G.R. No. L-13298             November 19, 1918
All persons who by themselves or their predecessors and interest
CORNELIO RAMOS, petitioner-appellant,
vs.
THE DIRECTOR OF LANDS, objector-appellee.
PROPERTY; LAND; POSSESSION.—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.
ID.; ID.; CONSTRUCTIVE POSSESSION.—The possession and
cultivation of a portion of a tract of land, under claim of ownership
of all, is a constructive possession of all, if the remainder is not in
the adverse possession of another.
This is an appeal by the applicant and appellant from a judgment
of the Court of First Instance of Nueva Ecija, denying the
registration of the larger portion of parcel No. 1 (Exhibit A of the
petitioner), marked by the letters A, B, and C on the plan, Exhibit
1, of the Government.
One Restituto Romero y Ponce apparently gained possession of a
considerable tract of land located in the municipality of San Jose,
Province of Nueva Ecija, in the year 1882. He took advantage of
the Royal Decree of February 13, 1894, to obtain a possessory
information title to the land, registered as such on February 8,
1896. Parcel No. 1, included within the limits of the possessory
information title of Restituto Romero, was sold in February, 1907,
to Cornelio Ramos, the instant petitioner, and his wife Ambrosia
Salamanca.
Ramos instituted appropriate proceedings to have his title
registered. Opposition was entered by the Director of Lands on the
ground that Ramos had not acquired a good title from the Spanish
government and by the Director of Forestry on the ground that the
first parcel was forest land. The trial court agreed with the
objectors and excluded parcel No. 1 from registration. So much for
the facts.
As to the law, the principal argument of the Solicitor-General is
based on the provisions of the Spanish Mortgage Law and of the
Royal Decree of February 13, 1894, commonly known as the
Maura Law. The Solicitor-General would emphasize that for land
to come under the protective ægis of the Maura Law, it must have
been shown that the land was cultivated for six years previously,
and that it was not land which pertained to the "zonas forestales."
As proof that the land was, even as long ago as the years 1894 to
1896, forestal and not agricultural in nature is the fact that there
are yet found thereon trees from 50 to 80 years of age.
We do not stop to decide this contention, although it might be
possible, following the doctrine laid down by the United States
Supreme Court with reference to Mexican and Spanish grantes
within the United States, where some recital is claimed to be false,
to say that the possessory information, apparently having taken
cognizance of the requisites for title, should not now be disturbed.
(Hancock vs. McKinney [1851], 7 Tex., 192; Hornsby and Roland
vs. United States [1869], 10 Wall., 224.) It is sufficient, as will
later appear, merely to notice that the predecessor in interest to the
petitioner at least held this tract of land under color of title.
Subsection 6 of section 54, of Act No. 926, entitled The Public
Land Law, as amended by Act No. 1908, reads as follows:
6.
have been in the open, continuous, exclusive, and notorious
possession and occupation of agricultural public lands, as defined
by said Act of Congress of July first, nineteen hundred and two,
under a bona fide claim of ownership except as against the
Government, for a period of ten years next preceding the twenty-
sixth day of July, nineteen hundred and four, except when
prevented by war or force majeure, shall be conclusively presumed
to have performed all the conditions essential to a government
grant and to have received the same, and shall be entitled to a
certificate of title to such land under the provisions of this chapter.
There are two parts to the above quoted subsection which must be
discussed. The first relates to the open, continuous, exclusive, and
notorious possession and occupation of what, for present purposes,
can be conceded to be agricultural public land, under a bona fide
claim of ownership.
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. Relative to actuality of possession,
it is admitted that the petitioner has cultivated only about one
fourth of the entire tract. This is graphically portrayed by Exhibit 1
of the Government, following:
4 hati hati equally
The question at once arises: Is that actual occupancy of a part of
the land described in the instrument giving color of title sufficient
to give title to the entire tract of land?lawphil.net
The doctrine of constructive possession indicates the answer. The
general rule is that the possession and cultivation of a portion of a
tract under claim of ownership of all is a constructive possession
of all, if the remainder is not in the adverse possession of another.
(Barr vs. Gratz's Heirs [1819], 4 Wheat., 213; Ellicott vs. Pearl
[1836], 10 Pet., 412; Smith vs. Gale [1892], 144 U. S., 509.) Of
course, there are a number of qualifications to the rule, one
particularly relating to the size of the tract in controversy with
reference to the portion actually in possession of the claimant. It is
here only necessary to apply the general rule.
The claimant has color of title; he acted in good faith; and he has
had open, peaceable, and notorious possession of a portion of the
property, sufficient to apprise the community and the world that
the land was for his enjoyment. (See arts. 446, 448, Civil Code.)
Possession in the eyes of the law does not mean that a man has to
have his feet on every square meter of ground before it can be said
that he is in possession. Ramos and his predecessor in interest
fulfilled the requirements of the law on the supposition that he
premises consisted of agricultural public land.
The second division of the law requires consideration of the term
"agricultural public land." The law affirms that the phrase is denied
by the Act of Congress of July 1st, 1902, known as the Philippine
bill. Turning to the Philippine Bill, we find in sections 13 to 18
thereof that three classes of land are mentioned. The first is
variously denominated "public land" or "public domain," the
second "mineral land," and the third "timber land." Section 18 of
the Act of Congress comes nearest to a precise definition, when it
makes the determination of whether the land is more valuable for
agricultural or for forest uses the test of its character.
Although these sections of the Philippine Bill have come before
the courts on numerous occasions, what was said in the case of
Jones vs. Insular Government ([1906], 6 Phil., 122), is still true,
1
namely: "The meaning of these sections is not clear and it is
difficult to give to them a construction that will be entirely free
from objection." In the case which gave most serious consideration
to the subject (Mapa vs. Insular Government [1908], 10 Phil.,
175), it was found that there does exist in the Act of Congress a
definition of the phrase "agricultural public lands." It was said that
the phrase "agricultural public lands" as used in Act No. 926
means "those public lands acquired from Spain which are not
timber or mineral lands."
The idea would appear to be to determine, by exclusion, if the land
is forestal or mineral in nature and, if not so found, to consider it to
be agricultural land. Here, again, Philippine law is not very
helpful. For instance, section 1820 of the Administrative Code of
1917 provides: "For the purposes of this chapter, 'public forest'
includes, except as otherwise specially indicated, all unreserved
public land, including nipa and mangrove swamps, and all forest
reserves of whatever character." This definition of "public forest,"
it will be noted, is merely "for the purposes of this chapter." A little
further on, section 1827 provides: "Lands in public forests, not
including forest reserves, upon the certification of the Director of
Forestry that said lands are better adapted and more valuable for
agricultural than for forest purposes and not required by the public
interests to be kept under forest, shall be declared by the
Department Head to be agricultural lands." With reference to the
last section, there is no certification of the Director of Forestry in
the record, as to whether this land is better adapted and more
valuable for agricultural than for forest purposes.
The lexicographers define "forest" as "a large tract of land covered
with a natural growth of trees and underbrush; a large wood." The
authorities say that he word "forest" has a significant, not an
insignificant meaning, and that it does not embrace land only
partly woodland. It is a tract of land covered with trees, usually of
considerable extent. (Higgins vs. Long Island R. Co. [1908], 114
N. Y. Supp., 262; People vs. Long Island R. Co. [1908], 110 N. Y.
Supp., 512.)
The foresters say that no legal definition of "forest" is practicable
or useful. B. H. Baden-Powell, in his work on Forest Law of India,
states as follows:
Every definition of a forest that can be framed for legal purposes
will be found either to exclude some cases to which the law ought
to apply, or on the other hand, to include some with which the law
ought not to interfere. It may be necessary, for example, to take
under the law a tract of perfectly barren land which at present has
neither trees, brushwood, nor grass on it, but which in the course f
time it is hoped will be "reboise;" but any definition wide enough
to take in all such lands, would also take in much that was not
wanted. On the other hand, the definition, if framed with reference
to tree-growth, might (and indeed would be almost sure to) include
a garden, shrubbery, orchard, or vineyard, which it was not
designed to deal with.
B. E. Fernow, in his work on the Economics of Forestry, states as
follows:
A forest in the sense in which we use the term, as an economic
factor, is by no means a mere collection of trees, but an organic
whole in which all parts, although apparently heterogeneous,
jumbled together by accident as it were and apparently unrelated,
bear a close relation to each other and are as interdependent as any
other beings and conditions in nature.
The Director of Forestry of the Philippine Islands has said:
During the time of the passage of the Act of Congress of July 1,
1902, this question of forest and agricultural lands was beginning
to receive some attention and it is clearly shown in section 18 of
the above mentioned Act; it leaves to the Bureau of Forestry the
certification as to what lands are for agricultural or forest uses.
Although the Act states timber lands, the Bureau has in its
administration since the passage of this act construed this term to
mean forest lands in the sense of what was necessary to protect,
for the public good; waste lands without a tree have been declared
more suitable for forestry in many instances in the past. The term
'timber' as used in England and in the United States in the past has
been applied to wood suitable for construction purposes but with
the increase in civilization and the application of new methods
every plant producing wood has some useful purpose and the term
timber lands is generally though of as synonymous with forest
lands or lands producing wood, or able to produce wood, if
agricultural crops on the same land will not bring the financial
return that timber will or if the same land is needed for protection
purposes.
x x x           x x x          x x x
The laws in the United States recognize the necessity of technical
advice of duly appointed boards and leave it in the hands of these
boards to decide what lands are more valuable for forestry
purposes or for agricultural purposes.
In the Philippine Islands this policy is follows to as great an extent
as allowable under the law. In many cases, in the opinion of the
Bureau of Forestry, lands without a single tree on them are
considered as true forest land. For instance, mountain sides which
are too steep for cultivation under ordinary practice and which, if
cultivated, under ordinary practice would destroy the big natural
resource of the soil, by washing, is considered by this bureau as
forest land and in time would be reforested. Of course, examples
exist in the Mountain Province where steep hillsides have been
terraced and intensive cultivation practiced but even then the
mountain people are very careful not to destroy forests or other
vegetative cover which they from experience have found protect
their water supply. Certain chiefs have lodged protests with the
Government against other tribes on the opposite side of the
mountain cultivated by them, in order to prevent other tribes from
cutting timber or destroy cover guarding their source of water for
irrigation.
Dr. M. S. Shaler, formerly Dean of the Lawrence Scientific School,
remarked that if mankind could not devise and enforce ways
dealing with the earth, which will preserve this source of like "we
must look forward to the time, remote it may be, yet equally
discernible, when out kin having wasted its great inheritance will
fade from the earth because of the ruin it has accomplished."
The method employed by the bureau of Forestry in making
inspection of lands, in order to determine whether they are more
adapted for agricultural or forest purposes by a technical and duly
trained personnel on the different phases of the conservation of
natural resources, is based upon a previously prepared set of
questions in which the different characters of the land under
inspection are discussed, namely:
Slope of land: Level; moderate; steep; very steep.
Exposure: North; South; East; West.
Soil: Clay; sandy loam; sand; rocky; very rocky.
