Republic of the Philippines

SUPREME COURT
Manila

SECOND DIVISION

G.R. No. L-69002 June 30, 1988

REPUBLIC OF THE PHILIPPINES, petitioner,

vs.
AMANDA LAT VDA. DE CASTILLO, FLORENCIO T. CASTILLO, SOLEDAD LOTA CASTILLO,
CARLOS L. CASTILLO, NIEVES KATIGBAK CASTILLO, MARIANO L. CASTILLO, HIPOLITA
DYTIAPCO CASTILLO, AIDA CASTILLO HERRERA, HERMITO HERRERA, JOSE L. CASTILLO,
LILIA MACEDA CASTILLO, TERESITA L. CASTILLO, REGISTER OF DEEDS OF BATANGAS
and THE INTERMEDIATE APPELLATE COURT, respondents.

Castro, Nardo, Quintanilla, Gonzales & Macatangay Law Office for respondents.

PARAS, J.:

This is a petition for review on certiorari of the April 26, 1984 Decision of the then Intermediate Appellate Court * reversing the February 6,
1976 Decision of the then Court of First Instance of Batangas, Branch VI, in Civil Case No. 2044.

The antecedental facts of this case, as found by the then Intermediate Appellate Court, are as
follows:

Sometime in 1951, the late Modesto Castillo applied for the registration of two
parcels of land, Lots 1 and 2, located in Banadero, Tanauan, Batangas, described in
Plan Psu-119166, with a total area of 39,755 square meters. In a decision dated
August 31, 1951, the said Modesto Castillo, married to Amanda Lat, was declared
the true and absolute owner of the land with the improvements thereon, for which
Original Certificate of Title No. 0-665 was, issued to him by the Register of Deeds at
Batangas, Batangas, on February 7, 1952. By virtue of an instrument dated March
18, 1960, the said Lots 1 and 2 covered by Original Certificate of Title No. 0-665,
together with Lot No. 12374 covered by Transfer Certificate of Title No. 3254-A and
Lot No. 12377 covered by Transfer Certificate of Title No. 3251-A, were consolidated
and sub-divided into Lots 1 to 9 under Pcs-1046. After the death of Modesto Castillo,
or on August 31, 1960, Amanda Lat Vda. de Castillo, et al., executed a deed of
partition and assumption of mortgage in favor of Florencio L. Castillo, et al., as a
result of which Original Certificate of Title No. D-665 was cancelled, and in lieu
thereof, new transfer cerfificates of title were issued to Florencio Castillo, et al., to
wit: Transfer Certificate of Title No. 21703 (Lot 4) (and) Transfer Certificate of Title
No. 21704 to Florencio Castillo (Lot 5); Transfer Certificate of Title No. T-21708 to
Carlos L. Castillo (Lot 7); Transfer Certificate of Title No. T-21712 to Mariano L.
Castillo (Lot 6); Transfer Certificate of Title No. T-21713 to Jose L. Castillo (Lot 9);
Transfer Certificate of Title No. T-21718 to Aida C. Herrera (Lot 2); and Transfer
Certificate of Title No. T-21727 to Teresita L. Castillo (Lot 8).

The Republic of the Philippines filed Civil Case No. 2044 with the lower court for the
annulment of the certificates of title issued to defendants Amanda Lat Vda. de
 Castillo, et al., as heirs/successors of Modesto Castillo, and for the reversion of the
lands covered thereby (Lots 1 and 2, Psu-119166) to the State. It was alleged that
said lands had always formed part of the Taal Lake, washed and inundated by the
waters thereof, and being of public ownership, it could not be the subject of
registration as private property. Appellants herein, defendants below, alleged in their
answer that the Government's action was already barred by the decision of the
registration court; that the action has prescribed; and that the government was
estopped from questioning the ownership and possession of appellants.

After trial, the then Court of First Instance of Batangas, Branch VI, presided over by Honorable
Benjamin Relova, in a Decision dated February 6, 1976 (Record on Appeal, pp. 62-69), ruled in
favor of herein petitioner Republic of the Philippines. The decretal portion of the said decision, reads:

WHEREFORE, the Register of Deeds of Batangas is hereby ordered to cancel

Original Certificate of Title No. 0-665 in the name of Modesto Castillo and the
subsequent Transfer of Certificates of Title issued over the property in the names of
the defendants. Lots Nos. 1 and 2 of Plan Psu-19166 are hereby declared public
lands belonging to the state. Without pronouncement as to costs.

The Court of Appeals, on appeal, in a Decision promulgated on April 26,1984, reversed and set
aside the appealed decision, and dismissed the complaint (Record, pp. 31-41). Herein petitioner filed
a Motion for Reconsideration (Record, pp. 42-51), but the same was denied in a Resolution
promulgated on October 12,1984 (Record, p. 52). Hence, the instant petition.

The sole issue raised in this case is whether or not the decision of the Land Registration Court
involving shore lands constitutes res adjudicata.

There is no question that one of the requisites of res judicata is that the court rendering the final
judgment must have jurisdiction over the subject matter (Ramos v. Pablo, 146 SCRA 24 [1986]; that
shores are properties of the public domain intended for public use (Article 420, Civil Code) and,
therefore, not registrable. Thus, it has long been settled that portions of the foreshore or of the
territorial waters and beaches cannot be registered. Their inclusion in a certificate of title does not
convert the same into properties of private ownership or confer title upon the registrant (Republic v.
Ayala y Cia, 14 SCRA, 259 [1965], citing the cases of Dizon, et al. v. Bayona, et al., 98 Phil. 943;
and Dizon, et al. v. Rodriguez, et al., 13 SCRA 704).

But an important bone of contention is the nature of the lands involved in this case.

Petitioner contends "that "Lots 1 and 2, PSU-119166 had always formed part of the Taal Lake,
washed and inundated by the waters thereof. Consequently, the same were not subject to
registration, being outside the commerce of men; and that since the lots in litigation are of public
domain (Art. 502), par. 4 Civil Code) the registration court (of 1951) did not have jurisdiction to
adjudicate said lands as private property, hence, res judicata does not apply. (Rollo, pp. 37-38).

The Government presented both oral and documentary evidence.

As summarized by the Intermediate Appelate Court (now Court of Appeals), the testimonies of the
witnesses for the petitioner are as follows:

1. Rosendo Arcenas, a Geodetic Engineer connected with the Bureau of Lands since
1961, testified to the effect that Lots 1 and 2, Psu-119166, which are the lots in
question, adjoin the cadastral survey of Tanauan, Batangas (Cad. 168); that the
original boundary of the original cadastral survey was foreshore land as indicated on
the plan; that the cadastral survey of Tanauan was executed sometime in 1923; that
the first survey executed of the land after 1923 was the one executed in 1948 under
Plan Psu-119166 that in the relocation survey of the disputed lots in 1962 under
SWO-40601, said lots were annotated on the plan as claimed by the Republic of the
Philippines in the same manner that it was so annotated in Plan Psu-119166; thus
showing that the Government was the only claimant of the land during the survey in
1948; that during the relocation survey made in 1962, old points cannot be Identified
or located because they were under water by about forty centimeters; that during the
ocular inspection of the premises on November 23, 1970, he found that 2
monuments of the lots in question were washed out by the waters of the Baloyboy
Creek; that he also found duck pens along the lots in question; that there are houses
in the premises as well as some camotes and bananas; and that he found also some
shells ('suso') along the banks of the Taal lake (Tsn, Nov. 16, 1970, pp. 13-21; Feb.
16, 1971, pp. 4-36).

2. Braulio Almendral testified to the effect that he is a resident of Tanauan, Batangas,

near the Taal lake; that like himself there are other occupants of the land among
whom are Atanacio Tironas, Gavino Mendoza, Juliano Tirones, Agapito Llarena, etc.;
that it was they who filled up the area to make it habitable; that they filled up the area
with shells and sand; that their occupation is duck raising; and that the Castillos
never stayed in or occupied the premises (Tsn, Nov. 16, 1970, pp. 32-50).

3. Arsenio Ibay, a Geodetic Engineer connected with the Bureau of Lands since
1968, also testified to the effect that in accordance with the cadastral plan of
Tanauan, the only private claim of Sixto Castillo referred to Lots 1006 to 1008; that
the Castillos never asserted any private claim to the lots in question during the
cadastral survey;' that in the preparation of plan Psu-119166, Lots 12374 and 12377
were made as reference to conform to previously approved plans; that lot 12374 is a
portion of cadastral lot 10107, SWO-86738 while Lot 22377 is a portion of Lot 10108
of the same plan (Tsn, Nov. 25, 1970, pp. 115-137).

4. Jose Isidro, a Land Investigator of the Bureau of Lands, testified to the effect that
pursuant to the order of the Director of Lands, he, together with Engineer Rufino
Santiago and the barrio captain of Tanauan, Batangas, conducted an investigation of
the land in question; that he submitted a report of investigation, dated October 19,
1970 (Exh. H-1); that portions of the lot in question were covered by public land
applications filed by the occupants thereof; that Engineer Santiago also submitted a
report (Exh. H-8); that he had notified Dr. Mariano Castillo before conducting the
investigation (Tsn, Nov. 25,1970, pp. 137-162).

5. Rufino Santiago, another Geodetic Engineer connected with the Bureau of Lands,
testified to the effect that on October 19,1970, he submitted a report of investigation
regarding the land in question; that he noted on the plan Exhibit H-9 the areas on
which the houses of Severo Alcantara and others were built; that he found that the
land was planted to coconuts which are about 15 years old; that the land is likewise
improved with rice paddies; that the occupants thereof are duck raisers; that the area
had been elevated because of the waste matters and duck feeds that have
accumulated on the ground through the years (Tsn, Nov. 26,1970, pp. 163-196).
 6. Pablo Tapia, Barrio Captain of Tanauan, Batangas, since 1957, testified to the
effect that the actual occupants of Lots I and 2 are Atanacio Tirones,tc.; that during
the war the water line reached up to a point marked Exhibit A-9 and at present the
water has receded to a point up to Exhibit A-12; that the reasons why the waters of
Taal lake have receded to the present level is because of the fillings made by the
people living in Lots 1 and 2; that there are several duck pens all over the place; that
the composition of the soil is a mixture of mud and duck feeds; that improvements
consist of bananas, bamboos and palay; that the shoreline is not even in shape
because of the Baloyboy Creek; that the people in the area never came to know
about the registration case in which the lots in question were registered; that the
people living in the area, even without any government aid, helped one another in the
construction of irrigated rice paddies; that he helped them file their public land
applications for the portions occupied by them; that the Castillos have never been in
possession of the premises; that the people depend upon duck raising as their
means of their livelihood; that Lots 1 and 2 were yet inexistent during the Japanese
occupation; and that the people started improving the area only during liberation and
began to build their houses thereon. (Tsn, Nov. 26,1970, pp. 197-234).

Among the exhibits formally offered by the Government are: the Original Plan of Tanauan, Batangas,
particularly the Banader Estate, the Original Plan of PSU-119166, Relocation Verification Survey
Plan, maps, and reports of Geodetic Engineers, all showing the original shoreline of the disputed
areas and the fact that the properties in question were under water at the time and are still under
water especially during the rainy season (Hearing, March 17,1971, TSN, pp. 46-47).

On the other hand, private respondents maintain that Lots 1 and 2 have always been in the
possession of the Castillo family for more than 76 years and that their possession was public,
peaceful, continuous, and adverse against the whole world and that said lots were not titled during
the cadastral survey of Tanauan, because they were still under water as a result of the eruption of
Taal Volcano on May 5, 1911 and that the inundation of the land in question by the waters of Taal
Lake was merely accidental and does not affect private respondents' ownership and possession
thereof pursuant to Article 778 of the Law of Waters. They finally insisted that this issue of facts had
been squarely raised at the hearing of the land registration case and, therefore, res judicata (Record
on Appeal, pp. 63-64). They submitted oral and documentary evidence in support of their claim.

Also summarized by respondent Appellate Court, the testimonies of the witnesses of private
respondents are as follows:

1. Silvano Reano, testified to the effect that he was the overseer of the property of
the late Modesto Castillo located at Banadero,Tanauan, Batangas since 1944 to
1965; that he also knows Lots 1 and 2, the parcels of land in question, since he was
managing said property; that the occupants of said Lots 1 and 2 were engaged in
duck raising; that those occupants were paying the Castillos certain amount of
money because their animals used to get inside the lots in question; that he was
present during the survey of the land in 1948; and that aside from the duck pens
which are built in the premises, the land is planted to rice (Tsn, April 14, 1971, pp.
62-88).

2. Dr. Mariano Castillo, testified to the effect that the late Modesto Castillo was a
government official who held high positions in the Government; and that upon his
death the land was subdivided among his legal heirs. (Appellee's Brief, pp. 4-9).
As above-stated, the trial court decided the case in favor of the government but the decision was
reversed on appeal by the Court of Appeals.

A careful study of the merits of their varied contentions readily shows that the evidence for the
government has far outweighed the evidence for the private respondents. Otherwise stated, it has
been satisfactorily established as found by the trial court, that the properties in question were the
shorelands of Taal Lake during the cadastral survey of 1923.

Explaining the first survey of 1923, which showed that Lots 1 and 2 are parts of the Taal Lake,
Engineer Rosendo Arcenas testified as follows:

ATTY. AGCAOILI:

Q Now, you mentioned Engineer that a subject matter of that plan

which appears to be Lots 1 and 2 are adjoining cadastral lots of the
Tanauan Cadastre, now, will you please state to the Court what is the
basis of that statement of yours?

A The basis of that statement is the plan itself, because there is here
an annotation that the boundary on the northeastern side is Tanauan
Cadastre 168 which indicates that the boundary of the original
cadastral survey of Tanauan Cadastre way back in the year 1923
adjoins a foreshore land which is also indicated in this plan as
foreshore lands of Taal lake, sir.

xxx xxx xxx

Q Now, on this plan Exhibit "A-2", there are two lots indicated namely,
Lots 12374 and 12377, what do these lots represent?

A This is the cadastral lot executed in favor of a certain Modesto

Castillo that corresponds to Lots 12374 and another Lot 12377, sir.

Q At the time this survey plan Psu-119166 and marked as Exhibit "A-
2" was executed in 1948, were these lots 1 and 2 already in
existence as part of the cadastral survey?

A No, sir, because there is already a foreshore boundary.

Q Do I understand from you Mr. Witness at the time of the survey of

this land these two lots form part of this portion?

A Yes, sir.

Q When again was the cadastral survey of Tanauan, Batangas,

executed if you know?

A In the year 1923, sir. (Hearing of Nov. 16, 1970, TSN pp. 15-17).

Such fact was further verified in the Verification-Relocation Survey of 1948 by Engineer Arcenas
who conducted said survey himself and reported the following:
 That as per original plan Psu-119166, it appears that Lot 1 and Lot 2, Psu-119166
surveyed and approved in the name of Modesto Castillo is a portion of Taal Lake and
as such it appears to be under water during the survey of cadastral Lot No. 12374
and Lot No. 12377, which was surveyed and approved in the name of Modesto
Castillo under Cad. 168. To support this theory is the annotation appearing and
printed along lines 2-3-4-5 of Lot 1, Psu-119166 and along lines 4-5-6 of Lot 2, Psu-
119166 which notations clearly indicates that such boundary of property was a
former shorelines of Taal Lake, in other words, it was the extent of cultivation being
the shorelines and the rest of the area going to the southwestern direction are
already covered by water level.

Another theory to bolster and support this Idea is the actual location now in the
verification-relocation survey of a known geographic point were Barrio Boundary
Monument (BBM N. 22) is under water level quite for sometimes as evidence by
earthworks (collection of mud) that amount over its surface by eighty (80)
centimeters below the ground, see notation appearing on verification-relocation plan
previously submitted. (Re-Verification-Relocation Survey Exhibits, pp. 64-65).

Said surveys were further confirmed by the testimonies of witnesses to the effect that from 1950 to
1969, during rainy season, the water of Taal lake even went beyond the questioned lots; and that the
water, which was about one (1) foot, stayed up to more or less two (2) to three (3) months
(Testimonies of Braulio Almendral and Anastacio Tirones both residents of Banadero, Tanauan,
Batangas (Hearing of Nov. 16, 1970, TSN, pp. 41-42 and Hearing of Nov. 23, 1970, TSN, pp. 93, 98-
99, respectively). In the Relocation Survey of 1962, there were no definite boundary or area of Lots 1
and 2 because a certain point is existing which was under water by 40 centimeters (Testimony of
Engineer Arcena, Hearing of Nov. 16,1970, TSN, p. 20).

Lakeshore land or lands adjacent to the lake, like the lands in question must be differentiated from
foreshore land or that part of the land adjacent to the sea which is alternately covered and left dry by
the ordinary flow of the tides (Castillo, Law on Natural Resources, Fifth Edition, 1954, p. 67).

Such distinction draws importance from the fact that accretions on the bank of a lake, like Laguna de
Bay, belong to the owners of the estate to which they have been added (Gov't. v. Colegio de San
Jose, 53 Phil. 423) while accretion on a sea bank still belongs to the public domain, and is not
available for private ownership until formally declared by the government to be no longer needed for
public use (Ignacio v. Director of Lands, 108 Phil. 335 [1960]).

But said distinction will not help private respondents because there is no accretion shown to exist in
the case at bar. On the contrary, it was established that the occupants of the lots who were engaged
in duck raising filled up the area with shells and sand to make it habitable.

The defense of long possession is likewise not available in this case because, as already ruled by
this Court, mere possession of land does not by itself automatically divest the land of its public
character (Cuevas v. Pineda, 143 SCRA 674 [1968]).

PREMISES CONSIDERED, the April 26,1984 Decision of the then Intermediate Appellate Court is
hereby SET ASIDE and REVERSED and the February 6,1976 Decision of the then Court of First
Instance of Batangas is hereby AFFIRMED and REINSTATED.

SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 68166 February 12, 1997

HEIRS OF EMILIANO NAVARRO, petitioner,

vs.
INTERMEDIATE APPELLATE COURT & HEIRS OF SINFOROSO PASCUAL, respondents.

HERMOSISIMA, JR., J.:

Unique is the legal question visited upon the claim of an applicant in a Land Registration case by
oppositors thereto, the Government and a Government lessee, involving as it does ownership of
land formed by alluvium.

The applicant owns the property immediately adjoining the land sought to be registered. His
registered property is bounded on the east by the Talisay River, on the west by the Bulacan River,
and on the north by the Manila Bay. The Talisay River and the Bulacan River flow down towards the
Manila Bay and act as boundaries of the applicant's registered land on the east and on the west.

The land sought to be registered was formed at the northern tip of the applicant's land. Applicant's
registered property is bounded on the north by the Manila Bay.

The issue: May the land sought to be registered be deemed an accretion in the sense that it
naturally accrues in favor of the riparian owner or should the land be considered as foreshore land?

Before us is a petition for review of: (1) the decision   and (2) two subsequent resolutions   of the
1 2

Intermediate Appellate Court   (now the Court of Appeals) in Land Registration Case No. N-84,   the
3 4

application over which was filed by private respondents' predecessor-in-interest, Sinforoso Pascual,
now deceased, before the Court of First Instance   (now the Regional Trial Court) of Balanga,
5

Bataan.

There is no dispute as to the following facts:

On October 3, 1946, Sinforoso Pascual, now deceased, filed an application for foreshore lease
covering a tract of foreshore land in Sibocon, Balanga, Bataan, having an area of approximately
seventeen (17) hectares. This application was denied on January 15, 1953. So was his motion for
reconsideration.

Subsequently, petitioners' predecessor-in-interest, also now deceased, Emiliano Navarro, filed a

fishpond application with the Bureau of Fisheries covering twenty five (25) hectares of foreshore land
also in Sibocon, Balanga, Bataan. Initially, such application was denied by the Director of Fisheries
on the ground that the property formed part of the public domain. Upon motion for reconsideration,
the Director of Fisheries, on May 27, 1958, gave due course to his application but only to the extent
of seven (7) hectares of the property as may be certified by the Bureau of Forestry as suitable for
fishpond purposes.

The Municipal Council of Balanga, Bataan, had opposed Emiliano Navarro's application. Aggrieved
by the decision of the Director of Fisheries, it appealed to the Secretary of Natural Resources who,
however, affirmed the grant. The then Executive Secretary, acting in behalf of the President of the
Philippines, similarly affirmed the grant.

On the other hand, sometime in the early part of 1960, Sinforoso Pascual flied an application to
register and confirm his title to a parcel of land, situated in Sibocon, Balanga, Bataan, described in
Plan Psu-175181 and said to have an area of 146,611 square meters. Pascual claimed that this land
is an accretion to his property, situated in Barrio Puerto Rivas, Balanga, Bataan, and covered by
Original Certificate of Title No. 6830. It is bounded on the eastern side by the Talisay River, on the
western side by the Bulacan River, and on the northern side by the Manila Bay. The Talisay River as
well as the Bulacan River flow downstream and meet at the Manila Bay thereby depositing sand and
silt on Pascual's property resulting in an accretion thereon. Sinforoso Pascual claimed the accretion
as the riparian owner.

On March 25, 1960, the Director of Lands, represented by the Assistant Solicitor General, filed an
opposition thereto stating that neither Pascual nor his predecessors-in-interest possessed sufficient
title to the subject property, the same being a portion of the public domain and, therefore, it belongs
to the Republic of the Philippines. The Director of Forestry, through the Provincial Fiscal, similarly
opposed Pascual's application for the same reason as that advanced by the Director of Lands. Later
on, however, the Director of Lands withdrew his opposition. The Director of Forestry become the
sole oppositor.

On June 2, 1960, the court a quo issued an order of general default excepting the Director of Lands
and the Director of Forestry.

Upon motion of Emiliano Navarro, however, the order of general default was lifted and, on February
13, 1961, Navarro thereupon filed an opposition to Pascual's application. Navarro claimed that the
land sought to be registered has always been part of the public domain, it being a part of the
foreshore of Manila Bay; that he was a lessee and in possession of a part of the subject property by
virtue of a fishpond permit issued by the Bureau of Fisheries and confirmed by the Office of the
President; and that be bad already converted the area covered by the lease into a fishpond.

During the pendency of the land registration case, that is, on November 6, 1960, Sinforoso Pascual
filed a complaint for ejectment against Emiliano Navarro, one Marcelo Lopez and their privies,
alleged by Pascual to have unlawfully claimed and possessed, through stealth, force and strategy, a
portion of the subject property covered by Plan Psu-175181. The defendants in the case were
alleged to have built a provisional dike thereon: thus they have thereby deprived Pascual of the
premises sought to be registered. This, notwithstanding repeated demands for defendants to vacate
the property.

The case was decided adversely against Pascual. Thus, Pascual appealed to the Court of First
Instance (now Regional Trial Court) of Balanga, Bataan, the appeal having been docketed as Civil
Case No. 2873. Because of the similarity of the parties and the subject matter, the appealed case for
ejectment was consolidated with the land registration case and was jointly tried by the court a quo.
During the pendency of the trial of the consolidated cases, Emiliano Navarro died on November 1,
1961 and was substituted by his heirs, the herein petitioners.

Subsequently, on August 26, 1962, Pascual died and was substituted by his heirs, the herein private
respondents.

On November 10, 1975, the court a quo rendered judgment finding the subject property to be
foreshore land and, being a part of the public domain, it cannot be the subject of land registration
proceedings.

The decision's dispositive portion reads:

WHEREFORE, judgment is rendered:

(1) Dismissing plaintiff [private respondent] Sinforoso Pascual's complaint for

ejectment in Civil Case No. 2873;

(2) Denying the application of Sinforoso Pascual for land registration over the land in
question; and

(3) Directing said Sinforoso Pascual, through his heirs, as plaintiff in Civil Case No.
2873 and as applicant in Land Registration Case No. N-84 to pay costs in both
instances." 6

The heirs of Pascual appealed and, before the respondent appellate court, assisted the following
errors:

1. The lower court erred in not finding the land in question as an accretion by the
action of the Talisay and Bulacan Rivers to the land admittedly owned by applicants-
appellants [private respondents].

2. The lower court erred in holding that the land in question is foreshore land.

3. The lower court erred in not ordering the registration of the land in controversy in
favor of applicants-appellants [private respondents].

4. The lower court erred in not finding that the applicants-appellants [private
respondents] are entitled to eject the oppositor-appellee [petitioners]. 7

On appeal, the respondent court reversed the findings of the court a quo and granted the petition for
registration of the subject property but excluding therefrom fifty (50) meters from corner 2 towards
corner 1; and fifty meters (50) meters from corner 5 towards corner 6 of the Psu-175181.

The respondent appellate court explained the reversal in this wise:

The paramount issue to be resolved in this appeal as set forth by the parties in their
respective briefs is — whether or not the land sought to be registered is accretion or
foreshore land, or, whether or not said land was formed by the action of the two
rivers of Talisay and Bulacan or by the action of the Manila Bay. If formed by the
action of the Talisay and Bulacan rivers, the subject land is accretion but if formed by
the action of the Manila Bay then it is foreshore land.
 xxx xxx xxx

It is undisputed that applicants-appellants [private respondents] owned the land

immediately adjoining the land sought to be registered. Their property which is
covered by OCT No. 6830 is bounded on the east by the Talisay River, on the west
by the Bulacan River, and on the north by the Manila Bay. The Talisay and Bulacan
rivers come from inland flowing downstream towards the Manila Bay. In other words,
between the Talisay River and the Bulacan River is the property of applicants with
both rivers acting as the boundary to said land and the flow of both rivers meeting
and emptying into the Manila Bay. The subject land was formed at the tip or apex of
appellants' [private respondents'] land adding thereto the land now sought to be
registered.

This makes this case quite unique because while it is undisputed that the subject
land is immediately attached to appellants' [private respondents'] land and forms the
tip thereof, at the same time, said land immediately faces the Manila Bay which is
part of the sea. We can understand therefore the confusion this case might have
caused the lower court, faced as it was with the uneasy problem of deciding whether
or not the subject land was formed by the action of the two rivers or by the action of
the sea. Since the subject land is found at the shore of the Manila Bay facing
appellants' [private respondents'] land, it would be quite easy to conclude that it is
foreshore and therefore part of the patrimonial property of the State as the lower
court did in fact rule . . . .

xxx xxx xxx

It is however undisputed that appellants' [private respondents'] land lies between

these two rivers and it is precisely appellants' [private respondents'] land which acts
as a barricade preventing these two rivers to meet. Thus, since the flow of the two
rivers is downwards to the Manila Bay the sediments of sand and silt are deposited
at their mouths.

It is, therefore, difficult to see how the Manila Bay could have been the cause of the
deposit thereat for in the natural course of things, the waves of the sea eat the land
on the shore, as they suge [sic] inland. It would not therefore add anything to the land
but instead subtract from it due to the action of the waves and the wind. It is then
more logical to believe that the two rivers flowing towards the bay emptied their cargo
of sand, silt and clay at their mouths, thus causing appellants' [private respondents']
land to accumulate therein.

However, our distinguished colleage [sic], Mr. Justice Serrano, do [sic] not seem to
accept this theory and stated that the subject land arose only when . . . . Pascual
planted "palapat" and "bakawan" trees thereat to serve as a boundary or strainer. But
we do not see how this act of planting trees by Pascual would explain how the land
mass came into being. Much less will it prove that the same came from the sea.
Following Mr. Justice Serrano's argument that it were the few trees that acted as
strainers or blocks, then the land that grew would have stopped at the place where
the said trees were planted. But this is not so because the land mass went far
beyond the boundary, or where the trees were planted.

On the other hand, the picture-exhibits of appellants [private respondents] clearly

show that the land that accumulated beyond the so- called boundary, as well as the
 entire area being applied for is dry land, above sea level, and bearing innumerable
trees . . . The existence of vegetation on the land could only confirm that the soil
thereat came from inland rather than from the sea, for what could the sea bring to the
shore but sand, pebbles, stones, rocks and corrals? On the other hand, the two
rivers would be bringing soil on their downward flow which they brought along from
the eroded mountains, the lands along their path, and dumped them all on the
northern portion of appellants' [private respondents'] land.

In view of the foregoing, we have to deviate from the lower court's finding. While it is
true that the subject land is found at the shore of the Manila Bay fronting appellants'
[private respondents'] land, said land is not foreshore but an accretion from the
action of the Talisay and Bulacan rivers. In fact, this is exactly what the Bureau of
Lands found out, as shown in the following report of the Acting Provincial Officer,
Jesus M. Orozco, to wit:

"Upon ocular inspection of the land subject of this registration made

on June 11, 1960, it was found out that the said land is . . . .
sandwitched [sic] by two big rivers . . . . These two rivers bring down
considerable amount of soil and sediments during floods every year
thus raising the soil of the land adjoining the private property of the
applicant [private respondents]. About four-fifth [sic] of the area
applied for is now dry land whereon are planted palapat trees thickly
growing thereon. It is the natural action of these two rivers that has
caused the formation of said land . . . . subject of this registration
case. It has been formed, therefore, by accretion. And having been
formed by accretion, the said land may be considered the private
property of the riparian owner who is the applicant herein [private
respondents] . . . .

In view of the above, the opposition hereto filed by the government

should be withdrawn, except for the portion recommended by the
land investigator in his report dated May 2, 1960, to be excluded and
considered foreshore. . . ."

Because of this report, no less than the Solicitor General representing the Bureau of
Lands withdrew his opposition dated March 25, 1960, and limited "the same to the
northern portion of the land applied for, compromising a strip 50 meters wide along
the Manila Bay, which should be declared public land as part of the foreshore" . . . .  8

Pursuant to the aforecited decision, the respondent appellate court ordered the issuance of
the corresponding decree of registration in the name of private respondents and the
reversion to private respondents of the possession of the portion of the subject property
included in Navarro's fishpond permit.

On December 20, 1978, petitioners filed a motion for reconsideration of the aforecited decision. The
Director of Forestry also moved for the reconsideration of the same decision. Both motions were
opposed by private respondents on January 27, 1979.

On November 21, 1980, respondent appellate court promulgated a resolution denying the motion for
reconsideration filed by the Director of Forestry. It, however, modified its decision, to read, viz:
 (3). Ordering private oppositors Heirs of Emiliano Navarro to vacate that portion
included in their fishpond permit covered by Plan Psu-175181 and hand over
possession of said portion to applicants-appellants, if the said portion is not within the
strip of land fifty (50) meters wide along Manila Bay on the northern portion of the
land subject of the registration proceedings and which area is more particularly
referred to as fifty (50) meters from corner 2 towards corner 1; and fifty (50) meters
from corner 5 towards corner 6 of Plan Psu-175181. . . .  9

On December 15, 1980, we granted the Solicitor General, acting as counsel for the Director of
Forestry, an extension of time within which to file in this court, a petition for review of the decision
dated November 29, 1978 of the respondent appellate court and of the aforecited resolution dated
November 21, 1980.

Thereafter, the Solicitor General, in behalf of the Director of Forestry, filed a petition for review
entitled, "The Director of Forestry vs. the Court of Appeals."   We, however, denied the same in a
10

minute resolution dated July 20, 1981, such petition having been prematurely filed at a time when
the Court of Appeals was yet to resolve petitioners' pending motion to set aside the resolution dated
November 21, 1980.

On October 9, 1981, respondent appellate court denied petitioners' motion for reconsideration of the
decision dated November 29, 1978.

On October 17, 1981, respondent appellate court made an entry of judgment stating that the
decision dated November 29, 1978 had become final and executory as against herein petitioners as
oppositors in L.R.C. Case No. N-84 and Civil Case No. 2873 of the Court of First Instance (now the
Regional Trial Court) of Balanga, Bataan.

On October 26, 1981, a second motion for reconsideration of the decision dated November 29, 1978
was filed by petitioners' new counsel.

On March 26, 1982, respondent appellate court issued a resolution granting petitioners' request for
leave to file a second motion for reconsideration.

On July 13, 1984, after hearing, respondent appellate court denied petitioners' second motion for
reconsideration on the ground that the same was filed out of time, citing Rule 52, Section 1 of the
Rules of Court which provides that a motion for reconsideration shall be made ex-parte and filed
within fifteen (15) days from the notice of the final order or judgment.

Hence this petition where the respondent appellate court is imputed to have palpably erred in
appreciating the fact of the case and to have gravely misapplied statutory and case law relating to
accretion, specifically, Article 457 of the Civil Code.

We find no merit in the petition.

The disputed property was brought forth by both the withdrawal of the waters of Manila Bay
and the accretion formed on the exposed foreshore land by the action of the sea which
brought soil and sand sediments in turn trapped by the palapat and bakawan trees planted
thereon by petitioner Sulpicio Pascual in 1948

Anchoring their claim of ownership on Article 457 of the Civil Code, petitioners vigorously argue that
the disputed 14-hectare land is an accretion caused by the joint action of the Talisay and Bulacan
Rivers which run their course on the eastern and western boundaries, respectively, of petitioners'
own tract of land.

Accretion as a mode of acquiring property under said Article 457, requires the concurrence of the
following requisites: (1) that the accumulation of soil or sediment be gradual and imperceptible; (2)
that it be the result of the action of the waters of the river; and (3) that the land where the accretion
takes place is adjacent to the bank of the river.   Accretion is the process whereby the soil is
11

deposited, while alluvium is the soil deposited on the estate fronting the river bank  ; the owner of
12

such estate is called the riparian owner. Riparian owners are, strictly speaking, distinct from littoral
owners, the latter being owners of lands bordering the shore of the sea or lake or other tidal
waters.   The alluvium, by mandate of Article 457 of the Civil Code, is automatically owned by the
13

riparian owner from the moment the soil deposit can be seen   but is not automatically registered
14

property, hence, subject to acquisition through prescription by third persons  . 15

Petitioners' claim of ownership over the disputed property under the principle of accretion, is
misplaced.

First, the title of petitioners' own tract of land reveals its northeastern boundary to be Manila Bay.
Petitioners' land, therefore, used to adjoin, border or front the Manila Bay and not any of the two
rivers whose torrential action, petitioners insist, is to account for the accretion on their land. In fact,
one of the petitioners, Sulpicio Pascual, testified in open court that the waves of Manila Bay used to
hit the disputed land being part of the bay's foreshore but, after he had planted palapat and bakawan
trees thereon in 1948, the land began to
rise. 
16

Moreover, there is no dispute as to the location of: (a) the disputed land; (b) petitioners' own tract of
land; (c) the Manila Bay; and, (d) the Talisay and Bulacan Rivers. Petitioners' own land lies between
the Talisay and Bulacan Rivers; in front of their land on the northern side lies now the disputed land
where before 1948, there lay the Manila Bay. If the accretion were to be attributed to the action of
either or both of the Talisay and Bulacan Rivers, the alluvium should have been deposited on either
or both of the eastern and western boundaries of petitioners' own tract of land, not on the northern
portion thereof which is adjacent to the Manila Bay. Clearly lacking, thus, is the third requisite of
accretion, which is, that the alluvium is deposited on the portion of claimant's land which is adjacent
to the river bank.

Second, there is no dispute as to the fact that petitioners' own tract of land adjoins the Manila Bay.
Manila Bay is obviously not a river, and jurisprudence is already settled as to what kind of body of
water the Manila Bay is. It is to be remembered that we held that:

Appellant next contends that . . . . Manila Bay cannot be considered as a sea. We

find said contention untenable. A bay is part of the sea, being a mere indentatiom of
the same:

"Bay. — An opening into the land where the water is shut in on all
sides except at the entrance; an inlet of the sea; an arm of the sea,
distinct from a river, a bending or curbing of the shore of the sea or of
a lake. " 7 C.J. 1013-1014."  17

The disputed land, thus, is an accretion not on a river bank but on a sea bank, or on what used to be
the foreshore of Manila Bay which adjoined petitioners' own tract of land on the northern side. As
such, the applicable law is not Article 457 of to Civil Code but Article 4 of the Spanish Law of Waters
of 1866.
The process by which the disputed land was formed, is not difficult to discern from the facts of the
case. As the trial court correctly observed:

A perusal of the survey plan . . . . of the land subject matter of these cases shows
that on the eastern side, the property is bounded by Talisay River, on the western
side by Bulacan River, on the southern side by Lot 1436 and on the northern side by
Manila Bay. It is not correct to state that the Talisay and Bulacan Rivers meet a
certain portion because the two rivers both flow towards Manila Bay. The Talisay
River is straight while the Bulacan River is a little bit meandering and there is no
portion where the two rivers meet before they end up at Manila Bay. The land which
is adjacent to the property belonging to Pascual cannot be considered an accretion
[caused by the action of the two rivers].

Applicant Pascual . . . . has not presented proofs to convince the Court that the land
he has applied for registration is the result of the settling down on his registered land
of soil, earth or other deposits so as to be rightfully be considered as an accretion
[caused by the action of the two rivers]. Said Art. 457 finds no applicability where the
accretion must have been caused by action of the bay.  18

The conclusion formed by the trial court on the basis of the aforegoing observation is that the
disputed land is part of the foreshore of Manila Bay and therefore, part of the public domain. The
respondent appellate court, however, perceived the fact that petitioners' own land lies between the
Talisay and Bulacan Rivers, to be basis to conclude that the disputed land must be an accretion
formed by the action of the two rivers because petitioners' own land acted as a barricade preventing
the two rivers to meet and that the current of the two rivers carried sediments of sand and silt
downwards to the Manila Bay which accumulated somehow to a 14-hectare land. These
conclusions, however, are fatally incongruous in the light of the one undisputed critical fact: the
accretion was deposited, not on either the eastern or western portion of petitioners' land where a
river each runs, but on the northern portion of petitioners' land which adjoins the Manila Bay. Worse,
such conclusions are further eroded of their practical logic and consonance with natural experience
in the light of Sulpicio Pascual's admission as to having planted palapat and bakawan trees on the
northern boundary of their own land. In amplification of this, plainly more reasonable and valid are
Justice Mariano Serrano's observations in his dissenting opinion when he stated that:

As appellants' (titled) land . . . . acts as a barricade that prevents the two rivers to
meet, and considering the wide expanse of the boundary between said land and the
Manila Bay, measuring some 593.00 meters . . . . it is believed rather farfetched for
the land in question to have been formed through "sediments of sand and salt [sic] . .
. . deposited at their [rivers'] mouths." Moreover, if "since the flow of the two rivers is
downwards to the Manila Bay the sediments of sand and silt are deposited at their
mouths," why then would the alleged cargo of sand, silt and clay accumulate at the
northern portion of appellants' titled land facing Manila Bay instead of merely at the
mouths and banks of these two rivers? That being the case, the accretion formed at
said portion of appellants' titled [land] was not caused by the current of the two rivers
but by the action of the sea (Manila Bay) into which the rivers empty.

The conclusion . . . . is not supported by any reference to the evidence which, on the
contrary, shows that the disputed land was formed by the action of the sea. Thus, no
less than Sulpicio Pascual, one of the heirs of the original applicant, testified on
cross-examination that the land in dispute was part of the shore and it was only in
1948 that he noticed that the land was beginning to get higher after he had planted
 trees thereon in
1948. . . . .

. . . . it is established that before 1948 sea water from the Manila Bay at high tide
could reach as far as the dike of appellants' fishpond within their titled property,
which dike now separates this titled property from the land in question. Even in 1948
when appellants had already planted palapat and bakawan trees in the land
involved, inasmuch as these trees were yet small, the waves of the sea could still
reach the dike. This must be so because in . . . . the survey plan of the titled property
approved in 1918, said titled land was bounded on the north by Manila Bay. So
Manila Bay was adjacent to it on the north. It was only after the planting of the
aforesaid trees in 1948 that the land in question began to rise or to get higher in
elevation.

The trees planted by appellants in 1948 became a sort of strainer of the sea water
and at the same time a kind of block to the strained sediments from being carried
back to the sea by the very waves that brought them to the former shore at the end
of the dike, which must have caused the shoreline to recede and dry up eventually
raising the former shore leading to the formation of the land in question." 19

In other words, the combined and interactive effect of the planting of palapat and bakawan
trees, the withdrawal of the waters of Manila Bay eventually resulting in the drying up of its
former foreshore, and the regular torrential action of the waters of Manila Bay, is the
formation of the disputed land on the northern boundary of petitioners' own tract of land.

The disputed property is an accretion on a sea bank, Manila Bay being an inlet or an arm of
the sea; as such, the disputed property is, under Article 4 of the Spanish Law of Waters of
1866, part of the public domain

At the outset, there is a need to distinguish between Manila Bay and Laguna de Bay.

While we held in the case of Ignacio v. Director of Lands and

Valeriano   that Manila Bay is considered a sea for purposes of determining which law on accretion
20

is to be applied in multifarious situations, we have ruled differently insofar as accretions on lands

adjoining the Laguna de Bay are concerned.

In the cases of Government of the P.I v. Colegio de San Jose  , Republic v. Court of

21

Appeals  , Republic v. Alagad  , and Meneses v. Court of

22 23

Appeals  , we categorically ruled that Laguna de Bay is a lake the accretion on which, by the
24

mandate of Article 84 of the Spanish Law of Waters of 1866, belongs to the owner of the land
contiguous thereto.

The instant controversy, however, brings a situation calling for the application of Article 4 of the
Spanish Law of Waters of 1866, the disputed land being an accretion on the foreshore of Manila Bay
which is, for all legal purposes, considered a sea.

Article 4 of the Spanish Law of Waters of August 3, 1866 provides as follows:

Lands added to the shores by accretions and alluvial deposits caused by the action
of the sea, form part of the public domain. When they are no longer washed by the
waters of the sea and are not necessary for purposes of public utility, or for the
 establishment of special industries, or for the coast-guard service, the Government
shall declare them to be the property of the owners of the estates adjacent thereto
and as increment thereof.

In the light of the aforecited vintage but still valid law, unequivocal is the public nature of the disputed
land in this controversy, the same being an accretion on a sea bank which, for all legal purposes, the
foreshore of Manila Bay is. As part of the public domain, the herein disputed land is intended for
public uses, and "so long as the land in litigation belongs to the national domain and is reserved for
public uses, it is not capable of being appropriated by any private person, except through express
authorization granted in due form by a competent authority."   Only the executive and possibly the
25

legislative departments have the right and the power to make the declaration that the lands so
gained by action of the sea is no longer necessary for purposes of public utility or for the cause of
establishment of special industries or for coast guard services.   Petitioners utterly fail to show that
26

either the executive or legislative department has already declared the disputed land as qualified,
under Article 4 of the Spanish Law of Waters of 1866, to be the property of petitioners as owners of
the estates adjacent thereto.

WHEREFORE, the instant Petition for Review is hereby DENIED and DISMISSED.

Costs against petitioners.

SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 94283             March 4, 1991

MAXIMO JAGUALING, ANUNCITA JAGUALING and MISAMIS ORIENTAL CONCRETE

PRODUCTS, INC., petitioners,
vs.
COURT OF APPEALS (FIFTEENTH DIVISION), JANITA F. EDUAVE and RUDYGONDO
EDUAVE, respondents.

Cabanlas, Resma & Cabanlas Law Offices for petitioners.

Jaime Y Sindiong for private respondents.

GANCAYCO, J.:

Between the one who has actual possession of an island that forms in a non-navigable and non-
flotable river and the owner of the land along the margin nearest the island, who has the better right
thereto? This is the issue to be resolved in this petition.

The parties to this case dispute the ownership of a certain parcel of land located in Sta. Cruz,
Tagoloan, Misamis Oriental with an area of 16,452 square meters, more or less, forming part of an
island in a non-navigable river, and more particularly described by its boundaries as follows:

North — by the Tagoloan River,

South — by the Tagoloan River,
East — by the Tagoloan River and
West — by the portion belonging to Vicente Neri.

Private respondents filed with the Regional Trial Court of Misamis Oriental  an action to quiet title
1

and/or remove a cloud over the property in question against petitioners.

Respondent Court of Appeals  summarized the evidence for the parties as follows:
2

The appellant [private respondent Janita Eduave] claims that she inherited the land from his
[sic] father, Felomino Factura, together with his co-heirs, Reneiro Factura and Aldenora
Factura, and acquired sole ownership of the property by virtue of a Deed of Extra Judicial
Partition with sale (Exh. D). The land is declared for tax purposes under Tax Decl. No. 26137
(Exh. E) with an area of 16,452 square meters more or less (Exh. D). Since the death of her
father on May 5, 1949, the appellant had been in possession of the property although the tax
declaration remains in the name of the deceased father.

The appellants further state that the entire land had an area of 16,452 square meters
appearing in the deed of extrajudicial partition, while in [the] tax declaration (Exh. E) the area
is only 4,937 square meters, and she reasoned out that she included the land that was under
water. The land was eroded sometime in November 1964 due to typhoon Ineng, destroying
the bigger portion and the improvements leaving only a coconut tree. In 1966 due to the
movement of the river deposits on the land that was not eroded increased the area to almost
half a hectare and in 1970 the appellant started to plant bananas [sic].

In 1973 the defendants-appellees [petitioners herein] asked her permission to plant corn and
bananas provided that they prevent squatters to come to the area.

The appellant engaged the services of a surveyor who conducted a survey and placed
concrete monuments over the land. The appellant also paid taxes on the land in litigation,
and mortgaged the land to the Luzon Surety and Co., for a consideration of P6,000.00.

The land was the subject of a reconveyance case, in the Court of First Instance of Misamis
Oriental, Branch V, at Cagayan de Oro City, Civil Case No. 5892, between the
appellant Janita Eduave vs. Heirs of Antonio Factura which was the subject of judgment by
compromise in view of the amicable settlement of the parties, dated May 31, 1979. (Exh. R);

That the heirs of Antonio Factura, who are presently the defendants-appellees in this case
had ceded a portion of the land with an area of 1,289 square meters more or less, to the
appellant, Janita Eduave, in a notarial document of conveyance, pursuant to the decision of
the Court of First Instance, after a subdivision of the lot No. 62 Pls-799, and containing 1,289
square meters more or less was designated as Lot No. 62-A [sic], and the subdivision plan
was approved as Pls-799-Psd-10-001782. (Exh. R; R-1 and R-2);

The portion Lot No. 62-A, is described as follows:

A parcel of land (Lot No. 62-A, Psd-10-001782 being a portion of Lot 62, Pls-799,
Tagoloan Public Land Subdivision) situated in Bo. Sta. Cruz, Municipality of
Tagoloan, Province of Misamis Oriental. Bounded on the W, and on the N along lines
4-5-1 by Lot 62-B of the subdivision plan 10-001782; on the E by line 1-2 by Lot 64;
Pls-799; on the S, along line 2-3-4 by Saluksok Creek, containing an area of one
thousand two hundred eighty nine (1,289) square meters more or less.

Appellant also applied for concession with the Bureau of Mines to extract 200 cubic meters
of gravel (Exh. G & G-1); and after an ocular inspection the permit was granted (Exh. K, and
K-1 and K-2). That the appellant after permit was granted entered into an agreement with
Tagoloan Aggregates to extract sand and gravel (Exh. L; L-1; and L-2), which agreement
was registered in the office of the Register of Deeds (Exh. M; M-1; and M-2);

The defendants-appellees [petitioners herein] denied the claim of ownership of the appellant,
and asserted that they are the real owners of the land in litigation containing an area of
18,000 square meters more or less. During the typhoon Ineng in 1964 the river control was
washed away causing the formation of an island, which is now the land in litigation. The
defendants started occupying the land in 1969, paid land taxes as evidenced by tax
declaration No. 26380 (Exh. 4) and tax receipts (Exhs. 7 to 7-G), and tax clearances (Exhs. 8
& 9). Photographs showing the actual occupation of the land by the defendants including
improvements and the house were presented as evidence (Exh. 11 to 11-E). The report of
the Commissioner who conducted the ocular inspection was offered as evidence of the
defendants (Exh. G).
 The sketch plan prepared by Eng. Romeo Escalderon (Exh. 12) shows that the plaintiffs'
[private respondents'] land was across the land in litigation (Exh. 12-A), and in going to the
land of the plaintiff, one has to cross a distance of about 68 meters of the Tagoloan river to
reach the land in litigation.
3

On 17 July 1987 the trial court dismissed the complaint for failure of private respondents as plaintiffs
therein to establish by preponderance of evidence their claim of ownership over the land in litigation.
The court found that the island is a delta forming part of the river bed which the government may use
to reroute, redirect or control the course of the Tagoloan River. Accordingly, it held that it was
outside the commerce of man and part of the public domain, citing Article 420 of the Civil Code. 4

As such it cannot be registered under the land registration law or be acquired by prescription. The
trial court, however, recognized the validity of petitioners' possession and gave them preferential
rights to use and enjoy the property. The trial court added that should the State allow the island to be
the subject of private ownership, the petitioners have rights better than that of private respondents. 5

On appeal to the Court of Appeals, respondent court found that the island was formed by the
branching off of the Tagoloan River and subsequent thereto the accumulation of alluvial deposits.
Basing its ruling on Articles 463 and 465 of the Civil Code  the Court of Appeals reversed the
6

decision of the trial court, declared private respondents as the lawful and true owners of the land
subject of this case and ordered petitioners to vacate the premises and deliver possession of the
land to private respondents. 7

In the present petition, petitioners raise the following as errors of respondent court, to wit:

1. Whether [or not] respondent court correctly applied the provisions of Articles 463 and 465
of the new Civil Code to the facts of the case at bar; and

2. Whether [or not] respondent court gravely abused its discretion in the exercise of its
judicial authority in reversing the decision appealed from. 8

Petitioners point out as merely speculative the finding of respondent court that the property of private
respondents was split by the branching off or division of the river. They argue that because, as held
by the trial court, private respondents failed to prove by preponderance of evidence the identity of
their property before the same was divided by the action of the river, respondent court erred in
applying Article 463 of the Civil Code to the facts of this case.

