Property Cases No. 10.
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.
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.
Civil Law; Property; Condominium; Ownership; Purchaser of a
condominium unit becomes owner of the unit only upon full payment
of its purchase price.—The share of stock appurtenant to the unit
will 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 ownership 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.
Same, Same, Same, Same; Same; Ownership of a unit is a
condition to become a shareholder in the condominium corporation;
“Separate interest” in a condominium, construed.—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 shareholder 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, be also ceases
automatically to be a shareholder.
Same; Same, Same; Same; Same; Jurisdiction; Collections of
overdue accounts on assessments of a condominium within the
jurisdiction of regular courts.—Inasmuch as the private respondents
are not shareholders of the petitioner condominium corporation, the
instant cases for collection cannot be a “controversy arising out of
intra-corporation 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.
PETITION from the order of the Court of First Instance, Br. XXX,
Pasay City.
The facts are stated in the opinion of the Court.
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.
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.3 The La Perla Commercial, Incorporated

bought the ‘“Solana” unit on installment from the Tower Builders,
Inc.4 The petitioner, Sunset View 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 of the 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 Leng5 to whom was assigned on July 11, 1977 a unit called
“Alegria” of the Sunset View Condominium Project by Alfonso Uy6
who had entered into a “Contract to Buy 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 ot 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
Property Cases No. 10. 2
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 dismiss10 of the petitioner, the trial court issued an
order dated August 13, 1979 denying the motion to dismiss,11 The
private respondent’s motion for reconsideration thereof was denied
by the trial court in its Order dated September 19, 1979.
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. 7530-P. 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.14
After the parties had submitted their respective memoranda on the
matter, the respondent Judge issued an order dated December 14,
1979 in which he directed that “the appeal is hereby dismissed and
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.”15 The petitioner’s motion for
reconsideration thereof was denied in an order dated January 14,
1980.16 Hence this petition for certiorari, alleging grave abuse of
discretion on the part of the 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. 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, automatically a stockholder of the
petitioner Condominium Corporation?
2. 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 x x x.”
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 x x x an enabling or master deed which shall contain, among
others, the following:
Property Cases No. 10. 3
xxx
“(d) A statement 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 x x x.”
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 I:
“(d) Each Unit owner shall, as an essential condition to such
ownership, acquire stockholding in the Condominium Corporation
hereinbelow provided x x x.”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 x x x.”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 I, 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 x x
x.“

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 all 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 all
rights and interests in connection therewith x x x.”20
The share of stock appurtenant to the unit will 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 ownership 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. x x x 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 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
Property Cases No. 10. 4
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 cases, 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.
 Property Cases No. 10. 5

SO ORDERED. A corporation has no power to release an original subscriber from

paying for his shares without a valuable consideration for such
     Teehankee (Chairman), Makasiar, Guerrero and MelencioHerrera, release. (Philippine National Bank vs. Bitulak Sawmill Inc., 23 SCRA
JJ., concur. 1366).

Orders of respondent judge are set aside. A share of stock coming from dividends declared cannot be issued to
one who is not a stockholder of a corporation. (Nielson & Co., Inc.
Notes.—A contract to purchase is a mere preliminary agreement vs. Lepanto Consolidated Mining Co., 26 SCRA 540).
where it carries neither a specific description of the objects procured
and the price to be paid therefor. (Consolidated Mills, Inc. vs.
Reparations Commission, 76 SCRA 18)

A party suing to recover ownership of land must prove the

identity of the property. (Laluan vs. Molpaya, 65 SCRA 494)

A possessory information inscribed in the property registry

demonstrates prima facie that the possessor of the land to which it
refers is the owner thereof. (Querubin vs. Alconcel, 67 SCRA 105)

Suitors in action to quiet title need not be in possession of the

questioned property. (Tan vs. Valdejueza, 66 SCRA 105).

The order of exclusion by the probate court of property from the

inventory is an interlocutory order as the question of title of the
property cannot be determined by it. (Vda. de Rodriguez vs. Court
of Appeals, 91 SCRA 540)

The power to review decisions of the Securities and Exchange

Commission pertains not to the Court of First Instance but to the
Supreme Court exclusively, pursuant to Section 1, Rule 43, and
Section 35, Commonwealth Act No. 83 as amended by Republic Act
No. 635. (AFAG Veteran Corps., Inc. vs. Pineda, 15 SCRA 254)

While Section 1, Rule 43 of the Old Rules of Court and Section 35 of

the Securities Act speak of an aggrieved person as entitled to appeal
from an order of the Securities and Exchange Commission, Section
1, Rule 43 of the Revised Rules of Court, on the other hand, refers
to “any party” as being entitled to make such an appeal. (Palting vs.
San Jose Petroleum, Inc., 18 SCRA 924).

Shares of stock does not represent property of the corporation.

(Stockholders of F. Ganzon & Sons, Inc. vs. Register of Deeds of
Manila, 6 SCRA 373).

G.R. No. 188802. February 14, 2011.*
REVELINA LIMSON, petitioner, vs. WACK WACK
CONDOMINIUM CORPORATION, respondent.
Condominium Act (Republic Act No. 4726); Common Areas;
Statutory Construction; Verba Legis; The electrical panel’s location
inside a condominium unit notwithstanding, it is not automatically
considered as part of it—the pertinent provisions of the law (Section
6 (a) of Republic Act No. 4726) and the master deed contemplate
that “common areas,” e.g. utility installations, may be situated
within the unit; Where a statute is clear, plain and free from
ambiguity, it must be given its literal meaning and applied without
attempt to interpret.—Section 3 (e) of R.A. 4726 defines “common
areas” as “the entire project except all units separately granted or
held or reserved.” Section 6 (a) of the same law provides: a.) x x x
The following are not part of the unit: bearing walls, columns, floors,
roofs, foundations, and other common structural elements of the
buildings; lobbies, stairways, hallways and other areas of common
use, elevator equipment and shafts, central heating, central
refrigeration and central air conditioning equipment, reservoir,
tanks, pumps and other central services and facilities, pipes, ducts,
flues, chutes, conduits wires and other utility installations, wherever
located, except the outlets thereof when located within the unit.
(emphasis and underscoring supplied) The electrical panel’s location
inside the unit notwithstanding, it is not automatically considered as
part of it. The above-quoted pertinent provisions of the law and the
master deed contemplate that “common areas,” e.g. utility
installations, may be situated within the unit. Where a statute is
clear, plain and free from ambiguity, it must be given its literal
meaning and applied without attempt to interpret. Verba legis non
est recedendum, index animi sermo est. There should be no
departure from the words of the statute, for speech is the index of
intention.
Same; Same; In a multi-occupancy dwelling such as
Apartments, limitations are imposed under Republic Act No. 4726 in
accordance with the common interest and safety of the occupants
therein which at times may curtail the exercise of ownership; A
condominium corporation cannot disclaim responsibility for the
maintenance of the Apartments’ electrical supply system solely
Property Cases No. 10. 6
because a component thereof is placed inside a unit.—In a multi-
occupancy dwelling such as Apartments, limitations are imposed
under R.A. 4726 in accordance with the common interest and safety
of the occupants therein which at times may curtail the exercise of
ownership. To maintain safe, harmonious and secured living
conditions, certain stipulations are embodied in the duly registered
deed of restrictions, in this case the Master Deed, and in house rules
which the condominium corporation, like respondent, is mandated to
implement. Upon acquisition of a unit, the owner not only affixes his
conformity to the sale; he also binds himself to a contract with other
unit owners. Unquestionably, the fuse box controls the supply of
electricity into the unit. Power is sourced through jumper cables
attached to the main switch which connects the unit’s electrical line
to the Apartment’s common electrical line. It is an integral
component of a power utility installation. Respondent cannot
disclaim responsibility for the maintenance of the Apartments’
electrical supply system solely because a component thereof is
placed inside a unit.
PETITION for review on certiorari of a decision of the Court of
Appeals.
   The facts are stated in the opinion of the Court.
  Christopher Lycurgus Q. Morania for petitioner.
  Alberto B. Guevarra, Jr. for respondent.
CARPIO-MORALES, J.:
On January 22, 1996, Revelina Limson1 (Revelina) purchased
from Conchita Benitez an apartment unit (Unit 703) at Wack Wack
Apartments, Wack Wack Road, Mandaluyong City.
Upon moving in, Revelina noticed defects in the electrical main
panel located inside the unit, drawing her to report them, by letter
of February 22, 1996, to the Wack Wack Condominium Corporation
(respondent), a non-stock corporation organized for the purpose of
holding title to and managing the common areas of Wack Wack
Apartments.

Racquel Gonzalez, who sits as Member of respondent’s Board of
Directors, replied by letter of February 23, 1996 that under Section
3 of the House Rules and Regulations, it is the duty of the unit
owner to maintain the electrical and plumbing systems at his/her
expense.
By still another letter dated February 28, 1996, Revelina informed
respondent that the “switch board is such that No. 12 wire is
protected by 30 ampere fuse” and that five appliances—refrigerator,
freezer, iron, dryer and washing machine—are connected to only
one fuse.
Revelina later sought professional assistance from a private
electrical consultant, Romago, Incorporated. It was concluded that
the wirings in Unit 703 are unsafe, hazardous and did not comply
with the Philippine Electrical Code.
On Revelina’s request, the City Building Office conducted an
inspection of Unit 703 following which a Report dated January 21,
1997 was accomplished with the following findings and
recommendations:
Findings:
1. The load center consists of 100 A 2 pst main switch and fusible
cut out Blocks with 16 circuits. The fusible cut out block
enclosure is not provided with cover, exposing electrical live
part that makes it hazardous, unsafe and will be difficult to
maintain because a portion was blocked by a shelf.
2. The jumper cable from main safety switch to fusible cut-out
blocks used 2 #10 wire (Capt. 60 amp) per phase. This is
undersized and would overheat.
3. The fusible current protective devise where all 30 Amp., sp., 240
v FOR 2 #12 TW (20 AMP. Capacity wire) this does not
comply with the provision of the Philippine Electrical Code
that stipulates rating of the protective devise shall be the
same as the conductor ampacity especially on a multi outlet
circuit.
Property Cases No. 10. 7
4. Power supply for water heaters was tapped to small appliance for
convenience outlet circuit.
Recommendation:
1. Replacement of fusible load center with panel board and circuit
breaker components to correct the problem as enumerated
on items 2, 3, 4 of our findings.
2. Replace the embedded circular loom with conduit on moulding.
3. Check all grounded circuit for water heater lad.
4. Provide separate circuit for water heater lad.
5. Submit As Built Electrical Plan signed and sealed by a Professional
Electrical Engineer together with the previous approved
Electrical Plan. (emphasis and underscoring supplied)
The Report was sent by then Mayor Benjamin Abalos, Sr. to
respondent by letter dated January 31, 1997. On February
3, 1997, respondent, through Architect Eugenio Gonzalez,
wrote Revelina to demand that repairs in line with the
above-stated recommendation of the City Building Office be
undertaken within ten (10) days.
Before the deadline, respondent’s Board of Directors convened on
February 7, 1997 and resolved to impose a daily fine of
P1,000.00 on Revelina and her husband Benjamin, to
commence on February 14, 1997, should the latter fail to
comply.
Revelina and her husband refused to undertake the repairs and to
pay the fine. They claimed that the electrical main panel
forms part of the common areas, citing Section 6 of Republic
Act No. 4726,2 “AN ACT TO DEFINE CONDOMINIUM,
ESTABLISH REQUIREMENTS FOR ITS CREATION AND
GOVERNMENT OF ITS INCIDENTS,” the pertinent provision
of which reads:
“Sec. 6. Unless otherwise expressly provided in the enabling or
master deed or the declaration of restrictions, the incidents of a
condominium grant are as follows:

a.) x x x The following are not part of the unit: bearing walls,
columns, floors, roofs, foundations, and other common structural
elements of the buildings; lobbies, stairways, hallways and other
areas of common use, elevator equipment and shafts, central
heating, central refrigeration and central air conditioning equipment,
reservoir, tanks, pumps and other central services and facilities,
pipes, ducts, flues, chutes, conduits wires and other utility
installations, wherever located, except the outlets thereof when
located within the unit.” (emphasis and underscoring supplied)
They argued that an electrical main panel is in the nature of a utility
installation.
Meanwhile, Revelina and her husband purchased an oversized
whirlpool. In the process of installation, the 7th floor utility room
which is adjacent to Unit 703 was damaged.
Revelina claimed that an agreement had been reached under which
respondent would take charge of the repair of the utility room and
would bill her for the cost incurred therefor but respondent failed to
do so. Yet the Board of Directors assessed her and her husband a
fine of P1,000.00 per day until the utility room is repaired.
Respondent thereupon filed a complaint for specific performance and
damages against Revelina and Benjamin before the Securities and
Exchange Commission (SEC) upon the following causes of action:
1. To compel the defendants (Spouses Limson) to undertake the
necessary repairs of the defective and hazardous condition
of the electrical wiring of their Unit 703 in accordance with
the report and recommendation of the Office of the Building
Official of Mandaluyong City;
2. To seek payment of liquidated damages from the defendants in
accordance with the Resolution of the Board of Directors of
plaintiff (respondent herein), starting February 15, 1997
until the defendants shall have complied with the
aforestated report and recommendation of the building
officials; and
3. To seek payment of [sic] from the defendants for the damages
they have caused to the common area of Wack Wack
Property Cases No. 10. 8
Apartments due to their insistence to install in their unit an
over-sized whirlpool.3
Pursuant to A.M. No. 00-11-03,4 the complaint was transferred to
the Regional Trial Court (RTC) of Mandaluyong City for
disposition.
As of June 30, 1997, the assessments and penalties charged against
the spouses had reached P569,736.94. On July 17, 1997,
respondent filed a Notice of Assessment with the Register of
Deeds, Mandaluyong City with application for foreclosure
and public auction of Unit 703.
At the public auction held on August 28, 1997, respondent emerged
as highest bidder and thereupon purchased Unit 703 in the
amount of P569,736.94, on account of which it was issued a
Certificate of Sale on September 15, 1997.
By Decision of December 22, 2003, Branch 214 of the Mandaluyong
RTC dismissed respondent’s complaint for lack of merit in
this wise:
“Guided by the findings and recommendation of the building official
of Mandaluyong City, it would appear that the questioned electrical
installations are to be considered as part of the common area and
not of Unit 703, though the same are necessarily found inside the
said unit. As contained in Section 6, par. 1 of the Condominium Act:
“a) The boundary of the Unit granted are the interior surfaces of the
perimeter walls, floors, ceilings, windows and doors thereof. The
following are not part of the unit: bearing walls, columns, floors,
roofs, foundations, and other common structural elements of the
buildings; lobbies, stairways, hallways and other areas of common
use, elevator equipment and shafts, central heating, central
refrigeration and central air conditioning equipment, reservoir,
tanks, pumps and other central services and facilities, pipes, ducts,
flues, chutes, conduits wires and other utility installations, wherever
located, except the outlets thereof when located within the unit.”
(underscoring supplied; emphasis in the original)5
On appeal, the Court of Appeals, by Decision of December 19,
2008,6 reversed the decision of the trial court, holding in the main
that for the electrical main panel to be considered as part of the

