Property Cases Complete

FIRST DIVISION
[G.R. No. L-11658. February 15, 1918.]
LEUNG YEE, plaintiff-appellant, vs. FRANK L. STRONG

MACHINERY COMPANY and J. G. WILLIAMSON, defendants-
appellees.
Booram & Mahoney for appellant.

Williams, Ferrier & SyCip for appellees.
SYLLABUS
1.CHATTEL MORTGAGE; REGISTRY OF MORTGAGE COVERING REAL

PROPERTY. — The sole purpose and object of the chattel mortgage registry is
to provide for the registry of "chattel mortgages," and transfers thereof, that
is to say, mortgages of personal property executed in the manner and form
prescribed in the statute. Neither the original registry in a chattel mortgage
registry of an instrument purporting to be a chattel mortgage of a building
and the machinery installed therein, nor the annotation in that registry of the
sale of the mortgaged property, had any effect whatever so far as the
building is concerned.
2.ID.; ID. — A factory building is real property, and the mere fact that it
is mortgaged and sold, separate and apart from the land on which it stands,
in no wise changes its character as real property.
3.VENDOR AND PURCHASER; REGISTRY OF TITLE; GOOD FAITH. — The
rights secured under the provisions of article 1473 of the Civil Code to that
one of two purchasers of the same real estate, who has secured and
inscribed his title thereto in the Land Registry, do not accrue unless such
inscription is made in good faith.
4.ID.; SEPARATE PURCHASERS; DETERMINATION OF RIGHTS. — The
respective rights of two or more separate purchasers of the same real estate
from the same owner in case none of them has secured an inscription of his
title in the land registry in good faith, are to be determined in accord with
the third, and not the second paragraph of that article.
5.ID.; GOOD FAITH. — One who purchases real estate with knowledge
of a defect or lack of title in his vendor cannot claim that he has acquired
title thereto in good faith, as against the true owner of the land or of an
interest therein; and the same rule must be applied to one who has
knowledge of facts which should have put him upon such inquiry and
investigation as might be necessary to acquaint him with the defects in the
title of his vendor.
6.ID.; ID. — A purchaser cannot close his eyes to facts which should put
a reasonable man upon his guard and then claim that he acted in good faith
under the belief that there was no defect in the title of the vendor.
CD Technologies Asia, Inc. © 2021 cdasiaonline.com
7.ID.; ID. — Good faith, or the lack of it, is in its last analysis a question
of intention; but in ascertaining the intention by which one is actuated on a
given occasion, we are necessarily controlled by the evidence as to the
conduct and outward acts by which alone the inward motive may, with
safety, be determined.
8.ID.; ID. — "Good faith, or the want of it, is not a visible, tangible fact
that can be seen or touched but rather a state or condition of mind which
can only be judged of by actual or fancied tokens or signs."
DECISION
CARSON, J : p
The "Compañia Agricola Filipina" bought a considerable quantity of

rice-cleaning machinery from the defendant machinery company, and
executed a chattel mortgage thereon to secure payment of the purchase
price. It included in the mortgage deed the building of strong materials in
which the machinery was installed, without any reference to the land on
which it stood. The indebtedness secured by this instrument not having been
paid when it fell due, the mortgaged property was sold by the sheriff, in
pursuance of the terms of the mortgage instrument, and was bought in by
the machinery company. The mortgage was registered in the chattel
mortgage registry, and the sale of the property to the machinery company in
satisfaction of the mortgage was annotated in the same registry on
December 29, 1913.
A few weeks thereafter, on or about the 14th of January, 1914, the
"Compañia Agricola Filipina" executed a deed of sale of the land upon which
the building stood to the machinery company, but this deed of sale, although
executed in a public document, was not registered. This deed makes no
reference to the building erected on the land and would appear to have been
executed for the purpose of curing any defects which might be found to exist
in the machinery company's title to the building under the sheriff's certificate
of sale. The machinery company went into possession of the building at or
about the time when this sale took place, that is to say, the month of
December, 1913, and it has continued in possession ever since.
At or about the time when the chattel mortgage was executed in favor
of the machinery company, the mortgagor, the "Compañia Agricola Filipina"
executed another mortgage to the plaintiff upon the building, separate and
apart from the land on which it stood, to secure payment of the balance of
its indebtedness to the plaintiff under a contract for the construction of the
building. Upon the failure of the mortgagor to pay the amount of the
indebtedness secured by the mortgage, the plaintiff secured judgment for
that amount, levied execution upon the building, bought it in at the sheriff's
sale on or about the 18th of December, 1914, and had the sheriff's
certificate of sale duly registered in the land registry of the Province of
Cavite.
At the time when the execution was levied upon the building, the
defendant machinery company, which was in possession, filed with the
sheriff a sworn statement setting up its claim of title and demanding the
release of the property from the levy. Thereafter, upon demand of the
sheriff, the plaintiff executed an indemnity bond in favor of the sheriff in the
sum of P12,000, in reliance upon which the sheriff sold the property at public
auction to the plaintiff, who was the highest bidder at the sheriff's sale.
This action was instituted by the plaintiff to recover possession of the
building from the machinery company.
The trial judge, relying upon the terms of article 1473 of the Civil Code,
gave judgment in favor of the machinery company, on the ground that the
company had its title to the building registered prior to the date of registry of
the plaintiff's certificate.
Article 1473 of the Civil Code is as follows:
"If the same thing should have been sold to different vendees,
the ownership shall be transferred to the person who may have first
taken possession thereof in good faith, if it should be personal
property.
"Should it be real property, it shall belong to the person acquiring
it who first recorded it in the registry.
"Should there be no entry, the property shall belong to the
person who first took possession of it in good faith, and, in the absence
thereof, to the person who presents the oldest title, provided there is
good faith."
The registry here referred to is of course the registry of real property,
and it must be apparent that the annotation or inscription of a deed of sale
of real property in a chattel mortgage registry cannot be given the legal
effect of an inscription in the registry of real property. By its express terms,
the Chattel Mortgage Law contemplates and makes provision for mortgages
of personal property; and the sole purpose and object of the chattel
mortgage registry is to provide for the registry of "Chattel mortgages," that
is to say, mortgages of personal property executed in the manner and form
prescribed in the statute. The building of strong materials in which the rice-
cleaning machinery was installed by the "Compañia Agricola Filipina" was
real property, and the mere fact that the parties seem to have dealt with it
separate and apart from the land on which it stood in no wise changed its
character as real property. It follows that neither the original registry in the
chattel mortgage registry of the instrument purporting to be a chattel
mortgage of the building and the machinery installed therein, nor the
annotation in that registry of the sale of the mortgaged property, had any
effect whatever so far as the building was concerned.
We conclude that the ruling in favor of the machinery company cannot
be sustained on the ground assigned by the trial judge. We are of opinion,
however, that the judgment must be sustained on the ground that the
agreed statement of facts in the court below discloses that neither the
purchase of the building by plaintiff nor his inscription of the sheriff's
certificate of sale in his favor was made in good faith, and that the
machinery company must be held to be the owner of the property under the
third paragraph of the above cited article of the code, it appearing that the
company first took possession of the property; and further, that the building
and the land were sold to the machinery company long prior to the date of
the sheriff's sale to the plaintiff.
It has been suggested that since the provisions of article 1473 of the
Civil Code require "good faith," in express terms, in relation to "possession"
and "title," but contain no express requirement as to "good faith" in relation
to the "inscription" of the property in the registry, it must be presumed that
good faith is not an essential requisite of registration in order that it may
have the effect contemplated in this article. We cannot agree with this
contention. It could not have been the intention of the legislator to base the
preferential right secured this article of the code upon an inscription of title
in bad faith. Such an interpretation placed upon the language of this section
would open wide the door to fraud and collusion. The public records cannot
be converted into instruments of fraud and oppression by one who secures
an inscription therein in bad faith. The force and effect given by law to an
inscription in a public record presupposes the good faith of him who enters
such inscription; and rights created by statute, which are predicated upon an
inscription in a public registry, do not and cannot accrue under an inscription
"in bad faith," to the benefit of the person who thus makes the inscription.
Construing the second paragraph of this article of the code, the
supreme court of Spain held in its sentence of the 13th of May, 1908, that:
"This rule is always to be understood on the basis of the good
faith mentioned in the first paragraph; therefore, it having been found
that the second purchasers who record their purchase had knowledge
of the precious sale, the question is to be decided in accordance with
the following paragraph." (Note 2, art. 1473, Civ. Code, Medina and
Marañon [1911] edition.)
"Although article 1473, in its second paragraph, provides that the
title of conveyance of ownership of the real property that is first
recorded in the registry shall have preference, this provision must
always be understood on the basis of the good faith mentioned in the
first paragraph; the legislator could not have wished to strike it out and
to sanction bad faith, just to comply with a mere formality which, in
given cases, does not obtain even in real disputes between third
persons." (Note 2, art. 1473, Civ. Code, issued by the publishers of the
La Revista de los Tribunales, 13th edition.)
The agreed statement of facts clearly discloses that the plaintiff, when
he bought the building at the sheriff's sale and inscribed his title in the land
registry, was duly notified that the machinery company had bought the
building from plaintiff's judgment debtor; that it had gone into possession
long prior to the sheriff's sale; and that it was in possession at the time when
the sheriff executed his levy. The execution of an indemnity bond by the
plaintiff in favor of the sheriff, after the machinery company had filed its
sworn claim of ownership, leaves no room for doubt in this regard. Having
bought in the building at the sheriff's sale with full knowledge that at the
time of the levy and sale the building had already been sold to the
machinery company by the judgment debtor, the plaintiff cannot be said to
have been a purchaser in good faith; and of course, the subsequent
inscription of the sheriff's certificate of title must be held to have been
tainted with the same defect.
Perhaps we should make it clear that in holding that the inscription of
the sheriff's certificate of sale to the plaintiff was not made in good faith, we
should not be understood as questioning, in any way, the good faith and
genuineness of plaintiff's claim against the "Compañia Agricola Filipina." The
truth is that both the plaintiff and the defendant company appear to have
had just and righteous claims against their common debtor. No criticism can
properly be made of the exercise of the utmost diligence by the plaintiff in
asserting and exercising his right to recover the amount of his claim from the
estate of the common debtor. We are strongly inclined to believe that in
procuring the levy of execution upon the factory building and in buying it at
the sheriff's sale, he conceived that he was doing no more than he had a
right to do under all the circumstances, and it is highly possible and even
probable that he thought at that time that he would be able to maintain his
position in a contest with the machinery company. There was no collusion on
his part with the common debtor, and no thought of the perpetration of a
fraud upon the rights of another, in the ordinary sense of the word. He may
have hoped, and doubtless he did hope, that the title of the machinery
company would not stand the test of an action in a court of law; and if later
developments had confirmed his unfounded hopes, no one could question
the legality or the propriety of the course he adopted.
But it appearing that he had full knowledge of the machinery
company's claim of ownership when he executed the indemnity bond and
bought in the property at the sheriff's sale, and it appearing further that the
machinery company's claim of ownership was well founded, he cannot be
said to have been an innocent purchaser for value. He took the risk and
must stand by the consequences; and it is in this sense that we find that he
was not a purchaser in good faith.
One who purchases real estate with knowledge of a defect or lack of
title in his vendor cannot claim that he has acquired title thereto in good
faith as against the true owner of the land or of an interest therein; and the
same rule must be applied to one who has knowledge of facts which should
have put him upon such inquiry and investigation as might be necessary to
acquaint him with the defects in the title of his vendor. A purchaser cannot
close his eyes to facts which should put a reasonable man upon his guard,
and then claim that he acted in good faith under the belief that there was no
defect in the title of the vendor. His mere refusal to believe that such defect
exists, or his willful closing of his eyes to the possibility of the existence of a
defect in his vendor's title, will not make him an innocent purchaser for
value, if it afterwards develops that the title was in fact defective, and it
appears that he had such notice of the defect as would have led to its
discovery had he acted with that measure of precaution which may
reasonably be required of a prudent man in a like situation. Good faith, or
the lack of it, is in its last analysis a question of intention; but in ascertaining
the intention by which one is actuated on a given occasion, we are
necessarily controlled by the evidence as to the conduct and outward acts by
which alone the inward motive may, with safety, be determined. So it is that
"the honesty of intention," "the honest lawful intent," which constitutes good
faith implies a "freedom from knowledge and circumstances which ought to
put a person on inquiry," and so it is that proof of such knowledge
overcomes the presumption of good faith in which the courts always indulge
in the absence of proof to the contrary. "Good faith, or the want of it, is not a
visible, tangible fact that can be seen or touched, but rather a state or
condition of mind which can only be judged of by actual or fancied tokens or
signs." (Wilder vs. Gilman, 55 Vt., 504, 505; Cf. Cardenas vs. Miller, 108 Cal.,
250; Breaux-Renoudet, Cypress Lumber Co. vs. Shadel, 52 La. Ann., 2094-
2098; Pinkerton Bros. Co. vs. Bromley, 119 Mich., 8, 10, 17.)
We conclude that upon the grounds herein set forth the disposing part
of the decision and judgment entered in the court below should be affirmed
with the costs of this instance against the appellant. So ordered.
Arellano, C. J., Johnson, Araullo, Street, and Malcolm, JJ., concur.
Torres, Avanceña, and Fisher, JJ., did not take part.
Footnotes
1.16 Off., 911