2
Character of soil cover: Cultivated, grass land, brush land, brush own good." On the other hand, the presumption should be, in lieu
land and timber mixed, dense forest. of contrary proof, that land is agricultural in nature. One very
If cultivated, state crops being grown and approximate number of apparent reason is that it is for the good of the Philippine Islands to
hectares under cultivation. (Indicate on sketch.) have the large public domain come under private ownership. Such
For growth of what agricultural products is this land suitable? is the natural attitude of the sagacious citizen.
State what portion of the tract is wooded, name of important If in this instance, we give judicial sanction to a private claim, let
timber species and estimate of stand in cubic meters per hectare, it be noted that the Government, in the long run of cases, has its
diameter and percentage of each species. remedy. Forest reserves of public land can be established as
If the land is covered with timber, state whether there is public provided by law. When the claim of the citizen and the claim of
land suitable for agriculture in vicinity, which is not covered with the Government as to a particular piece of property collide, if the
timber. Government desires to demonstrate that the land is in reality a
Is this land more valuable for agricultural than for forest purposes? forest, the Director of Forestry should submit to the court
(State reasons in full.) convincing proof that the land is not more valuable for agricultural
Is this land included or adjoining any proposed or established than for forest purposes. Great consideration, it may be stated,
forest reserve or communal forest? Description and ownership of should, and undoubtedly will be, paid by the courts to the opinion
improvements. of the technical expert who speaks with authority on forestry
If the land is claimed under private ownership, give the name of matters. But a mere formal opposition on the part of the Attorney-
the claimant, his place of residence, and state briefly (if necessary General for the Director of Forestry, unsupported by satisfactory
on a separate sheet) the grounds upon which he bases his claim. evidence will not stop the courts from giving title to the claimant.
When the inspection is made on a parcel of public land which has We hold that the petitioner and appellant has proved a title to the
been applied for, the corresponding certificate is forwarded to the entire tract of land for which he asked registration, under the
Director of Lands; if it is made on a privately claimed parcel for provisions of subsection 6, of section 54, of Act No. 926, as
which the issuance of a title is requested from the Court of Land amended by Act No. 1908, with reference to the Philippine Bill
Registration, and the inspection shows the land to be more adapted and the Royal Decree of February 13, 1894, and his possessory
for forest purposes, then the Director of Forestry requests the information.
Attorney-General to file an opposition, sending him all data Judgment is reversed and the lower court shall register in the name
collected during the inspection and offering him the forest officer of the applicant the entire tract in parcel No. 1, as described in plan
as a witness. Exhibit A, without special finding as to costs. So ordered.
It should be kept in mind that the lack of personnel of this Bureau,
the limited time intervening between the notice for the trial on an
expediente of land and the day of the trial, and the difficulties in
communications as well as the distance of the land in question
greatly hinder the handling of this work.
In the case of lands claimed as private property, the Director of
Forestry, by means of his delegate the examining officer, submits
before the court all evidence referring to the present forest
condition of the land, so that the court may compare them with the
alleged right by the claimant. Undoubtedly, when the claimant
presents a title issued by the proper authority or evidence of his
right to the land showing that he complied with the requirements
of the law, the forest certificate does not affect him in the least as
such land should not be considered as a part of the public domain;
but when the alleged right is merely that of possession, then the
public or private character of the parcel is open to discussion and
this character should be established not simply on the alleged right
of the claimant but on the sylvical condition and soil
characteristics of the land, and by comparison between this area, or
different previously occupied areas, and those areas which still
preserve their primitive character.
Either way we look at this question we encounter difficulty.
Indubitably, there should be conservation of the natural resources
of the Philippines. The prodigality of the spendthrift who
squanders his substance for the pleasure of the fleeting moment
must be restrained for the less spectacular but surer policy which
protects Nature's wealth for future generations. Such is the wise
stand of our Government as represented by the Director of
Forestry who, with the Forester for the Government of the United
States, believes in "the control of nature's powers by man for his
3
G.R. No. L-62680 November 9, 1988
DIRECTOR vs. CA
Same; Same; Possession under claim of ownership; The applicant
for registration must present proof of specific acts of ownership to
substantiate his claim, he cannot just rely or offer general
statements which are mere conclusions of law than factual
evidence of possession.—The private respondent can trace his own
possession of the land only to 1961, when he claims he (along with
his brothers and sister) purchased the same from their father.
Assuming the purchase to be true, he would have possessed the
property only for 15 years at the time he applied for its
registration in 1976. However, he would tack it to that of his
predecessors' possession, but there is not enough evidence of this
except his own unsupported declarations. The applicant must
present specific acts of ownership to substantiate the claim and
cannot just offer general statements which are mere conclusions of
law than factual evidence of possession.
Same; Same; Same; A mere casual cultivation of portions of the
land by the claimant does not constitute possession under claim of
ownership.—Finally, even assuming that he had really planted
those trees, such an act will hardly suffice to prove possession as
this would constitute what this Court has called "a mere casual
cultivation" in a parcel of land of this vast area. As Justice Pacifico
de Castro put it in Republic of the Philippines v. Vera: "x x x It is
to be noted that in the instant case evidence for the respondents
tend to show that only portions of the entire area applied for are
cultivated. A mere casual cultivation of portions of the land by the
claimant does not constitute possession under claim of ownership.
In that sense, possession is not exclusive and notorious so as to
give rise to a presumptive grant from the state. The possession of
public land however long the period thereof may have extended,
never confers title thereto upon the possessor because the statute of
limitations with regard to public land does not operate against the
state, unless the occupant can prove possession and occupation of
the same under claim of ownership for the required number of
years to constitute a grant from the state.”
It is the policy of the State to encourage and promote the
distribution of alienable public lands as a spur to economic growth
and in line with the social justice Ideal enshrined in the
Constitution. At the same time, the law imposes stringent
safeguards upon the grant of such resources lest they fall into the
wrong hands to the prejudice of the national patrimony.
This policy is involved in the case at bar, which deals with the
confirmation of an imperfect title over a tract of land allegedly
owned by the private respondent. The land is situated in Barrio
San Miguel, Municipality of Jordan, Sub-province of Guimaras, in
the Province of Iloilo, and consists of 181.4776 hectares. 1 On
December 29, 1976, Romerico Chavez filed an application for its
registration 2 with the Court of Fast Instance of Iloilo. 3 Only the
Director of Lands opposed. After hearing, with the applicant as the
lone witness, the application was granted. 4 The petitioner then
appealed to the Court of Appeals 5 which affirmed the decision but
reduced the area of the grant to 144 hectares as the maximum
allowable. 6 Disagreeing, the petitioner has come to this Court in
this petition for certiorari under Rule 45 of the Rules of Court.
The Republic of the Philippines contends that: 1) the subject land
was not sufficiently Identified with indubitable evidence; and 2)
the nature and length of possession required by law had not been
adequately established.
On the first challenge, the petitioner invokes the case of Director
of Lands v. Reyes, 7 where it was held that "the original tracing
cloth plan of the land applied for which must be approved by the
Director of Lands" was "a statutory requirement of mandatory
character" for the Identification of the land sought to be registered.
As what was submitted in the case at bar to Identify the subject
property was not the tracing cloth plan but only the blueprint copy
of the survey plan, the respondent court should have rejected the
same as insufficient.
We disagree with this contention. The Court of Appeals was
correct when it observed that in that case the applicant in effect
"had not submitted anything at all to Identify the subject property"
because the blueprint presented lacked the approval of the Director
of Lands. By contrast—
In the present case, there was considerable compliance with the
requirement of the law as the subject property was sufficiently
Identified with the presentation of blueprint copy of Plan
AS-06-000002 (San Pedro v. Director of Lands, CA-G.R. No.
65332-R, May 28, 1981). It should be noted in this connection that
the Bureau of Lands has certified to the correctness of the
blueprint copy of the plan including the technical description that
go with it. Hence, we cannot ignore the fact, absent in the Reyes
case, that applicant has provided ample evidence to establish the
Identity of the subject property. 8
Such a view was affirmed by the Court in Republic of the
Philippines v. Intermediate Appellate Court, 9 where we held that
while the best evidence to Identify a piece of land for registration
purposes was the original tracing cloth plan from the Bureau of
Lands, blueprint copies and other evidence could also provide
sufficient Identification. This rule was bolstered only recently in
the case of Director of Lands v. Court of Appeals, 10 where the
Court declared through Chief Justice Marcelo B. Fernan:
We affirm. No reversible error was committed by the appellate
court in ruling that Exhibit "O", the true certified copy of the white
paper plan, was sufficient for the purpose of Identifying the land in
question. Exhibit "O" was found by the appellate court to reflect
the land as surveyed by a geodetic engineer. It bore the approval of
the Land Registration Commission, and was re-verified and
approved by the Bureau of Lands on April 25, 1974 pursuant to the
provisions of P.D. No. 239 withdrawing from the Land
Registration Commission the authority to approve original survey
plans. It contained the following material data: the barrio
(poblacion), municipality (Amadeo) and province (Cavite) where
the subject land is located, its area of 379 square meters, the land
as plotted, its technical descriptions and its natural boundaries.
Exhibit "O" was further supported by the Technical Descriptions
signed by a geodetic surveyor and attested by the Land
Registration Commission. In fine, Exhibit "O" contained all the
details and information necessary for a proper and definite
Identification of the land sought to be registered, thereby serving
the purpose for which the original tracing cloth plan is required.
The fact therefore that the original survey plan was recorded on
white paper instead of a tracing cloth should not detract from the
probative value thereof. ....
4
The second ground will require a review of the findings of fact of
the trial court which, significantly, were not questioned in the
Court of Appeals. The private respondent has raised the objection
that such findings are as a rule not reviewable on appeal and more
so, we might add, if as in the case at bar they were not disputed at
all by the appellant.
Considering, that we deal here with the alienation of public land,
which must be permitted only after the most careful examination
of the applicant's claim, the Court dispenses with the general rules
above-cited. As an exception thereto, it will address itself to the
evidence of the alleged possession of the subject property,
reiterating that:
This case represents an instance where the findings of the lower
court overlooked certain facts of substance and value that if
considered would affect the result of the case (People v. Royeras,
130 SCRA 259) and when it appears that the appellate court based
its judgment on a misapprehension of facts (Carolina Industries,
Inc. v. CMS Stock Brokerage, Inc., et al., 97 SCRA 734; Moran, Jr.
v. Court of Appeals, 133 SCRA 88; Director of Lands v. Funtillar,
et al., G.R. No. 68533, May 23, 1986). This case therefore is an
exception to the general rule that the findings of facts of the Court
of Appeals are final and conclusive and cannot be reviewed on
appeal to this Court. 11
and—
... in the interest of substantial justice this Court is not prevented
from considering such a pivotal factual matter that had been
overlooked by the Courts below. The Supreme Court is clothed
with ample authority to review palpable errors not assigned as
such if it finds that their consideration is necessary in arriving at a
just decision. 12
Testifying for himself, the private respondent declared that the
land in dispute used to form part of a huge tract of land covered by
Plan Psu-13870 and owned by Miguel Chavez, who was his great-
grandfather. It was inherited and held for 23 years by his
grandfather, Hugo Chavez, who in 1941 passed it on to his father,
Jose Chavez, from whom he and his two brothers and a sister
acquired it by virtue of a "Deed of Definite Sale" on May 27, 1961.