It must be kept in mind that the sole issue decided by respondent court is whether or not the trial
court erred in dismissing the complaint for failure of private respondents (plaintiffs below] to establish
by preponderance of evidence their claim of ownership over the island in question. Respondent
court reversed the decision of the trial court because it did not take into account the other pieces of
evidence in favor of the private respondents. The complaint was dismissed by the trial court because
it did not accept the explanation of private respondents regarding the initial discrepancy as to the
area they claimed: i.e., the prior tax declarations of private respondents refer to an area with 4,937
square meters, white the Extra-judicial Partition with Sale, by virtue of which private respondents
acquired ownership of the property, pertains to land of about 16,452 square meters.

The trial court favored the theory of petitioners that private respondents became interested in the
land only in 1979 not for agricultural purposes but in order to extract gravel and sand. This, however,
is belied by other circumstances tantamount to acts of ownership exercised by private respondents
over the property prior to said year as borne out by the evidence, which apparently the trial court did
not consider at all in favor of private respondents. These include, among others, the payment of land
taxes thereon, the monuments placed by the surveyor whose services were engaged by the private
respondent, as evidenced by the pictures submitted as exhibits, and the agreement entered into by
private respondents and Tagoloan Aggregates to extract gravel and sand, which agreement was
duly registered with the Register of Deeds.

Private respondents also presented in evidence the testimony of two disinterested witnesses:
Gregorio Neri who confirmed the metes and bounds of the property of private respondents and the
effects of the typhoon on the same, and Candida Ehem who related on the agreement between
private respondents and petitioners for the latter to act as caretakers of the former.  The trial court
9

disregarded their testimony without explaining why it doubted their credibility and instead merely
relied on the self-serving denial of petitioners.
10

From the evidence thus submitted, respondent court had sufficient basis for the finding that the
property of private respondents actually existed and was Identified prior to the branching off or
division of the river. The Court of Appeals, therefore, properly applied Article 463 of the Civil Code
which allows the ownership over a portion of land separated or isolated by river movement to be
retained by the owner thereof prior to such separation or isolation. 11

Notwithstanding the foregoing and assuming arguendo as claimed by petitioners that private

respondents were not able to establish the existence and identity of the property prior to the
branching off or division of the Tagoloan River, and hence, their right over the same, private
respondents are nevertheless entitled under the law to their respective portion of the island.

It is clear petitioners do not dispute that the land in litigation is an island that appears in a non-
flotable and non-navigable river; they instead anchor their claim on adverse possession for about
fifteen years. It is not even controverted that private respondents are the owners of a parcel of land
along the margin of the river and opposite the island. On the other hand, private respondents do not
dispute that the island in question has been in the actual physical possession of petitioners; private
respondents insist only that such possession by petitioners is in the concept of caretakers thereof
with the permission of private respondents.

This brings Us, as phrased earlier in this opinion, to the underlying nature of the controversy in this
case: between the one who has actual possession of an island that forms in a non-navigable and
non-flotable river and the owner of the land along the margin nearest the island, who has the better
light thereto?

The parcel of land in question is part of an island that formed in a non-navigable and non-flotable
river; from a small mass of eroded or segregated outcrop of land, it increased to its present size due
to the gradual and successive accumulation of alluvial deposits. In this regard the Court of Appeals
also did not err in applying Article 465 of the Civil Code.  Under this provision, the island belongs to
12

the owner of the land along the nearer margin as sole owner thereof; or more accurately, because
the island is longer than the property of private respondents, they are deemed ipso jure to be the
owners of that portion which corresponds to the length of their property along the margin of the river.

What then, about the adverse possession established by petitioners? Are their rights as such not
going to be recognized? It is well-settled that lands formed by accretion belong to the riparian
owner.  This preferential right is, under Article 465, also granted the owners of the land located in
13

the margin nearest the formed island for the reason that they are in the best position to cultivate and
attend to the exploitation of the same.  In fact, no specific act of possession over the accretion is
14

required.  If, however, the riparian owner fails to assert his claim thereof, the same may yield to the
15

adverse possession of third parties, as indeed even accretion to land titled under the torrens system
must itself still be registered.
16
Petitioners may therefore, acquire said property by adverse possession for the required plumber of
years under the doctrine of acquisitive prescription. Their possession cannot be considered in good
faith, however, because they are presumed to have notice of the status of private respondents as
riparian owners who have the preferential right to the island as recognized and accorded by law;
they may claim ignorance of the law, specifically Article 465 of the Civil Code, but such is not, under
Articles 3 and 526 of the same code, an adequate and valid defense to support their claim of good
faith.  Hence, not qualifying as possessors in good faith, they may acquire ownership over the island
17

only through uninterrupted adverse possession for a period of thirty years.  By their own admission,
18

petitioners have been in possession of the property for only about fifteen years. Thus, by this token
and under the theory adopted by petitioners, the island cannot be adjudicated in their favor.

This case is not between parties as opposing riparian owners contesting ownership over an
accession but rather between a riparian owner and the one in possession of the island. Hence, there
is no need to make a final determination regarding the origins of the island, i.e., whether the island
was initially formed by the branching off or division of the river and covered by Article 463 of the Civil
Code, in which case there is strictly no accession because the original owner retains ownership, or
whether it was due to the action of the river under Article 465, or, as claimed by petitioners, whether
it was caused by the abrupt segregation and washing away of the stockpile of the river control, which
makes it a case of avulsion under Article 459. 19

We are not prepared, unlike the trial court, to concede that the island is a delta which should be
outside the commerce of man and that it belongs to the State as property of the public domain in the
absence of any showing that the legal requirements to establish such a status have been satisfied,
which duty properly pertains to the State.  However, We are also well aware that this petition is an
20

upshot of the action to quiet title brought by the private respondents against petitioners. As such it is
not technically an action in rem or an action in personam, but characterized as quasi in rem which is
an action in personam concerning real property.  Thus, the judgment in proceedings of this nature is
22

conclusive only between the parties  and does not bind the State or the other riparian owners who
23

may have an interest over the island involved herein.

WHEREFORE, We find no error committed by respondent court and DENY the petition for lack of
sufficient merit. The decision of respondent Court of Appeals is hereby AFFIRMED, without
pronouncement as to costs.

SO ORDERED
 Republic of the Philippines
SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 180076               November 21, 2012

DIONISIO MANANQUIL, LAUDENCIA MANANQUIL-VILLAMOR, ESTANISLAO MANANQUIL,

and DIANITA MANANQUIL-RABINO, represented by OTILLO RABINO, Petitioners,
vs.
ROBERTO MOICO, Respondent.**

DECISION

DEL CASTILLO, J.:

In order that an action for quieting of title may proper, it is essential that the plaintiff must have legal
or equitable title to, or interest in, the property which is the subject-matter of the action. Legal title
denotes registered ownership, while equitable title means beneficial ownership. In the absence of
such legal or equitable title, or interest, there is no cloud to be prevented or removed.

This Petition for Review on Certiorari assails the March 13, 2007 Decision of the Court of Appeals
1  2 

(CA) in CA-G.R. CV No. 81229, which reversed and set aside the January 2, 2001 Decision of the 3 

Malabon Regional Trial Court, Branch 74 in Civil Case No. 2741-MN, thus dismissing the said civil
case for quieting of title.

Factual Antecedents

Lots 18 and 19 in Dagat-Dagatan, Navotas form part of the land previously expropriated by the
National Housing Authority (NHA) and placed under its Tondo Dagat-Dagatan Foreshore
Development Project – where occupants, applicants or beneficiaries may purchase lots on
installment basis. In October 1984, Lot 18 was awarded to spouses Iluminardo and Prescilla
Mananquil under a Conditional Contract to Sell. Lot 19, on the other hand, was sold to Prescilla in
February 1980 by its occupant.

In 1991, Iluminardo and Prescilla died without issue, but it turned out that Prescilla had a child by a
previous marriage – namely Eulogio Francisco Maypa (Eulogio). After the spouses’ death,
Iluminardo’s supposed heirs (Mananquil heirs) – his brothers and sisters and herein petitioners
Dionisio and Estanislao Mananquil (Estanislao), Laudencia Mananquil-Villamor (Laudencia), and
Dianita Mananquil-Rabino (Dianita) – executed an Extrajudicial Settlement Among Heirs and
adjudicated ownership over Lots 18 and 19 in favor of Dianita. They took possession of Lots 18 and
19 and leased them out to third parties.

Sometime later, the Mananquil heirs discovered that in 1997, Eulogio and two others, Eulogio
Baltazar Maypa and Brenda Luminugue, on the claim that they are surviving heirs of Iluminardo and
Prescilla, had executed an Extrajudicial Settlement of Estate with Waiver of Rights and Sale, and a
Deed of Absolute Sale in favor of Roberto Moico (Moico).

In May 1997, Moico began evicting the Mananquils’ tenants and demolishing the structures they built
on Lots 18 and 19. In June, the Mananquils instituted Civil Case No. 2741-MN for quieting of title
and injunctive relief.

Ruling of the Regional Trial Court

The trial court issued a temporary restraining order, thus suspending eviction and demolition. After
trial on the merits, a Decision was rendered in favor of the Mananquils. The dispositive portion
thereof reads:

WHEREFORE, premises considered, judgment is hereby rendered:

1. Ordering that a permanent injunction be issued enjoining defendant Roberto Moico to

refrain from threatening the tenants and destroying the improvements standing on the
subject properties and from filing the ejectment suits against the tenants;

2. Ordering the Extrajudicial Settlement of Estate with Waiver of Rights and Sale and the
Deed of Absolute Sale dated January 9, 1997 cancelled for having no force and effect;

3. Declaring plaintiffs to be rightfully entitled to the subject properties and the Extrajudicial
Settlement of Heirs of the plaintiffs to be valid and enforceable;

4. Ordering defendants to pay jointly and severally the plaintiffs the following, to wit:

a. P50,000.00 as moral damages;

b. P50,000.00 as exemplary damages;

c. P50,000.00 for and as attorney’s fees; and

d. Costs of suit.

SO ORDERED. 4

Ruling of the Court of Appeals

Moico appealed to the CA, which reversed the trial court. It held that the petitioners have failed to
show that Iluminardo and Prescilla have –

x x x perfected their grant/award from the NHA so as to secure a firm, perfect and confirmed title
over the subject lots. It must be stressed that the Conditional Contract to Sell that covers Lot No. 18
stipulates several terms and conditions before a grantee of the NHA may legally acquire perfect title
over the land, and there should be no mistake that the same stipulations hold true with respect to Lot
No. 19. Inter alia, the more vital contractual conditions, are: (a) payment in installment of the price for
a specified period, (b) personal use of and benefit to the land by the grantee, and (c) explicit
prohibition from selling, assigning, encumbering, mortgaging, leasing, or sub-leasing the property
awarded x x x. 5
The CA noted that Lots 18 and 19 must still belong to the NHA, in the absence of proof that
Iluminardo and Prescilla have completed installment payments thereon, or were awarded titles to the
lots. And if the couple disposed of these lots even before title could be issued in their name, then
they may have been guilty of violating conditions of the government grant, thus disqualifying them
from the NHA program. Consequently, there is no right in respect to these properties that the
Mananquils may succeed to. If this is the case, then no suit for quieting of title could prosper, for lack
of legal or equitable title to or interest in Lots 18 and 19.

Issues

The present recourse thus raises the following issues for the Court’s resolution:

THE COURT OF APPEALS GRAVELY ERRED IN PASSING UPON AN ISSUE NOT BEING
ASSIGNED AS ERROR IN THE APPELLANTS’ BRIEF OF PRIVATE RESPONDENTS AND
NOT TOUCHED UPON DURING THE TRIAL IN THE COURT A QUO PARTICULARLY THE
ALLEGED VIOLATION OF THE SPOUSES ILUMINARDO AND PRESCILLA MANANQUIL
OF THE CONDITIONAL CONTRACT TO SELL PURPORTEDLY COVERING THE
PROPERTIES IN QUESTION, TO SUIT ITS RATIONALIZATION IN ITS QUESTIONED
DECISION JUSTIFYING THE REVERSAL OF THE DECISION OF THE COURT A QUO.

II

THE COURT OF APPEALS ALSO COMMITTED A GRIEVOUS ERROR IN CONSTRUING

THE PROVISIONS OF ARTICLES 476 AND 477 OF THE CIVIL CODE AGAINST
PETITIONERS NOTWITHSTANDING THE POSITIVE CIRCUMSTANCES OBTAINING IN
THIS CASE POINTING TO THE PROPRIETY OF THE CAUSE OF ACTION FOR
QUIETING OF TITLE. 6

Petitioners’ Arguments

Petitioners argue that the CA cannot touch upon matters not raised as issues in the trial court,
stressing that the NHA did not even intervene during the proceedings below to ventilate issues
relating to the rights of the parties to Lots 18 and 19 under the Tondo Dagat-Dagatan Foreshore
Development Project. Petitioners claim that since the issue of violation of the terms of the grant may
be resolved in a separate forum between the Mananquils and the NHA, it was improper for the CA to
have pre-empted the issue.

On quieting of title, petitioners advance the view that since they are the legal heirs of Iluminardo
Mananquil, then they possess the requisite legal or equitable title or interest in Lots 18 and 19, which
thus permits them to pursue Civil Case No. 2741-MN; whatever rights Iluminardo had over the lots
were transmitted to them from the moment of his death, per Article 777 of the Civil Code. And
among these rights are the rights to continue with the amortizations covering Lots 18 and 19, as well
as to use and occupy the same; their interest as successors-in-interest, though imperfect, is enough
to warrant the filing of a case for quieting of title to protect these rights.

Respondent Moico’s Arguments

Moico, on the other hand, argues that because the issue relating to Iluminardo and Prescilla’s
possible violation of the terms and conditions of the NHA grant is closely related to the issue of
ownership and possession over Lots 18 and 19, then the CA possessed jurisdiction to pass upon it.

Moico supports the CA view that petitioners failed to prove their title or interest in the subject
properties, just as he has proved below that it was his predecessor, Eulogio, who paid all obligations
relative to Lots 18 and 19 due and owing to the NHA, for which reason the NHA released and
cleared the lots and thus paved the way for their proper transfer to him.

Our Ruling

The petition lacks merit.

An action for quieting of title is essentially a common law remedy grounded on equity.  The
1âwphi1

competent court is tasked to determine the respective rights of the complainant and other claimants,
not only to place things in their proper place, to make the one who has no rights to said immovable
respect and not disturb the other, but also for the benefit of both, so that he who has the right would
see every cloud of doubt over the property dissipated, and he could afterwards without fear
introduce the improvements he may desire, to use, and even to abuse the property as he deems
best. But "for an action to quiet title to prosper, two indispensable requisites must concur, namely:
(1) the plaintiff or complainant has a legal or an equitable title to or interest in the real property
subject of the action; and (2) the deed, claim, encumbrance, or proceeding claimed to be casting
cloud on his title must be shown to be in fact invalid or inoperative despite its prima facie
appearance of validity or legal efficacy."7

Contrary to petitioners’ stand, the issue relating to the grant of rights, title or award by the NHA
determines whether the case for quieting of title may be maintained. If the petitioners are legitimate
successors to or beneficiaries of Iluminardo upon his death – under the certificate of title, award, or
grant, or under the special law or specific terms of the NHA program/project – then they possess the
requisite interest to maintain suit; if not, then Civil Case No. 2741-MN must necessarily be
dismissed.

From the evidence adduced below, it appears that the petitioners have failed to show their
qualifications or right to succeed Iluminardo in his rights under the NHA program/project. They failed
to present any title, award, grant, document or certification from the NHA or proper government
agency which would show that Iluminardo and Prescilla have become the registered
owners/beneficiaries/ awardees of Lots 18 and 19, or that petitioners are qualified successors or
beneficiaries under the Dagat-Dagatan program/project, taking over Iluminardo’s rights after his
death. They did not call to the witness stand competent witnesses from the NHA who can attest to
their rights as successors to or beneficiaries of Lots 18 and 19. They failed to present proof, at the
very least, of the specific law, provisions, or terms that govern the Tondo Dagat-Dagatan Foreshore
Development Project which would indicate a modicum of interest on their part. For this reason, their
rights or interest in the property could not be established.

It was erroneous, however, for the CA to assume that Iluminardo and Prescilla may have violated
the conditions of the NHA grant under the Tondo Dagat-Dagatan Foreshore Development Project by
transferring their rights prior to the issuance of a title or certificate awarding Lots 18 and 19 to them.
In the absence of proof, a ruling to this effect is speculative. Instead, in resolving the case, the trial
court – and the CA on appeal – should have required proof that petitioners had, either: 1) a
certificate of title, award, or grant from the proper agency (NHA or otherwise) in the name of their
predecessor Iluminardo, or, in the absence thereof, 2) a right to succeed to Iluminardo’s rights to
Lots 18 and 19, not only as his heirs, but also as qualified legitimate successors/beneficiaries under
the Tondo Dagat-Dagatan Foreshore Development Project terms and conditions as taken over by
the NHA. Petitioners should have shown, to the satisfaction of the courts that under the NHA
8 

program project governing the grant of Lots 18 and 19, they are entitled and qualified to succeed or
substitute for Iluminardo in his rights upon his death. As earlier stated, this takes the form of
evidence apart from proof of heirship, of course – of the specific law, regulation or terms covering
the program/project which allows for a substitution or succession of rights in case of death; the
certificate of title, award or grant itself; or the testimony of competent witnesses from the NHA.

Proof of heirship alone does not suffice; the Mananquils must prove to the satisfaction of the courts
that they have a right to succeed Iluminardo under the law or terms of the NHA project, and are not
disqualified by non-payment, prohibition, lack of qualifications, or otherwise.

WHEREFORE, premises considered, the Petition is DENIED for lack of merit. The March 13, 2007
Decision of the Court of Appeals in CA-G.R. CV No. 81229 is AFFIRMED.

SO ORDERED.

MARIANO C. DEL CASTILLO

 Republic of the Philippines
SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 157593             March 22, 2007

SPS. ALBERTO and JOCELYN AZANA, Petitioners,

vs.
CRISTOPHER LUMBO and ELIZABETH LUMBO-JIMENEZ, Respondents.

DECISION

CORONA, J.:

In this appeal by certiorari, spouses Alberto and Jocelyn Azana assail the decision 1 dated
September 17, 2002 and resolution2 dated March 12, 2003 of the Court of Appeals (CA) in CA-G.R.
CV No. 60973. After a re-evaluation of the evidence on record, the appellate court held that the trial
court’s factual findings were contrary to the evidence presented and, on that basis, reversed the
latter’s ruling.

Originally, respondents filed an action for quieting of title 3 in the Regional Trial Court (RTC) of Kalibo,
Aklan. The subject matter of the action was a piece of real property located in the island of Boracay,
a prime tourist destination. It was designated as Lot 64 during the national reservation survey of
Boracay on April 14, 1976.

Respondents alleged that they were the owners of Lot 64. They claimed that, in a deed of absolute
sale dated December 1, 1996, the spouses Emilio and Estela Gregorio sold Lot 64 to petitioners.
This cast a cloud over their title.

To support their claim of ownership, respondents stated that Lot 64 was originally part of the 8.0488-
hectare land bought in a public auction by their parents, which they inherited entirely; that such sale
in the public auction was evidenced by a final bill of sale dated September 18, 1939; that Lot 64 was
separately designated during the national reservation survey only because it was also being claimed
by the spouses Gregorio; and that, if Lots 63 and 64 were combined, the boundaries of the resulting
lot coincided with the boundaries of the lot purchased under the final bill of sale.

For their part, petitioners claim that they purchased Lot 64 from the spouses Gregorio in good faith;
that the spouses Gregorio became the lawful owners of Lot 64 by virtue of a deed of absolute sale
dated March 25, 1976 executed by Ignacio Bandiola in favor of Estela Gregorio whereby Bandiola
transferred to Gregorio a parcel of land with an area of 3.4768 hectares; and that Lot 64 was part of
this 3.4768-hectare land.

According to the RTC of Kalibo, Aklan, respondents failed to establish the identity of the lot sold
under the final bill of sale. Consequently, their claim of title over Lot 64 also had to fail. In the words
of the court a quo:
Assaying the evidence presented by the parties in relation to their respective submissions, the Court
noted that the land acquired by [respondents’] parents at the public auction is not solely bounded on
the North and East by [the] Visayan Sea, but also by Anunciacion Gelito and Guillermo Sualog,
respectively. Indeed, [respondents] own survey plan discloses that Lots 63 and 64 [are] bounded by
Lot 62 and seashore.

Hence, it is not clear that the land acquired by [respondents’] parents at an auction sale includes Lot
64. The Court could probably sustain [respondents’] theory if the said land is solely bounded on the
North and East by [the] Visayan Sea or seashore. There would be no space for any intervening
lot.4 (citations omitted)

Finding equiponderance of evidence 5, the trial court ruled in favor of petitioners and upheld the
validity of the sale of Lot 64 to them.

On review, the CA arrived at a different conclusion. It declared respondents as owners of Lot 64 and
nullified the sale by the spouses Gregorio to petitioners. The appellate court agreed with
respondents that Lot 64 was part of the 8.0488-hectare property described in the final bill of sale. As
opposed to the findings of the trial court, the appellate court was satisfied that the boundaries of the
lot resulting from the merger of Lots 63 and 64 coincided with the boundaries of the 8.0488 hectare
property. Moreover, the CA noted that the areas of Lots 63 and 64 were 7.0300 hectares and 1.2012
hectares respectively, meaning that the area resulting from the combination of the two lots was
equivalent to "8.0000 hectares, more or less, which [was] the total area being claimed by the
[respondents]".6

Aggrieved, the spouses Gregorio and the spouses Azana filed in this Court separate petitions for
review on certiorari under Rule 45 of the Rules of Court. The petitions were separately docketed as
G.R. No. 1576177 and G.R. No. 157593, respectively. The Court instantly denied both petitions for
essentially raising questions of fact which are generally beyond our review.

Thereafter, both the Gregorios and petitioners filed their respective motions for reconsideration. The
Court denied the MR8 of the spouses Gregorio, in effect denying G.R. No. 157617 with finality.

Meanwhile, the MR of the spouses Azana was granted. As a general rule, it is not the Supreme
Court’s function to review, examine and evaluate or weigh the probative value of the evidence
presented.9 The factual findings of the trial and appellate courts are binding on this Court and are
given great weight and respect.10 However, the rule is not absolute. In instances where there is
divergence in the findings and conclusions of the trial court, on one hand, and the appellate court, on
the other, the Court may give the petition due course and re-examine the evidence on
record.11 Satisfied that the foregoing exception applies to this case, the Court ordered the
reinstatement of G.R. No. 157593 (this petition).

Respondents oppose the petition on the ground that it is already barred by prior judgment. They
argue that the dismissal of the Gregorios’ petition (G.R. No. 157617) was a final judgment
constituting a bar to the institution of a similar petition.

Respondents’ position is incorrect. Res judicata calls for the concurrence of the following requisites:
(1) there is final judgment or order; (2) the court rendering it has jurisdiction over the subject matter
and the parties; (3) the judgment or order is on the merits and (4) there is, between the two cases,
identity of parties, subject matter and causes of action. 12 Here, the first requisite is absent. The
Court’s resolution denying the spouses Gregorio’s petition is not the final judgment contemplated by
the first requisite. Rather, "final judgment" entails a decision which perpetually settles the
controversy and lays to rest all questions raised. At that point, there was no final judgment because
the spouses Azana’s appeal of the CA decision was still pending before us. Stated differently, there
was yet no final judgment which could be entered and executed.

We now proceed to consider the documents relied upon by the parties.

To prove their claim, petitioners submitted a deed of absolute sale of real property 13 dated March 25,
1976 to show that Ignacio Bandiola sold to Estela Gregorio 3.4768 hectares of land located in
Manoc-Manoc, Malay, Aklan. The property was particularly described as follows:

THE PORTION SOLD CONSISTS of 3.4768 hectares, more or less, located at the southern side of
the whole parcel and with the following pertinent boundaries: on the North by Visayan Sea and
Ernesto Bandiola; on the East by Visayan Sea; on the South by Felicitas Lumbo, D. Pelayo, and D.
Magapi; and on the West by Teodorica Bandiola.14

They also presented the corresponding tax declaration15 which reiterated the same property
boundaries.

Petitioners point out that a portion of this property was separately declared for realty tax purposes
under ARP/TD No. 93-011-1020/1021 as Lot 64 with an area of 1.48 hectares. 16 The tax declaration
indicated that the boundaries of Lot 64 were:

North: Visayan Sea South: Lot 63

West: lot 99-pt East: Visayan Sea

In the hope of strengthening their case, petitioners narrated the supposed origin of the disputed
property. They claimed that the 3.4768-hectare property was taken from the consolidated lots owned
by Ignacio Bandiola, i.e., three contiguous parcels of land with individual areas of 8.7766 hectares,
6550 square-meters and 4994 square-meters.17] From this land mass, Ignacio Bandiola carved out
3.4768 hectares and sold the same to Estela Gregorio. Allegedly, this portion included Lot 64 which
Estela Gregorio, in turn, sold to petitioners.

Granting for the sake of argument that petitioners’ preceding allegations are true, it follows that
Ignacio Bandiola’s lots, if taken as one, must have extended to the Visayan Sea in the east to have
roped in Lot 64. It also follows that at least one of the lots should have the Visayan Sea as its
eastern boundary. However, this conclusion is belied by the tax declarations petitioners themselves
presented. Not one of the tax declarations stated that any of Bandiola’s lots was bound in the east
by the Visayan Sea. On the contrary, all the tax declarations stated that each of the lots was bound
in the east by a particular land mass:

Tax Declaration No. 3066

Land Area: 8.7766 hectares

Boundaries: North – Visayan Sea

East – Lorenzo Lumbo, Vanancio Maming

West – Conchita Tirol, Visayan Sea

South – Moises Pelayo, Paula Gelito 18

Tax Declaration No. 3087

Land Area: 0.6550 hectare

Boundaries: North – Visayan Sea

East – Felicitas Alag de Lumbo

West – Felicitas Alag de Lumbo

South – Quirica Lumbo19

Tax Declaration No. 3068

Land Area: 0.4994 hectare

Boundaries: North – Ignacio Bandiola

East – Anunciacion Gelito and F.A. Lumbo

West – Ignacio Bandiola

South – Gertrudes Casimero & Salvador Magapi 20

Petitioners strained to explain the discrepancy by pointing out that "Lot 64 was but a mere portion of
the three parcels of land covered by the [three] tax declarations. xxx. It [was] therefore, quite unlikely
that Lot 64 would have the exact same boundaries as any or all of these [three] parcels." 21

We find their explanation wanting. If, indeed, Lot 64 was part of Ignacio Bandiola’s mass of
properties it would have been in its south-east corner, occupying part of its southern and eastern
perimeter. 22 Therefore, the parcels of land covered by the three tax declarations must reflect
southern and/or eastern boundaries similar to those of Lot 64. But, as explained earlier, none of the
lots was enclosed or partly enclosed in the east by the sea. It is highly unlikely that the corner portion
of the mother property would not have similar boundaries as those of the latter on at least two sides.

The Court is not inclined to pronounce which of the documents presented by petitioners is true and
correct. It is enough to say that the evidence they presented cast doubt on the validity of their claim.
Petitioners failed to establish, by preponderance of evidence, the exact perimeters of the land which
they claim as their own.

On the other hand, respondents anchor their claim over Lot 64 on a final bill of sale 23 dated
September 18, 1939. Apparently, the document was executed in favor of Lorenzo and Felicitas
Lumbo who bought an 8.0488-hectare property in a public auction. It stated:

That on September 30, 1937, the real property under Tax Declaration No. 6523 was forfeited to the
Government in the manner and form prescribed by Act 3995 known as the Assessment Law, for
non-payment of land taxes corresponding to the years 1931 to 1937, inclusive, the description of
which follows:
A parcel of cocal land situated in the barrio of Manocmanoc, municipality of Buruanga, province of
Capiz, Philippines, having an area of 80, 488 square meters more or less. Bounded on the North by
Visayan Sea; on the East by the property of Guillermo Sualog and Visayan Sea; on the South by the
property of Moises Pelayo; and on the West by the properties of Venancio Maming and Lucino
Gelito, and assessed at P1040.00. x x x.24

The trial court discredited the final bill of sale by highlighting the fact that the property bought at the
public auction was not solely bound on the north and east by the Visayan Sea but also by the
properties of Anuncion Gelito and Guillermo Sualog, respectively. With this, the trial court deduced
that there was an intervening space which should not have been there if the lot referred to in the
document included Lot 64. Thus, the final bill of sale must pertain to a different parcel of land.

We find the trial court’s conclusion inaccurate. The Gelito and Sualog properties were not located
between the Visayan Sea and the disputed property. Otherwise, the tax declarations and final bill of
sale would have indicated that the Lumbo property was solely bound in the north by the Gelito
property and in the east by the Sualog property. A cursory look at the survey map 25 reveals that the
perimeter of the Lumbo property ran along the Visayan Sea and Gelito’s property in the north, and
the Visayan Sea and Sualog’s property in the east. Naturally, the tax declarations and final bill of
sale included the two properties mentioned as part of the boundaries of the Lumbo property.

Petitioners underscore the seeming irregularities in the description of the property under the final bill
of sale, a deed of sale dated May 20, 1939 and the tax declarations for the years 1991 and 1993 in
the names of respondents. They posit that these irregularities negate respondents’ claim of legal or
equitable title and ultimately justify the resolution of the case in their favor.

A deed of absolute sale26 was executed on May 20, 1939 between Pantaleon Maming and the
respondents’ parents, stipulating the sale to the Lumbos of "an approximate area of [five hectares],
being a part of the land under Tax No. 6523 in the name of Pantaleon Maming…". 27 Petitioners
emphasize the fact that the property sold under the final bill of sale was the same lot under Tax
Declaration No. 6523. This discrepancy supposedly blurred the identification of the property claimed
by respondents.

We disagree.

The CA sufficiently reconciled the difference in the land areas in the two deeds:

xxx. It may be asked why there were two deeds of sale covering the same property. We find
credence in [respondents’] explanation. The public auction was held on 13 September 1938 and
therefore Pantaleon Maming had up to 13 September 1939 to redeem the property. Before the
expiration of the period of redemption, Lorenzo Lumbo bought [five] hectares of the [eight]-hectare
property in an attempt, as [respondents] put it, to persuade Maming not to redeem the property. This
can be inferred from the price of ₱500.00 he paid for the [five] hectares while in the auction sale
held, he bought the entire 8.0488 hectares for only ₱56.78. xxx.28

Next, petitioners highlight the tax declarations filed by respondents for the years 1991 29 and
199330 covering Lot 63 only. In the absence of contrary evidence, tax declarations, being official
documents, enjoy a presumption of truth as to their contents. Petitioners contend that, unlike them,
respondents never actually declared Lot 64 as theirs and cannot therefore claim ownership of the
property.

Jurisprudence is consistent that tax declarations are not conclusive evidence of ownership of the
properties stated therein.31 A disclaimer is even printed on their face that they are "issued only in
connection with real property taxation [and] should not be considered as title to the property." At
best, tax declarations are an indicia of possession in the concept of an owner.32 However, non-
declaration of a property for tax purposes does not necessarily negate ownership. 33

From the foregoing, the fact that both tax declarations in the names of respondents covered Lot 63 only did
not necessarily mean they did not own Lot 64 as they were in fact able to present a document evidencing
ownership of both properties ― the final bill of sale.

Clearly, respondents have been able to establish by preponderance of evidence that they are the
rightful owners of Lot 64.

When an owner of real property is disturbed in any way in his rights over the property by the
unfounded claim of others, he may bring an action for quieting of title. The purpose of the action is to
remove the cloud on his title created by any instrument, record, encumbrance or proceeding which is
apparently valid or effective but is in truth and in fact invalid and prejudicial to his title. 34

Here, the deeds of sale executed in favor of petitioners and the spouses Gregorio were prima
facie valid and enforceable. However, further scrutiny and investigation established that petitioners’
predecessor-in-interest, Ignacio Bandiola, could not have owned the disputed lot. Consequently, the
subsequent conveyances of Lot 64 to the spouses Gregorio and thereafter, to petitioners, were null
and void. Therefore, respondents, as the adjudged owners of Lot 64, are entitled to have the
aforementioned deeds of sale nullified to remove any doubt regarding their ownership of the lot.

While the appellate court adequately explained its decision, it failed to categorically declare the
deeds of sale as null and void in its dispositive portion. Since it is the dispositive portion of the
decision which shall be carried out, it is important that the status of the deeds of sale be clearly
stated therein.

WHEREFORE, the petition is hereby DENIED. The decision dated September 17, 2002 and
resolution dated March 12, 2003 of the Court of Appeals are AFFIRMED with
the MODIFICATION that the deed of absolute sale dated March 25, 1976, in so far as it covers Lot
64, and the deed of absolute sale dated December 1, 1996 are hereby declared null and void.

Costs against petitioners.

SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 167391               June 8, 2011

PHIL-VILLE DEVELOPMENT AND HOUSING CORPORATION, Petitioner,

vs.
MAXIMO BONIFACIO, CEFERINO R. BONIFACIO, APOLONIO B. TAN, BENITA B. CAINA,
CRISPINA B. PASCUAL, ROSALIA B. DE GRACIA, TERESITA S. DORONIA, CHRISTINA GOCO
AND ARSENIO C. BONIFACIO, in their capacity as the surviving heirs of the late ELEUTERIA
RIVERA VDA. DE BONIFACIO, Respondents.

VILLARAMA, JR., J.:

This petition for review on certiorari 1 seeks to set aside the Decision2 dated January 31, 2005 and
Resolution3 dated March 15, 2005 of the Court of Appeals in CA-G.R. SP No. 62211. The Court of
Appeals dismissed the Complaint4 for Quieting of Title and Damages filed by Phil-Ville Development
and Housing Corporation (Phil-Ville) and denied its Motion for Reconsideration. 5

The factual antecedents, as culled from the records, are as follows.

Phil-Ville Development and Housing Corporation is the registered owner of three parcels of land
designated as Lots 1-G-1, 1-G-2 and 1-G-3 of the subdivision plan Psd-1-13-006209, located in
Caloocan City, having a total area of 8,694 square meters and covered by Transfer Certificates of
Title (TCT) Nos. 270921,6 2709227 and 270923.8 Prior to their subdivision, the lots were collectively
designated as Lot 1-G of the subdivision plan Psd-2731 registered in the name of Phil-Ville under
TCT No. T-148220.9 Said parcels of land form part of Lot 23-A of the Maysilo Estate originally
covered by Original Certificate of Title (OCT) No. 99410 registered on May 3, 1917 in the name of
Isabel Gil de Sola as the judicial administratrix of the estate of Gonzalo Tuason and thirty-one (31)
others. Phil-Ville acquired the lots by purchase from N. Dela Merced and Sons, Inc. on July 24,
1984.

Earlier, on September 27, 1961, a group composed of Eleuteria Rivera, Bartolome P. Rivera, Josefa
R. Aquino, Gregorio R. Aquino, Pelagia R. Angeles, Modesta R. Angeles, Venancio R. Angeles,
Felipe R. Angeles Fidela R. Angeles and Rosauro R. Aquino, claiming to be the heirs of Maria de la
Concepcion Vidal, a co-owner to the extent of 1-189/1000% of the properties covered by OCT Nos.
982, 983, 984, 985 and 994 of the Hacienda Maysilo, filed a petition with the Court of First Instance
(CFI) of Rizal in Land Registration Case No. 4557. They prayed for the substitution of their names
on OCT No. 994 in place of Maria de la Concepcion Vidal. Said petition was granted by the CFI in an
Order11 dated May 25, 1962.

Afterwards, the alleged heirs of Maria de la Concepcion Vidal filed a petition for the partition of the
properties covered by OCT Nos. 982, 983, 984, 985 and 994. The case was docketed as Civil Case
No. C-424 in the CFI of Rizal, Branch 12, Caloocan City. On December 29, 1965, the CFI granted
the petition and appointed three commissioners to determine the most equitable division of the
properties.12 Said commissioners, however, failed to submit a recommendation.

Thirty-one (31) years later, on May 22, 1996, Eleuteria Rivera filed a Supplemental Motion 13 in Civil
Case No. C-424, for the partition and segregation of portions of the properties covered by OCT No.
994. The Regional Trial Court (RTC), Branch 120, of Caloocan City, through Judge Jaime D.
Discaya, to whom the case was transferred, granted said motion. In an Order 14 dated September 9,
1996, Judge Discaya directed the segregation of portions of Lots 23, 28-A-1 and 28-A-2 and ordered
the Register of Deeds of Caloocan City to issue to Eleuteria Rivera new certificates of title over
them. Three days later, the Register of Deeds of Caloocan, Yolanda O. Alfonso, issued to Eleuteria
Rivera TCT No. C-31453715 covering a portion of Lot 23 with an area of 14,391.54 square meters.
On December 12, 1996, the trial court issued another Order directing the acting Branch Clerk to
issue a Certificate of Finality of the Order dated September 9, 1996.

Thereafter, one Rosauro R. Aquino filed a petition for certiorari contesting said Order of December
12, 1996 and impugning the partial partition and adjudication to Eleuteria Rivera of Lots 23, 28-A-1
and 28-A-2 of the Maysilo Estate. The case was docketed as CA-G.R. SP No. 43034 at the Court of
Appeals.

Meanwhile, a writ of possession16 was issued in Eleuteria Rivera’s favor on December 26, 1996 upon
the Order17 of Judge Discaya issued on the same date. Accordingly, Sheriff Cesar L. Cruz served a
Notice to Vacate18 dated January 2, 1997 upon Phil-Ville, requiring it to vacate Lots 23-A and 28.
Bonifacio Shopping Center, Inc., which occupied Lot 28-A-2, was also served a copy of the notice.
Aggrieved, Bonifacio Shopping Center, Inc. filed a petition for certiorari and prohibition, docketed as
CA-G.R. SP No. 43009, before the Court of Appeals. In a Decision 19 dated February 19, 1997, the
appellate court set aside and declared as void the Order and Writ of Possession dated December
26, 1996 and the Notice to Vacate dated January 2, 1997. The appellate court explained that a party
who has not been impleaded in a case cannot be bound by a writ of possession issued in connection
therewith.

Subsequently, on February 22, 1997, Eleuteria Rivera Vda. de Bonifacio died at the age of 96.20

On April 23, 1997, the Secretary of Justice issued Department Order No. 137 creating a special
committee to investigate the circumstances surrounding the issuance of OCT No. 994 and its
derivative titles.

On April 29, 1997, the Court of Appeals rendered a Decision 21 in CA-G.R. SP No. 43034 granting
Rosauro R. Aquino’s petition and setting aside the RTC’s Order of September 9, 1996, which
granted Eleuteria Rivera’s prayer for partition and adjudicated in her favor portions of Lots 23, 28-A-
1 and 28-A-2 of the Maysilo Estate. The appellate court likewise set aside the Order and the Writ of
Possession dated December 26, 1996.

Nonetheless, on June 5, 1997, petitioner filed a complaint for quieting of title and damages against
the surviving heirs of Eleuteria Rivera Vda. de Bonifacio (namely Maximo R. Bonifacio, Ceferino R.
Bonifacio, Apolonia B. Tan, Benita B. Caina, Crispina B. Pascual, Rosalia B. de Gracia, Teresita S.
Doronia, Christina B. Goco, Arsenio C. Bonifacio, Carmen B. Bernardino and Danilo C. Bonifacio)
and the Register of Deeds of Caloocan City. The case was docketed as Civil Case No. C-507 in the
RTC of Caloocan City, Branch 122.

On October 7, 1997, then Senator Marcelo B. Fernan filed P.S. Resolution No. 1032 directing the
Senate Committees on Justice and Human Rights and on Urban Planning, Housing and
Resettlement to conduct a thorough investigation, in aid of legislation, of the irregularities
surrounding the titling of the properties in the Maysilo Estate.

In a Decision22 dated March 24, 2000, the Caloocan RTC ordered the quieting of Phil-Ville’s titles
over Lots 1-G-1, 1-G-2 and 1-G-3, declaring as valid TCT Nos. 270921, 270922 and 270923 in Phil-
Ville’s name. The fallo of said Decision reads:

WHEREFORE, and in view of the foregoing, judgment is hereby rendered as follows:

1. Ordering the quieting of title of the plaintiff over Lots 1-G-1, 1-G-2 and 1-G-3, all the subd.
plan Psd-1-13-006209, being a portion of Lot 1-G, Psd-2731, LRC Rec. No. 4429, situated in
Kalookan City, as owner thereof in fee simple and with full faith and credit;

2. Declaring Transfer Ce[r]tificates of Title Nos. 270921, 270922 and 270923 in the name of
Phil-Ville Development and Housing Corporation over the foregoing parcels of land issued by
the Registry of Deeds for Kalookan City, as valid and effective;

3. Declaring Transfer Certificate of Title No. C-314537 over Lot 23, being a portion of Maysilo
Estate situated in Maysilo, Kalookan City, in the name of Eleuteria Rivera, issued by the
Registry of Deeds for Kalookan City, as null and void and with no force and effect;

4. Ordering the private defendants to surrender to the Registry of Deeds for Kalookan City,
thru this Court, the Owner’s Duplicate Certificate of said Transfer Certificate of Title No. C-
314537 in the name of Eleuteria Rivera;

5. Directing the public defendant, Register of Deeds of Kalookan City to cancel both Transfer
Certificate of Title Nos. C-314537 in the name of Eleuteria Rivera on file with the Register of
Deeds for Kalookan City, and the Owner’s Duplicate copy of Transfer Certificate of Title No.
C-314537 being required to be surrendered by the private defendants; and

6. Ordering the private defendants to pay plaintiff, jointly and severally, the sum of
₱10,000.00, as and by way of attorney’s fees, plus the costs of suit.

SO ORDERED.23

In upholding Phil-Ville’s titles, the trial court adopted the conclusion in Senate Committee Report No.
103124 dated May 25, 1998 that there is only one OCT No. 994, registered on May 3, 1917, and that
OCT No. 994, purportedly registered on April 19, 1917 (from which Eleuteria Rivera’s title originated)
does not exist. The trial court also found that it was physically impossible for respondents to be the
heirs of Eleuteria Rivera’s grandmother, Maria de la Concepcion Vidal, one of the registered owners
of OCT No. 994, because Maria de la Concepcion was born sometime in 1903, later than Eleuteria
Rivera who was born in 1901. 25 Lastly, the RTC pointed out that contrary to the contentions of
Rivera’s heirs, there is no overlapping of titles inasmuch as Lot 23 lies far from Lot 23-A, where Phil-
Ville’s lands are located.

On April 13, 2000, Atty. K.V. Faylona, on behalf of respondents, addressed a letter 26 to the Branch
Clerk of Court of the Caloocan City RTC requesting the complete address of Phil-Ville and its
counsel. Supposedly, respondents’ counsels of record, Attys. Nicomedes Tolentino and Jerry D.
Bañares, had abandoned the defense but still kept the records of the case. Thus, the Notice of
Appeal27 on behalf of respondents was filed by Atty. Faylona while two of the heirs, Danilo Bonifacio
and Carmen Bernardino, filed a separate Notice of Appeal 28 through their own counsel. The appeals
were consolidated and docketed as CA-G.R. CV No. 66547.

On April 17, 2000, respondents withdrew their appeal and instead filed before this Court a Petition
for Review on Certiorari,29 which was docketed as G.R. No. 142640. In a Resolution 30 dated
September 25, 2000, the Court referred the petition to the Court of Appeals for adjudication on the
merits since the case does not involve pure questions of law. Respondents moved for
reconsideration of the Resolution, but the Court denied their motion. Thus, respondents’ petition was
transferred to the Court of Appeals and docketed as CA-G.R. SP No. 62211.

Meanwhile, on October 17, 2002, the Court of Appeals rendered a Decision 31 in CA-G.R. CV No.
66547, dismissing the appeal as regards Danilo Bonifacio and Carmen Bernardino. Yet, along with
Danilo and Carmen, respondents moved for reconsideration on the contention that they are not
bound by the judgment since they had withdrawn their appeal therein. The Court of Appeals denied
said motion in a Resolution dated June 7, 2004. Danilo, Carmen and respondents elevated the case
to the Supreme Court through a Petition for Review on Certiorari, which was docketed as G.R. No.
163397. Said petition, however, was denied by this Court in a Resolution dated September 8, 2004
for being filed out of time.

Subsequently, on January 31, 2005, the Court of Appeals promulgated its assailed Decision in CA-
G.R. SP No. 62211, setting aside the RTC judgment and dismissing Phil-Ville’s complaint. The
appellate court held that the RTC had no jurisdiction to hear Phil-Ville’s complaint as it effectively
seeks to annul the Order dated May 25, 1962 of the CFI in LRC No. 4557, which directed the
substitution of the late Eleuteria Rivera and her co-heirs in place of Maria de la Concepcion Vidal as
registered owners on OCT No. 994. The appellate court likewise affirmed the validity of OCT No.
994 registered on April 19, 1917 citing the Supreme Court Decisions in Metropolitan Waterworks
and Sewerage Systems v. Court of Appeals 32 and Heirs of Luis J. Gonzaga v. Court of Appeals 33 as
precedents.

Phil-Ville sought reconsideration34 of the decision, but the Court of Appeals denied its motion in the
assailed Resolution dated March 15, 2005. Hence, this petition.

Petitioner alleges that:

I.

THE HONORABLE COURT OF APPEALS (FORMER NINTH DIVISION) ACTED WITHOUT

JURISDICTION ON THE PETITION FOR REVIEW OF RESPONDENTS MAXIMO
BONIFACIO, ET AL. IN CA-G.R SP NO. 62211 BECAUSE OF THE EARLIER DISMISSAL
OF THEIR APPEAL IN CA-G.R NO. 66547.

II.

THE HONORABLE COURT OF APPEALS (FORMER NINTH DIVISION) ACTED WITHOUT

JURISDICTION ON THE PETITION FOR REVIEW FILED BY RESPONDENTS MAXIMO
BONIFACIO, ET AL. IN CA-G.R. NO. SP 62211 WHICH DOES NOT RAISE PURE
QUESTION[S] OF LAW OR ISSUE[S] OF JURISDICTION AND THEREFORE THE
PROPER REMEDY AVAILABLE TO THEM IS ORDINARY APPEAL WHICH, AS STATED,
HAD ALREADY BEEN DISMISSED IN CA-G.R. CV NO. 66547.

III.
 THE HONORABLE COURT OF APPEALS (FORMER NINTH DIVISION) COMMITTED
GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR IN EXCESS OF
JURISDICTION IN HOLDING THAT THE TRIAL COURT HAS NO JURISDICTION ON THE
COMPLAINT FOR QUIETING OF TITLE FILED BY PETITIONER PHIL-VILLE IN CIVIL
CASE NO. C-507, OR IN THE ALTERNATIVE, IN FAILING TO DECLARE RESPONDENTS
MAXIMO [BONIFACIO], ET AL. ALREADY IN ESTOPPEL TO RAISE THE SAID ISSUE OF
JURISDICTION.35

Condensed, petitioner puts in issue the following: (1) whether the Court of Appeals committed grave
abuse of discretion in taking cognizance of respondents’ petition; and (2) whether the Court of
Appeals committed grave abuse of discretion in declaring that the trial court had no jurisdiction over
Civil Case No. C-507.

Pertinently, however, the genuine issue in this case is whether TCT No. C-314537 in the name of
Eleuteria Rivera constitutes a cloud over petitioner’s titles over portions of Lot 23-A of the Maysilo
Estate.

Petitioner argues mainly that the Court of Appeals acted without jurisdiction in resolving
respondents’ petition for review since it had dismissed their appeal in CA-G.R. CV No. 66547 for
failure to file brief. Petitioner also points out that respondents’ petition is defective because Maximo
Bonifacio alone signed its verification and certification of non-forum shopping without proof that he
was authorized to sign for the other respondents. It contends that the ruling in MWSS v. Court of
Appeals and Heirs of Gonzaga v. Court of Appeals will not invalidate its titles because it is not a
party to any of said cases. As well, petitioner invokes the finding in the joint investigation by the
Senate and the Department of Justice (DOJ) that there is only one OCT No. 994, that is, the one
registered on May 3, 1917. It maintains that the trial court had jurisdiction to hear its action since it is
one for quieting of title and not for annulment of the CFI Order dated May 25, 1962.

Conversely, respondents rely on MWSS v. Court of Appeals and Heirs of Gonzaga v. Court of

Appeals that upheld the titles emanating from OCT No. 994 registered on April 19, 1917. Therefore,
they insist that petitioner has no cause of action to seek the nullification of their title which is a
derivative of said OCT. Respondents reiterate that since they had withdrawn their appeal in CA-G.R.
CV No. 66547, the Court of Appeals decision therein applies only to Danilo Bonifacio and Carmen
Bernardino. Lastly, they believe that petitioner’s action is one for annulment of judgment, which is
foreign to the jurisdiction of the trial court.