FIRST DIVISION
[G.R. No. 109946. February 9, 1996.]
DEVELOPMENT BANK OF THE PHILIPPINES, petitioner, vs.

COURT OF APPEALS, MYLO O. QUINTO and JESUSA
CHRISTINE S. CHUPUICO, respondents.
Office of the Legal Counsel for DBP.

Alexander Acain for private respondents.
SYLLABUS
1. CIVIL LAW; LAND TITLES AND DEEDS; PUBLIC LAND ACT; LANDS
STILL SUBJECT OF FREE PATENT APPLICATION, REMAIN PART OF THE PUBLIC
DOMAIN; CASE AT BAR. — We hold that petitioner bank did not acquire valid
title over the land in dispute because it was public land when mortgaged to the
bank. We cannot accept petitioner's contention that the lot in dispute was no
longer public land when mortgaged to it since the Olidiana spouses had been in
open, continuous, adverse and public possession thereof for more than thirty
(30) years. In Visayan Realty, Inc. v. Meer we ruled that the approval of a sales
application merely authorized the applicant to take possession of the land so
that he could comply with the requirements prescribed by law before a final
patent could be issued in his favor. Meanwhile the government still remained
the owner thereof, as in fact the application could still be canceled and the land
awarded to another applicant should it be shown that the legal requirements
had not been complied with. What divests the government of title to the land is
the issuance of the sales patent and its subsequent registration with the
Register of Deeds. It is the registration and issuance of the certificate of title
that segregate public lands from the mass of public domain and convert it into
private property. Since the disputed lot in the case before us was still the
subject of a Free Patent Application when mortgaged to petitioner and no
patent was granted to the Olidiana spouses, Lot No. 2029 (Pls-61) remained
part of the public domain. CDta
2. ID.; OBLIGATIONS AND CONTRACTS; MORTGAGE; MORTGAGOR

MUST BE THE ABSOLUTE OWNER OF THE THING MORTGAGED; MORTGAGE VOID
WHERE MORTGAGOR IS NOT ABSOLUTE OWNER. — With regard to the validity
of the mortgage contracts entered into by the parties, Art. 2085, par. 2, of the
New Civil Code specifically requires that the pledgor or mortgagor be the
absolute owner of the thing pledged or mortgaged. Thus, since the disputed
property was not owned by the Olidiana spouses when they mortgaged it to
petitioner the contracts of mortgage and all their subsequent legal
consequences as regards Lot No. 2029 (Pls-61) are null and void. In a much
earlier case we held that it was an essential requisite for the validity of a
mortgage that the mortgagor be the absolute owner of the property
mortgaged, and it appearing that the mortgage was constituted before the
issuance of the patent to the mortgagor, the mortgage in question must of
necessity be void and ineffective. For, the law explicitly requires as imperative
for the validity of a mortgage that the mortgagor be the absolute owner of what
is mortgaged.
3. CIVIL LAW; LAND TITLES AND DEEDS; PUBLIC LAND ACT; ABSENCE
OF PRIOR KNOWLEDGE OF REAL ESTATE MORTGAGES EXECUTED BY PARTY IN
FAVOR OF PETITIONER BANK NEGATES FRAUDULENT ACQUISITION OF
PROPERTY ON LITIGATION. — Finally, anent the contention of petitioner that
respondents fraudulently obtained the property in litigation, we also find for the
latter. As correctly found by the lower courts, no evidence existed to show that
respondents had prior knowledge of the real estate mortgages executed by the
Olidiana spouses in favor of petitioner. The act of respondents in securing the
patents cannot therefore be categorized as having been tainted with fraud.
DECISION
BELLOSILLO, J : p
DEVELOPMENT BANK OF THE PHILIPPINES filed this petition for review on