Thereafter, on September 24, 1975, he and the other vendees
executed a "Subdivision Agreement" under which Lot 2755, the
property now sought to be registered in his name, was assigned to
him. 13
The private respondent further testified that he and his
predecessors-in-interest had been in peaceful, exclusive,
continuous and open possession of the land "since time
immemorial" (being one of the multitude who favor this
cliche).<äre||anº•1àw> He added that he had been paying taxes on
the property and had planted coconut and mango trees thereon
although they were not yet fruit-bearing. He had no co-owners and
there were no tenants on the land, which was also free of any lien
or encumbrance. 14
The Court feels that the evidence presented on this requirement is
not sufficient.
The private respondent can trace his own possession of the land
only to 1961, when he claims he (along with his brothers and
sister) purchased the same from their father. Assuming the
purchase to be true, he would have possessed the property only for
15 years at the time he applied for its registration in 1976.
However, he would tack it to that of his predecessors' possession,
but there is not enough evidence of this except his own
unsupported declarations. The applicant must present specific acts
of ownership to substantiate the claim and cannot just offer general
statements which are mere conclusions of law than factual
evidence of possession.
The private respondent showed that he had been paying taxes on
the land only from 1972 and up to 1977. There was no showing of
tax payments made on the same land before 1972 by his
predecessors-in-interest although they are supposed to have been
in possession thereof "since time immemorial.
Although he declared in 1977 that he had planted one thousand
mango and five thousand coconut trees on the land, he added that
they were not yet productive. It takes only ten years for mango
trees and five years for coconut trees to begin bearing fruit, which
can only mean that they had been planted in less than these
numbers of years, or not earlier than 1967. This weakens his claim
of possession which under P.D. Nos. 1073 and 1529, amending
Section 48 (b) of the Public Land Act, must commence not later
than June 12, 1945.
Furthermore, if it is true that his predecessors-in-interest were in
possession "since time immemorial," to use the tired phrase again,
why had they not themselves introduced any improvement on the
land? And considering that the private respondent had himself
declared that there were no tenants on the land, it is also difficult to
conceive how he could by himself alone have possessed such a
vast tract of land consisting of more than 181 hectares.
Finally, even assuming that he had really planted those trees, such
an act will hardly suffice to prove possession as this would
constitute what this Court has called "a mere casual cultivation" in
a parcel of land of this vast area. As Justice Pacifico de Castro put
it in Republic of the Philippines v. Vera: 15
... It is to be noted that in the instant case evidence for the
respondents tend to show that only portions of the entire area
applied for are cultivated. A mere casual cultivation of portions of
the land by the claimant does not constitute possession under claim
of ownership. In that sense, possession is not exclusive and
notorious so as to give rise to a presumptive grant from the state.
The possession of public land however long the period thereof
may have extended, never confers title thereto upon the possessor
because the statute of limitations with regard to public land does
not operate against the state, unless the occupant can prove
possession and occupation of the same under claim of ownership
for the required number of years to constitute a grant from the
state.
It is worth noting that when the private respondent testified at the
only two hearings on December 8, 1977, and on February 17,
1978, the counsel for the petitioner was not present. 16 While his
absence did not vitiate the proceedings, they nevertheless became
in effect ex parte and left the government without any
representative to protect its interests. It is possible that if its
counsel had been present, the testimonial and documentary
evidence submitted by the applicant would have been more
carefully examined.
In any event, the Court finds that although the subject property was
sufficiently Identified with the blueprint copy of the survey plan,
the applicant has failed to prove the peaceful, exclusive,
continuous, and open possession necessary to support his claim of
5
ownership. For this reason, the registration sought should have
been, as it is now, denied.
ACCORDINGLY, the petition is GRANTED and the decision of
the Court of Appeals dated November 23, 1982 is REVERSED.
No costs.
G.R. No. 79688             February 1, 1996
PLEASANTVILLE DEVELOPMENT CORPORATION,
petitioner,
vs.
COURT OF APPEALS, WILSON KEE, C.T. TORRES
ENTERPRISES, INC. and ELDRED JARDINICO,
respondents.
Civil Law; Property; Builder in Good Faith; Court agrees with the
findings and conclusions of the Court of Appeals that Kee was a
builder in good faith.—Petitioner fails to persuade this Court to
abandon the findings and conclusions of the Court of Appeals that
Kee was a builder in good faith.
Same; Same; Same; Good faith consists in the belief of the builder
that the land he is building on is his and his ignorance of any
defect or flaw in his title.—Good faith consists in the belief of the
builder that the land he is building on is his and his ignorance of
any defect or flaw in his title. And as good faith is presumed,
petitioner has the burden of proving bad faith on the part of Kee.
At the time he built improvements on Lot 8, Kee believed that said
lot was what he bought from petitioner. He was not aware that the
lot delivered to him was not Lot 8. Thus, Kee’s good faith.
Petitioner failed to prove otherwise.
PANGANIBAN, J.:
Is a lot buyer who constructs improvements on the wrong property
erroneously delivered by the owner's agent, a builder in good
faith? This is the main issue resolved in this petition for review on
certiorari to reverse the Decision1 of the Court of Appeals2 in CA-
G.R. No. 11040, promulgated on August 20, 1987.
By resolution dated November 13, 1995, the First Division of this
Court resolved to transfer this case (along with several others) to
the Third Division. After due deliberation and consultation, the
Court assigned the writing of this Decision to the undersigned
ponente.
The Facts
The facts, as found by respondent Court, are as follows:
Edith Robillo purchased from petitioner a parcel of land
designated as Lot 9, Phase II and located at Taculing Road,
Pleasantville Subdivision, Bacolod City. In 1975, respondent
Eldred Jardinico bought the rights to the lot from Robillo. At that
time, Lot 9 was vacant.
Upon completing all payments, Jardinico secured from the
Register of Deeds of Bacolod City on December 19, 1978 Transfer
Certificate of Title No. 106367 in his name. It was then that he
discovered that improvements had been introduced on Lot 9 by
respondent Wilson Kee, who had taken possession thereof.
It appears that on March 26, 1974, Kee bought on installment Lot
8 of the same subdivision from C.T. Torres Enterprises, Inc.
(CTTEI), the exclusive real estate agent of petitioner. Under the
Contract to Sell on Installment, Kee could possess the lot even
before the completion of all installment payments. On January 20,
1975, Kee paid CTTEI the relocation fee of P50.00 and another
P50.00 on January 27, 1975, for the preparation of the lot plan.
These amounts were paid prior to Kee's taking actual possession of
Lot 8. After the preparation of the lot plan and a copy thereof
given to Kee, CTTEI through its employee, Zenaida Octaviano,
accompanied Kee's wife, Donabelle Kee, to inspect Lot 8.
Unfortunately, the parcel of land pointed by Octaviano was Lot 9.
Thereafter, Kee proceeded to construct his residence, a store, an
auto repair shop and other improvements on the lot.
After discovering that Lot 9 was occupied by Kee, Jardinico
confronted him. The parties tried to reach an amicable settlement,
but failed.
On January 30, 1981, Jardinico's lawyer wrote Kee, demanding
that the latter remove all improvements and vacate Lot 9. When
Kee refused to vacate Lot 9, Jardinico filed with the Municipal
Trial Court in Cities, Branch 3, Bacolod City (MTCC), a
complaint for ejectment with damages against Kee.
Kee, in turn, filed a third-party complaint against petitioner and
CTTEI.
The MTCC held that the erroneous delivery of Lot 9 to Kee was
attributable to CTTEI. It further ruled that petitioner and CTTEI
could not successfully invoke as a defense the failure of Kee to
give notice of his intention to begin construction required under
paragraph 22 of the Contract to Sell on Installment and his having
built a sari-sari store without the prior approval of petitioner
required under paragraph 26 of said contract, saying that the
purpose of these requirements was merely to regulate the type of
improvements to be constructed on the Lot.3
However, the MTCC found that petitioner had already rescinded
its contract with Kee over Lot 8 for the latter's failure to pay the
installments due, and that Kee had not contested the rescission.
The rescission was effected in 1979, before the complaint was
instituted. The MTCC concluded that Kee no longer had any right
over the lot subject of the contract between him and petitioner.
Consequently, Kee must pay reasonable rentals for the use of Lot
9, and, furthermore, he cannot claim reimbursement for the
improvements he introduced on said lot.
The MTCC thus disposed:
IN VIEW OF ALL THE FOREGOING, judgment is hereby
rendered as follows:
1. Defendant Wilson Kee is ordered to vacate the premises of Lot
9, covered by TCT No. 106367 and to remove all structures and
improvements he introduced thereon;
2. Defendant Wilson Kee is ordered to pay to the plaintiff rentals at
the rate of P15.00 a day computed from the time this suit was filed
on March 12, 1981 until he actually vacates the premises. This
amount shall bear interests (sic) at the rate of 12 per cent (sic) per
annum.
3. Third-Party Defendant C.T. Torres Enterprises, Inc. and
Pleasantville Subdivision are ordered to pay the plaintiff jointly
and severally the sum of P3,000.00 as attorney's fees and P700.00
as cost and litigation expenses.4
On appeal, the Regional Trial Court, Branch 48, Bacolod City
(RTC) ruled that petitioner and CTTEI were not at fault or were
not negligent, there being no preponderant evidence to show that
they directly participated in the delivery of Lot 9 to Kee5 . It found
Kee a builder in bad faith. It further ruled that even assuming
6
arguendo that Kee was acting in good faith, he was, nonetheless,
guilty of unlawfully usurping the possessory right of Jardinico
over Lot 9 from the time he was served with notice to vacate said
lot, and thus was liable for rental.
The RTC thus disposed:
WHEREFORE, the decision appealed from is affirmed with
respect to the order against the defendant to vacate the premises of
Lot No. 9 covered by Transfer Certificate of Title No. T-106367 of
the land records of Bacolod City; the removal of all structures and
improvements introduced thereon at his expense and the payment
to plaintiff (sic) the sum of Fifteen (P15.00) Pesos a day as
reasonable rental to be computed from January 30, 1981, the date
of the demand, and not from the date of the filing of the complaint,
until he had vacated (sic) the premises, with interest thereon at
12% per annum. This Court further renders judgment against the
defendant to pay the plaintiff the sum of Three Thousand
(P3,000.00) Pesos as attorney's fees, plus costs of litigation.
The third-party complaint against Third-Party Defendants
Pleasantville Development Corporation and C.T. Torres
Enterprises, Inc. is dismissed. The order against Third-Party
Defendants to pay attorney's fees to plaintiff and costs of litigation
is reversed.6
Following the denial of his motion for reconsideration on October
20, 1986, Kee appealed directly to the Supreme Court, which
referred the matter to the Court of Appeals.
The appellate court ruled that Kee was a builder in good faith, as
he was unaware of the "mix-up" when he began construction of the
improvements on Lot 8. It further ruled that the erroneous delivery
was due to the negligence of CTTEI, and that such wrong delivery
was likewise imputable to its principal, petitioner herein. The
appellate court also ruled that the award of rentals was without
basis.