Petitioner argues in its first two assignments of errors that the Court of Appeals acted with grave
abuse of discretion in entertaining respondents’ petition. However, said contention deserves scant
consideration since the Court of Appeals, in CA-G.R. SP No. 62211, properly assumed jurisdiction
over respondents’ case after the same was referred to it by this Court through our Resolution dated
September 25, 2000. The issue raised by respondents, as petitioners in G.R. No. 142640, was
purely a question of fact that is beyond the power of this Court to resolve. Essentially, respondents
asked the Court to determine the ownership of the lots purportedly covered by petitioner’s titles.

Neither do we find merit in petitioner’s contention that the dismissal of the appeal in CA-G.R. CV No.
66547 is binding on respondents. The appellate court itself recognized the withdrawal of appeal filed
by respondents, thus:

… However, defendants Maximo R. Bonifacio, et al. withdrew their appeal so that the only appellants
herein are defendants-appellants Danilo R. Bonifacio, et al. 36
So did the trial court err in taking cognizance of petitioner’s action for quieting of title contrary to
respondents’ assertion that it is actually one for annulment of the CFI Order dated May 25, 1962? To
this query, we rule in the negative.

The nature of an action is determined by the material allegations of the complaint and the character
of the relief sought by plaintiff, and the law in effect when the action was filed irrespective of whether
he is entitled to all or only some of such relief.37

In its complaint, petitioner alleges:

27. That said TCT No. C-314537 of the late Eleuteria Rivera, although apparently valid and effective,
are in truth and in fact invalid and ineffective[;]

27.1. An examination of Decree No. 36455 issued on April 19, 1917 in LRC Case No. 4429
and also of OCT No. 994 which was issued … pursuant thereto will show that Lot 23 covered
by the said TCT No. C-3145[3]7 of the late Eleuteria Rivera is not one of the 34 parcels of
land covered by said Decree No. 36455 and OCT 994;

27.2. That, as hereinbefore stated, the same TCT No. C-314537 of the late Eleuteria Rivera
is a direct transfer from OCT No. 994 which was registered on April 19, 1917. The fact,
however, is that there is only one OCT No. 994 which was issued … pursuant to Decree No.
36455 in LRC Case No. 4429 and said OCT 994 was registered with the Register of Deeds
of Rizal on May 3, 1917. The Office of the Register of Deeds of Caloocan City or of Malabon
or of Pasig City has no record of any OCT No. 994 that was allegedly registered on April 19,
1917;

27.3. That said TCT No. C-314537 of the late Eleuteria Rivera could not cover Lot 23-A or
any portion/s thereof because, as hereinbefore recited, the whole of Lot 23-A had been
totally disposed of as early as July 24, 1923 and she and/or any of her alleged
predecessors-in-interest is not among those named in the memorandum of encumbrances of
OCT No. 994 as vendees or vendors of said Lot 23-A; 38

Ultimately, petitioner submits that a cloud exists over its titles because TCT No. C-314537 in the
name of Eleuteria Rivera purports to cover the same parcels of land covered by petitioner’s TCT
Nos. 270921, 270922 and 270923. It points out that what appears to be a valid and effective TCT
No. C-314537 is, in truth, invalid because it covers Lot 23 which is not among those described in the
OCT No. 994 on file with the Register of Deeds of Rizal and registered on May 3, 1917. Petitioner
notes that the OCT No. 994 allegedly registered on April 19, 1917 and from which TCT No. C-
314537 was derived, is not found in the records of the Register of Deeds. In other words, the action
seeks the removal of a cloud from Phil-Ville’s title and/or the confirmation of its ownership over the
disputed properties as the successor-in-interest of N. Dela Merced and Sons, Inc.

Quieting of title is a common law remedy for the removal of any cloud upon, doubt, or uncertainty
affecting title to real property. Whenever there is a cloud on title to real property or any interest in
real property by reason of any instrument, record, claim, encumbrance, or proceeding that is
apparently valid or effective, but is, in truth and in fact, invalid, ineffective, voidable, or
unenforceable, and may be prejudicial to said title, an action may be brought to remove such cloud
or to quiet the title. In such action, the competent court is tasked to determine the respective rights of
the complainant and the other claimants, not only to place things in their proper places, and make
the claimant, who has no rights to said immovable, respect and not disturb the one so entitled, but
also for the benefit of both, so that whoever has the right will see every cloud of doubt over the
property dissipated, and he can thereafter fearlessly introduce any desired improvements, as well as
use, and even abuse the property.39

In order that an action for quieting of title may prosper, two requisites must concur: (1) the plaintiff or
complainant has a legal or equitable title or interest in the real property subject of the action; and (2)
the deed, claim, encumbrance, or proceeding claimed to be casting cloud on his title must be shown
to be in fact invalid or inoperative despite its prima facie appearance of validity or legal efficacy.40

As regards the first requisite, we find that petitioner was able to establish its title over the real
properties subject of this action. Petitioner submitted in evidence the Deed of Absolute Sale 41 by
which it acquired the subject property from N. Dela Merced and Sons, Inc., as well as copies of OCT
No. 994 dated May 3, 1917 and all the derivative titles leading to the issuance of TCT Nos. 270921,
270922 and 270923 in petitioner’s name as follows:
1avvphi1

Title No. Registration Date Holder

8004 July 24, 1923 Vedasto Galino
8059 September 3, 1923 -ditto-
8160 October 24, 1923 -ditto-
8164 November 6, 1923 Juan Cruz Sanchez
8321 February 26, 1924 -ditto-
8734 September 11, 1924 Emilio Sanchez
12946 November 21, 1927 -ditto-
28315 July 16, 1935 Eastern Syndicate Mining Co., Inc.
39163 November 18, 1939 Royal Lawrence Rutter
43559 July 26, 1941 Mapua Institute of Technology
18767 June 16, 1950 Sofia Nepomuceno
57541 March 13, 1958 Leona N. de Jesus, Pacifico Nepomuceno, Sofia
Nepomuceno, Soledad Nepomuceno de Jesus
81679 December 15, 1960 Pacifico Nepomuceno, Sofia N. Jugo, Soledad N.
de Jesus
(81680) December 15, 1960 Pacifico Nepomuceno & Co.
17745
C-13794 April 21, 1978 Pacifico Nepomuceno & Co. Inc.
C-14603 May 16, 1978 N. de La Merced & Sons, Inc.
T-148220 April 22, 1987 Phil-Ville Development and Housing Corp.42

Petitioner likewise presented the Proyecto de particion de la Hacienda de Maysilo43 to prove that Lot
23-A, of which petitioner’s Lots 1-G-1, 1-G-2 and 1-G-3 form part, is among the 34 lots covered by
OCT No. 994 registered on May 3, 1917. It produced tax receipts accompanied by a
Certification44 dated September 15, 1997 issued by the City Treasurer of Caloocan stating that Phil-
Ville has been religiously paying realty taxes on the lots. Its documentary evidence also includes a
Plan45 prepared by the Chief of the Geodetic Surveys Division showing that Lot 23-A of the Maysilo
Estate is remotely situated from Lot 23 portion of the Maysilo Estate. Petitioner ties these pieces of
evidence to the finding in the DOJ Committee Report 46 dated August 28, 1997 and Senate
Committee Report No. 1031 dated May 25, 1998 that, indeed, there is only one OCT No. 994, that
is, the one registered on May 3, 1917.

On the other hand, respondents have not adduced competent evidence to establish their title to the
contested property or to dispute petitioner’s claim over the same. It must be noted that the RTC
Order dated September 9, 1996 in Civil Case No. C-424, which resulted in the issuance of TCT No.
C-314537 in the name of Eleuteria Rivera had long been set aside by the Court of Appeals in CA-
G.R. SP No. 43034. Clearly, respondents’ claim anchored primarily on TCT No. C-314537 lacks
legal basis. Rather, they rely simply on the Court’s pronouncement in MWSS v. Court of
Appeals and Heirs of Gonzaga v. Court of Appeals that OCT No. 994 registered on May 3, 1917 and
all titles emanating from it are void.

The Supreme Court sustained said decisions in the case of Manotok Realty, Inc. v. CLT Realty
Development Corporation47 promulgated on November 29, 2005. In said case, the Court declared
void the titles of the Manotoks and Aranetas which were derived from OCT No. 994 registered on
May 3, 1917 consistent with its ruling in MWSS and Gonzaga. The Court disregarded the DOJ and
Senate reports on the alleged anomalies surrounding the titling of the Maysilo Estate.

However, on motion for reconsideration, the Court issued a Resolution 48 dated December 14, 2007
which created a Special Division of the Court of Appeals to hear the consolidated cases on remand.
The Special Division was tasked to hear and receive evidence, conclude the proceedings and
submit to the Court a report on its findings as well as recommend conclusions within three months
from the finality of said Resolution. However, to guide the proceedings before the Special Division,
the Court laid the following definitive conclusions:

… First, there is only one OCT 994. As it appears on the record, that mother title was received for
transcription by the Register of Deeds on 3 May 1917, and that should be the date which should be
reckoned as the date of registration of the title. It may also be acknowledged, as appears on the title,
that OCT No. 994 resulted from the issuance of the decree of registration on [19] April 1917,
although such date cannot be considered as the date of the title or the date when the title took effect.

Second. Any title that traces its source to OCT No. 994 dated [19] April 1917 is void, for such
mother title is inexistent. The fact that the Dimson and CLT titles made specific reference to an
OCT No. 994 dated [19] April 1917 casts doubt on the validity of such titles since they refer to an
inexistent OCT. This error alone is, in fact, sufficient to invalidate the Dimson and CLT claims over
the subject property if singular reliance is placed by them on the dates appearing on their respective
titles.

Third. The decisions of this Court in MWSS v. Court of Appeals and Gonzaga v. Court of Appeals
cannot apply to the cases at bar, especially in regard to their recognition of an OCT No. 994 dated
19 April 1917, a title which we now acknowledge as inexistent. Neither could the conclusions in
MWSS [and] Gonzaga with respect to an OCT No. 994 dated 19 April 1917 bind any other case
operating under the factual setting the same as or similar to that at bar. 49 (Emphasis supplied.)

Eventually, on March 31, 2009, the Supreme Court issued a Resolution 50 reversing its Decision of
November 29, 2005 and declaring certain titles in the names of Araneta and Manotok valid. In the
course of discussing the flaws of Jose Dimson’s title based on his alleged 25% share in the
hereditary rights of Bartolome Rivera, Eleuteria Rivera’s co-petitioner in LRC No. 4557, the Court
noted:
… However, the records of these cases would somehow negate the rights of Rivera to claim from
Vidal. The Verification Report of the Land Registration Commission dated 3 August 1981 showed
that Rivera was 65 years old on 17 May 1963 (as gathered from the records of Civil Case Nos. 4429
and 4496). It can thus be deduced that, if Rivera was already 65 years old in 1963, then he must
have been born around 1898. On the other hand, Vidal was only nine (9) years in 1912; hence, she
could have been born only on [1903]. This alone creates an unexplained anomalous, if not
ridiculous, situation wherein Vidal, Rivera’s alleged grandmother, was seven (7) years younger than
her alleged grandson. Serious doubts existed as to whether Rivera was in fact an heir of Vidal, for
him to claim a share in the disputed portions of the Maysilo Estate. 51

The same is true in this case. The Death Certificate 52 of Eleuteria Rivera reveals that she was 96
years old when she died on February 22, 1997. That means that she must have been born in 1901.
That makes Rivera two years older than her alleged grandmother Maria de la Concepcion Vidal who
was born in 1903. Hence, it was physically impossible for Eleuteria Rivera to be an heir of Maria de
la Concepcion Vidal.

Moreover, the Partition Plan of the Maysilo Estate shows that Lot 23-A was awarded, not to Maria de
la Concepcion Vidal, but to Isabel Tuason, Esperanza Tuason, Trinidad Jurado, Juan O’ Farrell and
Angel O’ Farrell.53 What Vidal received as her share were Lot 6 and portions of Lots 10 and 17, all
subject to the usufructuary right of her mother Mercedes Delgado. This was not at all disputed by
respondents.

On the other hand, Vedasto Galino, who was the holder of TCT No. 8004 registered on July 24,
1923 and to whom petitioner traces its titles, was among the successful petitioners in Civil Case No.
391 entitled Rosario Negrao, et al. v. Concepcion Vidal, et al., who sought the issuance of bills of
sale in favor of the actual occupants of certain portions of the Maysilo Estate.

Be that as it may, the second requisite in an action for quieting of title requires that the deed, claim,
encumbrance, or proceeding claimed to be casting cloud on his title must be shown to be in fact
invalid or inoperative despite its prima facie appearance of validity or legal efficacy. Article 476 of
the Civil Code provides:

Art. 476. Whenever there is a cloud on title to real property or any interest therein, by reason of any
instrument, record, claim, encumbrance or proceeding which is apparently valid or effective but is in
truth and in fact invalid, ineffective, voidable, or unenforceable, and may be prejudicial to said title,
an action may be brought to remove such cloud or to quiet the title.

An action may also be brought to prevent a cloud from being cast upon title to real property or any
interest therein.

Thus, the cloud on title consists of: (1) any instrument, record, claim, encumbrance or proceeding;
(2) which is apparently valid or effective; (3) but is in truth and in fact invalid, ineffective, voidable, or
unenforceable; and (4) may be prejudicial to the title sought to be quieted. The fourth element is not
present in the case at bar.

While it is true that TCT No. C-314537 in the name of Eleuteria Rivera is an instrument that
appeared to be valid but was subsequently shown to be invalid, it does not cover the same parcels
of land that are described in petitioner’s titles. Foremost, Rivera’s title embraces a land measuring
14,391.54 square meters while petitioner’s lands has an aggregate area of only 8,694 square
meters. On the one hand, it may be argued that petitioner’s land could be subsumed within Rivera’s
14,391.54-square meter property. Yet, a comparison of the technical descriptions of the parties’ titles
negates an overlapping of their boundaries.
The technical description of respondents’ TCT No. C-314537 reads:

A parcel of land (Lot 23, being a portion of Maysilo Estate) situated in Maysilo, Caloocan, Metro
Manila, Island of Luzon. Bounded on the NW., along line 1-2 by Blk. 2; on the SW., along line 2-3
by Jacinto Street, along lines 3-4-5 by Blk. 4; along line 5-6 by Bustan St., and San Diego St., on
the S., along lines 6-7-8 by Blk. 13, all of Caloocan Cadastre; on the NE., along line 8-9 by Caloocan
Cadastre; and on the N., along line 9-1 by Epifanio de los Santos Avenue. Beginning at a point
marked "1" on plan, being S. 28 deg. 30’E., 530.50 m. from MBM No. 1, Caloocan Cadastre; thence
S. 07 deg. 20’W., 34.00 m. to point 2; S. 17 deg. 10’E., 12.00 m. to point 3; (0/illegible)

S. 15 deg. 31’E., 31.00 m. to point 4; S. 27 deg. 23’E., 22.50 m. to point 5;

S. 38 deg. 41’E., 43.20 m. to point 6; S. 71 deg. 35’E., 10.60 m. to point 7;

N. 84 deg. 30’E., 38.80 m. to point 8; N. 11 deg. 40’W., 131.20 m. to point 9;

N. 89 deg. 10’W., 55.00 m. to the point of beginning; containing an area of FOURTEEN

THOUSAND THREE HUNDRED NINETY ONE SQUARE METERS AND FIFTY FOUR
SQUARE DECIMETERS (14,391.54). more or less. All points referred to are indicated on the
plan and are marked on the ground by Old Ps. cyl. conc. mons. 15 x 60 cm.; bearings
true;54 (Emphasis supplied).

On the other hand, the technical description of petitioner’s lands before they were subdivided under
TCT No. T-148220 is as follows:

A parcel of land (Lot No. 1-G of the subdivision plan Psd-2731, being a portion of Lot 23-A, Maysilo
Estate, GLRO Rec. No. 4429), situated in the Municipality of Caloocan, Province of Rizal. Bounded
on the North., by Calle A. Samson; on the East., by properties of Gregoria de Jesus, Arcadio de
Jesus and Felix de Jesus; on the South., by properties of Lucas Bustamante and Patricio
Galauran; and on the West., by property of Patricio Galauran; and Lot No. 1-E of the subdivision
plan. Beginning at a point marked "1" on plan, being N.69 deg. 27’E., 1600.19 m. from BLLM No. 1,
Mp. of Caloocan, more or less, thence S. 21 deg. 25’E., 44.78 m. to point 2; thence S. 14 deg. 57’E.,
37.24 m. to point 3; thence S. 81 deg. 11’W., 20.28 m. to point 4; thence S. 86 deg. 06’W., 15.45 m.
to point 5; thence N. 67 deg. 20’W., 15.91 m. to point 6; thence N. 35 deg. 19’W., 37.56 m. to point
7; thence N. 27 deg. 11’W., 12.17 m. to point 8; thence N. 19 deg. 26’W., 23.32 m. to point 9; thence
N. 13 deg. 08’W., 28.25 m. to point 10; thence S. 78 deg. 45’W., 13.00 m. to point 11; thence N. 0
deg. 56’E., 48.92 m. to point 12; thence N. 89 deg. 13’E., 53.13 m. to point 13; thence S. 21 deg.
24’E., 67.00 m. to the point of beginning; containing an area of EIGHT THOUSAND SIX HUNDRED
NINETY FOUR (8,694) SQUARE METERS, more or less. All points referred to are indicated on the
plan and are marked on the ground points 1,2,3 and 13 by Old PLS conc. mons. point 4,6,7,8 and 9
by Old PLS stone mons.; points 5 to 10 and old stakes points 11 and 12 by PLS conc. mons.
bearings true, declination 1 deg. 08’E., date of the original survey, Sept. 8-27, Oct. 4-21 and Nov.
17-18, 1911 and that of the subdivision survey, Oct. 14 and 15, 1927. 55 (Emphasis supplied).

Such disparity in location is more vividly illustrated in the Plan prepared by Engr. Privadi J.G. Dalire,
Chief of the Geodetic Surveys Division, showing the relative positions of Lots 23 and 23-A. As it
appears on the Plan, the land covered by respondents’ TCT No. C-314537 lies far west of
petitioner’s lands under TCT Nos. 270921, 270922 and 270923. Strictly speaking, therefore, the
existence of TCT No. C-314537 is not prejudicial to petitioner’s titles insofar as it pertains to a
different land.
Significantly, an action to quiet title is characterized as a proceeding quasi in rem.56 In an
action quasi in rem, an individual is named a defendant and the purpose of the proceeding is to
subject his interests to the obligation or loan burdening the property. Actions quasi in rem deal with
the status, ownership or liability of a particular property but which are intended to operate on these
questions only as between the particular parties to the proceedings and not to ascertain or cut off the
rights or interests of all possible claimants. The judgment therein is binding only upon the parties
who joined in the action.57

Yet, petitioner was well aware that the lots encompassed by its titles are not the same as that
covered by respondents’ title. In its complaint, Phil-Ville alleges:

27.4. That Lot 23, being a portion of Maysilo Estate, as described in said TCT No. C-314537 of the
late Eleuteria Rivera when plotted using its tie line to MBM No. 1, Caloocan Cadastre is outside Lot
23-A of the Maysilo Estate. This must be so because Lot 23 is not [a] portion of Lot 23-A, Maysilo
Estate….58

This brings petitioner’s action within the purview of Rule 63 of the Rules of Court on Declaratory
Relief. Section 1 of Rule 63 provides:

SECTION 1. Who may file petition.-Any person interested under a deed, will, contract or other
written instrument, whose rights are affected by a statute, executive order or regulation, ordinance or
any other governmental regulation may, before breach or violation thereof, bring an action in the
appropriate Regional Trial Court to determine any question of construction or validity arising, and
for a declaration of his rights or duties, thereunder.

An action for the reformation of an instrument, to quiet title to real property or remove clouds
therefrom, or to consolidate ownership under Article 1607 of the Civil Code, may be brought under
this Rule. (Emphasis supplied).

An action for declaratory relief presupposes that there has been no actual breach of the instruments
involved or of the rights arising thereunder. Since the purpose of an action for declaratory relief is to
secure an authoritative statement of the rights and obligations of the parties under a statute, deed, or
contract for their guidance in the enforcement thereof, or compliance therewith, and not to settle
issues arising from an alleged breach thereof, it may be entertained before the breach or violation of
the statute, deed or contract to which it refers. A petition for declaratory relief gives a practical
remedy for ending controversies that have not reached the state where another relief is immediately
available; and supplies the need for a form of action that will set controversies at rest before they
lead to a repudiation of obligations, an invasion of rights, and a commission of wrongs.

In the present case, petitioner filed a complaint for quieting of title after it was served a notice to
vacate but before it could be dispossessed of the subject properties. Notably, the Court of Appeals,
in CA-G.R. SP No. 43034, had earlier set aside the Order which granted partial partition in favor of
Eleuteria Rivera and the Writ of Possession issued pursuant thereto. And although petitioner’s
complaint is captioned as Quieting of Title and Damages, all that petitioner prayed for, is for the
court to uphold the validity of its titles as against that of respondents’. This is consistent with the
nature of the relief in an action for declaratory relief where the judgment in the case can be carried
into effect without requiring the parties to pay damages or to perform any act. 59

Thus, while petitioner was not able to demonstrate that respondents’ TCT No. C-314537 in the name
of Eleuteria Rivera constitutes a cloud over its title, it has nevertheless successfully established its
ownership over the subject properties and the validity of its titles which entitles it to declaratory relief.
WHEREFORE, the petition for review on certiorari is GRANTED. The Decision dated January 31,
2005 and Resolution dated March 15, 2005 of the Court of Appeals in CA-G.R. SP No. 62211
are SET ASIDE. The Decision dated March 24, 2000 of the Caloocan RTC in Civil Case No. C-507
is hereby REINSTATED and UPHELD.

No pronouncement as to costs.

SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 175542               June 5, 2013

GREEN ACRES HOLDINGS, INC., Petitioner,

vs.
VICTORIA P. CABRAL, SPS. ENRIQUE T. MORAGA and VICTORIA SORIANO, FILCON READY
MIXED, INC., DEPARTMENT OF AGRARIAN REFORM ADJUDICATION BOARD (DARAB), and
REGISTRY OF DEEDS OF BULACAN, MEYCAUA YAN BRANCH, Respondents.

x-----------------------x

G.R. No. 183205

VICTORIA P. CABRAL, Petitioner,
vs.
PROVINCIAL ADJUDICATOR, JOSEPH NOEL C. LONGBOAN I OFFICE OF THE AGRARIAN
REFORM ADJUDICATOR, GREEN ACRES HOLDINGS, INC., SPOUSES ENRIQUE T. MORAGA
and VICTORIA SORIANO and FILCON READY MIXED, INC., Respondents.

DECISION

VILLARAMA, JR., J.:

Before us are two consolidated petitions for review on certiorari under Rule 45 of the 1997 Rules of
Civil Procedure, as amended.

In G.R. No. 175542, petitioner Green Acres Holdings, Inc. (hereafter, Green Acres) assails the
November 24, 2006 Decision1 of the Court of Appeals (CA) in CA-G.R. CV No. 85766 dismissing its
appeal from the November 3, 2004 Order2 of the Regional Trial Court (RTC) while in G.R. No.
183205, petitioner Victoria Cabral seeks to set aside the February 27, 2008 Decision 3 and May 29,
2008 Resolution4 of the CA in CA-G.R. SP No. 99651.

The facts are as follows:

Victoria Cabral was the original owner of a parcel of land in Barangay Pandayan, Meycauayan,
Bulacan with an area of 11,432 square meters and covered by Transfer Certificate of Title (TCT) No.
T-73737 (M). The land was placed under the coverage of Presidential Decree (P.D.) No. 27, and on
March 23, 1993, three Emancipation Patents were issued to the spouses Enrique Moraga and
Victoria Soriano (Spouses Moraga) as follows: EP No. 496039 with an area of 861 square meters;
EP No. 496040 with an area of 2,159 square meters; and EP No. 496041 with an area of 8,941
square meters. The Spouses Moraga thereafter caused the cancellation of EP No. 496041 and its
conversion to TCT No. 256260 (M).

On August 29, 1994, Cabral filed a complaint before the Provincial Agrarian Reform Adjudicator
(PARAD) seeking the cancellation of the Emancipation Patents issued to the Spouses Moraga on
the grounds that these were obtained through fraud and that the land is not suitable for rice and corn
production and has long been classified as residential, commercial, industrial and nonagricultural
land by the Zoning Administrator of the Housing and Land Use Regulatory Board. The case was
docketed as Reg. Case No. 739-Bul-94.

On December 15, 1995, the PARAD rendered a decision denying the petition for cancellation of the
Emancipation Patents and dismissing the complaint for lack of merit. Cabral appealed the decision
to the Department of Agrarian Reform Adjudication Board (DARAB). 5

While the appeal was pending, the Spouses Moraga subdivided the lot covered by TCT No. 256260
(M) into three smaller lots, the properties subject of this case. TCT Nos. T-270125 (M) covering
3,511 square meters, T-270126 (M) covering 2,715 square meters, and T-270127 (M) covering
2,715 square meters were thereafter issued in their names on May 29, 1996. On June 19, 1996, the
Spouses Moraga sold the lots to Filcon Ready Mixed Inc. (Filcon for brevity) and TCT Nos. T-
274486 (M),6 T-274487 (M)7 and T-274488 (M)8 were issued in the name of Filcon on June 24, 1996.

On April 29, 1999, Green Acres purchased9 five lots from Filcon including the three subject
properties covered by TCT Nos. T-274486 (M), T-274487 (M) and T-274488 (M) in the name of
Filcon. Except for an already cancelled annotation of a real estate mortgage in favor of Philippine
Commercial International Bank (PCI Bank),10 the titles were free from any annotations, liens, notices,
claims or encumbrances.

On April 30, 1999, the titles of Filcon were cancelled by the Register of Deeds of Meycauayan,
Bulacan and new titles were issued in the name of Green Acres including TCT Nos. T-345660
(M),11 T-345661 (M)12 and T-345662 (M)13 covering the subject properties. Green Acres then
constructed a warehouse building complex on the said lots.

On January 17, 2001, the DARAB resolved Cabral’s appeal and rendered judgment ordering the
cancellation of the titles issued in the names of the Spouses Moraga and those of Filcon for having
been illegally acquired. The dispositive portion of the DARAB decision reads:

WHEREFORE, premises considered, the decision is hereby REVERSED and SET ASIDE and a
NEW JUDGMENT is rendered disposing as follows:

1. Ordering the cancellation of TCT No. EP-051 (M) (EP No. 496039; TCT No. EP-052 (M)
(EP No. 496040); TCT No. EP-052 (M) (EP No. 496041); TCT No. T-270125 (M); TCT No. T-
270126 (M); and TCT No. T-270127 (M) – all in the names of defendants spouses Moraga;
TCT No. 274486 (M); TCT No. T-[2]74487 (M), and TCT No. T-274488 (M) – all in the name
of FILCO[N] READY MIXED INC;
 2. Directing the Register of Deeds of Bulacan to restore TCT No. T-73737 (M) in the name of
plaintiff Victoria P. Cabral;

3. Ordering defendants Moraga and their assign, FILCON READY MIXED INC., to vacate
the premises of the lands in question and turn over their possession to herein plaintiff; and,

4. All claims and counterclaims of both parties are hereby dismissed for insufficiency of
evidence.

SO ORDERED.14

When Green Acres learned about the DARAB decision, it sent a Letter 15 to Filcon on March 15, 2001
advising the latter that it learned that the properties it bought from Filcon were the subject of an
adverse decision of the DARAB. Fearing that its titles and possession might be disturbed by the
DARAB decision, Green Acres reminded Filcon of its warranties under the deed of sale.

In a letter16 dated March 30, 2001, Filcon replied that it was also an innocent purchaser for value
since at the time it purchased the subject property, it had no knowledge of any legal infirmity in the
title of the Spouses Moraga. In fact, it was able to secure a loan from PCI Bank in the amount of ₱12
million with the subject property as collateral. Filcon assured Green Acres that it is coordinating with
its predecessor, the Spouses Moraga, to make sure that Green Acres’ interest over the property is
protected.

On April 19, 2001, Green Acres filed a Complaint 17 for Quieting of Title, Damages with Application for
Preliminary Injunction and Writ of Preliminary Attachment before the RTC of Malolos, Bulacan
against Cabral, the Spouses Moraga, Filcon, the DARAB and the Registry of Deeds of Meycauayan,
Bulacan. The case was docketed as Civil Case No. 279-M-2001. Green Acres sought to quiet its title
and alleged that it is a purchaser in good faith and for value, claiming that it had no notice or
knowledge of any adverse claim, lien, or encumbrance on the properties. Neither was it a party to
the DARAB proceedings nor did it have notice of the said proceedings where the DARAB Decision
of January 17, 2001 was issued. Green Acres claimed that the DARAB decision casts a cloud on its
titles.

Cabral, in her Answer,18 denied all the material allegations in the complaint and alleged that Green
Acres never acquired valid title to the subject property, much less, can it claim to be an innocent
purchaser for value. She further averred that a declaratory judgment in a petition to quiet title will
effectively subject the DARAB decision to review.

After Green Acres presented its evidence, Cabral filed a Demurrer to Plaintiff’s Evidence 19 arguing
that Green Acres failed to prove that it is a purchaser in good faith and for value. She maintains that
the complaint is not appropriate for quieting of title since it omitted to assail her titles over the subject
property but instead questioned the proceedings held at the DARAB. She likewise insisted that the
trial court has no jurisdiction over the subject property since the same is still within the coverage of
the Comprehensive Agrarian Reform Law and thus under the jurisdiction of the DARAB.

In an Order20 dated November 3, 2004, the trial court granted the demurrer and ordered the case
dismissed.

Green Acres’ motion for reconsideration having been denied, Green Acres filed with the CA an
appeal which was docketed as CA-G.R. CV No. 85766.
In the meantime, the DARAB decision became final and executory on April 13, 2005 21 as no further
recourse was sought by the Spouses Moraga from the denial of their motion for reconsideration on
February 24, 2005.22On July 8, 2005, Cabral filed with the PARAD a Motion for Issuance of Writ of
Execution23 of the DARAB decision.

On January 25, 2006, the PARAD issued a Resolution denying the Motion for Issuance of Writ of
Execution for lack of merit. It ruled:

Only the decision of the Board as embodied in the dispositive portion of the decision can be
implemented by virtue of a writ of execution. The January 17, 2001 decision merely orders the
cancellation of the Emancipation Patent and Transfer Certificate of Titles issued by the Registry of
Deeds of Bulacan in favor of Sps. MORAGA and FILCON. Hence, if ever a Writ of Execution will be
issued, it will be up to the FILCON which was included in the dispositive portion of the Decision that
has become final and executory. Nothing in the body of the decision as well as the dispositive
portion thereof directs the cancellation of the title issued in favor of GREEN ACRES. If we subscribe
to the prayer of the movant, we will be in effect amending the aforementioned decision because we
will be inserting something that has not been directed to be done. x x x

xxxx

Aside from amending the final and executory decision in this case, this Forum will also be violating
the generally accepted principle of due process. It is already settled that even the administrative arm
of the government exercising quasi-judicial functions are not exempt from observing due process. x
xx

xxxx

It is clear as the sun rises from the east that GREEN ACRES was never made a party in the case at
bar. Much less was it mentioned in the decision sought to be executed itself. GREEN ACRES can
not be made to suffer the consequences of a case where it did not participate.

xxxx

Lastly, to allow movants’ contention will also render the pending case of quieting of title filed by
GREEN ACRES against herein plaintiff movant on April 18, 2001 before the Regional Trial Court,
Third Judicial Region, Branch 84 and docketed as Civil Case 279-M-2001 which was appealed to
the Court of Appeals, moot and academic.

All told, the titles of Sps. MORAGA and FILCON sought to be cancelled in the decision have already
been cancelled. Therefore, there is nothing to be done anymore, as the relief prayed for has become
fait accompli.24

Cabral filed a Motion for Recusation25 and a Motion for Reconsideration.26 The PARAD, however,
denied Cabral’s motions on September 11, 2006.27 Thus, on November 7, 2006, Cabral filed with the
PARAD a Notice of Appeal.28

In the meantime, the CA, on November 24, 2006, rendered a decision in CA-G.R. CV No. 85766
dismissing Green Acres’ appeal. Citing the case of Foster-Gallego v. Spouses Galang, 29 the
appellate court held that the trial court had no authority to interfere with the proceedings of a court of
equal jurisdiction, much less to annul the final judgment of a co-equal court. The appellate court
further held that the only issue in an action to quiet title is whether there is a cloud in a title to real
property because of any instrument, record, claim, encumbrance or a proceeding that has a prima
facie appearance of validity and the DARAB decision does not fall within said enumeration.

On February 27, 2007, the PARAD issued an Order30 denying due course to Cabral’s Notice of
Appeal and held that the resolution denying the motion for execution is an interlocutory order against
which the remedy is a petition for certiorari under Rule 65, and not an appeal to the DARAB. The
PARAD further ruled that Cabral’s act of impleading Green Acres as additional defendant only in the
execution stage is highly irregular and that to enforce the decision against Green Acres would violate
the latter’s right to due process.

On June 18, 2007, Cabral filed with the CA a petition for certiorari under Rule 65 seeking to annul
the January 25, 2006 and September 11, 2006 Resolutions, as well as the February 27, 2007 Order
of the PARAD.

On February 27, 2008, the CA denied Cabral’s petition. The appellate court ratiocinated as follows:

An execution can only be issued against a party and not against one who did not have his day in
court x x x. Green Acres was never a party to the case nor it was (sic) mentioned in the decision
sought to be executed, hence, Green Acres cannot be made to suffer the consequences of a case
where it did not participate. To maintain otherwise would be to ignore the constitutional prohibition
against depriving a person of his property without due process of law x x x.

Moreover, to apply the decision against Green Acres will amount to collateral attack against its titles
because nowhere in the case or decision that it was considered or passed upon. Under the Property
Registration Decree, titles issued under the Torrens system can only be altered, modified or
cancelled in direct proceeding in accordance with law

x x x.

Even assuming that spouses Moraga and Filcon fraudulently acquired the disputed lots, still, Green
Acres has valid and legitimate titles over the same since it is a purchaser in good faith and for value
when it acquired the properties from Filcon. A buyer in good faith is one who buys the property of
another without notice that some other person has a right to or interest in such property x x
x.31 (Citations omitted.)

Both Green Acres and Cabral are now before this Court seeking the reversal of the CA decisions
adverse to them.

In G.R. No. 175542, Green Acres contends that the CA erred in:

x x x RULING THAT THE DARAB DECISION IS NOT A SOURCE OF A CLOUD THAT IS

SUSCEPTIBLE TO AN ACTION FOR QUIETING OF TITLE.

x x x HOLDING THAT THE COURT DOES NOT HAVE AUTHORITY TO QUIET TITLES TO REAL
PROPERTY AND REMOVE A CLOUD PRODUCED BY A DARAB DECISION.

x x x AFFIRMING THE ORDER OF THE REGIONAL TRIAL COURT DATED NOVEMBER 3, 2004
THEREBY IMPLIEDLY HOLDING THAT GREEN ACRES IS NOT A PURCHASER IN GOOD FAITH
FOR VALUE; THUS, ITS TITLE CAN NOT BE QUIETED.32

In G.R. No. 183205, Cabral, on the other hand, argues that the CA erred when it:
x x x FAILED TO CORRECTLY APPLY THE PERTINENT PROVISIONS OF THE DARAB 2003
RULES OF PROCEDURE, P.D. 1529 AND THE CIVIL CODE, AMONG OTHERS, AS WELL AS
THE APPLICABLE JURISPRUDENCE.

x x x DISMISSED PETITIONER’S PETITION FOR CERTIORARI.

x x x FAILED TO RULE THAT THERE WAS GRAVE ABUSE OF DISCRETION AMOUNTING TO

LACK OF OR ABUSE OF DISCRETION ON THE PART OF PUBLIC RESPONDENT PROVINCIAL
ADJUDICATOR LONGBOAN.

x x x DECLARED THAT THE DECISION PROMULGATED ON JANUARY 17, 2001 CANNOT BE

MADE TO APPLY TO RESPONDENT GREEN ACRES.

x x x DECLARED THAT (SIC) RESPONDENT GREEN ACRES TO BE AN "INNOCENT

PURCHASER FOR VALUE."33

Simply put, the issues raised in the two petitions are essentially as follows: (1) Whether the January
17, 2001 DARAB decision may be enforced against Green Acres; and (2) Whether the said DARAB
decision in favor of Cabral constitutes a cloud on Green Acres’ title over the subject properties.

First Issue: Whether the January 17,

2001 DARAB decision may be
enforced against Green Acres.

Cabral contends that the PARAD committed grave abuse of discretion in not issuing the writ of
execution to enforce the January 17, 2001 DARAB decision in her favor. She argues that the
issuance of a writ of execution is ministerial under Section 1, Rule XX of the 2003 DARAB Rules of
Procedure which provides that the execution of a final order or decision shall issue as a matter of
course.

Cabral also argues that contrary to the PARAD’s ruling, she is not seeking the amendment of the
final decision sought to be executed. She contends that the directive to the Register of Deeds to
restore TCT No. T-73737 (M) in her name means that it should be done regardless of who holds title
to the property at the time of execution. In this case, it is Green Acres. She also points out that the
transfer from the Spouses Moraga to Filcon in 1996 and eventually to Green Acres in 1999
transpired after she filed a case with the DARAB in 1994. Therefore, under Section 12.2, Rule XX of
the DARAB Rules, Green Acres is considered a successor in interest by title subsequent to the
commencement of the action upon whom the final judgment or order of the DARAB is conclusive.
Cabral also insists that Green Acres cannot be considered an innocent purchaser for value because
the transfers were made to defeat the DARAB ruling.

Green Acres, for its part, submits that the CA did not err in denying Cabral’s petition for certiorari.
Green Acres contends that Cabral, through her motion for execution, sought the amendment of the
DARAB decision and did not move merely for its execution. Green Acres points out that Cabral’s
motion for execution specifically sought the cancellation of Green Acres’ titles even though the
DARAB decision neither included Green Acres or its titles. Green Acres points out that if the
issuance of a writ of execution that conforms to the decision may be denied on the ground that it will
be inequitable, moreso should it be denied in the case where the writ of execution prayed for goes
beyond the decision. Hence, even if the issuance of a writ of execution to enforce a final and
executory decision is a ministerial duty, the PARAD may not issue a writ of execution against Filcon
and Green Acres as prayed for by Cabral.
Green Acres also argues that it cannot be bound by the DARAB decision since a writ of execution of
a decision can only be issued against a party to the case and not against one who did not have his
day in court. Moreover, if granted, the execution sought will constitute a collateral attack against the
titles of Green Acres since nowhere in the DARAB decision sought to be executed were they
mentioned. Green Acres also adds that Cabral misinterpreted Section 12.2 of the DARAB Rules to
mean that a judgment issued in a case is binding upon, and can be executed, even against those
parties not impleaded in the case. Green Acres submits that Section 12 is a mere reproduction of
Section 47, Rule 39 of the Rules of Court on the principle of res judicata. Thus, the cited DARAB rule
does not operate to bind Green Acres, either presently or in the future, to the DARAB decision which
does not mention Green Acres either in the body or the dispositive portion. Green Acres likewise
argues that impleading it as an additional defendant in the execution stage aggravates the violation
of its right to due process.

Green Acres further contends that Cabral’s argument that it is not a purchaser in good faith and for
value may not be considered in the resolution of her petition before this Court as her argument goes
into the merits of the case and said matters were not raised in her motion for execution. But even if
the argument could be considered, Green Acres claims that the merits of the case show that it is a
purchaser in good faith and for value. Green Acres points out that when it purchased the properties
from Filcon, the properties were covered by transfer certificates of title, not Emancipation Patents,
without any indication that the titles had their origins from the application of any agrarian law. Green
Acres also adds that the occupancy or possession of the properties of both Filcon and Green Acres
were not clandestine as Cabral claims. Neither can it be true, as Cabral claimed, that its acquisition
of the titles to the properties was made through "surreptitious and illegal transfers." Green Acres
argues that Cabral must have known about the alleged illegal subdivision of the property and
issuance of the transfer certificates of titles or Emancipation Patents, or if she did not know, she is
nonetheless deemed to have received constructive notice of the same because the properties were
registered under the Torrens System. Yet, despite said notice, Cabral, with gross negligence, failed
to annotate a notice of lis pendens on said titles.

We find in favor of Green Acres.

The principle that a person cannot be prejudiced by a ruling rendered in an action or proceeding in
which he was not made a party conforms to the constitutional guarantee of due process of law. 34 In
Muñoz v. Yabut, Jr.,35 this Court ruled:

An action for declaration of nullity of title and recovery of ownership of real property, or re-
conveyance, is a real action but it is an action in personam, for it binds a particular individual only
although it concerns the right to a tangible thing. Any judgment therein is binding only upon the
parties properly impleaded.

Since they were not impleaded as parties and given the opportunity to participate in Civil Case No.
Q-28580, the final judgment in said case cannot bind BPI Family and the spouses Chan. The effect
of the said judgment cannot be extended to BPI Family and the spouses Chan by simply issuing an
alias writ of execution against them. No man shall be affected by any proceeding to which he is a
stranger, and strangers to a case are not bound by any judgment rendered by the court. In the same
manner, a writ of execution can be issued only against a party and not against one who did not have
his day in court. Only real parties in interest in an action are bound by the judgment therein and by
writs of execution issued pursuant thereto. 36 (Emphasis supplied.)

It is beyond dispute that Green Acres was not made a party in the DARAB case. Consequently, the
January 17, 2001 DARAB decision cannot bind Green Acres. Likewise, the binding effect of the
DARAB decision cannot be extended to Green Acres by the mere issuance of a writ of execution
against it. No one shall be affected by any proceeding to which he is a stranger, and strangers to a
case are not bound by any judgment rendered by the court. In the same manner, a writ of execution
can be issued only against a party and not against one who did not have his day in court. Only real
parties in interest in an action are bound by the judgment therein and by writs of execution and
demolition issued pursuant thereto.37

Moreover, a Torrens title, as a general rule, is irrevocable and indefeasible, and the duty of the court
is to see to it that this title is maintained and respected unless challenged in a direct proceeding.
Section 48 of P.D. No. 1529 provides:

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

In Sps. Sarmiento v. Court of Appeals,38 this Court explained when an action is a direct attack on a
title and when it is collateral:

An action is deemed an attack on a title when the object of the action or proceeding is to nullify the
title, and thus challenge the judgment pursuant to which the title was decreed. The attack is direct
when the object of the action is to annul or set aside such judgment, or enjoin its enforcement. On
the other hand, the attack is indirect or collateral when, in an action to obtain a different relief, an
attack on the judgment is nevertheless made as an incident thereof. 39

In the instant case, Cabral seeks the execution of a final and executory DARAB decision that directs
the cancellation of the TCTs in the name of the Spouses Moraga and Filcon. Nowhere in the said
decision is Green Acres or its TCTs mentioned. Nonetheless, in her Motion for Issuance of Writ of
Execution, Cabral alleged that Green Acres, like Filcon, "also never acquired valid title to the subject
land" and "hence, its present TCTs thereto should likewise be cancelled (together with the
respective Emancipation Patents and TCTs of Sps. Moraga and Filcon Ready Mixed, Inc. mentioned
in the DARAB Decision) and reverted back to her TCT."40 She prayed for the issuance of a writ of
execution against the Spouses Moraga and "their subsequent assigns/successors in interest Filcon
Ready Mixed, Inc. and Green Acres Holdings, Inc."41 Clearly, seeking the cancellation of the titles of
Green Acres by a mere Motion for Issuance of Writ of Execution of a decision rendered in a case
where said titles were not in issue constitutes a collateral attack on them which this Court cannot
allow.

Furthermore, as correctly ruled by the PARAD and upheld by the appellate court, only the decision
of the DARAB as embodied in the dispositive portion of the decision can be implemented by a writ of
execution. As held in Ingles v. Cantos:42

A writ of execution should conform to the dispositive portion of the decision to be executed, and the
execution is void if it is in excess of and beyond the original judgment or award, for it is a settled
general principle that a writ of execution must conform strictly with every essential particular of the
judgment promulgated. It may not vary the terms of the judgment it seeks to enforce. Nor may it go
beyond the terms of the judgment sought to be executed. Where the writ of execution is not in
harmony with and exceeds the judgment which gives it life, the writ has pro tanto no validity. 43

A reading of the fallo of the DARAB decision would show that nothing in it directs the cancellation of
the titles issued in favor of Green Acres. To subscribe to Cabral’s prayer in her motion is tantamount
to modifying or amending a decision that has already attained finality in violation of the doctrine of
immutability of judgment.
It is also worth noting that the fact that the DARAB by final judgment ordered the cancellation of the
titles of the Spouses Moraga and Filcon does not automatically make the titles of Green Acres null
and void. It is settled that a void title may be the source of a valid title in the hands of an innocent
purchaser for value.44 An innocent purchaser for value is one who, relying on the certificate of title,
bought the property from the registered owner, without notice that some other person has a right to,
or interest in such property and pays a full and fair price for the same at the time of such purchase or
before he has notice of the claim or interest of some other person in the property. 45 The rationale
therefor was expressed by this Court in the earlier case of Republic v. Court of Appeals, 46 thus:

Where innocent third persons, relying on the correctness of the certificate of title thus issued, acquire
rights over the property the court cannot disregard such rights and order the total cancellation of the
certificate. The effect of such an outright cancellation would be to impair public confidence in the
certificate of title, for everyone dealing with property registered under the Torrens system would
have to inquire in every instance whether the title has been regularly or irregularly issued. This is
contrary to the evident purpose of the law. Every person dealing with registered land may safely rely
on the correctness of the certificate of title issued therefor and the law will in no way oblige him to go
behind the certificate to determine the condition of the property. x x x 47

Green Acres is considered an innocent purchaser for value. It relied on the certificates of title of
Filcon, free from any liens and encumbrances. The only annotation on them was a cancelled real
estate mortgage in favor of PCI Bank. Thus, as held by the CA, Green Acres was under no
obligation to investigate beyond Filcon’s titles as Green Acres had all the reason to believe that said
titles were free from any lien, claim or encumbrance.

We also agree with the CA that Cabral’s allegation that the Spouses Moraga, Filcon and Green
Acres were parties to illegal contracts cannot be given weight as such goes into the merits of the
case and may not be considered in the execution stage.

If there is anyone to be blamed for Cabral’s failure to recover the subject properties, it is Cabral
herself, who, due to her own negligence, failed to annotate a notice of lis pendens on the titles of the
Spouses Moraga and Filcon and thus give notice to future transferees. She cannot claim that she
was clueless that the subject properties were being transferred. As Green Acres correctly pointed
out, the transfers to Filcon and eventually to Green Acres were made through public documents and
procedures. Also, considering the significant size of the properties, occupation of the same cannot
be made clandestinely. In fact, the properties were fenced by concrete walls and Filcon had
constructed a batch plant while Green Acres erected a warehouse and building on it. Had her
adverse claim been annotated on said titles, said notice would have served as a warning to Green
Acres or other purchasers of the properties that any right they acquire would be subject to the
outcome of the litigation before the DARAB. Having failed to make such annotation, this Court has
no choice but to uphold the titles of Green Acres, an innocent purchaser for value.

Whether the DARAB Decision in

favor of Cabral constitutes a cloud
on Green Acres’ title over the subject
properties

Green Acres argues that the DARAB decision is among those enumerated in Article 476 48 of the Civil
Code as a possible source of a cloud on title to real property. It contends that there can hardly be
any doubt that the DARAB Decision is an "instrument," or if not, a "record" and reflects a "claim" on
the properties, while the proceedings before the DARAB are "proceedings" directed at the real
properties now owned by Green Acres which are "apparently valid or effective" but "unenforceable"
against the titles of Green Acres. It also contends that the appellate court’s reliance on Foster-
Gallego v. Spouses Galang49 is misplaced since nothing in said case supports the proposition that a
decision of a coordinate court cannot be a source of cloud under Article 476 of the Civil Code. Green
Acres submits that Foster-Gallego is not applicable because the ruling there was that an action to
quiet title is not the proper remedy when to remove a cloud on a title, a final and executory decision
of the court need to be reviewed or vacated. In the present case, Green Acres does not seek a
review or reversal of the DARAB decision.

Cabral, for her part, insists that the DARAB decision is not among those enumerated in Article 476
which may cast a cloud on title to real property. As to the applicability of Foster-Gallego, she argues
that assuming that the ruling on the main issue in said case is not directly germane, the
pronouncements therein on the nature, function, purpose and limitations of a case for quieting of title
and the power of the courts in such proceedings are applicable.

Green Acres’ arguments are meritorious.

Article 476 of the Civil Code provides:

Art. 476. Whenever there is a cloud on title to real property or any interest therein, by reason of any
instrument, record, claim, encumbrance or proceeding which is apparently valid or effective but is in
truth and in fact invalid, ineffective, voidable, or unenforceable, and may be prejudicial to said title,
an action may be brought to remove such cloud or to quiet the title.