certiorari assailing the decision of the Court of Appeals holding that the
mortgages in favor of the bank were void and ineffectual because when
constituted the mortgagors, who were merely applicants for free patent of the
property mortgaged, were not the owners thereof in fee simple and therefore
could not validly encumber the same. 1
On 20 April 1978 petitioner granted a loan of P94,000.00 to the spouses
Santiago Olidiana and Oliva Olidiana. To secure the loan the Olidiana spouses
executed a real estate mortgage on several properties among which was Lot
2029 (Pls-61) with Tax Declaration No. 2335/1, situated in Bo. Bago Capalaran,
Molave, Zamboanga del Sur, with an area of 84,108 square meters, more or
less. At the time of the mortgage the property was still the subject of a Free
Patent application filed by the Olidianas with the Bureau of Lands but registered
under their name in the Office of the Municipal Assessor of Molave for taxation
purposes. 2
On 2 November 1978 the Olidiana spouses filed with the Bureau of Lands
a Request for Amendment of their Free Patent applications over several parcels
of land including Lot No. 2029 (Pls-61). In this request they renounced,
relinquished and waived all their rights and interests over Lot No. 2029 (Pls-61)
in favor of Jesusa Christine Chupuico and Mylo O. Quinto, respondents herein.
On 10 January 1979 Free Patent Nos. IX-5-2223 (covering one-half of Lot No.
2029 [Pls-61] and IX-5-2224 (covering the other half of the same Lot No. 2029
[Pls-61]) were accordingly granted respectively to respondents Jesusa Christine
Chupuico and Mylo O. Quinto by the Bureau of Lands District Land Office No. IX-
5, Pagadian City. Jesusa Christine Chupuico later obtained Original Certificate of
Title No. P-27,361 covering aforementioned property while Mylo O. Quinto was
also issued Original Certificate of Title No. P-27,362 in view of the previous free
patent. 3
On 20 April 1979 an additional loan of P62,000.00 was extended by

petitioner to the Olidiana spouses. Thus on 23 April 1979 the Olidianas
executed an additional mortgage on the same parcels of land already covered
by the first mortgage of 4 April 1978. This second mortgage also included Lot
No. 2029 (Pls-61) as security for the Olidiana spouses' financial obligation with
petitioner. 4
Thereafter, for failure of Santiago and Oliva Olidiana to comply with the
terms and conditions of their promissory notes and mortgage contracts,
petitioner extrajudicially foreclosed all their mortgaged properties.
Consequently, on 14 April 1983 these properties, including Lot No. 2029 (Pls-
61) were sold at public auction for P88,650.00 and awarded to petitioner as the
highest bidder. A Certificate of Sale was thereafter executed in favor of
petitioner and an Affidavit of Consolidation of Ownership registered in its name.
However, when petitioner tried to register the sale and the affidavit of
consolidation and to have the tax declaration transferred in its name it was
discovered that Lot No. 2029 (Pls-61) had already been divided into two (2)
parcels, one-half (1/2) now known as Lot 2029-A and covered by OCT No. P-
27,361 in the name of Jesusa Christine Chupuico, while the other half known as
Lot 2029-B was covered by the same OCT No. P-27,361 in the name of Mylo O.
Quinto. 5
In view of the discovery, petitioner filed an action for Quieting of Title and
Cancellation or Annulment of Certificate of Title against respondents. After trial
the Regional Trial Court of Molave, Zamboanga del Sur, Branch 23, rendered
judgment against petitioner. 6 The court ruled that the contracts of mortgage
entered into by petitioner and the subsequent foreclosure of subject property
could not have vested valid title to petitioner bank because the mortgagors
were not the owners in fee simple of the property mortgaged. The court also
found the mortgages over Lot No. 2029 (Pls-61) of no legal consequence
because they were executed in violation of Art. 2085, par. 2, of the New Civil
Code which requires that the mortgagor be the absolute owner of the thing
mortgaged. According to the court a quo there was no evidence to prove that
the mortgagors of the land in dispute were its absolute owners at the time of
the mortgage to petitioner.
The factual findings of the lower court disclose that when the Olidiana
spouses mortgaged Lot No. 2029 (Pls-61) to petitioner it was still the subject of
a miscellaneous sales application by the spouses with the Bureau of Lands.
Since there was no showing that the sales application was approved before the
property was mortgaged, the trial court concluded that the Olidiana spouses
were not yet its owners in fee simple when they mortgaged the property. The
lower court also said that with the subsequent issuance of the Free Patent by
the Bureau of Lands in the name of respondents Chupuico and Quinto, it could
be gleaned that the property was indeed public land when mortgaged to
petitioner. Therefore petitioner could not have acquired a valid title over the
subject property by virtue of the foreclosure and subsequent sale at public
auction. 7
Resultantly, the trial court declared the following as null and void insofar
as they related to Lot No. 2029 (Pls-61) being a public land: the real estate
mortgage dated 4 April 1978, the second mortgage dated 23 April 1979, the
foreclosure sale on 14 April 1983, the certificate of sale registered with the
Register of Deeds of Zamboanga del Sur on 1 September 1983, and the
affidavit of consolidation of ownership registered with the Register of Deeds on
2 August 1985.
Petitioner then appealed to the Court of Appeals which likewise ruled in

favor of respondents, hence the instant petition. 8
Petitioner now seeks to overturn the decision of respondent Court of

Appeals holding that Lot No. 2029 (Pls-61) could not have been the subject of a
valid mortgage and foreclosure proceeding because it was public land at the
time of the mortgage, and that the act of Jesusa Christine S. Chupuico and Mylo
O. Quinto in securing the patents was not tainted with fraud. The crux of this
appeal thus lies in the basic issue of whether the land in dispute could have
been validly mortgaged while still the subject of a Free Patent Application with
the government. 9
We agree with the court a quo. We hold that petitioner bank did not
acquire valid title over the land in dispute because it was public land when
mortgaged to the bank. We cannot accept petitioner's contention that the lot in
dispute was no longer public land when mortgaged to it since the Olidiana
spouses had been in open, continuous, adverse and public possession thereof
for more than thirty (30) years. 10 In Visayan Realty, Inc. v. Meer 11 we ruled
that the approval of a sales application merely authorized the applicant to take
possession of the land so that he could comply with the requirements
prescribed by law before a final patent could be issued in his favor. Meanwhile
the government still remained the owner thereof, as in fact the application
could still be canceled and the land awarded to another applicant should it be
shown that the legal requirements had not been complied with. What divests
the government of title to the land is the issuance of the sales patent and its
subsequent registration with the Register of Deeds. It is the registration and
issuance of the certificate of title that segregate public lands from the mass of
public domain and convert it into private property. 12 Since the disputed lot in
the case before us was still the subject of a Free Patent Application when
mortgaged to petitioner and no patent was granted to the Olidiana spouses, Lot
No. 2029 (Pls-61) remained part of the public domain.
With regard to the validity of the mortgage contracts entered into by the
parties, Art. 2085, par. 2, of the New Civil Code specifically requires that the
pledgor or mortgagor be the absolute owner of the thing pledged or
mortgaged. Thus, since the disputed property was not owned by the Olidiana
spouses when they mortgaged it to petitioner the contracts of mortgage and all
their subsequent legal consequences as regards Lot No. 2029 (Pls-61) are null
and void. In a much earlier case 13 we held that it was an essential requisite for
the validity of a mortgage that the mortgagor be the absolute owner of the
property mortgaged, and it appearing that the mortgage was constituted before
the issuance of the patent to the mortgagor, the mortgage in question must of
necessity be void and ineffective. For, the law explicitly requires as imperative
for the validity of a mortgage that the mortgagor be the absolute owner of what
is mortgaged. cda
Finally, anent the contention of petitioner that respondents fraudulently

obtained the property in litigation, we also find for the latter. As correctly found
by the lower courts, no evidence existed to show that respondents had prior
knowledge of the real estate mortgages executed by the Olidiana spouses in
favor of petitioner. The act of respondents in securing the patents cannot
therefore be categorized as having been tainted with fraud.
WHEREFORE, the petition is DENIED and the questioned decision of the

Court of Appeals is AFFIRMED.
SO ORDERED.
Padilla, Vitug, Kapunan, and Hermosisima, Jr., JJ., concur.
Footnotes
1. Penned by Justice Consuelo Yñares-Santiago, concurred in by Justices Luis

H. Javellana and Minerva P. Gonzaga-Reyes.
2. Rollo , pp. 18-19.

3. Id., p. 19.
4. Id., pp. 19-20.
5. Id., p. 20.
6. Decision penned by Judge Camilo E. Tamin, RTC-Br. 23, Zamboanga del Sur.
7. Id., pp. 47-56.