Thus, the Court of Appeals disposed:
WHEREFORE, the petition is GRANTED, the appealed decision
is REVERSED, and judgment is rendered as follows:
1. Wilson Kee is declared a builder in good faith with respect to
the improvements he introduced on Lot 9, and is entitled to the
rights granted him under Articles 448, 546 and 548 of the New
Civil Code.
2. Third-party defendants C.T. Torres Enterprises, Inc. and
Pleasantville Development Corporation are solidarily liable under
the following circumstances:
A.       If Eldred Jardinico decides to appropriate the improvements
and, thereafter, remove these structures, the third-party defendants
shall answer for all demolition expenses and the value of the
improvements thus destroyed or rendered useless;
b. If Jardinico prefers that Kee buy the land, the third-party
defendants shall answer for the amount representing the value of
Lot 9 that Kee should pay to Jardinico.
3. Third-party defendants C.T. Torres Enterprises, Inc. and
Pleasantville Development Corporation are ordered to pay in
solidum the amount of P3,000.00 to Jardinico as attorney's fees, as
well as litigation expenses.
4. The award of rentals to Jardinico is dispensed with.
Furthermore, the case is REMANDED to the court of origin for
the determination of the actual value of the improvements and the
property (Lot 9), as well as for further proceedings in conformity
with Article 448 of the New Civil Code.7
Petitioner then filed the instant petition against Kee, Jardinico and
CTTEI.
The Issues
The petition submitted the following grounds to justify a review of
the respondent Court's Decision, as follows:
1. The Court of Appeals has decided the case in a way probably
not in accord with law or the the (sic) applicable decisions of the
Supreme Court on third-party complaints, by ordering third-party
defendants to pay the demolition expenses and/or price of the land;
2. The Court of Appeals has so far departed from the accepted
course of judicial proceedings, by granting to private respondent-
Kee the rights of a builder in good faith in excess of what the law
provides, thus enriching private respondent Kee at the expense of
the petitioner;
3. In the light of the subsequent events or circumstances which
changed the rights of the parties, it becomes imperative to set aside
or at least modify the judgment of the Court of Appeals to
harmonize with justice and the facts;
4. Private respondent-Kee in accordance with the findings of facts
of the lower court is clearly a builder in bad faith, having violated
several provisions of the contract to sell on installments;
5. The decision of the Court of Appeals, holding the principal,
Pleasantville Development Corporation (liable) for the acts made
by the agent in excess of its authority is clearly in violation of the
provision of the law;
6. The award of attorney's fees is clearly without basis and is
equivalent to putting a premium in (sic) court litigation.
From these grounds, the issues could be re-stated as follows:
(1) Was Kee a builder in good faith?
(2) What is the liability, if any, of petitioner and its agent, C.T.
Torres Enterprises, Inc.? and
(3) Is the award of attorney's fees proper?
The First Issue: Good Faith
Petitioner contends that the Court of Appeals erred in reversing the
RTC's ruling that Kee was a builder in bad faith.
Petitioner fails to persuade this Court to abandon the findings and
conclusions of the Court of Appeals that Kee was a builder in good
faith. We agree with the following observation of the Court of
Appeals:
The roots of the controversy can be traced directly to the errors
committed by CTTEI, when it pointed the wrong property to
Wilson Kee and his wife. It is highly improbable that a purchaser
of a lot would knowingly and willingly build his residence on a lot
owned by another, deliberately exposing himself and his family to
the risk of being ejected from the land and losing all improvements
thereon, not to mention the social humiliation that would follow.
Under the circumstances, Kee had acted in the manner of a prudent
man in ascertaining the identity of his property. Lot 8 is covered by
Transfer Certificate of Title No. T-69561, while Lot 9 is identified
in Transfer Certificate of Title No. T-106367. Hence, under the
Torrens system of land registration, Kee is presumed to have
knowledge of the metes and bounds of the property with which he
is dealing. . . .
xxx       xxx       xxx
But as Kee is a layman not versed in the technical description of
his property, he had to find a way to ascertain that what was
described in TCT No. 69561 matched Lot 8. Thus, he went to the
subdivision developer's agent and applied and paid for the
7
relocation of the lot, as well as for the production of a lot plan by
CTTEI's geodetic engineer. Upon Kee's receipt of the map, his
wife went to the subdivision site accompanied by CTTEI's
employee, Octaviano, who authoritatively declared that the land
she was pointing to was indeed Lot 8. Having full faith and
confidence in the reputation of CTTEI, and because of the
company's positive identification of the property, Kee saw no
reason to suspect that there had been a misdelivery. The steps Kee
had taken to protect his interests were reasonable. There was no
need for him to have acted ex-abundantia cautela, such as being
present during the geodetic engineer's relocation survey or hiring
an independent geodetic engineer to countercheck for errors, for
the final delivery of subdivision lots to their owners is part of the
regular course of everyday business of CTTEI. Because of
CTTEI's blunder, what Kee had hoped to forestall did in fact
transpire. Kee's efforts all went to naught.8
Good faith consists in the belief of the builder that the land he is
building on is his and his ignorance of any defect or flaw in his
title 9 . And as good faith is presumed, petitioner has the burden of
proving bad faith on the part of Kee 10 .
At the time he built improvements on Lot 8, Kee believed that said
lot was what he bought from petitioner. He was not aware that the
lot delivered to him was not Lot 8. Thus, Kee's good faith.
Petitioner failed to prove otherwise.
To demonstrate Kee's bad faith, petitioner points to Kee's violation
of paragraphs 22 and 26 of the Contract of Sale on Installment.
We disagree. Such violations have no bearing whatsoever on
whether Kee was a builder in good faith, that is, on his state of
mind at the time he built the improvements on Lot 9. These alleged
violations may give rise to petitioner's cause of action against Kee
under the said contract (contractual breach), but may not be bases
to negate the presumption that Kee was a builder in good faith.
Petitioner also points out that, as found by the trial court, the
Contract of Sale on Installment covering Lot 8 between it and Kee
was rescinded long before the present action was instituted. This
has no relevance on the liability of petitioner, as such fact does not
negate the negligence of its agent in pointing out the wrong lot. to
Kee. Such circumstance is relevant only as it gives Jardinico a
cause of action for unlawful detainer against Kee.
Petitioner next contends that Kee cannot "claim that another lot
was erroneously pointed out to him" because the latter agreed to
the following provision in the Contract of Sale on installment, to
wit:
13. The Vendee hereby declares that prior to the execution of his
contract he/she has personally examined or inspected the property
made subject-matter hereof, as to its location, contours, as well as
the natural condition of the lots and from the date hereof whatever
consequential change therein made due to erosion, the said Vendee
shall bear the expenses of the necessary fillings, when the same is
so desired by him/her. 11
The subject matter of this provision of the contract is the change of
the location, contour and condition of the lot due to erosion. It
merely provides that the vendee, having examined the property
prior to the execution of the contract, agrees to shoulder the
expenses resulting from such change.
We do not agree with the interpretation of petitioner that Kee
contracted away his right to recover damages resulting from
petitioner's negligence. Such waiver would be contrary to public
policy and cannot be allowed. "Rights may be waived, unless the
waiver is contrary to law, public order, public policy, morals, or
good customs, or prejudicial to a third person with a right
recognized by law." 12
The Second Issue: Petitioner's Liability
Kee filed a third-party complaint against petitioner and CTTEI,
which was dismissed by the RTC after ruling that there was no
evidence from which fault or negligence on the part of petitioner
and CTTEI can be inferred. The Court of Appeals disagreed and
found CTTEI negligent for the erroneous delivery of the lot by
Octaviano, its employee.
Petitioner does not dispute the fact that CTTEI was its agent. But it
contends that the erroneous delivery of Lot 9 to Kee was an act
which was clearly outside the scope of its authority, and
consequently, CTTEI I alone should be liable. It asserts that "while
[CTTEI] was authorized to sell the lot belonging to the herein
petitioner, it was never authorized to deliver the wrong lot to Kee"
13 .
Petitioner's contention is without merit.
The rule is that the principal is responsible for the acts of the
agent, done within the scope of his authority, and should bear the
damage caused to third persons 14 . On the other hand, the agent
who exceeds his authority is personally liable for the damage 15
CTTEI was acting within its authority as the sole real estate
representative of petitioner when it made the delivery to Kee. In
acting within its scope of authority, it was, however, negligent. It is
this negligence that is the basis of petitioner's liability, as principal
of CTTEI, per Articles 1909 and 1910 of the Civil Code.
Pending resolution of the case before the Court of Appeals,
Jardinico and Kee on July 24, 1987 entered into a deed of sale,
wherein the former sold Lot 9 to Kee. Jardinico and Kee did not
inform the Court of Appeals of such deal.
The deed of sale contained the following provision:
1. That Civil Case No. 3815 entitled "Jardinico vs. Kee" which is
now pending appeal with the Court of Appeals, regardless of the
outcome of the decision shall be mutually disregarded and shall
not be pursued by the parties herein and shall be considered
dismissed and without effect whatso-ever; 16
Kee asserts though that the "terms and conditions in said deed of
sale are strictly for the parties thereto" and that "(t)here is no
waiver made by either of the parties in said deed of whatever
favorable judgment or award the honorable respondent Court of
Appeals may make in their favor against herein petitioner
Pleasantville Development Corporation and/or private respondent
C.T. Torres Enterprises; Inc." 17
Obviously, the deed of sale can have no effect on the liability of
petitioner. As we have earlier stated, petitioner's liability is
grounded on the negligence of its agent. On the other hand, what
the deed of sale regulates are the reciprocal rights of Kee and
Jardinico; it stressed that they had reached an agreement
independent of the outcome of the case.
Petitioner further assails the following holding of the Court of
Appeals:
2. Third-party defendants C.T. Torres Enterprises, Inc. and
Pleasantville Development Corporation are solidarily liable under
the following circumstances:
a. If Eldred Jardinico decides to appropriate the improvements and,
thereafter, remove these structures, the third-party defendants shall
8
answer for all demolition expenses and the value of the and/or extent of such damages was not proven during the trial, the
improvements thus destroyed or rendered useless; same cannot now be quantified and awarded;
b. If Jardinico prefers that Kee buy the land, the third-party (3) Petitioner Pleasantville Development Corporation and
defendants shall answer for the amount representing the value of respondent C.T. Torres Enterprises, Inc. are ordered to pay in
Lot 9 that Kee should pay to Jardinico. 18 solidum the amount of P3,000.00 to Jardinico as attorney's fees, as
Petitioner contends that if the above holding would be carried out, well as litigation expenses; and
Kee would be unjustly enriched at its expense. In other words, Kee (4) The award of rentals to Jardinico is dispensed with.
would be able to own the lot, as buyer, without having to pay SO ORDERED.
anything on it, because the aforequoted portion of respondent
Court's Decision would require petitioner and CTTEI jointly and
solidarily to "answer" or reimburse Kee therefor.
We agree with petitioner.
Petitioner' s liability lies in the negligence of its agent CTTEI. For
such negligence, the petitioner should be held liable for damages.
Now, the extent and/or amount of damages to be awarded is a
factual issue which should be determined after evidence is
adduced. However, there is no showing that such evidence was
actually presented in the trial court; hence no damages could flow
be awarded.
