, 1992, dismissing the complaint, and upholding
the right of the respondents over the land. The dispositive portion reads:
WHEREFORE, judgment is hereby rendered in favor of the defendant Victor Caballero and
against the plaintiffs herein, to wit:
1. Ordering the dismissal of the complaint with costs.
2. Ordering the defendant Victor Caballero as the absolute and lawful owner and possessor of
the land in question.
3. Ordering the plaintiffs, their heirs, lawyers, servants or privies not to disturb or molest the
possession and ownership of Victor Caballero over the land in question.
4. Ordering the plaintiffs to pay to defendant Victor Caballero, jointly and severally the sum of
FIVE THOUSAND (P5,000.00) pesos for expenses of litigation, and THREE THOUSAND
(P3,000.00) pesos for and as attorney's fees having been compelled to retain the services of
counsel to protect his interest herein.
SO ORDERED.15
The trial court ruled that it was not clearly shown that the land bought by Dr. Seriña from Lucia
Vda. de Marbella was the same land owned by Victor Caballero, and that the petitioners failed
to show that Lucia Vda. de Marbella bought the land from Eustaquio Caballero, the original
owner and cadastral claimant of the land. It also noted that the deed of sale between Lucia
Vda. de Marbella and Dr. Seriña showed that the land had an area of 5 hectares, whereas, the
petitioners only claimed 2.5 hectares. Furthermore, the boundaries of the land stated in the
complaint did not coincide with what was stated in the Deed of Sale, or in Tax Declaration No.
2442 in the name of Eustaquio Caballero. The trial court ruled that the petitioners failed to
explain these discrepancies, and that there was no showing that Tax Declaration No. 2442 was
cancelled by Tax Declaration No. 4029 in the name of Dr. Seriña. The trial court interpreted
this to mean that Eustaquio Caballero's right as owner of the land remained.
Dissatisfied, the petitioners appealed the case to the CA, which rendered a Decision16
affirming in toto the decision of the RTC. The petitioners filed a Motion for Reconsideration on
September 30, 1996.17 The CA denied the motion.18
Hence, the instant petition.
The petitioners assign the following errors:
1. THAT IT IS ERROR FOR THE HONORABLE COURT OF APPEALS TO UPHOLD THE
HONORABLE RTC ON THE ISSUE THAT THE ALLEGED IDENTITY OF THE LAND IN
LITIGATION IS UNESTABLISHED BETWEEN THE PARTIES-LITIGANTS.
2. THAT IT IS ERROR FOR THE HONORABLE COURT OF APPEALS TO FAIL TO
APPRECIATE THE 35-YEAR ACQUISITIVE PRESCRIPTION IN FAVOR OF THE
PLAINTIFFS-APPELLANTS.19
The issues in this petition are, therefore, the following: (1) whether the petitioners were able to
establish the identity of the land being claimed by them; and (2) whether acquisitive prescription
should be appreciated in favor of the petitioners.
The Ruling of the Court
The first issue deals clearly with a question of fact which is beyond the province of this Court
in a petition for review on certiorari. Well-entrenched is the rule that the Court's jurisdiction in a
petition for review is limited to reviewing or revising errors of law allegedly committed by the
appellate court. Factual findings of the Court of Appeals are conclusive on the parties and not
reviewable by this Court—and they carry even more weight when the Court of Appeals affirms
the factual findings of the trial court.20 The exceptions to this rule are the following:
(1) when the conclusion is a finding grounded entirely on speculations, surmises or conjectures;
(2) when the inference made is manifestly mistaken, absurd or impossible; (3) when there is
grave abuse of discretion; (4) when the judgment is based on misapprehension of facts; (5)
when the findings of facts are conflicting; (6) when the Court of Appeals, in making its findings,
went beyond the issues of the case and the same is contrary to the admissions of both
appellant and appellee; (7) when the findings of the Court of Appeals are contrary to those of
the trial court; (8) when the findings of fact are conclusions without citation of specific evidence
on which they are based; (9) when the Court of Appeals manifestly overlooked certain relevant
facts not disputed by the parties, which, if properly considered, would justify a different
conclusion; and (10) when the findings of fact of the Court of Appeals are premised on the
absence of evidence and are contradicted by the evidence on record.21
We find no cogent reason to reverse the findings of the CA. None of the aforementioned
exceptions is present in this case. The CA was correct in concluding that the petitioners failed
to establish that the parcel of land in the possession of the respondents is the same as that The boundary owners of the land as indicated in Tax Declaration No. 2442 differ from those
subject of their complaint. stated in Tax Declaration No. 4029. The boundary owners as indicated in Tax Declaration No.
2442 are as follows:
The CA noted that the land subject of the complaint has boundaries different from the land in
possession of the respondents. In fact, the land described in the complaint appears to be North - Rustico Dablio
different from the land described in the Deed of Sale which the petitioners invoke as the basis
of their ownership. South -Victor Obsioma

First. The petitioners alleged in their complaint that the boundaries of their property are as East - J. Seriña & T. Saburnido
follows:
West - Victorino Caballero28
North - Alejo Seriña
Under Tax Declaration No. 4029, on the other hand, the boundary owners are as follows:
South - T. Sabornido
North - Alejo Seriña
East - A. Seriña & T. Sabornido
South - Teofilo Saburnido
West - F. Caballero22
East - A. Seriña [and] T. Saburnido
On the other hand, the Deed of Sale provides that the property sold to them has the following
boundaries: West - Eustaquio Caballero29

North - Raymundo Seriña
South - Obdullo Caballero
East - Teofilo Saburnido
West - Obdullo Caballero23
Second. The complaint24 of the petitioners states that the property they are claiming has an
area of 2.5 hectares. On the other hand, the Deed of Sale25 provides that the subject property
has an area of 5 hectares.
Third. The complaint alleged that the property is located in "Mantadiao, Opol, Misamis
Oriental,"26 while the Deed of Sale shows that the property purchased is located in "Puntakon,
Igpit, Cagayan Or. Misamis."27
We agree with the CA that there was no showing that Tax Declaration No. 2442 in the name
of Eustaquio Caballero was cancelled. Absent any specific statement therein to that effect, it
cannot be presumed that Tax Declaration No. 4029 in the name of Dr. Seriña cancelled Tax
Declaration No. 2442.
Moreover, the land covered by Tax Declaration No. 2442 is different from that covered by Tax
Declaration No. 4029 for the following reasons:
Moreover, Tax Declaration No. 2442 covers an area of 119,490 square meters30 while Tax
Declaration No. 4029 covers only 25,000 square meters or 2.5 hectares.31
The petitioners argue that the Deed of Sale and Tax Declaration No. 4029 should not be
compared to Tax Declaration No. 2442 and the Technical Description of Cadastral Lot No.
3533 because the former refers only to a portion of the area referred to by the latter.32 While
the petitioners are correct on this point, such mistake would still not justify a different
conclusion. The fact remains that the documentary and testimonial evidence presented by the
petitioners did not prove the identity of the land being claimed. The petitioners did not present
evidence to prove that the land registered in the name of Eustaquio Caballero was sold to Lucia
Vda. de Marbella or her predecessor-in-interest from whom they purchased the land subject of
their complaint.
The failure to establish the identity of the land is obviously fatal to the petitioners’ case. In Beo
vs. Court of Appeals,33 a case which also involves an action for possession and quieting of
title, the Court had the occasion to state:
…[B]ecause petitioners failed to explain the discrepancy or present other evidence to prove
with certainty the location and area of the land they seek to recover, respondent court correctly
applied the invariable rule that a person who claims ownership of real property is duty-bound
to clearly identify the land being claimed, in accordance with the title on which he anchors his
right of ownership. When the record does not show that the land subject matter of the action
for recovery of possession has been exactly determined, such action cannot prosper, as in the
case of petitioners. In sum, proof of ownership coupled with identity of the land is the basic
rule.
Corollarily, the rule is likewise well-settled that in order that an action for recovery of possession
may prosper, it is indispensable that he who brings the action fully proves not only his
ownership but also the identity of the property claimed, by describing the location, area and
boundaries thereof. As the appellate court succinctly stated, he who claims to have a better
right to the property must clearly show that the land possessed by the other party is the very
land that belongs to him.34
On the second issue, the CA ruled that inasmuch as the petitioners failed to establish that the
parcel of land in possession of the respondents is the same as the subject of their complaint,
their claim of acquisitive prescription is clearly untenable.
The petitioners argue that they would not have regularly paid taxes on the land since 1947 had
they not believed that they owned the same.35 The respondents, for their part, aver that the
petitioners were only able to prove seven (7) years of actual possession of the land through
cultivation by their tenants. They argue that such seven-year period of cultivation cannot be
considered in the petitioners’ favor, since the witness who testified on this fact did not
personally know the boundaries of the land cultivated, or whether it was the same land bought
by Dr. Seriña. The respondents contend that acquisitive prescription applies only when there
is no dispute as to the identity of the property.36
We agree with the respondents. Since the property has not been clearly identified by the
petitioners, their claim of acquisitive prescription cannot be considered. Insufficient
identification of the portion of land claimed in absolute ownership cannot ripen into ownership.
Possession as a means of acquiring ownership, while it may be constructive, is not a mere
fiction.37
Assuming, however, that the disputed land has been clearly identified, acquisitive prescription
will still not lie in favor of the petitioners because they were not able to prove that they have
been in possession of the property for the requisite number of years. Prescription requires
public, peaceful, uninterrupted and adverse possession of the property in the concept of an
owner for ten years, in case the possession is in good faith and with just title.38
Aside from the testimony of Leonardo Vacalares that certain tenants of the petitioners cultivated
the land for a total of seven years, the petitioners did not present any other evidence to show
that they have been in actual possession of the property for at least ten years.
The petitioners’ argument that the payment of taxes on the property since May 31, 1948
constitutes proof of their possession of the subject land for thirty-five years is untenable. Tax
declarations and receipts are not conclusive evidence of ownership. At most, they constitute
mere prima facie proof of ownership of the property for which taxes have been paid. In the
absence of actual, public and adverse possession, the declaration of the land for tax purposes
does not prove ownership.39
IN LIGHT OF ALL THE FOREGOING, the petition is DENIED. The Decision of the Court of
Appeals is AFFIRMED. No costs.
SO ORDERED.
Puno, J., Chairman, Austria-Martinez, Tinga, and Chico-Nazario, JJ., concur.
G.R. No. 122249 January 29, 2004
REYNALDO, TELESFORO, REMEDIOS, ALFREDO and BELEN, all surnamed AGUIRRE,
VICENTA, HORACIO and FLORENCIO, all surnamed MAGTIBAY and LEONILA, CECILIA,
ANTONIO, and VENANCIO, all surnamed MEDRANO, and ZOSIMA QUIAMBAO,
Petitioners,
vs.
COURT OF APPEALS and ELIAS, JOSE, ARSENIA and ROGELIO, all surnamed
BALITAAN, and MARIA ROSALES, Respondents.
DECISION
AUSTRIA-MARTINEZ, J.:
Before us is a petition for review on certiorari under Rule 45 of the Rules of Court seeking the
reversal of the Decision1 dated July 26, 1995 rendered by the Court of Appeals in CA-G.R. CV
No. 42350 which set aside the Decision2 dated April 28, 1992 of the Regional Trial Court of
Batangas City (Branch 2) in Civil Case No. 202,3 and declared private respondents Heirs of
Tiburcio Balitaan, as owners of the parcel of unregistered land with an approximate area of
1,695 square meters, located at Aplaya, Bauan, Batangas.
The facts of the case are as follows:
In his lifetime, Leocadio Medrano was the owner and possessor of a parcel of residential land,
situated in Aplaya, Bauan, Batangas, containing an area of 2,611 square meters.4 The parcel
of land was conjugal property, having been acquired by Leocadio during his first marriage with
one Emiliana Narito. Their union begot four children, namely: (a) Gertrudes Medrano, now
deceased, represented in this case by her children, herein petitioners Telesforo, Reynaldo,
Remedios, Alfredo, and Belen, all surnamed Aguirre; (b) Isabel Medrano, likewise deceased,
represented by her children, herein petitioners Vicenta, Horacio, and Florencio, all surnamed
Magtibay; (c) Placido Medrano, also deceased, represented by his only child, herein petitioner
Zosima Quiambao; and (d) Sixto Medrano.
After the death of his first wife, Leocadio contracted a second marriage with Miguela Cariño.
Their union bore four children, herein co-petitioners, namely: Venancio, Leonila, Antonio and
Cecilia, all surnamed Medrano.
Upon the death of Leocadio on March 19, 1945, the surviving heirs agreed that Sixto should
manage and administer the subject property.
Sixto died on May 17, 1974. It was only after his death that petitioners heard rumors that Sixto
had, in fact, sold significant portions of the estate of Leocadio. It appears that on September 7,
1953, Sixto, without the knowledge and consent of the petitioners, executed an Affidavit of
Transfer of Real Property stating therein that he was the only heir of Leocadio.5 Sixto declared
that Leocadio died on September 16, 1949, instead of the actual date of his death on March
19, 1945. With the use of said affidavit and a survey plan,6 Tax Declaration No. 40105 in the
name of Leocadio was cancelled and Tax Declaration No. 44984 was issued in the name of
Sixto.7 On August 29, 1957, Sixto sold to Maria Bacong a 160- square meter portion of the
subject land.8 On September 28, 1959, Sixto sold to Tiburcio Balitaan a 1,695 square meter
portion of the same land.9 Sometime in November 1967, Maria Bacong sold her property to
Rosendo Bacong.10
Petitioners demanded the reconveyance of the portions sold by Sixto but Tiburcio Balitaan,
Maria Bacong and Rosendo Bacong refused to do so. Hence, petitioners filed against them
before the Regional Trial Court of Batangas (Branch 2), a complaint for Declaration of Nullity
of Documents, Partition, Malicious Prosecution and Damages, docketed as Civil Case No.
202.11
In their Answer, Maria Bacong and Rosendo Bacong contend that petitioners have no cause
of action because they acquired their property thru a valid deed of sale dated August 29, 1957,
executed by Sixto and, alternatively, petitioners' cause of action, if any, was barred by
prescription and laches.12
In his Answer, Tiburcio Balitaan contends that petitioners have no cause of action since
petitioners were well-aware of the sale of the property to him by Sixto; and that he was an
innocent purchaser for value, in possession and enjoyment of the land in the concept of
absolute owner, peacefully and publicly. He further echoed the contention of Maria and
Rosendo Bacong that any cause of action petitioners may have was barred by prescription and
laches.13
Maria Bacong died during the pendency of the suit in the trial court and she was substituted by
her surviving heirs, namely, Lorenza, Elena, Felipa, Manuel, Marilou, Ricardo, Medel, Monchito
and Milag, all surnamed Medrano.14 Tiburcio Balitaan also died and was substituted by his
heirs, herein private respondents, namely: his wife, Maria Rosales and their four children: Elias,
Jose, Arsenia and Rogelio, all surnamed Balitaan.15
On July 28, 1989, petitioners and Rosendo Bacong, for himself and as attorney-in-fact of the
heirs of Maria Bacong, entered into a compromise agreement to settle the case between
them.16 The compromise agreement, as approved by the trial court, provided that Rosendo
Bacong and the heirs of Maria Bacong agreed to pay ₱30,000.00 to petitioners in recognition
of petitioners' ownership of a 269-square meter portion17 and in consideration of which,
petitioners recognized the full ownership, rights, interest and participation of the former over
said land.18 The area of the subject land is thus reduced to 2,342 square meters (2,611 square
meters minus 269 square meters).
After trial on the merits, the trial court rendered judgment dated April 28, 1992, ruling that
private respondents did not dispute, by any evidence, the falsity of the Affidavit of Transfer, as
well as the fact that Sixto had co-owners to the property. It found that private respondents'
affirmative defense of laches and/or prescription are unavailing against a property held in co-
ownership as long as the state of co-ownership is recognized. Consequently, the trial court
upheld the sale made by Sixto in favor of private respondents only to the extent that Sixto is
entitled to by virtue of his being a co-owner.19
In determining the area that Sixto could have validly sold to private respondents, the trial court,
in its decision, provided for the manner of partition among the parties, based on the
memorandum submitted by petitioners, thus:
For the four (4) children of the first marriage, namely:
(1) Gertrudes, who is already dead represented by her children Tefesforo, Reynaldo,
Remedios, Alfredo and Belen, all surnamed Aguirre - 399.42 square meters;
(2) Isabel Medrano, who is already dead, represented by the plaintiffs, her children Vicenta,
Horacio and Florencio, all surnamed Magtibay - 399.42 square meters;
(3) Placido Medrano (dead), represented by his only child Zosima Medrano - 399.42 square
meters; and
(4) Sixto Medrano - 399.42 square meters only which he had the right to dispose of in favor of
Tiburcio Balitaan and Maria Rosales.
The above consist of undivided interest, shares and participations from the inheritance or
succession to the conjugal estate of Leocadio Medrano and Emiliana Narito.
For the children of the second marriage their shares in the inheritance from the property of
Leocadio Medrano are as follows:
(1) To Venancio Medrano - 138.32 square meters
(2) To Leonila Medrano - 138.32 square meters
(3) To Antonio Medrano - 138.32 square meters
(4) To Cecilia Medrano - 138.32 square meters
with all the above consisting of undivided shares, interest and participation in the estate.
For the defendants Maria Rosales, surviving spouse of the deceased Tiburcio Balitaan and
their Children, an area of 399.42 square meters, the only area and extent which Sixto Medrano
could have legally dispensed of in their favor.20
Thus, the dispositive portion of the trial court's decision reads as follows:
WHEREFORE, in view of the foregoing, the Court renders judgment in favor of the plaintiffs
and against the defendants, to wit:
(a) Ordering the partition of the property in question among the plaintiffs and the defendants;
and
(b) Ordering the parties, plaintiffs and defendants, to make a partition among themselves by
proper instruments of conveyance and to submit before this Court a project of partition should
the parties be able to agree for the confirmation of the Court within two (2) months upon receipt
of this decision, otherwise this Court will be constrained to appoint commissioners to make the
partition in accordance with law.
All other claims not having been duly proved are ordered dismissed.
SO ORDERED.21
Aggrieved, private respondents appealed to the Court of Appeals.22
On July 26, 1995, the appellate court rendered judgment recognizing the validity of the sale
only with respect to the undivided share of Sixto Medrano as co-owner; but nonetheless,
declaring respondents as absolute owners of 1,695 square meters of the subject property,
reasoning that:
. . . Defendants-appellees have been in possession, in the concept of owner, of the entire parcel
of land sold to Tiburcio Balitaan by Sixto Medrano for more than ten years, seventeen years to
be exact (1958-1975). Relying on the affidavit of transfer (Exhibit "B") the tax declaration
(Exhibit "C") and the survey plan (Exhibit "D") shown to him by Sixto Medrano which indicate
the latter as owner of the property in dispute, Tiburcio Balitaan believed transfer to him was
effected. (TSN, April 17, 1991, pp. 14-17) and thus, entered the property as owner (Ibid. at p.
13) Tiburcio Balitaan, believing himself as the lawful transferee, in addition, caused Tax
Declaration No. 51038 to be issued in his name (Exhibits "6", "6-A", "6-B", and "6-C"). Thus,
although the sale of the co-owned property is only valid as to the undivided share of Sixto
Medrano, defendants, by virtue of their open, adverse and uninterrupted possession from 1958
(Exhibit "G") to 1975, obtained title to the entire property and not just Sixto's undivided share.
This is pursuant to Article 1134 (1957a) of the New Civil Code which provides that:
Ownership and other real rights over immovable property are acquired by ordinary prescription
through possession of ten years.
...
Plaintiffs did not at all inquire as to the status of their property all this time and thus have been
remiss of their duties as owners of the property. Plaintiffs waited until Sixto's death to learn
more about their property. Even though the co-ownership is to be preserved in accordance with
the wishes of the deceased, the plaintiffs should have taken it upon themselves to look into the
status of the property once in a while, to assure themselves that it is managed well and that
they are receiving what is due them as co-owners of the parcel of land or to at least manifest
their continued interest in the property as normal owners would do. But the plaintiffs did not
show any interest in the way Sixto Medrano was managing the property which in effect gave
the latter carte blanche powers over the same. Such passivity is aggravated by the fact that
one of the plaintiffs resides a mere 600 meters away from the disputed property (TSN, April 17,
1991, p. 13). By not showing any interest, the plaintiffs have, in fact, slept on their rights and
thus, cannot now exercise a stale right.23
Petitioners sought reconsideration24 but the appellate court denied it in a Resolution dated
October 5, 1995.25
In their present recourse, petitioners take exception from the appellate court's findings that
respondents have been in possession, in the concept of owner of the entire parcel of land sold
to Tiburcio Balitaan by Sixto Medrano for seventeen years (1958-1975), relying on the Affidavit
of Transfer and Tax Declaration No. 51038 in the name of Sixto; and that Tiburcio acquired
ownership of the whole property from Sixto through ordinary prescription for ten years.
Petitioners submit that Tiburcio Balitaan was not a purchaser in good faith and for value since
there are enough circumstances which should have put him on guard and prompted him to be
more circumspect and inquire further about the true status of Sixto Medrano's ownership; that
during his lifetime, Tiburcio was a neighbor of petitioners and was well-aware that Sixto had
other siblings but Tiburcio chose to rely on the Affidavit of Transfer executed by Sixto Medrano
declaring that he was the only heir of Leocadio; that the Court of Appeals should not have
faulted them for failing to inquire about the status of the disputed property until after the death
of Sixto Medrano; that they are not guilty of laches.
It is settled that in the exercise of the Supreme Court's power of review, the findings of facts of
the Court of Appeals are conclusive and binding on the Supreme Court.26 The exceptions to
this rule are: (1) when the findings are grounded entirely on speculation, surmises or
conjectures; (2) when the inference made is manifestly mistaken, absurd or impossible; (3)
when there is grave abuse of discretion; (4) when the judgment is based on a misapprehension
of facts; (5) when the findings of fact are conflicting; (6) when in making its findings the Court
of Appeals went beyond the issues of the case, or its findings are contrary to the admissions
of both the appellant and the appellee; (7) when the findings are contrary to the trial court; (8)
when the findings are conclusions without citation of specific evidence on which they are based;
(9) when the facts set forth in the petition as well as in the petitioner's main and reply briefs are
not disputed by the respondent; (10) when the findings of fact are premised on the supposed
absence of evidence and contradicted by the evidence on record; and (11) when the Court of
Appeals manifestly overlooked certain relevant facts not disputed by the parties, which, if
properly considered, would justify a different conclusion.27 Exceptions (4), (7), (10) and (11)
are present in the instant case.1âwphi1
We find the petition meritorious.28 We agree with the petitioners that the Court of Appeals
committed a reversible error in upholding the claim of petitioners that they acquired ownership
of the subject property through prescription.
Acquisitive prescription of real rights may be ordinary or extraordinary. Ordinary acquisitive
prescription requires possession of things in good faith and with just title for the time fixed by
law;29 without good faith and just title, acquisitive prescription can only be extraordinary in
character. Regarding real or immovable property, ordinary acquisitive prescription requires a
period of possession of ten years,30 while extraordinary acquisitive prescription requires an
uninterrupted adverse possession of thirty years.31
Ordinary acquisitive prescription demands that possession be "in good faith", which consists in
the reasonable belief that the person from whom the thing is received has been the owner
thereof and could thereby transmit that ownership.32 There is "just title" when the adverse
claimant comes into possession of the property through any of the modes recognized by law
for the acquisition of ownership or other real rights, but that the grantor is neither the owner nor
in a position to transmit the right.33
Article 1130 of the Civil Code states that the "title for prescription must be true and valid." In
Doliendo vs. Biarnesa,34 we elucidated on this provision, thus:
We think that this contention is based on a misconception of the scope and effect of the
provisions of this article of the Code in its application to "ordinary prescription." It is evident that
by a "titulo verdadero y valido" in this connection we are not to understand a "titulo que por si
solo tiene fuerza de transferir el dominio sin necesidad de la prescricion" (a title which of itself
is sufficient to transfer the ownership without the necessity of the lapse of the prescription
period); and we accept the opinion of a learned Spanish law writer who holds that the "titulo
verdadero y valido" as used in this article of the code prescribes a "titulo Colorado" and not
merely "putativo;" a "titulo Colorado" being one 'which a person has when he buys a thing, in
good faith, from one whom he believes to be the owner,' and a "titulo putativo" "being one which
is supposed to have preceded the acquisition of a thing, although in fact it did not, as might
happen when one is in possession of a thing in the belief that it had been bequeathed to him."
(Viso Derecho Civil, Parte Segunda, p. 541)35
The requirements for ordinary acquisitive prescription as hereinabove described have not been
met in this case.
It must be remembered that the burden of proving the status of a purchaser in good faith lies
upon him who asserts that status. It is not sufficient to invoke the ordinary presumption of good
faith, that is, that everyone is presumed to have acted in good faith, since the good faith that is
here essential is integral with the very status that must be established.36
After a careful examination of the records, we find that private respondents failed to discharge
the burden of proof that Tiburcio Balitaan was a purchaser in good faith. It is undisputed that
Tiburcio practically lived his entire lifetime in the area where the property in dispute is located
and had been a neighbor of petitioners. He knew that Sixto Medrano had other siblings because
his son, Dr. Elias Balitaan, is the godson by baptism of spouses Jose Aguirre and Gertrudes
Medrano, the latter being a deceased sister of Sixto. Thus, Tiburcio was not a complete
stranger to the Medrano clan. Yet, he deliberately chose to close his eyes to said facts and
despite his personal knowledge to the contrary, he purchased the disputed property from Sixto
on the basis of the misrepresentation of the latter in his Affidavit of Transfer that he is the sole
surviving heir of Leocadio. A purchaser cannot close his eyes to facts which should put a
reasonable man upon his guard, and then claim that he acted in good faith under the belief that
there was no defect in the title of the vendor.37
Since the disputed property is an unregistered land, Tiburcio as buyer thereof did so at his peril.
Private respondents' claim that Tiburcio bought the land in good faith, that is, without notice
that some other person has a right to or interest in the property, would not protect them if it
turns out, as it actually did in this case, that the seller, Sixto Medrano, did not own the entire
property at the time of the sale, but only an undivided portion of the land as a co-owner. Private
respondents failed to show that the petitioners were notified of the subject sale or that
respondents gave their consent to the sale. Not being in "good faith", the ten-year period
required for ordinary acquisitive prescription does not apply.
Even the thirty-year period under extraordinary acquisitive prescription has not been met in this
case. Private respondents claim to have been in possession, in the concept of owner, of the
entire parcel of land sold to Tiburcio Balitaan by Sixto Medrano for only seventeen years (1958-
1975).
In addition, as we have enunciated in Salvador vs. Court of Appeals,38 to wit:
This Court has held that the possession of a co-owner is like that of a trustee and shall not be
regarded as adverse to the other co-owners but in fact as beneficial to all of them. Acts which
may be considered adverse to strangers may not be considered adverse insofar as co-owners
are concerned. A mere silent possession by a co-owner, his receipt of rents, fruits or profits
from the property, the erection of buildings and fences and the planting of trees thereon, and
the payment of land taxes, cannot serve as proof of exclusive ownership, if it is not borne out
by clear and convincing evidence that he exercised acts of possession which unequivocably
constituted an ouster or deprivation of the rights of the other co-owners.
Thus, in order that a co-owner's possession may be deemed adverse to the cestui que trust or
the other co-owners, the following elements must concur: (1) that he has performed
unequivocal acts of repudiation amounting to an ouster of the cestui que trust or the other co-
owners; (2) that such positive acts of repudiation have been made known to the cestui que
trust or the other co-owners; and (3) that the evidence thereon must be clear and convincing.39
(Emphasis supplied)
Tested against these guidelines, respondents failed to present competent evidence that the
acts of Sixto adversely and clearly repudiated the existing co-ownership among the heirs of
Leocadio Medrano.
Private respondents' reliance on the tax declaration in the name of Sixto Medrano is unworthy
of credit since we have held on several occasions that tax declarations by themselves do not
conclusively prove title to land.40 Further, private respondents failed to show that the Affidavit
executed by Sixto to the effect that he is the sole owner of the subject property was known or
made known to the other co-heirs of Leocadio Medrano.
Neither can we subscribe to the appellate court's view that petitioners are guilty of laches.
Laches is the negligence or omission to assert a right within a reasonable time, warranting a
presumption that the party entitled to assert it has abandoned it or declined to assert it.41 It
does not involve mere lapse or passage of time, but is principally an impediment to the
assertion or enforcement of a right, which has become under the circumstances inequitable or
unfair to permit.42 The rule that each co-owner may demand at any time the partition of the
common property implies that an action to demand partition is imprescriptible or cannot be
barred by laches.43
We have consistently held that if a co-owner sells the whole property as his, the sale will affect
only his own share but not those of the other co-owners who did not consent to the sale.44
Article 493 of the Civil Code provides:
Art. 493. Each co-owner shall have the full ownership of his part and the fruits and benefits
pertaining thereto, and he may therefore alienate, assign or mortgage it, and even substitute
another person in its enjoyment, except when personal rights are involved. But the effect of the
alienation or the mortgage, with respect to the co-owners, shall be limited to the portion which
may be allotted to him in the division upon the termination of the co-ownership.