8. Id., pp. 56-57.
9. Petition, pp. 4-5.
10. Id., p. 7.
11. 96 Phil. 515 (1955).
12. Director of Lands v. De Luna, 110 Phil. 28 (1960).

13. Vda. de Bautista v. Marcos, No. L-17072, 31 October 1961, 3 SCRA 434.

FIRST DIVISION
[G.R. No. 137887. February 28, 2000.]
REPUBLIC OF THE PHILIPPINES, petitioner, vs. DAMIAN

ERMITAÑO DE GUZMAN, DEOGRACIAS ERMITAÑO DE
GUZMAN, ZENAIDA ERMITAÑO DE GUZMAN, ALICIA
ERMITAÑO DE GUZMAN, SALVADOR ERMITAÑO DE GUZMAN,
DOMINGA ERMITAÑO, NATIVIDAD ENCARNACION, MELBA E.
TORRES, FLORA MANALO, SOCORRO DELA ROSA, JOSE
ERMITAÑO, ESMERANDO ERMITAÑO, TRICOM
DEVELOPMENT CORPORATION and FILOMENO ERMITAÑO ,
respondents.
The Solicitor General for petitioner.

Noe Cangco Zarate for Salvador E. de Guzman, et al.
Fortun Narvasa & Salazar for Filomeno Ermitaño.
Franco L. Loyola for Domingo Ermitaño, et al.
Rogelio F. Vista for Tricom.
Antonio Villano for S. de Guzman.
SYNOPSIS
The subject parcels of land were forest lands released as agricultural land
in 1965 and were possessed by private respondents and their predecessors-in-
interest for 63 years at time the application of their petition for confirmation of
imperfect title was filed in 1991. The RTC rendered judgment in favor of private
respondents and was affirmed on appeal by the Court of Appeals. Hence, this
recourse of the Republic.
It was ruled that possession of forest lands, no matter how long cannot
ripen into private property as possession prior to the release of the land cannot
be considered as alienable because absent the fact of declassification the
property occupied remained unclassified and cannot be acquired by
prescription. AIDcTE
SYLLABUS
1. LAND TITLES AND DEEDS; PUBLIC LAND ACT; CONFIRMATION OF

IMPERFECT TITLE; DOCTRINE IN DIRECTOR OF LAND MANAGEMENT VS. CA,
(G.R. NO. 94525, 205 SCRA 486 [1992]), NOT APPLICABLE TO CASE AT BAR. —
In the Director of Land Management vs. Court of Appeals, the period of
possession of the applicant's predecessor-in-interest was tacked to his own
possession to comply with the required thirty year period possession
requirement, the land involved therein was not forest land but alienable public
land. On the other hand, in the case before us, the property subject of private
respondents' application was only declared alienable in 1965. Prior to such
date, the same was forest land incapable of private appropriation. It was not
registrable and possession thereof, no matter how lengthy, could not convert it
into private property, (unless) and until such lands were reclassified and
considered disposable and alienable. In summary, therefore, prior to its
declaration as alienable land in 1965, any occupation or possession thereon
cannot be considered in the counting of the thirty year possession requirement.
This is in accord with the ruling in Almeda vs. Court of Appeals, (G.R. No.
85322, 196 SCRA 476 [1991]), and because the rules on the confirmation of
imperfect titles do not apply unless and until the land classified as forest land is
released in an official proclamation to that effect so that it may form part of the
disposable agricultural lands of the public domain.
2. ID.; ID.; FOREST LANDS OR FOREST RESERVES; NOT CAPABLE OF
PRIVATE APPROPRIATION; POSSESSION THEREOF, HOWEVER LONG, CANNOT
CONVERT THEM INTO PRIVATE PROPERTY. — Forest lands or forest reserves are
not capable of private appropriation and possession thereof, however long,
cannot convert them into private property. Possession of the land by private
respondents, whether spanning decades or centuries, could never ripen into
ownership. This Court is constrained to abide by the latin maxim " (d)ura lex,
sed lex."
DECISION
YNARES-SANTIAGO, J : p
Before us is a Petition for Review on Certiorari of a decision of the Court of

Appeals 1 affirming the judgment of the Regional Trial Court of Tagaytay,
Branch 18, in LRC Cases Nos. TG-362 and TG-396. 2
The facts are simple: cda
Conflicting applications for confirmation of imperfect title were filed by

Norma Almanzor and private respondent Salvador De Guzman over parcels of
land located in Silang, Cavite. After trial on the merits, the lower court rendered
judgment in favor of private respondent De Guzman, to wit —
"WHEREFORE, judgment is hereby rendered by this Court as
follows:
(1) In LRC Case No. TG-362, this Court hereby denies the
application for registration of the parcels of land mentioned therein by
applicant Norma R. Almanzor for lack of factual and legal bases;
(2) In LRC Case No. 396, this Court hereby approves the
petition for registration and thus places under the operation of Act 141,
Act 946 and/or P.D. 1529, otherwise known as the Property Registration
Law, the land described in Plan Psu-67537-Amd-2 and containing an
area of 308,638 square meters, as supported by its technical
descriptions now forming parts of the records of these cases, in
addition to other proofs adduced in the names of petitioners Damian
Ermitaño De Guzman, Deogracias Ermitaño De Guzman, Zenaida
Ermitaño De Guzman, Alicia Ermitaño De Guzman and Salvador De
Guzman, all married, of legal age and with residence and postal
addresses at Magallanes Street, Carmona, Cavite, subject to the claims
of oppositors Dominga Ermitaño, Natividad Encarnacion, Melba E.
Torres, Flora Manalo, Socorro de la Rosa, Jose Ermitaño and Esmeranso
Ermitaño under an instrument entitled 'Waiver of Rights with
Conformity" the terms and conditions of which are hereby ordered by
this Court to be annotated at the back of the certificates of title to be
issued to the petitioners pursuant to the judgment of this Court.
SO ORDERED." 3
As earlier mentioned, on appeal to the Court of Appeals, said judgment

was affirmed and the petition for registration of private respondents over the
subject parcels of land was approved.
Hence, the instant Petition, anchored upon the following assignments of

error —
I
THE TRIAL COURT ERRED IN NOT FINDING THAT THE DE GUZMANS

HAVE NOT SUBMITTED PROOF OF THEIR FEE SIMPLE TITLE OR
POSSESSION IN THE MANNER AND FOR THE LENGTH OF TIME
REQUIRED BY LAW TO JUSTIFY CONFIRMATION OF AN IMPERFECT TITLE.
II
THE TRIAL COURT ERRED IN NOT DECLARING THAT THE DE GUZMANS
HAVE NOT OVERTHROWN THE PRESUMPTION THAT THE LANDS ARE
PORTIONS OF THE PUBLIC DOMAIN BELONGING TO THE REPUBLIC OF
THE PHILIPPINES. 4
We find merit in the instant Petition.
It is not disputed that the subject parcels of land were released as

agricultural land only in 1965 5 while the petition for confirmation of imperfect
title was filed by private respondents only in 1991. 6 Thus the period of
occupancy of the subject parcels of land from 1965 until the time the
application was filed in 1991 was only twenty six (26) years, four (4) years
short of the required thirty (30) year period possession requirement under Sec.
14, P.D. 29 and R.A. No. 6940. llcd
In finding that private respondents' possession of the subject property

complied with law, the Court of Appeals reasoned out that —
"(W)hile it is true that the land became alienable and disposable
only in December, 1965, however, records indicate that as early as
1928, Pedro Ermitaño, appellees' predecessor-in-interest, was already
in possession of the property, cultivating it and planting various crops
thereon. It follows that appellees' possession as of the time of the filing
of the petition in 1991 when tacked to Pedro Ermitaño's possession is
63 years or more than the required 30 years period of possession. The
land, which is agricultural, has been converted to private property." 7
We disagree.
The Court of Appeals' consideration of the period of possession prior to

the time the subject land was released as agricultural is in direct contravention
of the pronouncement in Almeda vs. Court of Appeals, 8 to wit —
"The Court of Appeals correctly ruled that the private
respondents had not qualified for a grant under Section 48(b) of the
Public Land Act because their possession of the land while it was still
inalienable forest land, or before it was declared alienable and
disposable land of the public domain on January 13, 1968, could not
ripen into private ownership, and should be excluded from the
computation of the 30-year open and continuous possession in concept
of owner required under Section 48(b) of Com. Act 141. It accords with
our ruling in Director of Lands vs. Court of Appeals, Ibarra Bishar, et al.,
178 SCRA 708, that:
'Unless and until the land classified as forest is released in