The rights of Kee and Jardinico vis-a-vis each other, as builder in
good faith and owner in good faith, respectively, are regulated by
law (i.e., Arts. 448, 546 and 548 of the Civil Code). It was error for
the Court of Appeals to make a "slight modification" in the
application of such law, on the ground of "equity". At any rate, as
it stands now, Kee and Jardinico have amicably settled through
their deed of sale their rights and obligations with regards to Lot 9.
Thus, we delete items 2 (a) and (b) of the dispositive portion of the
Court of Appeals' Decision [as reproduced above] holding
petitioner and CTTEI solidarily liable.
The Third Issue: Attorney's Fees
The MTCC awarded Jardinico attorney's fees and costs in the
amount of P3,000.00 and P700.00, respectively, as prayed for in
his complaint. The RTC deleted the award, consistent with its
ruling that petitioner was without fault or negligence. The Court of
Appeals, however, reinstated the award of attorney's fees after
ruling that petitioner was liable for its agent's negligence.
The award of attorney's fees lies within the discretion of the court
and depends upon the circumstances of each case 19 . We shall not
interfere with the discretion of the Court of Appeals. Jardinico was
compelled to litigate for the protection of his interests and for the
recovery of damages sustained as a result of the negligence of
petitioner's agent 20 .
In sum, we rule that Kee is a builder in good faith. The disposition
of the Court of Appeals that Kee "is entitled to the rights granted
him under Articles 448, 546 and 548 of the New Civil Code" is
deleted, in view of the deed of sale entered into by Kee and
Jardinico, which deed now governs the rights of Jardinico and Kee
as to each other. There is also no further need, as ruled by the
appellate Court, to remand the case to the court of origin "for
determination of the actual value of the improvements and the
property (Lot 9), as well as for further proceedings in conformity
with Article 448 of the New Civil Code."
WHEREFORE , the petition is partially GRANTED. The Decision
of the Court of Appeals is hereby MODIFIED as follows:
(1) Wilson Kee is declared a builder in good faith;
(2) Petitioner Pleasantville Development Corporation and
respondent C.T. Torres Enterprises, Inc. are declared solidarily
liable for damages due to negligence; however, since the amount
9
G.R. No. L-8108             August 22, 1914
RAMON L. ORTIZ, plaintiff-appellant,
vs.
ASUNCION FUENTABELLA, ET AL., defendants-appellee.
EJECTMENT; DECLARATION OF NULLITY OF TITLE.—
Declaration of nullity of a title does not imply that it was acquired
in bad faith.
ID.; ID.; POSSESSION IN BAD FAITH.—Possession acquired
after having knowledge of certain facts that put in doubt the title of
the assignees must be regarded as in bad faith.
There has been inscribed in their property registry of the Province
of Ambos Camarines, since August 6, 1892, a possessory
information regarding a parcel of pasture land in the place called
Tagas in the municipality of San Jose of said province; in area 27
hectares and 90 centares; bounded on the north by the rivulet
Dacuilan and Calauit, on the south by the San Miguel River, on the
east by the sea, and on the west by the lands of Mariano Pelayo,
Maria Pagueo, and Gaspar Codillo. The authenticity of this
possessory information is not and never has been questioned.
The person securing this possessory information was Don Ramon
Ortiz, a resident of the said town of San Jose, who, according to
the contents of the information, "provided before the justice of the
peace of that town the possession he had held of said land for
fifteen years previously, when he had acquired it by cultivating it
himself, without securing any written title;" and it was approved
by order of July 2, 1892.
On March 10, 1909, Marcelina Ortiz, daughter of the said Don
Ramon Ortiz, addressed to Asuncio Fuentabella the following
letter:
I have been informed that you are thinking of setting out coco
palms on the lands that out parents possess in the place called
Tagas, of this municipality, used as a pasture for our cattle, within
the boundaries formed on the north by the rivulet Rangas Sadang,
on the east by the beach, on the south by the San Miguel River that
flows into the Sabang Bunga, and on the west by the lands of
Gaspar Codillo and others. If this be true, I request that you desist
from your purpose.
Asuncion Fuentebella answered the foregoing letter on the 19th of
the same month and year in the following words:
Regarding my idea of setting out coco palms, you are
misinformed; I am not thinking of setting out coco palms, as you
state, on lands belonging to your parents.
Under date of December 29 of the same year 1909, Asuncion
Fuentebella appears in a public document as the vendee of all the
land included in that inscribed information the vendors being the
brother and sister Juan and Sotera Cano, who in said document
state nothing more than the following: "This land has been quietly
and peacefully possessed by our late parents for thirty years prior
to this date." Thirty years preceding this date, which is December
29, 1909, are the years that have elapsed since 1879.
In view of this attitude of Asuncion Fuentebella, Ramon Ortiz filed
the present complaint, wherein he asks for restitution of the
possession of said parcel of land and P200 as damages.
Asuncion Fuentebella cited Juan and Sotera Cano in defense of the
title. She answer the complaint on August 21, 1911, and said that
she had been in possession of the said land for more than two
years and that she had set out thereon over 5,000 coco palms and
built a house, wherefore she prayed that either the complaint be
dismissed, or that the plaintiff pay her P8,000 Philippine currency
for the coco pals set out and the house built. The vendors, Cano
and his sister, substantiated their possession from the time of
inheriting the property from their parents to the time of the sale;
and subsidiarily, should this defense fail, they alleged prescription
in favor of the defendant Fuentebella.
After examining both the oral and documentary evidence the Court
of First Instance of Ambos Camarines absolved the defendant from
the complaint with the costs against the plaintiff, who appealed
from the judgment.
Asuncion Fuentebella cannot make her personal possession prevail
over the possession inscribed in the property years before she filed
her answer to the complaint. Primarily and personally the
defendant has no right beyond what she has derived from Juan and
Sotera Cano.
With reference to Juan and Sotera Cano's possession, the trial
court's conclusions are: That these Cano defendants have not really
and materially possesses a great part of the land; that Felipe Cano,
father of these defendants, had a house built on the tract, and
probably exercised acts of possession over the land in the
immediate neighborhood of the house and its vicinity by setting
out fruit trees on a part thereof and now claims to have exercised
such acts of possession over the hole of the land in question, which
was only planted in breadfruits and coco palms around his house
(B. of E. 15); that said land was not utilized during this time,
except for what said heirs of Felipe Cano had there, consisting in
some plantations of coco palms. (Ibid., 13.)
As for the law on this point, the court reached the two following
conclusions:
2. That Felipe Cano was in possession of part of the land during
his lifetime and that after his death this possession passed to his
children, two of whom are Juan and Sotera Cano.
3. That Juan and Sotera Cano in the year 1908 sold this land to the
defendant Asuncion Fuentebella, who then took possession thereof
and has held it to date. At the time of his transfer to the defendant
Fuentebella, Juan Cano and Sotera Cano were in possession of the
land as heirs of their father Felipe Cano; but the heirs of Felipe
Cano have not joined with those herein cited to defend the title,
Juan Cano and Sotera Cano, in this sale nor have they appeared as
parties and this court holds that their rights were not transferred by
their brother and sister Juan and Sotera Cano to the defendant
Asuncion Fuentebella. (B. of E., 16.)
From this it appears that neither Felipe Cano in his lifetime nor his
children after his death possessed in the place called Tagas more
space than was occupied by their house and their small plantations
of breadfruit and coco palms around it, that is to say, merely, a
portion of the tract of 27 hectares in question, not all of it; and that,
consequently, they could not sell to Fuentebella more than the
space occupied by the house and some small plantations of
breadfruit and coco palms, and of this small part only their
hereditary portions, not those which on that hypothesis should
pertain to their coheirs.
Reviewing the evidence, we find the following facts:
Sotera Cano and Juan Cano stated that they had other brothers
living, Bernabe and Potenciano Cano, and also some nephews, the
10
children of other brothers now deceased; and according to Juan
Cano,, the vended Fuentebella was acquainted with this fact.
Juan Peña, witness for the defendant, a man of 68 years of age and
brother-in-law of Felipe Cano, stated that the latter had his house
in Tagas "a little outside the land in question, although his
plantation of breadfruit trees was within the land in question" (p.
36); that he had nothing but a house and that it had been destroyed;
that Felipe Cano had been dead for over thirty years, for the
witness was then only a boy, "a child still," according to his own
words; that after Felipe Cano had died and the house had been
destroyed, his widow did not rebuild it, but that his heirs "went to
live on the other side of the Mitil Creek, whither they changed
their residence" (pp. 41 and 42); and the person who went to live
in the place they left was Cipriano Compuesto, who built his house
there; that Don Ramon Ortiz had carabaos and cattle there from the
time of the Spanish Government; and that on the land in question
there are coco palms that were planted by Cipriano Compuesto
beside his house.
This testimony of a witness for the defendant, a resident of the
place where the land in question is located, is of the greatest
importance, since it amounts to confirmation of what already, on
page 7, the plaintiff had testified, to wit, that in the year 1882
Cipriano Compuesto, with his consent had set out coco palms in
the place where his cattle pen (the plaintiff's) was constructed-that
is, in the place where, from what the witness Juan Peña says,
Felipe Cano's destroyed house had been; and that the plaintiff had
allowed Cipriano Compuesto to set out those coco palms on
condition that if he did not remain on the land he would have to
sell them, as indeed happened, those coco palms set out by
Compuesto now belonging to the plaintiff. Already, on page 6, the
plaintiff had also declared that one of the western boundaries of
the land in question, as appears in the information inscribed in the
registry, was the land of Maria Pagueo, which passed to Cipriano
Compuesto so that in the plan Exhibit B of the plaintiff, Cipriano
Compuesto appears as the owner of the land that adjoins it on the
west; and if, as the witness Juan Peña states, Cipriano Compuesto
built his house in the very same place where Felipe Cano had his,
a little outside the land in question, and that his plantation of
breadfruits was on the land in question, and Compuesto also set
out his coco palms, on the said land with the plaintiff's permission,
the consequence is that Felipe Cano's house represents nothing
else than Cipriano Compuesto's, and the breadfruit trees of Felipe
Cano nothing else than Cipriano Compuesto's coco palms — that
is to say, that both houses were "a little outside the place in
question" and that merely the plantation of breadfruit trees of the
one and of coco palms of the other were those on the land in
question, Compuesto's planting of coco palms, which later passed
to the plaintiff, being by permission of the latter.
So the following findings of fact are to be regarded as established
upon the foregoing evidence: (1) That Felipe Cano, the
predecessor in interest of the Cano defendants, did not have his
house on the land in question but a little outside of it, and that on it
he had only his plantation of coco palms; (2) that his house was
built on the same place that later came to be Maria Paqueo's land,
conterminous on the west with the land in question, according to
the possessory information: (3) that this same land of Maria
Paqueo became Cipriano Compuesto's, and it appears in the plan
(Exhibit B), made in 1892, as conterminous on the west with the
land in question, and of the latter Cipriano occupied only the place
planted in coco palms.