It clearly provides that the sale or other disposition affects only the seller's share pro indiviso,
and the transferee gets only what corresponds to his grantor's share in the partition of the
property owned in common. Since a co-owner is entitled to sell his undivided share, a sale of
the entire property by one co-owner without the consent of the other co-owners is not null and
void; only the rights of the co-owner/seller are transferred, thereby making the buyer a co-
owner of the property.45 Accordingly, we held in Bailon-Casilao vs. Court of Appeals:
From the foregoing, it may be deduced that since a co-owner is entitled to sell his undivided
share, a sale of the entire property by one-co-owner without the consent of the other co-owners
is not null and void. However, only the rights of the co-owner-seller are transferred, thereby
making the buyer a co-owner of the property.
The proper action in cases like this is not for the nullification of the sale or for the recovery of
possession of the thing owned in common from the third person who substituted the co-owner
or co-owners who alienated their shares, but the DIVISION of the common property as if it
continued to remain in the possession of the co-owners who possessed and administered it
[Mainit v. Bandoy, supra].
Thus, it is now settled that the appropriate recourse of co-owners in cases where their consent
were not secured in a sale of the entire property as well as in a sale merely of the undivided
shares of some of the co-owners is an action for PARTITION under Rule 69 of the Revised
Rules of Court. Neither recovery of possession nor restitution can be granted since the
defendant buyers are legitimate proprietors and possessors in joint ownership of the common
property claimed [Ramirez v. Bautista, supra].46
It is clear therefore that the deed of sale executed by Sixto Medrano in favor of Tiburcio Balitaan
is a valid conveyance only insofar as the share of Sixto Medrano in the co-ownership is
concerned. Thus, the respondent court erred in declaring the ownership of the entire 1,695-
square meter property sold by Sixto, in favor of the private respondents.
The next question is what is the area of the pro indiviso share pertaining to Sixto Medrano that
was sold to private respondents? The trial court endeavored to determine the same by
ascertaining the inheritance of each of the heirs of Leocadio. However, the manner of partition
as set out by the trial court in the text of its decision needs to be amended so as to conform to
the laws on intestate succession under the Old Civil Code absent any allegation or showing
that Leocadio left any last will and testament.
It is not disputed that the 2,342-square meter property was a conjugal property of Leocadio
and Emiliana. Upon the death of Emiliana, which occurred many years before the death of
Leocadio in 1945, both deaths occurring before the enactment of the New Civil Code in 1950,
all the four children of the first marriage and the four children of the second marriage shall share
equally. The subject property should have been divided into eight equal parts, pursuant to
Articles 921 and 931 of the old Civil Code,47 or 292.75 square meters each. The respective
heirs of the now deceased children of Leocadio inherit by way of representation the respective
shares of their respective parents, pursuant to Articles 933 and 934 of the Old Civil Code.48
At the time of death of Leocadio in 1945, Miguela was entitled only to the usufruct of the land
pursuant to Article 834 of the Old Civil Code,49 which provides that "[i]f only one legitimate
child or descendant survives, the widower or widow shall have the usufruct of the third available
for betterment, such child or descendant to have the naked ownership until, on the death of the
surviving spouse, the whole title is merged in him".
Thus, to recapitulate, each of the heirs of Leocadio should inherit 292.75 square meters, pro-
indiviso (2,342 square meters ¸ 8 = 292.75 square meters) after deducting from the original
2,611 square meters of the subject property the 269 square meters ceded to the heirs of Maria
Bacong in a compromise agreement among the petitioners and the heirs of Maria Bacong. The
deceased children of Leocadio are represented by their respective heirs by right of
representation under Articles 933 and 934 of the Old Civil Code.
Accordingly, the undivided shares of Leocadio's eight children or their heirs by right of
representation, upon the death of Leocadio in 1945 are as follows:
(1) Venancio Medrano - 292.75 square meters

(2) Leonila Medrano - 292.75 square meters
(3) Antonio Medrano - 292.75 square meters
(4) Cecilia Medrano - 292.75 square meters
(5) Heirs of Gertrudes M. Aguirre, Telesforo, Reynaldo, Remedios, Alfredo and Belen, all
surnamed Aguirre- - 292.75 square meters
(6) Heirs of Isabel M. Magtibay, Vicenta, Horacio and Florencio, all surnamed Magtibay -
292.75 square meters
(7) Heirs of Placido Medrano, plaintiff Zosima Medrano Quimbao - 292.75 square meters
(8) Sixto Medrano - 292.75 square meters
During the pendency of the case in the trial court but after the death of Sixto, petitioners sold
460 square meters to one Mateo Castillo. Consequently, the 460 square meters should be
charged against the shares of petitioners only and should not affect the 292.75 square meters
undivided share of Sixto Medrano which he had sold in 1959.50 Accordingly, 460 square
meters divided by 7 equals 65.71 square meters. Deducting said area from 292.75 square
meters, the final undivided share of each of the seven heirs of Leocadio should be 227.04
square meters (292.75 - 65.71 = 227.04) and that pertaining to Sixto in 292.75 square meters.
Thus, the manner of partition set forth by the trial court in its decision should be amended, as
follows:
(1) Gertrudes M. Aguirre, deceased, represented by her children, herein petitioners Telesforo,
Reynaldo, Remedios, Alfredo and Belen, all surnamed Aguirre - 227.04 square meters
(2) Isabel M. Magtibay, deceased, represented by her children, herein petitioners Vicenta,
Horacio and Florencio, all surnamed Magtibay - 227.04 square meters
(3) Placido Medrano, deceased, represented by his only child, Placido Medrano - 227.04
square meters
(4) Private respondents Maria Rosales and heirs of Tiburcio Balitaan, namely: Elias, Jose,
Arsenia and Rogelio all surnamed Balitaan (in lieu of Sixto Medrano) - 292.75 square meters
(5) Venancio Medrano - 227.04 square meters
(6) Leonila Medrano - 227.04 square meters
(7) Antonio Medrano - 227.04 square meters
(8) Cecilia Medrano - 227.04 square meters
(9) Rosendo Bacong - 269 square meters
(10) Mateo Castillo - 460 square meters
WHEREFORE, we GRANT the petition. The assailed decision of the Court of Appeals in CA-
G.R. CV No. 42350, dated July 26, 1995, is REVERSED and SET ASIDE. The decision of the
Regional Trial Court is REINSTATED with the following MODIFICATIONS:
The sale in favor of private respondents is declared VALID but only insofar as the 292.75
square meters undivided share of Sixto Medrano in the subject property is concerned.
Let the parcel of land, located at Aplaya, Bauan, Batangas, consisting of 2,611 square meters,
be partitioned and distributed as determined by the Court in the text of herein decision.
Accordingly, let the records of the case be remanded to the Regional Trial Court of Batangas
City (Branch 2) in Civil Case No. 202 for further appropriate proceedings under Rule 69 of the
Rules of Court.
No pronouncement as to costs.
SO ORDERED.
Puno, (Chairman), Quisumbing, Callejo Sr. and Tinga, JJ., concur.
G.R. No. L-9969 October 26, 1915
MODESTA BELTRAN, ET AL., plaintiffs-appellees,
vs.
FELICIANA DORIANO, ET AL., defendants-appellants.
Ceferino Hilario for appellants.
M. Buyson Lampa for appellees.
TORRES, J.:
This is an appeal by a bill of exceptions, filed by counsel for the defendants, from the judgments
of November 4, 1913, in which the Honorable Julio Llorente, judge declared the preliminary
injunction theretofore issued in the case to be final, sentenced the defendants to pay to the
plaintiffs, with the exception of Saturnino Vitug, the sum of P500 as damages, and absolved
the defendants from the complaint filed by Saturnino Vitug without express finding as to costs.
On June 27, 1913, counsel for Modesta Beltran and her minor children Ignacio, Jose and
Eliodoro, surnamed Guintu, filed a written complaint in the Court of First Instance of Pampanga
in which he alleged that his clients were the owners in fee simple of a parcel of mangrove
swamp land situated in the barrio of Santa Cruz, municipality of Lubao, Pampanga, containing
an area of 71 hectares, the boundaries of which are set forth in the complaint; that on or about
the 23d of June ,1913, the defendants unlawfully took possession of and continue to occupy
the said land of the plaintiff, cutting nipa thereon, in violation of plaintiffs' rights and causing the
latter damages to the extent of P500; and that, unless a preliminary injunction issue against
the defendants, enjoining them from continuing to perform such acts, the defendants would
suffer great damage and the judgment to be rendered in this case would be useless. The said
counsel therefore prayed the court to appoint Saturnino Vitug curator ad litem for the plaintiffs
surnamed Vitug who were minors, and that after the filing of a bond, a preliminary injunction
issue against the defendants enjoining them from continuing to perform the prejudicial acts
mentioned in the complaint, and that, after the necessary legal steps, a final injunction issue
enjoining the defendants, their agents, mandataries, or other persons acting in their behalf from
performing the acts that gave rise to these proceedings, and that the defendants be ordered,
jointly and severally, to pay to the plaintiffs the sum of P500 as damages, and to the payment
of the costs.
On July 14, 1913, after the plaintiffs had furnished bond, the court, ex parte, granted a
preliminary injunction against the defendants and all their attorneys, mandataries, agents and
other persons who might act in their name, enjoining them from cutting the nipa growing on the
land described in the complaint.
The defendants, who lived in the same Province of Pampanga, were, on July 16, 1913, cited
to appear, and notwithstanding that the written notice of appearance filed by counsel for the
defendants was dated August 4, 1913, this notice was not received in the office of the clerk of
the Court of First Instance of Pampanga until August 8, 1913, that is, 23 days after the
defendants had been summoned. By a writing of august 14, 1913, counsel for the defendants
answered the complaint, denying the allegations contained in all its paragraphs and setting up
a special defense thereto, but this pleading was not received by the clerk of the court until the
8th of September of the same year. Consequently, on September 6, 1913, on motion by
plaintiff, the judge issued an order declaring the defendants in default.
After hearing the case and considering the evidence adduced by the plaintiffs, the court
rendered the aforementioned decision, to which the defendants excepted and by a motion in
writing asked for a reopening of the case and a new trial. This motion was overruled, the
appellants excepted, and, the proper bill of exceptions having been filed, the same was
approved and transmitted to the clerk of the Supreme Court.
These proceedings were brought on account of the seizure by defendants of a considerable
amount of nipa planted on a parcel of mangrove swamp land belonging to the plaintiffs,
Modesta Beltran and her children, the description and boundaries of which land are given in
the complaint. The owners of the land suffered damages through the loss of about 5,000 nipa
plants which were taken possession of by defendants and cut by their orders, and which, at a
valuation of ten centavos each, amount to a total value of P500.
By a notarial instrument executed and ratified on October 1911, Feliciano de la Rosa, the
husband of Rosario Lim, sold outright and in perpetuity a parcel of mangrove swamp land,
situated in the barrio of Santa Cruz, pueblo of Lubao, Pampanga, the situation and boundaries
of which are set forth in the instrument, to Doroteo Guintu and his wife Modesta Beltran, for the
sum of P2,000, the vendor transferring to the vendees the dominion, possession and ownership
of the said land free of all charge and encumbrance, as shown by the records of the property
registry and of the Bureau of Forestry. This instrument was presented in evidence as Exhibit
A.
In the document Exhibit B it appears Feliciana Doriano, the widow of the late Francisco de la
Rosa, their children Maria de la Rosa (accompanied by her husband, Leonardo Fernandez)
and Feliciano de la Rosa, both of legal age, and Eugenio Fernandez, guardian of the minor
Ramon de la Rosa, have declared that the said deceased, Francisco de la Rosa, husband and
father of the deponents, left at his death property consisting mostly of mangrove swamp land
which has not yet been judicially petitioned; but in the proceedings for the settlement of his
estate, pending in the court of that province, there was presented a proposed partition which,
up to the 30th of March, 1912, had not yet been approved, and which set forth that there had
been awarded to Maria de la Rosa, as her share of the estate, the mangrove swamp land
situated in Gumi or Calangain, as specifically described in the deed of sale executed by her on
the same date in behalf of Modesta Beltran and ratified before the notary Esteban Victorio. In
the same proposed partition there was adjudicated to Feliciano de la Rosa, likewise as a part
of his share in the estate, another parcel of mangrove swamp land, the description of which is
given in the deed of sale executed in turn by him in behalf of the spouses Doroteo Guintu and
Modesta Beltran and ratified on October 6, 1911. The heirs of the deceased De la Rosa agreed
to recognize these sales as valid and effective as though the hereditary property had been
judicially partitioned and the said lands legally adjudicated to the vendors who alienated them
and they furthermore waived all the rights they might have therein. The said deed was ratified
before a notary by the makers of the instrument.
By virtue of the acquisition by the spouses Guintu and Beltran of the land referred to in the
notarial instrument Exhibit A, they entered into the possession of the property and took steps
to improve it and increase the number of plants in order to secure the greatest benefit
therefrom.
By the mere fact of the death of the husband, his children and heirs, together with their mother,
by operation, of law succeeded him in the dominion, property and possession of the land and
its improvements, for, from the moment Doroteo Guintu died, though survived by his widow,
the rights to the succession of their deceased father were thereby transmitted to his children,
since the latter, as his forced heirs, succeeded him in all his rights and obligations. (Arts. 657
and 661, Civil Code).lawphil.net
If, as it was fully proven, the plaintiffs Modesta Beltran and her children are in lawful possession
of the land in question as the owners thereof, we fail to see how the defendants, especially
Feliciano de la Rosa, dared to usurp the land which the latter had sold to the plaintiff Beltran
and to her deceased husband, as evidenced in an irrefragable manner by the said deed Exhibit
A. The record nowhere indicates any right or title in them by which they took possession of and
ordered cut some 5,000 nipa plants, thereby causing the owners of the same losses and
damages which, as proved at the trial, amounted to the value of P500.
Apart from the fact that in the instrument Exhibit B the heirs and widow of the deceased
Francisco de la Rosa accepted and agreed to the sale of a parcel of land by Maria de la Rosa
to Modesta Beltran, and to the sale of the land in the case at bar by Feliciano de la Rosa to the
said Beltran and her husband, Doroteo Guintu, as parts of their respective shares of the
inheritance, just as though the plan for the proposed partition, presented and submitted for
judicial sanction, had been approved, and that they thus waived all rights they might have had
over the said sales, it is certain that the defendants have not alleged that one of them, Feliciano
de la Rosa, in selling the land in question, disposed of it improperly, as belonging to his other
co-heirs, and that he had no right to alienate it; on the contrary, the record shows that it was
clearly proven that the proposed partition submitted to the court included the land sold by De
la Rosa to Modesta Beltran and to her husband, now deceased, as a part of his inheritance,
and it does not appear that the sale caused any detriment to his co-heirs.
There is no provisions of law whatever which prohibits a co-heir from selling his share of the
estate, or legal portion, to a stranger, before the partition of the hereditary property is approved
by the court, for article 1067 of the Civil Code prescribes: "If any of the heirs should sell his
hereditary rights to a stranger before the division, all or any of the co-heirs may subrogate
themselves in the place of the purchaser, reimbursing him for the value of the purchase,
provided they do so within the period of a month, to be counted from the time they were
informed thereof." .
Still more: section 762 of the Code of Civil Procedure contains among others the following
provisions: "Such partition may be made although some of the original heirs or devisees have
conveyed their shares to other persons; and such shares shall be set to the persons holding
the same as they would have been to the heirs or devisees." .
In law, the rule governing property held by various co-owners in common is analogous to that
which obtains where the estate of a deceased person is held pro indiviso by several co-
participants, for, pursuant to article 450 of the Civil Code, "each one of the participants in a
thing possessed in common is considered as having exclusively possessed the part which may
be alloted to him on the distribution for the entire period during which there is no division." .
The provisions of this article appear to be confirmed by that contained in article 1068 of the
Civil Code. Feliciano de la Rosa could, therefore, lawfully sell the said land in question as a
part of his share of the estate, even before the approval of the proposed partition of the
property, which his father, Francisco de la Rosa, left at his death and besides, apart from this,
the sale made by him appears to have been expressly recognized by himself and his co-heirs
as well as by his mother, Feliciana Doriano, in Exhibit B.
As the defendants legally alienated the land by absolute sale to the plaintiffs and received the
price thereof, they can never justify the seizure, made with manifest bad faith, of the products
of the said land which no longer belongs to them.
For the foregoing reasons, whereby the errors assigned to the judgment appealed from are
deemed to have been refuted, and holding the said judgment to be in conformity with law and
the merits of the case, we must, as we do hereby, affirm the same, with the costs against the
appellants. So ordered.
Arellano, C.J., Johnson, Carson, and Araullo, JJ., concur.
G.R. No. 171068 September 5, 2007
HEIRS OF MARCELINA ARZADON-CRISOLOGO, represented by Leticia C. del Rosario,
MAURICIA ARZADON and BERNARDO ARZADON, petitioners,
vs.
AGRIFINA RAÑON, substituted by SUZIMA RAÑON-DUTERTE and OTHELO RAÑON,
respondents.
DECISION
CHICO-NAZARIO, J.:
This is a Petition for Certiorari under Rule 45 of the Rules of Court of the Decision1 and
Resolution2 of the Court of Appeals in CA-G.R. SP No. 72552, dated 10 November 2005 and
12 January 2006, respectively, which affirmed in toto the Decision3 dated 8 August 2002 of the
Regional Trial Court (RTC) of Batac, Ilocos Norte, Branch 18, in Civil Case No. 3875-18. The
RTC reversed the 11 December 2001 Decision4 of the Municipal Circuit Trial Court (MCTC) of
Badoc-Pinili, Badoc, Ilocos Norte, in Civil Case No. 141-B.
Records show that on 18 October 1995, Agrifina Rañon5 filed a Complaint6 against spouses
Conrado and Mila Montemayor (spouses Montemayor) with the MCTC of Badoc, Ilocos Norte,
claiming ownership over an unregistered residential lot (subject property) situated at Brgy. No.
2 Badoc, Ilocos Norte, covered by Tax Declaration No. 420809, more particularly described as
follows:
"RESIDENTIAL with an area of 472 sq. ms. (sic) Bounded on the North by Ladera St.; on the
East by Dionisio Ladera; on the South by Buenaventura Arzadon; and on the West by Rafael
Ladera; Assessed at P1700.00 under Tax Dec. No. 420809."7
According to Agrifina Rañon, her family had enjoyed continuous, peaceful and uninterrupted
possession and ownership over the subject property since 1962, and had religiously paid the
taxes thereon. They had built a house on the subject property where she and her family had
resided. Unfortunately, in 1986, when her family was already residing in Metro Manila, fire
razed and destroyed the said house. Nonetheless, they continued to visit the subject property,
as well as pay the real estate taxes thereon. However, in August of 1986, her daughter, Zosie
Rañon, discovered that the subject property was already in the name of the spouses
Montemayor under Tax Declaration No. 0010563 which was purportedly issued in their favor
by virtue of an Affidavit of Ownership and Possession which the spouses Montemayor executed
themselves. The Affidavit was alleged to have created a cloud of doubt over Rañon’s title and
ownership over the subject property.
Hence, Agrifina Rañon sought a Writ of Preliminary Injunction8 against the spouses
Montemayor commanding them to cease and desist from further exercising any right of
ownership or possession over the subject property. She further prayed that she be finally
declared the true and lawful owner of the subject property.
The spouses Montemayor, for their part, alleged that they acquired the subject lot by purchase
from Leticia del Rosario and Bernardo Arzadon who are the heirs of its previous owners for a
consideration of P100,000.00.9
On 22 July 1996, the Heirs of Marcelina Arzadon-Crisologo, (represented by Leticia A.
Crisologo del Rosario), Mauricia Arzadon, and Bernardo Arzadon (petitioners) filed an Answer
in Intervention10 claiming, inter alia, that they are the rightful owners of the subject property,
having acquired the same from their predecessors-in-interest. They averred that there existed
no liens or encumbrances on the subject property in favor of Agrifina Rañon; and that no
person, other than they and the spouses Montemayor, has an interest in the property as owner
or otherwise.
Per petitioners’ allegations, their predecessors-in-interest, spouses Timoteo and Modesta
Alcantara (spouses Alcantara) bought the subject property from its owner, Rafael Ladera, on 2
May 1936. The spouses Alcantara then built a house of strong materials on the subject property
which served as their conjugal home. Residing with them was Timoteo Alcantara’s sister,
Augustina Alcantara-Arzadon. As the spouses Alcantara died without issue, their properties
were left to Timoteo Alcantara’s nearest of kin, Augustina Alcantara-Arzadon and Tiburcio
Alcantara, sister and brother, respectively, of Timoteo Alcantara. Tiburcio Alcantara also died
without any known heir; thus, leaving the subject property in Augustina Alcantara-Arzadon’s
sole favor. Augustina Alcantara-Arzadon is the mother of petitioners Marcelina Arzadon-
Crisologo (now deceased and whose heirs are represented by Leticia del Rosario) and
Mauricia Arzadon. Bernardo Arzadon is the son of Mauricia Arzadon.
Petitioners asseverated further that Bernardo Arzadon had lived in the house constructed on
the subject property until 1985 when it was gutted by fire. To further support their claims,
petitioners averred that they had religiously paid the real estate taxes on the subject property.
Finally, by way of a counterclaim, petitioners sought compensation for the damages which they
allegedly suffered by reason of the baseless filing of the instant suit.
On 22 October 1999, the MCTC issued an Order11 dropping the name of the spouses
Montemayor from the caption of the case on the ground that sometime in 1996, Leticia del
Rosario and Bernardo Arzadon had repurchased the subject property from the spouses
Montemayor for the consideration of P100,000.00. As a result, the spouses Montemayor had
no more interest or claim whatsoever on the property in litigation.
On 11 December 2001, the MCTC rendered a Decision in favor of the petitioners. The decretal
portion thereof reads, thus:
WHEREFORE, in view of all the foregoing, judgment is hereby rendered:
1. Declaring the [petitioners] to be the true and lawful owners of one-half (1/2) portion of the
undivided whole of the lot-in-suit by mode of succession pursuant to [A]rticle 1001 of the [C]ivil
[C]ode of the Philippines;
2. Declaring the [petitioners] to have the better right over the other half of the undivided whole
of the lot-in-suit by mode of prescription pursuant to [A]rticle 1137 of the Civil Code of the
Philippines;
3. Dismissing the counter-claim of the [petitioners] against the [respondents];
4. Ordering [petitioners] to pay the cost of the suit.12
First, the MCTC ruled that while the adverse claims of Agrifina Rañon on the subject lot against
the spouses Alcantara may have started in 1962, this adverse possession was interrupted in
the year 1977 due to the filing of an adverse claim by petitioner Marcelina Arzadon-Crisologo
with the Office of the Assessor. In 1977, the tax declaration in the name of Valentin Rañon,
Agrifina Rañon’s husband, was cancelled and a new tax declaration was issued in Marcelina
Arzadon-Crisologo’s name. The MCTC said that the period of possession of the spouses
Rañon in the concept of an owner from 1962 to 1977 did not ripen into ownership because their
occupation was in bad faith. The Civil Code requires, for acquisitive prescription of real
property, 30 years of uninterrupted possession if the same is wanting in good faith and without
a just title.
Second, the MCTC held that by virtue of succession, petitioners are entitled to one-half of the
subject property. This is because according to Article 100113 of the Civil Code, should brothers
and sisters or their children survive with the widow or the widower (who are without issue), the
latter shall be entitled to one-half of the inheritance and the brothers and sisters or their children
to the other half. The spouses Alcantara died without issue. As between Timoteo Alcantara and
Modesta Alcantara, the former predeceased the latter. Timoteo Alcantara was survived by (1)
his brother Tiburcio Alcantara, who also died without any known heir; and (2) his sister
Augustina Alcantara. Thus, following the death of the spouses Alcantara, only the children of
Augustina Alcantara, namely Marcelina Arzadon-Crisologo and Mauricia Arzadon, stand to
inherit Timoteo Alcantara’s share in the subject property.
Moreover, the MCTC declared that for the part of Modesta Alcantara, there was no legal heir
who claimed the other half of the property which she14 inherited from her husband, Timoteo
Alcantara who predeceased her. On this portion, the MCTC held that petitioners exercised
rights of ownership and dominion over the same by periodically visiting the lot and cleaning
it.15 It also held that from 31 August 1977, when petitioners’ predecessor-in-interest Marcelina
Arzadon-Crisologo filed an adverse claim for herself and for her brothers and sisters which led
to the issuance of Tax Declaration No. 44120 in her name, to 11 December 2001,16 there is a
total of 33 years, three months and 10 days which is sufficient to claim ownership over the
subject property by adverse possession under Article 113717 of the Civil Code.

On appeal, the RTC reversed and set aside the Decision of the MCTC.
The RTC declared that the respondent Rañons who are heirs of the original plaintiff had
acquired the subject property by virtue of acquisitive prescription, and therefore adjudged
respondents to be the absolute owners thereof; thus, in the 8 August 2002 Decision of the RTC,
it held:
WHEREFORE, in view of the foregoing, the Decision of the trial [c]ourt is hereby REVERSED
and SET ASIDE, and judgment is hereby rendered:
1) Declaring the [respondents] as the absolute owners of the parcel of land in suit, having
acquired the same through extraordinary acquisitive prescription.
No costs.18
In its findings, the RTC declared that a more circumspect scrutiny of the evidence showed that
for a long time from the death of the spouses Alcantara, no one adjudicated the subject property
unto themselves. Although petitioners and their predecessors-in-interest claimed to have
successional rights over the subject property, they did not take action to have the same
adjudicated to themselves or, at least, to have the same declared for taxation purposes. The
RTC ruled that petitioners had slept on their rights. On the part of the respondent Rañons, in
1962, Valentin Rañon, respondents’ father, declared the subject property in his name for
taxation purposes and paid the corresponding taxes thereon. In the years that followed, his
wife, Agrifina Rañon, declared the same in her name for taxation purposes, as well as paid the
real estate taxes on the subject property. In 1977, the latter even mortgaged the subject
property with the Philippine National Bank. It was only in 1977 when petitioners’ predecessor-
in-interest Marcelina Arzadon-Crisologo executed an Adverse Claim and Notice of Ownership
and declared the subject property in her name and paid its taxes.
The RTC elucidated in this wise, to wit:
It bears to note that since the death of Timoteo Alcantara until the year 1977, [petitioners], as
well as their predecessors-in-interests (sic) had not taken any concrete step in exercising their
supposed successional rights over the parcel of land in suit, or at least, the Intervenors should
have always [stayed] on their guard or especially vigilant against anyone who would secure a
claim to the said parcel of land, more so that Valentin Rañon and plaintiff Agrifina Rañon were
then living with them. It is very unfortunate that it was only in 1977 that the Intervenors made
known to others of their supposed successional rights over the parcel of land in suit. Relief is
denied to a claimant whose right has become stale for a long time, considering that some other
persons like [respondents] had wayback (sic) taken the necessary action in claiming the parcel
of land in suit. It is the vigilant and not the sleepy that is being assisted by the laws. (Ledita
Burce Jacob v. Court of Appeals, et al., G.R. No. 92159, July 1, 1993).
It stands to reason, therefore, to hold that because of the claim of the [respondents] to have
acquired the parcel of land in suit by acquisitive prescription, the Intervenors who belatedly
claimed to be the legal and compulsory heirs of the late Timoteo Alcantara, as ruled by the trial
court, had regrettably forfeited their such (sic) successional rights, simply due to their inaction
for a long period of time. Hence, contrary to the findings of the trial court, the [petitioners] are
not entitled to the one-half (1/2) portion of the parcel of land in suit.19
Likewise, the RTC reasoned that the Notice of Adverse Claim executed by petitioners’
predecessor-in-interest Marcelina Arzadon-Crisologo against the Rañons in 1977 implied that
respondents have been in possession of the subject property. On this matter, the RTC said,
viz:
Evidently, the trial court considered by implication that the execution by Marcelina Arzadon
Crisologo of said Adverse Claim and Notice of Ownership in 1977 to have interrupted the
running of the prescriptive period on the possession by the [respondents] of the parcel of land
in suit. It bears to stress on (sic) this point, that the Adverse Claim and Notice of Ownership
executed by Marcelina Arzadon Crisologo is nothing but a notice of a claim adverse to the
[respondents]. By its nature, its implication is that the [respondents] have been in possession
of the parcel of land in suit in some concept. But definitely, said Adverse Claim does not, upon
its execution, operate to toll or interrupt the running of the prescriptive period because there is
a necessity to determine the validity of the same. And this could only be done by the filing of
the necessary action in court such [as] contemplated in the provisions of Article 1123 of the
Civil Code. It is only on (sic) such instance that the prescriptive period should be deemed
interrupted. And undisputedly, nothing had been done by the Intervenors after the execution of
said Adverse Claim by Marcelina Crisologo, except of course as they claimed, and as held by
the trial court, they started to possess the parcel of land in suit. Regretably (sic), however, such
possession by the Intervenors of the parcel of land in suit does not benefit them for purposes
of prescription.20
The RTC also declared that the Rañons have been in possession of the parcel of land in the
concept of an owner since 1962. Even as they had gone to live in Manila following the burning
of the house on the subject property, they continued to exercise acts of dominion over the same
by visiting and looking after the property. The RTC also considered in favor of the respondents,
the admission of petitioner Bernardo Arzadon and the petitioners’ witnesses that Valentin
Rañon and Agrifina Rañon had been staying in the house on the subject lot since 1947, which
shows that they had been in possession of the subject property for a period of more than 50
years.