an official proclamation to that effect so that it may form part of
the disposable lands of the public domain, the rules on
confirmation of imperfect title do not apply (Amunategui vs.
Director of Forestry , 126 SCRA 69; Director of Lands vs. Court of
Appeals, 129 SCRA 689; Director of Lands vs. Court of Appeals,
133 SCRA 701; Republic vs. Court of Appeals , 148 SCRA 480;
Vallarta vs. Intermediate Appellate Court, 151 SCRA 679).
'Thus possession of forest lands, however long, cannot
ripen into private ownership (Vamo vs. Government , 41 Phil. 161
[1920]; Adorable vs. Director of Forestry , 17 Phil. 410 [1960]). A
parcel of forest land is within the exclusive jurisdiction of the
Bureau of Forestry and beyond the power and jurisdiction of the
cadastral court to register under the Torrens System ( Republic
vs. Court of Appeals, 89 SCRA 648; Republic vs. Vera , 120 SCRA
210 [1983]; Director of Lands vs. Court of Appeals, 129 SCRA 689
[1984]).'" (emphasis ours)
So, too, is the Court of Appeals' reliance on the case of Director of Land
Management vs. Court of Appeals 9 misplaced. There, while the period of
possession of the applicant's predecessor-in-interest was tacked to his own
possession to comply with the required thirty year period possession
requirement, the land involved therein was not forest land but alienable public
land. On the other hand, in the case before us, the property subject of private
respondents' application was only declared alienable in 1965. Prior to such
date, the same was forest land incapable of private appropriation. It was not
registrable and possession thereof, no matter how lengthy, could not convert it
into private property, (unless) and until such lands were reclassified and
considered disposable and alienable. 10
In summary, therefore, prior to its declaration as alienable land in 1965,
any occupation or possession thereon cannot be considered in the counting of
the thirty year possession requirement. This is in accord with the ruling in
Almeda vs. Court of Appeals, (supra), and because the rules on the confirmation
of imperfect titles do not apply unless and until the land classified as forest land
is released in an official proclamation to that effect so that it may form part of
the disposable agricultural lands of the public domain. 11
While we acknowledge the Court of Appeals' finding that private

respondents and their predecessors-in-interest have been in possession of the
subject land for sixty three (63) years at the time of the application of their
petition, our hands are tied by the applicable laws and jurisprudence in giving
practical relief to them. The fact remains that from the time the subject land
was declared alienable until the time of their application, private respondents'
occupation thereof was only twenty-six (26) years. We cannot consider their
thirty-seven (37) years of possession prior to the release of the land as
alienable because absent the fact of declassification prior to the possession and
cultivation in good faith by petitioner, the property occupied by him remained
classified as forest or timberland, which he could not have acquired by
prescription. Further, jurisprudence is replete with cases which reiterate that
forest lands or forest reserves are not capable of private appropriation and
possession thereof, however long, cannot convert them into private property.
Possession of the land by private respondents, whether spanning decades or
centuries, could never ripen into ownership. This Court is constrained to abide
by the latin maxim "(d)ura lex, sed lex." 12
WHEREFORE, the instant Petition is GRANTED and the February 26, 1998
decision of the Court of Appeals in CA-G.R. CV No. 48785 as well as that of the
Regional Trial Court of Cavite, Branch 38, in LRC Case No. TG-396 are both
REVERSED. Judgment is rendered dismissing LRC Case No. 396 for failure of the
applicants therein to comply with the thirty year occupancy and possessory
requirements of law for confirmation of imperfect title. No pronouncement as to
costs.
SO ORDERED. cdll
Davide, Jr., C.J., Puno, Kapunan and Pardo, JJ., concur.
Footnotes
1. CA-G.R. CV No. 48785, dated 26 February 1998; Petition, Annex "A"; Rollo, p.
24-38.
2. Dated 8 September 1994; Records, LRC Case No. TG-362, pp. 440-454.
3. Id., at p. 14; Rollo, p. 454.

4. Petition, pp. 7-8; Rollo, pp. 12-13.
5. See Exhibit "S-4"; Records, p. 98.
6. See Petition; Records, LRC Case No. TG-396, pp. 1-18.
7. See Note 1, at p. 10; Rollo, p. 33.

8. G.R. No. 85322, 196 SCRA 476, 480 [1991].
9. G.R. No. 94525, 205 SCRA 486 [1992].
10. Palomo vs. Court of Appeals, G.R. No. 95608, 266 SCRA 392, 401 [1997].
11. Ituralde vs. Falcasantos, G.R. No. 128017, 301 SCRA 293, 296 [1999], citing
Sunbeam Convenience Foods, Inc. vs. Court of Appeals, 181 SCRA 443, 448
[1990].
12. De la Cruz vs. Court of Appeals, G.R. No. 120652, 286 SCRA 230, 235
[1998].

SECOND DIVISION
[G.R. No. 193618. November 28, 2016.]
HEIRS OF LEOPOLDO DELFIN and SOLEDAD DELFIN, namely

EMELITA D. FABRIGAR and LEONILO C. DELFIN , petitioners,
vs. NATIONAL HOUSING AUTHORITY, respondent.
DECISION
LEONEN, J : p
Under Commonwealth Act No. 141, a claimant may acquire alienable

and disposable public land upon evidence of exclusive and notorious
possession of the land since June 12, 1945. The period to acquire public land
by acquisitive prescription under Presidential Decree No. 1529 begins to run
only after the promulgation of a law or a proclamation by the President
stating that the land is no longer intended for public use or the development
of national wealth.
This resolves a Petition for Review on Certiorari 1 under Rule 45 of the
1997 Rules of Civil Procedure praying that the assailed February 26, 2010
Decision 2 and July 2, 2010 Resolution 3 of the Court of Appeals in CA-G.R. CV
No. 80017 be reversed, and that the May 20, 2002 Decision 4 of the Regional
Trial Court in Civil Case No. II-1801 be reinstated.
The Regional Trial Court's May 20, 2002 Decision awarded
compensation to Leopoldo and Soledad Delfin (Delfin Spouses) for an Iligan
City property subsequently occupied by respondent National Housing
Authority.
The assailed Court of Appeals Decision reversed the Regional Trial
Court's May 20, 2002 Decision and dismissed the Delfin Spouses' complaint
seeking compensation. The assailed Court of Appeals Resolution denied their
Motion for Reconsideration.
In a Complaint for "Payment of Parcel(s) of Land and Improvements
and Damages" 5 the Delfin Spouses claimed that they were the owners of a
28,800 square meter parcel of land in Townsite, Suarez, Iligan City (the
"Iligan Property"). 6 They allegedly bought the property in 1951 from Felix
Natingo and Carlos Carbonay, who, allegedly, had been in actual possession
of the property since time immemorial. 7 The Delfin Spouses had been
declaring the Iligan Property in their names for tax purposes since 1952, 8
and had been planting it with mangoes, coconuts, corn, seasonal crops, and
vegetables. 9
They further alleged that, sometime in 1982, respondent National
Housing Authority forcibly took possession of a 10,798 square meter portion
of the property. 10 Despite their repeated demands for compensation, the
National Housing Authority failed to pay the value of the property. 11 The
Delfin Spouses thus, filed their Complaint. 12
They asserted that the property's reasonable market value was not
less than P40 per square meter 13 and that its improvements consisting of
fruit-bearing trees should be valued at P13,360.00 at the time of taking. 14
They similarly claimed that because the National Housing Authority occupied
the property, they were deprived of an average net yearly income of
P10,000.00. 15 CAIHTE
In its Answer, 16 the National Housing Authority alleged that the Delfin
Spouses' property was part of a military reservation area. 17 It cited
Proclamation No. 2151 (actually, Proclamation No. 2143, the National
Housing Authority made an erroneous citation) as having supposedly
reserved the area in which property is situated for Iligan City's slum
improvement and resettlement program, and the relocation of families who
were dislocated by the National Steel Corporation's five-year expansion
program. 18
According to the National Housing Authority, Proclamation No. 2151
also mandated it to determine the improvements' valuation. 19 Based on the
study of the committee it created, the value of the property was supposedly
only P4.00 per square meter, regardless of the nature of the improvements
on it. 20
It emphasized that among all claimants, only the Delfin Spouses and
two others remained unpaid because of their disagreement on the property's
valuation. 21
The National Housing Authority failed to appear during the pre-trial
conference. 22 Upon the Delfin Spouses' motion, the Regional Trial Court
declared the National Housing Authority in default. 23 The case was set for
the ex-parte reception of the Delfin Spouses' evidence. 24
On May 20, 2002, the Regional Trial Court rendered a Decision in favor
of the Delfin Spouses. 25 The dispositive portion of the Decision read:
WHEREFORE, premises considered, and by virtue of the
existence of preponderance of evidence, the Court hereby enters a
judgment in favor of spouses-plaintiffs Leopoldo Delfin and Soledad
Delfin against defendant National Housing Authority, its agents or
representative/s ordering to pay the former the following, to wit:
1) P400,000.00 representing the reasonable market value of

a portion of the land taken by the defendant containing an
area of 10,000 square meters at the rate of P40.00 per
square meters plus legal interest per annum from the filing
in Court of the complaint until fully paid;
2) P13,360.00 representing the value of the permanent

improvements that were damaged and destroyed plus
legal interest per annum from the time of the filing of this
case until fully paid;
3) P10,000.00, representing attorney's fees;