common areas, it should have been intended for communal use and
benefit. The subject electrical main panel being located inside the
unit and its principal function being to control the flow of electricity
into the unit, the appellate court concluded that charges for its
repair cannot be for respondent’s account.
On the imposition of fine on the spouses Limson for failure to correct
the faulty electrical wiring despite notice, the appellate court upheld
respondent’s authority to enforce the same. Finding, however, that
the amount of P1,000 fine per day was excessive, it reduced the
same to P200.
Respecting respondent’s imposition of a fine of P1,000 per day on
the spouses’ alleged failure to repair the 7th floor utility room, the
appellate court disallowed the same, however, it holding that
respondent did not first seek reimbursement from them before
assessment.
Finally, the appellate court denied respondent’s prayer for actual
damages in the amount of P5,000 representing repair expenses on
the utility room, it having failed to present receipts therefor.
Her Motion for Reconsideration having been denied, Revelina filed
the present petition for review.
The Court finds for Revelina.
The pertinent provisions of the Wack Wack Apartments Master Deed
follow:
“Section 5. The Common Areas.—The common elements or areas of
the Project (herein referred to as the “Common Areas”) shall
comprise all parts of the Project other than the Units, including
without limitation the following:
xxxx
(e) All central and appurtenant equipment and installations for
common facilities and utilities such as power, light, sewerage,
drainage, garbage chute, and water connections (including all
outlets, pipes, ducts, wires, cables and conduits used in connection
therewith, whether located in Common Areas or in Units); all
elevators, elevator shafts, tanks, pumps, motors, fans,
Property Cases No. 10. 9
compressors, and control equipment; all common utility spaces and
areas;
(f) All other parts of the Project and all apparatus, equipment and
installations therein which are for common use or necessary or
convenient for the existence, maintenance of safety of the Project.
(emphasis and underscoring supplied)
Section 3. Maintenance, Repairs and Alterations.—(a) All
maintenance of and repairs of any Unit (other than the maintenance
of and repairs to any of the Common Areas contained therein not
necessitated by the act or negligence of the owner, tenant or
occupant of such Unit) shall be made [by], and at the expense of,
the owner of such unit. Each Unit owner shall be responsible for all
damages to any other Unit and to the Common Areas resulting from
his failure to effect such maintenance and repairs. Each Unit owner
shall also be responsible for promptly reporting to the Condominium
Corporation any defect or need for repairs in any of the Common
Areas in his Unit. (emphasis and underscoring supplied)
x x x x”
Section 3 (e) of R.A. 4726 defines “common areas” as “the entire
project except all units separately granted or held or reserved.”
Section 6 (a) of the same law provides:
a.) x x x The following are not part of the unit: bearing walls,
columns, floors, roofs, foundations, and other common structural
elements of the buildings; lobbies, stairways, hallways and other
areas of common use, elevator equipment and shafts, central
heating, central refrigeration and central air conditioning equipment,
reservoir, tanks, pumps and other central services and facilities,
pipes, ducts, flues, chutes, conduits wires and other utility
installations, wherever located, except the outlets thereof when
located within the unit. (emphasis and underscoring supplied)
The electrical panel’s location inside the unit notwithstanding, it is
not automatically considered as part of it. The above-quoted
pertinent provisions of the law and the master deed contemplate
that “common areas,” e.g. utility installations, may be situated
within the unit.

Where a statute is clear, plain and free from ambiguity, it must be
given its literal meaning and applied without attempt to interpret.7
Verba legis non est recedendum, index animi sermo est. There
should be no departure from the words of the statute, for speech is
the index of intention.
An explanation of the Apartment’s electrical supply system was
presented by respondent, viz.:
a) x x x [T]he electrical system of the Apartments commences with
a common main electrical line (main line) provided by the
Apartments, connected to a Meralco line outside the
building. This common main line runs to the ground floor of
the building, where the common meter station is located;
from where individual secondary lines, are tapped to the
common main line. There are as many individual secondary
lines tapped to the common main line, as there are units.
EVERY SECONDARY LINE TRAVELS VERTICALLY TO ITS
DESIGNATED FLOOR AND LEADS TO AN INDIVIDUAL UNIT.
b) The construction is such, that every secondary line is embedded
within the wall of a unit, until it surfaces from the wall,
ready to supply electricity to that unit; the UNIT, in this
case, has two (2) metal boxes, inside the UNIT; both
attached to the wall of the UNIT. The first of the two (2)
metal boxes is the main switch box. (Annex “B” and “B-1”
The main switch box has a hole, through which the
secondary line enters and is attached to the upper end of
two (2) big fuses, located in the main switch box (Annex “B-
1-a”). The upper end of the two (2) big fuses, where the
secondary line (tapped to the main line) ends are indicated
and marked as (Annex “B-1-b” and “B-1-c”)
c) At the lower end of these two (2) big fuses, there are separate
electrical wires (technically called “jumper cables”). The
jumper cables originate in the UNIT’s second metal box
which is the fusible cutout box (fuse box), and the jumper
cables are connected to the lower end of the two (2) big
fuses in the main switch box to draw electricity to feed the
fuse box. x x x”8 (capitalization and underscoring in the
original)
Property Cases No. 10. 10
In a multi-occupancy dwelling such as Apartments, limitations are
imposed under R.A. 47269 in accordance with the common
interest and safety of the occupants therein which at times
may curtail the exercise of ownership. To maintain safe,
harmonious and secured living conditions, certain
stipulations are embodied in the duly registered deed of
restrictions, in this case the Master Deed, and in house rules
which the condominium corporation, like respondent, is
mandated to implement. Upon acquisition of a unit, the
owner not only affixes his conformity to the sale; he also
binds himself to a contract with other unit owners.10
Unquestionably, the fuse box controls the supply of electricity into
the unit. Power is sourced through jumper cables attached to the
main switch which connects the unit’s electrical line to the
Apartment’s common electrical line. It is an integral component of a
power utility installation. Respondent cannot disclaim responsibility
for the maintenance of the Apartments’ electrical supply system
solely because a component thereof is placed inside a unit.
As earlier stated, both the law and the Master Deed refer to utility
installations as forming part of the common areas, which reference
is justified by practical considerations. Repairs to correct any defects
in the electrical wiring should be under the control and supervision
of respondent to ensure safety and compliance with the Philippine
Electrical Code,11 not to mention security and peace of mind of the
unit owners
 WHEREFORE, the petition is GRANTED. The Court of Appeals
Decision of December 19, 2008 is REVERSED and SET ASIDE. The
Decision of Branch 214 of the Mandaluyong Regional Trial Court
dismissing the complaint of Wack Wack Condominium Corporation
against Revelina and Benjamin Limson is, in light of the foregoing
discussions, REINSTATED.
SO ORDERED.
Brion, Peralta,** Villarama, Jr. and Mendoza,*** JJ., concur.
No. L-60219. June 29, 1984.*

BIENVENIDO AMISTOSO, petitioner, vs. SENECIO ONG,
EPIFANIA NERI & HON. PRESIDING JUDGE, ESTEBAN M.
LISING OF THE COURT OF FIRST INSTANCE OF CAMARINES
SUR, BRANCH VI, respondents.
Natural Resources; Water and Water Rights; Property; Easements;
Jurisdiction; Inasmuch as petitioner was already granted water
rights by the Secretary of Public Works before P.D. 1067 took effect,
said right can no longer be re-litigated before the National Water
Resources Council.—The grant contradicts the erroneous findings of
the respondent Judge, and incontrovertibly entitles petitioner to the
beneficial use of water from Silmod River. That right is now a vested
one and may no longer be litigated anew so as to bring petitioner’s
case within the jurisdiction of the National Water Resources Council.
To resurrect that issue—right to the use of irrigation water from
Silmod River—will be violative of the rule on res judicata which also
applies with equal vigor and effect to quasi judicial tribunal
(Brillantes vs. Castro, 99 Phils. 497, Ipekdjian Merchandising, Inc.
vs. Court of Tax Appeals, 9 SCRA 72, September 30, 1963).
Same; Same; Same; Same; Same; Respondents’ closure of the
irrigation canal thus depriving petitioner of water from the Silmod
River makes judicial intervention necessary as the issue involved is
not the right of petitioner to use water but the recognition of that
right as an easement to respondent’s land.—As correctly postulated
by the petitioner, the court a quo is not being asked to grant
petitioner the right to use but to compel private respondents to
recognize that right and have the same annotated on respondent
Neri’s Torrens Certificate of Title. Resort to judicial intervention
becomes necessary because of the closure made by the respondents
of the irrigation canal thus depriving the petitioner to continue
enjoying irrigation water coming from Silmod River through
respondents’ property. The interruption of the free flow of water
caused by the refusal to re-open the closed irrigation canal
constituted petitioner’s cause of action in the court below, which
decidedly do not fall within the domain of the authority of the
National Water Resources Council.
Same; Same; Same; Same; Same; Where issue involved is not on a
settlement of water rights dispute, but the enjoyment of a right to
water use for which a permit was already granted, the regular court
Property Cases No. 10. 11
has jurisdiction over the dispute, not the National Water Resources
Council.—The said pronouncement, however, finds no application to
the instant case for in there, both petitioners and respondent have
no established right emanating from any grant by any governmental
agency to the use, appropriation and exploitation of water. In the
case at bar, however, a grant indubitably exists in favor of the
petitioner. It is the enjoyment of the right emanating from that
grant that is in litigation. Violation of the grantee’s right, who in this
case is the petitioner, by the closure of the irrigation canal, does not
bring the case anew within the jurisdiction of the National Water
Resources Council.
ABAD SANTOS, J., separate opinion:
Property; Easements; Case should be remanded below for reception
of evidence on the issue of convenience of place of easement and
payment of indemnity.—The petitioner’s right to establish an
easement of aqueduct over the lands of the private respondents
appears to be indubitable in the light of the facts given in the main
opinion. However, before the easement of aqueduct can be formally
established certain requirements must be observed. I refer to the
provisions of Articles 642 and 643 of the Civil Code. Among other
things, the petitioner must show that the situation of the aqueduct
is the most convenient and the least onerous to third persons and
he should pay indemnity to the owners of the servient estates. The
case should be remanded to the trial court which should adjudicate
on these matters before the petitioner’s easement of aqueduct is
annotated on the certificates of title.
PETITION for certiorari to review the order of the Court of First
Instance of Camarines Sur, Br. VI. Lising, J.
The facts are stated in the opinion of the Court.
Rosales and Associates Law Office for petitioner.
     Gil P. Pacamarra for respondents.
CUEVAS, J.:

This is a Petition for Review on Certiorari of the Order of the defunct
Court of First Instance of Camarines Sur, Branch VI dated January
14, 1981, dismissing its Civil Case No. P-153, for lack of jurisdiction.
The pertinent antecedents are as follows:
On July 27, 1978, petitioner as plaintiff, filed before the then Court
of First Instance of Camarines Sur, a complaint for Recognition of
Easement with Preliminary Injunction and Damages. The complaint
which was docketed in the aforesaid Court as Civil Case No. P-153
among others alleged, that plaintiff (now petitioner) and defendant
Epifania Neri (one of the herein private respondents) are the owners
of adjoining parcels of agricultural land situated in Cauayanan,
Tinambac, Camarines Sur; that an irrigation canal traverses the land
of defendant Neri through which irrigation water from the Silmod
River passes and flows to the land of the petitioner for the latter’s
beneficial use; and that respondent Neri, owner of the land on which
said irrigation canal exists and Senecio Ong, the cultivator of the
said property, despite repeated demands refused to recognize the
rights and title of the petitioner to the beneficial use of the water
passing through the aforesaid irrigation canal and to have
petitioner’s rights and/or claims annotated on the Certificate of Title
of respondent Neri . . . Hence, the filing of the said complaint.
In their Answer, private respondents denied the existence of any
right on the part of the petitioner to the use of the canal mentioned
in the complaint nor any contract, much less any deed or
encumbrance on their property and assert that they have not
performed any act prejudicial to the petitioner that will warrant the
filing of the complaint against them. By way of affirmative and
special defenses, private respondents alleged that petitioner’s
complaint states no cause of action and that the Court has no
jurisdiction over the same.
Issues having been joined, trial was held. After petitioner has rested
his case by a formal offer of his testimonial and documentary
evidences, private respondents instead of presenting their evidence,
filed a motion to dismiss. In the said motion, respondents contend
that the instant case, involving as it does development, exploitation,
conservation and utilization of water resources falls within the
exclusive jurisdiction of the National Water Resources Council
pursuant to P.D. NO. 424, Section 2(b) and Section 88 thereof.
Property Cases No. 10. 12
Acting on private respondents’ motion, respondent Judge dismissed
petitioner’s complaint for lack of jurisdiction in an Order dated
January 14, 1981. The pertinent portion of that Order reads as
follows:
“x x x The basis of the motion to dismiss are the provisions of
Presidential Decree No. 424 and the Water Code known as
Presidential Decree No. 1067. In opposing the motion to dismiss,
plaintiff contends that the present action does not involve water
dispute and that since the present action was filed before the court
prior to the effectivity of the Presidential Decree No. 424, it is the
old law on the matter that should be applied. These contentions of
the plaintiff are without merit. The complaint belies the plaintiff’s
contention. Allegations in the complaint are explicit regarding the
claim of the right of plaintiff over the water passing through his
land. The right over irrigation water not having been shown as
established or vested or that said vested right, if any, has not been
alleged to be registered in accordance with the water code, the
provisions of Presidential Decrees 424 and 1067 shall govern. As
stated by the Supreme Court in the case of Abe-Abe vs. Manta, No.
L-4827, May 31, 1979, 90 SCRA 523, to wit:
“It is incontestable that the petitioner’s immediate recourse is to
ventilate their grievance with the National Water Resources Council
which, as already noted, is the administrative agency exclusively
vested with original jurisdiction to settle water rights disputes under
the water code under Presidential Decree No. 424.
The code assumes that it is more expeditious and pragmatic to
entrust to an administrative agency the settlement of water rights
disputes rather than require the claimants to go directly to the court
where the proceedings are subject to unavoidable delays which are
detrimental to the parties x x x
That jurisdiction of the Council under Section 2(b) of Presidential
Decree No. 424 is reaffirmed in Sec. 88 of the Water Code and in
Section 3(d) thereof which provides that ‘the utilization,
exploitation, development, conservation and protection of water
resources shall be subject to the control and regulation of the
government through Council.”

Failing to obtain a favorable reconsideration of the Order of
dismissal, petitioner now comes before Us through the instant
petition contending:
1. (1)
That the case at bar is not to settle any water dispute
between the parties but a complaint which calls purely for a
determination of the right of the plaintiff to have an
established right amounting to an easement annotated on
the certificate of title of the defendant, hence the question is
judicial which may be taken cognizance of by the respondent
court;
3. (2)
That since the case was filed on July 26, 1972, which was
before the effectivity of P.D. NO. 424, therefore, even if
defendant’s contention is correct—that the case involved
water rights dispute—the old law on water applies and not
the present water code of the Philippines of 1976; otherwise,
the Court shall lose jurisdiction by subsequent legislation
contrary to the well-settled rule that once jurisdiction is
acquired it cannot be lost;
4. (3)
That the herein defendant can no longer raise the question of
plaintiff’s right to the beneficial use of irrigation water since
the right to use had already been determined, decided and
laid to rest
5. when the Department of Public Works, Transportation and
Communications awarded petitioner Water Rights Grant after
complying with all the legal requirements such as publication,
payment of fees, survey, investigation, etc.; and
6. (4)
That the issue in the case at bar which was erroneously
overlooked by the respondent Judge does not involve a
determination of the right of the parties to the utilization,
conservation and protection of the parties’ respective water
rights, hence it does not fall within the competence nor
jurisdiction of the National Water Resources Council.
Property Cases No. 10. 13
In a Resolution promulgated on August 11, 1982, we required the
respondents to comment on the petition. Private respondents’
COMMENT was filed on March 2, 1984. Petitioner’s REPLY thereto on
the other hand was filed on May 10, 1984.
We considered the COMMENT as an Answer and gave due course to
the petition.
Private respondents contend that the assailed order of dismissal was
in order since a mere cursory reading of the complaint shows that
petitioner claims for the right to use water coming from the Silmod
River and prays that his right to the utilization thereof be respected
and not be disturbed and/or obstructed by the respondents. On its
face then, the dispute is on the use, conservation and protection of
the right to water either by the petitioner or by the private
respondents. The annotation of the alleged encumbrance on the title
of the private respondent is merely the relief prayed for on the basis
of the claim to the use and protection of water passing through the
land of the respondents. And since the controversy hinges on the
right to use and protect the water from the Silmod River that passes
on the land of the private respondents to the petitioner’s property,
the proper authority to determine such a controversy is the National
Water Resources Council which is vested with exclusive jurisdiction
over such question pursuant to P.D. NOS. 424 and 1067.
We find the petition impressed with merit.
Private respondents’ insistence that what is involved in the instant
case is the right to use, exploit and convey water is controverted by
the “STIPULATION OF FACTS” entered into between them and the
petitioner in the court below which was approved in an Order dated
February 20, 1975, the pertinent portion of which reads as follows:
1. “1.
That there exists an irrigation canal for the use of the
defendants diverting water coming from the Silmod River,
Tinambac, Camarines Sur, passing on the ricelands of the
latter to the plaintiff’s land irrigating the land of the latter,
although plaintiff claims it existed since 1952 up to the
present, but disputed by the defendants.