An action may also be brought to prevent a cloud from being cast upon title to real property or any
interest therein.

Quieting of title is a common law remedy for the removal of any cloud upon, doubt, or uncertainty
affecting title to real property. Whenever there is a cloud on title to real property or any interest in
real property by reason of any instrument, record, claim, encumbrance, or proceeding that is
apparently valid or effective, but is in truth and in fact, invalid, ineffective, voidable, or unenforceable,
and may be prejudicial to said title, an action may be brought to remove such cloud or to quiet the
title. In such action, the competent court is tasked to determine the respective rights of the
complainant and the other claimants, not only to place things in their proper places, and make the
claimant, who has no rights to said immovable, respect and not disturb the one so entitled, but also
for the benefit of both, so that whoever has the right will see every cloud of doubt over the property
dissipated, and he can thereafter fearlessly introduce any desired improvements, as well as use, and
even abuse the property.50

For an action to quiet title to prosper, two indispensable requisites must concur: (1) the plaintiff or
complainant has a legal or equitable title or interest in the real property subject of the action; and (2)
the deed, claim, encumbrance, or proceeding claimed to be casting a cloud on his title must be
shown to be in fact invalid or inoperative despite its prima facie appearance of validity or legal
efficacy.51

There is no dispute as to the first requisite since Green Acres has legal title over the subject
properties. The issue lies in the second requisite.

A cloud on title consists of (1) any instrument, record, claim, encumbrance or proceeding; (2) which
is apparently valid or effective; (3) but is in truth and in fact invalid, ineffective, voidable, or
unenforceable; and (4) may be prejudicial to the title sought to be quieted. 52
This Court holds that the DARAB decision in favor of Cabral satisfies all four elements of a cloud on
title.

As Green Acres correctly points out, the DARAB decision, a final one at that, is both an "instrument"
and a "record." Black’s Law Dictionary defines an instrument as a document or writing which gives
formal expression to a legal act or agreement, for the purpose of creating, securing, modifying or
terminating a right.53 A record, on the other hand, is defined as a written account of some act, court
proceeding, transaction or instrument drawn up under authority of law, by a proper officer, and
designed to remain as a memorial or permanent evidence of the matters to which it relates. 54 It is
likewise a "claim" which is defined as a cause of action or a demand for money or property 55 since
Cabral is asserting her right over the subject lots. More importantly, it is a "proceeding" which is
defined as a regular and orderly progress in form of law including all possible steps in an action from
its commencement to the execution of judgment and may refer not only to a complete remedy but
also to a mere procedural step that is part of a larger action or special proceeding. 56

Also, the DARAB decision is apparently valid and effective.  It is a final decision that has not been
1âwphi1

reversed, vacated or nullified. It is likewise apparently effective and may be prejudicial to Green
Acres’ titles since it orders the cancellation of the titles of the Spouses Moraga and Filcon all from
which Green Acres derived its titles. However, as discussed above, it is ineffective and
unenforceable against Green Acres because Green Acres was not properly impleaded in the
DARAB proceedings nor was there any notice of lis pendens annotated on the title of Filcon so as to
serve notice to Green Acres that the subject properties were under litigation. As such, Green Acres
is an innocent purchaser for value.

Furthermore, in the case of Dare Adventure Farm Corporation v. Court of Appeals, 57 this Court had
the occasion to rule that one of the proper remedies of a person who was not impleaded in the
proceedings declaring null and void the title from which his title to the property had been derived, is
an action for quieting title. In said case, Dare Adventure Farm Corporation purchased property from
the Goc-ongs. Dare later discovered that said property was previously mortgaged by the Goc-ongs
to the Ngs. When the Goc-ongs failed to pay their obligation, the mortgage was foreclosed and the
Ngs were declared owners of the property. Dare, who was not impleaded in the foreclosure case,
filed a petition for annulment of the judgment of the trial court with the appellate court. The Court
upheld the appellate court’s dismissal of the petition since such remedy may be availed only when
other remedies are wanting. We further ruled that Dare’s resort to annulment of judgment was
unnecessary since it cannot be prejudiced by the judgment as it was not impleaded. Two remedies
were suggested to Dare as proper recourse, one of which is an action for quieting of title:

We agree with the CA's suggestion that the petitioner's proper recourse was either an action for
quieting of title or an action for reconveyance of the property. It is timely for the Court to remind that
the petitioner will be better off if it should go to the courts to obtain relief through the proper recourse;
otherwise, it would waste its own time and effort, aside from thereby unduly burdening the dockets of
the courts.

The petitioner may vindicate its rights in the property through an action for quieting of title, a
common law remedy designed for the removal of any cloud upon, or doubt, or uncertainty affecting
title to real property. The action for quieting of title may be brought whenever there is a cloud on title
to real property or any interest in real property by reason of any instrument, record, claim,
encumbrance, or proceeding that is apparently valid or effective, but is, in truth and in fact, invalid,
ineffective, voidable, or unenforceable, and may be prejudicial to said title. In the action, the
competent court is tasked to determine the respective rights of the plaintiff and the other claimants,
not only to put things in their proper places, and make the claimant, who has no rights to the
immovable, respect and not disturb the one so entitled, but also for the benefit of both, so that
whoever has the right will see every cloud of doubt over the property dissipated, and he can
thereafter fearlessly introduce any desired improvements, as well as use, and even abuse the
property.58

WHEREFORE, the petition in G.R. No. 175542 is GRANTED. The Decision dated November 24,
2006 of the Court of Appeals in CA-G.R. CV No. 85766 is REVERSED and SET ASIDE. TCT Nos.
T-345660 (M), T-345661 (M) and T -345662 (M) registered in the name of Green Acres Holdings,
Inc. are declared VALID and any cloud over such titles which may have been created by the
Decision dated January 17, 2001 of the Department of Agrarian Reform Adjudication Board in
DARAB Case No. 5129 (Reg. Case No. 739-Bul-94) is hereby REMOVED.

The petition in G.R. No. 183205 is DENIED for lack of merit. The Decision dated February 27, 2008
and Resolution dated May 29, 2008 of the Court of Appeals in CA-G.R. SP No. 99651 are
AFFIRMED.

With costs against the petitioner in G.R. No. 183205.

SO ORDERED.

MARTIN S. VILLARAMA, JR.

Associate Justice
 SECOND DIVISION

G.R. No. 141964             June 30, 2006

SPOUSES EDESITO and CONSORCIA RAGASA, Petitioners,

vs.
SPOUSES GERARDO and RODRIGA ROA and the EX-OFFICIO SHERIFF OF QUEZON
CITY, Respondents.

DECISION

CORONA, J.:

Edesito and Consorcia Ragasa filed a complaint1 against private respondents Gerardo and Rodriga
Roa and the public respondent ex-officio sheriff of Quezon City founded on the following allegations:

On May 10, 1989, plaintiffs [petitioners here] entered into a contract with Oakland Development
Resources Corporation for the purchase in installments of a piece of property, with improvements,
located at No. 06, Garnet St., Prater Village II, Diliman, Q.C. covered by TCT No. 27946 of the
Registry of Deeds for Quezon City and more particularly described in a photocopy of TCT No. 27946
[…];

Immediately thereafter, plaintiffs took possession of the property covered by TCT No. 27946 of the
Registry of Deeds for Quezon City and resided thereat together with their relatives who continued to
occupy the same whenever the plaintiffs would leave for Italy where they both worked. Hence, from
May of 1989 up to the present date, plaintiffs were in continuous and notorious possession of the
property covered by TCT No. 27946 of the Registry of Deeds for Quezon City to the exclusion of
others and in the concept of an owner;

In March of 1992, plaintiffs were able to fully pay for the agreed purchase price of the property
covered by TCT No. 27946 of the Registry of Deeds for Quezon City and accordingly, a Deed of
Absolute Sale dated March 12, 1992 was executed by and between Oakland Development
Resources Corporation […] and the original owner’s copy of TCT No. 27946 of the Registry of
Deeds for Quezon City accordingly turned over to them;

However, despite the execution of the Deed of Absolute Sale, Oakland Development Resources
Corporation failed to cause the transfer of title to plaintiffs. On the part of plaintiffs, all the while they
thought that the Deed of Absolute Sale and possession of the original of the owner’s copy of TCT
No. 27946 of Registry of Deeds for Quezon City was more than sufficient to protect their rights and
interests over the property;

Sometime March of 1999, during one of the trips of plaintiff Consorcia Ragasa to the Philippines
from Italy, upon learning that Oakland Development Resources Corporation was no longer functional
as a corporate entity, she decided to cause the transfer of registration of TCT No. 27946 of Registry
of Deeds for Quezon City herself since the vendor thereof was apparently in no position to undertake
the same;

She was thus surprised to learn from the Registry of Deeds for Quezon City that on April 14, 1995,
the property in question was sold by defendant Ex-Officio Sheriff of Quezon City [a respondent here]
to defendants Sps. Roa [respondents here] as the highest bidder for the price and consideration
of P511,000.00 as shown in the Sheriff’s Final Deed of Sale […].

xxx xxx xxx

The levy on attachment and the execution sale undertaken by the Ex-Officio Sheriff’s Office of
Quezon City is clearly illegal there being no notice given by said individual to the occupants of the
property in question.

Furthermore, a casual perusal of the Sheriff’s Deed of Sale will reveal that the execution price
of P511,000.00 is grossly inadequate to pay for real properties listed therein with fair market values
conservatively estimated at P3,000,000.00

The case was raffled to Branch 2202 of the Quezon City Regional Trial Court (RTC) and was
docketed as Civil Case No. Q-99-37908.

Instead of filing an answer, private respondents moved for the dismissal of the complaint on the
grounds of prescription and laches. In an order 3 dated February 3, 2000, the RTC granted the
motion. Characterizing the suit as an action "upon an injury to the rights of the plaintiff" which,
according to Article 1146 of the Civil Code,4 must be filed within four years, the RTC held that
petitioners’ action was barred by prescription for having been filed more than four years after the
registration of the execution sale.

Seeking a reversal of the trial court’s order dismissing their complaint, petitioners proceeded
forthwith to this Court with the present petition for review on certiorari 5 raising only a pure question of
law.6

We grant the petition.

The trial court’s order of dismissal was predicated on the theory that the suit petitioners commenced
was an "action upon an injury to their rights" contemplated in Article 1146 of the Civil Code. That
premise was erroneous. A reading of the allegations in petitioners’ complaint reveals that the action
was essentially one for quieting of title to real property under Article 476 of the Civil Code which
states:

Whenever there is a cloud on title to real property or any interest therein, by reason of any
instrument, record, claim, encumbrance or proceeding which is apparently valid or effective but is in
truth and in fact invalid, ineffective, voidable, or unenforceable, and may be prejudicial to said title,
an action may be brought to remove such cloud or to quiet the title.

An action may also be brought to prevent a cloud being cast upon title to real property or any interest
therein.

To make out an action to quiet title under the foregoing provision, the initiatory pleading has only to
set forth allegations showing that (1) the plaintiff has "title to real property or any interest
therein"7 and (2) the defendant claims an interest therein adverse to the plaintiff’s arising from an
"instrument, record, claim, encumbrance, or proceeding which is apparently valid or effective but is
in truth and in fact invalid, ineffective, voidable, or unenforceable." 8 Thus, the averments in
petitioners’ complaint that (1) they acquired ownership of a piece of land by tradition or delivery as a
consequence of sale and (2) private respondents subsequently purchased the same piece of land at
an allegedly void execution sale were sufficient to make out an action to quiet title under Article 476.

This being the case, Article 1146 (which refers to actions "upon an injury to the rights of the plaintiff"
and "upon a quasi-delict") 9 did not apply. Rather, considering petitioners’ allegation in their complaint
that "from May of 1989 up to the present date, plaintiffs [had been] in continuous and notorious
possession of the property…to the exclusion of others and in the concept of owner[s]" 10 ― an
assertion private respondents never bothered to dispute ― our ruling in Sapto v. Fabiana11 should
apply:

[I]t is an established rule of American jurisprudence (made applicable in this jurisdiction by Art. 480
of the New Civil Code)12 that actions to quiet title to property in the possession of the plaintiff are
imprescriptible.

"The prevailing rule is that the right of a plaintiff to have his title to land quieted, as against one who
is asserting some adverse claim or lien thereon, is not barred while the plaintiff or his grantors
remain in actual possession of the land, claiming to be owners thereof, the reason for this rule being
that while the owner in fee continues liable to an action, proceeding, or suit upon the adverse claim,
he has a continuing right to the aid of a court of equity to ascertain and determine the nature of such
claim and its effect on his title, or to assert any superior equity in his favor. He may wait until his
possession is disturbed or his title is attacked before taking steps to vindicate his right. But the rule
that the statute of limitations is not available as a defense to an action to remove a cloud from title
can only be invoked by a complain[ant] when he is in possession. One who claims property which is
in the possession of another must, it seems, invoke his remedy within the statutory period." (citations
omitted)13

Accordingly, petitioners’ action was not subject to prescription.

WHEREFORE, the petition is GRANTED. The February 3, 2000 order of the Regional Trial Court,
Branch 220, Quezon City dismissing petitioners’ complaint is hereby REVERSED and SET ASIDE.
Let this case be REMANDED to the court a quo for further proceedings.

SO ORDERED.
RENATO C. CORONA
Associate Justice

WE CONCUR:

REYNATO S. PUNO
Acting Chief Justice
Chairperson

(On Official Business)

ANGELINA SANDOVAL-GUTIERREZ ADOLFO S. AZCUNA
Associate Justice Asscociate Justice

CANCIO C. GARCIA
Associate Justice

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution, I certify that the conclusions in the above
decision had been reached in consultation before the case was assigned to the writer of the opinion
of the Court’s Division.

REYNATO S. PUNO
 epublic of the Philippines
SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 157593             March 22, 2007

SPS. ALBERTO and JOCELYN AZANA, Petitioners,

vs.
CRISTOPHER LUMBO and ELIZABETH LUMBO-JIMENEZ, Respondents.

DECISION

CORONA, J.:

In this appeal by certiorari, spouses Alberto and Jocelyn Azana assail the decision 1 dated
September 17, 2002 and resolution2 dated March 12, 2003 of the Court of Appeals (CA) in CA-G.R.
CV No. 60973. After a re-evaluation of the evidence on record, the appellate court held that the trial
court’s factual findings were contrary to the evidence presented and, on that basis, reversed the
latter’s ruling.

Originally, respondents filed an action for quieting of title 3 in the Regional Trial Court (RTC) of Kalibo,
Aklan. The subject matter of the action was a piece of real property located in the island of Boracay,
a prime tourist destination. It was designated as Lot 64 during the national reservation survey of
Boracay on April 14, 1976.

Respondents alleged that they were the owners of Lot 64. They claimed that, in a deed of absolute
sale dated December 1, 1996, the spouses Emilio and Estela Gregorio sold Lot 64 to petitioners.
This cast a cloud over their title.

To support their claim of ownership, respondents stated that Lot 64 was originally part of the 8.0488-
hectare land bought in a public auction by their parents, which they inherited entirely; that such sale
in the public auction was evidenced by a final bill of sale dated September 18, 1939; that Lot 64 was
separately designated during the national reservation survey only because it was also being claimed
by the spouses Gregorio; and that, if Lots 63 and 64 were combined, the boundaries of the resulting
lot coincided with the boundaries of the lot purchased under the final bill of sale.
For their part, petitioners claim that they purchased Lot 64 from the spouses Gregorio in good faith;
that the spouses Gregorio became the lawful owners of Lot 64 by virtue of a deed of absolute sale
dated March 25, 1976 executed by Ignacio Bandiola in favor of Estela Gregorio whereby Bandiola
transferred to Gregorio a parcel of land with an area of 3.4768 hectares; and that Lot 64 was part of
this 3.4768-hectare land.

According to the RTC of Kalibo, Aklan, respondents failed to establish the identity of the lot sold
under the final bill of sale. Consequently, their claim of title over Lot 64 also had to fail. In the words
of the court a quo:

Assaying the evidence presented by the parties in relation to their respective submissions, the Court
noted that the land acquired by [respondents’] parents at the public auction is not solely bounded on
the North and East by [the] Visayan Sea, but also by Anunciacion Gelito and Guillermo Sualog,
respectively. Indeed, [respondents] own survey plan discloses that Lots 63 and 64 [are] bounded by
Lot 62 and seashore.

Hence, it is not clear that the land acquired by [respondents’] parents at an auction sale includes Lot
64. The Court could probably sustain [respondents’] theory if the said land is solely bounded on the
North and East by [the] Visayan Sea or seashore. There would be no space for any intervening
lot.4 (citations omitted)

Finding equiponderance of evidence 5, the trial court ruled in favor of petitioners and upheld the
validity of the sale of Lot 64 to them.

On review, the CA arrived at a different conclusion. It declared respondents as owners of Lot 64 and
nullified the sale by the spouses Gregorio to petitioners. The appellate court agreed with
respondents that Lot 64 was part of the 8.0488-hectare property described in the final bill of sale. As
opposed to the findings of the trial court, the appellate court was satisfied that the boundaries of the
lot resulting from the merger of Lots 63 and 64 coincided with the boundaries of the 8.0488 hectare
property. Moreover, the CA noted that the areas of Lots 63 and 64 were 7.0300 hectares and 1.2012
hectares respectively, meaning that the area resulting from the combination of the two lots was
equivalent to "8.0000 hectares, more or less, which [was] the total area being claimed by the
[respondents]".6

Aggrieved, the spouses Gregorio and the spouses Azana filed in this Court separate petitions for
review on certiorari under Rule 45 of the Rules of Court. The petitions were separately docketed as
G.R. No. 1576177 and G.R. No. 157593, respectively. The Court instantly denied both petitions for
essentially raising questions of fact which are generally beyond our review.

Thereafter, both the Gregorios and petitioners filed their respective motions for reconsideration. The
Court denied the MR8 of the spouses Gregorio, in effect denying G.R. No. 157617 with finality.

Meanwhile, the MR of the spouses Azana was granted. As a general rule, it is not the Supreme
Court’s function to review, examine and evaluate or weigh the probative value of the evidence
presented.9 The factual findings of the trial and appellate courts are binding on this Court and are
given great weight and respect.10 However, the rule is not absolute. In instances where there is
divergence in the findings and conclusions of the trial court, on one hand, and the appellate court, on
the other, the Court may give the petition due course and re-examine the evidence on
record.11 Satisfied that the foregoing exception applies to this case, the Court ordered the
reinstatement of G.R. No. 157593 (this petition).
Respondents oppose the petition on the ground that it is already barred by prior judgment. They
argue that the dismissal of the Gregorios’ petition (G.R. No. 157617) was a final judgment
constituting a bar to the institution of a similar petition.

Respondents’ position is incorrect. Res judicata calls for the concurrence of the following requisites:
(1) there is final judgment or order; (2) the court rendering it has jurisdiction over the subject matter
and the parties; (3) the judgment or order is on the merits and (4) there is, between the two cases,
identity of parties, subject matter and causes of action. 12 Here, the first requisite is absent. The
Court’s resolution denying the spouses Gregorio’s petition is not the final judgment contemplated by
the first requisite. Rather, "final judgment" entails a decision which perpetually settles the
controversy and lays to rest all questions raised. At that point, there was no final judgment because
the spouses Azana’s appeal of the CA decision was still pending before us. Stated differently, there
was yet no final judgment which could be entered and executed.

We now proceed to consider the documents relied upon by the parties.

To prove their claim, petitioners submitted a deed of absolute sale of real property 13 dated March 25,
1976 to show that Ignacio Bandiola sold to Estela Gregorio 3.4768 hectares of land located in
Manoc-Manoc, Malay, Aklan. The property was particularly described as follows:

THE PORTION SOLD CONSISTS of 3.4768 hectares, more or less, located at the southern side of
the whole parcel and with the following pertinent boundaries: on the North by Visayan Sea and
Ernesto Bandiola; on the East by Visayan Sea; on the South by Felicitas Lumbo, D. Pelayo, and D.
Magapi; and on the West by Teodorica Bandiola.14

They also presented the corresponding tax declaration15 which reiterated the same property
boundaries.

Petitioners point out that a portion of this property was separately declared for realty tax purposes
under ARP/TD No. 93-011-1020/1021 as Lot 64 with an area of 1.48 hectares. 16 The tax declaration
indicated that the boundaries of Lot 64 were:

North: Visayan Sea South: Lot 63

West: lot 99-pt East: Visayan Sea

In the hope of strengthening their case, petitioners narrated the supposed origin of the disputed
property. They claimed that the 3.4768-hectare property was taken from the consolidated lots owned
by Ignacio Bandiola, i.e., three contiguous parcels of land with individual areas of 8.7766 hectares,
6550 square-meters and 4994 square-meters.17] From this land mass, Ignacio Bandiola carved out
3.4768 hectares and sold the same to Estela Gregorio. Allegedly, this portion included Lot 64 which
Estela Gregorio, in turn, sold to petitioners.

Granting for the sake of argument that petitioners’ preceding allegations are true, it follows that
Ignacio Bandiola’s lots, if taken as one, must have extended to the Visayan Sea in the east to have
roped in Lot 64. It also follows that at least one of the lots should have the Visayan Sea as its
eastern boundary. However, this conclusion is belied by the tax declarations petitioners themselves
presented. Not one of the tax declarations stated that any of Bandiola’s lots was bound in the east
by the Visayan Sea. On the contrary, all the tax declarations stated that each of the lots was bound
in the east by a particular land mass:
Tax Declaration No. 3066

Land Area: 8.7766 hectares

Boundaries: North – Visayan Sea

East – Lorenzo Lumbo, Vanancio Maming

West – Conchita Tirol, Visayan Sea

South – Moises Pelayo, Paula Gelito 18

Tax Declaration No. 3087

Land Area: 0.6550 hectare

Boundaries: North – Visayan Sea

East – Felicitas Alag de Lumbo

West – Felicitas Alag de Lumbo

South – Quirica Lumbo19

Tax Declaration No. 3068

Land Area: 0.4994 hectare

Boundaries: North – Ignacio Bandiola

East – Anunciacion Gelito and F.A. Lumbo

West – Ignacio Bandiola

South – Gertrudes Casimero & Salvador Magapi 20

Petitioners strained to explain the discrepancy by pointing out that "Lot 64 was but a mere portion of
the three parcels of land covered by the [three] tax declarations. xxx. It [was] therefore, quite unlikely
that Lot 64 would have the exact same boundaries as any or all of these [three] parcels." 21

We find their explanation wanting. If, indeed, Lot 64 was part of Ignacio Bandiola’s mass of
properties it would have been in its south-east corner, occupying part of its southern and eastern
perimeter. 22 Therefore, the parcels of land covered by the three tax declarations must reflect
southern and/or eastern boundaries similar to those of Lot 64. But, as explained earlier, none of the
lots was enclosed or partly enclosed in the east by the sea. It is highly unlikely that the corner portion
of the mother property would not have similar boundaries as those of the latter on at least two sides.

The Court is not inclined to pronounce which of the documents presented by petitioners is true and
correct. It is enough to say that the evidence they presented cast doubt on the validity of their claim.
Petitioners failed to establish, by preponderance of evidence, the exact perimeters of the land which
they claim as their own.

On the other hand, respondents anchor their claim over Lot 64 on a final bill of sale 23 dated
September 18, 1939. Apparently, the document was executed in favor of Lorenzo and Felicitas
Lumbo who bought an 8.0488-hectare property in a public auction. It stated:

That on September 30, 1937, the real property under Tax Declaration No. 6523 was forfeited to the
Government in the manner and form prescribed by Act 3995 known as the Assessment Law, for
non-payment of land taxes corresponding to the years 1931 to 1937, inclusive, the description of
which follows:

A parcel of cocal land situated in the barrio of Manocmanoc, municipality of Buruanga, province of
Capiz, Philippines, having an area of 80, 488 square meters more or less. Bounded on the North by
Visayan Sea; on the East by the property of Guillermo Sualog and Visayan Sea; on the South by the
property of Moises Pelayo; and on the West by the properties of Venancio Maming and Lucino
Gelito, and assessed at P1040.00. x x x.24

The trial court discredited the final bill of sale by highlighting the fact that the property bought at the
public auction was not solely bound on the north and east by the Visayan Sea but also by the
properties of Anuncion Gelito and Guillermo Sualog, respectively. With this, the trial court deduced
that there was an intervening space which should not have been there if the lot referred to in the
document included Lot 64. Thus, the final bill of sale must pertain to a different parcel of land.

We find the trial court’s conclusion inaccurate. The Gelito and Sualog properties were not located
between the Visayan Sea and the disputed property. Otherwise, the tax declarations and final bill of
sale would have indicated that the Lumbo property was solely bound in the north by the Gelito
property and in the east by the Sualog property. A cursory look at the survey map 25 reveals that the
perimeter of the Lumbo property ran along the Visayan Sea and Gelito’s property in the north, and
the Visayan Sea and Sualog’s property in the east. Naturally, the tax declarations and final bill of
sale included the two properties mentioned as part of the boundaries of the Lumbo property.

Petitioners underscore the seeming irregularities in the description of the property under the final bill
of sale, a deed of sale dated May 20, 1939 and the tax declarations for the years 1991 and 1993 in
the names of respondents. They posit that these irregularities negate respondents’ claim of legal or
equitable title and ultimately justify the resolution of the case in their favor.

A deed of absolute sale26 was executed on May 20, 1939 between Pantaleon Maming and the
respondents’ parents, stipulating the sale to the Lumbos of "an approximate area of [five hectares],
being a part of the land under Tax No. 6523 in the name of Pantaleon Maming…". 27 Petitioners
emphasize the fact that the property sold under the final bill of sale was the same lot under Tax
Declaration No. 6523. This discrepancy supposedly blurred the identification of the property claimed
by respondents.

We disagree.

The CA sufficiently reconciled the difference in the land areas in the two deeds:

xxx. It may be asked why there were two deeds of sale covering the same property. We find
credence in [respondents’] explanation. The public auction was held on 13 September 1938 and
therefore Pantaleon Maming had up to 13 September 1939 to redeem the property. Before the
expiration of the period of redemption, Lorenzo Lumbo bought [five] hectares of the [eight]-hectare
property in an attempt, as [respondents] put it, to persuade Maming not to redeem the property. This
can be inferred from the price of ₱500.00 he paid for the [five] hectares while in the auction sale
held, he bought the entire 8.0488 hectares for only ₱56.78. xxx.28

Next, petitioners highlight the tax declarations filed by respondents for the years 1991 29 and
199330 covering Lot 63 only. In the absence of contrary evidence, tax declarations, being official
documents, enjoy a presumption of truth as to their contents. Petitioners contend that, unlike them,
respondents never actually declared Lot 64 as theirs and cannot therefore claim ownership of the
property.

Jurisprudence is consistent that tax declarations are not conclusive evidence of ownership of the
properties stated therein.31 A disclaimer is even printed on their face that they are "issued only in
connection with real property taxation [and] should not be considered as title to the property." At
best, tax declarations are an indicia of possession in the concept of an owner.32 However, non-
declaration of a property for tax purposes does not necessarily negate ownership. 33

From the foregoing, the fact that both tax declarations in the names of respondents covered Lot 63 only did
not necessarily mean they did not own Lot 64 as they were in fact able to present a document evidencing
ownership of both properties ― the final bill of sale.

Clearly, respondents have been able to establish by preponderance of evidence that they are the
rightful owners of Lot 64.

When an owner of real property is disturbed in any way in his rights over the property by the
unfounded claim of others, he may bring an action for quieting of title. The purpose of the action is to
remove the cloud on his title created by any instrument, record, encumbrance or proceeding which is
apparently valid or effective but is in truth and in fact invalid and prejudicial to his title. 34

Here, the deeds of sale executed in favor of petitioners and the spouses Gregorio were prima
facie valid and enforceable. However, further scrutiny and investigation established that petitioners’
predecessor-in-interest, Ignacio Bandiola, could not have owned the disputed lot. Consequently, the
subsequent conveyances of Lot 64 to the spouses Gregorio and thereafter, to petitioners, were null
and void. Therefore, respondents, as the adjudged owners of Lot 64, are entitled to have the
aforementioned deeds of sale nullified to remove any doubt regarding their ownership of the lot.

While the appellate court adequately explained its decision, it failed to categorically declare the
deeds of sale as null and void in its dispositive portion. Since it is the dispositive portion of the
decision which shall be carried out, it is important that the status of the deeds of sale be clearly
stated therein.

WHEREFORE, the petition is hereby DENIED. The decision dated September 17, 2002 and
resolution dated March 12, 2003 of the Court of Appeals are AFFIRMED with
the MODIFICATION that the deed of absolute sale dated March 25, 1976, in so far as it covers Lot
64, and the deed of absolute sale dated December 1, 1996 are hereby declared null and void.

Costs against petitioners.

SO ORDERED.

RENATO C. CO
 Republic of the Philippines
SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 159788               December 23, 2009

SOTERO ROY LEONERO, RODOLFO LIM, ISIDORO A. PADILLA, JR., AMY ROSE FISMA, and
NORMA CABUYO, Petitioners,
vs.
SPOUSES MARCELINO B. BARBA and FORTUNA MARCOS-BARBA, represented by IMELDA
N. FORONDO, and REGISTER OF DEEDS OF QUEZON CITY, Respondents.

DECISION

PERALTA, J.:

This resolves the Petition for Review on Certiorari under Rule 45 of the Rules of Court, praying that
the Decision1 of the Court of Appeals (CA) dated July 31, 2002 denying petitioner's appeal, and its
Resolution2 dated September 8, 2003 denying the motion for reconsideration, be reversed and set
aside.

The undisputed facts, as gathered from the records, are as follows.

Petitioners filed a complaint against respondents for Quieting of Title and Preliminary Injunction
before the Regional Trial Court (RTC) of Quezon City, Branch 216, docketed as Q-94-20097,
praying that Transfer Certificates of Title (TCT) Nos. 59721, 59725, 59726 and 59727, in the name
of respondents, be declared null and void for having emanated from Original Certificate of Title
(OCT) No. 614. Petitioners alleged that said OCT No. 614 had been declared void in a Partial
Decision on Defaulted Private Respondents in Civil Case No. Q-35672.

Respondents filed their Answer, maintaining that TCT Nos. 59721, 59725, 59726 and 59727, all in
their names, were all genuine titles duly issued by the Register of Deeds of Quezon City and
correctly plotted by the Land Registration Authority. They further argued that the Partial Decision in
Civil Case No. Q- 35672 could not possibly have any effect on them, as they were not parties to said
case. It was also pointed out that petitioners, as defendants in a separate ejectment case filed
against them by respondents, had been ordered by the Metropolitan Trial Court (MeTC), Branch 36
to vacate the subject lots. A Writ of Execution had been issued on April 6, 1994 to implement the
order to vacate.

On May 6, 1994, the RTC issued an Order3 directing the parties to submit memoranda, "after which,
the case shall be deemed submitted for resolution whether or not they have filed their respective
memoranda."

Thereafter, on July 7, 1994, the RTC issued an Order 4 denying the prayer for a writ of preliminary
injunction and also dismissing the principal action for quieting of title. Petitioners moved for
reconsideration of said Order and moved for leave to amend the complaint. In an Order dated July
29, 1994, the RTC denied the motion for reconsideration and, consequently, no longer acted on the
motion for leave to amend the complaint.

Aggrieved by the foregoing Orders of the RTC, petitioner appealed to the CA. In the assailed CA
Decision dated July 31, 2002, the dismissal of petitioners' complaint was affirmed. The CA ruled that
the RTC committed no error in dismissing petitioners' complaint even before conducting trial on the
merits, because the Partial Decision in Civil Case No. Q-35672 could not have any legal effect on
herein respondents, as they were not parties to the aforementioned action. Petitioners' motion for
reconsideration of the said CA Decision was denied per Resolution dated September 8, 2003.

Hence, this petition where the main issue is whether the CA erred in affirming the RTC's dismissal of
the complaint for quieting of title despite the lack of trial on the merits, hence, allegedly depriving
petitioners of the opportunity to prove their allegations that respondents' aforementioned TCTs were
null and void.

The petition is doomed to fail.

It is not correct to say that petitioners were deprived of their day in court when the RTC dismissed
the complaint even before conducting trial on the merits. As held in Luzon Development Bank v.
Conquilla,5 the court, motu proprio, may render judgment on the pleadings based on the parties'
admissions in their pleadings and even without introduction of evidence, if and when these amply
establish that there is insufficiency of factual basis for the action. 6

In this case, petitioners admit that they are mere possessors of the parcels of land in question and
have been ordered by the MeTC to vacate the same. The gist of their claim in the action for quieting
of title with preliminary injunction is that the MeTC Decision in the ejectment case against them
should not be implemented, because respondents' TCTs are spurious, having emanated from OCT
No. 614, which has been declared null and void in a Partial Decision rendered in Civil Case No. Q-
35672. Petitioners' main prayer is for the nullification of respondents' TCTs.

From such allegations, it is already clear that petitioners' action cannot succeed. Firstly, Section 48
of the Property Registration Decree provides that a certificate of title cannot be subject to collateral
attack and can only be altered, modified or cancelled in a direct proceeding in accordance with law.
In Foster-Gallego v. Galang,7 the Court held that the issue of whether a title was procured by
falsification or fraud should be raised in an action expressly instituted for the purpose, not in an
action for quieting of title.8 Again, in Vda. de Gualberto v. Go,9 the Court held that the validity of a
certificate of title cannot be assailed in an action for quieting of title; an action for annulment of title is
the more appropriate remedy to seek the cancellation of a certificate of title. 10 Hence, herein
petitioners' action for quieting of title is a mere collateral attack against respondents' TCT Nos.
59721, 59725, 59726 and 59727, and is proscribed by the law. 1avvphi1

Secondly, as early as 2001 in Pinlac v. Court of Appeals,11 the Court categorically struck down the
Partial Decision issued in Civil Case No. Q-35672, upon which herein petitioners base their claim
that respondents' TCTs are spurious. The Court ruled that said Partial Decision was null and void.
Thus, in Cañete v. Genuino Ice Company, Inc.,12 the Court emphasized that:

First, their initial claim that OCT 614 – of which all the other subject titles are derivatives – is null
and void, has been proven wrong. As held in Pinlac and other cases, OCT 614 did legally exist and
was previously issued in the name of the Philippine Government in 1910 under the provisions of Act
496.

Second, the Ad Hoc Committee of the then Ministry of Natural Resources, which was specifically
tasked to investigate the historical background of the Piedad Estate, found that as early as the
period prior to the Second World War, all lots in the Piedad Estate had already been disposed of.

Third, the Piedad Estate has been placed under the Torrens system of land registration, which
means that all lots therein are titled.13

Clearly, petitioners' complaint is unfounded and the RTC acted properly in dismissing the same for
petitioners' failure to establish the factual basis for it.

WHEREFORE, the petition is DENIED for utter lack of merit.

SO ORDERED.

DIOSDADO M. PERALTA
 FIRST DIVISION

G.R. No. 120864             October 8, 2003

MANUEL T. DE GUIA, petitioner,
vs.
COURT OF APPEALS (Former Sixth Division) and JOSE B. ABEJO, represented by his
Attorney-in-Fact, Hermenegilda Abejo-Rivera, respondents.

DECISION

CARPIO, J.:

The Case

This is a Petition for Review on Certiorari assailing the 22 August 1994 Decision as well as the 27
1  2 

June 1995 Resolution of the Court of Appeals in CA-G.R. CV No. 39875. The Court of Appeals
affirmed the Decision of the Regional Trial Court ("trial court") of Malolos, Bulacan, Branch 16, in
3 

Civil Case No. 8796-M. The trial court’s Decision ordered petitioner Manuel T. De Guia ("DE GUIA")
to turn over to private respondent Jose B. Abejo ("ABEJO") possession of the one half (½) undivided
portion of a fishpond and to pay actual damages and attorney’s fees.

The Antecedents
On 12 May 1986, ABEJO instituted an action for recovery of possession with damages against DE
4 

GUIA. In his complaint, ABEJO alleged that he is the owner of the ½ undivided portion of a property
used as a fishpond ("FISHPOND") situated in Meycauayan, Bulacan and covered by TCT No. T-
6358 of the Bulacan Register of Deeds. He alleged ownership over approximately 39,611 square
meters out of the FISHPOND’s total area of 79,220 square meters. ABEJO further averred that DE
GUIA continues to possess and use the FISHPOND without any contract and without paying rent to
ABEJO’s damage and prejudice. ABEJO also complained that DE GUIA refuses to surrender
ownership and possession of the FISHPOND despite repeated demands to do so after DE GUIA’s
sublease contract over the FISHPOND had expired. ABEJO asked the trial court to order DE GUIA
to vacate an approximate area of 39,611 square meters as well as pay damages.

DE GUIA, a lawyer by profession, appeared on his own behalf. He filed his Answer on 12 January
1990 after the Court of Appeals resolved several issues concerning the validity of the service of
summons on him. In his Answer, DE GUIA alleged that the complaint does not state a cause of
action and has prescribed. He claimed that the FISHPOND was originally owned by Maxima
Termulo who died intestate with Primitiva Lejano as her only heir. According to him, ABEJO is not
the owner of the entire FISHPOND but the heirs of Primitiva Lejano who authorized him to possess
the entire FISHPOND. He assailed ABEJO’s ownership of the ½ undivided portion of the FISHPOND
as void and claimed ownership over an undivided half portion of the FISHPOND for himself. DE
GUIA sought payment of damages and reimbursement for the improvements he introduced as a
builder in good faith.

The trial court set the pre-trial and required the parties to file their pre-trial briefs. ABEJO filed his
pre-trial brief on 05 April 1990. DE GUIA filed his pre-trial brief on 31 July 1990. DE GUIA’s pre-trial
5  6 

brief raised as the only issue in the case the amount of damages in the form of rent that DE GUIA
should pay ABEJO. DE GUIA also submitted an Offer to Compromise, offering to settle ABEJO’s
7 

claim for ₱300,000 and to lease the entire FISHPOND to any party of ABEJO’s choice.

Hearing commenced on 30 July 1990. ABEJO rested his case on 4 December 1990. DE GUIA’s last
witness completed her testimony on 22 November 1991. The trial court summarized the evidence
presented by ABEJO and DE GUIA as follows:

Evidence adduced from plaintiff shows that there are two parcels of land covering a fishpond with a
total area of 79,220 sq. m. more or less, situated at Ubihan, Meycauayan, Bulacan and covered by
TCT No. 6358 equally owned by Primitiva Lejano and Lorenza Araniego married to Juan Abejo (Exh.
A). The one half undivided portion owned by Lorenza Araniego corresponding to 39,611 sq. m. was
later purchased by plaintiff from his father Teofilo Abejo (Exh. B), the only heir of the original owner
on November 22, 1983. Prior to this sale on July 30, 1974 the whole fishpond (79,220) was the
subject of a "Salin ng Pamumusisyong ng Palaisdaan" executed by the heirs of Primitiva Lejano with
the knowledge and consent of Teofilo A. Abejo in favor of one Aniano Victa and defendant. The
contract provided that the period of lease shall be until November 30, 1979. When the contract
expired and defendant failed to surrender the fishpond, written demands the last of which was on
November 27, 1983 were made for defendants to pay back rental and to vacate the premises in
question (Exh. D & E). Defendant refused to deliver possession and also to pay the rentals due. In
anticipation, however, that defendant will vacate the fishpond, plaintiff, on December 21, 1983
entered into a two year "Kasunduan ng Buwisan ng Palaisdaan" with Ruperto C. Villarico for a
consideration of ₱50,000.00 (Exh. G). This contract, despite its execution and even already
notarized, had to be cancelled and the amount of ₱50,000.00 returned by plaintiff to Villarico when
the defendant did not heed the demand to vacate the fishpond. For unpaid rental, actual as well as
moral and exemplary damages, plaintiff asks payment of ₱450,000.00 and ₱20,000.00 attorney’s
fees.
On the other hand, defendant’s evidence tends to show that the entire fishpond with an area of
79,200 sq. m. was leased to him by the heirs of Primitiva Lejano. Subsequently, defendant became
the absolute owner of one half of the undivided area of the fishpond and he questioned plaintiffs
ownership of the other half as void and fraudulent. As to the area pertaining to plaintiff, defendant
claimed that he introduced improvements worth ₱500,000 and being in good faith, he asked that he
should be reimbursed by plaintiff. In his pre-trial brief, however, defendant raised the only issue
which is the amount of damages plaintiff is entitled to in the form of rental. Hence, the thrust of the
testimonies of defendant’s witnesses particularly Ben Ruben Camargo and Marta Fernando Peña
was the amount of rental of fishponds in the same locality as the fishpond in question at a given
time. However, the documentary evidence (Exhs. 1 and 2) in support of their testimony were not
offered as evidence. 8

The trial court rendered its decision on 8 June 1992, disposing as follows:

WHEREFORE, premises considered, judgment is hereby rendered in favor of the plaintiff and
against the defendant and hereby orders that:

1. Defendant shall turn over possession to plaintiff one half undivided portion of the 79,200
sq. m. fishpond who shall enjoy the benefits and fruits in equal share with the defendant
effective immediately until such time that partition of the property is effected;

2. Defendant shall pay to plaintiff the amount of ₱262,500.00 by way of actual or

compensatory damages;

3 Defendant shall pay plaintiff ₱20,000.00 as and for attorney’s fees; and

4. To pay the costs.

SO ORDERED. 9

Aggrieved, DE GUIA went to the Court of Appeals insisting the trial court erred in ordering him to
vacate and surrender possession of the ½ undivided portion of the FISHPOND and to pay actual
damages and attorney’s fees. The Court of Appeals found DE GUIA’s appeal without merit and
affirmed the trial court’s decision. Upon DE GUIA’s motion for reconsideration, the appellate court
reduced the compensatory damages from ₱262,500 to ₱212,500.

Hence, the instant petition.

The undisputed facts as found by the trial court and adopted in toto by the Court of Appeals are
restated as follows:

1. The subject of the dispute are two undivided parcels of land used as a fishpond situated in
Barrio Ubihan, Meycauayan, Bulacan, originally co-owned by Primitiva Lejano and Lorenza
Araniego married to Juan Abejo.

2. The FISHPOND is registered under the names of Primitiva Lejano and Lorenza Araniego
under TCT No. 6358 of the Bulacan Register of Deeds as follows:

PRIMITIVA LEJANO, Filipina, of legal age, single - ½ share; and LORENZA ARANIEGO,
Filipina, of legal age, married to Juan Abejo, ½ share, ---
 3. The FISHPOND has a total land area of approximately 79,220 square meters. ABEJO is
seeking to recover possession of the ½ undivided portion of the FISHPOND containing
39,611 square meters.

4. DE GUIA (along with a certain Aniano Victa) acquired possession of the entire FISHPOND
by virtue of a document captioned Salin ng Pamumusisyong ng Palaisdaan ("Lease
Contract") executed between him and the heirs of Primitiva Lejano. The Lease Contract was
effective from 30 July 1974 up to 30 November 1979 for a consideration of ₱100,000.

5. The Lease Contract was executed with the knowledge and consent of Teofilo Abejo, sole
heir of Lorenza Araniego Abejo. Teofilo Abejo acquired Lorenza Araniego Abejo’s ½
undivided share in the FISHPOND by intestate succession.

6. Teofilo Abejo (now deceased) sold his ½ undivided share in the FISHPOND to his son,
ABEJO, on 22 November 1983.

7. DE GUIA continues to possess the entire FISHPOND and to derive income from the
property despite the expiration of the Lease Contract and several demands to vacate made
by Teofilo Abejo and by his successor-in-interest, ABEJO. The last demand letter was dated
27 November 1983.

8. ABEJO filed his complaint for recovery of possession with damages against DE GUIA on
12 May 1986.

9. DE GUIA’s claim of ownership over the other ½ undivided portion of the FISHPOND has
not been finally adjudicated for or against him.

DE GUIA offers the verified Complaint for Annulment of Real Estate Mortgage and Contract of
Lease with Preliminary Injunction signed by the heirs of Primitiva Lejano as proof of his ownership of
the other undivided half portion of the FISHPOND. Records show that DE GUIA filed the complaint
for himself and as attorney-in fact of the heirs of Primitiva Lejano ("Lejano Heirs") against Spouses
10 

Teofilo Morte and Angelina Villarico, Spouses Ruperto and Milagros Villarico, et al. ("Defendants").
The case was raffled to Branch 12 of the Regional Trial Court of Malolos, Bulacan, and docketed as
Civil Case. No. 86-27-M. The complaint alleged that DE GUIA acquired his ½ undivided share in the
FISHPOND from the Lejano Heirs in February 1986. DE GUIA and the Lejano Heirs sought to annul
the Kasulatan ng Sanglaan and Kasulatan ng Pagbubuwis ng Palaisdaan, executed on 10
November 1979 by Primitiva Lejano in favor of the Defendants. DE GUIA and the Lejano Heirs
claimed that Primitiva Lejano signed these documents under duress and without consideration.

The trial court rendered judgment on 28 February 1992 against DE GUIA and the Lejano Heirs as
11 

follows:

WHEREFORE, the evidence having shown the plaintiffs, particularly Manuel De Guia, their
successor-in-interest, not entitled upon the facts and the law to the relief prayed for in the amended
complaint, the same is hereby DISMISSED with costs against said plaintiff. Instead, as prayed for by
defendants, judgment is hereby rendered:

1. – Declaring the "Kasulatan ng Sanglaan" (Exhs. "A" & "1") dated November 10, 1979, and
the "Kasulatan ng Pagbubuwis ng Palaisdaan" (Exhs. "C" &"3") also dated November 10,
1979, as valid for all legal intents and purposes;
 2. – Ordering the Ex-Officio Sheriff, RTC, Bulacan, to proceed with the extrajudicial
foreclosure of the subject real estate mortgage; and

3. – Ordering plaintiffs to pay defendants attorney’s fees in the amount of ₱20,000.00.

SO ORDERED. 12

The Court of Appeals affirmed the trial court in a Decision dated 30 August 2002 in CA-G.R. CV No.
38031. The Court of Appeals found the claim of force and intimidation in the execution of the
documents as highly improbable since Primitiva Lejano’s son, Renato Davis, witnessed the signing
of the documents and found nothing irregular at the time. The appellate court also held that
assuming Defendants threatened DE GUIA and the Lejano Heirs with immediate foreclosure,
Defendants were merely exercising their legitimate right of foreclosing the mortgaged property for
non-payment of the loan. In addition, Primitiva Lejano’s lawyer and notary public, Atty. Mamerto
Abaño, testified that the parties appeared before him to affirm the contents of the documents. He
also stated that he was present when Defendants paid Primitiva Lejano Davis and her son Renato.
As of this writing, DE GUIA has a pending motion for reconsideration before the Court of Appeals. In
the event the Court of Appeals’ Decision attains finality, DE GUIA may lose whatever right he claims
over the FISHPOND.

The Trial Court’s Ruling

The trial court ruled that ABEJO has the right to demand that DE GUIA vacate and surrender an
area equivalent to ABEJO’s ½ undivided share in the FISHPOND. The trial court explained that DE
GUIA’s sublease contract expired in 1979 and ABEJO acquired his father’s share in 1983. However,
the trial court pointed out that ABEJO failed to present evidence of the judicial or extra-judicial
partition of the FISHPOND. The identification of the specific area pertaining to ABEJO and his co-
owner is vital in an action to recover possession of real property. Nevertheless, the trial court
declared that pending partition, it is only just that DE GUIA pay ABEJO a reasonable amount as
rental for the use of ABEJO’s share in the FISHPOND. DE GUIA admitted this obligation when he
raised as sole issue in his pre-trial brief how much rent he should pay ABEJO. DE GUIA even
proposed ₱300,000 as the reasonable amount but under certain conditions which ABEJO found
unacceptable.

In determining the reasonable rent due to ABEJO, the trial court considered the Lease Contract
between ABEJO and a certain Ruperto C. Villarico which provided for a yearly rent of ₱25,000 for ½
undivided portion of the FISHPOND. The trial court declared that the total amount of rent due is
₱212,500, computed from November 1983 when ABEJO became a co-owner of the FISHPOND up
to 1991 or a period of eight and one half years. The trial court further ordered DE GUIA to pay an
13 

additional ₱50,000 which represents the amount ABEJO returned to Ruperto C. Villarico when they
cancelled the Lease Contract between them due to DE GUIA’s refusal to vacate the FISHPOND.

Lastly, the trial court ruled that pending partition, ABEJO as co-owner has the right to possess the
FISHPOND and to receive an equal share in the benefits from the FISHPOND effective immediately.
Until there is a partition, and while there is no contract of lease, the Civil Code provisions on co-
ownership shall govern the rights of the parties.

The Court of Appeals’ Ruling

The Court of Appeals affirmed the trial court’s decision. The Court of Appeals debunked DE GUIA’s
claim that partition and not recovery of possession was the proper remedy under the circumstances.
The Court of Appeals pointed out that DE GUIA’s failure to respect ABEJO’s right over his ½
undivided share in the FISHPOND justifies the action for recovery of possession. The trial court’s
decision effectively enforces ABEJO’s right over the property which DE GUIA violated by possession
and use without paying compensation. According to the Court of Appeals, partition would constitute
a mechanical aspect of the decision just like accounting when necessary.