4) The costs of this suit. 26
The Regional Trial Court stated that it had no reason to doubt the
evidence presented by the Delfin Spouses:
On this regards (sic), the Court finds no reason to doubt the veracity
of the plaintiff['s evidence], there being none to controvert the same.
If said evidence did not ring true, the defendant should have and
could have easily destroyed their probatory value. Such indifference
can only mean that defendant had not (sic) equitable rights to protect
or assert over the disputed property together with all the
improvements existing thereon. This, the defendant did not do so and
the Court finds no cogent reasons to disbelieve or reject the plaintiff's
categorical declarations on the witness stand under a solemn oath,
for the same are entitled to full faith and credence. Indeed, if the
defendant National Housing Authority have been blinded with the
consequence of their neglect and apathy, then defendant have no
right to pass on to the spouses-plaintiffs of their negligence and
expect the Court to come to their rescue. For it is now much too late
in the day to assail the decision which has become final and
executory. 27
The National Housing Authority filed a Motion for Reconsideration, but
this was denied in the Regional Trial Court's September 10, 2002 Resolution.
28
On the National Housing Authority's appeal, the Court of Appeals

rendered the assailed February 26, 2010 Decision reversing the Regional
Trial Court: 29
WHEREFORE, the appeal is GRANTED. The assailed Decision is
REVERSED and SET ASIDE. Consequently, appellees' complaint for
compensation is DISMISSED for lack of merit. The property taken by
appellant NHA and for which compensation is sought by appellees is
hereby DECLARED land of the public domain. 30
The Court of Appeals ruled that the characterization of the property is
no longer an issue because the National Housing Authority already conceded
that the property is disposable public land by citing Proclamation No. 2151,
which characterized the property as "a certain disposable parcel of public
land." 31 However, the Delfin Spouses supposedly failed to establish their
possession of the property since June 12, 1945, as required in Section 48 (b)
of the Public Land Act. 32
During the pendency of their petition before the Court of Appeals. Both
Leopoldo and Soledad Delfin both passed away. Leopoldo passed away on
February 3, 2005 and Soledad on June 22, 2004. Their surviving heirs,
Emelita D. Fabrigar and Leonilo C. Delfin filed a Motion for Substitution
before the Court of Appeals, which was not acted upon. 33
In its assailed July 2, 2010 Resolution, 34 the Court of Appeals denied
the Motion for Reconsideration filed by the heirs of the Delfin Spouses.
Hence, this petition which was filed by the surviving heirs of the Delfin
Spouses, Emelita D. Fabrigar and Leonilo C. Delfin (petitioners). 35
For resolution is the issue of whether petitioners are entitled to just
compensation for the Iligan City property occupied by respondent National
Housing Authority. DETACa
I
The right to be justly compensated whenever private property is taken
for public use cannot be disputed. Article III, Section 9 of the 1987
Constitution states that:
Section 9. Private property shall not be taken for public use
without just compensation.
The case now hinges on whether the petitioners and their
predecessors-in-interests have been in possession of the Iligan Property for
such duration and under such circumstances as will enable them to claim
ownership.
Petitioners argue that they and their predecessors-in-interests' open,
continuous, exclusive, and notorious possession of the Iligan Property for
more than 30 years converted the property from public to private. 36 They
then posit that they acquired ownership of the property through acquisitive
prescription under Section 14 (2) of Presidential Decree No. 1529. 37
Petitioners also assert that the Court of Appeals disregarded
certifications and letters from government agencies, which support their
claims, particularly, their and their predecessors-in-interest's possession
since June 12, 1945. 38
Respondent counters, citing the Court of Appeals Decision, that
petitioners cannot rely on Section 14 (2) of Presidential Decree No. 1529
because the property was not yet declared private land when they filed their
Complaint. 39
II
Petitioners are erroneously claiming title based on acquisitive
prescription under Section 14 (2) of Presidential Decree No. 1529.
Section 14 reads in full:
Section 14. Who may apply. — The following persons may file in
the proper Court of First Instance an application for registration of
title to land, whether personally or through their duly authorized
representatives:
(1) Those who by themselves or through their predecessors-

in-interest have been in open, continuous, exclusive and
notorious possession and occupation of alienable and
disposable lands of the public domain under a bona fide
claim of ownership since June 12, 1945, or earlier.
(2) Those who have acquired ownership of private lands by

prescription under the provision of existing laws.
(3) Those who have acquired ownership of private lands or
abandoned river beds by right of accession or accretion
under the existing laws.

(4) Those who have acquired ownership of land in any other
manner provided for by law.
Where the land is owned in common, all the co-owners shall file
the application jointly.
Where the land has been sold under pacto de retro, the vendor
a retro may file an application for the original registration of the land,
provided, however, that should the period for redemption expire
during the pendency of the registration proceedings and ownership to
the property consolidated in the vendee a retro, the latter shall be
substituted for the applicant and may continue the proceedings.
A trustee on behalf of his principal may apply for original
registration of any land held in trust by him, unless prohibited by the
instrument creating the trust. [Emphasis supplied]
For acquisitive prescription to set in pursuant to Section 14 (2) of
Presidential Decree No. 1529, two (2) requirements must be satisfied: first,
the property is established to be private in character; and second the
applicable prescriptive period under existing laws had passed.
Property — such as land — is either of public dominion or private
ownership. 40
"Land is considered of public dominion if it either: (a) is intended for
public use; or (b) belongs to the State, without being for public use, and is
intended for some public service or for the development of the national
wealth." 41 Land that belongs to the state but which is not or is no longer
intended for public use, for some public service or for the development of
the national wealth, is patrimonial property; 42 it is property owned by the
State in its private capacity. Provinces, cities, and municipalities may also
hold patrimonial lands. 43
Private property "consists of all property belonging to private persons,
either individually or collectively," 44 as well as "the patrimonial property of
the State, provinces, cities, and municipalities." 45
Accordingly, only publicly owned lands which are patrimonial in
character are susceptible to prescription under Section 14 (2) of Presidential
Decree No. 1529. Consistent with this, Article 1113 of Civil Code demarcates
properties of the state, which are not patrimonial in character, as being not
susceptible to prescription:
Art. 1113. All things which are within the commerce of men are
susceptible of prescription, unless provided. Property of the State or
any of its subdivisions not patrimonial in character shall not be the
object of prescription.
Contrary to petitioners' theory then, for prescription to be viable, the
publicly-owned land must be patrimonial or private in character at the onset.
Possession for thirty (30) years does not convert it into patrimonial property.
For land of the public domain to be converted into patrimonial
property, there must be an express declaration — "in the form of a law duly
enacted by Congress or a Presidential Proclamation in cases where the
President is duly authorized by law" 46 — that "the public dominion property
is no longer intended for public service or the development of the national
wealth or that the property has been converted into patrimonial." 47
This Court's 2009 Decision in Heirs of Malabanan v. Republic 48
explains:
Nonetheless, Article 422 of the Civil Code states that "
[p]roperty of public dominion, when no longer intended for public use
or for public service, shall form part of the patrimonial property of the
State." It is this provision that controls how public dominion property
may be converted into patrimonial property susceptible to acquisition
by prescription. After all, Article 420 (2) makes clear that those
property "which belong to the State, without being for public use, and
are intended for some public service or for the development of the
national wealth" are public dominion property. For as long as the
property belongs to the State, although already classified as alienable
or disposable, it remains property of the public dominion if when * it
is "intended for some public service or for the development of the
national wealth." aDSIHc
Accordingly, there must be an express declaration by the State