Hence, if Felipe Cano's house had not been destroyed and his heirs
had not moved their residence to the other side of the Mitil Creek
and had remained in the same place in 1892, their land would have
appeared as conterminous on the west with the land in question,
instead of Maria Paqueo's in the possessory information and
instead of Cipriano Compuesto's in the plan Exhibit B.
Consequently, in 1892, the date of the possessory information,
they were not the possessors of the land in question but only
perhaps possessors of a tract of land conterminous with it on the
west. But they could not have committed even to be the possessors
in 1892 of this adjoining land on the west, because, according to
the testimony of their own witness, Juan Peña, where their father
Felipe Cano died, they changed their residence to the other side of
the Mitil Creek, and their father's death, according to the same
witness, occurred when even he was young; hence it is not
hazardous to conclude that in 1870 he was no longer alive, and
that in 1882 either Maria Paqueo or surely Cipriano Compuesto
was on the adjoining land. At all events it has been very
convincingly proved that neither in 1892 nor in 1882 nor in 1870
nor at any time did Felipe Cano and his children possess the land
that is the subject matter of the present litigation, and that at the
death of Felipe Cano and after the house located a little outside of
the disputed land had been destroyed his heirs did not continue to
live there but moved their residence to the other side of the Mitil
Creek.
Sotera Cano testifies that outside this disputed land, toward the
west some 600 or 800 brazas from its boundary, they had a coco-
palm and there they had their house, beside which they also had
the plantations which they had inherited from their father Felipe
Cano, this being the only house they had in that place, and in
which they were living at the time of their father's death; that she
was acquainted with the three persons, among them Maria Pagueo,
whose lands were conterminous on the west with the disputed
land, all three of which persons had their plantations. "These
plantations," she adds, "are between our plantations" (p. 57). And
Juan Cano says that when their father died they built the house
located in the coco-palm grove; that coming from these coco
palms where they were living to the visita (or barrio there is on the
land) one had to cross a creek called Mitil and that "according to
his belief the disputed land is the coco-palm grove where their
house is located beside the plantations toward the west of the
visita" (p. 68).
This belief or, as now shown, error of Juan Cano is the cause of all
the other errors that have given rise to this suit.
To offset the possession attested by the registered possessory
information it has not been proven in any way that either at the
date of its inscription in 1892 or in 1882 or in 1879 could Felipe
Cano or his children Juan and Sotera Cano have been in
possession of the disputed land; and if the complaint was
dismissed it was solely on the basis of the incorrect hypothesis that
"at the time when the plaintiff obtained this title of possessory
information, Felipe Cano, father of the persons herein cited to
defend the title, Juan and Sotera Cano, or they themselves if he
was dead, were in possession of said land or a part thereof." (B. of
E., 15.) It has been clearly demonstrated that in 1879 Felipe Cano
was already dead and that at his death and after the destruction of
11
his house on the border of the disputed land his children changed
their residence and went to live on the other side of the Mitil creek,
some 600 or 700 brazas from those borders, with plantations
between, or with plantations between of the three persons named
in the possessory ]information as adjoining on the west, among
these Maria Pagueo.
The authenticity and efficacy of the possessory information having
been proven by means of its inscription in the registry, and not
impugned, restitution must be ordered of the possession claimed
by the plaintiff, and also of the land in question, with the costs
against the defendants. Consequently, the judgment appealed from,
in so far as it dismisses the complaint, must be reversed.
With reference to the counterclaim set up by the defendant
Asuncio Fuentebella, only the following facts have been proved:
That the defendant has been in possession of the land claimed in
the complaint for only about two years from the date of the answer
thereto, since August 21, 1911, that is since some time before
August 21, 1909;
That from the document she has presented in evident she does not
appear to have purchased the land claimed in the complaint until
December 29, 1909, after she had already been warned by the
plaintiff's daughter in March of that year not to set out coco palms
on said land as it belonged to the latter's father;
That, if what the defendant and her witness Sotera Cano states it
true, the sale was closed in 1908, but the document had not been
drawn up until the price agreed upon had been paid;
That, according to the testimony of Juan Cano, the defendant
purchased the land from Juan Cano and Sotera not knowing
perfectly that there were other coheirs, that is, their two brothers
and various nephews whose number was not definitely stated;
That Juan Peña, witness for the defendant, states that Ramon Ortiz
has had cattle and carabaos since the time of the Spanish
Government, while it has been seen that, according to this same
witness, Felipe Cano had land in Tagas, not the land in question,
but a little outside that land; and his children, not the same land
their father had occupied, for this was later Cipriano Compuesto's,
but some coco-palm groves distant 600 or 800 brazas to the west
of the disputed land, whither they had moved their residence, it
thus very clearly appearing in this court that all this litigation has
been maintained on a false basis, which is the belief of the
defendant Juan Cano that the land now in question is exactly this
coco-palm grove where his house is located beside the plantations
to the west of the visita, or of the settlement formed on the land of
Ramon Ortiz.
These facts being admitted, the defendants called to support the
title have been unable to justify the sale they made of the land in
question to Asuncion Fuentebella.
Did Asuncion Fuentebella possess the land in good faith? That is
the point to be determined in the counterclaim.
It has not been proved that the defendant Asuncion Fuentebella has
acted in pursuance of some evil plan in conjunction with her
witness Irineo Peñas, who along with his father had from
childhood been after the latter's death continued to be the
herdsman of the plaintiff's cattle on the land in question and was
dismissed by the latter on account of his disloyalty and bad
conduct. Now it appears that he is the principal laborer of the
defendant in setting out coco palms.
However it be, we do not regard as decisive the evidence presented
to prove that the defendant's possession was in bad faith. The
nullity of the greater part of her title is not sufficient argument to
prove that she knew of the defect in her mode of acquisition of a
tract of land as belonging to Juan and Sotera Cano, when it is now
demonstrated in this case that neither Sotera, nor Juan Cano, nor
even their father Felipe Cano, had at any time possessed it, but
another tract in the neighborhood, possession whereof might easily
have caused error on the part of the purchaser. Defendant's bad
faith began after the warning given in a letter by the plaintiff's
daughter in March, 1909, for after having received it she then had
ground to doubt that Sotera and Juan Cano could transfer any title
of possession in the following December.
Possession acquired in good faith does not lose this character,
except in the case and from the moment that the possessor is aware
that he possesses the thing illegally. (Civil Code, art. 435.)
The trial court has declared that it encountered a good deal of
difficulty in deciding whether the coco palms had been set out
before or after the receipt of the said letter, but it believes that, in
view of the evidence, a large portion of the land, but not the whole,
was already so planted; that the house was under construction but
unfinished; and that "there is no other evidence in the case
regarding the value of said house or the value of the coco palms,
except what has been stated by the defendant." (B. of E., 14)
Everything done on the land, expenditures, outlay, improvements,
from the moment when the letter was received bears the stamp of
having carried out when the possessor was not unaware that she
was improperly in possession of the land. In the light of this
holding must be determined all the questions that arises
concerning the effects of the defendant's possession and the rights
she is entitled to under the provisions of the Civil Code with
respect to the house and the coco palms, that have led to her
counterclaim, once it has been ordered in this decision that
possession of the land be restored to the plaintiff.
The judgment is reversed in so far as it absolves the defendants
from the complaint, with the costs against the plaintiff.
Let possession of the land described in the second paragraph of the
complaint be restored to the plaintiff, with the cost in first instance
against the defendants, and without special finding with respect to
those of this instance.
Let the case be returned to the lower court so that it may fix
exactly the time when the construction and planting were carried
out and determine and declare the rights and obligations of each of
the litigating parties, after weighing the evidence already adduced
and what may be newly taken, in so far as pertinent.
12
G.R. No. 46623 December 7, 1939
MARCIAL KASILAG, petitioner,
vs.
RAFAELA RODRIGUEZ, URBANO ROQUE, SEVERO
MAPILISAN and IGNACIO DEL ROSARIO, respondents.
ID.; ID.; ID.; ID.; POSSESSION IN GOOD FAITH.—It is a fact
that the petitioner is not conversant with the laws because he is not
a lawyer. In accepting the mortgage of the improvements he
proceeded on the well-grounded belief that he was not violating
the prohibition regarding the alienation of the land. In taking
possession thereof and in consenting to receive its fruits, he did not
know, as clearly as a jurist does, that the possession and enjoyment
of the fruits are attributes of the contract of antichresis and that the
latter, as a lien, was prohibited by section 116. These
considerations again bring us to the conclusion that, as to the
petitioner, his ignorance of the provisions of section 116 is
excusable and may, therefore, be the basis of his good faith. We do
not give much importance to the change of the tax declaration,
which consisted in making the petitioner appear as the owner of
the land, because such an act may only be considered as a sequel
to the change of possession and enjoyment of the fruits by the
petitioner, about which we have stated that the petitioner's
ignorance of the law is possible and excusable. We, therefore, hold
that the petitioner acted in good faith in taking possession of the
land and enjoying its fruits.
ID.; ID.; ID.; ID.; ID.—The petitioner being a possessor in good
faith within the meaning of article 433 of the Civil Code and
having introduced the improvements upon the land as such, the
provisions of article 361 of the same Code are applicable;
wherefore, the respondents are entitled to have the improvements
and plants upon indemnifying the petitioner the value thereof
which we fix at P3,000, as appraised by the trial court; or the
respondents may elect to compel the petitioner to have the land by
paying its market value to be fixed by the court of origin.
This is an appeal taken by the defendant-petitioner from the
decision of the Court of Appeals which modified that rendered by
the court of First Instance of Bataan in civil case No. 1504 of said
court and held: that the contract Exhibit "1" is entirely null and
void and without effect; that the plaintiffs-respondents, then
appellants, are the owners of the disputed land, with its
improvements, in common ownership with their brother Gavino
Rodriguez, hence, they are entitled to the possession thereof; that
the defendant-petitioner should yield possession of the land in
their favor, with all the improvements thereon and free from any
lien; that the plaintiffs-respondents jointly and severally pay to the
defendant-petitioner the sum of P1,000 with interest at 6 percent
per annum from the date of the decision; and absolved the
plaintiffs-respondents from the cross-complaint relative to the
value of the improvements claimed by the defendant-petitioner.
The appealed decision also ordered the registrar of deeds of Bataan
to cancel certificate of title No. 325, in the name of the deceased
Emiliana Ambrosio and to issue in lieu thereof another certificate
of title in favor of the plaintiffs-respondents and their brother
Gavino Rodriguez, as undivided owners in equal parts, free of all
liens and incumbrances except those expressly provided by law,
without special pronouncement as to the costs.
The respondents, children and heirs of the deceased Emiliana
Ambrosio, commenced the aforesaid civil case to the end that they
recover from the petitioner the possession of the land and its
improvements granted by way of homestead to Emiliana Ambrosio
under patent No. 16074 issued on January 11, 1931, with
certificate of title No. 325 issued by the registrar of deeds of
Bataan on June 27, 1931 in her favor, under section 122 of Act No.
496, which land was surveyed and identified in the cadastre of the
municipality of Limay, Province of Bataan, as lot No. 285; that the
petitioner pay to them the sum of P650 being the approximate
value of the fruits which he received from the land; that the
petitioner sign all the necessary documents to transfer the land and
its possession to the respondents; that he petitioner be restrained,
during the pendency of the case, from conveying or encumbering
the land and its improvements; that the registrar of deeds of Bataan
cancel certificate of title No. 325 and issue in lieu thereof another
in favor of the respondents, and that the petitioner pay the costs of
suit.