On review before the Court of Appeals, the Decision of the RTC was affirmed in toto.
The Court of Appeals held that when Valentin Rañon executed the affidavit declaring himself
to be the true and lawful owner of the subject property in 1962, the same was a repudiation of
petitioners’ legal title over it. The repudiation, coupled with the payment of realty taxes, was
made with the knowledge of petitioners, who failed to act against it. Thus, from 1962 up to the
filing of the action in 1995, respondents continued to adversely occupy the property. In the
assailed 10 November 2005 Decision of the Court of Appeals, it ruled:
Moreover, respondents’ payment of realty taxes made with the knowledge and consent of
petitioners and went unchallenged for a number of years, indubitably show their positive claim
as owners of the property. While it is true that by themselves tax receipts and declarations of
ownership for taxation purposes are not incontrovertible evidence of ownership, they become
strong evidence of ownership acquired by prescription when accompanied by proof of actual
possession of the property. It is only where payment of taxes is accompanied by actual
possession of the land covered by the tax declaration that such circumstance may be material
in supporting a claim of ownership.
Needless to state, from 1962 onwards, prescription begun to run against petitioners and was
not in any way interrupted from their mere execution of the Notice of Adverse Claim since the
notice of adverse claim cannot take the place of judicial summons which produces the civil
interruption provided for under the law. And even if We are to eliminate the question of good
faith in determining the prescriptive period, evidence are (sic) still abundant to substantiate
respondents’ thirty years of possession in the concept of owner commencing from 1962 until
1995 when the complaint below was filed.21
Petitioners filed a Motion for Reconsideration thereon which was denied by the Court of
Appeals in the following manner, to wit:
After a careful study of the grounds relied upon by petitioners We find no new matters raised
to justify a modification much less, a reversal of the Decision sought to be reconsidered. To
reiterate, even assuming ex gratia argumenti that petitioner merely tolerated the Rañons (sic)
occupancy of the subject property, it must be stressed that the execution in 1962 of Valentin
Rañon’s Affidavit, the corresponding payment of realty taxes and other acts of dominion which
went unchallenged by the petitioners, had effectively severed their alleged juridical relation.
Suffice it to state that these acts, taken as a whole, vest upon the Rañons the right to claim
ownership over the subject property irrespective of whether the nature of their occupation was
rooted from the mere tolerance of the Arzadons or from a bona fide sale between Agrifina
Rañon and Rafael Ladera.22
Hence, the instant Petition.
The primordial issue in the case at bar is whether the Court of Appeals erred in declaring that
respondents had acquired ownership over the subject property through uninterrupted and
adverse possession thereof for thirty years, without need of title or of good faith. Petitioners
dispute the findings of the Court of Appeals and the RTC in declaring that acquisitive
prescription has set in against them and in favor of the respondents. They claim that the
evidence does not support respondents’ contention that they have been in public, notorious,
and uninterrupted possession over the subject property in the concept of an owner since 1962
as alleged in their Complaint. Instead, petitioners rely on the finding of the MCTC that
respondents were not able to prove their adverse claim for an uninterrupted period of thirty
years.
At this juncture, we take an opportune look at the applicable rules on the acquisition of
ownership through prescription.
Prescription is another mode of acquiring ownership and other real rights over immovable
property.23 It is concerned with lapse of time in the manner and under conditions laid down by
law, namely, that the possession should be in the concept of an owner, public, peaceful,
uninterrupted and adverse.24 Possession is open when it is patent, visible, apparent, notorious
and not clandestine.25 It is continuous when uninterrupted, unbroken and not intermittent or
occasional;26 exclusive when the adverse possessor can show exclusive dominion over the
land and an appropriation of it to his own use and benefit;27 and notorious when it is so
conspicuous that it is generally known and talked of by the public or the people in the
neighborhood.28 The party who asserts ownership by adverse possession must prove the
presence of the essential elements of acquisitive prescription.
Article 1117 of the Civil Code is instructive:
Art. 1117. Acquisitive prescription of dominion and other real rights may be ordinary or
extraordinary.
Articles 1134 and 1137 of the Civil Code fix the periods of possession,29 which provide:
Art. 1134. Ownership and other real rights over immovable property are acquired by ordinary
prescription through possession of ten years.
Art. 1137. Ownership and other real rights over immovables also prescribe through
uninterrupted adverse possession thereof for thirty years, without need of title or of good faith.
From the foregoing, it can be gleaned that acquisitive prescription of real rights may be ordinary
or extraordinary.30 Ordinary acquisitive prescription requires possession of things in good faith
and with just title for the time fixed by law; without good faith and just title, acquisitive
prescription can only be extraordinary in character.31 Regarding real or immovable property,
ordinary acquisitive prescription requires a period of possession of ten years, while
extraordinary acquisitive prescription requires an uninterrupted adverse possession of thirty
years.32
Were respondents able to sufficiently satisfy the legal requirements to prove prescription?
To recapitulate, respondents traced their claim of ownership from the year 1962 until the filing
of their Complaint for Ownership before the MCTC on 18 October 1995. To support their
possession, they rely on an Affidavit executed on 19 October 1962 by Valentin Rañon claiming
ownership over the subject property by virtue of an alleged sale. The MCTC, the RTC and the
Court of Appeals were unanimous in declaring that the execution by Valentin Rañon of the
Affidavit in 1962 was an express repudiation of petitioners’ claim over the property. By virtue
of such Affidavit, respondents were able to cancel Tax Declaration No. 02853 in the name of
petitioners’ predecessor-in-interest Timoteo Alcantara who was shown to have paid taxes on
the subject property in 1950. Hence, in 1962, Tax Declaration No. 033062 was issued in the
name of Valentin Rañon. The same was subsequently cancelled by Tax Declaration No.
033106, which was in the name of his wife, Agrifina Rañon. The same was likewise cancelled
in 1967 by Tax Declaration No. 420809, similarly under the name of Agrifina Rañon. In 1977,
however, petitioners’ predecessor-in-interest Marcelina Arzadon-Crisologo filed an Adverse
Claim and a Notice of Ownership claiming that the subject property which is not yet registered
in the Office of the Register of Deeds of Laoag City is declared under Tax Declaration No.
420809 in the name of Valentin Rañon for taxation purposes only; but that they have been in
possession of the said land publicly, peacefully and continuously without any intervention or
interruption for more than 15 years.
However, a question must be asked: did the Notice of Adverse Claim filed by petitioners
constitute an effective interruption since 1962 of respondents’ possession of the subject
property?
The answer is in the negative.
Article 112333 of the Civil Code is categorical. Civil interruption is produced by judicial
summons to the possessor. Moreover, even with the presence of judicial summons, Article
112434 sets limitations as to when such summons shall not be deemed to have been issued
and shall not give rise to interruption, to wit: 1) if it should be void for lack of legal solemnities;
2) if the plaintiff should desist from the complaint or should allow the proceedings to lapse; or
3) if the possessor should be absolved from the complaint.
Both Article 1123 and Article 1124 of the Civil Code underscore the judicial character of civil
interruption. For civil interruption to take place, the possessor must have received judicial
summons. None appears in the case at bar. The Notice of Adverse Claim which was filed by
petitioners in 1977 is nothing more than a notice of claim which did not effectively interrupt
respondents’ possession. Such a notice could not have produced civil interruption. We agree
in the conclusion of the RTC, which was affirmed by the Court of Appeals, that the execution
of the Notice of Adverse Claim in 1977 did not toll or interrupt the running of the prescriptive
period because there remains, as yet, a necessity for a judicial determination of its judicial
validity. What existed was merely a notice. There was no compliance with Article 1123 of the
Civil Code. What is striking is that no action was, in fact, filed by petitioners against
respondents. As a consequence, no judicial summons was received by respondents. As aptly
held by the Court of Appeals in its affirmance of the RTC’s ruling, the Notice of Adverse Claim
cannot take the place of judicial summons which produces the civil interruption provided for
under the law.35 In the instant case, petitioners were not able to interrupt respondents’ adverse
possession since 1962. The period of acquisitive prescription from 1962 continued to run in
respondents’ favor despite the Notice of Adverse Claim.
From another angle, we find that, quite clearly, questions of fact exist before us. There is a
question of fact when the doubt or difference arises as to the truth or falsehood of facts or when
the query invites calibration of the whole evidence considering mainly the credibility of the
witnesses, the existence and relevancy of specific surrounding circumstances as well as their
relation to each other and to the whole, and the probability of the situation.36
Thus, we find proper the application of the doctrine that findings of facts of the Court of Appeals
upholding those of the trial court are binding upon this Court.37 Even though the rule is subject
to exceptions,38 we do not find them applicable in the instant case.
As found by the RTC and affirmed by the Court of Appeals, nothing was done by petitioners to
claim possession over the subject property from the time their predecessors-in-interest had lost
possession of the property due to their deaths. Plainly, petitioners slept on their rights.
Vigilantibus sed non dormientibus jura subveniunt. The law comes to the succor only to aid the
vigilant, not those who slumber on their rights. It was only in 1977 when they attempted to call
the attention of respondents, which as earlier discussed, did not even operate as an interruption
on the latter’s possession. The RTC and the Court of Appeals held that from 1962 to the time
they filed their Complaint before the MCTC and until the present time, respondents occupied
without interruption the subject property in the concept of an owner, thereby acquiring
ownership via extraordinary acquisitive prescription. To reiterate, the RTC’s factual findings
based on the evidence on record were manifestly in favor of respondents, to wit:
Thus, by preponderance of evidence, it has been established preponderantly that the
[respondents] have been in possession of the parcel of land in suit continuously, peacefully,
publicly, notoriously, uninterrupted and in the concept of an owner since 1962 to the present.
The fact that the [respondents] have gone to live in Manila right after the house built in the
parcel of land in suit was burned in 1988, they, however, then and thereafter intermittently
come to Badoc, Ilocos Norte purposely to look after and to visit the parcel of land in suit. Actual
possession of land consists in the manifestation of acts of dominion over it of such a nature as
a party would naturally exercise over his own property. One needs (sic) not to (sic) stay on it.
The acts exercised by the [respondents] over the parcel of land in suit are consistent with
ownership. Possession in the eyes of the law does not mean that a man has to have his feet
on every square meter of the ground before it can be said that he is in possession [thereof].
(Ramos v. Director of Lands, 39 Phil. 175, cited in the case of Somodio v. Court of Appeals, et
al., 235 SCRA 307). It is sufficient that the [respondents] were able to subject the parcel of land
to the action of their will.
Furthermore, the Court finds it (sic) significant the testimonies of [petitioner] Bernardo Arzadon
and his witnesses Leonila Arzadon and Elpidio Evangelista who categorically testified to the
effect that Valentin Rañon and [respondent] Agrifina Rañon had been staying in the house
standing on the parcel of land in suit since 1947. Basically, the defendants are bound by their
admissions and also bound by the testimonies of the witnesses they presented. And going
along with their respective testimonies, from 1947 to 1977 or for [a] period of thirty (30) years
the [respondents] have been in possession of the parcel of land in suit enough to invoke
extraordinary acquisitive prescription, pursuant to the provisions of Article 113439 (sic) of the
New (sic) Civil Code. However, as earlier stated, the [respondents], contrary to the claim of the
[petitioners] and findings of the trial court, have been in possession of the parcel of land in suit
continuously and uninterrupted from 1962 to the present but because of the admissions of the
[petitioners], the [respondents] have been in possession of the same from 1947 to the present
or for more than fifty (50) years now.40
The open, continuous, exclusive and notorious possession by respondents of the subject
property for a period of more than 30 years in repudiation of petitioners’ ownership had been
established. During such length of time, respondents had exercised acts of dominion over the
subject property, and paid taxes in their name. Jurisprudence is clear that although tax
declarations or realty tax payments of property are not conclusive evidence of ownership,
nevertheless, they are good indicia of possession in the concept of owner for no one in his right
mind would be paying taxes for a property that is not in his actual or at least constructive
possession.41 They constitute at least proof that the holder has a claim of title over the
property.42 As is well known, the payment of taxes coupled with actual possession of the land
covered by the tax declaration strongly supports a claim of ownership.43 The Court of Appeals
did not err in affirming the factual findings of the RTC that respondents had validly established
their claim of ownership over the subject property through acquisitive prescription.
WHEREFORE, the Petition is DENIED. The Decision of the Court of Appeals dated 10
November 2005 and the Resolution dated 12 January 2006 in CA-G.R. SP No. 72552 are
AFFIRMED. No costs.
SO ORDERED.
Ynares-Santiago, Chairperson, Austria-Martinez, Nachura, Reyes, JJ., concur.
G.R. No. 159578 July 28, 2008
ROGELIA DACLAG and ADELINO DACLAG (deceased) Substituted by RODEL M.
DACLAG and ADRIAN M. DACLAG, Petitioners,
vs.
ELINO MACAHILIG, ADELA MACAHILIG CONRADO MACAHILIG, LORENZA HABER and
BENITA DEL ROSARIO, Respondents.
DECISION
AUSTRIA-MARTINEZ, J.:
Before us is a Petition for Review on Certiorari under Rule 45 of the Rules of Court seeking to
annul and set aside the Decision1 dated October 17, 2001 and the Resolution2 dated August
7, 2003 of the Court of Appeals (CA) in CA G.R. CV No. 48498.
The antecedent facts:
During their lifetime, the spouses Candido and Gregoria Macahilig were the owners of seven
parcels of land, all located in Numancia, Aklan. They had seven children, namely: Dionesio,
Emeliano, Mario, Ignacio, Eusebio, Tarcela and Maxima.
On March 18, 1982, Maxima, a daughter of Candido and Gregoria entered into a Deed of Extra-
judicial Partition3 with the heirs of her deceased brothers, Mario and Eusebio Macahilig, over
the seven parcels of land. The same deed stated that Dionesio was already deceased but was
survived by his daughter, Susana Briones; Emeliano was out of the country; Ignacio and
Tarcela were also both deceased but were survived by three children each.
One of the properties partitioned in the Deed was a parcel of irrigated riceland located at
Poblacion, Numancia, Aklan, with an area of 1,896 square meters declared in the name of
Maxima under Tax Declaration No. 644 which was denominated as "Parcel One." This Parcel
One was divided between Vicenta Macahilig Galvez for the heirs of Mario Macahilig, who was
given the one half southern portion of the land; and Adela Macahilig for the heirs of Eusebio
Macahilig, who got the one half northern portion. The Deed was notarized by Municipal Judge
Francisco M. Ureta in his capacity as ex-officio notary public. The heirs of Eusebio Macahilig
are the herein respondents.
On March 19, 1982, Maxima executed a Statement of Conformity4 in which she confirmed the
execution of the Deed of Extra-judicial Partition and conformed to the manner of partition and
adjudication made therein. She also attested that five parcels of land in the deed were declared
in her name for taxation purposes, although said lands were actually the property of her
deceased parents Candido and Gregoria Macahilig; that she waived, renounced and
relinquished all her rights to the land adjudicated to all her co-heirs in the deed; and that she
had already sold one parcel before the deed was executed, which was considered as her
advance share. Pedro Divison, Maxima's husband, also affixed his signature to the Statement
of Conformity.
On May 23, 1984, Maxima sold Parcel One to spouses Adelino and Rogelia Daclag
(petitioners) as evidenced by a Deed of Sale5.
On July 17, 1984, OCT No. P-138736 was issued in the name of petitioner Rogelia M. Daclag
by virtue of her free patent application.
On December 16, 1991, Elino Macahilig, Adela Macahilig, Conrado Macahilig, Lorenza Haber
and Benita del Rosario (respondents) filed with the Regional Trial Court (RTC) of Kalibo, Aklan
a complaint for recovery of possession and ownership, cancellation of documents and
damages against Maxima and petitioners, docketed as Civil Case No. 4334.
Respondents alleged that they were the lawful owners and previous possessors of the one half
northern portion of Parcel One by virtue of a Deed of Extra-judicial Partition; that since they
were all residents of Caloocan City, their land was possessed by their first cousin, Penicula
Divison Quijano, Maxima's daughter, as tenant thereon, as she was also in possession of the
one half southern portion as tenant of the heirs of Mario Macahilig; that sometime in 1983, upon
request of Maxima and out of pity for her as she had no share in the produce of the land,
Penicula allowed Maxima to farm the land; that without their knowledge, Maxima illegally sold
on May 23, 1984, the entire riceland to petitioners, who are now in possession of the land,
depriving respondents of its annual produce valued at ₱4,800.00.
In their Answer with Cross-Claim, petitioners contended that: petitioner Rogelia had been the
registered owner of the entire riceland since 1984 as evidenced by OCT No. P-13873; her title
had become incontrovertible after one year from its issuance; they purchased the subject land
in good faith and for value from co-defendant Maxima who was in actual physical possession
of the property and who delivered and conveyed the same to them; they were now in
possession and usufruct of the land since then up to the present; respondents were barred by
laches for the unreasonable delay in filing the case. They also filed a cross-claim against
Maxima for whatever charges, penalties and damages that respondents may demand from
them; and they prayed that Maxima be ordered to pay them damages for the fraud and
misrepresentation committed against them.
Respondents subsequently filed an Amended Complaint, upon learning that petitioners were
issued OCT No. 13873 by virtue of their free patent application, and asked for the
reconveyence of the one half northern portion of the land covered by such title.
The land in question was delimited in the Commissioner's Report and sketch submitted by
Bernardo G. Sualog as the one half northern portion, which had an area of 1178 sq. meters.
The Report and the sketch were approved by the RTC on June 22, 1991.
For failure of Maxima to file an answer, the RTC declared her in default both in the complaint
and cross-claim against her.
After trial, the RTC rendered its Decision7 dated November 18, 1994, the dispositive portion of
which reads:
WHEREFORE, finding preponderance of evidence in favor of plaintiffs [respondents], judgment
is hereby rendered as follows:
1. The deed of sale dated May 23, 1984, executed by Maxima Divison in favor of Adelino
Daclag and Rogelia Daclag before Notary Public Edgar R. Peralta and docketed in his notarial
register as Doc. No. 137, Page No. 30, Book No. VII, Series of 1984 is declared NULL and
VOID;
2. The plaintiffs are hereby declared the true and lawful owners and entitled to the possession
of the northern one-half (1/2) portion of the land described under paragraph 2 of the amended
complaint and designated as Exhibit "F-1" in the commissioners’ sketch with an area of 1,178
square meters;
3. The defendants-spouses Adelino and Rogelia Daclag [petitioners] are hereby ordered and
directed to vacate the land described in the preceding paragraph and restore and deliver the
possession thereof to the plaintiffs;
4. The defendants are ordered to execute a deed of reconveyance in favor of the plaintiffs over
the land described in paragraph 2 hereof;
5. The defendants are ordered, jointly and severally, to pay the plaintiffs ten (10) cavans of
palay per annum beginning the second cropping of 1984 until the time the possession of the
land in question is restored to the plaintiffs; and
6. The defendants are ordered, jointly and severally, to pay the plaintiffs reasonable attorney’s
fees in the amount of ₱3,000.00 plus cost of the suit.8
The RTC found that respondents were able to establish that Parcel One was divided between
the heirs of Mario and the heirs of Eusebio, with the former getting the one half southern portion
and the latter the one half northern portion embodied in a Deed of Extra-judicial partition, which
bore Maxima's thumbmarks; that nobody questioned the Deed's validity, and no evidence was
presented to prove that the document was not validly and regularly executed; that Maxima also
executed a duly notarized Statement of Conformity dated March 19, 1982 with the conformity
of her husband, Pedro. The RTC concluded that when Maxima executed the Deed of Sale in
favor of petitioners on May 23, 1984, Maxima had no right to sell that land as it did not belong
to her; that she conveyed nothing to petitioners; and that the deed of sale should be declared
null and void.
In disposing the issue of whether petitioners could be considered innocent purchasers for
value, the RTC ruled that petitioners could not even be considered purchasers, as they never
acquired ownership of the land since the sale to them by Maxima was void; and that petitioners'
act of reflecting only the price of ₱5,000.00 in the Deed of Sale to avoid paying taxes to the
BIR should be condemned for defrauding the government and thus should not be given
protection from the courts.
The RTC further ruled that since petitioners were able to obtain a free patent on the whole land
in petitioner Rogelia's name, reconveyance to respondents of the 1,178 sq. meter northern
portion of the land was just and proper; that the respondents were entitled to a share in the
harvest at two croppings per year after deducting the share of the tenant; that since Maxima
died in October 1993, whatever charges and claims petitioners may recover from her expired
with her.
Aggrieved, petitioners filed their appeal with the CA.
On October 17, 2001, the CA dismissed the appeal and affirmed the RTC decision.
The CA ruled that since Maxima had no right to sell the land as she was not the rightful owner
thereof, nothing was conveyed to petitioners; that a person who acquired property from one
who was not the owner and had no right to dispose of the same, obtained the property without
right of title, and the real owner may recover the same from him.
The CA found that since respondents were unaware of the sale, it was not a surprise that they
did not question petitioners' application for a free patent on the subject land; that the possession
by Maxima of the subject land did not vest ownership in her, as her possession was not in the
concept of an owner; and that petitioners were not purchasers in good faith. It also found that
the right to enjoy included the right to receive the produce of the thing; that respondents as true
owners of the subject land were deprived of their property when Maxima illegally sold it to
petitioners; and thus, equity demanded that respondents be given what rightfully belonged to
them under the principle that a person cannot enrich himself at the expense of another.

Hence, herein petition on the following grounds:
A. THE HONORABLE COURT OF APPEALS COMMITTED A SERIOUS ERROR WHEN IT
DECLARED THAT HEREIN PETITIONERS HAD NO VALID TITLE OVER THE LAND IN
QUESTION.
B. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT
PETITIONERS ARE NOT PURCHASERS OR BUYERS IN GOOD FAITH.
C. THE HONORABLE COURT OF APPEALS GRAVELY ERRED WHEN IT AFFIRMED THE
DECISION OF THE LOWER COURT IN ORDERING THE DEFENDANTS-PETITIONERS
JOINTLY AND SEVERALLY TO PAY PER ANNUM BEGINNING THE SECOND CROPPING
OF 1984 UNTIL THE TIME THE POSSESSION OF THE LAND IN QUESTION IS RESTORED
TO THE PLAINTIFFS [respondents].9
The issues for resolution are (1) whether Maxima was the previous owner of Parcel One, which
included respondents' one half northern portion, now covered by OCT No. P-13873; 2) whether
petitioners could validly invoke the defense of purchasers in good faith; and (3) whether
reconveyance is the proper remedy.
Preliminarily, we would like to state the inescapable fact that the Extra-judicial partition of the
estate of Candido Macahilig involving the seven parcels of land was made only between
Maxima and the heirs of her two deceased brothers Mario and Eusebio.
Section 1 of Rule 74 of the Rules of Court provides:
Section 1. Extrajudicial settlement by agreement between heirs. - If the decedent left no will
and no debts and the heirs are all of age, or the minors are represented by their judicial or legal
representatives duly authorized for the purpose, the parties may, without securing letters of
administration, divide the estate among themselves as they see fit by means of a public
instrument filed in the office of the register of deeds, and should they disagree, they may do so
in an ordinary action for partition. x x x
The fact of the extrajudicial settlement or administration shall be published in a newspaper of
general circulation in the manner provided in the next succeeding section; but no extrajudicial
settlement shall be binding upon any person who has not participated therein or had no notice
thereof.
Records do not show that there has been any case filed by the other heirs who had not
participated in the Deed of Extra-judicial Partition and were questioning the validity of such
partition. Thus, the resolution of the present case concerns only the issues between the parties
before us and will not in any way affect the rights of the other heirs who have not participated
in the partition.
The first two issues raised for resolution are factual. It is a settled rule that in the exercise of
the Supreme Court's power of review, the Court is not a trier of facts and does not normally
undertake the re-examination of the evidence presented by the contending parties during the
trial of the case, considering that the findings of facts of the CA are conclusive and binding on
the Court.10 While jurisprudence has recognized several exceptions in which factual issues
may be resolved by this Court, namely: (1) when the findings are grounded entirely on
speculation, surmises or conjectures; (2) when the inference made is manifestly mistaken,
absurd or impossible; (3) when there is grave abuse of discretion; (4) when the judgment is
based on a misapprehension of facts; (5) when the findings of facts are conflicting; (6) when in
making its findings the CA went beyond the issues of the case, or its findings are contrary to
the admissions of both the appellant and the appellee; (7) when the findings are contrary to
those of the trial court; (8) when the findings are conclusions without citation of specific
evidence on which they are based; (9) when the facts set forth in the petition as well as in the
petitioner's main and reply briefs are not disputed by the respondent; (10) when the findings of
fact are premised on the supposed absence of evidence and contradicted by the evidence on
record; and (11) when the CA manifestly overlooked certain relevant facts not disputed by the
parties, which, if properly considered, could justify a different conclusion,11 none of these
exceptions has been shown to apply to the present case and, hence, this Court may not review
the findings of fact made by the lower courts.
We find no cogent reason to depart from the findings of both the trial court and the CA that
Maxima was not the owner of the land she sold to petitioners, and that the one half northern
portion of such land was owned by the respondents; that Maxima had no right to dispose of the
land and, thus, she had no right to convey the same.
To repeat, records show that Maxima entered into a Deed of Extra-judicial Partition with the
heirs of her two deceased brothers, namely: Mario and Eusebio, over seven parcels of land
owned by Candido and Gregoria Macahilig. One of these lands was the irrigated riceland with
an area of 1,896 sq. meters which, per the Deed of Partition, was divided between the heirs of
Mario and Eusebio; and the former got the one half southern portion, while the latter got the
one half northern portion. Maxima affixed her thumbmark to the Deed. This parcel of riceland
was sold by Maxima to petitioners. However, Maxima, at the time of the execution of the Deed
of Sale over this parcel of land in favor of petitioner on May 23, 1984, had no right to sell the
same as she was not the owner thereof.
In fact, Maxima, with the conformity of her husband Pedro, had even executed a Statement of
Conformity, in which she affirmed the execution of the Deed of Extra-judicial Partition and
conformed to the manner of the partition of shares therein. She attested to the fact that the five
parcels of land subject of the Deed of Extra-judicial Partition, which were declared in her name
under different tax declarations, were actually properties of her deceased parents; and that she
waived all her rights over the lands or portions thereof adjudicated to all her co-heirs.
Neither Maxima nor any of her heirs ever questioned the validity of these two above-mentioned
documents to which she affixed her thumbmarks. Notably, when the instant complaint was filed
by respondents against Maxima and petitioners in 1991, in which respondents claimed as basis
of their ownership of the one half northern portion of the riceland was the Deed of Extra-judicial
Partition, Maxima, while still living at that time, as she died in 1993, never denied the same. As
already stated, she failed to file an answer and was declared in default.
In a contract of sale, it is essential that the seller is the owner of the property he is selling.12
Under Article 1458 of the Civil Code, the principal obligation of a seller is to transfer the
ownership of the property sold.13 Also, Article 1459 of the Civil Code provides that the thing
must be licit and the vendor must have a right to transfer the ownership thereof at the time it is
delivered. Maxima's execution of the Deed of Sale selling Parcel One, part of which is
respondents' one half northern portion, was not valid and did not transfer ownership of the land
to petitioners, as Maxima had no title or interest to transfer. It is an established principle that
no one can give what one does not have -- nemo dat quod non habet. Accordingly, one can
sell only what one owns or is authorized to sell, and the buyer can acquire no more than what
the seller can transfer legally.14
Petitioners insist that Maxima owned the subject land as shown by her actual and continuous
possession of the same; that it was declared in her name for taxation purposes; that throughout
the time that Maxima and her children were in possession of the property, she never gave any
share of the produce to respondents; and that Maxima even mortgaged the land to a bank.
We are not persuaded.