that the public dominion property is no longer intended for public
service or the development of the national wealth or that the property
has been converted into patrimonial. Without such express
declaration, the property, even if classified as alienable or disposable,
remains property of the public dominion, pursuant to Article 420 (2),
and thus incapable of acquisition by prescription. It is only when such
alienable and disposable lands are expressly declared by the State to
be no longer intended for public service or for the development of the
national wealth that the period of acquisitive prescription can begin
to run. Such declaration shall be in the form of a law duly enacted by
Congress or a Presidential Proclamation in cases where the President
is duly authorized by law. 49
This was reiterated in this Court's 2013 Resolution in Heirs of
Malabanan v. Republic: 50
[W]hen public land is no longer intended for public service or for the
development of the national wealth, thereby effectively removing the
land from the ambit of public dominion, a declaration of such
conversion must be made in the form of a law duly enacted by
Congress or by a Presidential proclamation in cases where the
President is duly authorized by law to that effect. 51
Attached to the present Petition was a copy of a May 18, 1988
supplemental letter to the Director of the Land Management Bureau. 52 This
referred to an executive order, which stated that petitioners' property was
no longer needed for any public or quasi-public purposes:
That it is very clear in the 4th Indorsement of the Executive Secretary
dated April 24, 1954 the portion thereof that will not be needed for
any public or quasi-public purposes, be disposed in favor of the actual
occupants under the administration of the Bureau of Lands (copy of
the Executive Order is herewith attached for ready reference). 53
However, a mere indorsement of the executive secretary is not the law
or presidential proclamation required for converting land of the public
domain into patrimonial property and rendering it susceptible to prescription.
There then was no viable declaration rendering the Iligan property to have
been patrimonial property at the onset. Accordingly, regardless of the length
of petitioners' possession, no title could vest on them by way of prescription.
III
While petitioners may not claim title by prescription, they may,
nevertheless, claim title pursuant to Section 48 (b) of Commonwealth Act
No. 141 (the Public Land Act).
Section 48 enabled the confirmation of claims and issuance of titles in
favor of citizens occupying or claiming to own lands of the public domain or
an interest therein. Section 48 (b) specifically pertained to those who "have
been in open, continuous, exclusive, and notorious possession and,
occupation of agricultural lands of the public domain, under a bona fide
claim of acquisition or ownership, since June 12, 1945":
Sec. 48. The following-described citizens of the Philippines,
occupying lands of the public domain or claiming to own any such
lands or an interest therein, but whose titles have not been perfected
or completed, may apply to the Court of First Instance of the province
where the land is located for confirmation of their claims and the
issuance of a certificate of title therefor under the Land Registration
Act, to wit:
xxx xxx xxx
(b) Those who by themselves or through their predecessors-

in-interest have been in open, continuous, exclusive, and
notorious possession and, occupation of agricultural lands
of the public domain, under a bona fide claim of acquisition
or ownership, since June 12, 1945, immediately preceding
the filing of the application for confirmation of title, except
when prevented by war or force majeure. These shall be
conclusively presumed to have performed all the conditions
essential to a government grant and shall be entitled to a
certificate of title under the provisions of this chapter. (As
amended by PD 1073.)
Section 48 (b) of the Public Land Act therefore requires that two (2)
requisites be satisfied before claims of title to public domain lands may be
confirmed: first, that the land subject of the claim is agricultural land; and
second, open, continuous, notorious, and exclusive possession of the land
since June 12, 1945. ETHIDa
The need for the land subject of the claim to have been classified as
agricultural is in conformity with the constitutional precept that "[a]lienable
lands of the public domain shall be limited to agricultural lands." 54 As
explained in this Court's 2013 Resolution in Heirs of Malabanan v. Republic:
Whether or not land of the public domain is alienable and
disposable primarily rests on the classification of public lands made
under the Constitution. Under the 1935 Constitution, lands of the
public domain were classified into three, namely, agricultural, timber
and mineral. Section 10, Article XIV of the 1973 Constitution classified
lands of the public domain into seven, specifically, agricultural,
industrial or commercial, residential, resettlement, mineral, timber or
forest, and grazing land, with the reservation that the law might
provide other classifications. The 1987 Constitution adopted the
classification under the 1935 Constitution into agricultural, forest or
timber, and mineral, but added national parks. Agricultural lands may
be further classified by law according to the uses to which they may
be devoted. The identification of lands according to their legal
classification is done exclusively by and through a positive act of the
Executive Department.
Based on the foregoing, the Constitution places a limit on the
type of public land that may be alienated. Under Section 2, Article XII
of the 1987 Constitution, only agricultural lands of the public domain
may be alienated; all other natural resources may not be.
Alienable and disposable lands of the State fall into two
categories, to wit: (a) patrimonial lands of the State, or those
classified as lands of private ownership under Article 425 of the Civil
Code, without limitation; and (b) lands of the public domain, or the
public lands as provided by the Constitution, but with the limitation
that the lands must only be agricultural. Consequently, lands
classified as forest or timber, mineral, or national parks are not
susceptible of alienation or disposition unless they are reclassified as
agricultural. A positive act of the Government is necessary to enable
such reclassification, and the exclusive prerogative to classify public
lands under existing laws is vested in the Executive Department, not
in the courts. 55
As the Court of Appeals emphasized, respondent has conceded that the
Iligan property was alienable and disposable land:
As to the first requirement: There was no need for appellees to
establish that the property involved was alienable and disposable
public land. This characterization of the property is conceded by
[respondent] who cites Proclamation No. 2151 as declaring that the
disputed property was "a certain disposable parcel of public land." 56
That the Iligan property was alienable and disposable, agricultural land,
has been admitted. What is claimed instead is that petitioners' possession is
debunked by how the Iligan Property was supposedly part of a military
reservation area 57 which was subsequently reserved for Iligan City's slum
improvement and resettlement program, and the relocation of families who
were dislocated by the National Steel Corporation's five-year expansion
program. 58
Indeed, by virtue of Proclamation No. 2143 (erroneously referred to by
respondent as Proclamation No. 2151) certain parcels of land in Barrio
Suarez, Iligan City were reserved for slum-improvement and resettlement
program purposes. 59 The proclamation characterized the covered area as
"disposable parcel of public land":
WHEREAS, a certain disposable parcel of public land situated at
Barrio Suarez, Iligan City consisting of one million one hundred
seventy-four thousand eight hundred fifty-three (1,174,853) square
meters, more or less, has been chosen by National Steel Corporation
and the City Government of Iligan with the conformity of the National
Housing/Authority, as the most suitable site for the relocation of the
families to be affected/dislocated as a result of National Steel
Corporation's program and for the establishment of a slum
improvement and resettlement project in the City of Iligan; 60
However, even if the Iligan Property was subsumed by Proclamation
No. 2143, the same proclamation recognized private rights, which may have
already attached, and the rights of qualified free patent applicants:
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the
Philippines, by virtue of the powers vested in me by law, do hereby
reserve for relocation of the families to be affected/dislocated by the
5-year expansion program of the National Steel Corporation and for
the slum improvement and resettlement project of the City of Iligan
under the administration and disposition of the National Housing
Authority, subject to private rights, if any there be, Lot 5258 (portion)
of the Iligan Cadastre, which parcel of land is of the public domain,
situated in Barrio Suarez, City of Iligan and more particularly
described as follows:
xxx xxx xxx
This Proclamation is subject to the condition that the qualified
free patent applicants occupying portions of the aforedescribed
parcel of land, if any, may be compensated for the value of their
respective portions and existing improvements thereon, as may be
determined by the National Housing Authority. 61
Whatever rights petitioners (and their predecessors-in-interest) may
have had over the Iligan property was, thus, not obliterated by Proclamation
No. 2143. On the contrary, the Proclamation itself facilitated compensation.
More importantly, there is documentary evidence to the effect that the
Iligan Property was not even within the area claimed by respondent. In a
letter 62 to the Director of Lands, dated December 22, 1987, Deputy Public
Land Inspector Pio Lucero, Jr. noted that:
That this land known as Lot No. 5258, Cad. 292, Iligan Cadastre which
portion was claimed also by the Human Settlement and/or National
Housing Authority; but the area applied for by Leopoldo Delfin is
outside the claim of the said agency as per certification issued dated
June 10, 1988; copy of which is herewith attached for ready
reference; 63
The same letter likewise indicated that the Iligan Property was already
occupied by June 1945 and that it had even been released for agricultural
purposes in favor of its occupants. 64 Accordingly, the Deputy Public Land
Inspector recommended the issuance of a patent in favor of petitioner
Leopoldo Delfin: 65
Upon investigation conducted by the undersigned in the premises of
the land, it was found and ascertained that the land applied for by
Leopoldo Delfin was first entered, occupied, possessed and cultivated
by him since the year June, 1945 up to the present; he have already
well improved the land and introduced some considerable
improvements such as coconut trees and different kinds of fruit trees
which are presently all fruit bearing trees; declared the same for
taxation purposes and taxes have been paid every year; and that
there is no other person or persons who bothered him in his peaceful
occupation and cultivation thereof;
cSEDTC
Records of this Office show that said land was surveyed and claimed
by the Military Reservation, but the portion of which has been
released in favor of the actual occupants and the area of Leopoldo
Delfin is one of the portions released for agricultural purposes;
xxx xxx xxx
That the applicant caused the survey of the land under Sgs-12-
000099, approved by the Regional Land Director, Region XII, Bureau
of Lands, Cotabato City on April 3, 1979 (see approved plan attached
hereof);
In view hereof, it is therefore respectfully recommended that the
entry of the application be now confirmed and that patent be yes
issued in favor of Leopoldo Delfin. 66
A May 18, 1988 supplemental letter to the Director of the Land
Management Bureau further stated:
That the land applied for by Leopoldo Delfin is a portion of Lot
No. 5258, Cad. 292, Iligan Cadastre which was entered, occupied and
possessed by the said applicant since the year June 1945 up to the
present; well improved the same and introduced some considerable
improvements such as different kinds of fruit trees, coconut trees and
other permanent improvements thereon;
xxx xxx xxx
That is very clear in the 4th Indorsement of the Executive
Secretary dated April 24, 1954 the portion thereof that will not be
needed for any public or quasi-public purposes, be disposed in favor
of the actual occupants under the administration of the Bureau of
Lands[.] 67
Clearly then, petitioners acquired title over the Iligan Property pursuant
to Section 48 (b) of the Public Land Act.
First, there is no issue that the Iligan Property had already been
declared to be alienable and disposable land. Respondent has admitted this
and Deputy Public Land Inspector Pio Lucero, Jr.'s letters to the Director of
Land attest to this.
Second, although the Delfin Spouses' testimonial evidence and tax
declarations showed that their possession went only as far back as 1952,
Deputy Public Land Inspector Pio Lucero, Jr.'s letters to the Director of Land
nevertheless attest to a previous finding that the property had already been
occupied as early as June 1945.
Having shown that the requisites of Section 48 (b) of the Public Land
Act have been satisfied and having established their rights to the Iligan
Property, it follows that petitioners must be compensated for its taking.
WHEREFORE, the Petition is GRANTED. The assailed Court of Appeals
Decision dated February 26, 2010 and Resolution dated July 2, 2010 in CA-
G.R. CV No. 80017 are REVERSED and SET ASIDE. The Regional Trial
Court's Decision dated May 20, 2002 in Civil Case No. II-1801 is
REINSTATED.
SO ORDERED.
Carpio, Brion, Del Castillo and Mendoza, JJ., concur.
Footnotes
1. Rollo , pp. 50-67.
2. Id. at 69-85. The Decision was penned by Associate Justice Romulo V. Borja, and
concurred in by Associate Justices Edgardo T. Lloren and Angelita A. Gacutan
of the Twenty-First Division, Court of Appeals, Cagayan de Oro.
3. Id. at 99-105. The Resolution was penned by Associate Justice Romulo V. Borja,
and concurred in by Associate Justices Edgardo T. Lloren and Angelita A.
Gacutan of the Former Twenty-First Division, Court of Appeals, Cagayan de
Oro.
4. Id. at 149-159. The Decision was penned by Presiding Judge Maximo B. Ratunil of
the Regional Trial Court of Lanao Del Norte.
5. Id. at 112-115.
6. Id. at 11.
7. Id. at 11 and 144.
8. Id. at 11.
9. Id. at 120-121.
10. Id. at 11 and 144.