The Court of Appeals likewise rejected DE GUIA’s claim that the award of compensatory damages
of ₱242,000, computed based on the rent stipulated in the Lease Contract between ABEJO and
Ruperto C. Villarico, is grossly exorbitant. The Court of Appeals clarified that the amount the trial
court awarded was ₱262,500 and not ₱242,000 as erroneously alleged by DE GUIA. The Court of
Appeals pointed out that the notarized Lease Contract between ABEJO and Ruperto C. Villarico
carries more evidentiary weight than the testimonies of DE GUIA’s witnesses, Ben Ruben Camargo
and Marta Fernando Peña. The Court of Appeals also upheld the award of attorney’s fees since the
parties could have avoided litigation had DE GUIA heeded the justifiable demands of ABEJO.

On motion for reconsideration, the Court of Appeals reduced the compensatory damages from
₱262,500 to ₱212,500. The Court of Appeals explained that the trial court correctly computed the
total amount of rent due at ₱212,500. The trial court erred, however, in adding the sum of ₱50,000
representing the rent for 1983 and 1984 which ABEJO returned to Ruperto C. Villarico. The
appellate court clarified that the sum of ₱212,500 was arrived at by multiplying the rent of ₱25,000
by 8½ years. The 8½ year period already included the two months rent received from and then
subsequently reimbursed to Ruperto C. Villarico.

The Issues

DE GUIA raises the following issues in his Memorandum:

I.

THE COURT OF APPEALS ERRED IN AFFIRMING THE TRIAL COURT’S DECISION DENYING
PETITIONER’S PLEA FOR DISMISSAL OF THE COMPLAINT FOR FAILURE TO STATE A CAUSE
OF ACTION;

II.

THE COURT OF APPEALS ERRED IN AFFIRMING THE TRIAL COURT’S ORDER DIRECTING
PETITIONER TO TURN OVER THE ONE-HALF UNDIVIDED PORTION OF THE FISHPOND
WHICH IS STILL UNDER A STATE OF CO-OWNERSHIP;

III.

THE COURT OF APPEALS ERRED IN AFFIRMING, IN PART, THE AWARD OF ACTUAL OR

COMPENSATORY DAMAGES DESPITE LACK OF CREDIBLE EVIDENCE TO SUPPORT THE
SAME;

IV.

THE COURT OF APPEALS ERRED IN AFFIRMING THE AWARD OF ATTORNEY’S FEES IN

PRIVATE RESPONDENT’S FAVOR. 14
In essence, this Court is asked to resolve: (1) whether an action for recovery of possession and turn-
over of the ½ undivided portion of a common property is proper before partition; and (2) whether
there is sufficient basis for the award of compensatory damages and attorney’s fees.

The Court’s Ruling

The petition is partly meritorious.

First and Second Issues: Cause of Action and Turn-Over of Possession

DE GUIA contends that a co-owner cannot claim a definite portion from the property owned in
common until there is a partition. DE GUIA argues that ABEJO should have filed an action for
partition instead of recovery of possession since the court cannot implement any decision in the
latter case without first a partition. DE GUIA contends that an action for recovery of possession
cannot prosper when the property subject of the action is part of an undivided, co-owned property.
The procedural mode adopted by ABEJO, which is recovery of possession, makes enforcement
difficult if not impossible since there is still no partition of the subject property.

Under Article 484 of the Civil Code, "there is co-ownership whenever the ownership of an undivided
thing or right belongs to different persons." A co-owner of an undivided parcel of land is an "owner of
the whole, and over the whole he exercises the right of dominion, but he is at the same time the
owner of a portion which is truly abstract." On the other hand, there is no co-ownership when the
15 

different portions owned by different people are already concretely determined and separately
identifiable, even if not yet technically described.16

Article 487 of the Civil Code provides, "[a]ny one of the co-owners may bring an action in ejectment."
This article covers all kinds of actions for the recovery of possession. Article 487 includes forcible
entry and unlawful detainer (accion interdictal), recovery of possession (accion publiciana), and
recovery of ownership (accion de reivindicacion). The summary actions of forcible entry and unlawful
detainer seek the recovery of physical possession only. These actions are brought before municipal
trial courts within one year from dispossession. However, accion publiciana, which is a plenary
action for recovery of the right to possess, falls under the jurisdiction of the proper regional trial court
when the dispossession has lasted for more than one year. Accion de reivindicacion, which seeks
the recovery of ownership, also falls under the jurisdiction of the proper regional trial court.17 
1awphi1.nét

Any co-owner may file an action under Article 487 not only against a third person, but also
against another co-owner who takes exclusive possession and asserts exclusive ownership
of the property. In the latter case, however, the only purpose of the action is to obtain recognition
18 

of the co-ownership. The plaintiff cannot seek exclusion of the defendant from the property because
as co-owner he has a right of possession. The plaintiff cannot recover any material or determinate
part of the property. 19

In Hermogena G. Engreso with Spouse Jose Engreso v. Nestoria De La Cruz and Herminio De
La Cruz, we reiterated the rule that a co-owner cannot recover a material or determinate part of a
20 

common property prior to partition as follows:

It is a basic principle in civil law that before a property owned in common is actually partitioned, all
that the co-owner has is an ideal or abstract quota or proportionate share in the entire property. A
co-owner has no right to demand a concrete, specific or determinate part of the thing owned in
common because until division is effected his right over the thing is represented only by an ideal
portion.
As such, the only effect of an action brought by a co-owner against a co-owner will be to obtain
recognition of the co-ownership; the defendant cannot be excluded from a specific portion of the
property because as a co-owner he has a right to possess and the plaintiff cannot recover any
material or determinate part of the property. Thus, the courts a quo erred when they ordered the
delivery of one-half (½) of the building in favor of private respondent.

Indisputably, DE GUIA has been in exclusive possession of the entire FISHPOND since July 1974.
Initially, DE GUIA disputed ABEJO’s claim of ownership over the ½ undivided portion of the
FISHPOND. Subsequently, he implicitly recognized ABEJO’s ½ undivided share by offering to settle
the case for ₱300,000 and to vacate the property. During the trial proper, neither DE GUIA nor
ABEJO asserted or manifested a claim of absolute and exclusive ownership over the entire
FISHPOND.  Before this Court, DE GUIA limits the issues to the propriety of bringing an action for
1a\^/phi1.net

recovery of possession and the recovery of compensatory damages.

Following the inherent and peculiar features of co-ownership, while ABEJO and DE GUIA have
equal shares in the FISHPOND quantitatively speaking, they have the same right in a qualitative
sense as co-owners. Simply stated, ABEJO and DE GUIA are owners of the whole and over the
whole, they exercise the right of dominion. However, they are at the same time individual owners of
a ½ portion, which is truly abstract because until there is partition, such portion remains
indeterminate or unidentified. As co-owners, ABEJO and DE GUIA may jointly exercise the right of
21 

dominion over the entire FISHPOND until they partition the FISHPOND by identifying or segregating
their respective portions.

Since a co-ownership subsists between ABEJO and DE GUIA, judicial or extra-judicial partition is
the proper recourse. An action to demand partition is imprescriptible and not subject to laches. Each
22 

co-owner may demand at any time the partition of the common property unless a co-owner has
repudiated the co-ownership under certain conditions. Neither ABEJO nor DE GUIA has repudiated
23 

the co-ownership under the conditions set by law.

To recapitulate, we rule that a co-owner may file an action for recovery of possession against a co-
owner who takes exclusive possession of the entire co-owned property. However, the only effect of
such action is a recognition of the co-ownership. The courts cannot proceed with the actual
partitioning of the co-owned property. Thus, judicial or extra-judicial partition is necessary to effect
physical division of the FISHPOND between ABEJO and DE GUIA. An action for partition is also the
proper forum for accounting the profits received by DE GUIA from the FISHPOND. However, as a
necessary consequence of such recognition, ABEJO shall exercise an equal right to possess, use
and enjoy the entire FISHPOND.

DE GUIA further claims that the trial and appellate courts erred when they ordered the recovery of
rent when the exact identity of the portion in question had not yet been clearly defined and
delineated. According to DE GUIA, an order to pay damages in the form of rent is premature before
partition.

We disagree.

The right of enjoyment by each co-owner is limited by a similar right of the other co-owners. A co-
owner cannot devote common property to his exclusive use to the prejudice of the co-
ownership. Hence, if the subject is a residential house, all the co-owners may live there with their
24 

respective families to the extent possible. However, if one co-owner alone occupies the entire house
without opposition from the other co-owners, and there is no lease agreement, the other co-owners
cannot demand the payment of rent. Conversely, if there is an agreement to lease the house,
the co-owners can demand rent from the co-owner who dwells in the house.
The co-owners can either exercise an equal right to live in the house, or agree to lease it. If they fail
to exercise any of these options, they must bear the consequences. It would be unjust to require the
co-owner to pay rent after the co-owners by their silence have allowed him to use the property. 25

In case the co-owners agree to lease a building owned in common, a co-owner cannot retain it for
his use without paying the proper rent. Moreover, where part of the property is occupied exclusively
26 

by some co-owners for the exploitation of an industry, the other co-owners become co-participants in
the accessions of the property and should share in its net profits. 27

The Lejano Heirs and Teofilo Abejo agreed to lease the entire FISHPOND to DE GUIA. After DE
GUIA’s lease expired in 1979, he could no longer use the entire FISHPOND without paying rent. To
allow DE GUIA to continue using the entire FISHPOND without paying rent would prejudice
ABEJO’s right to receive rent, which would have accrued to his ½ share in the FISHPOND had it
been leased to others. Since ABEJO acquired his ½ undivided share in the FISHPOND on 22
28 

November 1983, DE GUIA should pay ABEJO reasonable rent for his possession and use of
ABEJO’s portion beginning from that date. The compensatory damages of ₱25,000 per year
awarded to ABEJO is the fair rental value or the reasonable compensation for the use and
occupation of the leased property, considering the circumstances at that time. DE GUIA shall
29 

continue to pay ABEJO a yearly rent of ₱25,000 corresponding to ABEJO’s ½ undivided share in the
FISHPOND. However, ABEJO has the option either to exercise an equal right to occupy the
FISHPOND, or to file a new petition before the trial court to fix a new rental rate in view of changed
circumstances in the last 20 years. 1a\^/phi1.net

ABEJO made an extrajudicial demand on DE GUIA by sending the 27 November 1983 demand
letter. Thus, the rent in arrears should earn interest at 6% per annum from 27 November 1983 until
finality of this decision pursuant to Article 2209 of the Civil Code. Thereafter, the interest rate is 12%
30 

per annum from finality of this decision until full payment. 31

Third Issue: Lack of Credible Evidence to Support Award of Compensatory Damages

DE GUIA contends the ₱212,500 in rent awarded to ABEJO is exorbitant. He assails as doubtful and
self-serving evidence the Lease Contract between ABEJO and Ruperto C. Villarico that served as
basis for the yearly rent of ₱25,000 for ABEJO’s share in the FISHPOND.

DE GUIA says the trial and appellate courts should have given credence to the testimonies of his
witnesses, Ben Ruben Camargo ("Camargo") and Marta Fernando Peña ("Peña") that rentals of
fishponds in the same vicinity are for much lesser considerations.

This issue involves calibration of the whole evidence considering mainly the credibility of witnesses.
As a rule, a party may raise only questions of law in an appeal by certiorari under Rule 45 of the
Rules of Court. The Supreme Court is not duty-bound to analyze and weigh again the evidence
considered in the proceedings below. More so in the instant case, where the Court of Appeals
32 

affirmed the factual findings of the trial court. 33

It is not true that the trial court disregarded the testimonies of Camargo and Peña because DE GUIA
failed to present documentary evidence to support their testimonies. Actually, the trial and appellate
courts found the testimonies of Camargo and Peña unconvincing. Judges cannot be expected to rely
on the testimonies of every witness. In ascertaining the facts, they determine who are credible and
who are not. In doing so, they consider all the evidence before them. 34

We find no cogent reason to overturn the trial and appellate courts’ evaluation of the witnesses’
testimonies. We likewise find reasonable the ₱25,000 yearly compensation for ABEJO’s ½ undivided
share in the FISHPOND. Indeed, being a question of fact, it is for the trial and appellate courts to
decide and this Court will not disturb their findings unless clearly baseless or irrational. The
exception does not obtain in this case.

Fourth Issue: Attorney’s Fees

The trial court did not err in imposing attorney’s fees of ₱20,000. Attorney’s fees can be awarded in
the cases enumerated in Article 2208 of the Civil Code specifically:

xxx

(2) Where the defendant’s act or omission has compelled the plaintiff to litigate with third persons or
to incur expenses to protect his interest;

xxx

DE GUIA is a lawyer and he should have known that a co-owner could not take exclusive
possession of a common property. Although DE GUIA offered to settle the case out of court, such
offer was made under conditions not acceptable to ABEJO. Certainly, ABEJO was still put to
unnecessary expense and trouble to protect his interest under paragraph (2), Article 2208 of the Civil
Code.

WHEREFORE, the Decision dated 22 August 1994 and Resolution dated 27 June 1995 of the Court
of Appeals in CA-G.R. CV No. 39875 is AFFIRMED with respect to that portion ordering Manuel T.
De Guia to pay Jose B. Abejo compensatory damages of ₱212,500 and attorney’s fees of ₱20,000,
and MODIFIED as follows:

1. The co-ownership between Manuel T. De Guia and Jose B. Abejo over the entire
FISHPOND covered by TCT No. 6358 of the Bulacan Register of Deeds is recognized
without prejudice to the outcome of CA–G.R. CV No. 38031 pending before the Court of
Appeals and other cases involving the same property;

2. Manuel T. De Guia and Jose B. Abejo shall equally enjoy possession and use of the entire
FISHPOND prior to partition;

3. The compensatory damages of ₱25,000 per annum representing rent from 27 November
1983 until May 1992 shall earn interest at 6% per annum from 27 November 1983 until
finality of this decision, and thereafter at 12% per annum until full payment;

4. Manuel T. de Guia shall pay Jose B. Abejo a yearly rent of ₱25,000 from June 1992 until
finality of this decision, with interest at 6% per annum during the same period, and thereafter
at 12% interest per annum until full payment;

5. After finality of this decision and for as long as Manuel T. de Guia exclusively possesses
the entire FISHPOND, he shall pay Jose B. Abejo a yearly rental of ₱25,000 for the latter’s ½
undivided share in the FISHPOND, unless Jose B. Abejo secures from the proper court an
order fixing a different rental rate in view of possible changed circumstances.

SO ORDERED.

Davide, Jr., C.J., (Chairman), Vitug

 Republic of the Philippines
SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 149313             January 22, 2008

JULITA ROMBAUA PANGANIBAN, PAQUITO ROMBAUA, RUPERTO ROMBAUA, TERESITA

ROMBAUA TELAJE and LEONOR ROMBAUA OPIANA, petitioners,
vs.
JULITA S. OAMIL, respondent.

DECISION

YNARES-SANTIAGO, J.:

Assailed in this petition for review on certiorari are the Decision 1 of the Court of Appeals dated March
2, 2001 in CA-G.R. CV No. 57557, which affirmed in toto the Order dated October 23, 1997 of the
Regional Trial Court of Olongapo City, Branch 73, and the Resolution 2 dated July 10, 2001 denying
the motion for reconsideration.

The facts as culled from the records are as follows:

On April 26, 1993 Julita Oamil, herein respondent, filed a complaint for specific performance with
damages3 with the Regional Trial Court of Olongapo City, praying that Partenio Rombaua (Partenio)
be ordered to execute a final deed of sale over the parcel of land which was the subject of a prior
"Agreement to Sell" executed by and between them on May 17, 1990. The property which is alleged
to be covered by the said "Agreement to Sell" consists of 204.5 square meters of land located at #11
21st St., East Bajac-Bajac, Olongapo City, and is claimed by respondent Oamil to be Partenio’s
conjugal share in a parcel of commercial land (the subject property) with an aggregate area of 409
square meters acquired by Partenio and his deceased first wife Juliana 4 during their marriage.
There are two portions of the subject property in contention: one consisting of 204.5 square meters
facing 21st Street (the 21st St. portion), and another consisting of 204.5 square meters facing Canda
Street (the Canda St. portion). Petitioners and their father Partenio are acknowledged co-owners of
the subject property to the following extent: one-half to Partenio as his conjugal share, and one-sixth
each of the remaining half to petitioners and Partenio as the surviving heirs of Juliana.

For failure to file an answer, Partenio was declared in default, and respondent presented her
evidence ex parte.

On December 26, 1993, the trial court promulgated its Decision, 5 the dispositive portion of which
reads as follows:

WHEREFORE, viewed from all the foregoing, judgment is hereby rendered as follows:

(1) The defendant is hereby ordered to execute a deed of absolute sale over the ½ portion
(front) of the realty subject matter of this case in favor of the plaintiff and to surrender the
possession thereof to the plaintiff. Failure of the defendant to do so, then the City Assessor
of Olongapo is hereby directed to effect the transfer of all rights/interest on the one-half (1/2)
front portion of the said realty in the name of the plaintiff, upon the finality of this decision;

(2) Plaintiff, however, is ordered to pay the amount of EIGHT THOUSAND PESOS
(P8,000.00) representing the balance of the interests due on the amount of P200,000.00,
delinquent for one (1) year computed at 12% per annum;

(3) Defendant is, likewise, hereby ordered to pay the plaintiff attorney’s fees in the amount of
TEN THOUSAND PESOS (P10,000.00).

Let a copy of this Decision be furnished the City Assessor of Olongapo City.

SO ORDERED.6

Note that the trial court did not specify which portion of the property – the 21 st St. portion or the
Canda St. portion – should be deeded to respondent as buyer of Partenio’s conjugal share.

Partenio failed to appeal, and the decision became final and executory on February 4, 1994. Entry of
judgment was made on February 8, 1994, and a writ of execution was issued on February 15, 1994
and served upon Partenio on February 21, 1994. The writ was served as well upon the City
Assessor of Olongapo City, who caused the transfer of the Tax Declaration covering the 21 st St.
portion in respondent’s name.

In June 1994, petitioners filed a verified petition for relief from the decision of the trial court,
grounded on the following: 1) that Partenio’s conjugal share in the property, and that of petitioners as
well, are being litigated in a judicial partition proceeding 7 (the partition case) which is pending with
the Court of Appeals, hence the trial court may not yet render a decision disposing of a definite area
of the subject property in respondent’s favor; and, (2) that petitioners were unjustly deprived of the
opportunity to protect and defend their interest in court because, notwithstanding that they are
indispensable parties to the case (being co-owners of the subject property), they were not impleaded
in Civil Case No. 140-0-93.
In lieu of a hearing, the parties were directed to submit their respective position papers. Respondent,
meanwhile, moved to dismiss the petition, claiming that the stated grounds for relief are not included
in the enumeration under Section 2, Rule 38 of the Rules of Court. Petitioners opposed the motion.

In an Order dated January 13, 1995, the trial court denied the petition for relief because the decision
in Civil Case No. 140-0-93 had become final and executory. It held that only indispensable parties to
the case may participate in the proceedings thereof, and since petitioners may not be considered as
indispensable parties because the subject matter of the proceedings involves Partenio’s conjugal
share in the property, they are precluded from filing a petition for relief from the court’s judgment.

Petitioners moved for reconsideration insisting that they are indispensable parties in Civil Case No.
140-0-93 because as co-owners of the subject property by virtue of succession to the rights of their
deceased mother, they possess an interest that must be protected. Instead of resolving the motion,
the trial court, with the concurrence of the petitioners and the respondent, deferred the proceedings,
to await the result of a pending appeal with the Court of Appeals of the decision in Special Civil
Action No. 340-0-86,8 the partition case, where the trial court, in its decision, awarded specifically the
Canda St. portion to Partenio as his conjugal share.

In the meantime, or sometime in 1995, a Motion for leave of court to file a Complaint in Intervention
was filed by Sotero Gan (Gan), who claims to be the actual and rightful owner of Partenio’s conjugal
share. Gan claims to have purchased Partenio’s conjugal share in the property, and in return, the
latter on November 29, 1990 executed a deed of waiver and quitclaim of his possessory rights. Gan
likewise claims that the tax declaration covering the portion of the property had been transferred in
his name. He thus seeks the dismissal of Civil Case No. 140-0-93 and the reinstatement of his name
on the tax declaration which by then had been placed in respondent’s name.

The parties submitted their respective oppositions to Gan’s motion, the core of their argument being
that with the finality of the decision in the case, intervention was no longer proper, and that Gan’s
cause of action, if any, should be litigated in a separate proceeding.

The trial court, in an Order dated January 22, 1996, denied Gan’s motion for intervention for being
filed out of time, considering that the decision of the court had become final and executory in
February 1994. Gan moved for reconsideration which was opposed by respondent, citing, among
others, an Order dated April 18, 1994 issued by the Department of Environment and Natural
Resources (CENRO of Olongapo) which includes a finding that Gan had transferred his rights and
interest in the subject property to one Chua Young Bing.

In another Order dated October 23, 1997, 9 the trial court denied Gan’s motion for reconsideration, as
well as the petitioners’ motion for reconsideration of the January 13, 1995 order denying the petition
for relief. In said order, the court made reference to the decision in Special Civil Action No. 340-0-86,
which by then had become final and executory.10 The trial court likewise substantially modified its
Decision dated December 26, 1993, by awarding specifically the 21st St. portion of the property to
Partenio as his conjugal share, despite the pronouncement in Special Civil Action No. 340-0-86
which awards the Canda St. portion to him.

From the foregoing October 23, 1997 order, the petitioners and Gan interposed their separate
appeals to the Court of Appeals. Meanwhile, respondent filed a motion for execution pending appeal,
which was denied on the ground that there exist no special or compelling reasons to allow it.

On March 2, 2001, the appellate court rendered the herein assailed Decision, which affirmed in toto
the appealed October 23, 1997 Order of the trial court.
The appellate court sustained the trial court’s ruling that Partenio’s conjugal share in the subject
property consists of the 21st St. portion, thereby disregarding the prior final and executory decision in
Special Civil Action No. 340-0-86 which declares that Partenio is entitled to the Canda St. portion.
The appellate court based the award of the 21st St. portion to respondent on the ground that
petitioners have always acknowledged their father Partenio’s "acts of ownership" over the 21 st St.
portion, thus signifying their consent and thereby barring them from questioning the award.

Respondents moved for reconsideration but it was denied.

Petitioners are now before us via the present petition, raising the sole issue of whether petitioners
can intervene in the proceedings in Civil Case

No. 140-0-93 in order to protect their rights as co-owners of the subject property.

We resolve to GRANT the petition.

Under a co-ownership, the ownership of an undivided thing or right belongs to different persons.
During the existence of the co-ownership, no individual can claim title to any definite portion of the
community property until the partition thereof; and prior to the partition, all that the co-owner has is
an ideal or abstract quota or proportionate share in the entire land or thing. 11 Before partition in a co-
ownership, every co-owner has the absolute ownership of his undivided interest in the common
property. The co-owner is free to alienate, assign or mortgage this undivided interest, except as to
purely personal rights. The effect of any such transfer is limited to the portion which may be awarded
to him upon the partition of the property.12

Under Article 497 of the Civil Code, in the event of a division or partition of property owned in
common, assignees of one or more of the co-owners may take part in the division of the thing owned
in common and object to its being effected without their concurrence. But they cannot impugn any
partition already executed, unless there has been fraud, or in case it was made notwithstanding a
formal opposition presented to prevent it, without prejudice to the right of the debtor or assignor to
maintain its validity.

The decision in Special Civil Action No. 340-0-86, which is an action for judicial partition of the
subject property, determines what Partenio, and ultimately, respondent, as his successor-in-interest,
is entitled to in Civil Case No. 140-0-93. As Partenio’s successor-in-interest to the property,
respondent could not acquire any superior right in the property than what Partenio is entitled to or
could transfer or alienate after partition. In a contract of sale of co-owned property, what the vendee
obtains by virtue of such a sale are the same rights as the vendor had as co-owner, and the vendee
merely steps into the shoes of the vendor as co-owner. 13

As early as May 17, 1990, when respondent and Partenio executed the "Agreement to Sell", the
former knew that the property she was purchasing was conjugal property owned in common by
Partenio and the heirs of his deceased wife.14 And while Civil Case No. 140-0-93 (the specific
performance case) was pending, respondent was apprised of the pendency of Special Civil Action
No. 340-0-86 (the partition case). Yet, respondent did not intervene, nor did she take part, nor enter
any formal opposition – as assignee of Partenio’s conjugal share in the property – in said partition
proceedings. She did not exercise the rights granted her under Article 497 of the Civil Code. Instead,
when the court in Civil Case No. 140-0-93 decided to suspend the proceedings and hold the same in
abeyance while the appeal in Special Civil Action No. 340-0-86 remained unresolved, the
respondent unconditionally agreed to its temporary abatement. In other words, she chose to sit back
and await the resolution thereof.
Consequently, when the decision in Special Civil Action No. 340-0-86 became final and executory
without the respondent having questioned the same in any manner whatsoever, by appeal or
otherwise, the division of property decreed therein may no longer be impugned by her.

Thus said, the trial court in Civil Case No. 140-0-93 could not award the 21 st St. portion to Partenio,
since the court in Special Civil Action No. 340-0-86 specifically awarded the Canda St. portion to
him. The decision in Special Civil Action No. 340-0-86, which became final and executory, should
put an end to the co-ownership between Partenio and the respondents, and the award made to each
co-owner of specific portions of the property as their share in the co-ownership should be respected.

Since the issue of each of the co-owners’ specific portion in the aggregate property has been laid to
rest in Special Civil Action No. 340-0-86, the final and executory decision in said proceeding should
be conclusive on the issue of which specific portion of the property became the subject matter of the
sale between Partenio and the respondent; that is, that Partenio, as declared owner of the Canda St.
portion, could have transferred to respondent only that part of the property and not the 21 st St.
portion. Although Partenio was free to sell or transfer his undivided interest to the respondent, the
effect of such transfer is limited to the portion which may be awarded to him upon the partition of the
property.

It was likewise error for the appellate court to have considered the alleged acts of ownership
exercised upon the 21st St. portion by Partenio as weighing heavily against the decreed partition in
Special Civil Action No. 340-0-86. The determination of this issue is beyond the ambit of the trial
court in Civil Case No. 140-0-93. As far as it was concerned, it could only award to the respondent, if
proper, whatever specific portion Partenio is found to be entitled to in the event of a partition, in
accordance with Article 493 of the Civil Code and the procedure outlined in the Rules of Court. It
could not, in an ordinary proceeding for specific performance with damages, subject the property to
a partial division or partition without the knowledge and participation of the other co-owners, and
while a special civil action for partition was simultaneously pending in another court.

The court in Civil Case No. 140-0-93 is not a partition court but one litigating an ordinary civil case,
and all evidence of alleged acts of ownership by one co-owner should have been presented in the
partition case, there to be threshed out in order that the partition court may arrive at a just division of
the property owned in common; it is not for the trial court in the specific performance case to
properly appreciate. Being a court trying an ordinary civil suit, the court in Civil Case No. 140-0-93
had no jurisdiction to act as a partition court. Trial courts trying an ordinary action cannot resolve to
perform acts pertaining to a special proceeding because it is subject to specific prescribed rules. 15

That the trial court suspended the proceedings in Civil Case No. 140-0-93 to make way for the
resolution of Special Civil Action No. 340-0-86 was an indication that it intended to abide by
whatever would be decreed in the latter case. For, understandably, the resolution of Special Civil
Action No. 340-0-86 will settle the issue in Civil Case No. 140-0-93 with respect to which specific
portion of the property constitutes the subject matter of the specific performance suit and which
would, in any case, be adjudicated to either of the two – the defendant co-owner and seller Partenio
or the plaintiff buyer Oamil, the herein respondent. Yet in the end, the trial court ultimately
disregarded what had been finally adjudicated and settled in Special Civil Action No. 340-0-86, and
instead it took a position that was entirely diametrically opposed to it.

It was likewise irregular for the respondent to have obtained a certificate of title over specific property
which has not been partitioned, especially where she concedes awareness of the existing co-
ownership which has not been terminated, and recognizes her status as mere successor-in-interest
to Partenio. The spring may not rise higher than its source.
In sum, the trial court and the Court of Appeals, by disregarding the final and executory judgment in
Special Civil Action No. 340-0-86, certainly ignored the principle of conclusiveness of judgments,
which states that –

[A] fact or question which was in issue in a former suit and was there judicially passed upon
and determined by a court of competent jurisdiction, is conclusively settled by the judgment
therein as far as the parties to that action and persons in privity with them are concerned and
cannot be again litigated in any future action between such parties or their privies, in the
same court or any other court of concurrent jurisdiction on either the same or different cause
of action, while the judgment remains unreversed by proper authority. It has been held that in
order that a judgment in one action can be conclusive as to a particular matter in another
action between the same parties or their privies, it is essential that the issue be identical. If a
particular point or question is in issue in the second action, and the judgment will depend on
the determination of that particular point or question, a former judgment between the same
parties or their privies will be final and conclusive in the second if that same point or question
was in issue and adjudicated in the first suit (Nabus vs. Court of Appeals, 193 SCRA 732
[1991]). Identity of cause of action is not required but merely identity of issues. 16

The ruling in Special Civil Action No. 340-0-86 – that the Canda St. portion shall go to Partenio –
became the law of the case and continues to be binding between the parties as well as their
successors-in-interest, the decision in said case having become final and executory. Hence, the
binding effect and enforceability of that dictum can no longer be relitigated anew in Civil Case No.
140-0-93 since said issue had been resolved and finally laid to rest in the partition case, by
conclusiveness of judgment, if not by the principle of res judicata. It may not be reversed, modified or
altered in any manner by any court.

As a result of the trial court’s refusal to abide by the decision in Special Civil Action No. 340-0-86,
the rights of the petitioners have been unnecessarily transgressed, thereby giving them the right to
seek relief in court in order to annul the October 23, 1997 Order of the trial court which substantially
and wrongly modified its original decision in Civil Case No. 140-0-93. It was clear mistake for the trial
court to have gone against the final and executory decision in Special Civil Action No. 340-0-86 and
its original decision, which does not award a definite portion of the disputed property to Partenio,
precisely because, as a court litigating an ordinary civil suit, it is not authorized to partition the
subject property but only to determine the rights and obligations of the parties in respect to
Partenio’s undivided share in the commonly owned property. As a result of this mistake, the
petitioners are entitled to relief.

Finally, with respect to Gan’s intervention, we affirm the appellate court’s finding that the same is no
longer proper considering that the decision in Civil Case No. 140-0-93 had become final and
executory. Gan moved to intervene only in 1995, when the decision became final and executory in
February 1994. Certainly, intervention, being merely collateral or ancillary to the principal action,
may no longer be allowed in a case already terminated by final judgment. 17 Moreover, since Gan did
not appeal the herein assailed decision of the appellate court, then the same, as against him, has
become final and executory.

WHEREFORE, the petition is GRANTED. The Decision of the Court of Appeals dated March 2, 2001
in CA-G.R. CV No. 57557 and the Resolution dated July 10, 2001 are REVERSED and SET ASIDE,
with the exception that the denial of the intervenor Sotero Gan’s motion for intervention
is AFFIRMED.

The Order dated October 23, 1997 of the Regional Trial Court of Olongapo City in Civil Case No.
140-0-93 is hereby DECLARED of no effect. In all other respects, the Decision of the trial court in
Civil Case No. 140-0-93 dated December 26, 1993 is AFFIRMED. The said court is
moreover ORDERED to abide by the pronouncement in Special Civil Action No. 340-0-86 with
respect to Partenio Rombaua’s conjugal share in the disputed property.

SO ORDERED.

Austria-Martinez, Corona*, N

Republic of the Philippines

SUPREME COURT
Manila

FIRST DIVISION

G.R. No. L-52361 April 27, 1981

SUNSET VIEW CONDOMINIUM CORPORATION, petitioner,

vs.
THE HON. JOSE C. CAMPOS, JR. OF THE COURT OF FIRST INSTANCE, BRANCH XXX,
PASAY CITY and AGUILAR-BERNARES REALTY, respondents.

G.R. No. L-52524 April 27, 1981

SUNSET VIEW CONDOMINIUM CORPORATION, petitioner,

vs.
THE HON. JOSE C. CAMPOS, JR., PRESIDING JUDGE OF THE COURT OF FIRST INSTANCE,
BRANCH XXX, PASAY CITY, and LIM SIU LENG, respondents.

FERNANDEZ, J.:

These two cases which involve similar facts and raise Identical questions of law were ordered
consolidated by resolution of this Court dated March 17, 1980. 
1

The petitioner, Sunset View Condominium Corporation, in both cases, is a condominium corporation
within the meaning of Republic Act No. 4726 in relation to a duly registered Amended Master Deed
with Declaration of Restrictions of the Sunset View Condominium Project located at 2230 Roxas
Boulevard, Pasay City of which said petitioner is the Management Body holding title to all the
common and limited common areas.  2

G.R. NO. 52361

The private respondent, Aguilar-Bernares Realty, a sole proprietorship with business name
registered with the Bureau of Commerce, owned and operated by the spouses Emmanuel G. Aguilar
and Zenaida B. Aguilar, is the assignee of a unit, "Solana", in the Sunset View Condominium Project
with La Perla Commercial, Incorporated, as assignor.   The La Perla Commercial, Incorporated
3

bought the "Solana" unit on installment from the Tower Builders, Inc.   The petitioner, Sunset View
4

Condominium Corporation, filed for the collection of assessments levied on the unit against Aguilar-
Bernares Realty, private respondent herein, a complaint dated June 22, 1979 docketed as Civil
Case No. 7303-P of the Court of First Instance of Pasay City, Branch XXX. The private respondent
filed a Motion to Dismiss the complaint on the grounds (1) that the complaint does not state a cause
of action: (2) that the court has no jurisdiction over the subject or nature other action; and (3) that
there is another action pending between the same parties for the same cause. The petitioner filed its
opposition thereto. The motion to dismiss was granted on December 11, 1979 by the respondent
Judge who opined that the private respondent is, pursuant to Section 2 of Republic Act No. 4726, a
"holder of a separate interest" and consequently, a shareholder of the plaintiff condominium
corporation; and that "the case should be properly filed with the Securities & Exchange Commission
which has exclusive original jurisdiction on controversies arising between shareholders of the
corporation." the motion for reconsideration thereof having been denied, the petitioner, alleging
grave abuse of discretion on the part of respondent Judge, filed the instant petition for certiorari
praying that the said orders be set aside.

G.R. NO. 52524

The petitioner filed its amended complaint dated July 16, 1979 docketed as Civil Case No. 14127 of
Branch I of the City Court of Pasay City for the collection of overdue accounts on assessments and
insurance premiums and the interest thereon amounting to P6,168 06 as of March 31, 1979 against
the private respondent Lim Siu Leng   to whom was assigned on July 11, 1977 a unit called "Alegria"
5

of the Sunset. View Condominium Project by Alfonso Uy   who had entered into a "Contract to Buy
6

and Sell" with Tower Builders, Inc. over the said unit on installment basis. 7

The private respondent filed a motion to dismiss on the ground of lack of jurisdiction, alleging that
the amount sought to be collected is an assessment. The correctness and validity of which is certain
to involve a dispute between her and the petitioner corporation; that she has automatically become,
as a purchaser of the condominium unit, a stockholder of the petitioner pursuant to Section 2 of the
Condominium Act, Republic Act No. 4726; that the dispute is intra-corporate and is consequently
under the exclusive jurisdiction of the Securities & Exchange Commission as provided in Section 5
of P.D. No. 902-A. 8

The petitioner filed its opposition thereto, alleging that the private respondent who had not fully paid
for the unit was not the owner thereof, consequently was not the holder of a separate interest which
would make her a stockholder, and that hence the case was not an intra-corporate dispute.  9

After the private respondent had filed her answer to the opposition to the motion to dismiss   of the
10

petitioner, the trial court issued an order dated August 13, 1979 denying the motion to dismiss.   The
11

private respondent's motion for reconsideration thereof was denied by the trial court in its Order
dated September 19, 1979.  12

The private respondent then appealed pursuant to Section 10 of Rule 40 of the Rules of Court to the
Court of First Instance, where the appeal was docketed as Civil Case No. 7530P. The petitioner filed
its "Motion to Dismiss Appeal" on the ground that the order of the trial court appealed from is
interlocutory. 
13
The motion to dismiss the appeal was denied and the parties were ordered to submit their respective
memorandum on the issue raised before the trial court and on the disputed order of the trial
judge.   After the parties had submitted their respective memoranda on the matter, the respondent
14

Judge issued an order dated December 14, 1979 in which he directed that "the appeal is hereby
dismissed and d the judgment of the lower court is reversed. The case is dismissed and the parties
are directed to ventilate their controversy with the Securities & Exchange Commission.   The
15

petitioner's motion for reconsideration thereof was denied in an order dated January 14,
1980.   Hence this petition for certiorari, alleging grave abuse of discretion on the part of the
16

respondent Judge.

Issues Common to Both Cases

It is admitted that the private respondents in both cases have not yet fully paid the purchase price of
their units. The Identical issues raised in both petitions are the following:

1. Is a purchaser of a condominium unit in the condominium project managed by the petitioner, who
has not yet fully paid the purchase price thereof, automaticaly a ,stockholder of the petitioner
Condominium Corporation

2. Is it the regular court or the Securities & Exchange Commission that has jurisdiction over cases
for collection of assessments assessed by the Condominium Corporation on condominium units the
full purchase price of which has not been paid?

The private respondents in both cases argue that every purchaser of a condominium unit, regardless
of whether or not he has fully paid the purchase price, is a "holder of a separate interest" mentioned
in Section 2 of Republic Act No. 4726, otherwise known as "The Condominium Act" and is
automatically a shareholder of the condominium corporation.

The contention has no merit. Section 5 of the Condominium Act expressly provides that the
shareholding in the Condominium Corporation will be conveyed only in a proper case. Said Section
5 provides:

Any transfer or conveyance of a unit or an apartment, office or other space therein,

shall include the transfer or conveyance of the undivided interests in the common
areas or, in a proper case, the membership or shareholding in the condominium
corporation ...

It is clear then that not every purchaser of a condominium unit is a shareholder of the condominium
corporation. The Condominium Act leaves to the Master Deed the determination of when the
shareholding will be transferred to the purchaser of a unit. Thus, Section 4 of said Act provides:

The provisions of this Act shall apply to property divided or to be divided into
condominium only if there shall be recorded in the Register of Deeds of the province
or city in which the property lies and duly annotated in the corresponding certificate
of title of the land ... an enabling or master deed which shall contain, among others,
the following:

xxx xxx xxx

 (d) Astatement of the exact nature of the interest acquired or to be acquired by the
purchaser in the separate units and in the common areas of the condominium project
...

The Amended Master Deeds in these cases, which were duly registered in the Register of Deeds,
and which contain, by mandate of Section 4, a statement of the exact nature of the interest acquired
by a purchaser of a unit, provide in Section 6 of Part 1:

(d) Each Unit owner shall, as an essential condition to such ownership, acquire
stockholding in the Condominium Corporation herein below provided ...  17

The Amended Master Deeds likewise provide in Section 7 (b), thus.

(b) All unit owners shall of necessity become stockholders of the Condominium
Corporation. TOWER shall acquire all the shares of stock of SUNSET VIEW and
shall allocate the said shares to the units in proportion to the appurtenant interest in
the COMMON AREAS and LIMITED COMMON AREAS as provided in Section 6 (b)
above. Said shares allocated are mere appurtenances of each unit, and therefore,
the same cannot be transferred, conveyed, encumbered or otherwise disposed of
separately from the Unit ... 
18

It is clear from the above-quoted provisions of the Master Deeds that the shareholding in the
Condominium Corporation is inseparable from the unit to which it is only an appurtenant and that
only the owner of a unit is a shareholder in the Condominium Corporation.

Subparagraph (a) of Part 1, Section 6, of the Master Deeds determines when and under what
conditions ownership of a unit is acquired by a purchaser thus:

(a) The purchaser of a unit shall acquire title or ownership of such Unit, subject to the
terms and conditions of the instrument conveying the unit to such purchaser and to
the terms and conditions of any subsequent conveyance under which the purchaser
takes title to the Unit, and subject further to this MASTER DEED ...  19

The instrument conveying the unit "Solana" in G.R. NO. 52361 is the "Contract to Buy and Sell"
dated September 13, 1977, Annex "D", while that conveying the unit "Alegria" in G.R. NO. 52524 is
the "Contract to Buy and Sell" dated May 12, 1976, Annex "C". In both deeds of conveyance, it is
provided:

4. Upon full payment by the BUYER of the total purchase price and full compliance
by the BUYER of an its obligations herein, the SELLER will convey unto the BUYER,
as soon as practicable after completion of the construction, full and absolute title in
and to the subject unit, to the shares of stock pertaining thereto and to an rights and
interests in connection therewith ... 
20

The share of stock appurtenant to the unit win be transferred accordingly to the purchaser of the unit
only upon full payment of the purchase price at which time he will also become the owner of the unit.
Consequently, even under the contract, it is only the owner of a unit who is a shareholder of the
Condominium Corporation. Inasmuch as owners is conveyed only upon full payment of the purchase
price, it necessarily follows that a purchaser of a unit who has not paid the full purchase price thereof
is not The owner of the unit and consequently is not a shareholder of the Condominium Corporation.
That only the owner of a unit is a stockholder of the Condominium Corporation is inferred from
Section 10 of the Condominium Act which reads:

SEC. 10. ... Membership in a condominium corporation, regardless of whether it is a

stock or non-stock corporation, shall not be transferable separately from the
condominium unit of which it is an appurtenance When a member or stockholder
ceases is to own a unit in the project in which the condominium corporation owns or
holds the common areas, he shall automatically cease to be a member or
stockholder of the condominium corporation.

Pursuant to the above statutory provision, ownership of a unit is a condition sine qua non to being a
shareholder in the condominium corporation. It follows that a purchaser of a unit who is not yet the
owner thereof for not having fully paid the full purchase price, is not a shareholder By necessary
implication, the "separate interest" in a condominium, which entitles the holder to become
automatically a share holder in the condominium corporation, as provided in Section 2 of the
Condominium Act, can be no other than ownership of a unit. This is so because nobody can be a
shareholder unless he is the owner of a unit and when he ceases to be the owner, he also ceases
automatically to be a shareholder.

The private respondents, therefore, who have not fully paid the purchase price of their units and are
consequently not owners of their units are not members or shareholders of the petitioner
condominium corporation,

Inasmuch as the private respondents are not shareholders of the petitioner condominium
corporation, the instant case for collection cannot be a "controversy arising out of intracorporate or
partnership relations between and among stockholders, members or associates; between any or all
of them and the corporation, partnership or association of which they are stockholders, members or
associates, respectively" which controversies are under the original and exclusive jurisdiction of the
Securities & Exchange Commission, pursuant to Section 5 (b) of P.D. No. 902- A. The subject
matters of the instant cases according to the allegations of the complaints are under the jurisdiction
of the regular courts: that of G.R. NO. 52361, which is for the collection of P8,335.38 with interest
plus attorney's fees equivalent to the principal or a total of more than P10,000.00 is under the
jurisdiction of the Court of First Instance; and that of G.R. NO. 52524, which is for the collection of
P6,168-06 is within the jurisdiction of the City Court.

In view of the foregoing, it is no longer necessary to resolve the issue raised in G.R. NO. 52524 of
whether an order of the City Court denying a motion to dismiss on the ground of lack of jurisdiction
can be appealed to the Court of First Instance.

WHEREFORE, the questioned orders of the respondent Judge dated December 11, 1979 and
January 4, 1980 in Civil Case No. 7303-P, subject matter of the Petition in G.R. No. 52361, are set
aside and said Judge is ordered to try the case on the merits. The orders dated December 14, 1979
and January 14, 1980 in Civil Case No. 7530-P, subject matter of the petition in G.R. No. 52524 are
set aside and the case is ordered remanded to the court a quo, City Court of Pasay City, for trial on
the merits, with costs against the private respondents.

SO ORDERED.
 FIRST DIVISION

G.R. No. 123552             February 27, 2003

TWIN TOWERS CONDOMINIUM CORPORATION, petitioner,

vs.
THE COURT OF APPEALS, ALS MANAGEMENT & DEVELOPMENT CORPORATION, ANTONIO
LITONJUA and SECURITIES AND EXCHANGE COMMISSION, respondents.

DECISION

CARPIO, J.:

The Case

Before us is a petition for review on certiorari to nullify the Decision dated August 31, 1995 of the
1  2 

Court of Appeals and its Resolution dated January 16, 1996 denying petitioner’s motion for
3 

reconsideration. The Court of Appeals dismissed petitioner’s appeal from the Decision en banc of
4 

the Securities and Exchange Commission, which reversed the order of the SEC Hearing Officer. The 5 

Court of Appeals dismissed the appeal for lack of merit and for non-compliance with the requirement
on certification of non-forum shopping. 6
The Antecedent Facts

On June 30, 1988, petitioner Twin Towers Condominium Corporation ("petitioner" for brevity) filed a
complaint with the Securities and Exchange Commission ("SEC" for brevity) against respondents
7 

ALS Management & Development Corporation ("ALS" for brevity) and Antonio Litonjua ("Litonjua" for
brevity). The complaint prayed that ALS and Litonjua be ordered to pay solidarily the unpaid
condominium assessments and dues with interests and penalties covering the four quarters of 1986
and 1987 and the first quarter of 1988.

The complaint alleged, among others, that petitioner, a non-stock corporation, is organized for the
sole purpose of holding title to and managing the common areas of Twin Towers Condominium
("Condominium" for brevity). Membership in petitioner corporation is compulsory and limited to all
registered owners of units in the Condominium. ALS, as registered owner of Unit No. 4-A ("Unit" for
brevity) of the Condominium, is a member of petitioner. Litonjua, who is the corporate president of
ALS, occupies the Unit.

Petitioner collects from all its members quarterly assessments and dues as authorized by its Master
Deed and Declaration of Restrictions ("Master Deed" for brevity) and its By-Laws. As of the filing of
the complaint with the SEC, petitioner’s records of account show that ALS failed to pay assessments
and dues starting 1986 up to the first quarter of 1988. Petitioner claimed against both ALS and
Litonjua P118,923.20 as unpaid assessments and dues. This amount includes accrued interests of
P30,808.33 and penalty charges of P7,793.34, plus P 1,500.00 as unpaid contingency fund
assessment for 1987. 8

In their joint Answer with Counterclaim, ALS and Litonjua asserted that petitioner failed to state a
cause of action against Litonjua. ALS and Litonjua argued that petitioner’s admission that ALS and
not Litonjua is the registered owner of the Unit and member of petitioner exonerates Litonjua from
any liability to petitioner. While ALS is a juridical person that cannot by itself physically occupy the
Unit, the natural person who physically occupies the Unit does not assume the liability of ALS to
petitioner. Neither does the agent who acts for the corporation become personally liable for the
corporation’s obligation.

As counterclaim, ALS claimed damages against petitioner arising from petitioner’s act of repeatedly
preventing ALS, its agents and guests from using the parking space, swimming pool, gym, and other
facilities of the Condominium. In addition, Litonjua claimed damages against petitioner for the latter’s
act of including Litonjua’s name in the list of delinquent unit owners which was posted on petitioner’s
bulletin board.9

On December 11, 1991, the SEC Hearing Officer ordered petitioner to pay Litonjua moral and
exemplary damages for maliciously including Litonjua’s name in the list of delinquent unit owners
and for impleading him as a respondent. On the other hand, the SEC Hearing Officer ordered ALS to
pay the assessments and dues to petitioner. However, the Hearing Officer did not determine the
10 

exact amount to be paid by ALS because petitioner failed to lay down the basis for computing the
unpaid assessments and dues. The dispositive portion of the decision reads thus:
11 

"WHEREFORE, premises considered, judgment is hereby rendered as follows:

1. Ordering respondent ALS to pay the legal assessments/dues due the complainant within
thirty (30) days from finality of this Decision; and

2. Ordering the complainant to pay respondent Antonio Litonjua the sum of THREE
HUNDRED THOUSAND PESOS (P300,000.00) as moral damages, FIFTY THOUSAND
 PESOS (P50,000.00) as exemplary damages, and TWO HUNDRED THOUSAND PESOS
(P200,000.00) as and by way of attorney’s fees.

SO ORDERED." 12

Not satisfied with the SEC Hearing Officer’s decision, both parties filed their respective appeals to
the SEC en banc. Petitioner assailed the award of moral and exemplary damages as well as
13 

attorney’s fees in favor of Litonjua. On the other hand, ALS appealed that portion of the decision
ordering it to pay to petitioner the assessments and dues.

In a decision dated July 30, 1993, the SEC en banc nullified the award of damages and attorney’s
fees to Litonjua on the ground that the SEC had no jurisdiction over Litonjua. The SEC en banc held
that there is no intra-corporate relationship between petitioner and Litonjua who is not the registered
owner of the Unit and thus, not a member of petitioner. The SEC en banc stated that petitioner could
not invoke the doctrine of piercing the veil of ALS’ corporate fiction since disregarding the corporate
entity is a function of the regular courts.