The petitioner denied in his answer all the material allegations of
the complaint and by way of special defense alleged that he was in
possession of the land and that he was receiving the fruits thereof
by virtue of a mortgage contract, entered into between him and the
deceased Emiliana Ambrosio on May 16, 1932, which was duly
ratified by a notary public; and in counterclaim asked that the
respondents pay him the sum of P1,000 with 12 per cent interest
per annum which the deceased owed him and that, should the
respondents be declared to have a better right to the possession of
the land, that they be sentenced to pay him the sum of P5,000 as
value of all the improvements which he introduced upon the
land.lawphil.net
On May 16, 1932 Emiliana Ambrosio, in life, and the petitioner
executed the following public deed:
"This agreement, made and entered into this 16th day of May,
1932, by and between Emiliana Ambrosio, Filipino, of legal age,
widow and resident of Limay, Bataan, P.L., hereinafter called the
party of the first part, and Marcial Kasilag, Filipino, of legal age,
married to Asuncion Roces, and resident at 312 Perdigon Street,
Manila, P.L., hereinafter called party of the second part.
WITNESSETH: That the parties hereto hereby covenant and agree
to and with each other as follows:
ARTICLE I. That the party of the first part is the absolute
registered owner of a parcel of land in the barrio of Alngan,
municipality of Limay, Province of Bataan, her title thereto being
evidenced by homestead certificate of title No. 325 issued by the
Bureau of Lands on June 11, 1931, said land being lot No. 285 of
the Limay Cadastre, General Land Registration Office Cadastral
Record No. 1054, bounded and described as follows:
Beginning at point marked 1 on plan E-57394, N. 84º 32' W.
614.82 m. from B.B.M. No. 3, thence N. 66º 35' E. 307.15 m. to
point "2"; S. 5º 07' W. to point "5"; S.6º 10' E. 104.26 m. to point
"4"; S. 82º 17' W. to point "5"; S. 28º 53' W. 72.26 m. to point "6";
N. 71º 09' W. to point "7"; N. 1º 42' E. 173.72 m. to point 1, point
of beginning, "Containing an area of 6.7540 hectares. "Points 1,2,6
and 7, B.L.; points 3,4 and 5, stakes; points 4, 5 and 6 on bank of
Alangan River. "Bounded on the North, by property claimed by
Maria Ambrosio; on the East, by Road; on the South, by Alangan
13
River and property claimed by Maxima de la Cruz; and on the
West, by property claimed by Jose del Rosario. "Bearing true.
Declination 0º 51' E. "Surveyed under authority of sections 12-22,
Act No. 2874 and in accordance with existing regulations of the
Bureau of Lands, by Mamerto Jacinto, public land surveyor, on
July 8, 1927 and approved on February 25, 1931.
ARTICLE II. That the improvements on the above described land
consist of the following:
Four (4) mango trees, fruit bearing: one hundred ten (110) hills of
bamboo trees; one (1) tamarind and six (6) boñga trees.
ARTICLE III. That the assessed value of the land is P940 and the
assessed value of the improvements is P860, as evidenced by tax
declaration No. 3531 of the municipality of Limay, Bataan.
ARTICLE IV. That for and in consideration of the sum of one
thousand pesos (P1,000) Philippine currency, paid by the party of
second part to the party of the first part, receipt whereof is hereby
acknowledged, the party of the first part hereby encumbers and
hypothecates, by way of mortgage, only the improvements
described in Articles II and III hereof, of which improvements the
party of the first part is the absolute owner.
ARTICLE V. That the condition of said mortgage is such that if the
party of the first part shall well and truly pay, or cause to paid to
the party of the second part, his heirs, assigns, or executors, on or
before the 16th day of November, 1936, or four and one-half (4½)
years after date of the execution of this instrument, the aforesaid
sum of one thousand pesos (P1,000) with interest at 12 per cent
per annum, then said mortgage shall be and become null and void;
otherwise the same shall be and shall remain in full force and
effect, and subject to foreclosure in the manner and form provided
by law for the amount due thereunder, with costs and also
attorney's fees in the event of such foreclosure.lawphil.net
ARTICLE VI. That the party of the first part shall pay all taxes and
assessments which are or may become due on the above described
land and improvements during the term of this agreement.
ARTICLE VII. That within thirty (30) days after date of execution
of this agreement, the party of the first part shall file a motion
before the Court of First Instance at Balanga, Bataan, P. I.,
requesting cancellation of Homestead Certificate of Title No. 325
referred to in Article I hereof and the issuance, in lieu thereof, of a
certificate of title under the provisions of Land Registration Act
No. 496, as amended by Act 3901.
ARTICLE III. It if further agreed that if upon the expiration of the
period of time (4½) years stipulated in this mortgage, the
mortgagor should fail to redeem this mortgage, she would execute
a deed of absolute sale of the property herein described for the
same amount as this mortgage, including all unpaid interests at the
rate of 12 per cent per annum, in favor of the mortgagee.
ARTICLE IX. That in the event the contemplated motion under
Article VII hereof is not approved by the Court, the foregoing
contract of sale shall automatically become null and void, and the
mortgage stipulated under Article IV and V shall remain in full
force and effect.
In testimony whereof, the parties hereto have hereunto set their
hands the day and year first herein before written.
(Sgd.) MARCIAL KASILAG
(Sgd.) EMILIANA AMBROSIO
Signed in the presence of:
(Sgd.) ILLEGIBLE
(Sgd.) GAVINO RODRIGUEZ.
PHILIPPINE ISLANDS } ss.
BALANGA, BATAAN } ss.
Before me this day personally appeared Emiliana Ambrosio
without cedula by reason of her sex, to me known and known to
me to be the person who signed the foregoing instrument, and
acknowledged to me that she executed the same as her free and
voluntary act and deed.
I hereby certify that this instrument consists of three (3) pages
including this page of the acknowledgment and that each page
thereof is signed by the parties to the instrument and the witnesses
in their presence and in the presence of each other, and that the
land treated in this instrument consists of only one parcel.
In witness whereof I have hereunto set my hand and affixed my
notarial seal, this 16th day of May, 1932.
(Sgd.) NICOLAS NAVARRO
Notary Public
My commission expires December 31, 1933.
Doc. No. 178
Page 36 of my register
Book No. IV
One year after the execution of the aforequoted deed, that is, in
1933, it came to pass that Emiliana Ambrosio was unable to pay
the stipulated interests as well as the tax on the land and its
improvements. For this reason, she and the petitioner entered into
another verbal contract whereby she conveyed to the latter the
possession of the land on condition that the latter would not collect
the interest on the loan, would attend to the payment of the land
tax, would benefit by the fruits of the land, and would introduce
improvements thereon. By virtue of this verbal contract, the
petitioner entered upon the possession of the land, gathered the
products thereof, did not collect the interest on the loan, introduced
improvements upon the land valued at P5,000, according to him
and on May 22, 1934 the tax declaration was transferred in his
name and on March 6, 1936 the assessed value of the land was
increased from P1,020 to P2,180.
After an analysis of the conditions of Exhibit "1" the Court of
Appeals came to the conclusion and so held that the contract
entered into by and between the parties, set out in the said public
deed, was one of absolute purchase and sale of the land and its
improvements. And upon this ruling it held null and void and
without legal effect the entire Exhibit 1 as well as the subsequent
verbal contract entered into between the parties, ordering,
however, the respondents to pay to the petitioner, jointly and
severally, the loan of P1,000 with legal interest at 6 per cent per
annum from the date of the decision. In this first assignment of
error the petitioner contends that the Court of Appeals violated the
law in holding that Exhibit 1 is an absolute deed of sale of the land
and its improvements and that it is void and without any legal
effect.
The cardinal rule in the interpretation of contracts is to the effect
that the intention of the contracting parties should always prevail
because their will has the force of law between them. Article 1281
of the Civil Code consecrates this rule and provides, that if the
terms of a contract are clear and leave no doubt as to the intention
of the contracting parties, the literal sense of its stipulations shall
14
be followed; and if the words appear to be contrary to the evident
intention of the contracting parties, the intention shall prevail. The
contract set out in Exhibit 1 should be interpreted in accordance
with these rules. As the terms thereof are clear and leave no room
for doubt, it should be interpreted according to the literal meaning
of its clauses. The words used by the contracting parties in Exhibit
1 clearly show that they intended to enter into the principal
contract of loan in the amount of P1,000, with interest at 12 per
cent per annum, and into the accessory contract of mortgage of the
improvements on the land acquired as homestead, the parties
having moreover, agreed upon the pacts and conditions stated in
the deed. In other words, the parties entered into a contract of
mortgage of the improvements on the land acquired as homestead,
to secure the payment of the indebtedness for P1,000 and the
stipulated interest thereon. In clause V the parties stipulated that
Emiliana Ambrosio was to pay, within four and a half years, or
until November 16, 1936, the debt with interest thereon, in which
event the mortgage would not have any effect; in clause VI the
parties agreed that the tax on the land and its improvements,
during the existence of the mortgage, should be paid by the owner
of the land; in clause VII it was covenanted that within thirty days
from the date of the contract, the owner of the land would file a
motion in the Court of First Instance of Bataan asking that
certificate of title No. 325 be cancelled and that in lieu thereof
another be issued under the provisions of the Land Registration
Act No. 496, as amended by Act No. 3901; in clause VIII the
parties agreed that should Emiliana Ambrosio fail to redeem the
mortgage within the stipulated period of four years and a half, she
would execute an absolute deed of sale of the land in favor of the
mortgagee, the petitioner, for the same amount of the loan of
P1,000 including unpaid interest; and in clause IX it was stipulated
that in case the motion to be presented under clause VII should be
disapproved by the Court of First Instance of Bataan, the contract
of sale would automatically become void and the mortgage would
subsist in all its force.
Another fundamental rule in the interpretation of contracts, not
less important than those indicated, is to the effect that the terms,
clauses and conditions contrary to law, morals and public order
should be separated from the valid and legal contract and when
such separation can be made because they are independent of the
valid contract which expresses the will of the contracting parties.
Manresa, commenting on article 1255 of the Civil Code and
stating the rule of separation just mentioned, gives his views as
follows:
On the supposition that the various pacts, clauses or conditions are
valid, no difficulty is presented; but should they be void, the
question is as to what extent they may produce the nullity of the
principal obligation. Under the view that such features of the
obligation are added to it and do not go to its essence, a criterion
based upon the stability of juridical relations should tend to
consider the nullity as confined to the clause or pact suffering
therefrom, except in case where the latter, by an established
connection or by manifest intention of the parties, is inseparable
from the principal obligation, and is a condition, juridically
speaking, of that the nullity of which it would also occasion.
(Manresa, Commentaries on the Civil Code, Volume 8, p. 575.)