Maxima's possession of the subject land was by reason of her request to her daughter
Penicula, who was installed by respondents as tenant after the execution of the Deed of Extra-
judicial Partition, as Maxima wanted to farm the land so that she could have a share in the
produce, to which Penicula acceded out of pity.15 It was also established that after the
execution of the Deed of Extra-judicial Partition, Penicula as tenant was able to farm the subject
land for one cropping year before she allowed her mother Maxima to farm the land thereafter;
and, at that time, Penicula gave the corresponding share of the produce of that one crop year
to Adela,16 one of herein respondents, thus establishing respondents' ownership of the subject
land. Evidently, Maxima's possession of the land was not in the concept of an owner.
While the land was declared in Maxima's name for taxation purposes, it did not establish
Maxima's ownership of the same. We have held that a tax declaration, by itself, is not
considered conclusive evidence of ownership.17 It is merely an indicium of a claim of
ownership.18 Because it does not by itself give title, it is of little value in proving one's
ownership.19 Petitioners' reliance on Maxima's tax declaration in assuming that she owned
Parcel One is an erroneous assumption that should not prejudice the rights of the real owners.
The fact that a mortgage was constituted on the land while the same was in Maxima's name
would not make Maxima the owner thereof. Maxima's non-ownership of Parcel One was clearly
established by the Deed of Extra-judicial Partition and the Statement of Conformity, wherein
she categorically declared that the land was actually owned by her deceased parents, to which
she separately affixed her thumbmarks. Both documents showed declarations against her
interest in the land. A declaration against interest is the best evidence which affords the
greatest certainty of the facts in dispute.20
While petitioners were able to secure a certificate of title covering Parcel One in petitioner
Rogelia's name, their possession of a certificate of title alone does not necessarily make them
the true owners of the property described therein. Our land registration laws do not give the
holder any better title than what he actually has.21
In Naval v. Court of Appeals,22 we held:
Registration of a piece of land under the Torrens System does not create or vest title, because
it is not a mode of acquiring ownership. A certificate of title is merely an evidence of ownership
or title over the particular property described therein. It cannot be used to protect a usurper
from the true owner; nor can it be used as a shield for the commission of fraud; neither does it
permit one to enrich himself at the expense of others. Its issuance in favor of a particular person
does not foreclose the possibility that the real property may be co-owned with persons not
named in the certificate, or that it may be held in trust for another person by the registered
owner.
x x x notwithstanding the indefeasibility of the Torrens title, the registered owner may still be
compelled to reconvey the registered property to its true owners. The rationale for the rule is
that reconveyance does not set aside or re-subject to review the findings of fact of the Bureau
of Lands. In an action for reconveyance, the decree of registration is respected as
incontrovertible. What is sought instead is the transfer of the property or its title which has been
wrongfully or erroneously registered in another person's name, to its rightful or legal owner, or
to the one with a better right.23
We find that reconveyance of the subject land to respondents is proper. The essence of an
action for reconveyance is that the free patent and certificate of title are respected as
incontrovertible. What is sought is the transfer of the property, which has been wrongfully or
erroneously registered in another person's name, to its rightful owner or to one with a better
right.24
Respondents have specifically prayed that petitioners be ordered to restore and reconvey to
them the subject land. In an action for reconveyance, the issue involved is one of ownership;
and for this purpose, evidence of title may be introduced. Respondents had sufficiently
established that Parcel One, covered by OCT No. P-13873, of which respondents' northern
one half portion formed a part, was not owned by Maxima at the time she sold the land to
petitioners. We have earlier discussed the evidence presented by respondents establishing
that Maxima had no claim of ownership over the land sold by her to petitioners.
An action for reconveyance prescribes in 10 years, the point of reference being the date of
registration of the deed or the date of issuance of the certificate of title over the property.25
Records show that while the land was registered in the name of petitioner Rogelia in 1984, the
instant complaint for reconveyance was filed by the respondents in 1991, and was thus still
within the ten-year prescriptive period.
Petitioners claim that they were innocent buyers in good faith and for value; that there was no
evidence showing that they were in bad faith when they purchased the subject land; that Article
526 of the Civil Code provides that he is deemed a possessor in good faith who is not aware
that there exists in his title or mode of acquisition any flaw which invalidates it; and that good
faith is always presumed, and upon him who alleges bad faith on the part of a possessor rests
the burden of proof.
Notably, petitioners bought the property when it was still an unregistered land. The defense of
having purchased the property in good faith may be availed of only where registered land is
involved and the buyer had relied in good faith on the clear title of the registered owner.26
In Ong v. Olasiman27 in which a claim of good faith was raised by petitioner who bought an
unregistered land, we held:
Finally, petitioners' claim of good faith does not lie too as it is irrelevant:
[T]he issue of good faith or bad faith of the buyer is relevant only where the subject of the sale
is registered land and the purchaser is buying the same from the registered owner whose title
to the land is clean x x x in such case the purchaser who relies on the clean title of the registered
owner is protected if he is a purchaser in good faith for value. Since the properties in question
are unregistered lands, petitioners as subsequent buyers thereof did so at their peril. Their
claim of having bought the land in good faith, i.e., without notice that some other person has a
right to or interest in the property, would not protect them if it turns out, as it actually did in this
case, that their seller did not own the property at the time of the sale. 28
Petitioners claim that the subject land is a public land, and that petitioners were issued title
over this land in 1984; that respondents did not present any evidence to prove that the subject
land was already a private land prior to their acquisition and the issuance of a free patent title
to them; that the presumption that the subject land was formerly part of the mass of alienable
lands of public domain under the Regalian doctrine, and was regularly granted to petitioners
by way of free patent and certificate of title, remains incontrovertible in favor of
petitioner.1avvphi1
This issue was only raised for the first time in petitioners' Memorandum filed with us. Well-
settled is the rule that issues not raised and/or ventilated in the trial court cannot be raised for
the first time on appeal and cannot be considered for review — to consider questions belatedly
raised tramples on the basic principles of fair play, justice and due process.29
Finally, we find no error committed by the CA in affirming the RTC's order for petitioners to pay
respondents their corresponding share in the produce of the subject land from the time they
were deprived thereof until the possession is restored to them. As aptly stated by the CA, thus:
It is said that one of the attributes of ownership is the right to enjoy and dispose of the the thing
owned, The right to enjoy included the right to receive the produce of the thing. The plaintiffs-
appellees, as true owners of the subject land were deprived of their property when Maxima
Divison illegally sold it to spouses Daclags. As such, equtiy demands that the plaintiff-
appeellees be given what rightfully belonged to them under the time honored principle that a
person cannot enrich himself at the expense of another.
WHEREFORE, the petition for review is DENIED. The Decision dated October 17, 2001 and
Resolution dated August 7, 2003 of the Court of Appeals are AFFIRMED.
Costs against petitioners.
SO ORDERED.
G.R. No. 159578 February 18, 2009
ROGELIA DACLAG and ADELINO DACLAG (deceased), substituted by RODEL M.
DACLAG, and ADRIAN M. DACLAG, Petitioners,
vs.
ELINO MACAHILIG, ADELA MACAHILIG, CONRADO MACAHILIG, LORENZA HABER and
BENITA DEL ROSARIO, Respondents.
RESOLUTION
AUSTRIA-MARTINEZ, J.:
Before us is petitioners' Motion for Reconsideration of our Decision dated July 28, 2008 where
we affirmed the Decision dated October 17, 2001 and the Resolution dated August 7, 2003 of
the Court of Appeals (CA) in CA-G.R. CV No. 48498.
Records show that while the land was registered in the name of petitioner Rogelia in 1984,
respondents’ complaint for reconveyance was filed in 1991, which was within the 10-year
prescriptive period.
We ruled that since petitioners bought the property when it was still an unregistered land, the
defense of having purchased the property in good faith is unavailing. We affirmed the Regional
Trial Court (RTC) in finding that petitioners should pay respondents their corresponding share
in the produce of the subject land from the time they were deprived thereof until the possession
is restored to them.
In their Motion for Reconsideration, petitioners contend that the 10-year period for
reconveyance is applicable if the action is based on an implied or a constructive trust; that since
respondents' action for reconveyance was based on fraud, the action must be filed within four
years from the discovery of the fraud, citing Gerona v. De Guzman,1 which was reiterated in
Balbin v. Medalla.2
We do not agree.
In Caro v. Court of Appeals,3 we have explicitly held that "the prescriptive period for the
reconveyance of fraudulently registered real property is 10 years reckoned from the date of the
issuance of the certificate of title x x x."4
However, notwithstanding petitioners' unmeritorious argument, the Court deems it necessary
to make certain clarifications. We have earlier ruled that respondents' action for reconveyance
had not prescribed, since it was filed within the 10-year prescriptive period.
However, a review of the factual antecedents of the case shows that respondents' action for
reconveyance was not even subject to prescription.
The deed of sale executed by Maxima in favor of petitioners was null and void, since Maxima
was not the owner of the land she sold to petitioners, and the one-half northern portion of such
land was owned by respondents. Being an absolute nullity, the deed is subject to attack
anytime, in accordance with Article 1410 of the Civil Code that an action to declare the
inexistence of a void contract does not prescribe. Likewise, we have consistently ruled that
when there is a showing of such illegality, the property registered is deemed to be simply held
in trust for the real owner by the person in whose name it is registered, and the former then
has the right to sue for the reconveyance of the property.5 An action for reconveyance based
on a void contract is imprescriptible.6 As long as the land wrongfully registered under the
Torrens system is still in the name of the person who caused such registration, an action in
personam will lie to compel him to reconvey the property to the real owner.7 In this case, title
to the property is in the name of petitioner Rogelia; thus, the trial court correctly ordered the
reconveyance of the subject land to respondents.
Petitioners next contend that they are possessors in good faith, thus, the award of damages
should not have been imposed. They further contend that under Article 544, a possessor in
good faith is entitled to the fruits received before the possession is legally interrupted; thus, if
indeed petitioners are jointly and severally liable to respondents for the produce of the subject
land, the liability should be reckoned only for 1991 and not 1984.
We find partial merit in this argument.
Article 528 of the Civil Code provides that possession acquired in good faith does not lose this
character, except in a case and from the moment facts exist which show that the possessor is
not unaware that he possesses the thing improperly or wrongfully. Possession in good faith
ceases from the moment defects in the title are made known to the possessors, by extraneous
evidence or by suit for recovery of the
property by the true owner. Whatever may be the cause or the fact from which it can be
deduced that the possessor has knowledge of the defects of his title or mode of acquisition, it
must be considered sufficient to show bad faith.8 Such interruption takes place upon service
of summons.9lawphil.net
Article 544 of the same Code provides that a possessor in good faith is entitled to the fruits
only so long as his possession is not legally interrupted. Records show that petitioners received
a summons together with respondents' complaint on August 5, 1991;10 thus, petitioners' good
faith ceased on the day they received the summons. Consequently, petitioners should pay
respondents 10 cavans of palay per annum beginning August 5, 1991 instead of 1984.
Finally, petitioner would like this Court to look into the finding of the RTC that "since Maxima
died in October 1993, whatever charges and claims petitioners may recover from her expired
with her"; and that the proper person to be held liable for damages to be awarded to
respondents should be Maxima Divison or her estate, since she misrepresented herself to be
the true owner of the subject land.
We are not persuaded.
Notably, petitioners never raised this issue in their appellants' brief or in their motion for
reconsideration filed before the CA. In fact, they never raised this matter before us when they
filed their petition for review. Thus, petitioners cannot raise the same in this motion for
reconsideration without offending the basic rules of fair play, justice and due process, specially
since Maxima was not substituted at all by her heirs after the promulgation of the RTC Decision.
WHEREFORE, petitioners’ Motion for Reconsideration is PARTLY GRANTED. The Decision
of the Court of Appeals dated July 28, 2008 is MODIFIED only with respect to prescription as
discussed in the text of herein Resolution, and the dispositive portion of the Decision is
MODIFIED to the effect that petitioners are ordered to pay respondents 10 cavans of palay per
annum beginning August 5, 1991 instead of 1984.
SO ORDERED.
G.R. No. 172384 September 12, 2007
ERMINDA F. FLORENTINO, Petitioner,
vs.
SUPERVALUE, INC., Respondent.
DECISION
CHICO-NAZARIO, J.:
Before this Court is a Petition for Review on Certiorari under Rule 45 of the Revised Rules of
Court, filed by petitioner Erminda F. Florentino, seeking to reverse and set aside the Decision,1
dated 10 October 2003 and the Resolution,2 dated 19 April 2006 of the Court of Appeals in
CA-G.R. CV No. 73853. The appellate court, in its assailed Decision and Resolution, modified
the Decision dated 30 April 2001 of the Regional Trial Court (RTC) of Makati, Branch 57, in
Civil Case No. 00-1015, finding the respondent Supervalue, Inc., liable for the sum of
₱192,000.00, representing the security deposits made by the petitioner upon the
commencement of their Contract of Lease. The dispositive portion of the assailed appellate
court’s Decision thus reads:
WHEREFORE, premises considered, the appeal is PARTLY GRANTED. The April 30, 2001
Decision of the Regional Trial Court of Makati, Branch 57 is therefore MODIFIED to wit: (a) the
portion ordering the [herein respondent] to pay the amount of ₱192,000.00 representing the
security deposits and ₱50,000.00 as attorney’s fees in favor of the [herein petitioner] as well
as giving [respondent] the option to reimburse [petitioner] ½ of the value of the improvements
introduced by the [petitioner] on the leased [premises] should [respondent] choose to
appropriate itself or require the [petitioner] to remove the improvements, is hereby REVERSED
and SET ASIDE; and (b) the portion ordering the return to [petitioner] the properties seized by
[respondent] after the former settled her obligation with the latter is however MAINTAINED.3
The factual and procedural antecedents of the instant petition are as follows:
Petitioner is doing business under the business name "Empanada Royale," a sole
proprietorship engaged in the retail of empanada with outlets in different malls and business
establishments within Metro Manila.4
Respondent, on the other hand, is a domestic corporation engaged in the business of leasing
stalls and commercial store spaces located inside SM Malls found all throughout the country.5
On 8 March 1999, petitioner and respondent executed three Contracts of Lease containing
similar terms and conditions over the cart-type stalls at SM North Edsa and SM Southmall and
a store space at SM Megamall. The term of each contract is for a period of four months and
may be renewed upon agreement of the parties.6
Upon the expiration of the original Contracts of Lease, the parties agreed to renew the same
by extending their terms until 31 March 2000.7
Before the expiration of said Contracts of Lease, or on 4 February 2000, petitioner received
two letters from the respondent, both dated 14 January 2000, transmitted through facsimile
transmissions.8
In the first letter, petitioner was charged with violating Section 8 of the Contracts of Lease by
not opening on 16 December 1999 and 26 December 1999.9
Respondent also charged petitioner with selling a new variety of empanada called "mini-
embutido" and of increasing the price of her merchandise from ₱20.00 to ₱22.00, without the
prior approval of the respondent.10
Respondent observed that petitioner was frequently closing earlier than the usual mall hours,
either because of non-delivery or delay in the delivery of stocks to her outlets, again in violation
of the terms of the contract. A stern warning was thus given to petitioner to refrain from
committing similar infractions in the future in order to avoid the termination of the lease
contract.11
In the second letter, respondent informed the petitioner that it will no longer renew the Contracts
of Lease for the three outlets, upon their expiration on 31 March 2000.12
In a letter-reply dated 11 February 2000, petitioner explained that the "mini-embutido" is not a
new variety of empanada but had similar fillings, taste and ingredients as those of pork
empanada; only, its size was reduced in order to make it more affordable to the buyers.13
Such explanation notwithstanding, respondent still refused to renew its Contracts of Lease with
the petitioner. To the contrary, respondent took possession of the store space in SM Megamall
and confiscated the equipment and personal belongings of the petitioner found therein after
the expiration of the lease contract.14
In a letter dated 8 May 2000, petitioner demanded that the respondent release the equipment
and personal belongings it seized from the SM Megamall store space and return the security
deposits, in the sum of ₱192,000.00, turned over by the petitioner upon signing of the Contracts
of Lease. On 15 June 2000, petitioner sent respondent another letter reiterating her previous
demands, but the latter failed or refused to comply therewith. 15
On 17 August 2000, an action for Specific Performance, Sum of Money and Damages was filed
by the petitioner against the respondent before the RTC of Makati, Branch 57.16
In her Complaint docketed as Civil Case No. 00-1015, petitioner alleged that the respondent
made verbal representations that the Contracts of Lease will be renewed from time to time and,
through the said representations, the petitioner was induced to introduce improvements upon
the store space at SM Megamall in the sum of ₱200,000.00, only to find out a year later that
the respondent will no longer renew her lease contracts for all three outlets.17
In addition, petitioner alleged that the respondent, without justifiable cause and without
previous demand, refused to return the security deposits in the amount of ₱192,000.00.18
Further, petitioner claimed that the respondent seized her equipment and personal belongings
found inside the store space in SM Megamall after the lease contract for the said outlet expired
and despite repeated written demands from the petitioner, respondent continuously refused to
return the seized items.19
Petitioner thus prayed for the award of actual damages in the sum of ₱472,000.00, representing
the sum of security deposits, cost of improvements and the value of the personal properties
seized. Petitioner also asked for the award of ₱300,000.00 as moral damages; ₱50,000.00 as
exemplary damages; and ₱80,000.00 as attorney’s fees and expenses of litigation.20
For its part, respondent countered that petitioner committed several violations of the terms of
their Contracts of Lease by not opening from 16 December 1999 to 26 December 1999, and
by introducing a new variety of empanada without the prior consent of the respondent, as
mandated by the provision of Section 2 of the Contract of Lease. Respondent also alleged that
petitioner infringed the lease contract by frequently closing earlier than the agreed closing
hours. Respondent finally averred that petitioner is liable for the amount ₱106,474.09,
representing the penalty for selling a new variety of empanada, electricity and water bills, and
rental adjustment, among other charges incidental to the lease agreements. Respondent
claimed that the seizure of petitioner’s personal belongings and equipment was in the exercise
of its retaining lien, considering that the petitioner failed to settle the said obligations up to the
time the complaint was filed.21
Considering that petitioner already committed several breaches of contract, the respondent
thus opted not to renew its Contracts of Lease with her anymore. The security deposits were
made in order to ensure faithful compliance with the terms of their lease agreements; and since
petitioner committed several infractions thereof, respondent was justified in forfeiting the
security deposits in the latter’s favor.
On 30 April 2001, the RTC rendered a Judgment22 in favor of the petitioner and found that the
physical takeover by the respondent of the leased premises and the seizure of petitioner’s
equipment and personal belongings without prior notice were illegal. The decretal part of the
RTC Judgment reads:
WHEREFORE, premises duly considered, judgment is hereby rendered ordering the [herein
respondent] to pay [herein petitioner] the amount of ₱192,000.00 representing the security
deposits made by the [petitioner] and ₱50,000.00 as and for attorney’s fees.
The [respondent] is likewise ordered to return to the [petitioner] the various properties seized
by the former after settling her account with the [respondent].
Lastly, the [respondent] may choose either to reimburse the [petitioner] one half (1/2) of the
value of the improvements introduced by the plaintiff at SM Megamall should [respondent]
choose to appropriate the improvements to itself or require the [petitioner] to remove the
improvements, even though the principal thing may suffer damage thereby. [Petitioner] shall
not, however, cause anymore impairment upon the said leased premises than is necessary.
The other damages claimed by the plaintiff are denied for lack of merit.
Aggrieved, the respondent appealed the adverse RTC Judgment to the Court of Appeals.
In a Decision23 dated 10 October 2003, the Court of Appeals modified the RTC Judgment and
found that the respondent was justified in forfeiting the security deposits and was not liable to
reimburse the petitioner for the value of the improvements introduced in the leased premises
and to pay for attorney’s fees. In modifying the findings of the lower court, the appellate court
declared that in view of the breaches of contract committed by the petitioner, the respondent is
justified in forfeiting the security deposits. Moreover, since the petitioner did not obtain the
consent of the respondent before she introduced improvements on the SM Megamall store
space, the respondent has therefore no obligation to reimburse the petitioner for the amount
expended in connection with the said improvements.24 The Court of Appeals, however,
maintained the order of the trial court for respondent to return to petitioner her properties after
she has settled her obligations to the respondent. The appellate court denied petitioner’s
Motion for Reconsideration in a Resolution25 dated 19 April 2006.
Hence, this instant Petition for Review on Certiorari26 filed by the petitioner assailing the Court
of Appeals Decision. For the resolution of this Court are the following issues:
I. Whether or not the respondent is liable to return the security deposits to the petitions.
II. Whether or not the respondent is liable to reimburse the petitioner for the sum of the
improvements she introduced in the leased premises.
III. Whether or not the respondent is liable for attorney’s fees.27
The appellate court, in finding that the respondent is authorized to forfeit the security deposits,
relied on the provisions of Sections 5 and 18 of the Contract of Lease, to wit:
Section 5. DEPOSIT. The LESSEE shall make a cash deposit in the sum of SIXTY THOUSAND
PESOS (P60,000.00) equivalent to three (3) months rent as security for the full and faithful
performance to each and every term, provision, covenant and condition of this lease and not
as a pre-payment of rent. If at any time during the term of this lease the rent is increased[,] the
LESSEE on demand shall make an additional deposit equal to the increase in rent. The
LESSOR shall not be required to keep the deposit separate from its general funds and the
deposit shall not be entitled to interest. The deposit shall remain intact during the entire term
and shall not be applied as payment for any monetary obligations of the LESSEE under this
contract. If the LESSEE shall faithfully perform every provision of this lease[,] the deposit shall
be refunded to the LESSEE upon the expiration of this Lease and upon satisfaction of all
monetary obligation to the LESSOR.
xxxx
Section 18. TERMINATION. Any breach, non-performance or non-observance of the terms and
conditions herein provided shall constitute default which shall be sufficient ground to terminate
this lease, its extension or renewal. In which event, the LESSOR shall demand that LESSEE
immediately vacate the premises, and LESSOR shall forfeit in its favor the deposit tendered
without prejudice to any such other appropriate action as may be legally authorized.28
Since it was already established by the trial court that the petitioner was guilty of committing
several breaches of contract, the Court of Appeals decreed that she cannot therefore rightfully
demand the return of the security deposits for the same are deemed forfeited by reason of
evident contractual violations.
It is undisputed that the above-quoted provision found in all Contracts of Lease is in the nature
of a penal clause to ensure petitioner’s faithful compliance with the terms and conditions of the
said contracts.
A penal clause is an accessory undertaking to assume greater liability in case of breach. It is
attached to an obligation in order to insure performance and has a double function: (1) to
provide for liquidated damages, and (2) to strengthen the coercive force of the obligation by
the threat of greater responsibility in the event of breach.29 The obligor would then be bound
to pay the stipulated indemnity without the necessity of proof of the existence and the measure
of damages caused by the breach.30 Article 1226 of the Civil Code states:
Art. 1226. In obligations with a penal clause, the penalty shall substitute the indemnity for
damages and the payment of interests in case of noncompliance, if there is no stipulation to
the contrary. Nevertheless, damages shall be paid if the obligor refuses to pay the penalty or
is guilty of fraud in the fulfillment of the obligation.
The penalty may be enforced only when it is demandable in accordance with the provisions of
this Code.
As a general rule, courts are not at liberty to ignore the freedoms of the parties to agree on
such terms and conditions as they see fit as long as they are not contrary to law, morals, good
customs, public order or public policy. Nevertheless, courts may equitably reduce a stipulated
penalty in the contracts in two instances: (1) if the principal obligation has been partly or
irregularly complied with; and (2) even if there has been no compliance if the penalty is
iniquitous or unconscionable in accordance with Article 1229 of the Civil Code which clearly
provides:
Art. 1229. The judge shall equitably reduce the penalty when the principal obligation has been
partly or irregularly complied with by the debtor. Even if there has been no performance, the
penalty may also be reduced by the courts if it is iniquitous or unconscionable.31
In ascertaining whether the penalty is unconscionable or not, this court set out the following
standard in Ligutan v. Court of Appeals,32 to wit:
The question of whether a penalty is reasonable or iniquitous can be partly subjective and
partly objective. Its resolution would depend on such factor as, but not necessarily confined to,
the type, extent and purpose of the penalty, the nature of the obligation, the mode of breach
and its consequences, the supervening realities, the standing and relationship of the parties,
and the like, the application of which, by and large, is addressed to the sound discretion of the
court. xxx.
In the instant case, the forfeiture of the entire amount of the security deposits in the sum of
₱192,000.00 was excessive and unconscionable considering that the gravity of the breaches
committed by the petitioner is not of such degree that the respondent was unduly prejudiced
thereby. It is but equitable therefore to reduce the penalty of the petitioner to 50% of the total
amount of security deposits.
It is in the exercise of its sound discretion that this court tempered the penalty for the breaches
committed by the petitioner to 50% of the amount of the security deposits. The forfeiture of the
entire sum of ₱192,000.00 is clearly a usurious and iniquitous penalty for the transgressions
committed by the petitioner. The respondent is therefore under the obligation to return the 50%
of ₱192,000.00 to the petitioner.
Turning now to the liability of the respondent to reimburse the petitioner for one-half of the
expenses incurred for the improvements on the leased store space at SM Megamall, the
following provision in the Contracts of Lease will enlighten us in resolving this issue:
Section 11. ALTERATIONS, ADDITIONS, IMPROVEMENTS, ETC. The LESSEE shall not
make any alterations, additions, or improvements without the prior written consent of LESSOR;
and all alterations, additions or improvements made on the leased premises, except movable
or fixtures put in at LESSEE’s expense and which are removable, without defacing the buildings
or damaging its floorings, shall become LESSOR’s property without
compensation/reimbursement but the LESSOR reserves the right to require the removal of the
said alterations, additions or improvements upon expiration of the lease.
The foregoing provision in the Contract of Lease mandates that before the petitioner can
introduce any improvement on the leased premises, she should first obtain respondent’s
consent. In the case at bar, it was not shown that petitioner previously secured the consent of
the respondent before she made the improvements on the leased space in SM Megamall. It
was not even alleged by the petitioner that she obtained such consent or she at least attempted
to secure the same. On the other hand, the petitioner asserted that respondent allegedly
misrepresented to her that it would renew the terms of the contracts from time to time after their
expirations, and that the petitioner was so induced thereby that she expended the sum of
₱200,000.00 for the improvement of the store space leased.
This argument was squarely addressed by this court in Fernandez v. Court of Appeals,33 thus:
The Court ruled that the stipulation of the parties in their lease contract "to be renewable" at
the option of both parties stresses that the faculty to renew was given not to the lessee alone
nor to the lessor by himself but to the two simultaneously; hence, both must agree to renew if
a new contract is to come about.
Petitioner’s contention that respondents had verbally agreed to extend the lease indefinitely is
inadmissible to qualify the terms of the written contract under the parole evidence rule, and
unenforceable under the statute of frauds.34
Moreover, it is consonant with human experience that lessees, before occupying the leased
premises, especially store spaces located inside malls and big commercial establishments,
would renovate the place and introduce improvements thereon according to the needs and
nature of their business and in harmony with their trademark designs as part of their marketing
ploy to attract customers. Certainly, no inducement or misrepresentation from the lessor is
necessary for this purpose, for it is not only a matter of necessity that a lessee should re-design
its place of business but a business strategy as well.
In ruling that the respondent is liable to reimburse petitioner one half of the amount of
improvements made on the leased store space should it choose to appropriate the same, the
RTC relied on the provision of Article 1678 of the Civil Code which provides:
Art. 1678. If the lessee makes, in good faith, useful improvements which are suitable to the use
for which the lease is intended, without altering the form or substance of the property leased,
the lessor upon the termination of the lease shall pay the lessee one-half of the value of the
improvements at that time. Should the lessor refuse to reimburse said amount, the lessee may
remove the improvements, even though the principal thing may suffer damage thereby. He
shall not, however, cause any more impairment upon the property leased than is necessary.
While it is true that under the above-quoted provision of the Civil Code, the lessor is under the
obligation to pay the lessee one-half of the value of the improvements made should the lessor
choose to appropriate the improvements, Article 1678 however should be read together with
Article 448 and Article 546 of the same statute, which provide:
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.
xxxx
Art. 546. Necessary expenses shall be refunded to every possessor; but only possessor in
good faith may retain the thing until he has been reimbursed therefor.
Useful expenses shall be refunded only to the possessor in good faith with the same right of
retention, the person who has defeated him in the possession having the option of refunding
the amount of the expenses or of paying the increase in value which the thing may have
acquired by reason thereof.