Furthermore, the SEC en banc remanded the case to the Hearing Officer to determine the value of
the services petitioner failed to render to ALS because of the latter’s non-use of the Condominium
facilities. The SEC en banc ruled that the value of these services could be deducted from the unpaid
assessments and dues that ALS owes petitioner.

Thus, the SEC en banc declared:

"WHEREFORE, in view of the foregoing, the order appealed from is hereby reversed insofar as it
awards moral and exemplary damages and attorney’s fees to respondent Litonjua as the same is
null and void for lack of jurisdiction of this Commission over the said party.
14

As regards that portion of the appealed Order directing respondent ALS to pay the legal
assessment/dues to the complainant TTC within thirty (30) [days] from finality of the said decision,
the same is hereby modified by remanding the case to the hearing officer for determination of the
value of the services withheld by the complainant TTC from respondent ALS in order that the
same may be deducted from the amount of legal assessments and dues which the respondent
corporation shall pay to the complainant.

SO ORDERED." (Emphasis supplied)

15 

Petitioner appealed the SEC en banc Decision to the Court of Appeals contending grave error or
grave abuse of discretion by the SEC en banc.

The Ruling of the Court of Appeals

The Court of Appeals dismissed petitioner’s appeal on both procedural and substantive grounds.
Procedurally, the Court of Appeals found the petition defective for failure to contain a sworn
certification of non-forum shopping as required by Section 6 of Administrative Circular No. 1-95 and
Section 2 of Revised Circular No. 28-91.

On the merits, the Court of Appeals substantially affirmed the decision of the SEC en banc that there
is no ground to pierce the veil of ALS’ corporate fiction. The Court of Appeals held that there is
nothing in the records to show that ALS is engaged in unlawful, business or that Litonjua is using
ALS to defraud third parties. The fact alone that ALS is in arrears in paying its assessments and
dues does not make ALS or Litonjua guilty of fraud which would warrant piercing the corporate veil
of ALS. Thus, it was improper for petitioner to post Litonjua’s name instead of ALS’ in the list of
delinquent unit owners since Litonjua is not a member of petitioner.

The Court of Appeals also sustained the claim of petitioner against ALS for unpaid assessments and
dues but found that petitioner failed to substantiate by preponderance of evidence the basis for
computing the unpaid assessments and dues. Thus, the Court of Appeals remanded the case to the
SEC Hearing Officer for further reception of evidence and for determination of the exact amount of
ALS’ liability to petitioner. The Court of Appeals, however, directed the SEC Hearing Officer to
deduct from ALS’ unpaid assessments and dues the value of the services denied to ALS because of
the latter’s non-use of the Condominium facilities. In allowing the deduction, the Court of Appeals
declared the Condominium’s House Rule 26.3 as ultra vires. House Rule 26.3, which petitioner
claims as its basis for denying the use of the Condominium facilities to ALS, authorizes withholding
of the use of the Condominium facilities from delinquent unit owners. The Court of Appeals,
however, ruled that petitioner is not expressly authorized by its Master Deed and By-Laws to prohibit
delinquent members from using the facilities of the Condominium.

The Court of Appeals went further and declared the interest and penalty charges prescribed by
House Rule 26.5 on delinquent accounts as exorbitant or grossly excessive, although this was not
16 

raised as an issue. While in its complaint, petitioner sought to recover P118,923.20 as unpaid
assessments and dues, in its amended petition for review, petitioner sought P994,529.75, more than
eight times the amount it originally claimed from ALS. 17

In the dispositive portion of its assailed decision, the Court of Appeals declared:

"WHEREFORE, the instant petition is hereby DENIED and is accordingly DISMISSED." 18

Hence, this petition.

The Issues

In its Memorandum, petitioner assigns the following errors in the decision of the Court of Appeals:

1. "IN DISMISSING THE PETITION ALLEGEDLY BECAUSE OF PETITIONER’S FAILURE

TO COMPLY WITH THE PERTINENT PROVISIONS OF SUPREME COURT CIRCULAR
NOS. 1-95 AND 28-91 ON THE CERTIFICATION AGAINST FORUM SHOPPING;"

2. "IN ORDERING A REMAND OF THE CASE BACK TO THE HEARING OFFICER FOR
THE RECEPTION OF EVIDENCE FOR SERVICES SUPPOSEDLY NOT RENDERED BY
PETITIONER;"

3. "IN DECLARING HOUSE RULE NO. 26.3 AS ULTRA VIRES;"

4. "IN FINDING THE PENALTIES AND INTERESTS PRESCRIBED IN HOUSE RULE

26.5 AS EXORBITANT AND GROSSLY EXCESSIVE;"
19 

5. "IN REFUSING TO RECOGNIZE THE FACT THAT RESPONDENT LITONJUA AND NOT
ALS IS THE REAL OWNER OF APARTMENT UNIT 4-A;" and
 6. "IN FAILING TO FIND THAT THERE IS ON RECORD OVERWHELMING EVIDENCE TO
SHOW THE BASIS OF THE DUES AND ASSESSMENTS BEING COLLECTED FROM THE
PRIVATE RESPONDENTS." 20

The Ruling of the Court

The petition is partly meritorious.

A perusal of the foregoing issues readily reveals that petitioner raises two aspects of the case for
consideration - the procedural aspect and the substantive aspect.

We will discuss the procedural aspect first.

Non-compliance with Supreme Court Circular No. 1-95 and Revised Circular No. 28-91.

Petitioner submits that the Court of Appeals erred in dismissing its appeal for non-compliance with
Supreme Court Circular No. 1-95 and Revised Circular No. 28-91. Petitioner asserts that when it
filed its petition, both circulars were not yet in full force.

Petitioner filed its petition for review with the Court of Appeals on August 18, 1993 and its amended
petition on September 3, 1993. Both the original and amended petitions were filed before the
effectivity of Revised Administrative Circular No. 1-95 on June 1, 1995. However, contrary to
petitioner’s claim, before the issuance of Revised Administrative Circular No. 1-95, there was
already an existing circular requiring a sworn certification of non-forum shopping from a party filing a
petition for review with the Court of Appeals. 1a\^/phi1.net

Circular No. 28-91, which took effect on January 1, 1992, required a sworn certification of non-forum
shopping in cases filed with the Court of Appeals and the Supreme Court. Circular No. 28-91
specifically provides for summary dismissal of petitions which do not contain a sworn certification of
non-forum shopping. Sections 2 and 3 of Circular No. 28-91 state:

"2. Certification - The party must certify under oath that he has not commenced any other action or
proceeding involving the same issues in the Supreme Court, the Court of Appeals, or different
Divisions thereof, or any other tribunal or agency, and that to the best of his knowledge, no such
action or proceeding is pending in the Supreme Court, the Court of Appeals, or different Divisions
thereof, or any other tribunal or agency. If there is any action pending, he must state the status of the
same.  If he should learn that a similar action or proceeding has been filed or is pending before the
1awphi1.nét

Supreme Court, the Court of Appeals, or different Divisions thereof, or any other tribunal or agency,
he should notify the court, tribunal or agency within five (5) days from such notice.

3. Penalties -

a. Any violation of this Circular shall be a cause for the summary dismissal of the multiple petition or
complaint.

x x x."

Clearly, petitioner cannot claim that at the time of the filing of its petitions with the Court of Appeals,
it was not required under any existing Supreme Court Circular to include in its petitions a sworn
certification of non-forum shopping. Circular No. 28-91 applies in the instant case, being the Circular
in force at the time. Petitioner cannot even feign ignorance of Circular No. 28-91 as its petitions were
filed more than one year after the Circular’s effectivity. The rule against forum shopping has long
been established and Circular No. 28-91 merely formalized the prohibition and provided the
appropriate penalties against violators. 21

The Court of Appeals did not err in dismissing the petition for this procedural lapse. However, special
circumstances or compelling reasons may justify relaxing the rule requiring certification on non-
forum shopping. Technical rules of procedure should be used to promote, not frustrate justice. While
22 

the swift unclogging of court dockets is a laudable objective, granting substantial justice is an even
more urgent ideal. The certificate of non-forum shopping is a mandatory requirement. Nonetheless,
23 

this requirement must not be interpreted too literally to defeat the ends of justice.
24

In the instant case, the merits of petitioner’s case should be considered special circumstances or
compelling reasons that justify tempering the hard consequence of the procedural requirement on
non-forum shopping. In the interest of justice, we reinstate the petition.

Essentially, the substantive issues for resolution in the instant petition can be summarized into four,
as follows:

1. Whether petitioner can collect assessments and dues despite its denial to ALS of the use
of the Condominium facilities pursuant to House Rule 26.3;

2. Whether ALS can validly offset against its unpaid assessments and dues the value of the
services withheld by petitioner;

3. Whether a remand of the case to the proper trial court is necessary to determine the
amounts involved; and

4. Whether the penalties prescribed in House Rule 26.2 are grossly excessive and
exorbitant.

First Issue: Payment of assessments and dues.

Petitioner’s authority to assess dues.

Petitioner was organized to hold title to the common areas of the Condominium and to act as its
management body. The Condominium Act, the law governing condominiums, states that:

"Title to the common areas, including the land, or the appurtenant interests in such areas, may be
held by a corporation specially formed for the purpose (hereinafter known as the "condominium
corporation") in which the holders of separate interests shall automatically be members or
shareholders, to the exclusion of others, in proportion to the appurtenant interest of their respective
units in the common areas. xxx" 25

The Condominium Act provides that the Master Deed may authorize the condominium corporation to
collect "reasonable assessments to meet authorized expenditures." For this purpose, each unit
26 

owner "may be assessed separately for its share of such expenditures in proportion (unless
otherwise provided) to its owner’s fractional interest in the common areas." Also, Section 20 of the
27 

Condominium Act declares:

"Section 20. An assessment upon any condominium made in accordance with a duly registered
declaration of restrictions shall be an obligation of the owner thereof at the ‘time the
assessment is made. xxx" (Emphasis supplied)

Petitioner is expressly authorized by its Master Deed to impose reasonable assessments on its
members to maintain the common areas and facilities of the Condominium. Section 4, Part II of
petitioner’s Master Deed provides:

"Section 4. ASSESSMENTS. From and after date Ayala Investment & Development Corporation
formally conveys the condominium project to the Condominium Corporation, the owner of each
unit shall be proportionately liable for the common expenses of the condominium project,
which shall be assessed against each unit owner in the project and paid to the Condominium
Corporation as provided in Part I Section 8 (b) hereof at such times and in such manner as shall be
provided in the By-Laws of the Condominium Corporation,

a.) Regular assessments for such amounts as shall be necessary to meet the

operating expenses of the Condominium Corporation as well as such amounts,
determined in accordance with the provisions of the By-Laws, to be made for the purpose of
creating and maintaining a special fund for capital expenditures on the common areas of the
project; including the cost of extraordinary repairs, reconstruction or restoration necessitated
by damage, depreciation, obsolescence, expropriation or condemnation of the common
areas or part thereof, as well as the cost of improvements or additions thereto authorized in
accordance with the provisions of the By-Laws;

b.) xxx

c.) There may be assessed against the unit owners, in the manner prescribed herein or in
the By-Laws of the Condominium Corporation, such other assessments as are not
specifically provided for herein;

d.) The amount of any such assessment, plus interest penalties, attorney’s fees and other
charges incurred for the collection of such assessment, shall constitute a lien upon the unit
and on the appurtenant interest of the unit owner in the Condominium Corporation. Such lien
shall be constituted in the manner provided in the By-Laws of the Condominium Corporation.
The foreclosure, transfer of conveyance, as well as redemption of the unit shall include the
unit owner’s appurtenant interest in the Condominium Corporation. The Condominium
Corporation shall have the power to bid at the foreclosure sale." 28

Thus, petitioner’s right to collect assessments and dues from its members and the corollary
obligation of its members to pay are beyond dispute.

There is also no question that ALS is a member of petitioner considering that ALS is the registered
owner of the Unit. Under the automatic exclusive membership clause in the Master Deed, ALS 29 

became a regular member of petitioner upon its acquisition of a unit in the Condominium.

As a member of petitioner, ALS assumed the compulsory obligation to share in the common
expenses of the Condominium. This compulsory obligation is further emphasized in Section 8,
paragraph c, Part I of the Master Deed, to wit:

"Each member of the Condominium Corporation shall share in the common expenses of the
condominium project in the same sharing or percentage stated xxx" (Emphasis supplied)
30 
Undoubtedly, as a member of petitioner, ALS is legally bound to pay petitioner assessments and
dues LO maintain the common areas and facilities of the Condominium. ALS’ obligation arises from
both the law and its contract with the Condominium developer and other unit owners.

Petitioner’s Master Deed provides that a member of the Condominium corporation shall share in the
common expenses of the condominium project. This obligation does not depend on the use or non-
31 

use by the member of the common areas and facilities of the Condominium. Whether or not a
member uses the common areas or facilities, these areas and facilities will have to be maintained.
Expenditures must be made to maintain the common areas and facilities whether a member uses
them frequently, infrequently or never at all.

ALS asserts that the denial by petitioner to ALS and Litonjua of the use of the Condominium facilities
deprived petitioner of any right to demand from ALS payment of any condominium assessments and
dues. ALS contends that the right to demand payment of assessments and dues carries with it the
correlative obligation to allow the use of the Condominium facilities. ALS is correct if it had not
defaulted on its assessment and dues before the denial of the use of the facilities. However, the
records clearly show that petitioner denied ALS and Litonjua the use of the facilities only after ALS
had defaulted on its obligation to pay the assessments and dues. The denial of the use of the
facilities was the sanction for the prior default incurred by ALS.

In essence, what ALS wants is to use its own prior non-payment as a justification for its future non-
payment of its assessments and dues. Stated another way, ALS advances the argument that a
contracting party who is guilty of first breaching his obligation is excused from such breach if the
other party retaliates by refusing to comply with his own obligation.

This obviously is not the law. In reciprocal obligations, when one party’ fulfills his obligation, and the
other does not, delay by the other begins. Moreover, when one party does not comply with his
obligation, the other party does not incur delay if he does not perform his own reciprocal obligation
because of the first party’s non-compliance. This is embodied in Article 1169 of the Civil Code, the
relevant provision of which reads:

"In reciprocal obligations, neither party incurs in delay if the other does not comply or is not ready to
comply in a proper manner with what is incumbent upon him. From the moment one of the parties
fulfills his obligation, delay by the other begins."

Thus, before ALS incurred its arrearages, petitioner allowed ALS to use the facilities. However, ALS
subsequently defaulted and thus incurred delay. It was only then that petitioner disallowed ALS and
Litonjua from using the facilities. Clearly, petitioner’s denial to ALS of the Condominium facilities,
after ALS had defaulted, does not constitute a valid ground on the part of ALS to refuse paying its
assessments and dues.

Validity of House Rule 26.3.

Petitioner’s House Rules and Regulations ("House Rules" for brevity) expressly authorize denial of
the use of condominium facilities to delinquent members. Specifically, House Rule 26.3 provides
that:

"26. ASSESSMENTS:

xxx
26.3 Names of unit owners with delinquent accounts who fail to pay two consecutive quarters shall
be posted in the bulletin board. Unit owners with delinquent accounts, their tenants,
guests/visitors and relatives shall not be allowed the use of all facilities of the condominium
such as the swimming pool, gym, social hall, etc." (Emphasis supplied)

The issue on the validity of House Rule 26.3 was raised for the first time on appeal. It is settled that
an issue not raised during trial could not be raised for the first time on appeal as to do so would be
offensive to the basic rules of fair play, justice, and due process. Nonetheless, the Court of Appeals
32 

opted to address this issue.

Petitioner justifies House Rule 26.3 by invoking Section 36, paragraph 11 of the Corporation Code
which grants every corporation the power "to exercise such powers as may be essential or
necessary to carry out its purpose or purposes as stated in its Articles of Incorporation." Petitioner
was organized for the main purpose of holding title to and managing the common areas of the
Condominium. Petitioner claims that there is here implied the power to enact such measures as may
be necessary to carry out the provisions of the Articles of Incorporation, By-Laws and Master Deed
to deal with delinquent members. This, asserts petitioner, includes the power to enact House Rule
26.3 to protect and safeguard the interests not only of petitioner but also of its members.

For their part, ALS and Litonjua assail the validity of House Rule 26.3 alleging that it is ultra
vires. ALS and Litonjua maintain that neither the Master Deed nor the By-Laws of petitioner
expressly authorizes petitioner to prohibit delinquent members from using the Condominium
facilities. Being ultra vires, House Rule 26.3 binds no one. Even assuming that House Rule 26.3
is intra vires, the same is iniquitous, unconscionable, and contrary to morals, good customs and
public policy. Thus, ALS claims it can validly deduct the value of the services withheld from the
assessments and dues since it was barred from using the Condominium facilities for which the
assessments and dues were being collected.

The Court of Appeals sustained respondents’ argument and declared House Rule 26.3 ultra vires on
the ground that petitioner is not expressly authorized by its Master Deed or its By-Laws to
promulgate House Rule 26.3.

House Rule 26.3 clearly restricts delinquent members from the use and enjoyment of the
Condominium facilities. The question is whether petitioner can validly adopt such a sanction to
enforce the collection of Condominium assessments and dues.

We rule that House Rule 26.3 is valid.

Section 45 of the Corporation Code provides:

"Sec. 45. Ultra vires acts of corporations. - No corporation under this code shall possess or exercise
any corporate powers except those conferred by this Code or by its articles of incorporation and
except such as are necessary or incidental to the exercise of the powers so conferred."

The term ultra vires refers to an act outside or beyond corporate powers, including those that may
ostensibly be within such powers but are, by general or special laws, prohibited or declared
illegal. The Corporation Code defines an ultra vires act as one outside the powers conferred by the
33 

Code or by the Articles of Incorporation, or beyond what is necessary or incidental to the exercise of
the powers so conferred. Moreover, special laws governing certain classes of corporations, like the
Condominium Act, also grant specific corporate powers to corporations falling under such special
laws.
The Condominium Act, petitioner’s By-Laws and the Master Deed expressly empower petitioner to
promulgate House Rule 26.3. Section 9 of the Condominium Act provides:

"Section 9. The owner of a project shall, prior to the conveyance of any condominium therein,
register a declaration of restrictions relating to such project, which restrictions xxx shall inure to and
bind all condominium owners in the project. xxx The Register of Deeds shall enter and annotate the
declaration of restrictions upon the certificate of title covering the land included within the project, if
the land is patented or registered under the Land Registration or Cadastral acts.

xxx

Such declaration of restrictions, among other things, may also provide:

(a) As to any management body-

1. For the powers thereof, Including power to enforce the provisions of the declaration
of restrictions;

xxx

3. Provisions for maintenance xxx and other services benefiting the common areas, xxx"

(Emphasis supplied)

The Condominium Act clearly provides that the Master Deed may expressly empower the
management body, petitioner in the instant case, to enforce all provisions in the Master Deed and
Declaration of Restrictions.

Pursuant to Section 9 (a) (1) and (3) of the Condominium Act, the Master Deed expressly authorizes
petitioner to exercise all the powers granted to the management body by the Condominium Act,
petitioner’s Articles of Incorporation and By-Laws, the Master Deed, and the Corporation Code.
Section 3, Part II of the Master Deed reads:

"Section 3. MANAGEMENT BODY. - The Condominium Corporation to be formed and organized

pursuant to Section 7 of Part I, above, shall constitute the management body of the project. As such
management body, the powers of the Condominium Corporation shall be such as are
provided by the Condominium Act, by the Articles of Incorporation and the By-Laws of the
Corporation, by this instrument and by the applicable provisions of the Corporation Code as
are not inconsistent with the Condominium Act. Among such powers but not by way of limitation,
it shall have the power to enforce the provisions thereof in accordance with the By-Laws of
the corporation." (Emphasis supplied)

Thus, the Master Deed clearly empowers petitioner to enforce the provisions of the Master Deed in
accordance with petitioner’s By-Laws.

Petitioner’s By-Laws expressly authorize petitioner’s Board of Directors to promulgate rules and
regulations on the use and enjoyment of the common areas. Thus, paragraph 2, Section 2 of
petitioner’s By-Laws states:

"Without limiting the general nature of the foregoing powers, the Board of Directors shall have the
power to enforce the limitations, restrictions, and conditions contained in the Master Deed and
Declaration of Restrictions of the project; promulgate rules and regulations concerning the use,
enjoyment and occupancy of the units, common areas and other properties in the
condominium project, to make and collect assessments against members as unit owners to defray
the costs and expenses of the condominium project and the corporation and to secure by legal
means the observance of the provisions of the Condominium Act, the Master Deed, the Articles of
Incorporation, these By-Laws, and the rules and regulations promulgated by it in accordance
herewith. The members of the corporation bind themselves to comply faithfully with all these
provisions." (Emphasis supplied)
34 

Evidently, the Condominium Act, the Master Deed and petitioner’s By-Laws grant petitioner the
express power to promulgate rules and regulations concerning the use, enjoyment and occupancy of
the common areas.

Moreover, House Rule 26.3, which prohibits delinquent members from using the common areas, is
necessary to ensure maintenance of the common areas. Petitioner’s purpose in enacting House
Rule 26.3 is to enforce effectively the provisions of the Master Deed. House Rule 26.3 is well within
the powers of petitioner to adopt as the same is reasonably necessary to attain the purpose for
which both petitioner and the Condominium project were created. Thus, Section 7 of the Master
Deed declares:

"Section 7. CONDOMINIUM CORPORATION. - A corporation to be known as THE TWIN TOWERS

CONDOMINIUM (hereinafter referred to as the "Condominium Corporation"), shall be formed and
organized pursuant to the Condominium Act and the Corporation Code to hold title to all the
aforestated common areas of the condominium project including the land, to manage THE TWIN
TOWERS CONDOMINIUM and to do such other things as may be necessary, incidental and
convenient to the accomplishment of said purposes xxx" (Emphasis supplied)
35 

Petitioner would be unable to carry out its main purpose of maintaining the Condominium common
areas and facilities if members refuse to pay their dues and yet continue to use these areas and
facilities. To impose a temporary ban on the use of the common areas and facilities until the
assessments and dues in arrears are paid is a reasonable measure that petitioner may undertake to
compel the prompt payment of assessments and dues.

Second Issue: Offsetting the value of services withheld against ALS’ unpaid assessments and dues.

ALS’ claim for reduction of its assessments and dues because of its non-use of the Condominium
facilities.

We rule that ALS has no right to a reduction of its assessments and dues to the extent of its non-use
of the Condominium facilities. ALS also cannot offset damages against its assessments and dues
because ALS is not entitled to damages for alleged injury arising from its own violation of its
contract. Such a breach of contract cannot be the source of rights or the basis of a cause of
action. To recognize the validity of such claim would be to legalize ALS’ breach of its contract.
36 

ALS’ claim for unrendered repair services barred by estoppel.

ALS also justifies its non-payment of dues on the ground of the alleged failure of petitioner to repair
the defects in ALS’ Unit. However, this claim for unrendered repairs was never raised before the
SEC Hearing Officer or the SEC en banc. The issue on these alleged unrendered repairs, which
supposedly caused ALS’ Unit to deteriorate, was raised for the first time on appeal. The Court of
Appeals did not pass upon the same.
Neither in the proceedings in the SEC nor in the appellate court did ALS present evidence to
substantiate its allegation that petitioner failed to render the repair services. Also, ALS failed to
establish whether it claimed for the costs of the repair because ALS advanced these expenses, or
for the value of damages caused to the Unit by the water leakage.

ALS is therefore barred at this late stage to interpose this claim. In Del Rosario v. Bonga, the Court
37 

held:

"As a rule, no question will be entertained on appeal unless it has been raised in the court below.
Points of law, theories, issues and arguments not brought to the attention of the lower court need not
be, and ordinarily will not be, considered by a reviewing court, as they cannot be raised for the first
time at that late stage. Basic considerations of due process impel this rule."

As this claim was a separate cause of action which should have been raised in ALS’ Answer with
Counterclaim, ALS’ failure to raise this claim is deemed a waiver of the claim.

Third Issue: Remand of the case to the proper trial court.

Question of fact.

The Court of Appeals ruled that there is a need to remand the case considering that there is no
sufficient evidence on record to establish the amount of petitioner’s claim against ALS for unpaid
assessments and dues.

The question of whether petitioner’s claim of P994,529.75 for unpaid assessments and dues against
ALS is supported by sufficient evidence is a purely factual issue and inevitably requires the weighing
of evidence. This Court is not a trier of facts, and it is not the function of this Court to re-examine the
evidence submitted by the parties. In cases brought before this Court from the Court of Appeals
38 

under Rule 45 of the Rules of Court, this Court’s jurisdiction is limited to reviewing errors of law
which must be distinctly set forth. In this mode of appeal, the findings of fact of the Court of Appeals
39 

and other courts of origin are conclusive. 40

Jurisprudence is settled that:

"(a)s a rule, the jurisdiction of this Court in cases brought to it from the Court of Appeals xxx is
limited to the review and revision of errors of law allegedly committed by the appellate court, as its
findings of fact are deemed conclusive. As such this Court is not duty-bound to analyze and weigh
all over again the evidence already considered in the proceedings below." 41

This rule admits of several exceptions. This Court may review the findings of fact of the Court of
Appeals:

"(a) where there is grave abuse of discretion; (b) when the finding is grounded entirely on
speculations, surmises or conjectures; (c) when the inference made is manifestly mistaken, absurd
or impossible; (d) when the judgment of the Court of Appeals was based on a misapprehension of
facts; (e) when the factual findings are conflicting; (F) when the Court of Appeals, in making its
findings, went beyond the issues of the case and the same are contrary to the admissions of both
appellant and appellee; (g) when the Court of Appeals manifestly overlooked certain relevant facts
not disputed by the parties and which, if properly considered, would justify a different conclusion;
and, (h) where the findings of fact of the Court of Appeals are contrary to those of the trial court, or
are mere conclusions without citation of specific evidence, or where the facts set forth by the
petitioner are not disputed by the respondent, or where the findings of fact of the Court of Appeals
are premised on the absence of evidence and are contradicted by the evidence on record." 42

However, none of these exceptions exists in the instant case.

The SEC Hearing Officer found that, while petitioner is entitled to collect the unpaid assessments
and dues from ALS, petitioner has failed to establish clearly the basis for computing the correct
amount of the unpaid assessments and dues. Indeed, there is no evidence laying down the basis of
petitioner’s claim other than allegations of previous demands and statements of accounts. Whether
petitioner has sufficiently established its claim by preponderance of evidence requires an
examination of the probative weight of the evidence presented by the parties. Evidently, this is a
question of fact the resolution of which is beyond the purview of the petition for review where only
errors of law may be raised. On the other hand, the decision of the Court of Appeals, finding
insufficient evidence on record, was made under its power to review both questions of fact and law.

Remand to the proper trial court.

While we sustain the ruling of the Court of Appeals, the case can no longer be remanded to the SEC
Hearing Officer. Republic Act No. 8799, which took effect on August 8, 2000, transferred SEC’s
jurisdiction over cases involving intra-corporate disputes to courts of general jurisdiction or the
appropriate regional trial courts. Section 5.2 of R.A. No. 8799 reads:

"5.2. The Commission’s jurisdiction over all cases enumerated under Section 5 of Presidential
Decree No. 902-A is hereby transferred to the Courts of general jurisdiction or the appropriate
Regional Trial Court; Provided, That the Supreme Court in the exercise of its authority may
designate the Regional Trial Court branches that shall exercise jurisdiction over these cases. The
Commission shall retain jurisdiction over pending cases involving intra-corporate disputes submitted
for final resolution which should be resolved within one (1) year from the enactment of this Code.
The Commission shall retain jurisdiction over pending suspension of payments/rehabilitation cases
filed as of 30 June 2000 until finally disposed."

Based on the Resolution issued by this Court in AM No. 00-8-10-SC, the Court Administrator and
43 

the Securities and Exchange Commission should cause the transfer of the records of SEC-AC Nos.
377 and 378 to the proper regional trial court for further reception of evidence and computation of
the correct amount of assessments and dues that ALS shall pay to petitioner.

Fourth Issue: Penalties prescribed in House Rule 26.2.

ALS and Litonjua did not question before either the SEC or the Court of Appeals the validity of the
penalties prescribed in the Condominium’s House Rule 26.2. Nevertheless, the Court of Appeals
ruled that House Rule 26.2 prescribes grossly excessive penalties and interests. The resolution of
this issue is not necessary in arriving at a complete and just resolution of this case. At any rate, we
find the interest and penalties prescribed under House Rule 26.2 reasonable considering the premier
location of the Condominium at the heart of Makati City. It is inevitable that ALS’ unpaid
assessments and dues would escalate because ALS’ delinquency started since 1986.

House Rule 26.2 clearly provides for a 24% interest and an 8% penalty, both running annually, on
the total amount due in case of failure to pay, to wit:
"26.2. Late payment of accounts of members shall be charged an interest rate of 24% per annum. In
addition, a penalty at the rate of 8% per annum shall be charged on delinquent accounts. The 24%
interest shall be imposed on unpaid accounts starting with the 21st day of the quarter until fully paid."

To reiterate, the Condominium Act expressly provides that the Master Deed may empower the
management body of the Condominium "to enforce the provisions of the declaration of
restrictions." The Master Deed authorizes petitioner, as the management body, to enforce the
44 

provisions of the Master Deed in accordance with petitioner’s By-Laws. Thus, petitioner’s Board of
Directors is authorized to determine the reasonableness of the penalties and interests to be imposed
against those who violate the Master Deed. Petitioner has validly done this by adopting the House
Rules.

The Master Deed binds ALS since the Master Deed is annotated on the condominium certificate of
title of ALS’ Unit. The Master Deed is ALS’ contract with all Condominium members who are all co-
owners of the common areas and facilities of the Condominium. Contracts have the force of law
between the parties and are to be complied with in good faith. From the moment the contract is
45 

perfected, the parties are bound to comply with what is expressly stipulated as well as with what is
required by the nature of the obligation in keeping with good faith, usage and the law. Thus, when
46 

ALS purchased its Unit from petitioner, ALS was bound by the terms and conditions set forth in the
contract, including the stipulations in the House Rules of petitioner, such as House Rule 26.2.

In sum, as a member of petitioner, ALS is indisputably bound by the Condominium’s House Rules
which are authorized by the By-Laws, the Master Deed and the Condominium Act.

Award of attorney’s fees.

The award of attorney’s fees as damages is the exception rather than the rule. The general rule is
that attorney’s fees cannot be recovered as part of damages because of the policy that no premium
should be placed on the right to litigate. Counsel’s fees are not awarded every time a party prevails
47 

in a suit. An award of attorney’s fees and expenses of litigation is proper under the instances
48 

provided for in Article 2208 of the Civil Code, one of which is where the defendant acted in gross and
evident bad faith. In this case, however, we find no cogent reason to award attorney’s fees in the
absence of showing of gross and evident bad faith on the part of ALS in refusing to satisfy
petitioner’s claim.

WHEREFORE, the petition is GRANTED and the assailed Decision of the Court of Appeals is SET
ASIDE. ALS Management & Development Corporation is ordered to pay Twin Towers Condominium
Corporation all overdue assessments and dues, including interest and penalties from date of default,
as shall be determined by the proper Regional Trial Court in accordance with this Decision. The
proper Regional Trial Court shall complete the computation within sixty (60) days from its receipt of
this Decision and the records of SEC-AC Nos. 377 and 378. Costs of suit against ALS Management
& Development Corporation.

SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 149313             January 22, 2008

JULITA ROMBAUA PANGANIBAN, PAQUITO ROMBAUA, RUPERTO ROMBAUA, TERESITA

ROMBAUA TELAJE and LEONOR ROMBAUA OPIANA, petitioners,
vs.
JULITA S. OAMIL, respondent.

DECISION

YNARES-SANTIAGO, J.:

Assailed in this petition for review on certiorari are the Decision 1 of the Court of Appeals dated March
2, 2001 in CA-G.R. CV No. 57557, which affirmed in toto the Order dated October 23, 1997 of the
Regional Trial Court of Olongapo City, Branch 73, and the Resolution 2 dated July 10, 2001 denying
the motion for reconsideration.

The facts as culled from the records are as follows:

On April 26, 1993 Julita Oamil, herein respondent, filed a complaint for specific performance with
damages3 with the Regional Trial Court of Olongapo City, praying that Partenio Rombaua (Partenio)
be ordered to execute a final deed of sale over the parcel of land which was the subject of a prior
"Agreement to Sell" executed by and between them on May 17, 1990. The property which is alleged
to be covered by the said "Agreement to Sell" consists of 204.5 square meters of land located at #11
21st St., East Bajac-Bajac, Olongapo City, and is claimed by respondent Oamil to be Partenio’s
conjugal share in a parcel of commercial land (the subject property) with an aggregate area of 409
square meters acquired by Partenio and his deceased first wife Juliana 4 during their marriage.

There are two portions of the subject property in contention: one consisting of 204.5 square meters
facing 21st Street (the 21st St. portion), and another consisting of 204.5 square meters facing Canda
Street (the Canda St. portion). Petitioners and their father Partenio are acknowledged co-owners of
the subject property to the following extent: one-half to Partenio as his conjugal share, and one-sixth
each of the remaining half to petitioners and Partenio as the surviving heirs of Juliana.

For failure to file an answer, Partenio was declared in default, and respondent presented her
evidence ex parte.

On December 26, 1993, the trial court promulgated its Decision, 5 the dispositive portion of which
reads as follows:

WHEREFORE, viewed from all the foregoing, judgment is hereby rendered as follows:

(1) The defendant is hereby ordered to execute a deed of absolute sale over the ½ portion
(front) of the realty subject matter of this case in favor of the plaintiff and to surrender the
possession thereof to the plaintiff. Failure of the defendant to do so, then the City Assessor
of Olongapo is hereby directed to effect the transfer of all rights/interest on the one-half (1/2)
front portion of the said realty in the name of the plaintiff, upon the finality of this decision;

(2) Plaintiff, however, is ordered to pay the amount of EIGHT THOUSAND PESOS
(P8,000.00) representing the balance of the interests due on the amount of P200,000.00,
delinquent for one (1) year computed at 12% per annum;

(3) Defendant is, likewise, hereby ordered to pay the plaintiff attorney’s fees in the amount of
TEN THOUSAND PESOS (P10,000.00).

Let a copy of this Decision be furnished the City Assessor of Olongapo City.

SO ORDERED.6

Note that the trial court did not specify which portion of the property – the 21 st St. portion or the
Canda St. portion – should be deeded to respondent as buyer of Partenio’s conjugal share.

Partenio failed to appeal, and the decision became final and executory on February 4, 1994. Entry of
judgment was made on February 8, 1994, and a writ of execution was issued on February 15, 1994
and served upon Partenio on February 21, 1994. The writ was served as well upon the City
Assessor of Olongapo City, who caused the transfer of the Tax Declaration covering the 21 st St.
portion in respondent’s name.

In June 1994, petitioners filed a verified petition for relief from the decision of the trial court,
grounded on the following: 1) that Partenio’s conjugal share in the property, and that of petitioners as
well, are being litigated in a judicial partition proceeding 7 (the partition case) which is pending with
the Court of Appeals, hence the trial court may not yet render a decision disposing of a definite area
of the subject property in respondent’s favor; and, (2) that petitioners were unjustly deprived of the
opportunity to protect and defend their interest in court because, notwithstanding that they are
indispensable parties to the case (being co-owners of the subject property), they were not impleaded
in Civil Case No. 140-0-93.

In lieu of a hearing, the parties were directed to submit their respective position papers. Respondent,
meanwhile, moved to dismiss the petition, claiming that the stated grounds for relief are not included
in the enumeration under Section 2, Rule 38 of the Rules of Court. Petitioners opposed the motion.

In an Order dated January 13, 1995, the trial court denied the petition for relief because the decision
in Civil Case No. 140-0-93 had become final and executory. It held that only indispensable parties to
the case may participate in the proceedings thereof, and since petitioners may not be considered as
indispensable parties because the subject matter of the proceedings involves Partenio’s conjugal
share in the property, they are precluded from filing a petition for relief from the court’s judgment.

Petitioners moved for reconsideration insisting that they are indispensable parties in Civil Case No.
140-0-93 because as co-owners of the subject property by virtue of succession to the rights of their
deceased mother, they possess an interest that must be protected. Instead of resolving the motion,
the trial court, with the concurrence of the petitioners and the respondent, deferred the proceedings,
to await the result of a pending appeal with the Court of Appeals of the decision in Special Civil
Action No. 340-0-86,8 the partition case, where the trial court, in its decision, awarded specifically the
Canda St. portion to Partenio as his conjugal share.

In the meantime, or sometime in 1995, a Motion for leave of court to file a Complaint in Intervention
was filed by Sotero Gan (Gan), who claims to be the actual and rightful owner of Partenio’s conjugal
share. Gan claims to have purchased Partenio’s conjugal share in the property, and in return, the
latter on November 29, 1990 executed a deed of waiver and quitclaim of his possessory rights. Gan
likewise claims that the tax declaration covering the portion of the property had been transferred in
his name. He thus seeks the dismissal of Civil Case No. 140-0-93 and the reinstatement of his name
on the tax declaration which by then had been placed in respondent’s name.

The parties submitted their respective oppositions to Gan’s motion, the core of their argument being
that with the finality of the decision in the case, intervention was no longer proper, and that Gan’s
cause of action, if any, should be litigated in a separate proceeding.

The trial court, in an Order dated January 22, 1996, denied Gan’s motion for intervention for being
filed out of time, considering that the decision of the court had become final and executory in
February 1994. Gan moved for reconsideration which was opposed by respondent, citing, among
others, an Order dated April 18, 1994 issued by the Department of Environment and Natural
Resources (CENRO of Olongapo) which includes a finding that Gan had transferred his rights and
interest in the subject property to one Chua Young Bing.

In another Order dated October 23, 1997, 9 the trial court denied Gan’s motion for reconsideration, as
well as the petitioners’ motion for reconsideration of the January 13, 1995 order denying the petition
for relief. In said order, the court made reference to the decision in Special Civil Action No. 340-0-86,
which by then had become final and executory.10 The trial court likewise substantially modified its
Decision dated December 26, 1993, by awarding specifically the 21st St. portion of the property to
Partenio as his conjugal share, despite the pronouncement in Special Civil Action No. 340-0-86
which awards the Canda St. portion to him.
From the foregoing October 23, 1997 order, the petitioners and Gan interposed their separate
appeals to the Court of Appeals. Meanwhile, respondent filed a motion for execution pending appeal,
which was denied on the ground that there exist no special or compelling reasons to allow it.

On March 2, 2001, the appellate court rendered the herein assailed Decision, which affirmed in toto
the appealed October 23, 1997 Order of the trial court.

The appellate court sustained the trial court’s ruling that Partenio’s conjugal share in the subject
property consists of the 21st St. portion, thereby disregarding the prior final and executory decision in
Special Civil Action No. 340-0-86 which declares that Partenio is entitled to the Canda St. portion.
The appellate court based the award of the 21st St. portion to respondent on the ground that
petitioners have always acknowledged their father Partenio’s "acts of ownership" over the 21 st St.
portion, thus signifying their consent and thereby barring them from questioning the award.

Respondents moved for reconsideration but it was denied.

Petitioners are now before us via the present petition, raising the sole issue of whether petitioners
can intervene in the proceedings in Civil Case

No. 140-0-93 in order to protect their rights as co-owners of the subject property.

We resolve to GRANT the petition.

Under a co-ownership, the ownership of an undivided thing or right belongs to different persons.
During the existence of the co-ownership, no individual can claim title to any definite portion of the
community property until the partition thereof; and prior to the partition, all that the co-owner has is
an ideal or abstract quota or proportionate share in the entire land or thing. 11 Before partition in a co-
ownership, every co-owner has the absolute ownership of his undivided interest in the common
property. The co-owner is free to alienate, assign or mortgage this undivided interest, except as to
purely personal rights. The effect of any such transfer is limited to the portion which may be awarded
to him upon the partition of the property.12

Under Article 497 of the Civil Code, in the event of a division or partition of property owned in
common, assignees of one or more of the co-owners may take part in the division of the thing owned
in common and object to its being effected without their concurrence. But they cannot impugn any
partition already executed, unless there has been fraud, or in case it was made notwithstanding a
formal opposition presented to prevent it, without prejudice to the right of the debtor or assignor to
maintain its validity.

The decision in Special Civil Action No. 340-0-86, which is an action for judicial partition of the
subject property, determines what Partenio, and ultimately, respondent, as his successor-in-interest,
is entitled to in Civil Case No. 140-0-93. As Partenio’s successor-in-interest to the property,
respondent could not acquire any superior right in the property than what Partenio is entitled to or
could transfer or alienate after partition. In a contract of sale of co-owned property, what the vendee
obtains by virtue of such a sale are the same rights as the vendor had as co-owner, and the vendee
merely steps into the shoes of the vendor as co-owner. 13

As early as May 17, 1990, when respondent and Partenio executed the "Agreement to Sell", the
former knew that the property she was purchasing was conjugal property owned in common by
Partenio and the heirs of his deceased wife.14 And while Civil Case No. 140-0-93 (the specific
performance case) was pending, respondent was apprised of the pendency of Special Civil Action
No. 340-0-86 (the partition case). Yet, respondent did not intervene, nor did she take part, nor enter
any formal opposition – as assignee of Partenio’s conjugal share in the property – in said partition
proceedings. She did not exercise the rights granted her under Article 497 of the Civil Code. Instead,
when the court in Civil Case No. 140-0-93 decided to suspend the proceedings and hold the same in
abeyance while the appeal in Special Civil Action No. 340-0-86 remained unresolved, the
respondent unconditionally agreed to its temporary abatement. In other words, she chose to sit back
and await the resolution thereof.

Consequently, when the decision in Special Civil Action No. 340-0-86 became final and executory
without the respondent having questioned the same in any manner whatsoever, by appeal or
otherwise, the division of property decreed therein may no longer be impugned by her.

Thus said, the trial court in Civil Case No. 140-0-93 could not award the 21 st St. portion to Partenio,
since the court in Special Civil Action No. 340-0-86 specifically awarded the Canda St. portion to
him. The decision in Special Civil Action No. 340-0-86, which became final and executory, should
put an end to the co-ownership between Partenio and the respondents, and the award made to each
co-owner of specific portions of the property as their share in the co-ownership should be respected.

Since the issue of each of the co-owners’ specific portion in the aggregate property has been laid to
rest in Special Civil Action No. 340-0-86, the final and executory decision in said proceeding should
be conclusive on the issue of which specific portion of the property became the subject matter of the
sale between Partenio and the respondent; that is, that Partenio, as declared owner of the Canda St.
portion, could have transferred to respondent only that part of the property and not the 21 st St.
portion. Although Partenio was free to sell or transfer his undivided interest to the respondent, the
effect of such transfer is limited to the portion which may be awarded to him upon the partition of the
property.

It was likewise error for the appellate court to have considered the alleged acts of ownership
exercised upon the 21st St. portion by Partenio as weighing heavily against the decreed partition in
Special Civil Action No. 340-0-86. The determination of this issue is beyond the ambit of the trial
court in Civil Case No. 140-0-93. As far as it was concerned, it could only award to the respondent, if
proper, whatever specific portion Partenio is found to be entitled to in the event of a partition, in
accordance with Article 493 of the Civil Code and the procedure outlined in the Rules of Court. It
could not, in an ordinary proceeding for specific performance with damages, subject the property to
a partial division or partition without the knowledge and participation of the other co-owners, and
while a special civil action for partition was simultaneously pending in another court.

The court in Civil Case No. 140-0-93 is not a partition court but one litigating an ordinary civil case,
and all evidence of alleged acts of ownership by one co-owner should have been presented in the
partition case, there to be threshed out in order that the partition court may arrive at a just division of
the property owned in common; it is not for the trial court in the specific performance case to
properly appreciate. Being a court trying an ordinary civil suit, the court in Civil Case No. 140-0-93
had no jurisdiction to act as a partition court. Trial courts trying an ordinary action cannot resolve to
perform acts pertaining to a special proceeding because it is subject to specific prescribed rules. 15

That the trial court suspended the proceedings in Civil Case No. 140-0-93 to make way for the
resolution of Special Civil Action No. 340-0-86 was an indication that it intended to abide by
whatever would be decreed in the latter case. For, understandably, the resolution of Special Civil
Action No. 340-0-86 will settle the issue in Civil Case No. 140-0-93 with respect to which specific
portion of the property constitutes the subject matter of the specific performance suit and which
would, in any case, be adjudicated to either of the two – the defendant co-owner and seller Partenio
or the plaintiff buyer Oamil, the herein respondent. Yet in the end, the trial court ultimately
disregarded what had been finally adjudicated and settled in Special Civil Action No. 340-0-86, and
instead it took a position that was entirely diametrically opposed to it.

It was likewise irregular for the respondent to have obtained a certificate of title over specific property
which has not been partitioned, especially where she concedes awareness of the existing co-
ownership which has not been terminated, and recognizes her status as mere successor-in-interest
to Partenio. The spring may not rise higher than its source.

In sum, the trial court and the Court of Appeals, by disregarding the final and executory judgment in
Special Civil Action No. 340-0-86, certainly ignored the principle of conclusiveness of judgments,
which states that –

[A] fact or question which was in issue in a former suit and was there judicially passed upon
and determined by a court of competent jurisdiction, is conclusively settled by the judgment
therein as far as the parties to that action and persons in privity with them are concerned and
cannot be again litigated in any future action between such parties or their privies, in the
same court or any other court of concurrent jurisdiction on either the same or different cause
of action, while the judgment remains unreversed by proper authority. It has been held that in
order that a judgment in one action can be conclusive as to a particular matter in another
action between the same parties or their privies, it is essential that the issue be identical. If a
particular point or question is in issue in the second action, and the judgment will depend on
the determination of that particular point or question, a former judgment between the same
parties or their privies will be final and conclusive in the second if that same point or question
was in issue and adjudicated in the first suit (Nabus vs. Court of Appeals, 193 SCRA 732
[1991]). Identity of cause of action is not required but merely identity of issues. 16

The ruling in Special Civil Action No. 340-0-86 – that the Canda St. portion shall go to Partenio –
became the law of the case and continues to be binding between the parties as well as their
successors-in-interest, the decision in said case having become final and executory. Hence, the
binding effect and enforceability of that dictum can no longer be relitigated anew in Civil Case No.
140-0-93 since said issue had been resolved and finally laid to rest in the partition case, by
conclusiveness of judgment, if not by the principle of res judicata. It may not be reversed, modified or
altered in any manner by any court.

As a result of the trial court’s refusal to abide by the decision in Special Civil Action No. 340-0-86,
the rights of the petitioners have been unnecessarily transgressed, thereby giving them the right to
seek relief in court in order to annul the October 23, 1997 Order of the trial court which substantially
and wrongly modified its original decision in Civil Case No. 140-0-93. It was clear mistake for the trial
court to have gone against the final and executory decision in Special Civil Action No. 340-0-86 and
its original decision, which does not award a definite portion of the disputed property to Partenio,
precisely because, as a court litigating an ordinary civil suit, it is not authorized to partition the
subject property but only to determine the rights and obligations of the parties in respect to
Partenio’s undivided share in the commonly owned property. As a result of this mistake, the
petitioners are entitled to relief.

Finally, with respect to Gan’s intervention, we affirm the appellate court’s finding that the same is no
longer proper considering that the decision in Civil Case No. 140-0-93 had become final and
executory. Gan moved to intervene only in 1995, when the decision became final and executory in
February 1994. Certainly, intervention, being merely collateral or ancillary to the principal action,
may no longer be allowed in a case already terminated by final judgment. 17 Moreover, since Gan did
not appeal the herein assailed decision of the appellate court, then the same, as against him, has
become final and executory.
WHEREFORE, the petition is GRANTED. The Decision of the Court of Appeals dated March 2, 2001
in CA-G.R. CV No. 57557 and the Resolution dated July 10, 2001 are REVERSED and SET ASIDE,
with the exception that the denial of the intervenor Sotero Gan’s motion for intervention
is AFFIRMED.

The Order dated October 23, 1997 of the Regional Trial Court of Olongapo City in Civil Case No.
140-0-93 is hereby DECLARED of no effect. In all other respects, the Decision of the trial court in
Civil Case No. 140-0-93 dated December 26, 1993 is AFFIRMED. The said court is
moreover ORDERED to abide by the pronouncement in Special Civil Action No. 340-0-86 with
respect to Partenio Rombaua’s conjugal share in the disputed property.

SO ORDERED.

Austria-Martinez, Corona*, N

Republic of the Philippines

SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 165427               March 21, 2011

BETTY B. LACBAYAN, Petitioner,
vs.
BAYANI S. SAMOY, JR., Respondent.

DECISION

VILLARAMA, JR., J.:

This settles the petition for review on certiorari filed by petitioner Betty B. Lacbayan against
respondent Bayani S. Samoy, Jr. assailing the September 14, 2004 Decision 1 of the Court of
Appeals (CA) in CA-G.R. CV No. 67596. The CA had affirmed the February 10, 2000 Decision 2 of
the Regional Trial Court (RTC), Branch 224, of Quezon City declaring respondent as the sole owner
of the properties involved in this suit and awarding to him ₱100,000.00 as attorney’s fees.