The same view prevails in the Anglo-American law, as condensed
in the following words:
Where an agreement founded on a legal consideration contains
several promises, or a promise to do several things, and a part only
of the things to be done are illegal, the promises which can be
separated, or the promise, so far as it can be separated, from the
illegality, may be valid. The rule is that a lawful promise made for
a lawful consideration is not invalid merely because an unlawful
promise was made at the same time and for the same
consideration, and this rule applies, although the invalidity is due
to violation of a statutory provision, unless the statute expressly or
by necessary implication declares the entire contract void. . . . (13
C. J., par. 470, p. 512; New York Cent. etc. R. Co. v. Gray, 239
U.S., 583; 60 Law ed., 451; U.S. v. Mora, 97 U.S., 413, 24 Law.
ed., 1017; U.S. v. Hodson, 10 Wall, 395; 19 Law ed. 937; Gelpcke
v. Dubuque, 1 Wall. 175, 17 Law ed., 520; U.S. v. Bradly, 10 Pet.
343, 9 Law. ed., 448; Borland v. Prindle, 144 Fed 713; Western
Union Tel. Co. v. Kansas Pac. R. Co., 4 Fed., 284; Northern Pac.
R. Co. v. U.S., 15 Ct. Cl., 428.)
Addressing ourselves now to the contract entered into by the
parties, set out in Exhibit 1, we stated that the principal contract is
that of loan and the accessory that of mortgage of the
improvements upon the land acquired as a homestead. There is no
question that the first of these contract is valid as it is not against
the law. The second, or the mortgage of the improvements, is
expressly authorized by section 116 of Act No. 2874, as amended
by section 23 of Act No. 3517, reading:
SEC. 116. Except in favor of the Government or any of its
branches, units or institutions, or legally constituted banking
corporations, lands acquired under the free patent or homestead
provisions shall not be subject to encumbrance or alienation from
the date of the approval of the application and for a term of five
years from and after the date of issuance of the patent or grant, nor
shall they become liable to the satisfaction of any debt contracted
prior to the expiration of said period; but the improvements or
crops on the land may be mortgaged or pledged to qualified
persons, associations, or corporations.
It will be recalled that by clause VIII of Exhibit 1 the parties
agreed that should Emiliana Ambrosio fail to redeem the mortgage
within the stipulated period of four and a half years, by paying the
loan together with interest, she would execute in favor of the
petitioner an absolute deed of sale of the land for P1,000,
including the interest stipulated and owing. The stipulation was
verbally modified by the same parties after the expiration of one
year, in the sense that the petitioner would take possession of the
land and would benefit by the fruits thereof on condition that he
would condone the payment of interest upon the loan and he
would attend to the payment of the land tax. These pacts made by
the parties independently were calculated to alter the mortgage a
contract clearly entered into, converting the latter into a contract of
antichresis. (Article 1881 of the Civil Code.) The contract of
antichresis, being a real encumbrance burdening the land, is illegal
and void because it is legal and valid.
The foregoing considerations bring us to the conclusion that the
first assignment of error is well-founded and that error was
committed in holding that the contract entered into between the
parties was one of absolute sale of the land and its improvements
and that Exhibit 1 is null and void. In the second assignment of
error the petitioner contends that the Court of Appeals erred in
holding that he is guilty of violating the Public Land Act because
15
he entered into the contract, Exhibit 1. The assigned error is vague
and not specific. If it attempts to show that the said document is
valid in its entirety, it is not well-founded because we have already
said that certain pacts thereof are illegal because they are
prohibited by section 116 of Act No. 2874, as amended.
In the third assignment of error the petitioner insists that his
testimony, as to the verbal agreement entered into between him
and Emiliana Ambrosio, should have been accepted by the Court
of Appeals; and in the fourth and last assignment of error the same
petitioner contends that the Court of Appeals erred in holding that
he acted in bad faith in taking possession of the land and in taking
advantage of the fruits thereof, resulting in the denial of his right
to be reimbursed for the value of the improvements introduced by
him.
We have seen that subsequent to the execution of the contract,
Exhibit 1, the parties entered into another verbal contract whereby
the petitioner was authorized to take possession of the land, to
receive the fruits thereof and to introduce improvements thereon,
provided that he would renounce the payment of stipulated interest
and he would assume payment of the land tax. The possession by
the petitioner and his receipt of the fruits of the land, considered as
integral elements of the contract of antichresis, are illegal and void
agreements because, as already stated, the contract of antichresis is
a lien and such is expressly prohibited by section 116 of Act No.
2874, as amended. The Court of Appeals held that the petitioner
acted in bad faith in taking possession of the land because he knew
that the contract he made with Emiliana Ambrosio was an absolute
deed of sale and, further, that the latter could not sell the land
because it is prohibited by section 116. The Civil Code does not
expressly define what is meant by bad faith, but section 433
provides that "Every person who is unaware of any flaw in his
title, or in the manner of its acquisition, by which it is invalidated,
shall be deemed a possessor in good faith"; and provides further,
that "Possessors aware of such flaw are deemed possessors in bad
faith". Article 1950 of the same Code, covered by Chapter II
relative to prescription of ownership and other real rights,
provides, in turn, that "Good faith on the part of the possessor
consists in his belief that the person from whom he received the
thing was the owner of the same, and could transmit the title
thereto." We do not have before us a case of prescription of
ownership, hence, the last article is not squarely in point. In
resume, it may be stated that a person is deemed a possessor in bad
faith when he knows that there is a flaw in his title or in the
manner of its acquisition, by which it is invalidated.
Borrowing the language of Article 433, the question to be
answered is whether the petitioner should be deemed a possessor
in good faith because he was unaware of any flaw in his title or in
the manner of its acquisition by which it is invalidated. It will be
noted that ignorance of the flaw is the keynote of the rule. From
the facts found established by the Court of Appeals we can neither
deduce nor presume that the petitioner was aware of a flaw in his
title or in the manner of its acquisition, aside from the prohibition
contained in section 116. This being the case, the question is
whether good faith may be premised upon ignorance of the laws.
Manresa, commenting on article 434 in connection with the
preceding article, sustains the affirmative. He says:
"We do not believe that in real life there are not many cases of
good faith founded upon an error of law. When the acquisition
appears in a public document, the capacity of the parties has
already been passed upon by competent authority, and even
established by appeals taken from final judgments and
administrative remedies against the qualification of registrars, and
the possibility of error is remote under such circumstances; but,
unfortunately, private documents and even verbal agreements far
exceed public documents in number, and while no one should be
ignorant of the law, the truth is that even we who are called upon
to know and apply it fall into error not infrequently. However, a
clear, manifest, and truly unexcusable ignorance is one thing, to
which undoubtedly refers article 2, and another and different thing
is possible and excusable error arising from complex legal
principles and from the interpretation of conflicting doctrines.
But even ignorance of the law may be based upon an error of fact,
or better still, ignorance of a fact is possible as to the capacity to
transmit and as to the intervention of certain persons, compliance
with certain formalities and appreciation of certain acts, and an
error of law is possible in the interpretation of doubtful doctrines.
(Manresa, Commentaries on the Spanish Civil Code. Volume IV,
pp. 100, 101 and 102.)
According to this author, gross and inexcusable ignorance of law
may not be the basis of good faith, but possible, excusable
ignorance may be such basis. It is a fact that the petitioner is not
conversant with the laws because he is not a lawyer. In accepting
the mortgage of the improvements he proceeded on the well-
grounded belief that he was not violating the prohibition regarding
the alienation of the land. In taking possession thereof and in
consenting to receive its fruits, he did not know, as clearly as a
jurist does, that the possession and enjoyment of the fruits are
attributes of the contract of antichresis and that the latter, as a lien,
was prohibited by section 116. These considerations again bring us
to the conclusion that, as to the petitioner, his ignorance of the
provisions of section 116 is excusable and may, therefore, be the
basis of his good faith. We do not give much importance to the
change of the tax declaration, which consisted in making the
petitioner appear as the owner of the land, because such an act may
only be considered as a sequel to the change of possession and
enjoyment of the fruits by the petitioner, to about which we have
stated that the petitioner's ignorance of the law is possible and
excusable. We, therefore, hold that the petitioner acted in good
faith in taking possession of the land and enjoying its fruits.
The petitioner being a possessor in good faith within the meaning
of article 433 of the Civil Code and having introduced the
improvements upon the land as such, the provisions of article 361
of the same Code are applicable; wherefore, the respondents are
entitled to have the improvements and plants upon indemnifying
the petitioner the value thereof which we fix at P3,000, as
appraised by the trial court; or the respondents may elect to
compel the petitioner to have the land by paying its market value
to be fixed by the court of origin.
The respondents also prayed in their complaint that the petitioner
be compelled to pay them the sum of P650, being the approximate
value of the fruits obtained by the petitioner from the land. The
Court of Appeals affirmed the judgment of the trial court denying
the claim or indemnity for damages, being of the same opinion as
the trial court that the respondents may elect to compel the
petitioner to have the land. The Court of Appeals affirmed the
judgment of the trial court that the respondents have not
16
established such damages. Under the verbal contract between the
petitioner and the deceased Emiliana Ambrosio, during the latter's
lifetime, the former would take possession of the land and would
receive the fruits of the mortgaged improvements on condition that
he would no longer collect the stipulated interest and that he would
attend to the payment of the land tax. This agreement, at bottom, is
tantamount to the stipulation that the petitioner should apply the
value of the fruits of the land to the payment of stipulated interest
on the loan of P1,000 which is, in turn, another of the elements
characterizing the contract of antichresis under article 1881 of the
Civil Code. It was not possible for the parties to stipulate further
that the value of the fruits be also applied to the payment of the
capital, because the truth was that nothing remained after paying
the interest at 12% per annum. This interest, at the rate fixed,
amounted to P120 per annum, whereas the market value of the
fruits obtainable from the land hardly reached said amount in view
of the fact that the assessed value of said improvements was,
according to the decision, P860. To this should be added the fact
that, under the verbal agreement, from the value of the fruits had to
be taken a certain amount to pay the annual land tax. We mention
these data here to show that the petitioner is also not bound to
render an accounting of the value of the fruits of the mortgaged
improvements for the reason stated that said value hardly covers
the interest earned by the secured indebtednes.
For all the foregoing considerations, the appealed decision is
reversed, and we hereby adjudge: (1) that the contract of mortgage
of the improvements, set out in Exhibit 1, is valid and binding; (2)
that the contract of antichresis agreed upon verbally by the parties
is a real incumbrance which burdens the land and, as such, is a null
and without effect; (3) that the petitioner is a possessor in good
faith; (4) that the respondents may elect to have the improvements
introduced by the petitioner by paying the latter the value thereof,
P3,000, or to compel the petitioner to buy and have the land where
the improvements or plants are found, by paying them its market
value to be filed by the court of origin, upon hearing the parties;
(5) that the respondents have a right to the possession of the land
and to enjoy the mortgaged improvements; and (6) that the
respondents may redeem the mortgage of the improvements by
paying to the petitioner within three months the amount of P1,000,
without interest, as that stipulated is set off by the value of the
fruits of the mortgaged improvements which petitioner received,
and in default thereof the petitioner may ask for the public sale of
said improvements for the purpose of applying the proceeds
thereof to the payment of his said credit. Without special
pronouncement as to the costs in all instances. So ordered.

17