Thus, to be entitled to reimbursement for improvements introduced on the property, the
petitioner must be considered a builder in good faith. Further, Articles 448 and 546 of the Civil
Code, which allow full reimbursement of useful improvements and retention of the premises
until reimbursement is made, apply only to a possessor in good faith, i.e., one who builds on
land with the belief that he is the owner thereof. A builder in good faith is one who is unaware
of any flaw in his title to the land at the time he builds on it.35 In this case, the petitioner cannot
claim that she was not aware of any flaw in her title or was under the belief that she is the
owner of the subject premises for it is a settled fact that she is merely a lessee thereof.1âwphi1
In Geminiano v. Court of Appeals,36 this Court was emphatic in declaring that lessees are not
possessors or builders in good faith, thus:
Being mere lessees, the private respondents knew that their occupation of the premises would
continue only for the life of the lease. Plainly, they cannot be considered as possessors nor
builders in good faith.
In a plethora of cases, this Court has held that Article 448 of the Civil Code, in relation to Article
546 of the same Code, which allows full reimbursement of useful improvements and retention
of the premises until reimbursement is made, applies only to a possessor in good faith, i.e.,
one who builds on land with the belief that he is the owner thereof. It does not apply where
one's only interest is that of a lessee under a rental contract; otherwise, it would always be in
the power of the tenant to "improve" his landlord out of his property.
Since petitioner’s interest in the store space is merely that of the lessee under the lease
contract, she cannot therefore be considered a builder in good faith. Consequently, respondent
may appropriate the improvements introduced on the leased premises without any obligation
to reimburse the petitioner for the sum expended.
Anent the claim for attorney’s fees, we resolve to likewise deny the award of the same.
Attorney’s fees may be awarded when a party is compelled to litigate or to incur expenses to
protect its interest by reason of unjustified act of the other.37
In the instant petition, it was not shown that the respondent unjustifiably refused to grant the
demands of the petitioner so as to compel the latter to initiate legal action to enforce her right.
As we have found herein, there is basis for respondent’s refusal to return to petitioner the
security deposits and to reimburse the costs of the improvements in the leased premises. The
award of attorney’s fees is therefore not proper in the instant case.
WHEREFORE, premises considered, the instant Petition is PARTLY GRANTED. The Court of
Appeals Decision dated 10 October 2003 in CA-G.R. CV No. 73853 is hereby AFFIRMED with
the MODIFICATION that the respondent may forfeit only 50% of the total amount of the security
deposits in the sum of ₱192,000.00, and must return the remaining 50% to the petitioner. No
costs.
SO ORDERED.
G.R. No. 133208 July 31, 2006
LAURENCIO C. RAMEL, SOCORRO B. RAMEL and RENE LEMAR B. RAMEL, petitioners,
vs.
DANIEL AQUINO and GUADALUPE ABALAHIN, respondents.
BENJAMIN AQUINO and VIRGINIA AQUINO, respondents-Intervenors.
DECISION
PUNO, J.:
At bar is a Petition for Review on Certiorari of the Decision and Resolution of the Court of
Appeals in CA-G.R. CV No. 28654 dated April 16, 1997 and March 25, 1998, respectively,
affirming the decision of the Regional Trial Court of Santiago, Isabela, Branch 21, in Civil Case
No. 0302.
The instant case originated from a suit filed by petitioners Laurencio C. Ramel, Socorro B.
Ramel and Rene Lemar B. Ramel against respondent Daniel Aquino, married to respondent
Guadalupe Abalahin, for Specific Performance with Preliminary Injunction and Damages.
Daniel Aquino is the registered owner of Lot No. 2080, a 14.1825-hectare land situated in
Tanggal, Cordon, Isabela under Transfer Certificate of Title (TCT) No. T-36937. On October
21, 1975, Aquino mortgaged the property to the Development Bank of the Philippines (DBP),
Ilagan Branch, Ilagan, Isabela for P50,000.00. In 1983, the property was in danger of being
foreclosed as respondents had no means to pay for the loan. Thus, on August 7, 1983, they
offered to sell to petitioners 8.2030 hectares of the mortgaged property.
Petitioners agreed to purchase the property but the agreement was not reduced into writing.
Petitioners were to buy the 8.2030 hectares at P13,500.00 per hectare or at a total sum of
around P110,700.00. Petitioners would assume the remaining mortgage obligation of
respondents with DBP as of July 31, 1983 in the amount of P85,543.00 and the balance of
about P25,000.00 shall be paid to respondents on installment.1
On the same day that the offer was made and accepted, petitioners gave respondents an
earnest money of P5,000.00.2 Further additional partial payments were made on September
7, 1983 in the sum of P15,000.003 and P4,800.004 on February 12, 1984. All three payments
were duly receipted by respondents.
Petitioners also made the following payments to DBP:5 P10,000.00 on September 7, 1983;
P3,097.00 on November 18, 1983; and, P10,000.00 on April 2, 1984, for a total of P23,097.00.
Respondents also sold to petitioners 2,484 square meters of the southern portion of the
mortgaged property for P2,700.00. Petitioners paid the full amount on September 7, 1983.6 On
even date, petitioners were allowed by respondents to take possession of the parcels of land
sold. Since then, they allegedly introduced improvements7 to the property, such as rice
paddies, drainage canal, fence and a house.
On November 18, 1983, petitioners applied for a re-structuring of the mortgage loan with the
DBP for a period of ten years, allegedly with the conformity of respondents. The bank approved
the loan re-structuring.8 Under the new scheme, the loan was to be paid with a semi-annual
amortization of P8,634.15 beginning May 21, 1984 for five years. Thereafter, the loan shall be
paid with a semi-annual amortization of P4,904.60 starting on the 6th to the 10th year.9
On October 1, 1984, petitioners went to DBP to pay for the amortization but they found out that
respondents had paid the bank P72,703.06. Petitioners offered to return to respondents the
said sum but the latter refused to accept the offer. Instead, respondents told petitioners that
they would return whatever they have paid for the land, and threatened to withdraw the
certificate of title of the land from the bank. The manager of the bank accepted the money
tendered by respondents as "deposit" and gave the parties time to settle the matter on their
own, but to no avail. On October 9, 1984, petitioners filed with the trial court for Specific
Performance with Preliminary Injunction and Damages. On October 12, 1984, the trial court
restrained the respondents from withdrawing the certificate of title and the Release of
Mortgage. The bank was also enjoined from releasing the title to respondents. On even date,
respondents withdrew the amount of P72,703.06 which they had paid to the bank.
Meanwhile, during the pendency of the case, petitioners made the following payments to DBP
in full settlement of the loan: P30,000.00 on November 29, 1984; P50,000.00 on April 30, 1986;
and P5,118.42 on May 2, 1986, or a total of around P108,216.00. The DBP then deposited the
Release of Mortgage to the Clerk of Court.
Respondent spouses alleged that petitioners agreed to pay them P35,000.00, not P25,000.00.
They further alleged that petitioners agreed to assume in full the then remaining mortgage loan
with DBP and to withdraw the certificate of title of the land not later than December 31, 1983.
Respondents allegedly set this period because they needed the title to claim the area taken by
the NIA for an irrigation canal. However, petitioners defaulted to pay the bank within the period
agreed upon and re-structured the loan without their consent. Upon learning of petitioners re-
structuring the loan, respondents decided to revoke the sale, sold a portion of Lot No. 2080
and tendered P72,703.06 from its proceeds to DBP on October 1, 1984 in full settlement of the
loan.
Respondents-Intervenors Benjamin Aquino and Virginia Aquino are the siblings of respondent
Aquino and intervened as co-owners of Lot No. 2080. An amicable settlement10 was entered
into between respondent Aquino and the intervenors on March 2, 1985.
The trial court issued an Order dated March 11, 1986 stating the following material parts of the
stipulations of the parties during the pre-trial conference:
STIPULATIONS OF FACTS
xxx
2. That the 8.2030 hectares of riceland located at Cordon, Isabela is covered by Transfer
Certificate of Title No. 36937, Isabela Registry, in the name of Daniel Aquino;
xxx
5. That the payments made by Rene Lemar R. Ramel and duly receipted are:
(1) On Feb. 12, 1983,11 the amount of P4,800.00 xxx;
(2) On August 7, 1983, the amount of P5,000.00 xxx;
(3) On Sept. 7, 1983, the amount of P15,000.00 xxx;
(4) On Sept. 7, 1983, the amount of P2,700.00 xxx;
and admitted by all the parties.12
On June 28, 1990, the trial court decided as follows, viz.:
WHEREFORE, in light of the foregoing considerations[,] judgment is hereby rendered:
1. ORDERING the spouses Daniel Aquino and Guadalupe Aquino to execute a deed of sale
over a portion of lot 2080 located and bounded by Ilut Creek on the south, Juan Mariano's lot
on the east, portion of lot 2080 on the north and Castillo's lot on the west, containing an area
of [2,484] square meters more or less, in favor of Rene Lemar Ramel.
2. DECLARING that the oral contract of sale between the plaintiff Rene Lemar Ramel and the
defendants spouses Daniel and Guadalupe Aquino as rescinded.
3. ORDERING the defendants spouses Daniel and Guadalupe Aquino to pay to the plaintiff
Rene Lemar Ramel the sums of P29,800.00 representing the amount received by said
defendants for the land, plus P108,216.00 representing the amount paid by the plaintiffs to the
bank.
4. ORDERING the plaintiffs to return the peaceful possession of the land, lot 2080[,] after they
shall have been paid the aforesaid amount by the defendants.
5. ORDERING the intervenors Benjamin Aquino and Virginia Aquino to reimburse to the
defendant Daniel Aquino their one-third share each of the amount of P138,016[.00] which the
latter paid to the plaintiff.
6. DECLARING that the intervenors Benjamin Aquino and Virginia Aquino are the co-owners
of the 8.2030 southern portion of lot 2080 in equal shares.13
Petitioners appealed to the Court of Appeals which affirmed the decision of the trial court and
denied their Motion for Reconsideration. Hence, this petition assailing the decision of the
appellate court, viz.:
I.A. Based not only on misapprehension and appreciation of facts, but also on the findings
which manifestly overlooked certain relevant facts not disputed by the parties and which, if
properly considered, would justify a different conclusion, as well as on an inference which is
manifestly mistaken.
I.B. Based on A false, fabricated and self-serving testimony of the respondents.
I.C. Based on the findings of facts which are contrary to those of the trial court and contrary to
the admission of the respondents herein.
II. The judgment of the trial court which was affirmed by the Court of Appeals is not in accord
with the existing laws and the applicable decisions of this Honorable Court, being an erroneous
application of Articles 1191 and 1545 of the Civil Code and the applicable jurisprudence.14
The hinge issues are the following: (1) whether petitioners substantially breached their
obligation warranting the rescission of the contract and (2) whether there is legal ground to
order the offsetting of the claim of improvements by petitioners to the claim of fruits derived
from the land by respondents.
First to be determined is the total amount paid by petitioners to respondents to show the
former's compliance or non-compliance with their obligation.
There is no question that petitioners were obligated to pay the remaining mortgage obligation
of respondents with the DBP as of July 31, 1983. The official receipt15 dated September 7,
1983 issued by DBP shows that the remaining mortgage obligation of respondents as of
September 7, 1983 was P75,544.92, that is after petitioners had paid the bank P10,000.00 on
the same date. Hence, the total remaining mortgage obligation as of July 31, 1983 which was
supposed to be assumed by petitioners was P85,544.92. Deducting this from the total value of
the land which is about P110,700.00, the balance of about P25,000.00, and not P35,000.00,
was to be paid by petitioners to respondents.
The courts a quo erred in concluding that petitioners were able to pay respondents a total sum
of P29,800.00. Per stipulation by the parties themselves, petitioners paid to respondents the
total sum of P27,500.00.16 This even includes the amount of P2,700.00 which petitioners paid
for the additional 2,484-square meter strip of land which they purchased from respondents.
Deducting this P2,700.00 from the total payments made for the 8.2030 hectares, petitioners
were able to pay a sum of P24,800.00 of the P25,000.00 balance for the subject parcel. This
small discrepancy is not a ground for respondents to rescind their contract with petitioners.
We look, however, to the other ground – the failure of petitioners to pay the remaining balance
of the mortgage obligation of respondents to the DBP. The record shows that at the time
petitioners filed the case with the trial court on October 9, 1984, they were able to pay only
P23,097.00 of the then P85,544.92 outstanding mortgage obligation of respondents. Instead
of petitioners paying the remaining balance on or before December 31, 1983, they asked the
DBP to re-structure the payment of the loan for ten years in November 1983. They did so
without the consent of respondents. Their claim to the contrary is not substantiated by
evidence.
First, after respondents learned that petitioners had re-structured the loan, respondents paid
the amount of P72,703.06 to DBP. The fact that respondents later on withdrew the amount
cannot operate against them because the trial court had enjoined them from withdrawing the
certificate of title and the bank from releasing the same.
Second, the subject property was facing foreclosure that December of 1983. It was precisely
due to the impending foreclosure that respondents offered to sell the subject property to
petitioners. It was never the intention of respondents to be left at the mercy of petitioners as to
when the latter would complete payment of the remaining mortgage obligation. It goes against
the common sense of man and the ordinary course of business that an owner of land sells his
property without any definite agreement as to when the obligation shall be paid, especially if
his property is facing foreclosure. Though petitioners were able to subsequently fully settle the
mortgage loan in May 1986 – two years and five months from December 1983, and one and a
half years after they filed this case – the fact remains that they reneged on their obligation to
pay within the agreed period. They could have asked respondents to give them a grace period
to settle the remaining loan obligation but they did not.
It is true that petitioners sent a Notice of Loan Approval17 dated November 24, 1983 addressed
to respondent Aquino informing that the application for loan re-structuring had been approved
by the DBP. But this does not prove their claim that respondents authorized the loan re-
structuring for the following reasons: one, it was petitioners themselves who applied for the
loan re-structuring; two, the document is a mere notice; three, the notice does not even show
that it was received by respondents; and four, after the manager of the DBP informed
respondents about the loan re-structuring, respondents rushed to sell another portion of their
land so they could pay the remaining obligation. They later withdrew the amount because of
the restraining order issued by the trial court and not because they waived their right to rescind
the contract.
With the breach committed by petitioners, the trial court ruled and the appellate court rightly
affirmed that petitioners substantially violated their obligation. Hence, respondents are entitled
to a rescission of the contract under Article 1191 of the Civil Code, viz.:
Art. 1191. The power to rescind obligations is implied in reciprocal ones, in case one of the
obligors should not comply with what is incumbent upon him.
The injured party may choose between the fulfillment and the rescission of the obligation, with
the payment of damages in either case. He may also seek rescission, even after he has chosen
fulfillment, if the latter should become impossible.
The court shall decree the rescission claimed, unless there be just cause authorizing the fixing
of a period.
xxx
Petitioners can not argue that their breach is merely casual and slight, especially that they were
able to subsequently pay the loan and the purpose of the contract has been fulfilled by
petitioners, i.e., that the mortgage obligation shall be paid and respondents shall be able to
retain at least the rest of the land free from any liens or encumbrances.18 The ruling of the trial
court on this issue is correct, viz.:
x x x It is admitted that the underlying purpose of the Aquinos to sell a portion of the land was
in order that their mortgage obligation shall be paid and they shall be able to retain at least the
rest of the land free from any liens and encumbrances. It was imperative then for Rene Ramel
to pay the mortgage obligation. He did not do so. x x x x More important[,] he did not even
intend to pay the bank because he had the loan re-structured so as to be payable in ten years.
Of course, he finally paid the mortgage loan but only after one and one-half years after the filing
of this case. To the mind of the [c]ourt, the non-payment of the mortgage obligation until after
one and one-half years after the filing of this case constitutes a substantial breach that entitles
the Aquinos to rescind the contract.19
Rightly, the appellate court affirmed the ruling, viz.:
Since Ramel failed to settle Aquino's mortgage obligation on or before December 31, 1983 as
in fact he restructured it for a period of ten years, he committed a substantial breach of his
agreement with Aquino. That the breach is substantial is all the more appreciated when note is
taken of the fact that the entire 14.1825-hectare property, not just the 8.2030 hectares portion
thereof sold to Ramel, remained encumbered beyond the agreed deadline of December 31,
1983, thus restricting the owners' rights thereto.20
Petitioners further invoke Article 1592 of the Civil Code and argue that respondents are not
entitled to rescission because no demand has been made upon them either judicially or by
notarial act. They contend that respondents "merely raised rescission as a defense in this case
of Specific Performance and they have never informed the Ramels about their alleged decision
to exercise the said right before this case was filed xxx."21 They aver that the act of the Aquinos
in tendering payment to DBP does not constitute demand as the term is defined under Article
1592,22 viz.:
Art. 1592. In the sale of immovable property, even though it may have been stipulated that
upon failure to pay the price at the time agreed upon the rescission of the contract shall of right
take place, the vendee may pay, even after the expiration of the period, as long as no demand
for rescission of the contract has been made upon him either judicially or by a notarial act. After
the demand, the court may not grant him a new term.
Again, we reject the argument. We held in the case of Luzon Brokerage Co., Inc. v. Maritime
Building Co., Inc.23 that even a cross-claim found in the Answer filed in the trial court
constitutes judicial demand for rescission that satisfies the requirements of Article 1592.
Further, in Iringan v. Court of Appeals,24 we held that an action for Judicial Confirmation of
Rescission and Damages before the Regional Trial Court complied with the requirement of the
law for judicial demand of rescission even if the intention of the moving party was to compel
the other party to formalize in a public document their extrajudicial mutual agreement to rescind.
In this case, the mutual agreement to rescind was forged when the injured party sent to the
defaulting party a letter stating that he had considered the contract rescinded and that he would
not accept any further payment. The defaulting party replied that he was not opposing the
revocation of the sale, save for some reimbursements. We held that though the letter declaring
the intention to rescind did not satisfy the "demand" required by the law, the subsequent case
filed for a judicial confirmation of the rescission did meet the requirement for a valid demand.
We rule that respondents satisfied Article 1592 when they raised rescission as a defense in
their Answer. To be sure, petitioners learned of respondents' intention to rescind even before
they filed their Answer. Petitioners knew the intent to rescind when respondents deposited the
amount of P72,703.06 with DBP to fully settle their remaining obligation. Petitioners were told
by respondents that they were rescinding the contract after the mortgage was re-structured
without their consent. Indeed, it was this declaration by respondents that prompted petitioners
to file the case of Specific Performance with the trial court.
Finally, petitioners question the ruling of the courts a quo offsetting the claim of improvements
by petitioners and the claim of the fruits derived from the land by respondents. Petitioners claim
that the offsetting of claims is erroneous citing Articles 546 and 547 of the Civil Code, viz.:
Art. 546. Necessary expenses shall be refunded to every possessor; but only the possessor in
good faith may retain the thing until he has been reimbursed therefor.
Useful expenses shall be refunded only to the possessor in good faith with the same right of
retention, the person who has defeated him in the possession having the option of refunding
the amount of the expenses or of paying the increase in value which the thing may have
acquired by reason thereof.
Art. 547. If the useful improvements can be removed without damage to the principal thing, the
possessor in good faith may remove them, unless the person who recovers the possession
exercises the option under paragraph 2 of the preceding article.
Under these provisions, petitioners argue that as possessors in good faith and in the concept
of an owner, they are entitled to the fruits received before possession was legally interrupted
and they must be reimbursed for their expenses or for the increase in the value the subject
property may have acquired by reason thereof.25
The records show that both parties failed to prove their claims through any receipt or document.
Despite the lack of proof, the trial court ordered that whatever improvements spent on the land
shall be offset from the fruits derived therefrom, viz.:26
The plaintiffs claimed that they were able to improve the land after possession was given to
them. No receipts were shown to guide the [c]ourt as to how much [were] the costs of the
improvements. Likewise the defendants claimed that the plaintiffs were able to cultivate the
land and harvest palay although their testimonies to this effect [are] based on their
presumptions and calculations not on actual harvest such that the [c]ourt also cannot make
determination of the real fruits derived from the land. This being so, the [c]ourt shall just offset
the claim of improvements to the claim of fruits derived from the land and then place the parties
in their previous positions before the agreement. Whatever improvements spent on the land
shall be compensated from the fruits derived therefrom.27
The appellate court found the setting off by the trial court to be in order, viz.:
[W]e find in order the Solomonic setting off by the court a quo the appellants' claim of
improvements on, with the appellees' claims for value of the fruits of, the subject land, given
the paucity of evidence on the matter. Along the same vein, We find it just and fair to set off the
compensation arising from the possession and enjoyment of the fruits of subject lot by
appellants during the pendency of the case with the interests due on the amounts paid by them
to the Aquinos and to the DBP.28
We can not order an offsetting of the claims as did the trial court and the appellate court. The
evidence show that both parties failed to prove their respective claims. In the absence of
evidence from both parties on their claims, offsetting is improper. The right to offset may exist
but the question of how much is to be offset is factual in nature and needs to be proved by
proper evidence.
IN VIEW WHEREOF, the Decision and the Resolution of the Court of Appeals in CA-G.R. CV
No. 28654 dated April 16, 1997 and March 25, 1998, respectively, are AFFIRMED with the
MODIFICATION that respondents are ordered to pay petitioners the sum of P24,800.00, not
P29,800.00 as ordered by the trial court, representing the amounts they received from
petitioners, plus the sum of P108,216.00 representing the amounts petitioners paid to DBP.
The order on the offsetting of claims is DELETED for lack of evidence. Respondents-
intervenors, as co-owners, are likewise ordered to reimburse respondent Aquino their one-third
share each of the total amount to be paid by Aquino to petitioners.
SO ORDERED.
Sandoval-Gutierrez, Corona, Azcuna, Garcia, J.J., concur.
G.R. No. L-18452 May 31, 1965
AUGUSTO COSIO and BEATRIZ COSIO DE RAMA, petitioners,
vs.
CHERIE PALILEO, respondent.
Recto Law Office for petitioners.
Bengzon, Villegas, Bengzon and Zarraga for respondent.
REGALA, J.:
This is an action to recover the possession of a house. It was filed following our decision in
Palileo v. Cosio, 51 O.G. 6181, in which We ruled that the house in question had not been sold
out but had merely been given as security for a debt, the pacto de retro sale between the parties
being in reality a loan with an equitable mortgage. In a sense, therefore, this case is a sequel
to Palileo v. Cosio. The parties are here this time to litigate on the issue of possession and its
effects.
The house in this case, a two-story building, was formerly owned by Felicisima Vda. de Barza.
It is located at 25 (formerly 6) Antipolo Street, Pasay City, on a lot belonging to the Hospicio de
San Juan de Dios. On October 4, 1950, this house and the leasehold right to the lot were
bought by respondent Cherie Palileo who paid part of the purchase price and mortgaged the
house to secure the payment of the balance.
It appears that respondent Palileo defaulted in her obligation, because of which the mortgage
was foreclosed and the house was advertised for sale. Fortunately for her, however,
respondent Palileo was able to raise money on December 18, 1951 before the house could be
sold at public auction. On this date, respondent Palileo received from petitioner Beatriz Cosio
de Rama the sum of P12,000 in consideration of which she signed a document entitled
"Conditional Sale of Residential Building," purporting to convey to petitioner Cosio de Rama
the house in question. Under this document, the right to repurchase the house within one year
was reserved to respondent Palileo. On the same day, the parties entered into an agreement
whereby respondent Palileo remained in possession of the house as tenant, paying petitioner
Cosio de Rama a monthly rental of P250.
Petitioner Cosio de Rama subsequently insured the house against fire with the Associated
Insurance & Surety Co., Inc. On October 25, 1952, fire broke out in the house and partly
destroyed the same. For the loss, petitioner Cosio de Rama was paid P13,107 by the insurance
company.
At the instance of his sister, petitioner Cosio de Rama, the other petitioner Augusto Cosio
entered the premises and began the repair of the house. Soon after an action was filed by
respondent Palileo against Cosio de Rama for the reformation of the deed of pacto de retro
sale into a loan with an equitable mortgage. This case was filed in the Court of First Instance
of Rizal on December 4, 1952. One week after (December 11), respondent Palileo filed another
action in the Municipal Court of Pasay City, this time seeking the ejectment of petitioner Cosio
who, it was alleged, had entered and occupied the house without the knowledge and consent
of respondent Palileo. Just the same, however, repair work went on and although at times
interrupted it was finally completed in 1953 at a cost of P12,000.
Meanwhile the ejectment suit was dismissed by the Municipal Court. Respondent Palileo
appealed to the Court of First Instance of Pasig, but the case was again dismissed, this time
for failure of respondent Palileo to prosecute. The dismissal of the case was subsequently
made "without prejudice."
In the other case, respondent Palileo was successful. Both the lower court and this Court
declared the transaction of the parties to be a loan with an equitable mortgage and not a
conditional sale. It was found that the amount of P12,000, which purported to be the price, was
in fact a loan; that the amount of P250 paid every month as rent was in reality interest; and that
the house allegedly sold was intended to be a security for the loan. Accordingly, this Court
directed petitioner Cosio de Rama to return to respondent Palileo the sum of P810 which she
had collected as interest in excess of that allowed by law. This Court likewise ruled that
petitioner Cosio de Rama could keep the proceeds of the fire insurance but that her claim
against respondent Palileo under the loan was to be deemed assigned to the insurance
company.
As earlier stated, this suit was instituted to recover the possession of the house as a
consequence of our decision that it had not really been sold but had merely been given as
security for a loan. It was originally brought against petitioner Cosio who asked that the action
be dismissed on the ground that it was barred by the judgment of the Municipal Court which
dismissed the ejectment case against him. The court denied the motion to dismiss. And so
petitioner Cosio filed his answer. He was later joined by petitioner Cosio de Rama who was
allowed to intervene in the action.
Thereafter, the lower court rendered judgment finding petitioner Cosio de Rama to be a
possessor in good faith with a right to retain possession until reimbursed for her expenses in
repairing the house. The dispositive portion of its decision reads:
IN VIEW OF THE FOREGOING, the Court hereby renders judgment declaring plaintiff Palileo
as the lawful owner of the house No. 25 Antipolo Street, Pasay City and entitled to the
possession thereof upon her paying to intervenor defendant Beatriz Cosio de Rama the sum
of TWELVE THOUSAND (P12,000.00) PESOS with interest at the legal rate from December
22, 1946 which is the date of the filing of intervenor-defendant's counterclaim until paid. There
is no judgment for costs.
Not satisfied, respondent Palileo appealed to the Court of Appeals and succeeded in having
the lower court decision modified. The appellate court ruled that —
by virtue of the pacto de retro sale intervenor-appellee (Beatriz Cosio de Rama) became the
temporary owner of the house and as such she was entitled to the possession thereof from the
date of such conditional sale although appellant (Cherie Palileo) was its actually occupant as
intervenor appellee's tenant. ... However, when appellant instituted the ejectment case against
appellee (Augusto Cosio) and intervenor-appellee (Cosio de Rama) as early as December
1952, when the latter had just started to reconstruct the house, and she likewise commenced
the action against intervenor-appellee in the same month of December, 1952, to have the deed
of pacto de retro sale declared as one of loan with equitable mortgage, said appellee and
intervenor-appellee's title to the house suffered from a flaw. From that time both appellee and
intervenor-appellee ceased to be considered possessors in good faith. (Art. 528, new Civil
Code; Tacas v. Tobon 53 Phil. 356; Lopez, Inc. v. Phil. Eastern Trading Co., Inc., 52 Off. Gaz.
1452) And if they chose to continue reconstructing the house even after they were appraised
of a flaw on their title they did so as builders in bad faith.
Accordingly, it rendered judgment as follows:
WHEREFORE, with the modification that appellant (Cherie Palileo) is hereby declared the
lawful owner of the house known as No. 25 Antipolo Street, Pasay City, and entitled to the
possession thereof, without reimbursing intervenor-appellee (Beatriz Cosio de Rama) the sum
of P12,000 allegedly spent for the reconstruction of the same, and appellee (Augusto Cosio)
and intervenor-appellee (Cosio de Rama) are hereby ordered to pay appellant a monthly rental
of P300 during the time they actually occupied the house just mentioned as possessors in bad
faith, the decision appealed from is hereby affirmed in all other respects. Without any
pronouncement as to costs.1äwphï1.ñët
Petitioners Cosio and Cosio de Rama have appealed to this Court by certiorari, citing Article
526 of the Civil Code which states as follows:
He is deemed a possessor in good faith who is not aware that there exists in his title or mode
of acquisition any flaw which invalidates it.
He is deemed a possessor in bad faith who possesses in any case contrary to the foregoing.
Mistake upon a doubtful or difficult question of law may be the basis of good faith.
They contend that they were not only possessors in good faith from the beginning but that they
continue to be such even after this Court's declaration that their transaction was a loan with a
mortgage and not a sale with a right of repurchase, because, as a matter of fact, this Court did
not invalidate, but merely reformed, the supposed deed of sale. Petitioners likewise aver that
neither can the ejectment suit be considered to be notice of any defect or flaw in their mode of
acquisition because that case after all was dismissed.
We believe that both the petitioners and the Court of Appeals are in error in saying that the
former had a right to the possession of the house under the deed of pacto de retro sale.