7. 2.
That the plaintiff has an approved water rights Grant issued
by the Department of Public Works, Transportation and
Communications, which plaintiff claims it for beneficial use to
irrigate their land from the Silmod River and defendants
dispute said claim.
8. 3.
That as of now, defendants have no approved Water Rights
Grant issued by the proper authorities for the use of the
water for irrigation purposes from the Silmod River.
However, defendants have a pending application for Water
Rights, the water of which shall pass thru a different
irrigation canal.
9. 4.
That one of the defendants’ predecessors-in-interest,
Abundio Barallas had a written contract with the plaintiff,
which defendants claim easement of aqueduct. Defendants
are questioning the legality, enforceability and validity of
such contract.
6.
That defendants refused to surrender their Transfer
Certificate of Title of her land for purposes of annotation of
the contract, allegedly an easement of aqueduct, on the
ground that she questions the validity, enforceability, legality
and therefore they are not bound by the same.”
From the foregoing stipulations, private respondents admit that
petitioner, then plaintiff, has an approved Water Rights Grant issued
by the Department of Public Works, Transportation and
Communications. Private respondents, however, contend that the
said grant does not pertain to the beneficial use of irrigation water
from Silmod River. The records, however, do not show any other
irrigation water going to petitioner’s property passing thru
respondents’ lot aside from that coming from the Silmod River.
Respondents’ controversion of petitioner’s right to irrigation water
specifically from Silmod River is undoubtedly a lame denial
Aside from this admission, the record clearly discloses an approved
Water Rights Grant in favor of petitioner. Dr. Bienvenido V.
Property Cases No. 10. 14
Amistoso, which was approved on November 13, 1973 by the Acting
Secretary of Public Works and Communications, David M. Consunji.
(Exh. I) The grant was made three (3) years before the
promulgation of P.D. 1067 on December 31, 1976, known as the
Water Code of the Philippines, which revised and consolidated the
laws governing ownership, appropriation, utilization, exploitation,
development, conservation and protection of water resources
thereby repealing among others, the provisions of the Spanish Law
of Water of August 3, 1866, the Civil Code of Spain of 1889, and the
Civil Code of the Philippines on ownership of water, easement
relating to water and of public water and acquisitive prescription on
the use of water which are inconsistent with the provisions of said
Code (Art. 10, P.D. 1067).
The water rights grant partakes the nature of a document known as
a water permit recognized under Article 13 of P.D. 1067, which
provides:
“Article 13. Except as otherwise herein provided, no person,
including government instrumentalities or government-owned or
controlled corporations, shall appropriate water without a water
right, which shall be evidenced by a document known as a water
permit.
Water right is the privilege granted by the government to
appropriate and use water.”
As to the validity of the WATER RIGHTS GRANT of Amistoso upon
the promulgation of P.D. 1067 on December 31, 1976, the
governing provision of law is found in the Transitory and Final
Provisions of P.D. 1067. It falls under “acts and contracts under the
regime of old laws”. Article 97 provides, thus:
“Article 97. Acts and contracts under the regime of old laws, if they
are valid in accordance therewith, shall be respected, subject to the
limitations established in this Code. Any modification or extension of
these acts and contracts after the promulgation of this Code, shall
be subject to the provisions hereof.”
It may be observed that the WATER RIGHTS GRANT of Amistoso
does not fall under “claims for a right to use water existing on or
before December 31, 1974” which under P.D. 1067 are required to

be registered with the National Water Resources Council within two
(2) years from promulgation of P.D. 1067, otherwise it is deemed
waived and the use thereof deemed abandoned. It is no longer a
mere “claim” inasmuch as there was already a GRANT by the
Secretary of Public Works, Transportation and Communications (the
official then authorized to issue said grant) on November 13, 1973
after complying with all the requirements then prescribed by law for
such grant.
The grant contradicts the erroneous findings of the respondent
Judge, and incontrovertibly entitles petitioner to the beneficial use of
water from Silmod River. That right is now a vested one and may no
longer be litigated anew so as to bring petitioner’s case within the
jurisdiction of the National Water Resources Council. To resurrect
that issue—right to the use of irrigation water from Silmod River—
will be violative of the rule on res judicata which also applies with
equal vigor and effect to quasi judicial tribunal (Brillantes vs. Castro,
99 Phils. 497, Ipekdjian Merchandising, Inc. vs. Court of Tax
Appeals, 9 SCRA 72, September 30, 1963).
As correctly postulated by the petitioner, the court a quo is not
being asked to grant petitioner the right to use but to compel
private respondents to recognize that right and have the same
annotated on respondent Neri’s Torrens Certificate of Title. Resort to
judicial intervention becomes necessary because of the closure
made by the respondents of the irrigation canal thus depriving the
petitioner to continue enjoying irrigation water coming from Silmod
River through respondents’ property. The interruption of the free
flow of water caused by the refusal to re-open the closed irrigation
canal constituted petitioner’s cause of action in the court below,
which decidedly do not fall within the domain of the authority of the
National Water Resources Council.
Respondents, however, rely very heavily on the dictum laid down in
the Abe-Abe vs. Manta, No. L-4827, May 31, 1979, 90 SCRA 524,
wherein it was held that—
“It is incontestable that the petitioner’s immediate recourse is to
ventilate their grievance with the National Water Resources Council
which, as already noted, is the administrative agency exclusively
vested with original jurisdiction to settle water rights disputes under
the water code and under Presidential Decree No. 424.
Property Cases No. 10. 15
The Code assumes that it is more expeditious and pragmatic to
entrust to an administrative agency the settlement of water rights
disputes rather than require the claimants to go directly to the court
where the proceedings are subject to unavoidable delays which are
detrimental to the parties x x x
That jurisdiction of the Council under Section 2(b) of Presidential
Decree No. 424 is reaffirmed in Section 88 of the Water Code and in
Section 3(d) thereof which provides that ‘the utilization,
exploitation, development, conservation and protection of water
resources shall be subject to the control and regulation of the
government through the Council.”
The said pronouncement, however, finds no application to the instant
case for in there, both petitioners and respondent have no established
right emanating from any grant by any governmental agency to the
use, appropriation and exploitation of water. In the case at bar,
however, a grant indubitably exists in favor of the petitioner. It is the
enjoyment of the right emanating from that grant that is in litigation.
Violation of the grantee’s right, who in this case is the petitioner, by the
closure of the irrigation canal, does not bring the case anew within the
jurisdiction of the National Water Resources Council.
WHEREFORE, the Order of the Honorable respondent Judge of
January 14, 1981, is hereby SET ASIDE. Private respondents are hereby
ordered to RECOGNIZE petitioner’s EASEMENT of water and to
surrender to the Register of Deeds of Camarines Sur the owner’s
duplicate Transfer Certificate of Title No. 14216 covering respondent
Epifania Neri’s property so that petitioner’s right to the beneficial use of
said irrigation canal and water passing through the same may be
annotated thereon.
[No. 13298. November 19, 1918.]

CORNELIO RAMOS, petitioner and appellant, vs. THE
DIRECTOR OF LANDS, objector and appellee.
1. 1.
PROPERTY; LAND; POSSESSION.—Actual possession of land
consists in the manifestation of acts of dominion over it of
such a nature as a party would naturally exercise over his
own property.
2. 2.
ID.; ID.; CONSTRUCTIVE POSSESSION.—The possession and
cultivation of a portion of a tract of land, under claim of
ownership of all, is a constructive possession of all, if the
remainder is not in the adverse possession of another.
3. 3.
ID. ; ID. ; ID.—One who has color of title, has acted in good
f aith, and has had open, peaceable, and notorious
possession of a portion of the property sufficient to apprise
the community and the world that the land was for his
enjoyment, Held: To be entitled to a title to the entire tract
of land for which he asks registration.
4. 4.
ID.; CLASSES.—The Philippine Bill in sections 13 to 18
recognizes three classes of land. The first is "Public Land,"
the second is "Mineral Land,'' and the third is "Timber Land."
5. 5.
ID.; "AGRICULTURAL PUBLIC LAND;" DEFINED.—The phrase
"agricultural public lands" as used in Act No. 926 means
"those public lands acquired from Spain which are not timber
or mineral lands." (Mapa vs. Insular Government [1908], 10
Phil., 175.) The idea would appear to be to determine, by
exclusion, if the land is forestal or mineral in nature, and if
not so found to consider it to be agricultural land.
6. 6.
ID.; "FOREST," DEFINED BY LEXICOGRAPHERS.—
Lexicographers define "forest" as "a large tract of land
covered with a natural growth of trees and underbrush; a
large wood."
Property Cases No. 10. 16
7. 7.
ID. ; ID. ; ID. ; BY LEGAL AUTHORITIES.—The authorities
say that the word "forest" has a significant, not an
insignificant meaning, and that it does not embrace land only
partly woodland. It is a tract of land covered with trees,
usually of considerable extent.
8. 8.
ID. ; ID. ; ID. ; BY FORESTERS.—The foresters say that no
legal definition of "forest" is practicable or useful.
9. 9.
ID.; ID.; POLICY OF BUREAU OF FORESTRY.—The policy of
the Bureau of Forestry of the Philippine Islands is set out in
the opinion.
10. 10.
ID.; CONSERVATION OF NATURAL, RESOURCES.—There
should be conservation of the natural resources of the
Philippines. The idea should be "the control of nature's
powers by man for his own good."
11. 11.
ID.; PUBLIC POLICY.—On the other hand, the presumption
should be, in lieu of contrary proof, that land is agricultural in
nature. One very apparent reason is that it is for the.good of
the Philippine Islands to have the large public domain come
under private ownership.
12. 12.
ID. ; REMEDIES OF GOVERNMENT AS AGAINST PRIVATE
CLAIMANTS.—When the claim of the citizen and the claim of
the Government as to a particular piece of property collide, if
the Government desires to demonstrate that the land is in
reality a forest, the Director of Forestry should submit to the
court convincing proof that the land is not more valuable for
agricultural than for forest purposes. Great consideration, it
may be stated, should, and undoubtedly will be, paid by the
courts to- the opinion of the technical expert who speaks
with authority on forestry matters.

APPEAL from a judgment of the Court of First Instance of Nueva
Ecija. Nepomuceno, J.
The facts are stated in the opinion of the court.
Basilio Aromin for appellant.
Solicitor-General Paredes for appellee.
MALCOLM, J..:
This is an appeal by the applicant and appellant from a judgment of
the Court of First Instance of Nueva Ecija, denying the registration
of the larger portion of parcel No. 1 (Exhibit A of the petitioner),
marked by the letters A, B, and C on the plan, Exhibit 1, of the
Government.
One Restituto Romero y Ponce apparently gained possession of a
considerable tract of land located in the munic-ipality of San Jose,
Province of Nueva Ecija, in the year 1882. He took advantage of the
Royal Decree of February 13, 1894, to obtain a possessory
information title to the land, registered as such on February 8,
1896. Parcel No. 1, included within the limits of the possessory
information title of Restituto Romero, was sold in February, 1907, to
Cornelio Ramos, the instant petitioner, and his wife Ambrosia
Salamanca.
Ramos instituted appropriate proceedings to have his title
registered. Opposition was entered by the Director of Lands on the
ground that Ramos had not acquired a good title from the Spanish
government and by the Director of Forestry on the ground that the
first parcel was forest land. The trial court agreed with the objectors
and excluded parcel No. 1 from registration. So much for the facts.
As to the law, the principal argument of the SolicitorGeneral is based
on the provisions of the Spanish Mortgage Law and of the Royal
Decree of February 13, 1894, commonly known as the Maura Law.
The Solicitor-General would emphasize that for land to come under
the protective ægis of the Maura Law, it must have been shown that
the land was cultivated for six years previously, and that it was not
land which pertained to the "zonas forestales." As proof that the
Property Cases No. 10. 17
land was, even as long ago as the years 1894 to 1896, forestal and.
not agricultural in nature is the fact that there are yet found thereon
trees from 50 to 80 years of age.
We do not stop to decide this contention, although it might be
possible, following the doctrine laid down by the United States
Supreme Court with reference to Mexican and Spanish grants within
the United States, where some recital is claimed to be false, to say
that the possessory information, apparently having taken
cognizance of the requisites for title, should not now be disturbed.
(Hancock vs. McKinney [1851], 7 Tex., 192; Hornsby and Roland vs.
United States [1869], 10 Wall., 224.) It is sufficient, as will later
appear, merely to notice that the predecessor in interest to the
petitioner at least held this tract of land under color of title.
Subsection 6 of section 54, of Act No. 926, entitled The Public Land
Law, as amended by Act No. 1908, reads as follows:
"6. All persons who by themselves or their predecessors in interest
have been in the open, continuous, exclusive, and notorious
possession and occupation of agricultural public lands, as defined by
said Act of Congress of July first, nineteen hundred and two, under a
bona fide claim of ownership except as against the Government, for
a period of ten years next preceding the twenty-sixth day of July,
nineteen hundred and four, except when prevented by war or force
majeure, shall be conclusively presumed to have performed all the
conditions essential to a government grant and to have received the
same, and shall be entitled to a certificate of title to such land under
the provisions of this chapter."
There are two parts to the above quoted subsection which must be
discussed. The first relates to the open, continous, exclusive, and
notorious possession and occupation of what, for present purposes,
can be conceded to be agricultural public land, under a bona fide
claim of ownership.
Actual possession of land consists in the manifestation of acts of
dominion over it of such a nature as a party would naturally exercise
over his own property. Relative to actuality of possession, it is
admitted that the petitioner has cultivated only about one fourth of
the entire tract. This is graphically portrayed by Exhibit 1 of the
Government, following:

The question at once arises: Is the actual occupancy of a part of the
land described in the instrument giving color of title sufficient to give
title to the entire tract of land?
The doctrine of. constructive possession indicates the answer. The
general rule is that the possession and cultivation of a portion of a
tract under claim of ownership of all is a constructive possession of
all, if the remainder is not in the adverse possession of another.
(Barr vs. Gratz's Heirs [1819], 4 Wheat., 213; Ellicott vs. Pearl
[1836], 10 Pet., 412; Smith vs. Gale [1892], 144 U. S., 509.) Of
course, there are a number of qualifications to the rule, one
particularly relating to the size of the tract in controversy with
reference to the portion actually in possession of the claimant. It is
here only necessary to apply the general rule.
The claimant has color of title; he acted in good faith; and he has
had open, peaceable, and notorious possession of a portion of the
property, sufficient to apprise the community and the world that the
land was for his enjoyment. (See arts. 446, 448, Civil Code.)
Possession in the eyes of the law does not mean that a man has to
have his feet on every square meter of ground before it can be said
that he is in possession. Ramos and his predecessor in interest
fulfilled the requirements of the law on the supposition that the
premises consisted of agricultural public land.
The second division of the law requires consideration of the term
"agricultural public land." The law affirms that the phrase is defined
by the Act of Congress of July 1st, ,1902, known as the Philippine
Bill. Turning to the Philippine Bill, we find in sections 13 to 18
thereof that three classes of land are mentioned. The first is
variously denominated "public land" or "public domain," the second
"mineral land," and the third "timber land." Section 18 of the Act of
Congress comes nearest to a precise definition, when it makes the
determination of whether the land is more valuable for agricultural
or for forest uses the test of its character. ,
Although these sections of the Philippine Bill have come before the
courts on numerous occasions, what was said in the case of Jones
vs. Insular Government ([1906], 6 Phil., 122), is still true, namely:
"The meaning of these sections is not clear and it is difficult to give
to them a construction that will be entirely free from objection." In
the case which gave most serious consideration to the subject
Property Cases No. 10. 18
(Mapa vs. Insular Government [1908], 10 Phil., 175), it was found.
that there does exist in the Act of Congress a definition of the
phrase "agricultural public lands." It was said that the phrase
"agricultural public lands" as used in Act No. 926 means "those
public lands acquired from Spain which are not timber or mineral
lands."
The idea would appear to be to determine, by exclusion, if the land
is forestal or mineral in nature and, if not so found, to consider it to
be agricultural land. Here, again, Philippine law is not very helpful.
For instance, section 1820 of the Administrative Code of 1917
provides: "For the purposes of this chapter, 'public forest' includes,
except as otherwise specially indicated, all unreserved public land,
including nipa and mangrove swamps, and all forest reserves of
whatever character." This definition of "public forest," it will be
noted, is merely "for the purposes of this chapter." A little further
on, section 1827 provides: "Lands in public forests, not including
forest reserves, upon the certification of the Director of Forestry that
said lands are better adapted and more valuable for agricultural
than for forest purposes and not required by the public interests to
be kept under forest, shall be declared by the Department Head to
be agricultural lands." With reference to the last section, there is no
certification of the Director of Forestry in the record, as to whether
this land is better adapted and more valuable for agricultural than
for forest purposes.
The lexicographers define "forest" as "a large tract of land covered
with a natural growth -of trees and underbrush; a large wood." The
authorities say that the word "forest" has a significant, not an
insignificant meaning, and that it does not embrace land only partly
woodland.
It is a tract of land covered with trees, usually of considerable
extent. (Higgins vs. Long Island R. Co. [1908], 114 N. Y. Supp.,
262; People vs. Long Island R. Co. [1908], 110 N. Y. Supp., 512.)
The foresters say that no legal definition of "forest" is practicable or
useful. B. H. Baden-Powell, in his work on Forest Law of India,
states as follows:
"Every definition of a forest that can be framed for legal purposes
will be found either to exclude some cases to which the law ought to

apply, or on the other hand, to include some with which the law
ought not to interfere. It may be necessary, for example, to take
under the law a tract of perfectly barren land which at present has
neither trees, brushwood, nor grass on it, but which in the course of
time it is hoped will be 'reboise;' but any definition wide enough to
take in all such lands, would also take in much that was not wanted.
On the other hand, the definition, if framed with reference to tree-
growth, might (and indeed would be almost sure to) include a
garden, shrubbery, orchard, or vineyard, which it was not designed
to deal with."
B. E. Fernow, in his work on the Economics of Forestry, states as f
ollows:
"A forest in the sense in which we use the term, as an economic
factor, is by no means a mere collection of trees, but an organic
whole in which all parts, although apparently heterogeneous,
jumbled together by accident as it were and apparently unrelated,
bear a close relation to each other and are as interdependent as any
other beings and conditions in nature."
The Director of Forestry of the Philippine Islands has .said:
"During the time of the passage of the Act of Congress of July 1,
1902, this question of forest and agricultural lands was beginning to
receive some attention and it is clearly shown in section 18 of the
above mentioned Act; it leaves to the Bureau of Forestry the
certification as to what lands are for agricultural or forest uses.
Although the Act states timber lands, the Bureau has in its
administration since the passage of this act construed this term to
mean forest lands in the sense of what was necessary to protect, for
the public good; waste lands without a tree have been declared
more suitable for forestry; in many instances in the past. The term
'timber'. as used in England and in the United States in the past has
been applied to wood suitable for construction purposes but with the
increase in civilization and the application of new methods every
plant producing wood has some useful purpose and the term timber
lands is generally thought of as synonymous with forest lands or
lands producing wood, or able to produce wood, if agricultural crops
on the same land will not bring the financial return that timber will
or if the same land is needed for protection purposes.
Property Cases No. 10. 19
*      *      *      *      *      *      *
"The laws in the United States recognize the necessity of technical
advice of duly appointed boards and leave it in the hands of these
boards to decide what lands are more valuable for forestry purposes
or for agricultural purposes.
"In the Philippine Islands this policy is followed to as great an extent
as allowable under the law. In many cases, in the opinion of the
Bureau of Forestry, lands without a single tree on them are
considered as true forest land. For instance, mountain sides which
are too steep for cultivation under ordinary practice and which, if
cultivated, under ordinary practice would destroy the big natural
resource of the soil, by washing, is considered by this Bureau as
forest land and in time would be reforested. Of course, examples
exist in the Mountain Province where steep hillsides have been
terraced and intensive cultivation practiced but even then the
mountain people are very careful not to destroy f orests or other
vegetative cover which they from experience have found protect
their water supply. Certain chiefs have lodged protests with the
Government against other tribes on the opposite side of the
mountain cultivated by them, in order to prevent other tribes from
cutting timber or destroy cover guarding their source of water for
irrigation.
"Dr. M. S. Shaler, formerly Dean of the Lawrence Scientific School,
remarked that if mankind could not devise and enforce ways dealing
with the earth, which will preserve this source of life 'we must look
forward to the time, remote it may be, yet equally discernible, when
our kin having wasted its great inheritance will fade from the earth
because of the ruin it has accomplished.'
"The method employed by the Bureau of Forestry in making
inspection of lands, in order to determine whether they are more
adapted for agricultural or forest purposes, by a technical and duly
trained personnel on the different phases of the conservation of
natural resources, is based upon a previously prepared set of
questions in which the different characters of the land under
inspection are discussed, namely:
"Slope of land: Level; moderate; steep; very steep.

"Exposure: North; South; East; West.
"Soil: Clay; sandy loam; sand; rocky; very rocky.
"Character of soil cover: Cultivated, grass land, brush land, brush
land and timber mixed, dense forest.
"If cultivated, state crops being grown and approximate number
of hectares under cultivation. (Indicate on sketch.)
"For growth of what agricultural products is this land suitable ?
"State what portion of the tract is wooded, name of important
timber species and estimate of stand in cubic meters per hectare,
diameter and percentage of each species.
"If the land is covered with timber, state whether there is public
land suitable for agriculture in vicinity, which is not covered with
timber. "Is this land more valuable for agricultural than for forest
purposes? (State reasons in full.)
"Is this land included or adjoining any proposed or established forest
reserve or communal forest? Description and ownership of
improvements.
"If the land is claimed under private ownership, give the name of
the claimant, his place of residence, and state briefly (if necessary
on a separate sheet) the grounds upon which he bases his claim.
"When the inspection is made on a parcel of public land which has
been applied for, the corresponding certificate is forwarded to the
Director of Lands; if it is made on a privately claimed parcel for
which the issuance of a title is requested from the Court of Land
Registration, and the inspection shows the land to be more adapted
for forest purposes, then the Director of Forestry requests the
AttorneyGeneral to file an opposition, sending him all data collected
during the inspection and offering him the forest officer as a
witness.
"It should be kept in mind that the lack of personnel of this Bureau,
the limited time intervening between the notice for the trial of an
expediente of land and the day of the trial, and the difficulties in
Property Cases No. 10. 20
communications as well as the distance of the land in question
greatly hinder the handling of this work.
"In the case of lands claimed as private property, the Director of
Forestry, by means of his delegate the examining officer, submits
before the court all evidence referring to the present forest condition
of the land, so that the court may compare them with the alleged
right by the claimant. Undoubtedly,. when the claimant presents a
title issued by the proper authority or evidence of his right to the
land showing that he complied with the requirements of the law, the
forest certificate does not affect him in the least as such' land should
not be considered as a part of the public domain; but when the
alleged right is merely that of possession,' then the public or private
character of the parcel is open to discussion and this character
should be established not simply on the alleged right of the claimant
but on the sylvical condition and soil characteristics ,of the land, and
by comparison between this area, or different previously occupied
areas, and those areas which still preserve their primitive
character."
Either way we look at this question we encounter difficulty.
Indubitably, there should be conservation of the natural resources of
the Philippines. The prodigality of the spendthrift who squanders his
substance for the pleasure of the fleeting moment must be
restrained f or the less spectacular but surer policy which protects
Nature's wealth for future generations. Such is the wise stand of our
Government as represented by the Director of Forestry who, with
the Forester f or the Government of the United States, believes in
"the control of nature's powers by man for his own good." On the
other hand, the presumption should be, in lieu of contrary proof,
that land is agricultural in nature. One very apparent reason is that
it is for the good of the Philippine Islands to have the large public
domain come under private ownership. Such is the natural attitude
of the sagacious citizen.
If in this instance, we give judicial sanction to a private claim, let it
be noted that the Government, in the long run of cases, has its
remedy. Forest reserves of public land can be established as
provided by law. When the claim of the citizen and the claim of the
Government as to a particular piece of property collide, if the
Government desires to demonstrate that the land is in reality a
 Property Cases No. 10. 21

forest, the Director of Forestry should submit to the court convincing

proof that the land is not more valuable for agricultural than for
forest purposes. Great consideration, it may be stated, should, and
undoubtedly will be, paid by the courts to the opinion of the
technical expert who speaks with authority on forestry matters. But
a mere formal opposition on the part of the Attorney-General for the
Director of Forestry, unsupported by satisfactory evidence will not
stop the courts from giving title to the claimant.

We hold that the petitioner and appellant has proved a title to the
entire tract of land for which he asked registration, under the
provisions of subsection 6, of section 54, of Act No. 926, as
amended by Act No. 1908, with reference to the Philippine Bill and
the Royal Decree of February 13, 1894, and his possessory
information.

Judgment is reversed and the lower court shall register in the

name of the applicant the entire tract in parcel No. 1, as described
in plan Exhibit A, without special finding as to costs. So ordered.

Arellano, C. J., Torres, Johnson, Street, and Fisher, JJ., concur.

Judgment reversed.

No. L-25723. June 29, 1984.*
THE DIRECTOR OF LANDS and HEIRS OF THE DECEASED
HOMESTEADERS, namely, IGNACIO BANGUG, PASCUAL
BANGUG, EUSEBIO GUMIRAN, SANTIAGO AGGABAO and
ANTONIO DERAY, petitioners-appellants, vs. COURT OF
APPEALS and HEIRS OF BRUNO CABAUATAN, respondents-
appellees.
Land Registration Act; The land applied for registration must be
identified.—As correctly contended by the Solicitor General, the land
applied for must be identified. The claim of possession or having a
composition title is inutile if the land is not identified.
Same; The rule on constructive possession does not apply where the
major portion of the 138 hectares applied for has been in the
adverse possession of homesteaders.—The trial court granted the
application for registration of the six lots with an area of 128
hectares, in addition to the oft-mentioned 25 hectares already
registered. It reasoned out that if Bruno’s heirs had possession of
the said 25 hectares, they could be deemed to have “constructive
possession” of the remaining part of the land provided that the
same is not in the adverse possession of another person (Ramos vs.
Director of Lands, 39 Phil. 175). We hold that the rule on
constructive possession does not apply to this case because the
major portion of the disputed 128 hectares has been in the adverse
possession of homesteaders and their heirs and is still part of the
public domain until the patents are issued.
Same; Application for land registration cannot be granted where
location of land applied for was not proven and claim of last
composition title not proved by secondary evidence.—The area
claimed is in excess of that mentioned in the composition title. The
alleged lost composition title cannot be given any probative value.
Its contents were not proven by secondary evidence. The precise
location of the land and the possession thereof were not proven by
the applicants. The alleged possession of Bruno’s heirs may refer to
the 25 hectares already registered in their names. Inexplicably, the
registration of the 154 hectares was made in two installments.
PETITION to review the decision of the Court of Appeals.
Property Cases No. 10. 22
The facts are stated in the opinion of the Court.
     Primitivo P. Cammayo, Mabbayad, Macutay & Cendeña, Melanio
T. Singson and Silvestre Br. Bello and Alejandro Mina for petitioners-
appellants.
     The Solicitor General and Arnulfo Tamayo for respondents-
appellees.
AQUINO, J.:
This is a land registration case involving 128 hectares of land
located in Cabagan, Isabela. On page 125 of the Gaceta de Manila
dated January 30, 1984, it was published that the land applied for
by Bruno Cabanatan (sic) “en la jurisdiccion de Cabagan de la de
Isabela de Luzon” was declared “enagenables” (Exh. P).
On page 142 of the Gaceta de Manila dated August 2, 1885, this
entry was published: “Adjudicando 6 x x x D. Bruno Cabanatan (sic)
la extension de 138 hectareas, 91 Areas y 50 centiáreas de terreno
situado en el pueblo de Cabagan, en Isabela de Luzon, en la
cantidad de pfs. 188’71 6/8” (Exh. Q. The name is “Cabauatan” in
Exh. M).
“Bruno Cabanatan” of Cabagan, Isabela appears as No. 322 in a
handwritten list of “Expedientes Remitidos á Terrenos Publicos”
(terminated cases) dated November 30, 1901 in the files of the
Division of Archives (Exh. L and O).
However, the applicants have not produced in evidence any
composition title, the basis of their application. It was allegedly
burned in the house of Pepe Buraga during the war (34 tsn June 26,
1956). So, we do not know the boundaries of the 138-hectare land
allegedly adjudicated to Bruno Cabanatan, granting that he was the
same as Bruno Cabauatan, the ancestor of the applicants; in what
barrio or sitio of Cabagan it is located; why in 1932 the 138
hectares had been increased to 154 hectares, and why in 1921 the
same land was declared for tax purposes in the name of Honofre
Cabauatan, Bruno’s nephew, and not in the names of Bruno’s heirs.
 Property Cases No. 10. 23

As correctly contended by the Solicitor General, the land applied for
must be identified. The claim of possession or having a composition
title is inutile if the land is not identified.
Bruno died during the Spanish regime. The year when he died is not
known. He is survived by seven children with the following
descendants:
third of the land. However, lawyer Binag denied that he ever made
such a proposition.
Emilio also claimed that the land of Bruno is in Sitio Malini, three
kilometers from Sitio Malasi. The trial court and Binag denied that
there was a sitio in Cabagan called Malini. It was not found in the
list of sitios in the governor’s office.