This suit stemmed from the following facts.

Petitioner and respondent met each other through a common friend sometime in 1978. Despite
respondent being already married, their relationship developed until petitioner gave birth to
respondent’s son on October 12, 1979.3

During their illicit relationship, petitioner and respondent, together with three more incorporators,
were able to establish a manpower services company. 4 Five parcels of land were also acquired
during the said period and were registered in petitioner and respondent’s names, ostensibly as
husband and wife. The lands are briefly described as follows:

1. A 255-square meter real estate property located at Malvar St., Quezon City covered by
TCT No. 303224 and registered in the name of Bayani S. Samoy, Jr. "married to Betty
Lacbayan."5

2. A 296-square meter real estate property located at Main Ave., Quezon City covered by
TCT No. 23301 and registered in the name of "Spouses Bayani S. Samoy and Betty
Lacbayan."6

3. A 300-square meter real estate property located at Matatag St., Quezon City covered by
TCT No. RT-38264 and registered in the name of Bayani S. Samoy, Jr. "married to Betty
Lacbayan Samoy."7

4. A 183.20-square meter real estate property located at Zobel St., Quezon City covered by
TCT No. 335193 and registered in the name of Bayani S. Samoy, Jr. "married to Betty L.
Samoy."8

5. A 400-square meter real estate property located at Don Enrique Heights, Quezon City
covered by TCT No. 90232 and registered in the name of Bayani S. Samoy, Jr. "married to
Betty L. Samoy."9

Initially, petitioner lived with her parents in Mapagbigay St., V. Luna, Quezon City. In 1983, petitioner
left her parents and decided to reside in the property located in Malvar St. in Project 4, Quezon City.
Later, she and their son transferred to Zobel St., also in Project 4, and finally to the 400-square
meter property in Don Enrique Heights. 10

Eventually, however, their relationship turned sour and they decided to part ways sometime in 1991.
In 1998, both parties agreed to divide the said properties and terminate their business partnership by
executing a Partition Agreement. 11 Initially, respondent agreed to petitioner’s proposal that the
properties in Malvar St. and Don Enrique Heights be assigned to the latter, while the ownership over
the three other properties will go to respondent.12 However, when petitioner wanted additional
demands to be included in the partition agreement, respondent refused. 13 Feeling aggrieved,
petitioner filed a complaint for judicial partition14 of the said properties before the RTC in Quezon City
on May 31, 1999.

In her complaint, petitioner averred that she and respondent started to live together as husband and
wife in 1979 without the benefit of marriage and worked together as business partners, acquiring real
properties amounting to ₱15,500,000.00. 15 Respondent, in his Answer,16 however, denied petitioner’s
claim of cohabitation and said that the properties were acquired out of his own personal funds
without any contribution from petitioner.17

During the trial, petitioner admitted that although they were together for almost 24 hours a day in
1983 until 1991, respondent would still go home to his wife usually in the wee hours of the
morning.18 Petitioner likewise claimed that they acquired the said real estate properties from the
income of the company which she and respondent established. 19

Respondent, meanwhile, testified that the properties were purchased from his personal funds,
salaries, dividends, allowances and commissions.20 He countered that the said properties were
registered in his name together with petitioner to exclude the same from the property regime of
respondent and his legal wife, and to prevent the possible dissipation of the said properties since his
legal wife was then a heavy gambler.21 Respondent added that he also purchased the said
properties as investment, with the intention to sell them later on for the purchase or construction of a
new building.22

On February 10, 2000, the trial court rendered a decision dismissing the complaint for lack of
merit.23 In resolving the issue on ownership, the RTC decided to give considerable weight to
petitioner’s own admission that the properties were acquired not from her own personal funds but
from the income of the manpower services company over which she owns a measly 3.33% share. 24

Aggrieved, petitioner elevated the matter to the CA asserting that she is the pro indiviso owner of
one-half of the properties in dispute. Petitioner argued that the trial court’s decision subjected the
certificates of title over the said properties to collateral attack contrary to law and jurisprudence.
Petitioner also contended that it is improper to thresh out the issue on ownership in an action for
partition.25

Unimpressed with petitioner’s arguments, the appellate court denied the appeal, explaining in the
following manner:

Appellant’s harping on the indefeasibility of the certificates of title covering the subject realties is, to
say the least, misplaced. Rather than the validity of said certificates which was nowhere dealt with in
the appealed decision, the record shows that what the trial court determined therein was the
ownership of the subject realties – itself an issue correlative to and a necessary adjunct of the claim
of co-ownership upon which appellant anchored her cause of action for partition. It bears
emphasizing, moreover, that the rule on the indefeasibility of a Torrens title applies only to original
and not to subsequent registration as that availed of by the parties in respect to the properties in
litigation. To our mind, the inapplicability of said principle to the case at bench is even more
underscored by the admitted falsity of the registration of the selfsame realties in the parties’ name as
husband and wife.

The same dearth of merit permeates appellant’s imputation of reversible error against the trial court
for supposedly failing to make the proper delineation between an action for partition and an action
involving ownership. Typically brought by a person claiming to be co-owner of a specified property
against a defendant or defendants whom the plaintiff recognizes to be co-owners, an action for
partition may be seen to present simultaneously two principal issues, i.e., first, the issue of whether
the plaintiff is indeed a co-owner of the property sought to be partitioned and, second – assuming
that the plaintiff successfully hurdles the first – the issue of how the property is to be divided between
plaintiff and defendant(s). Otherwise stated, the court must initially settle the issue of ownership for
the simple reason that it cannot properly issue an order to divide the property without first making a
determination as to the existence of co-ownership. Until and unless the issue of ownership is
definitely resolved, it would be premature to effect a partition of the properties. This is precisely what
the trial court did when it discounted the merit in appellant’s claim of co-ownership. 26

Hence, this petition premised on the following arguments:

I. Ownership cannot be passed upon in a partition case.

 II. The partition agreement duly signed by respondent contains an admission against
respondent’s interest as to the existence of co-ownership between the parties.

III. An action for partition cannot be defeated by the mere expedience of repudiating co-
ownership based on self-serving claims of exclusive ownership of the properties in dispute.

IV. A Torrens title is the best evidence of ownership which cannot be outweighed by
respondent’s self-serving assertion to the contrary.

V. The properties involved were acquired by both parties through their actual joint
contribution of money, property, or industry.27

Noticeably, the last argument is essentially a question of fact, which we feel has been squarely
threshed out in the decisions of both the trial and appellate courts. We deem it wise not to disturb the
findings of the lower courts on the said matter absent any showing that the instant case falls under
the exceptions to the general rule that questions of fact are beyond the ambit of the Court’s
jurisdiction in petitions under Rule 45 of the 1997 Rules of Civil Procedure, as amended. The issues
may be summarized into only three:

I. Whether an action for partition precludes a settlement on the issue of ownership;

II. Whether the Torrens title over the disputed properties was collaterally attacked in the
action for partition; and

III. Whether respondent is estopped from repudiating co-ownership over the subject realties.

We find the petition bereft of merit.

Our disquisition in Municipality of Biñan v. Garcia28 is definitive. There, we explained that the
determination as to the existence of co-ownership is necessary in the resolution of an action for
partition. Thus:

The first phase of a partition and/or accounting suit is taken up with the determination of whether or
not a co-ownership in fact exists, and a partition is proper (i.e., not otherwise legally proscribed) and
may be made by voluntary agreement of all the parties interested in the property. This phase may
end with a declaration that plaintiff is not entitled to have a partition either because a co-ownership
does not exist, or partition is legally prohibited. It may end, on the other hand, with an adjudgment
that a co-ownership does in truth exist, partition is proper in the premises and an accounting of rents
and profits received by the defendant from the real estate in question is in order. x x x

The second phase commences when it appears that "the parties are unable to agree upon the
partition" directed by the court. In that event[,] partition shall be done for the parties by the [c]ourt
with the assistance of not more than three (3) commissioners. This second stage may well also deal
with the rendition of the accounting itself and its approval by the [c]ourt after the parties have been
accorded opportunity to be heard thereon, and an award for the recovery by the party or parties
thereto entitled of their just share in the rents and profits of the real estate in question. x x
x29 (Emphasis supplied.)

While it is true that the complaint involved here is one for partition, the same is premised on the
existence or non-existence of co-ownership between the parties. Petitioner insists she is a co-owner
pro indiviso of the five real estate properties based on the transfer certificates of title (TCTs) covering
the subject properties. Respondent maintains otherwise. Indubitably, therefore, until and unless this
issue of co-ownership is definitely and finally resolved, it would be premature to effect a partition of
the disputed properties.30 More importantly, the complaint will not even lie if the claimant, or
petitioner in this case, does not even have any rightful interest over the subject properties. 31

Would a resolution on the issue of ownership subject the Torrens title issued over the disputed
realties to a collateral attack? Most definitely, it would not.

There is no dispute that a Torrens certificate of title cannot be collaterally attacked, 32 but that rule is
not material to the case at bar. What cannot be collaterally attacked is the certificate of title and not
the title itself.33 The certificate referred to is that document issued by the Register of Deeds known as
the TCT. In contrast, the title referred to by law means ownership which is, more often than not,
represented by that document. 34 Petitioner apparently confuses title with the certificate of title. Title
as a concept of ownership should not be confused with the certificate of title as evidence of such
ownership although both are interchangeably used. 35

Moreover, placing a parcel of land under the mantle of the Torrens system does not mean that
ownership thereof can no longer be disputed. Ownership is different from a certificate of title, the
latter only serving as the best proof of ownership over a piece of land. The certificate cannot always
be considered as conclusive evidence of ownership. 36 In fact, mere issuance of the certificate of title
in the name of any person does not foreclose the possibility that the real property may be under co-
ownership with persons not named in the certificate, or that the registrant may only be a trustee, or
that other parties may have acquired interest over the property subsequent to the issuance of the
certificate of title.37 Needless to say, registration does not vest ownership over a property, but may be
the best evidence thereof. 1avvphi1

Finally, as to whether respondent’s assent to the initial partition agreement serves as an admission
against interest, in that the respondent is deemed to have admitted the existence of co-ownership
between him and petitioner, we rule in the negative.

An admission is any statement of fact made by a party against his interest or unfavorable to the
conclusion for which he contends or is inconsistent with the facts alleged by him. 38 Admission against
interest is governed by Section 26 of Rule 130 of the Rules of Court, which provides:

Sec. 26. Admissions of a party. – The act, declaration or omission of a party as to a relevant fact
may be given in evidence against him.

To be admissible, an admission must (a) involve matters of fact, and not of law; (b) be categorical
and definite; (c) be knowingly and voluntarily made; and (d) be adverse to the admitter’s interests,
otherwise it would be self-serving and inadmissible. 39

A careful perusal of the contents of the so-called Partition Agreement indicates that the document
involves matters which necessitate prior settlement of questions of law, basic of which is a
determination as to whether the parties have the right to freely divide among themselves the subject
properties. Moreover, to follow petitioner’s argument would be to allow respondent not only to admit
against his own interest but that of his legal spouse as well, who may also be lawfully entitled co-
ownership over the said properties. Respondent is not allowed by law to waive whatever share his
lawful spouse may have on the disputed properties. Basic is the rule that rights may be waived,
unless the waiver is contrary to law, public order, public policy, morals, good customs or prejudicial
to a third person with a right recognized by law.40
Curiously, petitioner herself admitted that she did not assent to the Partition Agreement after seeing
the need to amend the same to include other matters. Petitioner does not have any right to insist on
the contents of an agreement she intentionally refused to sign.

As to the award of damages to respondent, we do not subscribe to the trial court’s view that
respondent is entitled to attorney’s fees. Unlike the trial court, we do not commiserate with
respondent’s predicament. The trial court ruled that respondent was forced to litigate and engaged
the services of his counsel to defend his interest as to entitle him an award of ₱100,000.00 as
attorney’s fees. But we note that in the first place, it was respondent himself who impressed upon
petitioner that she has a right over the involved properties. Secondly, respondent’s act of
representing himself and petitioner as husband and wife was a deliberate attempt to skirt the law
and escape his legal obligation to his lawful wife. Respondent, therefore, has no one but himself to
blame the consequences of his deceitful act which resulted in the filing of the complaint against him.

WHEREFORE, the petition is DENIED. The September 14, 2004 Decision of the Court of Appeals in
CA-G.R. CV No. 67596 is AFFIRMED with MODIFICATION. Respondent Bayani S. Samoy, Jr. is
hereby declared the sole owner of the disputed properties, without prejudice to any claim his legal
wife may have filed or may file against him. The award of ₱100,000.00 as attorney’s fees in
respondent’s favor is DELETED.

No costs.

SO ORDERED.

MARTIN S. VILLARAMA, JR.

Associate Justice

WE CONCUR:

CONCHITA CARPIO MORALES

Associate Justice
Chairperson

ARTURO D. BRION
 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. 2426            January 24, 1906

FERNANDO MONTAÑO LOPEZ, plaintiff-appellee,

vs.
PEDRO MARTINEZ ILUSTRE, defendant-appellant.

Hartigan, Marple, Rohde and Gutierrez for appellant.

Carlos Casademunt for appellee.

WILLARD, J.:

On the 26th day of December, 1902, Francisco Martinez and the defendant, Pedro Martinez, his
son, were the owners as tenants in common of two separate parcels of land in Calle Dulumbayan, in
the city of Manila, each being the owner of an undivided one-half of each of said tracts of land. On
the 26th day of December, 1902, Francisco Martinez conveyed to the plaintiff his undivided half
interest in both said tracts of land. This deed contained a clause giving Martinez the right to
repurchase the property within one year from December 26, 1902. He did not repurchase it, and on
the 28th of December, 1903, the plaintiff caused the proper marginal entry to be made upon the
books in the registry of property in which registry the conveyance had been recorded, and
afterwards brought this action in March, 1904, asking for a partition of the two lots of land, between
himself and the defendant, and that defendant account for and pay to the plaintiff his part of the rents
of the said properties from the 26th day of December, 1903.

It appeared that Francisco Martinez and the defendant, his son, were the owners as tenants in
common of twenty-six other parcels of land; that in June, 1903, before the expiration of the year in
which Francisco Martinez had the right to repurchase the property so conveyed to the plaintiff, he
and the defendant, his son, made a voluntary partition of these twenty-eight tracts of land, which
partition was approved by the Court of First Instance of manila on the 15th day of June, 1903. These
twenty-eight tracts of land had been acquired by Francisco Martinez during his marriage with his
wife, Doña Germana Ilustre. The wife having died, her estate was in process of administration in the
Court of First Instance of Manila, and the partition above mentioned was made on the theory that
these lands were the property of the conjugal partnership existing between Francisco Martinez and
his wife. In this partition the two parcels of land in question in this case fell to the defendant, and his
claim is that by this partition plaintiff lost all his interest in the property. Judgment was entered in the
court below in favor of plaintiff as prayed for in his complaint, and the defendant has brought the
case here by bill of exceptions.

Article 399 of the Civil Code is as follows:

Every coowner shall have full ownership of his part and in the fruits and benefits derived
therefrom, and he therefore may alienate, assign, or mortgage it, and even substitute
another person in its enjoyment, unless personal rights are in question. But the effect of the
alienation or mortgage, with regard to the coowners, shall be limited to the share which may
be awarded him in the division on the dissolution of the community.

This article gives the owner of an undivided interest in the property the right to freely sell and
dispose of it — that is, of his undivided interest. he has no right to sell a divided part of the real
estate. If he is the owner of an undivided half of a tract of land, he has a right to sell and convey an
undivided half, but he has no right to divide the lot into two parts, and convey the whole of one part
by metes and bounds. All that Francisco Martinez undertook to do in this case was to convey his
undivided interest in these two properties. This he had a perfect right to do, in accordance with the
terms of said article. There is nothing in the last clause of the article inconsistent with this position.
That declares simply that when the property is divided the purchaser gets an interest only in that part
which may be assigned to him. For the purposes of this case we see no difference between it and a
case in which the tenant in common makes an absolute conveyance of his undivided interest in the
property, without reserving the right to repurchase. In the case of an absolute conveyance of that
character, the relation between the grantor in the deed and his cotenant is terminated. They are no
longer cotenants. The grantee in the deed takes the place of the grantor, and he and the other
owner of the property become cotenants. In such a case the grantor loses all interest in the property,
and of course has no right to take any part in the partition of it. It would be absurd to say that after
such conveyance the grantor, who had lost all his interest in the property, could by agreement with
the other owner make a partition of property in which he had no interest that would be binding upon
his grantee.

We do not see how the fact that Francisco Martinez and his son were the owners of other pieces of
property as tenants in common can affect the question presented in this case. Each tract was
separate and distinct from all the others. The parties had a right to deal with one lot without any
reference to the other twenty-seven. The fact that the defendant acquired title to all of them by
inheritance from his mother did not make them physically one tract of land, so that a conveyance by
the son of his undivided half interest in one of these lots would amount to a conveyance of a divided
part of a tract of land held by him in common with this father.
The judgment of the court below is affirmed, with the costs of this instance against the appellant, and
after the expiration of twenty days judgment should be entered in accordance herewith and the case
remanded to the court below for execution. So ordered.

Republic of the Philippines

SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 179549               June 29, 2010

LIRIO A. DEANON, represented by Attorney-in-Fact JOCELYN D. ASOR, Petitioner,

vs.
MARFELINA C. MAG-ABO, Respondent.

DECISION

PERALTA, J.:

This is a petition for review on certiorari1 of the Decision of the Court of Appeals in CA-G.R. SP No.
97714, dated May 25, 2007, and its Resolution dated August 28, 2007, which denied petitioner’s
motion for reconsideration. The Decision of the Court of Appeals affirmed the Decision of the
Regional Trial Court (RTC) of Pasig City, Branch 161, which held that respondent Marfelina 2 C. Mag-
abo has a better right of possession of the property involved in this case.

The facts are as follows:

The property involved in this case is a 74-square-meter lot located at No. 181 Bayabas Extension,
NAPICO, Manggahan, Pasig City.3

The records show that the lot is part of the 24,406-square-meter property titled to the Metro Manila
Commission (now Metro Manila Development Authority [MMDA]) under Transfer Certificate of Title
(TCT) No. PT-96040.4 On October 22, 2002, the MMDA sold the 24,406-square-meter property to
the NAPICO Homeowners Association XIII, Inc,5 and a new title, TCT No. PT-119333, was issued in
the name of the NAPICO Homeowners Association XIII, Inc.

It appears that the subject property is under the Community Mortgage Program being implemented
by the MMDA, the National Housing Authority and the National Home Mortgage Finance Corporation
under the socialized housing program of the government. 6

On March 17, 2004, petitioner Lirio A. Deanon filed a Complaint 7 for unlawful detainer and ejectment
against respondent Marfelina Mag-abo with the Metropolitan Trial Court (MeTC) of Pasig City,
Branch 70 (trial court).

Petitioner alleged that respondent occupied the subject property in the year 2000, when it was still
owned by Ma. Imelda Eloisa P. Galvan. The lot was then being used by Felizardo Sasi, the
caretaker of Galvan. The rights to the said property were offered for sale by Galvan to Sasi, but the
sale did not materialize. By virtue of an Agreement dated November 18, 2000, Sasi vacated the lot.

After Sasi vacated the lot, respondent allegedly used the property as her garage without any
permission from Ma. Imelda Eloisa Galvan. Since Galvan was not in need of the premises yet, she
allegedly allowed respondent to use the place as a garage. There was no verbal or written lease
agreement between Galvan and respondent. Respondent was never charged or assessed for any
rental for occupying the property.

On July 28, 2003, Ma. Imelda Eloisa Galvan executed a Waiver 8 of her rights over the subject
property in favor of petitioner. It was agreed that petitioner would assume payment of the
amortization and other incidental costs of the property, which was mortgaged with the National
Home Mortgage Finance Corporation.

In a letter9 dated July 28, 2003, Galvan informed the NAPICO Homeowners Association XIII, Inc.
that she had transferred her right of ownership over the said lot in favor of petitioner.

On June 5, 2004, petitioner wrote a letter 10 to the National Home Mortgage Finance Corporation,
requesting for the substitution of the right of ownership for Lot No. 37, Block 9, located at No. 181
Bayabas Extension, NAPICO, Manggahan, Pasig City.

On August 14, 2003, the Board of Directors of the NAPICO Homeowners Association XIII, Inc.
issued a Board Resolution11 resolving that the Board would issue a letter of endorsement signed by
its President to the National Home Mortgage Finance Corporation for the transfer of rights over the
subject property from Galvan to petitioner.

Petitioner alleged that she was required to pay all arrearages of the former owner, Ma. Imelda Eloisa
P. Galvan, before the substitution was effected. Such payment was evidenced by a
Certification12 issued by NAPICO Homeowners Association XIII, Inc. on January 13, 2004, stating
that the account of Galvan had been updated and/or the arrearages thereof had been paid in full by
petitioner for the purpose of substitution.
Also on January 13, 2004, petitioner and NAPICO Homeowners Association XIII, Inc., represented
by its President, Wilson S. Baltazar, executed a Lease/Purchase Agreement 13 over the subject
property. The term of the lease was 25 years with a monthly rental of ₱374.15. The parties agreed
that all rental payments would be considered as installment payment for the purchase price of the
unit awarded to the lessee.

Meantime on August 14, 2003, petitioner, through her counsel, sent respondent a notice 14 that the
subject property had been purchased from Ma. Imelda Eloisa Galvan and that respondent was being
given 90 days from receipt of the notice within which to vacate the property; otherwise, legal action
would be taken against her.

Despite receipt of the notice, respondent refused to vacate the subject property. Petitioner sought
the intercession of the Barangay Lupon of Barangay Manggahan, Pasig City, but the parties failed to
reach an amicable settlement of the case. On February 20, 2004, the Barangay Lupon issued a
Certification15 allowing the parties to file a complaint in the proper court.

Hence, petitioner filed the Complaint against respondent. Petitioner prayed that after notice and
hearing, judgment be rendered directing respondent and all persons claiming rights under her to
vacate and surrender the subject premises at No. 181 Bayabas Extension, NAPICO, Manggahan,
Pasig City, and to pay petitioner attorney's fees in the amount of ₱20,000.00 and ₱2,000.00 per
appearance fee and costs of the suit.

In her Answer,16 respondent countered that petitioner had no cause of action against her. She
claimed that she acquired the subject property from Ruth Cabrera through a Deed of Transfer and
Assignment of Rights dated February 23, 2001. Ruth Cabrera, on the other hand, acquired the
property by virtue of a Certificate of Sale dated February 28, 1998.

The allegations of respondent17 showed that the former lot claimants and owner of all the
improvements on the subject property were the spouses Dominador Galvan and Ma. Imelda Eloisa
Galvan. Dominador Galvan was charged with the crime of Attempted Rape before the RTC of Pasig
City, Branch 166, but he was found guilty of the crime of Acts of Lasciviousness. After the decision
became final, the RTC, on motion of the victim’s mother, issued a Writ of Execution against
Dominador Galvan to satisfy the civil indemnity in the amount of ₱15,000.00.

The deputy sheriff of the RTC of Pasig City, Branch 166 levied on the subject property, referred to as
Lot 32, Block 5, Zone 4, Phase 3, located at 181 Bayabas Extension, NAPICO, Manggahan, Pasig
City, with Dominador Galvan and his wife Ma. Imelda Eloisa Galvan as lot claimants. At the auction
sale conducted by the deputy sheriff, the Galvans’ rights over the subject property was purchased by
Ruth Cabrera in the amount of ₱15,000.00. A certificate of sale was issued in the name of Ruth
Cabrera, and she acquired Galvan’s rights over the subject property as no redemption appeared to
have been made within the reglementary period provided under Section 33, Rule 39 of the Rules of
Court.

Sometime in 1999, Ruth Cabrera filed an unlawful detainer case with the MeTC of Pasig City,
Branch 68 against the spouses Galvan, entitled Ruth Cabrera v. Spouses Dominador Galvan and
Ma. Imelda Eloisa P. Galvan, Spouses John Doe Sase and Marissa Sase.18

On August 30, 2000, the MeTC of Pasig City, Branch 68 ruled in favor of Ruth Cabrera. The
dispositive portion of the MeTC’s Decision states:

Wherefore, premises considered, judgment is hereby rendered for herein plaintiff and against herein
defendants, ordering the latter and all those claiming rights under them to vacate and surrender
possession of the subject property; ordering defendants to pay ₱1,000.00 a month as reasonable
compensation for their continued occupation of the subject property from April 1999 until the time
they and all those claiming rights under them shall have completely vacated the property; to pay
attorney’s fees in the amount of ₱5,000.00 and the costs of suit. 19

Defendants spouses Galvan and spouses Sase appealed the Decision of the MeTC of Pasig City,
Branch 68 to the RTC of Pasig City, Branch 267. In a Decision dated May 9, 2001, the appellate
court affirmed in toto the decision of the lower court. No appeal was made; hence, the decision
became final and executory.

On November 27, 2003, the MeTC of Pasig City, Branch 68 issued an Order 20 granting the motion
for issuance of a writ of execution filed by plaintiff Ruth Cabrera. Hence, defendants spouses Galvan
and the spouses Sase were ejected from the subject property.

Meantime, on February 23, 2001, Ruth Cabrera,21 through a Deed of Transfer and Assignment of
Rights,22 conveyed to respondent all her rights and interest over the Certificate of Sale covering the
subject property. Thereafter, respondent took possession and control of the property.

Hence, respondent prayed that the Complaint be dismissed for lack of cause of action.

In a Decision dated December 15, 2005, the trial court ruled in favor of petitioner. The dispositive
portion of the Decision reads:

WHEREFORE, premises considered, judgment is hereby rendered in favor of the plaintiff and
against defendant Marfelina Mag-abo in the following manner:

1) Ordering the defendant and all persons claiming rights under her to vacate and surrender
the peaceful possession of the premises located at No. 181 Bayabas Extension, NAPICO,
Manggahan, Pasig City;

2) Ordering the defendant to pay plaintiff the sum of ₱20,000.00 as and by way of attorney's
fees; and

3) Ordering the defendant to pay the costs of suit.23

The trial court held that petitioner was able to establish, by preponderance of evidence, a case for
repossession. It held that no right was ever transferred to respondent by Ruth Cabrera. It pointed out
that petitioner requested for a certified true copy of the Deed of Transfer and Assignment of Rights
at the Notarial Section of the Makati Regional Trial Court, but no such copy was submitted, showing
that there was no available record of the same.

The trial court stated that the Decisions of the MeTC of Pasig City, Branch 68 and the RTC of Pasig,
Branch 267 in the unlawful detainer case entitled Ruth Cabrera v. Spouses Dominador Galvan and
Ma. Imelda Eloisa P. Galvan, Spouses John Doe Sase and Marissa Sase, which Decisions
respondent attached to her Answer, could not be used to conclude that there was a right transferred
or assigned to her. When petitioner asked the former owner about the alleged Certificate of Sale in
the name of Ruth Cabrera, she was given copies of the appeal papers.

The trial court gave credence to petitioner’s evidence showing that the subject lot is part of the
property of the MMDA under TCT No. PT-96040, which property was sold to the NAPICO
Homeowners Association XIII, Inc., and a new title, TCT No. PT-119333, was subsequently issued in
the name of the said association.

The trial court stated that petitioner has never known any other owner of the subject property aside
from Ma. Imelda Eloisa Galvan. Moreover, Ma. Imelda Eloisa Galvan was the one registered as
owner- awardee by the Association. After the approval of the substitution, the President of the
NAPICO Homeowners Association XIII, Inc. issued a Certification dated May 20, 2004, which stated
that petitioner, in place of the former owner Ma. Imelda Eloisa Galvan, has acquired the said lot.
Hence, the trial court concluded that petitioner may demand that she be placed in possession of the
property, because possession is a mere consequence of ownership.

Respondent appealed the trial court’s decision to the RTC of Pasig City, Branch 161.

On August 18, 2006, the RTC reversed the trial court’s decision. The dispositive portion of the
Decision states:

WHEREFORE, in view of all the foregoing, the APPEALED DECISION is hereby REVERSED and
SET ASIDE. Civil Case No. 7813 is ordered DISMISSED. 24

The RTC held that the evidence on record showed that prior to the transfer of rights by Ma. Imelda
Eloisa Galvan to petitioner, the subject property was already transferred to respondent through a
Deed of Transfer and Assignment of Rights executed by Ruth Cabrera-Mendoza, who was able to
obtain the property by virtue of a Certificate of Sale dated February 28, 1998 pursuant to a Writ of
Execution dated February 6, 1998. This fact was already established in the Decisions of the MeTC
of Pasig City, Branch 68, and the RTC of Pasig City, Branch 267 in the case for ejectment, entitled
Ruth Cabrera v. Spouses Dominador Galvan and Ma. Imelda Eloisa P. Galvan, Spouses John Doe
Sase and Marissa Sase.

The RTC stated that Galvan’s failure to file an appeal of the decision of the RTC of Pasig City,
Branch 267 rendered the said decision final and executory. By virtue of a Writ of Execution, the
spouses Dominador Galvan and Ma. Imelda Eloisa Galvan, and the spouses John Doe Sase and
Marissa Sase were ejected from the subject property; thus, Ruth Cabrera was able to gain
possession of the same. Ruth Cabrera turned over the possession and control of the property to
respondent by virtue of the Deed of Transfer and Assignment of Rights.

The RTC held that respondent’s possession of the property is in the concept of an owner, and not by
mere tolerance of Ma. Imelda Eloisa Galvan. Galvan did not have any right to transfer the property to
petitioner in July 2003, since she knew of the two Decisions of the MeTC of Pasig City, Branch 68
and the RTC of Pasig City, Branch 267.

Further, the RTC held that the case should be dismissed on the ground of res judicata. The
requisites of res judicata are: (1) there must be a former final judgment rendered on the merits; (2)
the court must have had jurisdiction over the subject matter and the parties; and (3) there must be
identity of parties, subject matter and cause of action between the first and second actions. 25

The RTC stated that the existence and finality of the decision of the RTC of Pasig City, Branch 267
in the unlawful detainer case entitled Ruth Cabrera v. Spouses Dominador Galvan and Ma. Imelda
Eloisa P. Galvan, Spouses John Doe Sase and Marissa Sase was not contested by petitioner. The
court in the said case had jurisdiction over the subject matter and the parties. The case established
the fact that by virtue of the Certificate of Sale dated February 28, 1998 issued in the name of Ruth
Cabrera, she was able to acquire Galvan’s rights over the subject property, including the right of
possession. Thus, the first and second requisites of res judicata have been complied with.
As regards the presence of identity of parties, the RTC cited the case of Taganas v.
Emuslan,26 which held that there is identity of parties where the parties in both actions are the same
or there is privity between them, or they are successors-in-interest by title subsequent to the
commencement of the action, litigating for the same thing and under the same title and in the same
capacity.

The RTC stated that in this case, petitioner is the successor-in-interest of Ma. Imelda Eloisa Galvan,
who was one of the defendants in the first case entitled Ruth Cabrera v. Spouses Dominador Galvan
and Ma. Imelda Eloisa P. Galvan, Spouses John Doe Sase and Marissa Sase, while respondent is
the successor-in-interest of Ruth Cabrera, who was the plaintiff in the first case. Therefore, it is clear
that the parties in both actions are substantially the same, representing the very same interest.

Moreover, the RTC averred that the subject of an action is defined as the matter or thing with
respect to which the controversy has arisen, concerning which a wrong has been done. 27 There can
be no doubt that the subject matter involved in the first case and this case is the lot located at No.
181 Bayabas Extension, NAPICO, Manggahan, Pasig City. Hence, the RTC held that the element of
identity of subject matter is also present.

The RTC also ruled that the causes of action in the two cases under consideration are identical. It
cited Dela Rama v. Mendiola,28 which held:

x x x Causes of action are identical when there is an identity in the facts essential to the
maintenance of the two actions, or where the same evidence will sustain both actions. If the same
facts or evidence can sustain either, the two actions are considered the same, so that the judgment
in one is a bar to the other.

x x x [T]he difference in form and nature of the two actions is immaterial. The philosophy behind the
rule on res judicata prohibits the parties from litigating the same issue more than once. x x x.

When material facts or questions in issue in a former action were conclusively settled by a judgment
rendered therein, such facts or questions constitute res judicata and may not be again litigated in a
subsequent action between the same parties or their privies regardless of the form of the latter. This
is the essence of res judicata or bar by prior judgment. The parties are bound not only as regards
every matter offered and received to sustain or defeat their claims or demand but as to any other
admissible matter which might have been offered for that purpose and of all other matters that could
have been adjudged in that case.

The RTC explained that the issue involved in the first unlawful detainer case was who between Ruth
Cabrera and the Spouses Galvan had the right of possession over the subject property. In the
present case, the issue is who between Deanon and Mag-abo, the successors-in-interest of the
Spouses Galvan and Ruth Cabrera, respectively, has the right of possession over the subject
property. The issue of possession over the subject property was already decided upon in the first
case, as the parties therein were the predecessors-in-interest of the parties in this case. Thus, the
RTC held that the present case is barred by res judicata, because the parties are bound by any
other admissible matter which might have been offered for that purpose and all other matters that
could have been adjudged in the prior case.

Petitioner appealed the Decision of the RTC to the Court of Appeals via a petition for review.

The Court of Appeals affirmed the Decision of the RTC in its Decision dated May 25, 2007, the
dispositive portion of which reads:
UPON THE VIEW WE TAKE OF THIS CASE, THUS, the petition must be, as it is hereby DENIED,
and consequently, DISMISSED. Costs against petitioner. 29

Petitioner’s motion for reconsideration was denied by the Court of Appeals in a Resolution 30 dated
August 28, 2007.

Hence, petitioner filed this petition.

The main issue in this case is who among the parties is entitled to possession of the subject property
and the structure erected thereon, located at No. 181 Bayabas Street Extension, NAPICO,
Manggahan, Pasig City.

The Court upholds the decision of the Court of Appeals that respondent Marfelina Mag-abo is
entitled to possession of the subject property.

Petitioner seeks the ejectment of respondent from the subject property on the ground that she
acquired the property from its grantee, Ma. Imelda Eloisa P. Galvan, and she is recognized by the lot
owner, NAPICO Homeowners Association XIII, Inc., as the claimant in the place of Galvan, and that
respondent’s occupancy of the property was merely tolerated by Ma. Imelda Eloisa Galvan.

However, evidence on record showed that in the ejectment case entitled Ruth Cabrera v. Sps.
Dominador Galvan and Ma. Imelda Eloisa P. Galvan, and Sps. John Doe Sase and Marissa Sase
involving the same property, the RTC of Pasig City, Branch 267, in a Decision 31 dated May 9, 2001,
held that Ruth Cabrera, who is respondent’s predecessor-in-interest, is entitled to the possession of
the said property, not the Spouses Galvan, who are petitioner’s predecessor-in-interest. It was
established that Ruth Cabrera acquired the rights of Ma. Imelda Eloisa Galvan over the subject
property by virtue of a Certificate of Sale dated February 28, 1998, after the said property was levied
upon and sold in a public auction to satisfy the civil indemnity of ₱15,000.00 imposed upon
Dominador Galvan in a criminal case filed with the RTC of Pasig City, Branch 166.

Therefore, when Ma. Imelda Eloisa Galvan waived her rights over the subject property in favor of
petitioner on July 28, 2003,32 the rights to the property had already been transferred to Ruth Cabrera,
who, in turn, conveyed her rights to respondent by virtue of the Deed of Transfer and Assignment of
Rights dated February 23, 2001. 33

Petitioner contends that the lawful owner of the subject property should be entitled to actual physical
possession of the same. Petitioner asserts that Ruth Cabrera-Mendoza and her successor-in-
interest, respondent Mag-abo, failed for an unreasonable length of time to inform the National Home
Mortgage Corporation of their rights over the property; hence, they cannot prevail over the right of
petitioner, who acquired the property in good faith and for value by virtue of the document entitled
Waiver of Rights on Lot,34 which was executed by Ma. Imelda Eloisa P. Galvan in her favor.
Petitioner pointed out that Ma. Imelda Eloisa Galvan was a mere awardee of the lot from the
NAPICO Homeowners Association XIII, Inc. Petitioner emphasized that she complied with the
tedious process in order to perfect her rights over the property, and she was still paying monthly
amortization to the NAPICO Homeowners Association XIII, which remits the payment to the National
Home Mortgage Corporation.

In short, petitioner claims that she is a buyer in good faith and for value of the rights to the property,
and upon notice to the lot owner NAPICO Homeowners Association XIII, Inc. and payment of Ma.
Imelda Eloisa Galvan’s arrears, the rights of Galvan to purchase the property was transferred to her,
and she is still paying the purchase price to the said Association. Thus, she has a better right of
possession over respondent, who failed to inform the NAPICO Homeowners Association XIII, Inc. for
an unreasonable length of time of her rights over the property.

The contention of petitioner does not persuade.

To reiterate, Ma. Imelda Eloisa Galvan transferred her rights over the subject property to petitioner
on July 28, 2003. At that time, she had already lost her rights to the property, as Ruth Cabrera
acquired her rights by virtue of the Certificate of Sale dated February 28, 1998. In addition, Ruth
Cabrera transferred her rights to the property to respondent through the Deed of Transfer and
Assignment of Rights on February 23, 2001, which is two years earlier than the transfer to petitioner.

Consequently, petitioner cannot be considered a buyer in good faith, because respondent was
already in possession of the subject property at the time Ma. Imelda Eloisa Galvan conveyed her
rights over the property to petitioner. It is settled rule that a buyer of real property that is in the
possession of a person other than the seller must be wary and should investigate the rights of the
person in possession.35 Otherwise, without such inquiry, the buyer can hardly be regarded as a
buyer in good faith.36

Since respondent was already in possession of the subject property at the time Ma. Imelda Eloisa
Galvan transferred her rights over the property to petitioner, petitioner was obliged to investigate
respondent’s rights over the property vis-à-vis that of the seller. Petitioner cannot be considered a
buyer in good faith for her failure to make such inquiry.

The Court notes that respondent’s rights over the property are the same rights, interest and claim of
then lot claimant Ma. Imelda Eloisa Galvan to the property as of the time of the levy. 37 It appears that
respondent failed to inform the NAPICO Homeowners Association XIII, Inc. of her rights in order to
facilitate substitution and assumption of payment of the purchase price, while petitioner
accomplished the same. However, this development, insofar as the instant case is concerned, does
not detract from the finding that respondent is entitled to the right of possession of the subject
property.1avvphi1

The sole issue for resolution in an unlawful detainer case is physical or material possession. 38 Courts
in ejectment cases decide questions of ownership only as it is necessary to decide the question of
possession.39 The reason for this rule is to prevent the defendant from trifling with the summary
nature of an ejectment suit by the simple expedient of asserting ownership over the disputed
property.40

The Court's adjudication of ownership in an ejectment case is merely provisional, and it will not bar
or prejudice an action between the same parties involving title to the property, if and when such
action is brought seasonably before the proper forum. 41

WHEREFORE, the petition for review on certiorari is DENIED. The Decision of the Court of Appeals,
dated May 25, 2007, in CA-G.R. SP No. 97714 is hereby AFFIRMED.

Costs against petitioner.

SO ORDERED.

DIOSDADO M. PERALTA
 Republic of the Philippines
SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 178906               February 18, 2009

ELVIRA T. ARANGOTE, petitioner,
vs.
SPS. MARTIN MAGLUNOB and LOURDES S. MAGLUNOB, and ROMEO SALIDO, Respondents.

DECISION

CHICO-NAZARIO, J.:

Before this Court is a Petition for Review on Certiorari under Rule 45 of the 1997 Revised Rules of
Civil Procedure seeking to reverse and set aside the Decision 1 dated 27 October 2006 and
Resolution2 dated 29 June 2007 of the Court of Appeals in CA-G.R. SP No. 64970. In its assailed
Decision, the appellate court affirmed the Decision3 dated 12 September 2000 of the Regional Trial
Court (RTC), 6th Judicial Region, Branch 1, Kalibo, Aklan, in Civil Case No. 5511, which reversed
the Decision4 dated 6 April 1998 of the 7th Municipal Circuit Trial Court (MCTC) of Ibajay-Nabas,
Ibajay, Aklan, in Civil Case No. 156; and declared5 the herein respondent-Spouses Martin and
Lourdes Maglunob (Spouses Maglunob) and respondent Romeo Salido (Romeo) as the lawful
owners and possessors of Lot 12897 with an area of 982 square meters, more or less, located in
Maloco, Ibajay, Aklan (subject property). In its assailed Resolution, the appellate court denied herein
petitioner Elvira T. Arangote’s Motion for Reconsideration.

Elvira T. Arangote, herein petitioner married to Ray Mars E. Arangote, is the registered owner of the
subject property, as evidenced by Original Certificate of Title (OCT) No. CLOA-1748. 6 Respondents
Martin (Martin II) and Romeo are first cousins and the grandnephews of Esperanza Maglunob-
Dailisan (Esperanza), from whom petitioner acquired the subject property.

The Petition stems from a Complaint 7 filed by petitioner and her husband against the respondents for
Quieting of Title, Declaration of Ownership and Possession, Damages with Preliminary Injunction,
and Issuance of Temporary Restraining Order before the MCTC, docketed as Civil Case No. 156.

The Complaint alleged that Esperanza inherited the subject property from her uncle Victorino
Sorrosa by virtue of a notarized Partition Agreement 8 dated 29 April 1985, executed by the latter’s
heirs. Thereafter, Esperanza declared the subject property in her name for real property tax
purposes, as evidenced by Tax Declaration No. 16218 (1985). 9

The Complaint further stated that on 24 June 1985, Esperanza executed a Last Will and
Testament10 bequeathing the subject property to petitioner and her husband, but it was never
probated. On 9 June 1986, Esperanza executed another document, an Affidavit, 11 in which she
renounced, relinquished, waived and quitclaimed all her rights, share, interest and participation
whatsoever in the subject property in favor of petitioner and her husband. On the basis thereof, Tax
Declaration No. 16218 in the name of Esperanza was cancelled and Tax Declaration No.
1666612 (1987) was issued in the name of the petitioner and her husband.

In 1989, petitioner and her husband constructed a house on the subject property. On 26 March
1993, OCT No. CLOA-1748 was issued by the Secretary of the Department of Agrarian Reform
(DAR) in the name of petitioner, married to Ray Mars E. Arangote. However, respondents, together
with some hired persons, entered the subject property on 3 June 1994 and built a hollow block wall
behind and in front of petitioner’s house, which effectively blocked the entrance to its main door.

As a consequence thereof, petitioner and her husband were compelled to institute Civil Case No.
156.

In their Answer with Counterclaim in Civil Case No. 156, respondents averred that they co-owned
the subject property with Esperanza. Esperanza and her siblings, Tomas and Inocencia, inherited
the subject property, in equal shares, from their father Martin Maglunob (Martin I). When Tomas and
Inocencia passed away, their shares passed on by inheritance to respondents Martin II and Romeo,
respectively. Hence, the subject property was co-owned by Esperanza, respondent Martin II
(together with his wife Lourdes), and respondent Romeo, each holding a one-third pro-indiviso share
therein. Thus, Esperanza could not validly waive her rights and interest over the entire subject
property in favor of the petitioner.

Respondents also asserted in their Counterclaim that petitioner and her husband, by means of fraud,
undue influence and deceit were able to make Esperanza, who was already old and illiterate, affix
her thumbmark to the Affidavit dated 9 June 1986, wherein she renounced all her rights and interest
over the subject property in favor of petitioner and her husband. Respondents thus prayed that the
OCT issued in petitioner’s name be declared null and void insofar as their two-thirds shares are
concerned.
After trial, the MCTC rendered its Decision dated 6 April 1998 in Civil Case No. 156, declaring
petitioner and her husband as the true and lawful owners of the subject property. The decretal
portion of the MCTC Decision reads:

WHEREFORE, judgment is hereby rendered:

A. Declaring the [herein petitioner and her husband] the true, lawful and exclusive owners
and entitled to the possession of the [subject property] described and referred to under
paragraph 2 of the [C]omplaint and covered by Tax Declaration No. 16666 in the names of
the [petitioner and her husband];

B. Ordering the [herein respondents] and anyone hired by, acting or working for them, to
cease and desist from asserting or claiming any right or interest in, or exercising any act of
ownership or possession over the [subject property];

C. Ordering the [respondents] to pay the [petitioner and her husband] the amount of
₱10,000.00 as attorney’s fee. With cost against the [respondents]. 13

The respondents appealed the aforesaid MCTC Decision to the RTC. Their appeal was docketed as
Civil Case No. 5511.

Respondents argued in their appeal that the MCTC erred in not dismissing the Complaint filed by the
petitioner and her husband for failure to identify the subject property therein. Respondents further
faulted the MCTC for not declaring Esperanza’s Affidavit dated 9 June 1986 -- relinquishing all her
rights and interest over the subject property in favor of petitioner and her husband -- as null and void
insofar as respondents’ two-thirds share in the subject property is concerned.

On 12 September 2000, the RTC rendered its Decision reversing the MCTC Decision dated 6 April
1998. The RTC adjudged respondents, as well as the other heirs of Martin Maglunob, as the lawful
owners and possessors of the entire subject property. The RTC decreed:

WHEREFORE, judgment is hereby rendered as follows:

1) The appealed [D]ecision is REVERSED;

2) [Herein respondents] and the other heirs of Martin Maglunob are declared the lawful
owners and possessors of the whole [subject property] as described in Paragraph 2 of the
[C]omplaint, as against the [herein petitioner and her husband].

3) [Petitioner and her husband] are ordered to immediately turn over possession of the
[subject property] to the [respondents] and the other heirs of Martin Maglunob; and

4) [Petitioner and her husband] are ordered to pay [respondents] attorney’s fees of
₱5,000.00, other litigation expenses of ₱5,000.00, moral damages of ₱10,000.00 and
exemplary damages of P5,000.00. 14

Petitioner and her husband filed before the RTC, on 26 September 2000, a Motion for New Trial or
Reconsideration15 on the ground of newly discovered evidence consisting of a Deed of
Acceptance16 dated 23 September 2000, and notice17 of the same, which were both made by the
petitioner, for herself and in behalf of her husband, 18 during the lifetime of Esperanza. In the RTC
Order19 dated 2 May 2001, however, the RTC denied the aforesaid Motion for New Trial or
Reconsideration.

The petitioner and her husband then filed a Petition for Review, under Rule 42 of the 1997 Revised
Rules of Civil Procedure, before the Court of Appeals, where the Petition was docketed as CA-G.R.
SP No. 64970.

In their Petition before the appellate court, petitioner and her husband raised the following errors
committed by the RTC in its 12 September 2000 Decision:

I. It erred in reversing the [D]ecision of the [MCTC];

II. It erred in declaring the [herein respondents] and the other heirs of Martin Maglunob as
the lawful owners and possessors of the whole [subject property];

III. It erred in declaring [OCT] No. CLOA-1748 in the name of [herein petitioner] Elvie T.
Arangote as null and void;

IV. It erred in denying [petitioner and her husband’s] [M]otion for [N]ew [T]rial or
[R]econsideration dated [26 September 2000; and

V. It erred in not declaring the [petitioner and her husband] as possessors in good faith. 20

On 27 October 2006, the Court of Appeals rendered a Decision denying the Petition for Review of
petitioner and her husband and affirming the RTC Decision dated 12 September 2000. Petitioner
and her husband’s subsequent Motion for Reconsideration was similarly denied by the Court of
Appeals in its Resolution dated 29 June 2007.

Hence, petitioner21 now comes before this Court raising in her Petition the following issues:

I. Whether the [RTC] acted with grave abuse of discretion amounting to lack or excess of
jurisdiction when it declared the [petitioner and her husband’s title to the subject property]
null and void;

II. Whether the [RTC] acted with grave abuse of discretion amounting to lack of jurisdiction
when it declared the Affidavit of Quitclaim null and void; and

III. Whether the [RTC] and the Honorable Court of Appeals acted with grave abuse of
discretion amounting to lack or excess of jurisdiction when it rejected petitioner’s claim as
possessors (sic) in good faith, hence, entitled to the rights provided in [Article] 448 and
[Article] 546 of the Civil Code. 22

Petitioner contends that the aforesaid OCT No. CLOA-1748 was issued in her name on 26 March
1993 and was registered in the Registry of Deeds of Aklan on 20 April 1993. From 20 April 1993 until
the institution of Civil Case No. 156 on 10 June 1994 before the MCTC, more than one year had
already elapsed. Considering that a Torrens title can only be attacked within one year after the date
of the issuance of the decree of registration on the ground of fraud and that such attack must be
through a direct proceeding, it was an error on the part of the RTC and the Court of Appeals to
declare OCT No. CLOA-1748 null and void.
Petitioner additionally posits that both the RTC and the Court of Appeals committed a mistake in
declaring null and void the Affidavit dated 9 June 1986 executed by Esperanza, waiving all her rights
and interest over the subject property in favor of petitioner and her husband. Esperanza’s Affidavit is
a valid and binding proof of the transfer of ownership of the subject property in petitioner’s name, as
it was also coupled with actual delivery of possession of the subject property to petitioner and her
husband. The Affidavit is also proof of good faith on the part of petitioner and her husband.