Petitioners did not have such a right at any time and they knew this.
In reforming instruments, courts do not make another contract for the parties (See Civil Code,
Arts. 1359-1369 and the Report of the Code Commission, p. 56). They merely inquire into the
intention of the parties and, having found it, reform the written instrument (not the contract) in
order that it may express the real intention of the parties (See Id., Arts. 1365 and 1602). This
is what was done in the earlier case between the parties. In holding that the document entitled
"Conditional Sale of Residential Building" was in fact a mortgage, this Court said: "This
document did not express the true intention of the parties which was merely to place said
property (the house) as security for the payment of the loan." (Palileo v. Cosio, 51 O.G. 6181
at 6184)
If that was the intention of the parties (to conform to which their written instrument was
reformed) then petitioner Cosio de Rama knew from the beginning that she was not entitled to
the possession of the house because she was a mere mortgagee. For the same reason, she
could not have been mistaken as to the true nature of their agreement. Hence, in bidding her
brother, petitioner Cosio, to enter the premises and make repairs and in later occupying the
house herself, petitioner Cosio de Rama did so with this knowledge.
As possessors in bad faith, petitioners are jointly liable for the payment of rental, the reasonable
value of which, as found by the appellate court is P300 a month. (Art. 549. See Lerma v. De la
Cruz, 7 Phil. 581) This finding is supported by the evidence and we find no reason to disturb it.
But even as we hold petitioner Cosio de Rama to be a possessor in bad faith we nevertheless
believe that she is entitled to be reimbursed for her expenses in restoring the house to its
original condition after it had been partly damaged by fire, because such expenses are
necessary (Angeles v. Lozada, 54 Phil. 184) and, under Article 546, are to be refunded even
to possessors in bad faith. As already stated, petitioner Cosio de Rama spent P12,000 for the
repair work.
The error of the appellate court lies in its failure to appreciate the distinction that while petitioner
Cosio de Rama is a possessor in bad faith, she is not a builder in bad faith. Thus in describing
petitioners as "builders in bad faith" and, consequently, in holding that they have no right to be
reimbursed, the court obviously applied Article 449 which states that "he who builds, plants or
sows in bad faith on the land of another loses what is built, planted or sown without right to
indemnity." But article 449 is a rule of accession and we are not here concerned with accession.
There is here no reason for the application of the principle accesio cedit principali, such as is
contemplated in cases of accession continua of which article 449 is a rule. For what petitioners
did in this case was not to build a new house on the land of another. Rather, what they did was
merely to make repairs on a house that had been partly destroyed by fire and we are asked
whether they have a right to be refunded for what they spent in repairs. The land on which the
house is built is not even owned by respondent Palileo, that land being the property of the
Hospicio de San Juan de Dios. This case comes under article 546 which, as we have already
indicated, provides for the refund of necessary expenses "to every possessor."
And now we come to the last point in petitioners' assignment of errors. It is contended that the
present action is barred by the judgment of the Municipal Court which dismissed the ejectment
case filed by respondent Palileo against petitioner Cosio. It is said that although that ejectment
was vacated when it was appealed to the Court of First Instance, the subsequent dismissal of
the case was equivalent to the withdrawal of the appeal and therefore to a revival of the
judgment of the Municipal Court. That judgment, to repeat, dismissed the ejectment case
against petitioner Cosio.
We note that this point, though raised in the Court of First Instance, was not properly assigned
as error in the Court of Appeals. It was there taken up only in the "preliminary remarks" in the
brief. Although petitioners were appellees in the Court of Appeals, they should have assigned
this alleged error if only to maintain the decision of the lower court.
Apart from this consideration, we believe that this action is not barred by the prior judgment in
the ejectment case. The pertinent provisions of the Rules of Court state:
Effect of appeals. — A perfected appeal shall operate to vacate the judgment of the justice of
the peace or the municipal court, and the action when duly docketed in the Court of First
Instance, shall stand for trial de novo upon its merits in accordance with the regular procedure
in that court, as though the same had never been tried before and had been originally there
commenced. If the appeal is withdrawn, or dismissed for failure to prosecute, the judgment
shall be deemed revived and shall forthwith be remanded to the justice of the peace or
municipal court for execution. (Rule 40, see. 9, Rules of Court.)
The following comment answers squarely petitioners' arguments:
The case shall stand in the Court of First Instance as though the same "had been originally
there commenced." Thus, if an action is filed in an inferior court, and the plaintiff fails to appear
and the case is dismissed, may the plaintiff file another complaint for the same cause? The
Supreme Court held that, since the appeal had the effect of vacating the judgment of the inferior
court and, therefore, the case, when dismissed, was in the Court of First Instance as if the
same "had been originally there commenced" and since dismissals, on the ground
aforementioned, of cases coming within the original jurisdiction of the Court of First Instance,
are without prejudice, the conclusion is that plaintiff may file a new complaint for the same
cause. (Marco v. Hashim 40 Phil. 592) This ruling, however, is affected to a certain extent by
Rule 17, section 3, which provides that the dismissal of a case on the ground of plaintiff's failure
to appear at the trial, is a final adjudication upon the merits unless the court otherwise provides."
(2 Moran, Comments on the Rules of Court, 344-345 [1963 ed.])
Here the dismissal of the ejectment case for failure of respondent Palileo to prosecute was
expressly made to be without prejudice. That judgment, therefore, cannot be a bar to the filing
of another action like the present.
WHEREFORE, with the modification that petitioner Cosio de Rama should be reimbursed her
necessary expenses in the amount of P12,000 by respondent Palileo, the judgment of the Court
of Appeals is affirmed in all other respects, without pronouncements as to, cost.
Bengzon, C.J., Bautista Angelo and Zaldivar, JJ., concur.
Reyes, J.B.L., Paredes and Makalintal, JJ., concur in the result.
Barrera and Bengzon, J.P., JJ., took no part.
G.R. No. 155640 May 7, 2008
EUGENIA CASTELLANO and ERLAINE CASTELLANO, petitioners,
vs.
SPS. FLORENTINO FRANCISCO and ESTELITA MATA FRANCISCO, respondents.
DECISION
CARPIO, J.:
The Case
This is a petition for review1 seeking to reverse the 11 June 2002 Decision2 of the Court of
Appeals in CA-G.R. SP No. 63703 as well as the 15 October 2002 Resolution3 denying the
motion for reconsideration. The Court of Appeals in its assailed decision set aside the 12
January 2001 Decision4 of the Department of Agrarian Reform Adjudication Board (DARAB)
which affirmed the 30 August 1999 Decision5 of the Regional Adjudicator. The Court of Appeals
declared petitioner Erlaine Castellano's (Erlaine) emancipation patent void and ordered the
return of possession of the subject land to respondent spouses Florentino and Estelita
Francisco (spouses Francisco) upon payment of the loan.
The Facts
Since 1955, spouses Francisco had been in possession of about 23,032 square meters of land
at Barangay Malayantoc, Sto. Domingo, Nueva Ecija. In 1976, pursuant to Presidential Decree
No. 276 (PD No. 27), respondent Florentino Francisco (Florentino) was issued Certificate of
Land Transfer No. 03019169.
Spouses Francisco alleged that in 1989, due to extreme poverty, they borrowed P50,000 from
petitioner Eugenia Castellano (Eugenia) and, in return, Eugenia would cultivate and possess
the property until full payment of the loan. Spouses Francisco promised to pay within three
years or until 1992. Their agreement was not reduced into writing.
According to spouses Francisco, in the latter part of 1992, they offered to pay the loan but
Eugenia refused to accept payment. Spouses Francisco later learned that Eugenia was able
to secure Emancipation Patent No. 489877 and Transfer Certificate of Title No. EP-71729 in
the name of Erlaine, Eugenia's son.
On 17 December 1997, spouses Francisco filed a petition for cancellation of Erlaine's
emancipation patent before the DARAB. Spouses Francisco claimed that ownership of the lot
was transferred in Erlaine's name without their knowledge and consent. Spouses Francisco
asserted that all the documents necessary for the valid transfer of rights were fabricated and
falsified.7
In their answer, the Castellanos stated that spouses Francisco later informed them that they
would no longer redeem the land. A transfer action was later initiated by the Department of
Agrarian Reform (DAR) Team Office and, on 15 October 1992, the Regional Director of the
DAR, Region III, issued an order approving the transfer action in favor of Erlaine. The
Castellanos denied that there was fraud and maintained that the standard procedure for a
transfer action was followed.
The Decision of the Regional Adjudicator
On 30 August 1999, Regional Adjudicator Fe Arche Manalang (Regional Adjudicator) ruled in
favor of the Castellanos, the dispositive portion of the decision reads:
WHEREFORE, premises considered, judgment is hereby rendered:
1. Finding and declaring the Petitioners [spouses Francisco] as having sold and abandoned
their tenancy/possessory rights over the subject landholding more particularly described in
paragraph 4 of the Petition;
2. Directing the cancellation of CLT No. 0301916 issued in the name of Petitioner Florentino
M. Francisco covering the subject property;
3. Directing the forfeiture in favor of the Government of all amortization payments so far made
by the said Petitioner with the Land Bank of the Philippines;
4. Permanently disqualifying the same Petitioner as an Agrarian Reform Beneficiary under the
Government's Comprehensive Agrarian Reform Program; [and]
5. Dismissing all other claims for want of evidence or lack of basis.
NO COSTS.8
The Regional Adjudicator declared that while Florentino was the original tenant-beneficiary and
a holder of a certificate of land transfer, spouses Francisco committed a breach of obligation
when they sold their tenancy rights to the Castellanos. The Regional Adjudicator ruled that
spouses Francisco abandoned the land when they went to work abroad and executed a "waiver
of rights." The Regional Adjudicator stated that neglect or abandonment of the land by the
beneficiary for two years is a ground for the forfeiture of the awarded land and cancellation of
the certificate of land transfer.
The Regional Adjudicator also ruled that there were no irregularities in the transfer proceedings
leading to the issuance of Erlaine's emancipation patent. The Regional Adjudicator declared
that the waiver of rights executed by Florentino and his heirs, duly acknowledged before a
notary public, enjoyed the presumption of regularity and validity. No evidence was presented
to contradict the same. The mistake in the status of Florentino describing him as a widower
was a mere oversight which Estelita Francisco later on ratified.
Spouses Francisco appealed the decision to the DARAB.
The Decision of the DARAB
On 12 January 2001, the DARAB dismissed the appeal for lack of merit and affirmed the
Regional Adjudicator's 30 August 1999 Decision.
The DARAB declared that Florentino's certificate of land title did not vest in him absolute
ownership over the land because transfer of ownership was subject to certain conditions. The
DARAB ruled that spouses Francisco surrendered their possesssory right over the land in
exchange for P50,000 and physically abandoned the land when they worked abroad. The
DARAB held that this was sufficient ground for forfeiture of the awarded land and cancellation
of the certificate of land transfer.
On the other hand, the DARAB stated that it is the issuance of the emancipation patent in favor
of the tenant beneficiary that vests him with absolute ownership of the land. The DARAB ruled
that, with the issuance of Erlaine's emancipation patent, Erlaine had a superior right over
spouses Francisco, who were mere holders of a certificate of land transfer. The DARAB also
stated that the issuance of Erlaine's emancipation patent enjoyed the presumption of regularity
and validity that is not overcome by the filing of an information for falsification of public
document.
Spouses Francisco appealed to the Court of Appeals.
The Decision of the Court of Appeals
In its 11 June 2002 Decision, the Court of Appeals reversed the 12 January 2001 DARAB
Decision. The Court of Appeals ruled that Erlaine's emancipation patent should be canceled
because it was issued in violation of PD No. 27. Under PD No. 27, spouses Francisco could
not make any valid form of transfer except to the government or, by hereditary succession, to
their heirs. Since the basis for the transfer action and the issuance of Erlaine's emancipation
patent was spouses Francisco's alienation of their possessory right in favor of Erlaine, the
transaction is void.
The Court of Appeals also ruled that spouses Francisco did not abandon the property. The
Court of Appeals said that spouses Francisco only surrendered possession of the property to
the Castellanos during the period of the loan, on the condition that upon extinguishment of the
obligation, possession shall revert back to spouses Francisco.
The Issues
The Castellanos raise the following issues:
1. Whether spouses Francisco abandoned their rights over the land; and
2. Whether Erlaine's emancipation patent is valid.
The Ruling of the Court
The petition is partly meritorious.
Spouses Francisco did not abandon the land
We agree with the finding of the Court of Appeals that spouses Francisco did not abandon the
land. The Court of Appeals stated that abandonment9 requires (1) a clear and absolute
intention to renounce a right or a claim or to abandon a right or property; and (2) an external
act by which that intention is expressed or carried into effect. The intention to abandon implies
a departure, with the avowed intent of never returning, resuming or claiming the right and the
interest that have been abandoned.10
In this case, there was no showing that spouses Francisco had a clear, absolute or irrevocable
intent to abandon the land. Spouses Francisco's surrender of possession did not amount to
abandonment because there was an obligation on the part of Eugenia to return possession of
the land to spouses Francisco upon full payment of the loan.11
Erlaine's emancipation patent is valid
The Court of Appeals ruled that Erlaine's emancipation patent was void and should be canceled
because spouses Francisco could not validly transfer ownership of the land to Erlaine. The
Court of Appeals ruled that spouses Francisco's transfer of the rights or possession to the
Castellanos violated PD No. 27 and is therefore void.
Indeed, the sale or transfer of rights over a property covered by a certificate of land transfer is
void except when the alienation is made in favor of the government or through hereditary
succession.12 In this case, however, the Court of Appeals failed to consider that the basis for
the issuance of Erlaine's emancipation patent was Florentino's voluntary surrender of the land
to the Samahang Nayon, which qualifies as surrender or transfer to the government.
In Corpuz v. Grospe,13 the Court said:
To repeat, the land was surrendered to the government, not transferred to another private
person. It was the government, through the DAR, which awarded the landholding to the private
respondents who were declared as qualified beneficiaries under the agrarian laws. Voluntary
surrender, as a mode of extinguishment of tenancy relations, does not require court approval
as long as it is convincingly and sufficiently proved by competent evidence.
Petitioner's voluntary surrender to the Samahang Nayon qualifies as a surrender or transfer to
the government because such action forms part of the mechanism for the disposition and the
reallocation of farmholdings to tenant-farmers who refuse to become beneficiaries of PD 27.
Under Memorandum Circular No. 8-80 of the then Ministry of Agrarian Reform, the Samahan
shall, upon notice from the agrarian reform team leader, recommend other tenant-farmers who
shall be substituted to all rights and obligations of the abandoning or surrendering tenant-
farmer.14 (Emphasis supplied)
In this case, Florentino's intention to surrender the land to the Samahang Nayon was clear. On
3 July 1989, Florentino executed a waiver of rights and voluntarily surrendered ownership over
the land to the Samahang Nayon.15 On 4 September 1990, the Samahang Nayon issued
Resolution No. 6 acknowledging Florentino's surrender of the land and recommending three
farmers, including Erlaine, to the DAR as agrarian reform beneficiaries.16 On 4 October 1990,
Florentino executed another salaysay stating that he had no objection to the transfer of the
land in Erlaine's name because he already returned the land to the government.17 The records
also show that the proper transfer action was undertaken.18 Therefore, Erlaine's emancipation
patent is valid since it was issued pursuant to Florentino's voluntary surrender of the land to
the Samahang Nayon, not pursuant to spouses Francisco's alienation of their possessory right
to Eugenia.
WHEREFORE, we GRANT the petition. We REVERSE and SET ASIDE the 11 June 2002
Decision and the 15 October 2002 Resolution of the Court of Appeals in CA-G.R. SP No.
63703. We REINSTATE the 30 August 1999 Decision of the Regional Adjudicator and the 12
January 2001 Decision of the Department of Agrarian Reform Adjudication Board and declare
Erlaine Castellano's Emancipation Patent valid.
SO ORDERED.
Puno, C.J., Chairperson, Azcuna, Velasco, Jr.*, Leonardo-de Castro, JJ., concur.
[ GR No. 198356, Apr 20, 2015 ]
SUPAPO v. SPS. ROBERTO AND SUSAN DE JESUS +
DECISION
BRION, J.:
We resolve the petition for review on certiorari[1] filed by petitioners Esperanza Supapo and
Romeo Supapo[2] (Spouses Supapo) to assail the February 25, 2011 decision[3] and August
25, 2011 resolution[4] of the Court of Appeals (CA) in CA-G.R. SP No. 111674.
Factual Antecedents
The Spouses Supapo filed a complaint[5] for accion publiciana against Roberto and Susan de
Jesus (Spouses de Jesus), Macario Bernardo (Macario), and persons claiming rights under
them (collectively, the respondents), with the Metropolitan Trial Court (MeTC) of Caloocan City.
The complaint sought to compel the respondents to vacate a piece of land located in
Novaliches, Quezon City, described as Lot 40, Block 5 (subject lot). The subject lot is covered
by Transfer Certificate of Title (TCT) No. C-28441[6] registered and titled under the Spouses
Supapo's names. The land has an assessed value of thirty-nine thousand nine hundred eighty
pesos (39,980.00) as shown in the Declaration of Real Property Value (tax declaration) issued
by the Office of the City Assessor of Caloocan.[7]
The Spouses Supapo did not reside on the subject lot. They also did not employ an overseer
but they made sure to visit at least twice a year.[8] During one of their visits in 1992, they saw
two (2) houses built on the subject lot. The houses were built without their knowledge and
permission. They later learned that the Spouses de Jesus occupied one house while Macario
occupied the other one.[9]
The Spouses Supapo demanded from the respondents the immediate surrender of the subject
lot by bringing the dispute before the appropriate Lupong Tagapamayapa. The Lupon issued
a Katibayan Upang Makadulog sa Hukuman (certificate to file action) for failure of the parties
to settle amicably.[10]
The Spouses Supapo then filed a criminal case[11] against the respondents for violation of
Presidential Decree No. 772 or the Anti-Squatting Law.[12] The trial court convicted the
respondents. The dispositive portion of the decision reads:
WHEREFORE, in view of all the foregoing, this Court finds accused ROBERTO DE JESUS,
SUSAN DE JESUS and MACARIO BERNARDO, GUILTY beyond reasonable doubt for
Violation of Presidential Decree No. 772, and each accused is hereby ordered to pay a fine of
ONE THOUSAND PESOS (P1,000.00), and to vacate the subject premises.
SO ORDERED.[13] (Emphasis supplied.)
The respondents appealed their conviction to the CA.[14] While the appeal was pending,
Congress enacted Republic Act (RA) No. 8368, otherwise known as "An Act Repealing
Presidential Decree No. 772," which resulted to the dismissal of the criminal case.[15]
On April 30, 1999, the CA's dismissal of the criminal case became final.[16]
Notwithstanding the dismissal, the Spouses Supapo moved for the execution of the
respondents' civil liability, praying that the latter vacate the subject lot. The Regional Trial Court
(RTC) granted the motion and issued the writ of execution. The respondents moved for the
quashal of the writ but the RTC denied the same. The RTC also denied the respondents' motion
for reconsideration.
The respondents thus filed with the CA a petition for certiorari to challenge the RTC's orders
denying the quashal of the writ and the respondent's motion for reconsideration.[17] The CA
granted the petition and held that with the repeal of the Anti-Squatting Law, the respondents'
criminal and civil liabilities were extinguished.[18] The dispositive portion of the decision reads:
WHEREFORE, premises considered, the petition for certiorari with prayer for injunction is
GRANTED. The orders dated June 5, 2003 and July 24, 2003 of Branch 131 of the Regional
Trial Court of Caloocan City in Criminal Case No. C-45610 are REVERSED and SET ASIDE.
Said court is hereby permanently ENJOINED from further executing or implementing its
decision dated March 18, 1996.
SO ORDERED.
The CA, however, underscored that the repeal of the Anti-Squatting Law does not mean that
people now have unbridled license to illegally occupy lands they do not own, and that it was
not intended to compromise the property rights of legitimate landowners.[19] In cases of
violation of their property rights, the CA noted that recourse may be had in court by filing the
proper action for recovery of possession.
The Spouses Supapo thus filed the complaint for action publiciana.[20]
After filing their Answer,[21] the respondents moved to set their affirmative defenses for
preliminary hearing[22] and argued that: (1) there is another action pending between the same
parties; (2) the complaint for accion publiciana is barred by statute of limitations; and (3) the
Spouses Supapo's cause of action is barred by prior judgment.
The MeTC Ruling[23]
The MeTC denied the motion to set the affirmative defenses for preliminary hearing. It ruled
that the arguments advanced by the respondents are evidentiary in nature, which at best can
be utilized in the course of the trial. The MeTC likewise denied the respondents' motion for
reconsideration.
From the MeTC's ruling, the respondents filed a petition for certiorari with the RTC.[24]
The RTC Ruling[25]
The RTC granted the petition for certiorari on two grounds, viz.: (i) the action has prescribed;
and (ii) accion publiciana falls within the exclusive jurisdiction of the RTC.
It held that in cases where the only issue involved is possession, the MeTC has jurisdiction if
the action for forcible entry or unlawful detainer is filed within one (1) year from the time to
demand to vacate was made. Otherwise, the complaint for recovery of possession should be
filed before the RTC.
The dispositive portion of the RTC decision reads:
WHEREFORE, premises considered, the instant petition is hereby GRANTED.
The Orders dated October 24, 2008 and February 23, 2009 are hereby declared NULL and
VOID.
The Public Respondent is hereby directed to DISMISS Civil Case No. 08-29245 for lack of
jurisdiction.
SO ORDERED.[26]
In their motion for reconsideration,[27] the Spouses Supapo emphasized that the court's
jurisdiction over an action involving title to or possession of land is determined by its assessed
value; that the RTC does not have an exclusive jurisdiction on all complaints for accion
publiciana; and that the assessed value of the subject lot falls within MeTC's jurisdiction.
The RTC denied the petitioners' motion for reconsideration.
It held that although the MeTC had jurisdiction based on the assessed value of the subject lot,
the Spouses Supapos' cause of action had already prescribed, the action having been filed
beyond the ten (l0)-year prescriptive period under Article 555 of the Civil Code.[28] As it was
not proven when the actual demand to vacate was made, the RTC ruled that the reckoning
period by which the ejectment suit should have been filed is counted from the time the
certificate to file action was issued. The certificate to file action was issued on November 25,
1992, while the complaint for accion publiciana was filed only on March 7, 2008, or more than
ten (10) years thereafter.
Dissatisfied with the RTC ruling, the Spouses Supapo appealed to the CA.[29]
The CA Ruling[30]
The CA dismissed the appeal and held that the complaint for accion publiciana should have
been lodged before the RTC and that the period to file the action had prescribed.
The dispositive portion of the CA decision reads: Accion publiciana is an ordinary civil proceeding to determine the better right of possession of
realty independent of title. It refers to an ejectment suit filed after the expiration of one year
WHEREFORE, the appeal is DENIED. The Decision dated June 30, 2009 and Order dated from the accrual of the cause of action or from the unlawful withholding of possession of the
October 19, 2009 are AFFIRMED. realty.[34]

SO ORDERED In the present case, the Spouses Supapo filed an action for the recovery of possession of the
subject lot but they based their better right of possession on a claim of ownership.
The Spouses Supapo moved[31] but failed[32] to secure a reconsideration of the CA decision;
hence, they came to us through the present petition. This Court has held that the objective of the plaintiffs in accion publiciana is to recover
possession only, not ownership. However, where the parties raise the issue of ownership, the
The Petition courts may pass upon the issue to determine who between the parties has the right to possess
the property.[35]
In seeking reversal of the CA's ruling, the Spouses Supapo essentially argue that:
This adjudication is not a final determination of the issue of ownership; it is only for the purpose
(1) of resolving the issue of possession, where the issue of ownership is inseparably linked to the
the MeTC exercises exclusive original jurisdiction over accion publiciana where the assessed issue of possession. The adjudication of the issue of ownership, being provisional, is not a bar
value of the property does not exceed P20,000.00, or P50,000.00 if the property is located in to an action between the same parties involving title to the property. The adjudication, in short,
Metro Manila; and that is not conclusive on the issue of ownership.[36]
(2)
prescription had not yet set in because their cause of action is imprescriptible under the Torrens Thus, while we will dissect the Spouses Supapo's claim of ownership over the subject property,
system. we will only do so to determine if they or the respondents should have the right of possession.

The Respondents' Case[33] Having thus determined that the dispute involves possession over a real property, we now
resolve which court has the jurisdiction to hear the case.
The respondents argue that the complaint for accion publiciana was (1) filed in the wrong court;
(2) barred by prescription; and (3) barred by res judicata. Under Batas Pambansa Bilang 129,[37] the jurisdiction of the RTC over actions involving title
to or possession of real property is plenary.[38]
Issues
RA No. 7691,[39] however, divested the RTC of a portion of its jurisdiction and granted the
The issues for resolution are: Metropolitan Trial Courts, Municipal Trial Courts and Municipal Circuit Trial Courts the
exclusive and original jurisdiction to hear actions where the assessed value of the property
Whether the MeTC properly acquired jurisdiction; does not exceed Twenty Thousand Pesos (P20,000.00), or Fifty Thousand Pesos
Whether the cause of action has prescribed; and (P50,000.00), if the property is located in Metro Manila.
Whether the complaint for accion publiciana is barred by res judicata.
Section 1 of RA No. 7691 states:
Our Ruling
Section 1. Section 19 of Batas Pambansa Blg. 129, otherwise known as the "Judiciary
The petition is meritorious. Reorganization Act of 1980," is hereby amended to read as follows:
Section. 19. Jurisdiction in civil cases. - Regional Trial Courts shall exercise exclusive original
We hold that: (1) the MeTC properly acquired jurisdiction; (2) the cause of action has not jurisdiction:
prescribed; and (3) the complaint is not barred by res judicata.
(2) In all civil actions which involve the title to, or possession of, real property, or any interest
Accion Publiciana and therein, where the assessed value of the property involved exceeds Twenty thousand pesos
the Jurisdiction of the (P20,000.00) or, for civil actions in Metro Manila, where such value exceeds Fifty thousand
MeTC pesos (P50,000.00) x x x. (Emphasis supplied.)
Section 3 of the same law provides:
Section. 3. Section 33 of the same law is hereby amended to read as follows:
Section. 33. Jurisdiction of Metropolitan Trial Courts, Municipal Trial Courts and Municipal
Circuit Trial Courts in Civil Cases. - Metropolitan Trial Courts, Municipal Trial Courts, and
Municipal Circuit Trial Courts shall exercise:
xxxx
(3) Exclusive original jurisdiction in all civil actions which involve title to, or possession of, real
property, or any interest therein where the assessed value of the property or interest therein
does not exceed Twenty thousand pesos (P20,000.00) or, in civil actions in Metro Manila,
where such assessed value does not exceed Fifty thousand pesos (P50,000.00) exclusive of
interest, damages of whatever kind, attorney's fees, litigation expenses and costs x x x.
(Emphasis supplied.)
In view of these amendments, jurisdiction over actions involving title to or possession of real
property is now determined by its assessed value.[40] The assessed value of real property is
its fair market value multiplied by the assessment level. It is synonymous to taxable value.[41]
In Quinagoran v. Court of Appeals,[42] we explained:
[D]oes the RTC have jurisdiction over all cases of recovery of possession regardless of the
value of the property involved?
The answer is no. The doctrine on which the RTC anchored its denial of petitioner's Motion to
Dismiss, as affirmed by the CA that all cases of recovery of possession or accion publiciana
lies with the regional trial courts regardless of the value of the property no longer holds true.
As tilings now stand, a distinction must be made between those properties the assessed value
of which is below P20,000.00, if outside Metro Manila; and P50,000.00, if within.[43] (Emphasis
supplied.)
In this regard, the complaint must allege the assessed value of the real property subject of the
complaint or the interest thereon to determine which court has jurisdiction over the action. This
is required because the nature of the action and the court with original and exclusive jurisdiction
over the same is determined by the material allegations of the complaint, the type of relief
prayed for by the plaintiff, and the law in effect when the action is filed, irrespective of whether
the plaintiffs are entitled to some or all of the claims asserted therein.[44]
In the present case, the Spouses Supapo alleged that the assessed value of the subject lot,
located in Metro Manila, is P39,980.00. This is proven by the tax declaration[45] issued by the
Office of the City Assessor of Caloocan. The respondents do not deny the genuineness and
authenticity of this tax declaration.
Given that the Spouses Supapo duly complied with the jurisdictional requirements, we hold that
the MeTC of Caloocan properly acquired jurisdiction over the complaint for accion publiciana.
The cause of action
has not prescribed
The respondents argue that the complaint for accion publiciana is dismissible for being filed
out of time.
They invoke Article 555 of the Civil Code, which states: Art. 555. A possessor may lose his
possession:
xxxx
(4) By the possession of another, subject to the provisions of Article 537, if the new possession
has lasted longer than one year. But the real right of possession is not lost till after the lapse of
ten years. (Emphasis supplied.)