1. 1. On March 5, 1934 Judge Mariano Rosauro issued Decree No. 536561

Candida, survived by Lucio Guingab and Jose Buraga. for the registration of a parcel of land, plan Psu 95520, with an area
10. 2. of 25 hectares located at the “sitio of Malisi, Bar-rio of Aggub,”
Paulina, survived by Maria, Jose, Gregorio and Epifania, Cabagan. It was registered in the names of the following heirs of
surnamed Samus (children of the first marriage) and by Bruno as proindiviso co-owners without regard to the right of
Eugenia and Vicente Uanan, children of her second marriage. representation (Exh. J):
11. 3.
Francisco, survived by Manuel, Faustina, Juan and Remedios. 1 Candida Cabauatan 11 Remedios Cabauatan
12. 4.
2 Maria Samus 12 Purisima Cabauatan
Bruno 2nd, survived by Purisima, Francisco, Cristeta,
Benjamin and Respicio. 3 Jose Samus 13 Francisco Cabauatan
13. 5.
Salvador, survived by Paz, Lucio, Lourdes and Pilar, who is 4 Gregorio Samus 14 Cristeta Cabauatan
dead and is in turn survived by her children Celso Mesa and
5 Epifanio Samus 15 Benjamin Cabauatan
Ruben Mesa.
14. 6. 6 Eugenia Uanan 16 Rufina Cabauatan
Heculina, survived by Faustino, Maria, Alexandra, Genoveva,
Amada and Francisco, all surnamed Cauan. Genoveva Cauan 7 Vicente Uanan 17 Paz Cabauatan
is dead and is survived by her child, Josefina Balmaceda. 8
15. 7.
Manuel Cabauatan 18 Lucio Cabauatan
Guillermo, survived by his son, Pedro Cabauatan. 9 Faustino Cabauatan 19 Lourdes Cabauatan
Bruno had a brother named Leon, who had a son named Honofre
(Onofre) who, curiously enough, obtained in 1921 a tax declaration 10 Juan Cabauatan 20 Celso Mesa
for the 138 hectares assessed at P5,200. In that tax declaration, it
was stated that the land is located at Malasi, Cabagan, bounded on
the north, east and south by public land (P.D.) and on the west by a
mountain. How Onofre came to have a tax declaration for that land
has not been adequately explained. 21 Ruben Mesa 26 Amada Cauan
Emilio Cabauatan, a son of Onofre, in his opposition and testimony 22 Faustino Cauan 27 Francisco Cauan
claimed that lawyer Miguel Binag, in behalf of Bruno’s heirs, in 1937
23 Maria Cauan 28 Josefina Balmaceda
proposed to use the said declaration in the land registration
proceeding. He promised to give the heirs of Onofre Cabauatan one- 24 Alexandra Cauan and

25 Genoveva Cauan 29 Pedro Cabauatan
The 25 hectares land already registered has as boundaries parts of
the land under controversy. Thus, the decree states that the 25
hectares are bounded on the northeast and south by public lands;
on the east by property of Tomas Vinarao vs. heirs of Bruno
Cabauatan; on the west by property of Lucas Pagulayan vs. heirs of
Bruno Cabauatan and on the northwest by the Lagoon Malasi
Grande and public land.
It may be asked: why did not that 1934 registration case embrace
the whole 138 hectares allegedly covered by Bruno’s composition
title and why did Bruno’s heirs have to resort to a second or another
registration case in 1937? The applicants have not offered any
satisfactory explanation.
In 1934, the year the 25 hectares of land located at Malasi,
Cabagan, was registered in the names of Bruno’s heirs, they
produced a survey plan, Psu-95458, for his land which had an area
of 154 hectares, much larger than the 138 hectares adjudicated to
Bruno in 1885. Clearly, the area was inflated by 16 hectares. The
land consisted of seven contiguous lots located in Barrio Aggub,
Cabagan. It included the 25 hectares of plan Psu-95520 which was
already registered and which was designated as Lot No. 6.
The plan was based on a 1932 survey. The surveyor in 1934
indicated in the plan Psu-95458 the following claimants of the seven
lots (Exh. F):
Lot No. 1—Claimed by Pascual Bangug.
Lot No. 2—Claimed by Heirs of Antonio Deray.
Lot No. 3—Claimed by Heirs of Ignacio Bangug.
Lot No. 4—Claimed by Eusebio Gumiran.
Lot No. 5—Uncultivated.
Lot No. 6—Claimed by Ramon Guingab (already
registered).
Property Cases No. 10. 24
Lot No. 7—Claimed by Vicente Ramos and Casiano
Mabbayad.
The provincial fiscal, in representation of the Director of Lands,
alleged in his opposition that the land claimed by Bruno’s heirs was
covered by the approved and subsisting homestead applications of
(1) Santiago Aggabao, deceased, now heirs represented by Simplicio
Aggabao; (2) Ignacio Bangug, deceased, now his heirs represented
by Anacleto Bangug; (3) Eusebio Gumiran, deceased, now his heirs
represented by Luis Gumiran; (4) Antonio Deray, deceased, now his
heirs represented by Pablo Deray; (5) Casiano Mabbayad,
transferor, now Rodolfo Albano, transferee, and (6) Gaudencio
Flores (p. 23, RA).
As already stated, the instant second registration case was filed in
1937 based on an expanded survey. The applicants are the very
same heirs of Bruno who were the applicants in the first registration
case.
They claim the land without taking into account the rule on
representation. The record does not disclose why the case was not
finished before liberation. The trial commenced in 1956 or almost
twenty years after the application was filed. That is an unusual
feature of the case.
Evidence for the applicants, Bruno’s heirs.—From the testimonies
of Candida Cabauatan, Jose Buraga, Gabriel Zipagan and Placido
Angoluan, the trial court found that the land in question (128.8 plus
25.4 or 154 hectares) was administered by Bruno’s son, Salvador.
There were allegedly forty tenants during the Spanish regime
working in the middle portion of the land.
Some of the tenants were still on the land during the American
regime. They have been cultivating the land under the overseers,
Zipagan and Angoluan. During the Spanish regime, Bruno’s children
received 1/3 of the products, such as corn and palay, as the owner’s
share. The tenants also planted kapok, acacia trees and some
oranges.
They allegedly constructed rice paddies and built dwelling houses.
Bruno’s heirs have possessed the land openly, peacefully,

continuously and in the concept of owner since the Spanish regime
up to the present time.
In 1916, about 50 hectares of the land were under cultivation,
the greater portion of which is included in Lot No. 6, which, as
already mentioned, was registered in 1934 in the names of Bruno’s
heirs, the same applicants in this 1937 case. The land taxes were
paid since 1921 in the name of Honofre, not an heir of Bruno.
Evidence for the Director of Lands and homesteaders.—As
oppositor, the Director of Lands presented the following
documentary evidence:
1. (1)
The 1924 homestead application of Eusebio Gumiran and his
intention to make final proof dated July 22, 1930 for 24
hectares of land located at Sitio Malasi, Barrio Aggub,
Cabagan (Exh. 1-3).
16. (2)
The order dated August 28, 1931 for the issuance of a patent
to Pascual Bangug for 24 hectares covered by his 1911
application (Exh. 5 and 6-DL).
17. (3)
The approval dated November 23, 1931 of Ignacio Bangug’s
homestead application for 10 hectares (Exh. 7 and 8-DL).
18. (4)
The approval dated March 23, 1932 of Casiano Mabbayad’s
homestead application for 24 hectares (Exh. 10 and 11-DL):
19. (5)
The approval dated August 12, 1950 of Gaudencio Flores’
homestead application for 24 hectares (Exh. 12 and 13-DL).
20. (6)
The approval dated August 24, 1932 of Santiago Aggabao’s
1926 homestead application for 24 hectares (Exh. 14 and 16-
DL).
Property Cases No. 10. 25
21. (7)
The approval dated May 15, 1928 of Antonio Deray’s
homestead application for 24 hectares (Exh. 17-DL).
As noted by the Solicitor General, the Court of Appeals failed to
mention in its decision the evidence for the homesteaders. The
following is a summary of that evidence by the Solicitor General and
the trial court.
Ignacio Bangug in 1917 occupied about ten hectares of the land
in Sitio Malasi. He planted it to rice, corn, tobacco and beans. He
applied in 1926 for a homestead over that parcel of land (Exh. 11).
He paid the land taxes as early as 1922 (Exh. 1 to 10). His
application was approved in 1931. After his death in 1931, his son
Jose continued to occupy the homestead. Jose Bangug did not know
that the land was included in the survey made for Bruno’s heirs.
Pascual Bangug, who died in 1950, had cultivated a portion of the
disputed land since 1910 and in 1911 he filed his homestead
application (Exh. F). He declared it for tax purposes and paid the
land taxes since 1916 (Exh. 2 to 24). The homestead patent was
issued in 1931 (Exh. 25). He built his house on the land. His heirs
continued his possession after his death. Pascual planted the land to
rice, corn, mongo, peanuts, oranges, lemon, acacia and bamboos.
Eusebio Gumiran occupied in 1924 a portion of Lots Nos. 4 and 5
(Exh. K). He filed his homestead application in that same year. He
planted the land to rice and other staple crops. He made a final
proof in 1930. After his death in 1942, his children and widow
continued to possess the homestead.
Santiago Aggabao started occupying the land in Sitio Malasi in
1927. It has an area of 24 hectares. His homestead application was
approved in 1932 (Exh. 16). His children have possessed the
homestead after his death. They planted it to rice, corn and
vegetables.
Antonio Deray filed in 1924 his homestead application for 24
hectares in what is now Lot No. 2 of the survey plan. It was
approved in 1928 (Exh. 17 and 18-DL). His heirs have been in
possession of the homestead.
 Property Cases No. 10. 26

Gaudencio Flores and the heirs of Honofre Cabauatan also Notes.—A tax declaration secured over a parcel of land that is
presented evidence as oppositors but they did not appeal to this forested does not vest ownership to declarant. (Republic vs. Court of
Court. Appeals, 116 SCRA 505.)

Ruling.—The trial court granted the application for registration of
the six lots with an area of 128 hectares, in addition to the oft-
mentioned 25 hectares already registered. It reasoned out that if
Bruno’s heirs had possession of the said 25 hectares, they could be
deemed to have “constructive possession” of the remaining part of
the land provided that the same is not in the adverse possession of
another person (Ramos vs. Director of Lands, 39 Phil. 175).
We hold that the rule on constructive possession does not apply
to this case because the major portion of the disputed 128 hectares
has been in the adverse possession of homesteaders and their heirs
and is still part of the public domain until the patents are issued.
A petitioner for reconstitution of title is duty-bound to know the
adjacent boundary of owners with claims overlapping the property
covered by the title to be reconstituted. (Tahanan Development
Corporation vs. Court of Appeals, 118 SCRA 273.)
The main differences between the Land Registration Law and the
Public Land Law are: Under the first, there exists already a title
which is to be confirmed by the court; under the second, the
presumption always is that the land applied for pertains to the
State, and that the occupants and possessors claim an interest only
in the same virtue of their imperfect title or continuous, open, and
notorious possession. (Republic vs. Aquino, 120 SCRA 186.)

The area claimed is in excess of that mentioned in the ——o0o——

composition title. The alleged lost composition title cannot be given
any probative value. Its contents were not proven by secondary
evidence. The precise location of the land and the possession
thereof were not proven by the applicants. The alleged possession of
Bruno’s heirs may refer to the 25 hectares already registered in
their names. Inexplicably, the registration of the 154 hectares was
made in two installments.

WHEREFORE, the decisions of the Court of Appeals and the trial

court are reversed and set aside. The application for registration is
dismissed. The Director of Lands should issue to appellant heirs of
the deceased homesteaders their patents in accordance with the
Public Land Law. Costs against the applicants.

SO ORDERED.

     Makasiar (Chairman), Concepcion, Jr., Guerrero, Escolin and

Cuevas, JJ., concur.

     Abad Santos, J., no part.

Decisions reversed and set aside.


G.R. No. 57092
EDGARDO DE JESUS, REMEDIOS DE JESUS, JUANITO DE
JESUS, JULIANA DE JESUS, JOSE DE JESUS, FLOR-DELIZA DE
JESUS, REYNALDO DE JESUS, ERNESTO DE JESUS, PRISCILO
DE JESUS, CORAZON DE JESUS, petitioners, vs. COURT OF
APPEALS and PRIMITIVA FELIPE DE JESUS, respondents.
Remedial Law; Evidence; The notarization of a private document
converts it into a public one and renders it admissible in court
without further proof of its authenticity.—On the evidentiary value of
these documents, it should be recalled that the notarization of a
private document converts it into a public one and renders it
admissible in court without further proof of its authenticity (Joson
vs. Baltazar, 194 SCRA 114 [1991]). This is so because a public
document duly executed and entered in the proper registry is
presumed to be valid and genuine Guzman, 37 Phil. 652 [1918];
U.S. vs. Enriquez, 1 Phil. 241 [1902]; Favor vs. Court of Appeals,
194 SCRA 308 [1991]). As such, the party challenging the recital of
the document must prove his claim with clear and convincing
evidence.
Same; Same; There is no doubt that the pacto de retro deed of sale
has assumed the character of a public document.—There is no doubt
that the pacto de retro deed of sale has assumed the character of a
public document, having been notarized by then Justice of the Peace
Francisco Makapugay, Jr. in his capacity as Notary Public Ex-Oficio.
Hence, it is presumed valid and authentic until proven otherwise.
Civil Law; Property; Ownership; Tax receipts and declarations of
ownership for tax purposes upon which private respondent basically
anchors her claim are not incontrovertible evidence of ownership.—
More-over, the tax receipts and declarations of ownership for tax
purposes upon which private respondent basically anchors her claim,
are not incontrovertible evidence of ownership; they only become
evidence of ownership acquired by prescription when accompanied
by proof of actual possession of the property.
Same; Same; Same; Prescription; Possession to constitute the
foundation of a prescriptive right must be possession under a claim
of title or it must be adverse or in the concept of owner.—It thus
appears that Victoriano Felipe was residing in the house of Santiago
Property Cases No. 10. 27
de Jesus simply because he was married to Guillerma de la Cruz,
daughter of Maria Reyes by a first marriage, who, obviously, was
living with her mother who had taken Santiago de Jesus for her
second husband. In effect, their possession of the contested lot was
neither exclusive nor in the concept of owner. Possession, to
constitute the foundation of a prescriptive right, must be possession
under a claim of title or it must be adverse or in the concept of
owner or concepto de dueño.
Same; Same; Same; Same; While registration is not a mode of
acquiring ownership, it is evidence of such title over the particular
property.—To create a fundamental basis for her claim of ownership
by acquisitive prescription, private respondent mortgaged the
questioned property to the Rural Bank of Pulilan (Exh. “5-b”) not as
a mere possessor but as an owner thereof. She also registered both
the mortgage and the “Sinumpaang Salaysay” (tsn, December 18,
1974, p. 23). However, she never attempted to obtain a certificate
of title over the property. This omission indicates, to say the least,
that private respondent realizes her lack of any lawful claim of
ownership over the property for while registration is not a mode of
acquiring ownership, it is evidence of such title over the particular
property.
Same; Same; Same; Same; The prescriptive period required for
acquisition of immovable property is ten years if the possession is in
good faith and thirty years if in bad faith.—Under the present Civil
Code, the prescriptive period required for acquisition of immovable
property is ten years if the possession is in good faith, and thirty
years if in bad faith (South City Homes, Inc. vs. Republic, 185 SCRA
693 [1990]). Such open, continuous, exclusive and notorious
occupation of the disputed property for thirty years must be
conclusively established.
PETITION for review on certiorari of the decision of the Court of
Appeals.
The facts are stated in the opinion of the Court.
     Jose B. Soriano for petitioners.
     Jose A. Aguiling and Paquito C. Ochoa for private respondent.