Finally, petitioner argues that, assuming for the sake of argument, that Esperanza’s Affidavit is null
and void, petitioner and her husband had no knowledge of any flaw in Esperanza’s title when the
latter relinquished her rights to and interest in the subject property in their favor. Hence, petitioner
and her husband can be considered as possessors in good faith and entitled to the rights provided
under Articles 448 and 546 of the Civil Code.

This present Petition is devoid of merit.

It is a hornbook doctrine that the findings of fact of the trial court are entitled to great weight on
appeal and should not be disturbed except for strong and valid reasons, because the trial court is in
a better position to examine the demeanor of the witnesses while testifying. It is not a function of this
Court to analyze and weigh evidence by the parties all over again. This Court’s jurisdiction is, in
principle, limited to reviewing errors of law that might have been committed by the Court of
Appeals.23 This rule, however, is subject to several exceptions, 24 one of which is present in this case,
i.e., when the factual findings of the Court of Appeals and the trial court are contradictory.

In this case, the findings of fact of the MCTC as regards the origin of the subject property are in
conflict with the findings of fact of both the RTC and the Court of Appeals. Hence, this Court will
have to examine the records to determine first the true origin of the subject property and to settle
whether the respondents have the right over the same for being co-heirs and co-owners, together
with their grand aunt, Esperanza, before this Court can resolve the issues raised by the petitioner in
her Petition.

After a careful scrutiny of the records, this Court affirms the findings of both the RTC and the Court
of Appeals as regards the origin of the subject property and the fact that respondents, with their
grand aunt Esperanza, were co-heirs and co-owners of the subject property.

The records disclosed that the subject property was part of a parcel of land 25 situated in Maloco,
Ibajay, Aklan, consisting of 7,176 square meters and commonly owned in equal shares by the
siblings Pantaleon Maglunob (Pantaleon) and Placida Maglunob-Sorrosa (Placida). Upon the death
of Pantaleon and Placida, their surviving and legal heirs executed a Deed of Extrajudicial Settlement
and Partition of Estate in July 1981,26 however, the Deed was not notarized. Considering that
Pantaleon died without issue, his one-half share in the parcel of land he co-owned with Placida
passed on to his four siblings (or their respective heirs, if already deceased), namely: Placida, Luis,
Martin I, and Victoria, in equal shares.

According to the aforementioned Deed of Extrajudicial Settlement and Partition of Estate, the
surviving and legal heirs of Pantaleon and Placida agreed to have the parcel of land commonly
owned by the siblings declared for real property tax purposes in the name of Victorino Sorrosa
(Victorino), Placida’s husband. Thus, Tax Declarations No. 5988 (1942), 27 No. 6200 (1945)28 and No.
7233 (1953)29 were all issued in the name of Victorino.

Since Martin I already passed away when the Deed of Extrajudicial Settlement and Partition of
Estate was executed, his heirs30 were represented therein by Esperanza. By virtue of the said Deed,
Martin I received as inheritance a portion of the parcel of land measuring 897 square meters.
After the death of Victorino, his heirs31 executed another Partition Agreement on 29 April 1985, which
was notarized on the same date. The Partition Agreement mentioned four parcels of land. The
subject property, consisting of a portion of the consolidated parcels 1, 2, and 3, and measuring
around 982 square meters, was allocated to Esperanza. In comparison, the property given to
Esperanza under the Partition Agreement is bigger than the one originally allocated to her earlier
under the Deed of Extrajudicial Settlement and Partition of Estate dated July 1981, which had an
area of only 897 square meters. It may be reasonably assumed, however, that the subject property,
measuring 982 square meters, allocated to Esperanza under the Partition Agreement dated 29 April
1985, is already inclusive of the smaller parcel of 897 square meters assigned to her under the Deed
of Extrajudicial Settlement and Partition of Estate dated July 1981. As explained by the RTC in its 12
September 2000 Decision:

The [subject property] which is claimed by the [herein petitioner and her husband] and that which is
claimed by the [herein respondents] are one and the same, the difference in area and technical
description being due to the repartition and re-allocation of the parcel of land originally co-owned by
Pantaleon Maglunob and his sister Placida Maglunob and subsequently declared in the name of
[Victorino] under Tax Declaration No. 5988 of 1949. 32

It is clear from the records that the subject property was not Esperanza’s exclusive share, but also
that of the other heirs of her father, Martin I. Esperanza expressly affixed her thumbmark to the Deed
of Extrajudicial Settlement of July 1981 not only for herself, but also on behalf of the other heirs of
Martin I. Though in the Partition Agreement dated 29 April 1985 Esperanza affixed her thumbmark
without stating that she was doing so not only for herself, but also on behalf of the other heirs of
Martin I, this does not mean that Esperanza was already the exclusive owner thereof. The evidence
shows that the subject property is the share of the heirs of Martin I. This is clear from the
sketch33 attached to the Partition Agreement dated 29 April 1985, which reveals the proportionate
areas given to the heirs of the two siblings, Pantaleon and Placida, who were the original owners of
the whole parcel of land34 from which the subject property was taken.

Further, it bears emphasis that the Partition Agreement was executed by and among the son,
grandsons, granddaughters and cousins of Victorino. Esperanza was neither the granddaughter nor
the cousin of Victorino, as she was only Victorino’s grandniece. The cousin of Victorino is Martin I,
Esperanza’s father. In effect, therefore, the subject property allotted to Esperanza in the Partition
Agreement was not her exclusive share, as she holds the same for and on behalf of the other heirs
of Martin I, who was already deceased at the time the Partition Agreement was made.

To further bolster the truth that the subject property was not exclusively owned by Esperanza, the
Affidavit she executed in favor of petitioner and her husband on 6 June 1985 was worded as follows:

That I hereby renounce, relinquish, waive and quitclaim all my rights, share, interest and
participation whatsoever in the [subject property] unto the said Sps. Ray Mars Arangote and Elvira T.
Arangote, their heirs, successors, and assigns including the improvement found thereon; 35

Logically, if Esperanza fully owned the subject property, she would have simply waived her rights to
and interest in the subject property, without mentioning her "share" and "participation" in the same.
By including such words in her Affidavit, Esperanza was aware of and was limiting her waiver,
renunciation, and quitclaim to her one-third share and participation in the subject property.

Going to the issues raised by the petitioner in this Petition, this Court will resolve the same
concurrently as they are interrelated.
In this case, the petitioner derived her title to the subject property from the notarized Affidavit
executed by Esperanza, wherein the latter relinquished her rights, share, interest and participation
over the same in favor of the petitioner and her husband.

A careful perusal of the said Affidavit reveals that it is not what it purports to be. Esperanza’s
Affidavit is, in fact, a Donation. Esperanza’s real intent in executing the said Affidavit was to donate
her share in the subject property to petitioner and her husband.

As no onerous undertaking is required of petitioner and her husband under the said Affidavit, the
donation is regarded as a pure donation of an interest in a real property covered by Article 749 of the
Civil Code.36 Article 749 of the Civil Code provides:

Art. 749. In order that the donation of an immovable may be valid, it must be made in a public
document, specifying therein the property donated and the value of the charges which the donee
must satisfy.

The acceptance may be made in the same deed of donation or in a separate public document, but it
shall not take effect unless it is done during the lifetime of the donor.

If the acceptance is made in a separate instrument, the donor shall be notified thereof in an
authentic form, and this step shall be noted in both instruments.

From the aforesaid provision, there are three requisites for the validity of a simple donation of a real
property, to wit: (1) it must be made in a public instrument; (2) it must be accepted, which
acceptance may be made either in the same Deed of Donation or in a separate public instrument;
and (3) if the acceptance is made in a separate instrument, the donor must be notified in an
authentic form, and the same must be noted in both instruments.

This Court agrees with the RTC and the Court of Appeals that the Affidavit executed by Esperanza
relinquishing her rights, share, interest and participation over the subject property in favor of the
petitioner and her husband suffered from legal infirmities, as it failed to comply with the aforesaid
requisites of the law.

In Sumipat v. Banga,37 this Court declared that title to immovable property does not pass from the
donor to the donee by virtue of a Deed of Donation until and unless it has been accepted in a public
instrument and the donor duly notified thereof. The acceptance may be made in the very same
instrument of donation. If the acceptance does not appear in the same document, it must be made in
another. Where the Deed of Donation fails to show the acceptance, or where the formal notice of the
acceptance, made in a separate instrument, is either not given to the donor or else not noted in the
Deed of Donation and in the separate acceptance, the donation is null and void. 38

In the present case, the said Affidavit, which is tantamount to a Deed of Donation, met the first
requisite, as it was notarized; thus, it became a public instrument. Nevertheless, it failed to meet the
aforesaid second and third requisites. The acceptance of the said donation was not made by the
petitioner and her husband either in the same Affidavit or in a separate public instrument. As there
was no acceptance made of the said donation, there was also no notice of the said acceptance
given to the donor, Esperanza. Therefore, the Affidavit executed by Esperanza in favor of petitioner
and her husband is null and void.

The subsequent notarized Deed of Acceptance 39 dated 23 September 2000, as well as the notice40 of
such acceptance, executed by the petitioner did not cure the defect. Moreover, it was only made by
the petitioner several years after the Complaint was filed in court, or when the RTC had already
rendered its Decision dated 12 September 2000, although it was still during Esperanza’s lifetime.
Evidently, its execution was a mere afterthought, a belated attempt to cure what was a defective
donation.

It is true that the acceptance of a donation may be made at any time during the lifetime of the donor.
And granting arguendo that such acceptance may still be admitted in evidence on appeal, there is
still need for proof that a formal notice of such acceptance was received by the donor and noted in
both the Deed of Donation and the separate instrument embodying the acceptance. 41 At the very
least, this last legal requisite of annotation in both instruments of donation and acceptance was not
fulfilled by the petitioner. Neither the Affidavit nor the Deed of Acceptance bears the fact that
Esperanza received notice of the acceptance of the donation by petitioner. For this reason, even
Esperanza’s one-third share in the subject property cannot be adjudicated to the petitioner.

With the foregoing, this Court holds that the RTC and the Court of Appeals did not err in declaring
null and void Esperanza’s Affidavit.

The next issue to be resolved then is whether the RTC, as well as the Court of Appeals, erred in
declaring OCT No. CLOA-1748 in the name of petitioner and her husband null and void.

Again, this Court answers the said issue in the negative.

Section 48 of Presidential decree No. 1529 states:

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

Such proscription has long been enshrined in Philippine jurisprudence. The judicial action required to
challenge the validity of title is a direct attack, not a collateral attack. 42

The attack is considered direct when the object of an action is to annul or set aside such proceeding,
or enjoin its enforcement. Conversely, an attack is indirect or collateral when, in an action to obtain a
different relief, an attack on the proceeding is nevertheless made as an incident thereof. Such action
to attack a certificate of title may be an original action or a counterclaim, in which a certificate of title
is assailed as void.43

A counterclaim is considered a new suit in which the defendant is the plaintiff and the plaintiff in the
complaint becomes the defendant. It stands on the same footing as, and is to be tested by the same
rules as if it were, an independent action.44

In their Answer to the Complaint for Quieting of Title filed by the petitioner and her husband before
the MCTC, respondents included therein a Counterclaim wherein they repleaded all the material
allegations in their affirmative defenses, the most essential of which was their claim that petitioner
and her husband -- by means of fraud, undue influence and deceit -- were able to make their grand
aunt, Esperanza, who was already old and illiterate, affix her thumbmark to the Affidavit, wherein she
renounced, waived, and quitclaimed all her rights and interest over the subject property in favor of
petitioner and her husband. In addition, respondents maintained in their Answer that as petitioner
and her husband were not tenants either of Esperanza or of the respondents, the DAR could not
have validly issued in favor of petitioner and her husband OCT No. CLOA-1748. Thus, the
respondents prayed, in their counterclaim in Civil Case No. 156 before the MCTC, that OCT No.
CLOA-1748 issued in the name of petitioner, married to Ray Mars E. Arangote, be declared null and
void, insofar as their two-thirds shares in the subject property are concerned.

It is clear, thus, that respondents’ Answer with Counterclaim was a direct attack on petitioner’s
certificate of title. Furthermore, since all the essential facts of the case for the determination of the
validity of the title are now before this Court, to require respondents to institute a separate
cancellation proceeding would be pointlessly circuitous and against the best interest of justice.

Esperanza’s Affidavit, which was the sole basis of petitioner’s claim to the subject property, has
been declared null and void. Moreover, petitioner and her husband were not tenants of the subject
property. In fact, petitioner herself admitted in her Complaint filed before the MCTC that her husband
is out of the country, rendering it impossible for him to work on the subject property as a tenant.
Instead of cultivating the subject property, petitioner and her husband possessed the same by
constructing a house thereon. Thus, it is highly suspicious how the petitioner was able to secure
from the DAR a Certificate of Land Ownership Award (CLOA) over the subject property. The DAR
awards such certificates to the grantees only if they fulfill the requirements of Republic Act No. 6657,
otherwise known as the Comprehensive Agrarian Reform Program (CARP). 45 Hence, the RTC and
the Court of Appeals did not err in declaring null and void OCT No. CLOA-1748 in the name of the
petitioner, married to Ray Mars E. Arangote.

Considering that Esperanza died without any compulsory heirs and that the supposed donation of
her one-third share in the subject property per her Affidavit dated 9 June 1985 was already declared
null and void, Esperanza’s one-third share in the subject property passed on to her legal heirs, the
respondents.

As petitioner’s last-ditch effort, she claims that she is a possessor in good faith and, thus, entitled to
the rights provided for under Articles 448 and 546 of the Civil Code.

This claim is untenable.

The Civil Code describes a possessor in good faith as follows:

Art. 526. He is deemed a possessor in good faith who is not aware that there exists in his title or
mode of acquisition any flaw which invalidates it.

He is deemed a possessor in bad faith who possesses in any case contrary to the foregoing.

Mistake upon a doubtful or difficult question of law may be the basis of good faith.

Art. 1127. The good faith of the possessor consists in the reasonable belief that the person from
whom he received the thing was the owner thereof, and could transmit his ownership.

Possession in good faith ceases from the moment defects in the title are made known to the
possessor by extraneous evidence or by a suit for recovery of the property by the true owner. Every
possessor in good faith becomes a possessor in bad faith from the moment he becomes aware that
what he believed to be true is not so.46

In the present case, when respondents came to know that an OCT over the subject property was
issued and registered in petitioner’s name on 26 March 1993, respondents brought a Complaint on 7
August 1993 before the Lupon of Barangay Maloco, Ibajay, Aklan, challenging the title of petitioner
to the subject property on the basis that said property constitutes the inheritance of respondent,
together with their grandaunt Esperanza, so Esperanza had no authority to relinquish the entire
subject property to petitioner. From that moment, the good faith of the petitioner had ceased.

Petitioner cannot be entitled to the rights under Articles 448 and 546 of the Civil Code, because the
rights mentioned therein are applicable only to builders in good faith and not to possessors in good
faith.

Moreover, the petitioner cannot be considered a builder in good faith of the house on the subject
property. In the context that such term is used in particular reference to Article 448 of the Civil Code,
a builder in good faith is one who, not being the owner of the land, builds on that land, believing
himself to be its owner and unaware of any defect in his title or mode of acquisition. 47

The various provisions of the Civil Code, pertinent to the subject, read:

Article 448. The owner of the land on which anything has been built, sown, or planted in good faith,
shall have the right to appropriate as his own the works, sowing or planting, after payment of the
indemnity provided for in Articles 546 and 548, or to oblige the one who built or planted to pay the
price of the land, and the one who sowed, the proper rent. However, the builder or planter cannot be
obliged to buy the land if its value is considerably more than that of the building or trees. In such a
case, he shall pay reasonable rent, if the owner of the land does not choose to appropriate the
building or trees after proper indemnity. The parties shall agree upon the terms of the lease and in
case of disagreement, the court shall fix the terms thereof. 1avvphi1

Article 449. He who builds, plants, or sows in bad faith on the land of another, loses what is built,
planted or sown without right to indemnity.

Article 450. The owner of the land on which anything has been built, planted or sown in bad faith
may demand the demolition of the work, or that the planting or sowing be removed, in order to
replace things in their former condition at the expense of the person who built, planted or sowed; or
he may compel the builder or planter to pay the price of the land, and the sower the proper rent.

Under the foregoing provisions, the builder in good faith can compel the landowner to make a choice
between appropriating the building by paying the proper indemnity or obliging the builder to pay the
price of the land. The choice belongs to the owner of the land, a rule that accords with the principle
of accession, i.e., that the accessory follows the principal and not the other way around. Even as the
option lies with the landowner, the grant to him, nevertheless, is preclusive. He must choose one. He
cannot, for instance, compel the owner of the building to instead remove it from the land. In order,
however, that the builder can invoke that accruing benefit and enjoy his corresponding right to
demand that a choice be made by the landowner, he should be able to prove good faith on his part. 48

Good faith, here understood, is an intangible and abstract quality with no technical meaning or
statutory definition, and it encompasses, among other things, an honest belief, the absence of
malice and the absence of design to defraud or to seek an unconscionable advantage. An
individual’s personal good faith is a concept of his own mind and, therefore, may not conclusively be
determined by his protestations alone. It implies honesty of intention, and freedom from knowledge
of circumstances which ought to put the holder upon inquiry. The essence of good faith lies in an
honest belief in the validity of one’s right, ignorance of a superior claim, and absence of intention to
overreach another. Applied to possession, one is considered in good faith if he is not aware that
there exists in his title or mode of acquisition any flaw which invalidates it. 49

In this case, the subject property waived and quitclaimed by Esperanza to the petitioner and her
husband in the Affidavit was only covered by a tax declaration in the name of Esperanza. Petitioner
did not even bother to look into the origin of the subject property and to probe into the right of
Esperanza to relinquish the same. Thus, when petitioner and her husband built a house thereon in
1989 they cannot be considered to have acted in good faith as they were fully aware that when
Esperanza executed an Affidavit relinquishing in their favor the subject property the only proof of
Esperanza’s ownership over the same was a mere tax declaration. This fact or circumstance alone
was enough to put the petitioner and her husband under inquiry. Settled is the rule that a tax
declaration does not prove ownership. It is merely an indicium of a claim of ownership. Payment of
taxes is not proof of ownership; it is, at best, an indicium of possession in the concept of ownership.
Neither tax receipts nor a declaration of ownership for taxation purposes is evidence of ownership or
of a right to possess realty when not supported by other effective proofs. 50

With the foregoing, the petitioner is not entitled to the rights under Article 448 and 546 as the
petitioner is not a builder and possessor in good faith.

WHEREFORE, premises considered, the instant Petition is hereby DENIED. The Decision and
Resolution of the Court of Appeals in CA-G.R. SP No. 64970, dated 27 October 2006 and 29 June
2007, respectively, affirming the RTC Decision dated 12 September 2000 in Civil Case No. 5511 and
declaring the respondents the lawful owners and possessors of the subject property are hereby
AFFIRMED. No costs.

SO ORDERED.

MINITA V. CHICO-NAZARIO

Malido vs pono 646 scra 381 (book)

 Republic of the Philippines
SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 175874               December 11, 2013

HEIRS OF CIPRIANO TRAZONA, Namely: FRANCISCA T. MATBAGON, NATIVIDAD T.

ABADIANO, CARLITO C. TRAZONA; and Heirs of EDELBERTO C. TRAZONA represented by
his daughter DOMICINA T. ARANAS, ELADIA T. ALICAMEN (Now Deceased) Substituted by
DOMINGO ALICAMEN, LUPECIO ALICAMEN, REBECCA ALICAMEN-BALBUTIN, ELSEI
ALICAMEN, GLENN ALICAMEN, LENNEI ALICAMEN-GEONZON, DANILO ALICAMEN,
JOVELYN ALICAMEN-VILLETA, JIMBIE ALICAMEN and HERMOGENES C. TRAZONA (Now
Deceased) Substituted by LILYBETH TRAZONA-MANGILA, GEMMA TRAZONA, ELIZALDE
TRAZONA, BOBBY TRAZONA, and PALABIANA B. TRAZONA, Petitioners,
vs.
HEIRS OF DIONISIO CANADA, Namely: ROSITA C. GERSALINA, CONCEPTION C. GEONZON,
DANIEL CANADA, GORGONIO CANADA, LEOPOLDO CANADA, SUSANA C. DUNGOG,
LUZVIMINDA C. TABUADA, AND CEFERINA CANADA; PROVINCIAL ASSESSOR of Cebu and
MUNICIPAL ASSESSOR of Minglanilla, Cebu, Respondents.

DECISION

SERENO, CJ.:

This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court assailing the
Decision  and Resolution  of the Court of Appeals Cebu City (CA) in CA-G.R. CV No. 00099. The CA
1 2

reversed the Decision  of the Regional Trial Court of Cebu City, Branch 57 (RTC) in Civil Case No.
3

CEB-20620, which annulled the Deed of Absolute Sale dated 27 June 1956 and ordered the
cancellation of Tax Declaration No. 23959 in the name of Dionisio Cañada (Dionisio), predecessor of
respondents.

Petitioners are heirs of Cipriano Trazona (Cipriano), who owned an untitled parcel of land referred to
as Lot No. 5053-H. The property, located in Minglanilla, Cebu, is covered by Tax Declaration No.
07764 and has an area of 9,515 square meters.  The land was purchased from the government in
4

1940.  Since then, Cipriano had taken possession of the land, cultivated it and diligently paid taxes
5

thereon. 6

In 1949, Dionisio bought the adjacent parcel of land from Pilar Diaz.  It was later found that he had
7

encroached on a small portion of Lot No. 5053-H. He was then summoned by Cipriano for a
confrontation before the barangay captain in 1952.  Dionisio offered to buy the encroached portion,
8

but Cipriano refused the offer.  In 1956, the latter gave Dionisio permission to temporarily build a
9

house on said portion, where it still stands.  No action for ejectment was filed against Dionisio during
10

the lifetime of Cipriano,  who eventually died on 18 May 1982.  The latter’s son Hermogenes, one of
11 12

the petitioners herein who had cultivated the lot since 1972, took over.  On 24 March 1992, Dionisio
13

died.14

The present controversy arose in 1997. Petitioners went to the Office of the Municipal Assessor to
secure a copy of Tax Declaration No. 07764, as they intended to sell Lot No. 5053-H to an interested
buyer.  To their surprise, they were informed that Tax Declaration No. 07764 had been cancelled
15

and, in lieu thereof, Tax Declaration No. 23959 was issued on 24 June 1996 in the name of
Dionisio.  Apparently, respondents had caused the issuance of Tax Declaration No. 23959 by
16

submitting a Deed of Absolute Sale dated 27 June 1956 supposedly executed by Cipriano in favor of
Dionisio.  That sale involved a portion of Lot No. 5053-H described as follows:
17

x x x that portion of land of Lot No. FIVE THOUSAND FIFTY THREE-H (5053-H) under subdivision
plan FLR-133 approved by the Director of Lands Jose P. Dans on September 5, 1953, covered by
monuments No. 7, 8, 9, 10, 11, of said Lot No. 5053 bounded on the North by Lot No. 5954 & portion
of Lot 5053-H; East by portion of Lot 5053-H; South by Lot no. 5053-J of Domingo Ababon; West by
Lot no. 9479; x x x. 18

Petitioners summoned respondents before the Lupon Tagapamayapa, but the conciliation was not
successful.  On 28 July 1997, petitioners filed a Complaint  against respondents for quieting of title,
19 20

annulment of deed of sale, cancellation of Tax Declaration No. 23959, recovery of possession and
ownership, damages, and payment of attorney’s fees. Petitioners alleged therein that the Deed of
Absolute Sale dated 27 June 1956 was a forgery. Respondents, in their Answer,  alleged that the
21

assailed deed was a genuine document and asked for the payment of moral and exemplary
damages, and attorney’s fees, as counterclaims.
During trial, among the witnesses presented by petitioners was Romeo O. Varona, document
examiner of the Philippine National Police Crime Laboratory, Region VII. He testified that according
to his comparative analysis of Cipriano’s signature on the assailed deed and standard signatures on
other documents, Cipriano’s signature on the deed in question was a forgery. 22

For their part, respondents presented Dionisio’s son Gorgonio, who testified that he was present
when the assailed deed was executed.  He also stated that they had enjoyed the fruits of the lot in
23

question from 1956 until 1960, when they were confronted by petitioners. Respondents were asked
to show proof of ownership, but could not present any.  Thus, from 1960 onwards, petitioners
24

enjoyed the fruits of the property.  Later, respondents were able to find a copy of the assailed deed
25

in the National Archives, thereby enabling them to cause the issuance of Tax Declaration No.
23959. 26

In the presentation of their rebuttal evidence, petitioners presented a Deed of Absolute Sale dated
11 April 1953,  executed by Pilar Diaz in favor of Dionisio.  This prior sale involved the exact same
27
1âwphi1

portion allegedly sold to him by Cipriano – except that in the date of approval of the subdivision plan
by the Director of Lands, two figures were interchanged. Whereas the assailed deed showed the
date as "September 5, 1953," the Deed of Absolute Sale dated 11 April 1953 showed the date as
"September 5, 1935."

In its Decision dated 6 April 2004, the RTC annulled the assailed deed and ordered the cancellation
of Tax Declaration No. 23959, as well as the reinstatement of Tax Declaration No.
07764.  Respondents were also ordered to demolish their residential house on Lot No. 5053-H and
28

to pay petitioners attorney’s fees and litigation expenses. 29

The RTC found that respondents’ failure to present the deed for 40 years from its alleged execution
had not been satisfactorily and convincingly explained.  It also found that the assailed deed was
30

indeed a forgery for the following reasons:

1. It would have been pointless for Dionisio to buy the same property twice from different
owners.

2. Cipriano’s residence certificate, whose number was indicated in the assailed deed, as well
as in the notarial register where the deed was recorded, was allegedly issued in Minglanilla,
Cebu. The other persons’ residence certificates, whose numbers were indicated on the same
page of the notarial register, appear to have come from the same booklet as the residence
certificate of Cipriano, judging from their numerical sequence. However, the residence
certificates of these other persons had been issued in Sogod, Cebu.

3. There was indeed a glaring difference between the alleged signature of Cipriano in the
assailed deed and in his standard signatures in 10 other documents submitted by plaintiffs.

Respondents filed a Notice of Appeal dated 30 April 2004.

RULING OF THE CA

On 25 May 2006, the CA issued a Decision reversing that of the RTC. The appellate court ruled that
petitioners had failed to prove by requisite evidence their allegation that the assailed deed was a
forgery.  The deed, being a notarized document, enjoyed the presumption of authenticity and due
31

execution. Also, the fact that it was an ancient document that "remained unaltered after so many
years, bodes well for its authenticity."
32
The CA also concluded that the document examiner was not able to determine the forgery with
certainty. What he had examined was a mere machine copy of the assailed deed.  Furthermore,
33

even he admitted that the standard signatures of Cipriano had shown variations among themselves.

Finally, the CA ruled that respondents were the actual possessors of Lot No. 5053-H, since it was
their house that was standing on the property.  Thus, the CA granted the appeal and consequently
34

dismissed the Complaint of petitioners.

ISSUES

Petitioners come before us on a Petition for Review on Certiorari 35

alleging that the CA erred as follows:

1. Ruling that petitioners were not able to overturn the presumption of regularity of the
assailed deed;

2. Finding that the document examiner was not able to establish the forgery with certainty;

3. Finding that respondents were in actual possession of Lot No. 5053-H;

4. Ruling that there was no merit in petitioners’ prayer for the award of attorney’s fees and
litigation expenses.

OUR RULING

Petitioners presented clear and convincing

evidence that the assailed deed is a forgery.

Well-settled is the rule that petitions for review on certiorari under Rule 45 before this Court should
involve only questions of law.  A reading of the issues raised by petitioners readily show that they
36

are questions of fact, which are generally not within the purview of this Court. When a question
involves facts, the findings of the CA, including the probative weight accorded to certain pieces of
evidence, are binding on this Court. Also well-settled, however, are exceptions to this rule,  such as
37

when the findings of fact of the CA are contrary to those of the RTC, as in this case.

We sustain the findings of the RTC.

At the outset, it is worth pointing out that the sale of a mere portion of Lot No. 5053-H was what
brought about the cancellation of Tax Declaration No. 07764 and the consequent issuance of Tax
Declaration No. 23959, each of which covered the entire lot. The fact that the assailed deed covers
only a portion of Lot No. 5053-H becomes clearer still when one considers that it was bounded on
the north and the east by portions of Lot No. 5053-H itself.

As will be shown below, the assailed deed is a forgery. Assuming it were genuine, petitioners have a
right to the rest of the property not covered by the purported sale. If the procedure for the issuance
of tax declarations was followed – if care had been observed to make sure that all papers were in
order and understood – this irregularity would not have taken place.
It is true that notarized documents are accorded evidentiary weight as regards their due
execution.  Nevertheless, while notarized documents enjoy the presumption of regularity, this
38

presumption is disputable. They can be contradicted by evidence that is clear, convincing, and more
than merely preponderant.  Here, contrary to the conclusion of the CA, we find clear and convincing
39

evidence that is enough to overturn the presumption of regularity of the assailed deed.

First, the document examiner determined that the signature of Cipriano in the assailed deed had
been forged. No issue has been raised about his expertise. The finding of the CA that he had
examined a mere machine copy of the assailed deed was erroneous. The pertinent portion of his
testimony clearly shows otherwise, to wit:

ATTY. DURANO:

Q: Now you made mention of the standard documents, could you kindly tell the Honorable Court
what is [the] questioned document stated in your report?

[ROMEO O. VARONA]

[A]: The questioned document is the Deed of Absolute Sale dated June 27, 1956.

Q: Do you have a copy of that Deed of Sale as examined by you?

A: Well, I have a machine copy. I have examined the original copy at the archive’s office,
Mandaue City.  (Emphasis supplied)
40

In concluding that the signature of Cipriano in the assailed deed was a forgery, the document
examiner found that there were "significant differences in letter formation, construction and other
individual handwriting characteristics" between the assailed and the standard signatures of
Cipriano.41

The fact that the document examiner himself admitted that even the standard signatures of Cipriano
showed variations among themselves does not make the former’s determination any less
convincing. He explained that while every signature of the same person varies, the individual
handwriting characteristics of the person remain the same.  In Cesar v. Sandiganbayan,  we
42 43

recognized that there is bound to be some variation in the different samples of genuine signatures of
the same person.

Second, the RTC did not just rely on expert testimony in ruling that the signature was forged. It
likewise supported its finding that the signature was forged through independent observation:

Finally, a scrutiny of the signature on the questioned deed of sale compared to the eleven (11)
signatures on the ten (10) standard documents there exists a glaring difference in the letter
formation of capital letters "C" in Cipriano and "T" in Trazona. The capital C in questioned signature,
the initial stroke stopped at the upper curve of the letter C while in the standard signatures, it
overlaps from the upper curve. In the word Trazona, the capital T in the questioned signature is
disconnected from the T bar to the body of the questioned signature whereas, in the standard
signatures, the capital T is connected. These discrepancies can easily be noticed by mere physical
appearance that the letters C and T were written. 44

Third, the existence of the Deed of Absolute Sale dated 11 April 1953 brings into question the
regularity of the assailed deed. This deed was never disputed by respondents at any stage of the
proceedings, and was in fact admitted by them in their Comments to Plaintiffs’ Additional Formal
Offer of Exhibits.  Indeed, the RTC was correct in its observation that no one in complete possession
45

of one’s mental faculties would buy the same property twice from different owners. Respondents
never provided any explanation for this anomalous situation. In any case, it has been established
that Lot No. 5053-H is in the name of Cipriano, who bought it from the government in 1940. Thus,
only Cipriano had the right to dispose of the property, or portions thereof.

Fourth, Cipriano had cultivated the property and paid taxes thereon since the time he acquired it
from the government, and even after its purported sale to Dionisio, until his death.  Petitioners
46

continued paying the taxes thereon even after Cipriano had died.  Respondents started paying taxes
47

on the property only after Tax Declaration No. 23959 was issued in Dionisio’s name in 1997.  It 48

would be absurd for petitioners to pay taxes on a property they do not own.

Fifth, as admitted by Gorgonio himself, petitioners were the ones enjoying the fruits of the property
from 1960 until the present controversy.  Again, it is incongruous for petitioners to enjoy the fruits if
49

respondents owned the property.

Sixth, as the RTC noted, there was an irregularity regarding the place of issuance of Cipriano’s
residence certificate indicated in the assailed deed, as compared with the residence certificates of
the other persons indicated on the same page of the notarial register.

Finally, when the record management analyst from the Bureau of Archives presented the assailed
deed, the paper was noted to be white, while its supposed contemporaries in the bunch from where
it was taken had turned yellow with age.   Further, when the analyst was asked the question of
50

when- the assailed deed was received by the Bureau of Archives, she answered that it was
forwarded to them only on 28 September 1987 by RTC Region 7, Notarial Division. 51

Clearly, the evidence adduced fully supports the position of petitioners that the assailed deed of sale
is forged and that they are the owners of the property. Having been forced to litigate in order to
protect their interest therein, the award of attorney's fees and litigation expenses to them is in order.

The actual possession of Lot No. 5053-H by petitioners has been properly ruled on by the
RTC.  Much has been made by the CA of the fact that respondents' house was standing on the
1âwphi1

property. However, petitioners have explained that the house was erected only after Cipriano
permitted it.

Dionisio was then well aware that this temporary arrangement may be terminated at any time.
Respondents cannot now refuse to vacate the property or eventually demand reimbursement of
necessary and useful expenses under Articles 448 and 546 of the New Civil Code, because the
provisions apply only to a possessor in good faith, i.e., one who builds on land with the belief that he
is the owner thereof.   Persons who occupy land by virtue of tolerance of the owners are not
52

possessors in good faith.   Thus, the directive of the RTC for respondents to demolish their
53

residential house on Lot No. 5053-H was also proper.

WHEREFORE, the Decision and Resolution of the Court of Appeals Cebu City in CA-G.R. CV No.
00099 are REVERSED and SET ASIDE. The Decision of the Regional Trial Court of Cebu City,
Branch 57, in Civil Case No. CEB-20620 is REINSTATED in all respects.

SO ORDERED.

MARIA LOURDES P. A. SERENO

 Republic of the Philippines
SUPREME COURT
Manila

THIRD DIVISION

G.R. No.180086               July 2, 2014

AFP RETIREMENT AND SEPARATION BENEFITS SYSTEM [AFP-RSBS], Petitioner,

vs.
REPUBLIC OF THE PHILIPPINES, Respondent.

DECISION

LEONEN, J.:
The period of possession prior to the declaration that land is alienable and disposable agricultural
land is included in the computation of possession for purposes of acquiring registration rights over a
property if the land has already been declared as such at the time of the application for registration.

This is a Rule 45 petition of the Court of Appeals' January 10, 2007 decision and October 5, 2007
resolution. The Court of Appeals reversed the trial court decision approving petitioner's application
for registration.

On July 10, 1997, the Armed Forcesof the Philippines Retirement and Separation Benefits System
(AFP-RSBS) filed an application for original registration of parcels of land consisting of 48,151
square meters in Silang, Cavite.  The parcels of land were designated as Lot Nos. 2969-A, 2969-B,
1

and 2969-C, and had a total area of 48,151 square meters.  These were allegedly acquired from
2

Narciso Ambrad, Alberto Tibayan, and Restituto Tibayan on March 13, 1997.  It was also alleged
3

that their predecessors-ininterest had been in possession ofthe properties since June 12, 1945. 4

In a decision dated July 28, 2001,the Municipal Circuit Trial Court approved AFP-RSBS’s application
for original registration.  The Register of Deeds was directed to cause the registration of the
5

properties in the name of AFP-RSBS. 6

The Republic of the Philippines moved for the reconsideration of the decision.  However, the motion
7

was denied in an order dated February 19, 2003. 8

On March 14, 2003, the Republic appealed the decision and order of the trial court, alleging
improper identification of the properties, noncompliance with SC Administrative Circular No. 7-96
dated July 15, 1996 requiring that copies of a list of lots applied for be furnished to the Bureau of
Lands,  non-submission of a tracing cloth plan, and lack of the Department of Environment and
9

Natural Resources certification showing that the properties were already declared alienable and
disposable at the time of possession by the predecessors-in-interest. 10

On January 10, 2007, the Court ofAppeals reversed the decision of the trial court and dismissed
AFP-RSBS’s application.  The dispositive portion of the decision reads:
11

WHEREFORE, the Decision appealed from is REVERSED and SET ASIDE and another one
entered DISMISSING the application for original registration. 12

The Court of Appeals found that the properties had no pending land application and that there were
no overlapping lots.  Hence, no person needed to be notified of the land registration
13

proceedings.  The Court of Appeals also found that AFP-RSBS complied with the requirement to
14

submit a tracing cloth plan. 15

However, according to the Court of Appeals, since Lot 2969 was declared alienable and disposable
only on March 15, 1982, the period of possession of the predecessors-in-interest before that date
should be excluded from the computation of the period of possession.  Hence, AFPRSBS’s and its
16

predecessors-in-interest’s possessions could not ripen into ownership. 17

The Court of Appeals also ruled that AFP-RSBS, as a private corporation or association, may not
own alienable lands of the public domain pursuant to Section 3, Article XII of the Constitution. 18

On February 7, 2007, AFP-RSBS filed a motion for reconsideration of the Court of Appeals’
decision.  The Court of Appeals denied this motion in a resolution promulgated on October 5, 2007.
19 20
Hence, this petition was filed.

The issue in this case is whether the period of possession before the declaration that land is
alienable and disposable agricultural land should be excluded from the computation of the period of
possession for purposes of original registration.

AFP-RSBS argued that "[w]hat is required is that the property sought to be registered has already
been declared to be alienable and disposable land of the public domain at the time [of]the
application for registration . . . before the court."  In support of this argument, AFP-RSBS cited
21

Republic v. CA and Naguit  and Republic v. Bibonia and Manahan.  Hence, AFPRSBS and its
22 23

predecessors-in-interest’s possession before June 12, 1945 should have ripened into a bonafide
claim of ownership.  AFP-RSBS also argued that the land had already been private before its
24

acquisition in 1997 by virtue of the claim of ownership ofits predecessors-in-interest before

1945.  Therefore, petitioner corporation may acquire the property.
25

In its comment, the Republic argued that the classification of land as alienable and disposable is
required before possession can ripen into ownership.  The period of possession before declaration
26

that the land is alienable and disposable cannot be included in computing the period of adverse
possession.  Hence, before March 15, 1982, there could have been no possession in the concept of
27

an owner.  The Republic also argued that there was no sufficient evidence of open, continuous,
28

exclusive, and notorious possession under a bona fide claim of ownership before June 12, 1945.

We rule for petitioner.

The requirements for the application for original registration of land based on a claim of open and
continuous possession of alienable and disposable lands of public domain are provided in Section
14(1) of Presidential Decree No. 1529 or the Property Registration Decree. It provides:

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

(1) Those who by themselves or through their predecessors-in-interest have been in open,
continuous, exclusive and notorious possession and occupationof alienable and disposable lands of
the public domainunder a bona fide claim of ownership since June 12, 1945, or earlier. (Emphasis
supplied)

A similar provision can be found in Commonwealth Act No. 141 or Public Land Act:

Sec. 48. The following-described citizens of the Philippines, occupying lands of the public domain or
claiming to own any such lands or an interest therein, but whose titles have not been perfected or
completed, may apply to the Court of First Instance of the province where the land is located for
confirmation of their claims and the issuance of a certificate of title therefor under the Land
Registration Act, to wit:

....

(b) Those who by themselves or through their predecessors-in-interest have been in open,
continuous, exclusive, and notorious possession and occupationof agricultural lands of the public
domain, under a bona fide claim of acquisition or ownership, since June 12, 1945, immediately
preceding the filing of the application for confirmation of title, except when prevented by war or force
majeure. Those shall be conclusively presumed to have performed all the conditions essential to a
government grant and shall be entitled to a certificate of title under the provisions of this chapter. (As
amended by Presidential Decree No. 1073) (Emphasis supplied)

Based on these provisions, an applicant for original registration based on a claim of exclusive and
continuouspossession or occupation must show the existence of the following:

1) Open, continuous, exclusive,and notorious possession, by themselves or through their

predecessors-in-interest, of land;

2) The land possessed or occupied musthave been declared alienable and disposable agricultural
land of public domain;

3) The possession or occupation was under a bona fide claim of ownership;

4) Possession dates back to June 12, 1945 or earlier.

On one hand, petitioner argued that its and its predecessors-ininterest’s possession before the
declaration that the property was alienable and disposable agricultural land in1982 should be
included in the computation of the period of possession for purposes of registration.  On the other
29

hand, respondent holds the position that possession before the establishment of alienability of the
land should be excluded in the computation. 30

Republic v. Naguit  involves the similar question.In that case, this court clarified that Section 14(1) of
31

the Property Registration Decree should be interpreted to includepossession before the declaration
of the land’s alienability as long as at the time of the application for registration, the land has already
been declared part of the alienable and disposable agricultural public lands. This court also
emphasized in that case the absurdity that would result in interpreting Section 14(1)as requiring that
the alienability of public land should have already been established by June 12, 1945. Thus, this
court said in Naguit:

Besides, we are mindful of the absurdity that would result if we adopt petitioner’s position. Absent a
legislative amendment, the rule would be, adopting the OSG’s view, that all lands of the public
domain which were not declared alienable or disposable before June 12, 1945 would not be
susceptible to originalregistration, no matter the length of unchallenged possession by the occupant.
Such interpretation renders paragraph (1) of Section 14 virtually inoperative and even precludes the
government from giving it effect even as it decides to reclassify public agricultural lands as alienable
and disposable. The unreasonableness of the situation would even be aggravated considering that
before June 12, 1945, the Philippines was not yet even considered an independent state.

Instead, the more reasonable interpretation of Section 14(1) is that it merely requires the property
sought tobe registered as already alienable and disposable at the time the application for registration
of title is filed. If the State, at the time the application is made, has not yet deemed it proper to
release the property for alienation ordisposition, the presumption is that the government is still
reserving the rightto utilize the property; hence, the need to preserve its ownership in the State
irrespective of the length of adverse possession even if in good faith. However, if the property has
already been classified as alienable and disposable, as it is in this case, then there is already an
intention on the part of the State to abdicate its exclusive prerogative over the property. 32
However, in the later case of Republic v. Herbieto  that was cited by respondent, this court ruled that
33

the period of possession before the declaration that land is alienable and disposable cannot be
included in the computation of the period of possession. This court said:

Section 48(b), as amended, now requires adverse possession of the land since 12 June 1945 or
earlier.In the present Petition, the Subject Lots became alienable and disposable only on 25 June
1963. Any period of possession prior tothe date when the Subject Lots were classified as alienable
and disposable is inconsequential and should be excluded from the computation of the period of
possession; such possession can never ripen into ownership and unless the land had been
classified as alienable and disposable, the rules on confirmation of imperfect title shall not apply
thereto. It is very apparent then that respondents could not have complied with the period of
possession required by Section 48(b) of the Public Land Act, as amended, to acquire imperfect or
incomplete title to the Subject Lots that may be judicially confirmed or legalized.  This court clarified
34

the role of the date, June 12, 1945, in computing the period of possession for purposes of
registration in Heirs of Mario Malabanan v. Republic of the Philippines.  In that case, this court
35

declared that Naguit and not Herbieto should be followed. Herbieto "has [no] precedental value with
respect to Section 14(1)."  This court said:
36

The Court declares that the correct interpretation of Section 14(1) is that which was adopted in
Naguit. The contrary pronouncement in Herbieto, as pointed out in Naguit, absurdly limits the
application of the provision to the point of virtual inutility since it would only cover lands actually
declared alienable and disposable prior to 12 June 1945, even if the current possessor is able to
establish open, continuous, exclusive and notorious possession under a bona fideclaim of ownership
long before that date.

Moreover, the Naguitinterpretation allows more possessors under a bona fideclaim of ownership to
avail ofjudicial confirmation of their imperfect titles than whatwould be feasible under Herbieto. This
balancing fact is significant, especially considering our forthcoming discussion on the scope and
reach ofSection 14(2) of the Property Registration Decree.

....

Thus, neither Herbietonor its principal discipular ruling Buenaventura has any precedental value with
respect to Section 14(1). On the other hand, the ratio of Naguitis embedded in Section 14(1), since it
precisely involved situation wherein the applicant had been in exclusive possession under a bona
fideclaim of ownership prior to 12 June 1945. The Court’s interpretation of Section 14(1) therein was
decisive to the resolution of the case. Any doubt as to which between Naguitor Herbieto provides the
final word of the Court on Section 14(1) isnow settled in favor of Naguit. 37

Moreover, in the resolution of the motions for reconsideration of this court’s 2009 decision in Heirs of
Malabanan,  this court explained that there was no other legislative intent thatcould be associated
38

with the date, June 12, 1945, as written in our registration laws except that it qualifies the requisite
period of possession and occupation. The law imposes no requirement that land should have been
declared alienable and disposable agricultural land as early as June 12, 1945.

Therefore, what is important in computing the period of possession is that the land has already been
declaredalienable and disposable at the time of the application for registration. Upon satisfaction of
this requirement, the computation of the period may include the period of adverse possession prior
to the declaration that land is alienable and disposable.

Persons are entitled to the registration of their titles upon satisfaction of all the requirements
enumerated under our laws. No presumption or doctrine in favor of state ownership candeprive them
of their titles once all the conditions are satisfied.  Our Constitution contains no such limit upon our
39

citizens or privilege upon the state.  Neither was this doctrine extended to our organic acts.
40 41

Respondent argued that "[s]ince the land subject of petitioner’s application for registration was
classified alienable and disposable only on March 15, 1982, it follows that petitioner could not have
possessed the same in the concept of owner, earlier than the said date." 42

Respondent is mistaken. Although adverse, open, continuous, and notorious possession in the
concept of an owner is a conclusion of law to be determined by courts, it has more to do with a
person’s belief in good faith that he or she has just title to the property that he or she is occupying. It
is unrelated to the declaration that land isalienable or disposable. A possessor or occupant of
property may, therefore,be a possessor in the concept of an owner prior to the determination that the
property is alienable and disposable agricultural land. His or her rights, however, are still to be
determined under the law.

Petitioner’s right to the original registration of titleover the property is, therefore, dependent on the
existence of: a) a declaration that the land is alienable and disposable at the time ofthe application
for registration and b) open and continuous possession in the concept of an owner through itself or
through its predecessors-in-interest since June 12, 1945 or earlier.

In this case, there is no dispute that the properties were already declared alienable and disposable
land on March 15, 1982. Hence, the property was already alienable and disposable at the time of
petitioner’s application for registration on July 10, 1997.

As to the required period of possession, petitioner was able to show that it, through itself or its
predecessors-in-interest, has been in open, continuous, exclusive, and notorious possession before
1945 through testimonies and documents.

One of petitioner’s predecessors-in-interest, Emilia Amadure, testified that as early as her birth in
1917, her family was already residing in Barangay Biluso, Silang, Cavite. Her father, Maximo
Amadure, was the properties’ previous owner. She was able to describe the lots’ metes and bounds
as well as the adjoining properties’ owners.  She also testified that "the first time she came to know
43

aboutsaid lots was at the age of reason"  at which time, she saw her father in possession of the
44

properties. By June 12, 1945, she was already 28 years old.Tax declarations between 1948 to 1998
under Maximo’s name and other previous owners’ names were also presented. 45

Maximo Amadure’s grandson, Rogelio Amadure, corroborated Emilia’s testimony. He testified

thathis grandfather owned and tilled the properties with his five children: Catalino, Dominador,
Margarita, Gregonia, and Emelia Amadure.  They cultivated banana, corn, papaya, and palay on the
46

properties.  Before the war, Rogelio’s father informed him that Maximo owned the
47

properties.  Maximo’s children took possession of the properties after Maximo’s death.
48 49

Based on the testimonies, we can already deduce that petitioner’s predecessors-in-interest had
possessed the properties in the concept of an owner even earlier than 1945.

Petitioner was, therefore, able to prove all the requisites for the grant of an original registration of title
under our registration laws.

Respondent argues that although petitioner is a government-owned and -controlled corporation, it

cannot acquire title through acquisitive prescription. This argument is unmeritorious. The type of
corporation that petitioner is has nothing to do with the grant of its application for original registration.
Petitioner also acquired title to the property under Section 14(1) of the Property Registration Decree
or Section 48(b) of the Public Land Act, and not through acquisitive prescription.

If respondent’s argument stems from the Court of Appeals’ ruling that petitioner cannot acquire title
to the property because of Section 3, Article XII of the Constitution, which prohibits private
corporations from acquiring public land, respondent is, again, mistaken. The prohibition in Section 3,
Article XII of the Constitution applies only to private corporations. Petitioner is a government
corporation organized under Presidential Decree No. 361, as amended by Presidential Decree No.
1656.

WHEREFORE, the petition is GRANTED. The Court of Appeals' decision of January 10, 2007 and
resolution of October 5, 2007 are SET ASIDE. The July 28, 2001 trial court decision is
REINSTATED.

SO ORDERED.

MARVIC MARIO VICTOR F. L