The respondents point out that the Spouses Supapo filed the complaint for accion publiciana
on March 7, 2008 or more than ten (10) years after the certificate to file action was issued on
November 25, 1992. The respondents contend that the Spouses Supapo may no longer
recover possession of the subject property, the complaint having been filed beyond the period
provided by law.
Further, while the respondents concede that the Spouses Supapo hold a TCT over the subject
property, and assuming a Torrens title is imprescriptible and indefeasible, they posit that the
latter have lost their right to recover possession because of laches.
On their part, the Spouses Supapo admit that they filed the complaint for accion publiciana
more than ten (10) years after the certificate to file action was issued. Nonetheless, they argue
that their cause of action is imprescriptible since the subject property is registered and titled
under the Torrens system.
We rule that the Spouses Supapo's position is legally correct.
At the core of this controversy is a parcel of land registered under the Torrens system. The
Spouses Supapo acquired the TCT on the subject lot in 1979.[46] Interestingly, the
respondents do not challenge the existence, authenticity and genuineness of the Supapo's
TCT.[47]
In defense, the respondents rest their entire case on the fact that they have allegedly been in
actual, public, peaceful and uninterrupted possession of the subject property in the concept of
an owner since 1992. The respondents contend that they built their houses on the subject lot
in good faith. Having possessed the subject lot for more than ten (10) years, they claim that
they can no longer be disturbed in their possession.[48]
Under the undisputed facts of this case, we find that the respondents' contentions have no legal
basis.
In a long line of cases, we have consistently ruled that lands covered by a title cannot be
acquired by prescription or adverse possession. We have also held that a claim of acquisitive
prescription is baseless when the land involved is a registered land because of Article 1126[49]
of the Civil Code in relation to Act 496 [now, Section 47 of Presidential Decree (PD) No.
1529[50]].[51]
The Spouses Supapo (as holders of the TCT) enjoy a panoply of benefits under the Torrens
system. The most essential insofar as the present case is concerned is Section 47 of PD No.
1529 which states:
Section 47. Registered land not subject to prescriptions. No title to registered land in derogation
of the title of the registered owner shall be acquired by prescription or adverse possession.
In addition to the imprescriptibility, the person who holds a Torrens Title over a land is also
entitled to the possession thereof.[52] The right to possess and occupy the land is an attribute
and a logical consequence of ownership.[53] Corollary to this rule is the right of the holder of
the Torrens Title to eject any person illegally occupying their property. Again, this right is
imprescriptible.[54]
In Bishop v. CA,[55] we held that even if it be supposed that the holders of the Torrens Title
were aware of the other persons' occupation of the property, regardless of the length of that
possession, the lawful owners have a right to demand the return of their property at any time
as long as the possession was unauthorized or merely tolerated, if at all.[56]
Even if the defendant attacks the Torrens Title because of a purported sale or transfer of the
property, we still rule in favor of the holder of the Torrens Title if the defendant cannot adduce,
in addition to the deed of sale, a duly-registered certificate of title proving the alleged transfer
or sale.
A case in point is Umpoc v. Mercado[57] in which we gave greater probative weight to the
plaintiffs TCT vis-a-vis the contested unregistered deed of sale of the defendants. Unlike the
defendants in Umpoc, however, the respondents did not adduce a single evidence to refute the
Spouses Supapo's TCT. With more reason therefore that we uphold the indefeasibility and
imprescriptibility of the Spouses Supapo's title.
By respecting the imprescriptibility and indefeasibility of the Spouses Supapo's TCT, this Court
merely recognizes the value of the Torrens System in ensuring the stability of real estate
transactions and integrity of land registration.
We reiterate for the record the policy behind the Torrens System, viz.:
The Government has adopted the Torrens system due to its being the most effective measure
to guarantee the integrity of land titles and to protect their indefeasibility once the claim of
ownership is established and recognized. If a person purchases a piece of land on the
assurance that the seller's title thereto is valid, he should not run the risk of being told later that
his acquisition was ineffectual after all, which will not only be unfair to him as the purchaser,
but will also erode public confidence in the system and will force land transactions to be
attended by complicated and not necessarily conclusive investigations and proof of ownership.
The further consequence will be that land conflicts can be even more abrasive, if not even
violent.[58]
With respect to the respondents' defense[59] of laches, suffice it to say that the same is
evidentiary in nature and cannot be established by mere allegations in the pleadings.[60] In
other words, the party alleging laches must adduce in court evidence proving such allegation.
This Court not being a trier of facts cannot rule on this issue; especially so since the lower
courts did not pass upon the same.
Thus, without solid evidentiary basis, laches cannot be a valid ground to deny the Spouses
Supapo's petition.[61] On the contrary, the facts as culled from the records show the clear intent
of the Spouses Supapo to exercise their right over and recover possession of the subject lot,
viz.: (1) they brought the dispute to the appropriate Lupon; (2) they initiated the criminal
complaint for squatting; and (3) finally, they filed the action publiciana. To our mind, these acts
negate the allegation of laches.
With these as premises, we cannot but rule that the Spouses Supapo's right to recover
possession of the subject lot is not barred by prescription.
The action is not barred
by prior judgment
As a last-ditch effort to save their case, the respondents invoke res judicata. They contend that
the decision of the CA in CA-G.R. SP No. 78649 barred the filing of the action publiciana.
To recall, CA-G.R. SP No. 78649 is the petition for certiorari filed by the respondents to
challenge the RTC's issuance of the writ enforcing their civil liability (i.e., to vacate the subject
property) arising from their conviction under the Anti-Squatting Law. The CA granted the
petition and permanently enjoined the execution of the respondents' conviction because their
criminal liability had been extinguished by the repeal of the law under which they were tried
and convicted. It follows that their civil liability arising from the crime had also been erased.
The respondents' reliance on the principle of res judicata is misplaced.
Res judicata embraces two concepts: (1) bar by prior judgment as enunciated in Rule 39,
Section 47(b) of the Rules of Civil Procedure; and (2) conclusiveness of judgment in Rule 39,
Section 47(c).[62]
"Bar by prior judgment" means that when a right or fact had already been judicially tried on the
merits and determined by a court of competent jurisdiction, the final judgment or order shall be
conclusive upon the parties and those in privity with them and constitutes an absolute bar to
subsequent actions involving the same claim, demand or cause of action.[63]
The requisites[64] for res judicata under the concept of bar by prior judgment are:

(1) The former judgment or order must be final;
(2) It must be a judgment on the merits;
(3) It must have been rendered by a court having jurisdiction over the subject matter and the
parties; and
(4) There must be between the first and second actions, identity of parties, subject matter, and
cause of action.
Res judicata is not present in this case.
While requisites one to three may be present, it is obvious that the there is no identity of subject
matter, parties and causes of action between the criminal case prosecuted under the Anti-
Squatting Law and the civil action for the recovery of the subject property.
First, there is no identity of parties. The criminal complaint, although initiated by the Spouses
Supapo, was prosecuted in the name of the people of the Philippines. The accion publiciana,
on the other hand, was filed by and in the name of the Spouses Supapo.
Second, there is no identity of subject matter. The criminal case involves the prosecution of a
crime under the Anti-Squatting Law while the accion publiciana is an action to recover
possession of the subject property.
And third, there is no identity of causes of action. The people of the Philippines filed the criminal
case to protect and preserve governmental interests by prosecuting persons who violated the
statute. The Spouses Supapo filed the accion publiciana to protect their proprietary interests
over the subject property and recover its possession.
Even casting aside the requirement of identity of causes of action, the defense of res judicata
has still no basis.
The concept of "conclusiveness of judgment" does not require that there is identity of causes
of action provided that there is identity of issue and identity of parties.[65]
Under this particular concept of res judicata, any right, fact, or matter in issue directly
adjudicated or necessarily involved in the determination of an action before a competent court
in which judgment is rendered on the merits is conclusively settled by the judgment therein and
cannot again be litigated between the parties and their privies, whether or not the claim,
demand, purpose, or subject matter of the two actions is the same.[66]
As already explained, there is no identity of parties between the criminal complaint under the
Anti-Squatting law and the civil action for accion publiciana. For this reason alone,
"collusiveness of judgment" does not apply.
Even if we assume, for the sake of argument, that there is identity of parties, "conclusiveness
of judgment" still does not apply because there is no identity of issues. The issue in the criminal
case is whether the respondents (accused therein) committed the crime alleged in the
information, while the only issue in accion publiciana is whether the Spouses Supapo have a
better right than the respondents to possess and occupy the subject property.
For all these reasons, the defense of res judicata is baseless.
Final Note
As a final note, we stress that our ruling in this case is limited only to the issue of determining
who between the parties has a better right to possession. This adjudication is not a final and
binding determination of the issue of ownership. As such, this is not a bar for the parties or
even third persons to file an action for the determination of the issue of ownership.
WHEREFORE, premises considered, we GRANT the petition, and consequently REVERSE
and SET ASIDE the February 25, 2011 decision and August 25, 2011 resolution of the Court
of Appeals in CA-G.R. SP No. 111674.
SO ORDERED.
Carpio, (Chairperson), Del Castillo, Mendoza, and Leonen, JJ., concur.
G.R. No. 80298 April 26, 1990
EDCA PUBLISHING & DISTRIBUTING CORP., petitioner,
vs.
THE SPOUSES LEONOR and GERARDO SANTOS, doing business under the name and
style of "SANTOS BOOKSTORE," and THE COURT OF APPEALS, respondents.
Emiliano S. Samson, R. Balderrama-Samson, Mary Anne B. Samson for petitioner.
Cendana Santos, Delmundo & Cendana for private respondents.
CRUZ, J.:
The case before us calls for the interpretation of Article 559 of the Civil Code and raises the
particular question of when a person may be deemed to have been "unlawfully deprived" of
movable property in the hands of another. The article runs in full as follows:
Art. 559. The possession of movable property acquired in good faith is equivalent to a title.
Nevertheless, one who has lost any movable or has been unlawfully deprived thereof, may
recover it from the person in possession of the same.
If the possessor of a movable lost or of which the owner has been unlawfully deprived has
acquired it in good faith at a public sale, the owner cannot obtain its return without reimbursing
the price paid therefor.
The movable property in this case consists of books, which were bought from the petitioner by
an impostor who sold it to the private respondents. Ownership of the books was recognized in
the private respondents by the Municipal Trial Court, 1 which was sustained by the Regional
Trial Court, 2 which was in turn sustained by the Court of Appeals. 3 The petitioner asks us to
declare that all these courts have erred and should be reversed.
This case arose when on October 5, 1981, a person identifying himself as Professor Jose Cruz
placed an order by telephone with the petitioner company for 406 books, payable on delivery.
4 EDCA prepared the corresponding invoice and delivered the books as ordered, for which
Cruz issued a personal check covering the purchase price of P8,995.65. 5 On October 7, 1981,
Cruz sold 120 of the books to private respondent Leonor Santos who, after verifying the seller's
ownership from the invoice he showed her, paid him P1,700.00. 6
Meanwhile, EDCA having become suspicious over a second order placed by Cruz even before
clearing of his first check, made inquiries with the De la Salle College where he had claimed to
be a dean and was informed that there was no such person in its employ. Further verification
revealed that Cruz had no more account or deposit with the Philippine Amanah Bank, against
which he had drawn the payment check. 7 EDCA then went to the police, which set a trap and
arrested Cruz on October 7, 1981. Investigation disclosed his real name as Tomas de la Peña
and his sale of 120 of the books he had ordered from EDCA to the private respondents. 8
On the night of the same date, EDCA sought the assistance of the police in Precinct 5 at the
UN Avenue, which forced their way into the store of the private respondents and threatened
Leonor Santos with prosecution for buying stolen property. They seized the 120 books without
warrant, loading them in a van belonging to EDCA, and thereafter turned them over to the
petitioner. 9
Protesting this high-handed action, the private respondents sued for recovery of the books after
demand for their return was rejected by EDCA. A writ of preliminary attachment was issued
and the petitioner, after initial refusal, finally surrendered the books to the private respondents.
10 As previously stated, the petitioner was successively rebuffed in the three courts below and
now hopes to secure relief from us.
To begin with, the Court expresses its disapproval of the arbitrary action of the petitioner in
taking the law into its own hands and forcibly recovering the disputed books from the private
respondents. The circumstance that it did so with the assistance of the police, which should
have been the first to uphold legal and peaceful processes, has compounded the wrong even
more deplorably. Questions like the one at bar are decided not by policemen but by judges and
with the use not of brute force but of lawful writs.
Now to the merits
It is the contention of the petitioner that the private respondents have not established their
ownership of the disputed books because they have not even produced a receipt to prove they
had bought the stock. This is unacceptable. Precisely, the first sentence of Article 559 provides
that "the possession of movable property acquired in good faith is equivalent to a title," thus
dispensing with further proof.
The argument that the private respondents did not acquire the books in good faith has been
dismissed by the lower courts, and we agree. Leonor Santos first ascertained the ownership of
the books from the EDCA invoice showing that they had been sold to Cruz, who said he was
selling them for a discount because he was in financial need. Private respondents are in the
business of buying and selling books and often deal with hard-up sellers who urgently have to
part with their books at reduced prices. To Leonor Santos, Cruz must have been only one of
the many such sellers she was accustomed to dealing with. It is hardly bad faith for any one in
the business of buying and selling books to buy them at a discount and resell them for a profit.
But the real issue here is whether the petitioner has been unlawfully deprived of the books
because the check issued by the impostor in payment therefor was dishonored.
In its extended memorandum, EDCA cites numerous cases holding that the owner who has
been unlawfully deprived of personal property is entitled to its recovery except only where the
property was purchased at a public sale, in which event its return is subject to reimbursement
of the purchase price. The petitioner is begging the question. It is putting the cart before the
horse. Unlike in the cases invoked, it has yet to be established in the case at bar that EDCA
has been unlawfully deprived of the books.
The petitioner argues that it was, because the impostor acquired no title to the books that he
could have validly transferred to the private respondents. Its reason is that as the payment
check bounced for lack of funds, there was a failure of consideration that nullified the contract
of sale between it and Cruz.
The contract of sale is consensual and is perfected once agreement is reached between the
parties on the subject matter and the consideration. According to the Civil Code:
Art. 1475. The contract of sale is perfected at the moment there is a meeting of minds upon the
thing which is the object of the contract and upon the price.
From that moment, the parties may reciprocally demand performance, subject to the provisions
of the law governing the form of contracts.
xxx xxx xxx
Art. 1477. The ownership of the thing sold shall be transferred to the vendee upon the actual
or constructive delivery thereof.
Art. 1478. The parties may stipulate that ownership in the thing shall not pass to the purchaser
until he has fully paid the price.

It is clear from the above provisions, particularly the last one quoted, that ownership in the thing
sold shall not pass to the buyer until full payment of the purchase only if there is a stipulation
to that effect. Otherwise, the rule is that such ownership shall pass from the vendor to the
vendee upon the actual or constructive delivery of the thing sold even if the purchase price has
not yet been paid.
Non-payment only creates a right to demand payment or to rescind the contract, or to criminal
prosecution in the case of bouncing checks. But absent the stipulation above noted, delivery
of the thing sold will effectively transfer ownership to the buyer who can in turn transfer it to
another.
In Asiatic Commercial Corporation v. Ang,11 the plaintiff sold some cosmetics to Francisco
Ang, who in turn sold them to Tan Sit Bin. Asiatic not having been paid by Ang, it sued for the
recovery of the articles from Tan, who claimed he had validly bought them from Ang, paying
for the same in cash. Finding that there was no conspiracy between Tan and Ang to deceive
Asiatic the Court of Appeals declared:
Yet the defendant invoked Article 464 12 of the Civil Code providing, among other things that
"one who has been unlawfully deprived of personal property may recover it from any person
possessing it." We do not believe that the plaintiff has been unlawfully deprived of the cartons
of Gloco Tonic within the scope of this legal provision. It has voluntarily parted with them
pursuant to a contract of purchase and sale. The circumstance that the price was not
subsequently paid did not render illegal a transaction which was valid and legal at the
beginning.
In Tagatac v. Jimenez,13 the plaintiff sold her car to Feist, who sold it to Sanchez, who sold it
to Jimenez. When the payment check issued to Tagatac by Feist was dishonored, the plaintiff
sued to recover the vehicle from Jimenez on the ground that she had been unlawfully deprived
of it by reason of Feist's deception. In ruling for Jimenez, the Court of Appeals held:
The point of inquiry is whether plaintiff-appellant Trinidad C. Tagatac has been unlawfully
deprived of her car. At first blush, it would seem that she was unlawfully deprived thereof,
considering that she was induced to part with it by reason of the chicanery practiced on her by
Warner L. Feist. Certainly, swindling, like robbery, is an illegal method of deprivation of
property. In a manner of speaking, plaintiff-appellant was "illegally deprived" of her car, for the
way by which Warner L. Feist induced her to part with it is illegal and is punished by law. But
does this "unlawful deprivation" come within the scope of Article 559 of the New Civil Code?
xxx xxx xxx
. . . The fraud and deceit practiced by Warner L. Feist earmarks this sale as a voidable contract
(Article 1390 N.C.C.). Being a voidable contract, it is susceptible of either ratification or
annulment. If the contract is ratified, the action to annul it is extinguished (Article 1392, N.C.C.)
and the contract is cleansed from all its defects (Article 1396, N.C.C.); if the contract is annulled,
the contracting parties are restored to their respective situations before the contract and mutual
restitution follows as a consequence (Article 1398, N.C.C.).
However, as long as no action is taken by the party entitled, either that of annulment or of
ratification, the contract of sale remains valid and binding. When plaintiff-appellant Trinidad C.
Tagatac delivered the car to Feist by virtue of said voidable contract of sale, the title to the car
passed to Feist. Of course, the title that Feist acquired was defective and voidable.
Nevertheless, at the time he sold the car to Felix Sanchez, his title thereto had not been avoided
and he therefore conferred a good title on the latter, provided he bought the car in good faith,
for value and without notice of the defect in Feist's title (Article 1506, N.C.C.). There being no
proof on record that Felix Sanchez acted in bad faith, it is safe to assume that he acted in good
faith.
The above rulings are sound doctrine and reflect our own interpretation of Article 559 as applied
to the case before us.
Actual delivery of the books having been made, Cruz acquired ownership over the books which
he could then validly transfer to the private respondents. The fact that he had not yet paid for
them to EDCA was a matter between him and EDCA and did not impair the title acquired by
the private respondents to the books.
One may well imagine the adverse consequences if the phrase "unlawfully deprived" were to
be interpreted in the manner suggested by the petitioner. A person relying on the seller's title
who buys a movable property from him would have to surrender it to another person claiming
to be the original owner who had not yet been paid the purchase price therefor. The buyer in
the second sale would be left holding the bag, so to speak, and would be compelled to return
the thing bought by him in good faith without even the right to reimbursement of the amount he
had paid for it.
It bears repeating that in the case before us, Leonor Santos took care to ascertain first that the
books belonged to Cruz before she agreed to purchase them. The EDCA invoice Cruz showed
her assured her that the books had been paid for on delivery. By contrast, EDCA was less than
cautious — in fact, too trusting in dealing with the impostor. Although it had never transacted
with him before, it readily delivered the books he had ordered (by telephone) and as readily
accepted his personal check in payment. It did not verify his identity although it was easy
enough to do this. It did not wait to clear the check of this unknown drawer. Worse, it indicated
in the sales invoice issued to him, by the printed terms thereon, that the books had been paid
for on delivery, thereby vesting ownership in the buyer.
Surely, the private respondent did not have to go beyond that invoice to satisfy herself that the
books being offered for sale by Cruz belonged to him; yet she did. Although the title of Cruz
was presumed under Article 559 by his mere possession of the books, these being movable
property, Leonor Santos nevertheless demanded more proof before deciding to buy them.
It would certainly be unfair now to make the private respondents bear the prejudice sustained
by EDCA as a result of its own negligence.1âwphi1 We cannot see the justice in transferring
EDCA's loss to the Santoses who had acted in good faith, and with proper care, when they
bought the books from Cruz.
While we sympathize with the petitioner for its plight, it is clear that its remedy is not against
the private respondents but against Tomas de la Peña, who has apparently caused all this
trouble. The private respondents have themselves been unduly inconvenienced, and for merely
transacting a customary deal not really unusual in their kind of business. It is they and not
EDCA who have a right to complain.
WHEREFORE, the challenged decision is AFFIRMED and the petition is DENIED, with costs
against the petitioner.
Narvasa, Gancayco, Griño-Aquino and Medialdea, JJ., concur.
G.R. No. L-33397 June 22, 1984
ROMEO F. EDU, in his capacity as Commissioner of Land Transportation, EDUARDO
DOMINGO, CARLOS RODRIGUEZ and PATRICIO YAMBAO in their capacity as ANCAR
Agents, petitioners,
vs.
HONORABLE AMADOR E. GOMEZ, in his capacity as Judge of the Court of First
Instance of Manila, Branch 1, THE SHERIFF of Quezon City, and LUCILA ABELLO,
respondents.
Coronel Law Office for petitioners.
The Solicitor General for respondents.
RELOVA, J.:
Subject matter of this case is a 1968 model Volkswagen, bantam car, Engine No. H-5254416,
Chassis No. 118673654, allegedly owned by Lt. Walter A. Bala of Clark Airbase, Angeles City,
under whose name the car was allegedly registered on May 19, 1970 at the Angeles City Land
Transportation Commission Agency, under File No. 2B-7281.
The Office of the Commission on Land Transportation received a report on August 25, 1970
from the Manila Adjustment Company that the abovementioned car was stolen on June 29,
1970 from the residence of Lt. Bala, at 63 Makiling Street, Plaridel Subdivision, Angeles City.
Petitioners Eduardo Domingo, Carlos Rodriguez, and Patricio Yambao, agents of Anti-
Carnapping Unit (ANCAR) of the Philippine Constabulary, on detail with the Land
Transportation Commission, on February 2, 1971, recognized subject car in the possession of
herein private respondent Lucila Abello and immediately seized and impounded the car as
stolen property. Likewise, herein petitioner Romeo F. Edu, then Commissioner of Land
Transportation, seized the car pursuant to Section 60 of Republic Act 4136 which empowers
him to seize the motor vehicle for delinquent registration aside from his implicit power deducible
from Sec. 4(5), Sec. 5 and 31 of said Code, "to seize motor vehicles fraudulently or otherwise
not properly registered."
On February 15, 1971, herein private respondent Lucila Abello filed a complaint for replevin
with damages in respondent court, docketed as Civil Case No. 82215, impleading herein
petitioners, praying for judgment, among others, to order the sheriff or other proper officer of
the court to take the said property (motor vehicle) into his custody and to dispose of it in
accordance with law.
On February 18, 1971, respondent judge of the then Court of First Instance of Manila issued
the order for the seizure of the personal property. Solicitor Vicente Torres, appearing for the
herein petitioners, submits that the car in question legally belongs to Lt. Walter A. Bala under
whose name it is originally registered at Angeles City Land Transportation Commission
Agency; that it was stolen from him and, upon receipt by the Land Transportation
Commissioner of the report on the theft case and that the car upon being recognized by the
agents of the ANCAR in the possession of private respondent Lucila Abello, said agents seized
the car and impounded it as stolen vehicle. With respect to the replevin filed by private
respondent Lucila Abello, respondent Court of First Instance Judge found that the car in
question was acquired by Lucila Abello by purchase from its registered owner, Marcelino
Guansing, for the valuable consideration of P9,000.00, under the notarial deed of absolute
sale, dated August 11, 1970; that she has been in possession thereof since then until February
3, 1971 when the car was seized from her by the petitioners who acted in the belief that it is
the car which was originally registered in the name of Lt. Walter A. Bala and from whom it was
allegedly stolen sometime in June 1970.
Finding for the private respondent, respondent judge held that —
The complaint at bar is for replevin, or for the delivery of personal property, based on the
provisions of Rule 60, Sections 1 and 2 of the Rules of Court. All the requirements of the law
are present in the verified averments in the complaint, viz:
1. That plaintiff is the owner of the automobile in question.- petition.
2. That the aforesaid property was seized from her against her will not for a tax assessment or
fine pursuant to law, not under a writ of execution or attachment against her properties;
3. That the property is wrongfully detained by the defendants, who allegedly seized it from her
on February 3, 1971, "allegedly for the purpose of verifying the same" (see par. 3, Complaint),
but have refused since then until now to return the same to the plaintiff.
4. That plaintiff was ready to put up a bond in double the value of the car, and has in fact
already put up an P18,000.00 bond to the defendants for the return thereof to the latter, if that
shall be the ultimate judgment of the court, and to pay defendants damages that they may
incur.
The issuance therefore, by this Court of the order of seizure of the said chattel by the sheriff
and for the latter to take it into his custody, is precisely pursuant to the existing law, governing
the subject.
If defendants object to the seizure, the remedy provided for by law is set out in Section 5 of
Rule 60 and that is for them to put up a counter-bond for the same amount of P18,000.00,
which is double the value of the car in question. Defendants may not ignore the law under the
claim that, on complaint of a certain party, the Manila Adjustment Company, they have a right
to seize the same as it appears to be the property that was stolen from Lt. Walter A. Bala
several months ago. (p. 19, Rollo)
There is no merit in the petition considering that the acquirer or the purchaser in good faith of
a chattel of movable property is entitled to be respected and protected in his possession as if
he were the true owner thereof until a competent court rules otherwise. In the meantime, as
the true owner, the possessor in good faith cannot be compelled to surrender possession nor
to be required to institute an action for the recovery of the chattel, whether or not an indemnity
bond is issued in his favor. The filing of an information charging that the chattel was illegally
obtained through estafa from its true owner by the transferor of the bona fide possessor does
not warrant disturbing the possession of the chattel against the will of the possessor.
Finally, the claim of petitioners that the Commission has the right to seize and impound the car
under Section 60 of Republic Act 4136 which reads:
Sec. 60. The lien upon motor vehicles. Any balance of fees for registration, re-registration or
delinquent registration of a motor vehicle, remaining unpaid and all fines imposed upon any
vehicle owner, shall constitute a first lien upon the motor vehicle concerned.
is untenable. it is clear from the provision of said Section 60 of Republic Act 4136 that the
Commissioner's right to seize and impound subject property is only good for the proper
enforcement of lien upon motor vehicles. The Land Transportation Commission may issue a
warrant of constructive or actual distraint against motor vehicle for collection of unpaid fees for
registration, re-registration or delinquent registration of vehicles.
ACCORDINGLY, the petition is hereby DENIED.
SO ORDERED.
Teehankee (Chairman), Melencio-Herrera, Plana and De la Fuente, JJ., concur.
G.R. No. 111426 July 11, 1994
NORMA DIZON-PAMINTUAN, petitioner,
vs.
PEOPLE OF THE PHILIPPINES, respondent.
Puno and Puno for petitioner.
The Solicitor General for respondent.
DAVIDE, JR., J.:
The chief issue presented for our determination in this petition for review under Rule 45 of the
Rules of Court is the correctness of the decision of 29 March 1993 of the Court of Appeals in
CA-G.R. CR No. 110241 which affirmed the decision of Branch 20 of the Regional Trial Court
of Manila in Criminal Case No. 88-649542 finding the petitioner guilty of the violation of the
Anti-Fencing Law (P.D. No. 1612) but set aside the penalty imposed and ordered the trial court
to receive additional evidence on the "correct valuation" of the pieces of jewelry involved for
the sole purpose of determining the penalty to be imposed.
The information in Criminal Case No. 88-64954 charged the petitioner with the violation of the
Anti-Fencing Law in that
on or about and during the period from February 12, to February 24, 1988, inclusive, in the City
of Manila, Philippines, the said accused, with intent of gain for herself or for another, did then
and there wilfully, unlawfully and knowingly buy and keep in her possession and/or sell or
dispose of the following jewelries, to wit: one (1) set of earrings, a ring studded with diamonds
in a triangular style, one (1) set of earrings (diamond studded) and one (1) diamond-studded
crucifix, or all valued at P105,000.00, which she knew or should have known to have been
derived from the proceeds of the crime of robbery committed by Joselito Sacdalan Salinas
against the owner Teodoro and Luzviminda Encarnacion.3
On the basis of the testimonies of prosecution witnesses Teodoro Encarnacion (one of the
offended parties), Cpl. Ignacio Jao, Jr., and Pfc. Emmanuel Sanchez, both of the Western
Police District, the trial court promulgated on 16 November 1990 its decision, the dispositive
portion of which reads:
WHEREFORE, the prosecution having proved the guilty of the accused for violation of
Presidential Decree No. 1612 beyond reasonable doubt, the accused Norma Dizon-Pamintuan
is hereby sentenced to suffer an indeterminate penalty of imprisonment from FOURTEEN (14)
YEARS of prision mayor to NINETEEN (19) YEARS of reclusion temporal.