MELO, J.:
This has reference to a petition for review on certiorari seeking the
reversal of the decision of the Court of Appeals in CA-G.R. No.
59613 (December 24, 1980, Sison, P.V., Cenzon, Asuncion [P], JJ)
which reversed the decision dated September 7, 1975 of the then
Court of First Instance of Bulacan. In consequence, the appellate
court dismissed herein petitioners’ complaint and declared private
respondent Primitiva Felipe de Jesus to be the absolute owner
entitled to the possession of the land in question to the exclusion of
petitioners.
The property in dispute is a parcel of residential land situated in
Dampol 2nd, Pulilan, Bulacan, bounded on the North by a Vereda;
on the South, by the Provincial Road; on the East, by Catalino Tayag
(Tayao); on the West, by Macario de Leon, containing an area of
2565 square meters (Brief for the Petitioners, p. 3), and covered by
Tax Declaration No. 2383 of the Office of the Provincial Assessor of
Bulacan, in the name of Victoriano Felipe (Exh. “5-C”).
Respondent appellate court found the above-described parcel of land
to be the same parcel of land which was—
“. . . the subject of the Kasulatang-Biling-Mabibiling-Muli (Exh. 1)
executed on November 25, 1932, by Emilia Camacho (surviving
widow of Catalino Esguerra), Jose C. Esguerra and Socorro
Esguerra, conveying or selling this land to the spouses, Victoriano
Felipe and Guillerma de la Cruz, with right to repurchase the same
within a period of five years, but that the vendors-a-retro failed to
repurchase the land. The vendors-a-retro were the heirs of the
deceased Catalino Esguerra. Since the date of the sale the spouses
Victoriano Felipe and Guillerma de la Cruz, possessed and lived on
this land. The appellant [herein private respondent] was living with
her parents on the land, and upon their deaths, she continued to
live on and possess the same.” (pp. 33-34, Rollo.)
On November 29, 1961 private respondent executed a sworn
statement declaring herself the only heir of the deceased Victo-riano
Felipe and adjudicating to herself the ownership of the land in
question (Exh. “4”).
Property Cases No. 10. 28
More than twelve years later or on April 27, 1973, petitioners herein
filed in the Court of First Instance of Bulacan, an action for recovery
of ownership and possession and quieting of title to the
abovementioned piece of land covered by Tax Declaration No. 2383,
alleging among others: “that their grandfather, San-tiago de Jesus
during his lifetime owned the residential lot; that Santiago de Jesus
died before the outbreak of World War II, leaving three (3) sons,
namely: Mariano, Exequiel, and Jose, all surnamed de Jesus; that
Mariano de Jesus died on September 3, 1956 leaving eight (8)
surviving children, namely: Edgardo, Remedios, Juanita, Juliano,
Jose, Flordeliza, Reynaldo, and Ernesto, all surnamed de Jesus and
all of them plaintiffs; that Exequiel de Jesus died on April 3, 1948,
survived by two (2) children—Priscilo and Corazon, both surnamed
de Jesus, also plaintiffs in this case; while Jose de Jesus died before
the outbreak of World War II without any issue . . .” (p. 35, Record
on Appeal).
The trial court found for the plaintiffs, petitioners herein.
The dispositive portion of the decision dated September 7, 1975
reads:
“FOR ALL OF THE FOREGOING, judgment is hereby rendered:
1. (1)
Declaring the plaintiffs as having the better right to
ownership and possession of the residential lot in question by
virtue of hereditary succession;
13. (2)
Ordering the defendant to surrender the ownership and
possession of the said property to the herein plaintiffs;
14. (3)
Ordering the defendant to pay to the plaintiffs the sum of
P500.00 for and as attorney’s fees, and the costs of suit.
SO ORDERED.” (pp. 56-57, Record, on Appeal.)
As earlier intimated, on appeal, the Court of Appeals set aside the
judgment of the trial court in a decision promulgated on December
24, 1980 (pp. 32-38, Rollo), the dispositive portion of which reads:

“IN VIEW OF THE FOREGOING CONSIDERATION, finding serious
errors to have been committed by the trial court in its judgment, the
same is hereby set aside and another one entered, dismissing the
complaint, and declaring the appellant to be the absolute owner,
and entitled to the possession of this land in question, to the
exclusion of plaintiffs-appellees.” (p. 38, Rollo.)
Thus, the instant petition for review on certiorari which was filed
with this Court on August 13, 1981 (p. 9, Rollo) with the following
assigned errors:
“I
THE COURT OF APPEALS ERRED IN SETTING ASIDE THE JUDGMENT
OF THE TRIAL COURT WHICH AWARDED THE RESIDENTIAL LOT IN
QUESTION TO THE PETITIONERS BY VIRTUE OF HEREDITARY
SUCCESSION AND ORDERED THE PRIVATE RESPONDENT TO
SURRENDER THE OWNERSHIP AND POSSESSION OF THE SAME TO
THEM.
II
THE COURT OF APPEALS ERRED IN RULING THAT THE LAND
DESCRIBED IN THE PETITIONERS’ COMPLAINT IS THE SAME LAND
WHICH IS THE SUBJECT OF THE SALE WITH RIGHT TO
REPURCHASE (Exh. 1) EXECUTED ON NOVEMBER 5, 1932 BY THE
ESGUERRAS IN FAVOR OF THE PARENTS OF THE PRIVATE
RESPONDENT.
III
THE COURT OF APPEALS ERRED IN DECLARING THE PRIVATE
RESPONDENT TO BE THE ABSOLUTE OWNER AND ENTITLED TO THE
POSSESSION OF THE LAND IN QUESTION TO THE EXCLUSION OF
THE PETITIONERS.
IV
THE COURT OF APPEALS ERRED IN HOLDING THAT THIS LAND WAS
PURCHASED BY THE PARENTS OF THE PRIVATE RESPONDENT FROM
THE HEIRS OF THE LATE CATALINO ESGUERRA ON NOVEMBER 5,
1932 AND THE PRIVATE RESPONDENT AND HER PARENTS HAD
BEEN IN OPEN, CONTINUOUS, ADVERSE, PUBLIC AND NOTORIOUS
Property Cases No. 10. 29
POSSESSION OF THE SAME SINCE 1932 UP TO THE PRESENT, IN
THE CONCEPT OF OWNER.”
In effect, the sole issue in this petition boils down to this question:
Who has the right to the ownership and possession of the residential
lot subject matter of the case, petitioners by virtue of hereditary
succession, or private respondent who claims ownership through
purchase of the property by her parents?
According to the trial court, petitioners have the better right but
according to the appellate court, the property rightly belongs to
private respondent. In view of the fact that the findings of the trial
court and the appellate court are contrary to each other, this Court
shall exercise its authority of reviewing the evidence in order to
arrive at the correct facts based on the record (Director of Lands vs.
Court of Appeals, 117 SCRA 346 [1982]; Quality Tobacco
Corporation vs. Intermediate Appellate Court, 187 SCRA 210
[1990]; Valenzuela vs. Court of Appeals, 191 SCRA 1 [1990]; Shauf
vs. Court of Appeals, 191 SCRA 713 [1990]; Bustamante vs. Court
of Appeals, 194 SCRA 645 [1991]).
It is not disputed that petitioners are the heirs of their late
grandfather, Santiago de Jesus; what is in dispute is their claim that
the residential lot in question belonged to their grandfather and
therefore theirs by hereditary succession (Brief for the Respondent,
pp. 8-9). Neither is it contradicted that Santiago de Jesus was
married to Maria Reyes, a widow with three children by a prior
marriage, namely: Basilio, Violeta, and Guillerma, the last having
been the mother of herein private respondent (tsn, August 15,
1974, pp. 14-15; September 16, 1974, pp. 14-15, 39-41).
The only documentary evidence of Santiago de Jesus’ alleged
ownership of the residential lot in question is Tax Declaration No.
2384 (Exh. “A”) in the name of Victoriano Felipe. Therein, Felipe
claimed ownership for tax purposes of a house of mixed materials
and a nipa roof, valued at P190.00 and constructed on the lot or
“solar” belonging to Santiago de Jesus. The statement therein
regarding Santiago de Jesus’ ownership of the lot is supported by
the testimony of petitioners Edgardo de Jesus and Corazon de
Jesus-Masiglat, and three other witnesses. They asserted personal
knowledge of said fact which, they swore, was also common
knowledge in Dampol 2nd, Pulilan, Bulacan (tsn, August 15, 1974,

p. 16; September 16, 1974, pp. 18, 39). As a child, for instance,
witness Antonio Roxas was frequently in the house of his aunt, Maria
Reyes, a sister of his mother. When his aunt was still alive, she told
him and his mother, in the presence of Victoriano Felipe, that she
had no right at all over the property, including the old house, as it
really belonged to Santiago de Jesus (tsn, September 16, 1974, pp.
39, 46-49).
On the other hand, private respondent presented a contract of sale
with right of repurchase, “Kasulatang-Biling-Mabibi-ling-Muli” (Exh.
“1”), entered into in 1932 between her parents, Victoriano Felipe
and Guillerma de la Cruz, and the vendors-a-retro Emilia Camacho,
Socorro Esguerra, and Jose Esguerra; a “Sinumpaang Salaysay”; or
an affidavit of adjudication which private respondent executed in
1961 (Exh. “4”); and tax declarations and official receipts.
On the evidentiary value of these documents, it should be recalled
that the notarization of a private document converts it into a public
one and renders it admissible in court without further proof of its
authenticity (Joson vs. Baltazar, 194 SCRA 114 [1991]). This is so
because a public document duly executed and entered in the proper
registry is presumed to be valid and genuine until the contrary is
shown by clear and convincing proof (Asido vs. Guzman, 37 Phil.
652 [1918]; U.S. vs. Enriquez, 1 Phil. 241 [1902]; Favor vs. Court
of Appeals, 194 SCRA 308 [1991]). As such, the party challenging
the recital of the document must prove his claim with clear and
convincing evidence (Diaz vs. Court of Appeals, 145 SCRA 346
[1986]).
There is no doubt that the pacto de retro deed of sale has assumed
the character of a public document, having been nota-rized by then
Justice of the Peace Francisco Makapugay, Jr. in his capacity as
Notary Public Ex-Oficio. Hence, it is presumed valid and authentic
until proven otherwise. Petitioners, however, challenge this
presumption of validity and authenticity. They contend that private
respondent’s non-production of Tax Declaration No. 5096,
specifically mentioned in Exh. “1” as containing the description of
the piece of land subject of the “Kasulatang-Biling-Mabibiling-Muli”
shattered such presumption and rendered suspect the latter
document (Brief for the Petitioners, pp. 9, 19-22).
Property Cases No. 10. 30
While both Socorro Olarte, a signatory to the “Kasulatang-Biling-
Mabibiling-Muli” as one of the vendors-a-retro, and private
respondent testified that the land subject of the sale was covered by
Tax Declaration No. 5096 in the name of the original owner Catalino
Esguerra (tsn, October 21, 1974, p. 6 and December 18, 1974, pp.
3-5), they could not produce a copy of said tax declaration.
Capitalizing on said omission, petitioners presented a certified true
copy of said Tax Declaration No. 5096 (Exh. “G”) covering the year
1948 and which, however, concerns a piece of lot owned by a
certain Teodoro Sinson. Further, petitioners also produced certified
true copies of Tax Declarations Nos. 2214 (Exh. “H”), 2215 (Exh.
“I”) and 2216 (Exh. “J”), all in the name of Catalino Esguerra as
owner, and all for the year 1967.
Pablo H. Domingo, Senior Deputy Assessor, who was subpoe-naed
to present in court Tax Declaration No. 5096 in the name of Catalino
Esguerra identified the above-mentioned certified true copies of tax
declarations as having been issued by the Office of the Provincial
Assessor of Bulacan (tsn, March 12, 1975, pp. 13-14). However, he
said he could not bring with him a copy of Tax Declaration No. 5096
in the name of Catalino Esguerra as the records of the Office of the
Provincial Assessor only started with the year 1948 because the old
Assessor’s Office was burned down during the early part of the
liberation (Transcript, March 12, 1975, pp. 5-6, 12).
It is significant to note that the land covered by Tax Declaration No.
5096 (Exh. “G”) described therein as bamboo land, was previously
covered by Tax Declaration No. 233 for the same owner, while Tax
Declaration No. 2383 (Exh. “5-C”) beginning with the year 1948 and
covering the residential lot in question declared in the name of
Victoriano Felipe, cancelled Tax Declaration No. 5326 (Exh. “5-C-
1”). An uncertified copy of said Tax Declaration No. 5326 for
Victoriano Felipe purporting to commence with the year 1939
allegedly superseded Tax Declaration No. 252 in the name of
Catalino Esguerra (Exh. “3”).
In other words, the piece of residential lot covered by Tax
Declaration No. 2383 (Exh. “5”), or by Tax Declaration No. 252
(Exh. “3”) at around the time of the alleged sale, until superseded
by Tax Declaration No. 5326 (Exh. “5-C-1”) beginning with the year
1939, is not the piece of land covered by Tax Declaration No. 5096

specifically referred to in Exh. “1” as the subject of the “Kasulatang-
Biling-Mabibiling-Muli”. Thus, the fact that Guillerma de la Cruz,
mother of private respondent, made real property tax payments
purportedly on Tax Declaration No. 5096 for the years 1935 (Exh.
“2-d” and “2-e”) and 1936 (Exh. “2-b”) and probably for the years
1933, 1934, 1937 and 1938, in the name of Catalino Esguerra
neither alters the fact that the piece of land covered by Tax
Declaration No. 2383 (Exh. “5”) is not the subject of the
“Kasulatang-Biling-Mabibi-ling-Muli” (Exh. “1”) nor demonstrates
that the payments were made for the residential lot under litigation.
It is, therefore, evident that Tax Declaration No. 5096 was
inexistent at the time of the alleged sale. By a simply analysis of the
different tax declarations presented as evidence in this case, it is
likewise clear that when by virtue of the alleged sale, a new tax
declaration numbered 5326, was made in 1938 in the name of
Victoriano Felipe (Exh. “5-C-1”), what was cancelled was Tax
Declaration No. 252 (Exh. “3”), not Tax Declaration No. 5096 which
supposedly covered the property subject of the “Kasulatang-Biling-
Mabibiling-Muli”. It should be noted that the property under Tax
Declaration No. 5326 bears an identical description to the property
under litigation. Thus, the inevitable conclusion is that, without any
legal basis, Victoriano Felipe had declared himself the owner of the
disputed property for tax purposes. Tax Declaration No. 5326
thereafter became it was cancelled and new tax declarations were
made in the name of private respondent, viz., Tax Declaration No.
9453 in 1962 (Exh. “5-b”), then Tax Declaration No. 2657 in 1967
(Exh. “5”) and finally Tax Declaration No. 2962 in 1974 (Exh. “5-
A”).
As earlier stated, Guillerma de la Cruz had also been paying real
property tax on the house described as located in Dampol 2nd in the
name of Victoriano Felipe under Tax Declaration No. 14984 since
1933 (Exh. “2-C”), and then under Tax Declaration No. 3975 since
1941 (Exh. “2-4”) until 1947, and under Tax Declaration No. 2384 in
1948. By a twist of fate, however, Tax Declaration No. 2384
describes the house, among others, as located in the residential lot
belonging to Santiago de Jesus or “solar de Santiago de Jesus” (Exh.
“A-1”). While real property tax continued to be paid under the latter
declaration until 1958 (Exh. “2-y”), by stating in said tax declaration
that his house was located in the land of Santiago de Jesus.
Property Cases No. 10. 31
Victoriano Felipe recognized and admitted the ownership of Santiago
de Jesus over the residential lot involved herein. Such admission
puts to naught the claim of private respondent for when one derives
title to property from another, the act, declaration or omission of the
latter in relation to the property is evidence against the former
(Rolleza vs. Court of Appeals, 174 SCRA 354 [1989]).
The authenticity of the signature of Victoriano Felipe in the deed of
sale with right to repurchase is also in question. Both Moises de
Jesus and Antonio Roxas testified that Victoriano Felipe could not
even vote as he did not know how to read and write (tsn,
September 16, 1974, pp. 30, 42). Although Soccorro Esguerra
Olarte identified the signature of Victoriano Felipe on the
“Kasulatang-Biling-Mabibiling-Muli” as his (tsn, October 21, 1974, p.
13), she also testified that Victoriano Felipe has a brother who
looked exactly like Victoriano (tsn, October 21, 1974, p. 36) On the
issue, all that private respondent could say was that her father
studied the cartilla (tsn, January 24, 1975, p. 8).
Under the circumstances, there is strong, convincing, and conclusive
proof of the nullity and falsity of Exhibit “1”. Its evidentiary nature
cannot, therefore, be sustained (Legaspi vs. Court of Appeals, 142
SCRA 82 [1986]). Even if the document were to be considered
simply as a private document, it would it is already more than 30
years old as it cannot be considered unblemished by any
circumstance of suspicion (Heirs of Demet-ria Lacsa vs. Court of
Appeals, 197 SCRA 234 [1991]).
Consequently, the affidavit of adjudication executed by private
respondent on May 21, 1961 (Exh. “4”), has no evidentiary value as
it has become baseless. Furthermore, private respondent falsely
stated therein that she is the only heir of Victoriano Felipe for, at the
time of its execution, her mother, Guillerma de la Cruz, was still
living. Guillerma de la Cruz died on April 23, 1964 (Exh. “B”), three
years after the “Sinumpaang Salaysay” (Exh. “4”) was executed.
Moreover, the tax receipts and declarations of ownership for tax
purposes upon which private respondent basically anchors her claim,
are not incontrovertible evidence of ownership; they only become
evidence of ownership acquired by prescription when accompanied
by proof of actual possession of the property (Tabuena vs. Court of

Appeals, 196 SCRA 650 [1991]; Rojas vs. Court of Appeals, 192
SCRA 709 [1992]).
On the issue of ownership by acquisitive prescription, private
respondent contends: “Granting that it was formerly owned by their
late grandfather, they (petitioners) have lost whatever right they
may have over the land by extinctive prescription” for the reason
that she, private respondent has acquired the same by acquisitive
prescription (Brief for the Respondents, p. 9), citing Section 41 of
the old Code of Civil Procedure which states:
“SEC. 41. Title to Land by Prescription.—Ten years of actual adverse
possession by any person claiming to be the owner for that time of
any land or interest in land, uninterruptedly, continuously for ten
years by occupancy, descent, grants, or otherwise, in whatever way
such occupancy may have commenced or continued, shall vest in
every actual possessor of such land, a full and complete title . . . .”
Corazon de Jesus Masiglat testified that from 1930 to 1952, the
period of time she was living in the house her grandfather erected
on the contested property, her grandmother, Victoriano Felipe,
Guillerma de la Cruz, and private respondent also lived there (tsn,
July 16, 1974, p. 23). She was corroborated by to the time of his
death in 1948, Exequiel de Jesus was taking charge of the property
and that while the parents of private respondent were the ones
paying the real property taxes the money therefor came from
Exequiel (tsn, July 16, 1974, pp. 11-14). Witness Salvador Esguerra
testified that Victoriano Felipe began to reside in the house when he
married Guillerma de la Cruz and that Corazon and her father,
Exequiel, also resided there after the death of Santiago de Jesus
(tsn, August 15, 1974, pp. 14, 21, 22). Moises de Jesus, for his
part, testified that while Victoriano Felipe started staying in the
property only when the children of Santiago de Jesus had died,
Corazon de Jesus continued to reside there (tsn, September 16,
1974, p. 27).
In her own defense private respondent first testified that Corazon de
Jesus never lived with them and that Exequiel de Jesus never went
to their place (tsn., October 11, 1974, pp. 35-36). She did not
contradict, however, the testimony of Edgardo de Jesus on rebuttal
that he himself at the age of 12 used to stay in the house and was
witness to the occasion when Corazon fell in a ditch going towards
Property Cases No. 10. 32
their place, that as a result of such accident, Corazon sustained a
permanent deformity on one hand; and that Corazon left the place
only in 1952 when she got married (tsn, April 23, 1975, pp. 23-24).
Neither did private respondent or her witnesses traverse the
testimony of Corazon de Jesus-Masiglat, also on rebuttal, that since
childhood she had been residing in the house owned by her
grandfather Santiago de Jesus, together with private respondent
and the latter’s parents, and actually left the place only in 1952;
that her parents as well as her child died in that house, and that
private respondent was, in fact, the one who caused the registration
of her child’s death (tsn, April 23, 1975, p. 25). Even Socorro
Esguerra Olarte, witness for private respondent, testified that she
remembers Exequiel de Jesus as he was always around whenever
she visited the place and he was the one who got santol fruits for
her sometimes (tsn, September 23, 1974, p. 17).
It thus appears that Victoriano Felipe was residing in the house of
Santiago de Jesus simply because he was married to Guillerma de la
Cruz, daughter of Maria Reyes by a first marriage, who, obviously,
was living with her mother who had possession of the contested lot
was neither exclusive nor in the concept of owner. Possession, to
constitute the foundation of a prescriptive right, must be possession
under a claim of title or it must be adverse or in the concept of
owner or concepto de dueño (Ordoñez vs. Court of Appeals, 188
SCRA 109 [1990]; Coronado vs. Court of Appeals, 191 SCRA 814
[1990]; Manila Electric Company vs. Intermediate Appellate Court,
174 SCRA 313 [1989]).
In this case, Victoriano Felipe and his family were residing in the
land by mere tolerance. There is no way of knowing how the house
on the lot was described in Tax Declaration Nos. 14984 and 3975,
but, to repeat, in Tax Declaration No. 2384 which commenced with
the year 1948 (Exh. “A”), the house was described as constructed
on the lot or solar of Santiago de Jesus up to the year 1961 when
private respondent was still paying property tax (Exh. “2-x”).
Significantly, the “Kasulatang-Biling-Mabibiling-Muli” was not even
given to private respondent by her parents; she admitted having
found it in the house although they mentioned its existence to her
when they were still alive (tsn, December 18, 1974, pp. 18-19).

Under the circumstances, the prescriptive period cannot be
considered to have accrued during the lifetime of Victoriano Felipe.
It is interesting to note that when private respondent executed her
“Sinumpaang Salaysay” (Exh. “4”) adjudicating the disputed lot to
herself on the basis of the contract of sale as no repurchase had
been made by the vendors of retro, Exequiel de Jesus was already
dead and Corazon de Jesus-Masiglat was no longer residing in the
property in question. As she was in possession of the property,
private respondent then had it declared in her name for real
property tax purposes under Tax Declaration No. 9453 (Exh. “5-b”)
thereby cancelling Tax Declaration No. 2383 (Exh. “5-b-1”) which
was in the name of Victo-riano Felipe.
As to Tax Declaration No. 2384, the last vestige of Santiago de
Jesus’ ownership of the property in question, there is no evidence on
record as to whether private respondent had it cancelled, had a new
declaration made on the property in her name, or whether she
continued paying tax after her payment VOL. 217, JANUARY 21,
1993 testimony of Salvador Esguerra, that the old house was
demolished and a new bungalow was constructed on the lot (tsn,
August 15, 1974, pp. 23-24).
To create a fundamental basis for her claim of ownership by
acquisitive prescription, private respondent mortgaged the
questioned property to the Rural Bank of Pulilan (Exh. “5-b”) not as
a mere possessor but as an owner thereof. She also registered both
the mortgage and the “Sinumpaang Salaysay” (tsn, De-cember 18,
1974, p. 23). However, she never attempted to obtain a certificate
of title over the property. This omission indicates, to say the least,
that private respondent realizes her lack of any lawful claim of
ownership over the property for while registration is not a mode of
acquiring ownership, it is evidence of such title over the particular
property. (Avila v. Tapucar, 201 SCRA 148 [1991]).
Private respondent’s pretensions to acquisitive prescription may not
succeed even under Act No. 190, the Code of Civil Procedure. Under
Section 41 thereof, good faith and just title are not required for
purposes of acquisitive prescription; adverse possession in either
character ripens into ownership after the lapse of ten years (Cruz
vs. Court of Appeals, 93 SCRA 619 [1979]; Quilisado vs. Court of
Appeals, 182 SCRA 401 [1990]; Ongsiaco vs. Dallo, 27 SCRA 161
Property Cases No. 10. 33
[1969]); Miraflor vs. Court of Appeals, 142 SCRA 18 [1986]). The
just title required for acquisitive prescription to set in is not “titulo
verdadero y valido”—such title which by itself is sufficient to transfer
ownership without necessity of letting the prescriptive period elapse,
but only “titulo colorado”—or such title where, although there was a
mode of transferring ownership, still something is wrong because
the grantor is not the owner (Doliendo vs. Biannesa, 7 Phil. 232
[1906] cited in Solis vs. Court of Appeals, 176 SCRA 678 [1989]),
and incidentally, it may perhaps be mentioned that prescription
running even after the effectivity of the New Civil Code on August
30, 1950, continued to be governed by Section 41 of the Old Civil
Code (Solis vs. Court of Appeals, supra).
Under the present Civil Code, the prescriptive period required for
acquisition of immovable property is ten years if the possession is in
good faith, and thirty years if in bad faith (South City Homes, Inc.
vs. Republic, 185 SCRA 693 [1990]). the disputed property for thirty
years must be conclusively established (San Miguel Corporation vs.
Court of Appeals, 185 SCRA 722 [1990]).
Reckoned from the time she executed the affidavit of adjudication in
1961, eleven years after the New Civil Code had taken effect,
private respondent’s possession of the contested lot is far too short
of the prescriptive period of thirty years considering that her
possession is in bad faith. The filing of the petition for recovery of
ownership and possession and quieting of title by petitioners on April
27, 1973 was well below the acquisitive prescriptive period for
private respondent, which is thirty years under Article 1141 of the
present Civil Code. In this case, the statutory period of prescription
is deemed to have commenced when petitioners were made aware
of a claim adverse to them (Coronel vs. Intermediate Appellate
Court, 155 SCRA 270 [1987]), that is, when the affidavit of
adjudication was duly registered with the Registry of Deeds which,
at the earliest may be considered to be in 1974, when private
respondent was able to secure a tax declaration in her name.
WHEREFORE, the decision of the Court of Appeals under review is
hereby SET ASIDE and the decision of the trial court, dated
September 7, 1975, REINSTATED.
SO ORDERED.

     Gutierrez, Jr. (Chairman), Bidin, Davide, Jr. and Romero, JJ.,
concur.
G.R. No. 79688. February 1, 1996.*
PLEASANTVILLE DEVELOPMENT CORPORATION, petitioner,
vs. COURT OF APPEALS, WILSON KEE, C.T. TORRES
ENTERPRISES, INC. and ELDRED JARDINICO, respondents.
Civil Law; Property; Builder in Good Faith; Court agrees with the
findings and conclusions of the Court of Appeals that Kee was a
builder in good faith.—Petitioner fails to persuade this Court to
abandon the findings and conclusions of the Court of Appeals that
Kee was a builder in good faith.
Same; Same; Same; Good faith consists in the belief of the builder
that the land he is building on is his and his ignorance of any defect
or flaw in his title.—Good faith consists in the belief of the builder
that the land he is building on is his and his ignorance of any defect
or flaw in his title. And as good faith is presumed, petitioner has the
burden of proving bad faith on the part of Kee. At the time he built
improvements on Lot 8, Kee believed that said lot was what he
bought from petitioner. He was not aware that the lot delivered to
him was not Lot 8. Thus, Kee’s good faith. Petitioner failed to prove
otherwise.
Same; Same; Same; Violation of the Contract of Sale on Installment
may not be the basis to negate the presumption that Kee was a
builder in good faith.—Such violations have no bearing whatsoever
on whether Kee was a builder in good faith, that is, on his state of
mind at the time he built the improvements on Lot 9. These alleged
violations may give rise to petitioner’s cause of action against Kee
under the said contract (contractual breach), but may not be bases
to negate the presumption that Kee was a builder in good faith.
Same; Same; Waiver; Rights may be waived unless the waiver is
contrary to law, public order, public policy, morals or good customs
or prejudicial to a third person with a right recognized by law.—We
do not agree with the interpretation of petitioner that Kee
contracted away his right to recover damages resulting from
petitioner’s negligence. Such waiver would be contrary to public
policy and cannot be allowed. “Rights may be waived, unless the
Property Cases No. 10. 34
waiver is contrary to law, public order, public policy, morals, or good
customs, or prejudicial to a third person with a right recognized by
law.”
Same; Agency; Damages; Rule is that the principal is responsible
for the acts of the agent, done within the scope of his authority and
should bear the damage caused to third persons.—The rule is that
the principal is responsible for the acts of the agent, done within the
scope of his authority, and should bear the damage caused to third
persons. On the other hand, the agent who exceeds his authority is
personally liable for the damage.
PETITION for review on certiorari of a decision of the Court of
Appeals.
The facts are stated in the opinion of the Court.
     Mirano, Mirano & Associates Law Offices for petitioner.
     Federico T. Tabino, Jr. for C.T. Torres Enterprises, Inc.
     Abraham D. Caña for Wilson Kee.
PANGANIBAN, J.:
Is a lot buyer who constructs improvements on the wrong property
erroneously delivered by the owner’s agent, a builder in good faith?
This is the main issue resolved in this petition for review on
certiorari to reverse the Decision1 of the Court of Appeals2 in CA-
G.R. SP No. 11040, promulgated on August 20, 1987.
By resolution dated November 13, 1995, the First Division of this
Court resolved to transfer this case (along with several others) to
the Third Division. After due deliberation and consultation, the Court
assigned the writing of this Decision to the undersigned ponente.
The Facts
The facts, as found by respondent Court, are as follows:
Edith Robillo purchased from petitioner a parcel of land designated
as Lot 9, Phase II and located at Taculing Road, Pleasantville
Subdivision, Bacolod City. In 1975, respondent Eldred Jardinico

bought the rights to the lot from Robillo. At that time, Lot 9 was
vacant.
Upon completing all payments, Jardinico secured from the Register
of Deeds of Bacolod City on December 19, 1978 Transfer Certificate
of Title No. 106367 in his name. It was then that he discovered that
improvements had been introduced on Lot 9 by respondent Wilson
Kee, who had taken possession thereof.
It appears that on March 26, 1974, Kee bought on installment Lot 8
of the same subdivision from C.T. Torres Enterprises, Inc. (CTTEI),
the exclusive real estate agent of petitioner. Under the Contract to
Sell on Installment, Kee could possess the lot even before the
completion of all installment payments. On January 20, 1975, Kee
paid CTTEI the relocation fee of P50.00 and another P50.00 on
January 27, 1975, for the preparation of the lot plan. These
amounts were paid prior to Kee’s taking actual possession of Lot 8.
After the preparation of the lot plan and a copy thereof given to Kee,
CTTEI through its employee, Zenaida Octaviano, accompanied Kee’s
wife, Donabelle Kee, to inspect Lot 8. Unfortunately, the parcel of
land pointed by Octaviano was Lot 9. Thereafter, Kee proceeded to
construct his residence, a store, an auto repair shop and other
improvements on the lot.
After discovering that Lot 9 was occupied by Kee, Jardinico
confronted him. The parties tried to reach an amicable settlement,
but failed.
On January 30, 1981, Jardinico’s lawyer wrote Kee, demanding that
the latter remove all improvements and vacate Lot 9. When Kee
refused to vacate Lot 9, Jardinico filed with the Municipal Trial Court
in Cities, Branch 3, Bacolod City (MTCC), a complaint for ejectment
with damages against Kee.
Kee, in turn, filed a third-party complaint against petitioner and
CTTEI.
The MTCC held that the erroneous delivery of Lot 9 to Kee was
attributable to CTTEI. It further ruled that petitioner and CTTEI
could not successfully invoke as a defense the failure of Kee to give
notice of his intention to begin construction required under
paragraph 22 of the Contract to Sell on Installment and his having
Property Cases No. 10. 35
built a sari-sari store without the prior approval of petitioner
required under paragraph 26 of said contract, saying that the
purpose of these requirements was merely to regulate the type of
improvements to be constructed on the lot.3
However, the MTCC found that petitioner had already rescinded its
contract with Kee over Lot 8 for the latter’s failure to pay the
installments due, and that Kee had not contested the rescission. The
rescission was effected in 1979, before the complaint was instituted.
The MTCC concluded that Kee no longer had any right over the lot
subject of the contract between him and petitioner. Consequently,
Kee must pay reasonable rentals for the use of Lot 9, and,
furthermore, he cannot claim reimbursement for the improvements
he introduced on said lot. The MTCC thus disposed:
“IN VIEW OF ALL THE FOREGOING, judgment is hereby rendered as
follows:
1. 1.
Defendant Wilson Kee is ordered to vacate the premises of
Lot 9, covered by TCT No. 106367 and to remove all
structures and improvements he introduced thereon;
15. 2.
Defendant Wilson Kee is ordered to pay to the plaintiff
rentals at the rate of P15.00 a day computed from the time
this suit was filed on March 12, 1981 until he actually vacates
the premises. This amount shall bear interests (sic) at the
rate of 12 per cent (sic) per annum.
16. 3.
Third-Party Defendant C.T. Torres Enterprises, Inc. and
Pleasantville Subdivision are ordered to pay the plaintiff
jointly and severally the sum of P3,000.00 as attorney’s fees
and P700.00 as cost and litigation expenses.”4
On appeal, the Regional Trial Court, Branch 48, Bacolod City (RTC)
ruled that petitioner and CTTEI were not at fault or were not
negligent, there being no preponderant evidence to show that they
directly participated in the delivery of Lot 9 to Kee.5 It found Kee a
builder in bad faith. It further ruled that even assuming arguendo
that Kee was acting in good faith, he was, nonetheless, guilty of