No civil liability in view of the recovery of the items, subject-matter of this case.
With costs.4
The evidence of the prosecution is summarized by the trial court as follows:
Teodoro Encarnacion, Undersecretary, Department of Public Works and Highways testified
that he has just arrived at his residence located at Better Living Subdivision, Parañaque at
around 9:45 p.m. of February 12, 1988 coming from the Airport and immediately proceeded
inside the house, leaving behind his driver and two housemaids outside to pick-up his personal
belongings from his case. It was at this point that five unidentified masked armed persons
appeared from the grassy portion of the lot beside the house and poked their guns to his driver
and two helpers and dragged them inside his house. That the men pointed a gun at him and
was made to lie face down on the floor. The other occupants, namely his wife, the maids and
his driver were likewise made to lie on the floor. Thereafter, the robbers ransacked the house
and took away jewelries and other personal properties including cash. After the intruders left
the house he reported the matter immediately to the police. He was then interviewed by the
Parañaque police and was informed that an operation group would be assigned to the case.
He likewise reported the matter to the Western Police District on February 15, 1988. Two days
later, a group of WPD operatives came over to his house and he was asked to prepare a list of
items of jewelry and other valuables that were lost including a sketch of distinctive items. He
was later told that some of the lost items were in Chinatown area as tipped by the informer the
police had dispatched. That an entrapment would be made with their participation, on February
14, 1988. As such, they went to Camp Crame at around 9:00 a.m. and arrived at the vicinity of
733 Florentino Torres Street, Sta. Cruz, Manila at about 10:00 a.m.; that he is with his wife
posed as a buyer and were able to recognize items of the jewelry stolen displayed at the stall
being tended by Norma Dizon Pamintuan; the pieces were: 1 earring and ring studded with
diamonds worth P75,000 bought from estimator Nancy Bacud (Exh. "C-2"), 1 set of earring
diamond worth P15,000 (Exh. "C-3") and 1 gold chain with crucifix worth P3,000 (Exh. "C-4").
Corporal Ignacio Jao, Jr. of the WPD testified that he was with the spouses Teodoro
Encarnacion, Jr. in the morning of February 24, 1988 and they proceeded to Florentino Torres
Street, Sta. Cruz, Manila at the stall of Norma Dizon-Pamintuan together with Sgt. Perez. After
the spouses Encarnacion recognized the items subject matter of the robbery at the display
window of the stall being tended by the herein accused, they invited the latter to the precinct
and investigated the same. They likewise brought the said showcase to the WPD station. He
further testified that he has no prior knowledge of the stolen jewelries of the private complainant
from one store to another.
Pfc. Emmanuel Sanchez of the WPD testified that he reported for duty on February 24, 1988;
that he was with the group who accompanied the spouses Encarnacion in Sta. Cruz, Manila
and was around when the couple saw some of the lost jewelries in the display stall of the
accused. He was likewise present during the early part of the investigation of the WPD station.5
The recovery of the pieces of jewelry, on the basis of which the trial court ruled that no civil
liability should be adjudged against the petitioner, took place when, as testified to by Teodoro
Encarnacion, the petitioner "admitted that she got the items but she did not know they were
stolen [and that] she surrendered the items and gave them to [his] wife."6
On the other hand, the version of the defense, as testified to by Rosito Dizon-Pamintuan, is
summarized by the trial court thus:
The defense presented only the testimony of Rosito Dizon-Pamintuan who testified that he is
the brother of Norma Dizon-Pamintuan and that sometime around 11:00 a.m. of February 24,
1985, he, together with the accused went infront of the Carinderia along Florentino Torres
Street, Sta. Cruz, Manila waiting for a vacancy therein to eat lunch. Suddenly, three persons
arrived and he overheard that Cpl. Jao told her sister to get the jewelry from inside the display
window but her sister requested to wait for Fredo, the owner of the stall. But ten minutes later
when said Fredo did not show up, the police officer opened the display window and got the
contents of the same. The display stall was hauled to a passenger jeepney and the same,
together with the accused were taken to the police headquarters. He likewise testified that he
accompanied his sister to the station and after investigation was sent home.7
In convicting the petitioner, the trial court made the following findings:
The prosecution was able to prove by evidence that the recovered items were part of the loot
and such recovered items belong to the spouses Encarnacion, the herein private complainants.
That such items were recovered by the Police Officers from the stall being tended by the
accused at that time. Of importance, is that the law provides a disputable presumption of
fencing under Section 5 thereof, to wit:
Mere possession of any goods, article, item object, or anything of value which has been the
subject of robbery or thievery shall be prima facie evidence of fencing.
There is no doubt that the recovered items were found in the possession of the accused and
she was not able to rebut the presumption though the evidence for the defense alleged that the
stall is owned by one Fredo. A distinction should likewise be made between ownership and
possession in relation to the act of fencing. Moreover, as to the value of the jewelries recovered,
the prosecution was able to show that the same is Ninety Three Thousand Pesos
(P93,000.00).8
The petitioner then appealed her conviction to the Court of Appeals (CA-G.R. CR No. 11024)
where she raised two issues: (1) that the judgment was based on a mere presumption, and (2)
that the prosecution failed to show that the value of the jewelry recovered is P93,000.00.
In its challenged decision of 29 March 1993, the Court of Appeals disposed of the first issue in
this wise:
The guilt of accused-appellant was established beyond reasonable doubt. All the elements of
the crime of fencing in violation of the Anti-Fencing Law of 1979 (P.D. No. 1612), to wit:
1. A crime of robbery or theft has been committed;
2. A person, not a participant in said crime, buys, receives, possesses, keeps, acquires,
conceals, sells or disposes, or buys and sells; or in any manner deals in any article or item,
object or anything of value;
3. With personal knowledge, or should be known to said person that said item, object or
anything of value has been derived from the proceeds of the crime of robbery or theft;
4. With intent to gain for himself or for another;
have been established by positive and convincing evidence of the prosecution . . .
...
The fact that a crime of robbery has been committed on February 12, 1988 is established by
the testimony of private complainant Teodoro T. Encarnacion who immediately reported the
same to Parañaque Police Station of the Southern Police District (TSN, Hearings of October
3, 1988, November 9, 1988 and January 11, 1989; Exh. A) and submitted a list and sketches
of the jewelries robbed, among other things, from their residence located at Better Living
Subdivision, Parañaque, Metro Manila (Exh. C,
C-1 to C-4 and D).
The second element is likewise established by convincing evidence. On February 24, 1988,
accused-appellant was found selling the jewelries (Exhs. C-2, C-3 and C-4) which was
displayed in a showcase in a stall located at Florentino Street, Sta. Cruz, Manila. [Testimonies
of Teodoro Encarnacion (id. supra); Cpl. Ignacio Jao (TSN, Hearing of February 13, 1989) and
Pfc. Emmanuel Sanchez (TSN, Hearing of June 4, 1989)].
On the element of knowledge that the items are derived from the proceeds of the crime of
robbery and of intent to gain for herself or for another, the Anti-Fencing Law provides:
Sec. 5. Presumption of Fencing. — Mere possession of any good, article, item, object, or
anything of value which has been the subject of robbery or thievery shall be prima facie
evidence of fencing.
Knowledge and intent to gain are proven by the fact that these jewelries were found in
possession of appellant and they were displayed for sale in a showcase being tended by her
in a stall along Florentino Street, Sta. Cruz, Manila.9
Nevertheless, the Court of Appeals was of the opinion that there was not enough evidence to
prove the value of the pieces of jewelry recovered, which is essential to the imposition of the
proper penalty under Section 3 of P.D.
No. 1612. It opined that the trial court erred in concluding that "the value of the recovered
jewelries is P93,000.00 based on the bare testimony of the private complainant and the self-
serving list he submitted (Exhs. C, C-2 and C-4, TSN, Hearing of October 3, 1993)."10
The dispositive portion of the Court of Appeals' decision reads:
WHEREFORE, finding that the trial court did not commit any reversible error, its decision dated
October 26, 1990 convincing accused appellant is hereby AFFIRMED with the modification that
the penalty imposed is SET ASIDE and the Regional Trial Court (Branch 20) of Manila is
ordered to receive evidence with respect to the correct valuation of the properties involved in
this case, marked as Exhibits "C", "C-2" and "C-4" for the sole purpose of determining the
proper penalty to be meted out against accused under Section 3, P.D. No. 1612. Let the original
records be remanded immediately.11
Hence, this petition wherein the petitioner contends that:
I
PUBLIC RESPONDENT COURT OF APPEALS MANIFESTLY ERRED IN AFFIRMING THE
DECISION OF PUBLIC RESPONDENT JUDGE CAÑEBA, IN BLATANT DISREGARD OF
APPLICABLE LAW AND WELL-ESTABLISHED JURISPRUDENCE.
II
PUBLIC RESPONDENT COURT OF APPEALS MANIFESTLY ERRED IN REMANDING THE
CASE TO THE COURT A QUO FOR RECEPTION OF EVIDENCE FOR THE PURPOSE OF
DETERMINING THE CORRECT PENALTY TO BE IMPOSED.12
On 23 February 1994, after the public respondents had filed their Comment and the petitioner
her Reply to the Comment, this Court gave due course to the petition and required the parties
to submit their respective memoranda, which they subsequently complied with.
The first assigned error is without merit.
Fencing, as defined in Section 2 of P.D. No. 1612 (Anti-Fencing Law), is "the act of any person
who, with intent to gain for himself or for another, shall buy, receive, possess, keep, acquire,
conceal, sell or dispose of, or shall buy and sell, or in any manner deal in any article, item,
object or anything of value which he knows, or should be known to him, to have been derived
from the proceeds of the crime of robbery or theft."
Before P.D. No. 1612, a fence could only be prosecuted for and held liable as an accessory,
as the term is defined in Article 19 of the Revised Penal Code. The penalty applicable to an
accessory is obviously light under the rules prescribed in Articles 53, 55, and 57 of the Revised
Penal Code, subject to the qualification set forth in Article 60 thereof. Nothing, however, the
reports from law enforcement agencies that "there is rampant robbery and thievery of
government and private properties" and that "such robbery and thievery have become
profitable on the part of the lawless elements because of the existence of ready buyers,
commonly known as fence, of stolen properties," P.D.
No. 1612 was enacted to "impose heavy penalties on persons who profit by the effects of the
crimes of robbery and theft." Evidently, the accessory in the crimes of robbery and theft could
be prosecuted as such under the Revised Penal Code or under P.D. No. 1612. However, in
the latter case, he ceases to be a mere accessory but becomes a principal in the crime of
fencing. Elsewise stated, the crimes of robbery and theft, on the one hand, and fencing, on the
other, are separate and distinct offenses.13 The state may thus choose to prosecute him either
under the Revised Penal Code or P.D. No. 1612, although the preference for the latter would
seem inevitable considering that fencing is a malum prohibitum, and P.D. No. 1612 creates a
presumption of fencing14 and prescribes a higher penalty based on the value of the property.15
The elements of the crime of fencing are:
1. A crime of robbery or theft has been committed;
2. The accused, who is not a principal or accomplice in the commission of the crime of robbery
or theft, buys, receives, possesses, keeps, acquires, conceals, sells or disposes, or buys and
sells, or in any manner deals in any article, item, object or anything of value, which has been
derived from the proceeds of the said crime;
3. The accused knows or should have known that the said article, item, object or anything of
value has been derived from the proceeds of the crime of robbery or theft; and
4. There is, on the part of the accused, intent to gain for himself or for another.
In the instant case, there is no doubt that the first, second, and fourth elements were duly
established. A robbery was committed on 12 February 1988 in the house of the private
complainants who afterwards reported the incident to the Parañaque Police, the Western
Police District, the NBI, and the CIS, and submitted a list of the lost items and sketches of the
jewelry taken from them (Exhibits "C" and "D"). Three of these items stolen, viz., (a) a pair of
earrings and ring studded with diamonds worth P75,000.00 (Exhibit "C-2"); (b) one set of
earrings worth P15,000.00 (Exhibit "C-3"); and (c) a chain with crucifix worth P3,000.00 (Exhibit
"C-4"), were displayed for sale at a stall tended to by the petitioner in Florentino Torres Street,
Sta. Cruz, Manila. The public display of the articles for sale clearly manifested an intent to gain
on the part of the petitioner.
The more crucial issue to be resolved is whether the prosecution proved the existence of the
third element: that the accused knew or should have known that the items recovered from her
were the proceeds of the crime of robbery or theft.
One is deemed to know a particular fact if he has the cognizance, consciousness or awareness
thereof, or is aware of the existence of something, or has the acquaintance with facts, or if he
has something within the mind's grasp with certitude and clarity.16 When knowledge of the
existence of a particular fact is an element of an offense, such knowledge is established if a
person is aware of a high probability of its existence unless he actually believes that it does not
exist.17 On the other hand, the words "should know" denote the fact that a person of
reasonable prudence and intelligence would ascertain the fact in performance of his duty to
another or would govern his conduct upon assumption that such fact exists.18 Knowledge
refers to a mental state of awareness about a fact. Since the court cannot penetrate the mind
of an accused and state with certainty what is contained therein, it must determine such
knowledge with care from the overt acts of that person. And given two equally plausible states
of cognition or mental awareness, the court should choose the one which sustains the
constitutional presumption of innocence.19
Since Section 5 of P.D. No. 1612 expressly provides that "[m]ere possession of any good,
article, item, object, or anything of value which has been the subject of robbery or thievery shall
be prima facie evidence of fencing," it follows that the petitioner is presumed to have knowledge
of the fact that the items found in her possession were the proceeds of robbery or theft. The
presumption is reasonable for no other natural or logical inference can arise from the
established fact of her possession of the proceeds of the crime of robbery or theft. This
presumption does not offend the presumption of innocence enshrined in the fundamental
law.20 In the early case of United States vs.
Luling, 21 this Court held:
It has been frequently decided, in case of statutory crimes, that no constitutional provision is
violated by a statute providing that proof by the state of some material fact or facts shall
constitute prima facie evidence of guilt, and that then the burden is shifted to the defendant for
the purpose of showing that such act or acts are innocent and are committed without unlawful
intention. (Commonwealth vs. Minor, 88 Ky., 422.)
In some of the States, as well as in England, there exist what are known as common law
offenses. In the Philippine Islands no act is a crime unless it is made so by statute. The state
having the right to declare what acts are criminal, within certain well defined limitations, has a
right to specify what act or acts shall constitute a crime, as well as what proof shall constitute
prima facie evidence of guilt, and then to put upon the defendant the burden of showing that
such act or acts are innocent and are not committed with any criminal intent or intention.
In his book on constitutional law,22 Mr. Justice Isagani A. Cruz said:
Nevertheless, the constitutional presumption of innocence may be overcome by contrary
presumptions based on the experience of human conduct [People vs. Labara, April 20, 1954].
Unexplained flight, for example, may lead to an inference of guilt, as 'the wicked flee when no
man pursueth, but the righteous is as bold as a lion. Failure on the part of the accused to
explain his possession of stolen property may give rise to the reasonable presumption that it
was he himself who had stolen it [U.S. vs. Espia, 16 Phil. 506]. Under our Revised Penal Code,
the inability of an accountable officer to produce funds or property entrusted to him will be
considered prima facie evidence that he has appropriated them to his personal use [Art. 217].
According to Cooley, the constitutional presumption will not apply as long as there is "some
rational connection between the fact proved and the ultimate fact presumed, and the inference
of one fact from proof of another shall not be so unreasonable as to be purely arbitrary
mandate" [1 Cooley, 639].
The petitioner was unable to rebut the presumption under P.D. No. 1612. She relied solely on
the testimony of her brother which was insufficient to overcome the presumption, and, on the
contrary, even disclosed that the petitioner was engaged in the purchase and sale of jewelry
and that she used to buy from a certain Fredo.23

Fredo was not presented as a witness and it was not established that he was a licensed dealer
or supplier of jewelry. Section 6 of P.D. No. 1612 provides that "all stores, establishments or
entitles dealing in the buy and sell of any good, article, item, object or anything of value obtained
from an unlicensed dealer or supplier thereof, shall before offering the same for sale to the
public, secure the necessary clearance or permit from the station commander of the Integrated
National Police in the town or city where such store, establishment or entity is located." Under
the Rules and Regulations24 promulgated to carry out the provisions of Section 6, an
unlicensed dealer/supplier refers to any person, partnership, firm, corporation, association or
any other entity or establishment not licensed by the government to engage in the business of
dealing in or supplying "used secondhand articles," which refers to any good, article, item,
object or anything of value obtained from an unlicensed dealer or supplier, regardless of
whether the same has actually or in fact been used.
We do not, however, agree with the Court of Appeals that there is insufficient evidence to prove
the actual value of the recovered articles.
As found by the trial court, the recovered articles had a total value of P93,000.00, broken down
as follows:
a) one earring and ring studded with diamonds (Exh. "C-2") — P75,000.00
b) one set of earring (Exh. "C-3") — P15,000.00
c) one gold chain with crucifix (Exh. "C-4") — P3,000.00
These findings are based on the testimony of Mr. Encarnacion 25 and on Exhibit "C,"26 a list
of the items which were taken by the robbers on 12 February 1988, together with the
corresponding valuation thereof. On cross-examination, Mr. Encarnacion re-affirmed his
testimony on direct examination that the value of the pieces of jewelry described in Exhibit "C-
2" is P75,000.0027 and that the value of the items described in Exhibit "C-3" is P15,000.00,
although he admitted that only one earring — and not the pair — was recovered. 28 The cross-
examination withheld any question on the gold chain with crucifix described in Exhibit "C-4." In
view, however, of the admission that only one earring was recovered of the jewelry described
in Exhibit "C-3," it would be reasonable to reduce the value from P15,000.00 to P7,500.00.
Accordingly, the total value of the pieces of jewelry displayed for sale by the petitioner and
established to be part of the proceeds of the robbery on 12 February 1988 would be
P87,000.00.
Section 3(a) of P.D. No. 1612 provides that the penalty of prision mayor shall be imposed upon
the accused if the value of the property involved is more than P12,000.00 but does not exceed
P22,000.00, and if the value of such property exceeds the latter sum, the penalty of prision
mayor should be imposed in its maximum period, adding one year for each additional
P10,000.00; the total penalty which may be imposed, however, shall not exceed twenty years.
In such cases, the penalty shall be termed reclusion temporal and the accessory penalty
pertaining thereto provided in the Revised Penal Code shall also be imposed. The maximum
penalty that can be imposed in this case would then be eighteen (18) years and five (5) months,
which is within the range of reclusion temporal maximum. Applying the Indeterminate Sentence
law which allows the imposition of an indeterminate penalty which, with respect to offenses
penalized by a special law, shall range from a minimum which shall not be lower than the
minimum prescribed by the special law to a maximum which should not exceed the maximum
provided therein, the petitioner can thus be sentenced to an indeterminate penalty ranging from
ten (10) years and one (1) day of prision mayor maximum, as minimum to eighteen (18) years
and five (5) months of reclusion temporal maximum as maximum, with the accessory penalties
corresponding to the latter.
In the light of the foregoing, the Court of Appeals erred in setting aside the penalty imposed by
the trial court and in remanding the case to the trial court for further reception of evidence to
determine the actual value of the pieces of jewelry recovered from the petitioner and for the
imposition of the appropriate penalty.
We do not agree with the petitioner's contention, though, that a remand for further reception of
evidence would place her in double jeopardy. There is double jeopardy when the following
requisites concur: (1) the first jeopardy must have attached prior to the second, (2) the first
jeopardy must have validly been terminated, and (3) the second jeopardy must be for the same
offense as that in the first.29 Such a concurrence would not occur assuming that the case was
remanded to the trial court.
WHEREFORE, the instant petition is partly GRANTED by setting aside the challenged decision
of the Court of Appeals in CA-G.R. CR No. 11024 insofar as it sets aside the penalty imposed
by Branch 20 of the Regional Trial Court of Manila in Criminal Case No. 88-64954 and orders
the remand of the case for the trial court to receive evidence with respect to the correct value
of the properties involved. The decision of the Regional Trial Court is AFFIRMED subject to the
modification of the penalty which is hereby reduced to an indeterminate penalty ranging from
Ten (10) years and One (1) day of Prision Mayor maximum as minimum to Eighteen (18) years
and Five (5) months of Reclusion Temporal maximum as maximum, with the accessory
penalties of the latter.
SO ORDERED.
Cruz, Bellosillo, Quiason and Kapunan, JJ., concur.
G.R. No. 165895 June 5, 2009
TERLYNGRACE RIVERA, Petitioner,
vs.
FLORENCIO L. VARGAS, Respondent.
DECISION
NACHURA, J.:
What is the effect of a writ of replevin that has been improperly served?
This is the sole issue to be resolved in this petition for review on certiorari seeking to set aside
the Decision1 of the Court of Appeals (CA) dated November 18, 2003 in CA-G.R. SP No.
78529, as well as its October 20, 2004 Resolution,2 denying the petition for certiorari filed by
petitioner Terlyngrace Rivera (Rivera).
The facts follow.
On February 24, 2003, respondent Florencio Vargas (Vargas) filed a complaint3 against
petitioner and several John Does before Branch 02 of the Regional Trial Court (RTC) in
Tuguegarao City, Cagayan, for the recovery of a 150 T/H rock crushing plant located in Sariaya,
Quezon. In his complaint and affidavit,4 Vargas claims ownership of the said equipment, having
purchased and imported the same directly from Hyun Dae Trading Co., in Seoul, South Korea,
in December 1993.5 The equipment was allegedly entrusted to petitioner’s husband, Jan T.
Rivera, who died sometime in late 2002, as caretaker of respondent’s construction aggregates
business in Batangas. According to Vargas, petitioner failed to return the said equipment after
her husband’s death despite his repeated demands, thus forcing him to resort to court action.6
The complaint was accompanied by a prayer for the issuance of a writ of replevin and the
necessary bond amounting to ₱2,400,000.00.
Summons7 dated February 24, 2003 was served upon petitioner through her personal
secretary on April 28, 2003 at her residence in Parañaque City. Interestingly, however, the writ
of replevin8 was served upon and signed by a certain Joseph Rejumo, the security guard on
duty in petitioner’s crushing plant in Sariaya, Quezon on April 29, 2003,9 contrary to the sheriff’s
return10 stating that the writ was served upon Rivera.
On May 8, 2003, Rivera filed her answer, manifestation, and motion for the acceptance of
petitioner’s redelivery bond.11 In her answer, petitioner countered that the rock-crushing plant
was ceded in favor of her husband as his share following the dissolution of the partnership
formed between Jan Rivera and respondent’s wife, Iluminada Vargas (Iluminada), on May 28,
1998, while the partnership’s second rock-crushing plant in Cagayan was ceded in favor of
Iluminada.12 She further averred that from the time that the partnership was dissolved
sometime in 2000 until Jan Rivera’s death in late 2002, it was petitioner’s husband who
exercised ownership over the said equipment without any disturbance from respondent.13
On May 12, 2003, the RTC issued an Order14 disapproving petitioner’s redelivery bond
application for failure to comply with the requirements under Sections 5 and 6 of Rule 60 of the
Rules of Court.15 Without directly saying so, the RTC faulted petitioner for her failure to file the
application for redelivery bond within five (5) days from the date of seizure as provided in the
Rules of Court. Petitioner moved for reconsideration,16 but the same was also denied.17
Aggrieved, petitioner elevated the matter to the CA through a petition for certiorari under Rule
65. This, too, was denied for lack of merit.18 Petitioner moved for reconsideration,19 but it was
also denied.20
Undaunted, petitioner now comes to us via this Rule 45 petition.
Petitioner argues that the RTC committed grave abuse of discretion in denying her counterbond
on the ground that it was filed out of time. She contends that the mandatory five-day period did
not even begin to run in this case due to the improper service of the writ of replevin, contrary
to Section 4 of Rule 60.21
We find the petition meritorious.
Replevin is one of the most ancient actions known to law, taking its name from the object of its
process.22 It originated in common law as a remedy against the wrongful exercise of the right
of distress for rent23 and, according to some authorities, could only be maintained in such a
case.24 But by the weight of authority, the remedy is not and never was restricted to cases of
wrongful distress in the absence of any statutes relating to the subject, but is a proper remedy
for any unlawful taking.25 "Replevied," used in its technical sense, means delivered to the
owner,26 while the words "to replevy" means to recover possession by an action of replevin.27
Broadly understood in this jurisdiction, replevin is both a form of principal remedy and of
provisional relief. It may refer either to the action itself, i.e., to regain the possession of personal
chattels being wrongfully detained from the plaintiff by another, or to the provisional remedy
that would allow the plaintiff to retain the thing during the pendency of the action and to hold it
pendente lite.28 The action is primarily possessory in nature and generally determines nothing
more than the right of possession.29
The law presumes that every possessor is a possessor in good faith.30 He is entitled to be
respected and protected in his possession31 as if he were the true owner thereof until a
competent court rules otherwise.32 Before a final judgment, property cannot be seized unless
by virtue of some provision of law.33 The Rules of Court, under Rule 60, authorizes such
seizure in cases of replevin. However, a person seeking a remedy in an action for replevin must
follow the course laid down in the statute, since the remedy is penal in nature.34 When no
attempt is made to comply with the provisions of the law relating to seizure in this kind of action,
the writ or order allowing the seizure is erroneous and may be set aside on motion35 by the
adverse party. Be it noted, however, that a motion to quash the writ of replevin goes to the
technical regularity of procedure, and not to the merits of the case36 in the principal action.
The process regarding the execution of the writ of replevin in Section 4 of Rule 60 is
unambiguous: the sheriff, upon receipt of the writ of replevin and prior to the taking of the
property, must serve a copy thereof to the adverse party (petitioner, in this case) together with
the application, the affidavit of merit, and the replevin bond.37 The reasons are simple, i.e., to
provide proper notice to the adverse party that his property is being seized in accordance with
the court’s order upon application by the other party, and ultimately to allow the adverse party
to take the proper remedy consequent thereto.
the replevin bond filed by respondent. The trial, with respect to the main action, shall continue.
Respondent may, however, file a new application for replevin should he choose to do so.
WHEREFORE, the petition is GRANTED. The Decision of the Court of Appeals, as well as its
Resolution, in CA-G.R. SP No. 78529 is hereby SET ASIDE. The Regional Trial Court is hereby
ordered to restore the parties to their former positions, discharge respondent’s replevin bond,
and proceed with the trial of the main action with dispatch.

Service of the writ upon the adverse party is mandatory in line with the constitutional guaranty SO ORDERED.
on procedural due process and as safeguard against unreasonable searches and seizures.38
If the writ was not served upon the adverse party but was instead merely handed to a person
who is neither an agent of the adverse party nor a person authorized to receive court processes
on his behalf, the service thereof is erroneous and is, therefore, invalid, running afoul of the
statutory and constitutional requirements. The service is likewise invalid if the writ of replevin
was served without the required documents. Under these circumstances, no right to seize and
to detain the property shall pass, the act of the sheriff being both unlawful and
unconstitutional.1avvphi1

In the case at bar, petitioner avers that the writ of replevin was served upon the security guard
where the rock-crushing plant to be seized was located.39 The signature of the receiving party
indicates that the writ was received on April 29, 2003 by a certain Joseph Rejumo, the guard
on duty in a plant in Sariaya, Quezon, where the property to be seized was located, and
witnessed by Claudio Palatino, respondent’s caretaker.40 The sheriff’s return,41 however,
peremptorily states that both the writ of replevin and the summons were served upon Rivera.
On May 8, 2003, or nine (9) days after the writ was served on the security guard, petitioner
filed an answer to the complaint accompanied by a prayer for the approval of her redelivery
bond. The RTC, however, denied the redelivery bond for having been filed beyond the five-day
mandatory period prescribed in Sections 5 and 6 of Rule 60.42 But since the writ was invalidly
served, petitioner is correct in contending that there is no reckoning point from which the
mandatory five-day period shall commence to run.

The trial court is reminded that not only should the writ or order of replevin comply with all the
requirements as to matters of form or contents prescribed by the Rules of Court.43 The writ
must also satisfy proper service in order to be valid and effective: i.e. it should be directed to
the officer who is authorized to serve it; and it should be served upon the person who not only
has the possession or custody of the property involved but who is also a party or agent of a
party to the action. Consequently, a trial court is deemed to have acted without or in excess of
its jurisdiction with respect to the ancillary action of replevin if it seizes and detains a personalty
on the basis of a writ that was improperly served, such as what happened in this case.

At the outset, petitioner’s proper remedy should have been to file a motion to quash the writ of
replevin or a motion to vacate the order of seizure. Nevertheless, petitioner’s filing of an
application for a redelivery bond, while not necessary, did not thereby waive her right to
question the improper service. It now becomes imperative for the trial court to restore the
parties to their former positions by returning the seized property to petitioner and by discharging