unlawfully usurping the possessory right of Jardinico over Lot 9 from
the time he was served with notice to vacate said lot, and thus was
liable for rental.
The RTC thus disposed:
“WHEREFORE, the decision appealed from is affirmed with respect to
the order against the defendant to vacate the premises of Lot No. 9
covered by Transfer Certificate of Title No. T-106367 of the land
records of Bacolod City; the removal of all structures and
improvements introduced thereon at his expense and the payment
to plaintiff (sic) the sum of Fifteen (P15.00) Pesos a day as
reasonable rental to be computed from January 30, 1981, the date
of the demand, and not from the date of the filing of the complaint,
until he had vacated (sic) the premises, with interest thereon at
12% per annum. This Court further renders judgment against the
defendant to pay the plaintiff the sum of Three Thousand
(P3,000.00) Pesos as attorney’s fees, plus costs of litigation.
“The third-party complaint against Third-Party Defendants
Pleasantville Development Corporation and C.T. Torres Enterprises,
Inc. is dismissed. The order against Third-Party Defendants to pay
attorney’s fees to plaintiff and costs of litigation is reversed.”6
Following the denial of his motion for reconsideration on October 20,
1986, Kee appealed directly to the Supreme Court, which referred
the matter to the Court of Appeals.
The appellate court ruled that Kee was a builder in good faith, as he
was unaware of the “mix-up” when he began construction of the
improvements on Lot 8. It further ruled that the erroneous delivery
was due to the negligence of CTTEI, and that such wrong delivery
was likewise imputable to its principal, petitioner herein. The
appellate court also ruled that the award of rentals was without
basis.
Thus, the Court of Appeals disposed:
“WHEREFORE, the petition is GRANTED, the appealed decision is
REVERSED, and judgment is rendered as follows:
Property Cases No. 10. 36
1. 1.
Wilson Kee is declared a builder in good faith with respect to
the improvements he introduced on Lot 9, and is entitled to
the rights granted him under Articles 448, 546 and 548 of
the New Civil Code.
17. 2.
Third-party defendants C.T. Torres Enterprises, Inc. and
Pleasantville Development Corporation are solidarily liable
under the following circumstances:
1. a.
If Eldred Jardinico decides to appropriate the improvements
and, thereafter, remove these structures, the third-party
defendants shall answer for all demolition expenses and the
value of the improvements thus destroyed or rendered
useless;
18. b.
If Jardinico prefers that Kee buy the land, the third-party
defendants shall answer for the amount representing the
value of Lot 9 that Kee should pay to Jardinico.
19. 3.
Third-party defendants C.T. Torres Enterprises, Inc. and
Pleasantville Development Corporation are ordered to pay in
solidum the amount of P3,000.00 to Jardinico as attorney’s
fees, as well as litigation expenses.
20. 4.
The award of rentals to Jardinico is dispensed with.
“Furthermore, the case is REMANDED to the court of origin for the
determination of the actual value of the improvements and the
property (Lot 9), as well as for further proceedings in conformity
with Article 448 of the New Civil Code.”7
Petitioner then filed the instant petition against Kee, Jardinico and
CTTEI.
The Issues

The petition submitted the following grounds to justify a review of
the respondent Court’s Decision, as follows:
1. “1.
The Court of Appeals has decided the case in a way probably
not in accord with law or the the (sic) applicable decisions of
the Supreme Court on third-party complaints, by ordering
third-party defendants to pay the demolition expenses and/or
price of the land;
22. “2.
The Court of Appeals has so far departed from the accepted
course of judicial proceedings, by granting to private
respondent-Kee the rights of a builder in good faith in excess
of what the law provides, thus enriching private respondent
Kee at the expense of the petitioner;
23. “3.
In the light of the subsequent events or circumstances which
changed the rights of the parties, it becomes imperative to
set aside or at least modify the judgment of the Court of
Appeals to harmonize with justice and the facts;
24. “4.
Private respondent-Kee in accordance with the findings of
facts of the lower court is clearly a builder in bad faith,
having violated several provisions of the contract to sell on
installments;
1. “5.
The decision of the Court of Appeals, holding the principal,
Pleasantville Development Corporation (liable) for the acts
made by the agent in excess of its authority is clearly in
violation of the provision of the law;
25. “6.
The award of attorney’s fees is clearly without basis and is
equivalent to putting a premium in (sic) court litigation.”
From these grounds, the issues could be re-stated as follows:
Property Cases No. 10. 37
1. (1)
Was Kee a builder in good faith?
26. (2)
What is the liability, if any, of petitioner and its agent, C.T.
Torres Enterprises, Inc.? and
27. (3)
Is the award of attorney’s fees proper?
The First Issue: Good Faith
Petitioner contends that the Court of Appeals erred in reversing the
RTC’s ruling that Kee was a builder in bad faith.
Petitioner fails to persuade this Court to abandon the findings and
conclusions of the Court of Appeals that Kee was a builder in good
faith. We agree with the following observation of the Court of
Appeals:
“The roots of the controversy can be traced directly to the errors
committed by CTTEI, when it pointed the wrong property to Wilson
Kee and his wife. It is highly improbable that a purchaser of a lot
would knowingly and willingly build his residence on a lot owned by
another, deliberately exposing himself and his family to the risk of
being ejected from the land and losing all improvements thereon,
not to mention the social humiliation that would follow.
“Under the circumstances, Kee had acted in the manner of a
prudent man in ascertaining the identity of his property. Lot 8 is
covered by Transfer Certificate of Title No. T-69561, while Lot 9 is
identified in Transfer Certificate of Title No. T-106367. Hence, under
the Torrens system of land registration, Kee is presumed to have
knowledge of the metes and bounds of the property with which he is
dealing. x x x
x x x      x x x      x x x
“But as Kee is a layman not versed in the technical description of his
property, he had to find a way to ascertain that what was described
in TCT No. 69561 matched Lot 8. Thus, he went to the subdivision
developer’s agent and applied and paid for the relocation of the lot,
as well as for the production of a lot plan by CTTEI’s geodetic

engineer. Upon Kee’s receipt of the map, his wife went to the
subdivision site accompanied by CTTEI’s employee, Octaviano, who
authoritatively declared that the land she was pointing to was
indeed Lot 8. Having full faith and confidence in the reputation of
CTTEI, and because of the company’s positive identification of the
property, Kee saw no reason to suspect that there had been a
misdelivery. The steps Kee had taken to protect his interests were
reasonable. There was no need for him to have acted ex-abundantia
cautela, such as being present during the geodetic engineer’s
relocation survey or hiring an independent geodetic engineer to
countercheck for errors, for the final delivery of subdivision lots to
their owners is part of the regular course of everyday business of
CTTEI. Because of CTTEI’s blunder, what Kee had hoped to forestall
did in fact transpire. Kee’s efforts all went to naught.”8
Good faith consists in the belief of the builder that the land he is
building on is his and his ignorance of any defect or flaw in his title.9
And as good faith is presumed, petitioner has the burden of proving
bad faith on the part of Kee.10
At the time he built improvements on Lot 8, Kee believed that said
lot was what he bought from petitioner. He was not aware that the
lot delivered to him was not Lot 8. Thus, Kee’s good faith. Petitioner
failed to prove otherwise.
To demonstrate Kee’s bad faith, petitioner points to Kee’s violation
of paragraphs 22 and 26 of the Contract of Sale on Installment.
We disagree. Such violations have no bearing whatsoever on
whether Kee was a builder in good faith, that is, on his state of mind
at the time he built the improvements on Lot 9. These alleged
violations may give rise to petitioner’s cause of action against Kee
under the said contract (contractual breach), but may not be bases
to negate the presumption that Kee was a builder in good faith.
Petitioner also points out that, as found by the trial court, the
Contract of Sale on Installment covering Lot 8 between it and Kee
was rescinded long before the present action was instituted. This
has no relevance on the liability of petitioner, as such fact does not
negate the negligence of its agent in pointing out the wrong lot to
Kee. Such circumstance is relevant only as it gives Jardinico a cause
of action for unlawful detainer against Kee.
Property Cases No. 10. 38
Petitioner next contends that Kee cannot “claim that another lot was
erroneously pointed out to him” because the latter agreed to the
following provision in the Contract of Sale on Installment, to wit:
“13. The Vendee hereby declares that prior to the execution of his
contract he/she has personally examined or inspected the property
made subject-matter hereof, as to its location, contours, as well as
the natural condition of the lots and from the date hereof whatever
consequential change therein made due to erosion, the said Vendee
shall bear the expenses of the necessary fillings, when the same is
so desired by him/her.”11
The subject matter of this provision of the contract is the change of
the location, contour and condition of the lot due to erosion. It
merely provides that the vendee, having examined the property
prior to the execution of the contract, agrees to shoulder the
expenses resulting from such change.
We do not agree with the interpretation of petitioner that Kee
contracted away his right to recover damages resulting from
petitioner’s negligence. Such waiver would be contrary to public
policy and cannot be allowed. “Rights may be waived, unless the
waiver is contrary to law, public order,
public policy, morals, or good customs, or prejudicial to a third
person with a right recognized by law.”12
The Second Issue: Petitioner’s Liability
Kee filed a third-party complaint against petitioner and CTTEI, which
was dismissed by the RTC after ruling that there was no evidence
from which fault or negligence on the part of petitioner and CTTEI
can be inferred. The Court of Appeals disagreed and found CTTEI
negligent for the erroneous delivery of the lot by Octaviano, its
employee.
Petitioner does not dispute the fact that CTTEI was its agent. But it
contends that the erroneous delivery of Lot 9 to Kee was an act
which was clearly outside the scope of its authority, and
consequently, CTTEI alone should be liable. It asserts that “while
[CTTEI] was authorized to sell the lot belonging to the herein

petitioner, it was never authorized to deliver the wrong lot to
Kee.”13
Petitioner’s contention is without merit.
The rule is that the principal is responsible for the acts of the agent,
done within the scope of his authority, and should bear the damage
caused to third persons.14 On the other hand, the agent who
exceeds his authority is personally liable for the damage.15
CTTEI was acting within its authority as the sole real estate
representative of petitioner when it made the delivery to Kee. In
acting within its scope of authority, it was, however, negligent. It is
this negligence that is the basis of petitioner’s liability, as principal
of CTTEI, per Articles 1909 and 1910 of the Civil Code.
Pending resolution of the case before the Court of Appeals, Jardinico
and Kee on July 24, 1987 entered into a deed of sale, wherein the
former sold Lot 9 to Kee. Jardinico and Kee did not inform the Court
of Appeals of such deal.
The deed of sale contained the following provision:
1. “1.
That Civil Case No. 3815 entitled “Jardinico vs. Kee” which is
now pending appeal with the Court of Appeals, regardless of
the outcome of the decision shall be mutually disregarded
and shall not be pursued by the parties herein and shall be
considered dismissed and without effect whatsoever”;16
Kee asserts though that the “terms and conditions in said deed of
sale are strictly for the parties thereto” and that “(t)here is no
waiver made by either of the parties in said deed of whatever
favorable judgment or award the honorable respondent Court of
Appeals may make in their favor against herein petitioner
Pleasantville Development Corporation and/or private respondent
C.T. Torres Enterprises, Inc.”17
Obviously, the deed of sale can have no effect on the liability of
petitioner. As we have earlier stated, petitioner’s liability is
grounded on the negligence of its agent. On the other hand, what
the deed of sale regulates are the reciprocal rights of Kee and
Property Cases No. 10. 39
Jardinico; it stressed that they had reached an agreement
independent of the outcome of the case.
Petitioner further assails the following holding of the Court of
Appeals:
1. “2.
Third-party defendants C.T. Torres Enterprises, Inc. and
Pleasantville Development Corporation are solidarily liable
under the following circumstances:
1. “a.
If Eldred Jardinico decides to appropriate the improvements
and, thereafter, remove these structures, the third-party
defendants shall answer for all demolition expenses and the
value of the improvements thus destroyed or rendered
useless;
1. “b.
If Jardinico prefers that Kee buy the land, the third-party
defendants shall answer for the amount representing the
value of Lot 9 that Kee should pay to Jardinico.”18
Petitioner contends that if the above holding would be carried out,
Kee would be unjustly enriched at its expense. In other words, Kee
would be able to own the lot, as buyer, without having to pay
anything on it, because the aforequoted portion of respondent
Court’s Decision would require petitioner and CTTEI jointly and
solidarily to “answer” or reimburse Kee therefor.
We agree with petitioner.
Petitioner’s liability lies in the negligence of its agent CTTEI. For
such negligence, the petitioner should be held liable for damages.
Now, the extent and/or amount of damages to be awarded is a
factual issue which should be determined after evidence is adduced.
However, there is no showing that such evidence was actually
presented in the trial court; hence no damages could now be
awarded.
The rights of Kee and Jardinico vis-a-vis each other, as builder in
good faith and owner in good faith, respectively, are regulated by
 Property Cases No. 10. 40

law (i.e., Arts. 448, 546 and 548 of the Civil Code). It was error for 28. (2)
the Court of Appeals to make a “slight modification” in the Petitioner Pleasantville Development Corporation and
application of such law, on the ground of “equity.” At any rate, as it respondent C.T. Torres Enterprises, Inc. are declared
stands now, Kee and Jardinico have amicably settled through their solidarily liable for damages due to negligence; however,
deed of sale their rights and obligations with regards to Lot 9. Thus, since the amount and/or extent of such damages was not
we delete items 2 (a) and (b) of the dispositive portion of the Court proven during the trial, the same cannot now be quantified
of Appeals’ Decision [as reproduced above] holding petitioner and and awarded;
CTTEI solidarily liable.
29. (3)
The Third Issue: Attorney’s Fees Petitioner Pleasantville Development Corporation and
respondent C.T. Torres Enterprises, Inc. are ordered to pay
The MTCC awarded Jardinico attorney’s fees and costs in the amount in solidum the amount of P3,000.00 to Jardinico as attorney’s
of P3,000.00 and P700.00, respectively, as prayed for in his fees, as well as litigation expenses; and
complaint. The RTC deleted the award, consistent with its ruling that
petitioner was without fault or negligence. The Court of Appeals, 30. (4)
however, reinstated the award of attorney’s fees after ruling that The award of rentals to Jardinico is dispensed with.
petitioner was liable for its agent’s negligence.
SO ORDERED.
The award of attorney’s fees lies within the discretion of the court
and depends upon the circumstances of each case.19 We shall not      Narvasa (C.J., Chairman), Davide, Jr. and Melo, JJ., concur.
interfere with the discretion of the Court of Appeals. Jardinico was
compelled to litigate for the protection of his interests and for the      Francisco, J., No part. Member of the division in the Court of
recovery of damages sustained as a result of the negligence of Appeals which rendered the assailed decision.
petitioner’s agent.20
Petition partially granted. Judgment modified.
In sum, we rule that Kee is a builder in good faith. The disposition of
Note.—Person who claims that he has a better right to a real
the Court of Appeals that Kee “is entitled to the rights granted him
property must prove not only his ownership of the same but he
under Articles 448, 546 and 548 of the New Civil Code” is deleted, in
must also satisfactorily prove the identity thereof. (Javier vs. Court
view of the deed of sale entered into by Kee and Jardinico, which
of Appeals, 231 SCRA 498 [1994])
deed now governs the rights of Jardinico and Kee as to each other.
There is also no further need, as ruled by the appellate Court, to
remand the case to the court of origin “for determination of the
actual value of the improvements and the property (Lot 9), as well
as for further proceedings in conformity with Article 448 of the New
Civil Code.”

WHEREFORE, the petition is partially GRANTED. The Decision of

the Court of Appeals is hereby MODIFIED as follows:

1. (1)
Wilson Kee is declared a builder in good faith;