11. Id. at 11.
12. Id. at 10.

13. Id. at 11.
14. Id.
15. Id.
16. Id. at 116-119.

17. Id. at 144.
18. Id.
19. Id. at 145.
20. Id.
21. Id.
22. Id. at 12.
23. Id.
24. Id. at 12-13.
25. Id. at 159.

26. Id. at 159.
27. Id. at 157.

28. Id. at 14-15.
29. Id. at 69-85.

30. Id. at 26.
31. Id. at 20.

32. Id. at 24.
Com. Act No. 141, sec. 48 (b) provides:

Section 48. The following-described citizens of the Philippines, occupying lands of
the public domain or claiming to own any such lands or an interest therein,
but whose titles have not been perfected or completed, may apply to the
Court of First Instance of the province where the land is located for
confirmation of their claims and the issuance of a certificate of title therefor
under the Land Registration Act, to wit:
xxx xxx xxx
(b) Those who by themselves or through their predecessors-in-interest have been

in open, continuous, exclusive, and notorious possession and, occupation of
agricultural lands of the public domain, under a bona fide claim of acquisition
or ownership, since June 12, 1945, immediately preceding the filing of the
application for confirmation of title, except when prevented by war or force
majeure. These shall be conclusively presumed to have performed all the
conditions essential to a government grant and shall be entitled to a
certificate of title under the provisions of this chapter.
33. Id. at 52.
34. Rollo , pp. 99-105.

35. Id. at 52.
36. Id. at 60.

37. Id.
Pres. Decree No. 1529, sec. 14 states:

Section 14. Who may apply. — The following persons may file in the proper Court
of First Instance an application for registration of title to land, whether
personally or through their duly authorized representatives:
xxx xxx xxx

(2) Those who have acquired ownership of private lands by prescription under the
provision of existing laws.
xxx xxx xxx

Where the land is owned in common, all the co-owners shall file the application
jointly.
Where the land has been sold under pacto de retro, the vendor a retro may file an
application for the original registration of the land, provided, however, that
should the period for redemption expire during the pendency of the
registration proceedings and ownership to the property consolidated in the
vendee a retro, the latter shall be substituted for the applicant and may
continue the proceedings.
A trustee on behalf of his principal may apply for original registration of any land
held in trust by him, unless prohibited by the instrument creating the trust.
38. Rollo , p. 63.

39. Id. at 176-177.
40. CIVIL CODE, art. 419 provides:
Article 419. Property is either of public dominion or of private ownership.

41. Heirs of Malabanan v. Republic , 717 Phil. 141, 160 (2013). [Per J. Bersamin, En
Banc], citing CIVIL CODE, art. 420.
42. CIVIL CODE, arts. 421 and 422 provide:

Article 421. All other property of the State, which is not of the character stated in
the preceding article, is patrimonial property.
Article 422. Property of public dominion, when no longer intended for public use or
for public service, shall form part of the patrimonial property of the State.
43. CIVIL CODE, arts. 423 and 424 state:

Article 423. The property of provinces, cities, and municipalities is divided into
property for public use and patrimonial property.
Article 424. Property for public use, in the provinces, cities, and municipalities,
consist of the provincial roads, city streets, municipal streets, the squares,
fountains, public waters, promenades, and public works for public service
paid for by said provinces, cities, or municipalities.
All other property possessed by any of them is patrimonial and shall be governed
by this Code, without prejudice to the provisions of special laws.
44. CIVIL CODE, art. 425 states:
Article 425. Property of private ownership, besides the patrimonial property of the
State, provinces, cities, and municipalities, consists of all property belonging
to private persons, either individually or collectively.
45. CIVIL CODE, art. 425.
46. Heirs of Malabanan v. Republic , 605 Phil. 244, 279 (2009) [Per J. Tinga, En
Banc].
47. Id.
48. 605 Phil. 244 (2009) [Per J. Tinga, En Banc].

49. Id. at 278-279.
50. 717 Phil. 141 (2013) [Per J. Bersamin, En Banc].
51. Id. at 162.

52. Rollo , p. 139.
53. Id.
54. CONST., art. XII, sec. 3. Also, CONST., art. XII, sec. 2 states that, "[w]ith the
exception of agricultural lands, all other natural resources shall not be
alienated."
55. Heirs of Malabanan v. Republic , 717 Phil. 141, 161-162 (2013) [Per J. Bersamin,
En Banc], citing CONST. (1935), art. XIII, sec. 1; Krivenko v. Register of Deeds
of Manila, 79 Phil. 461, 468 (1947) [Per C.J. Moran, Second Division]; CONST.,
art. XII, sec. 3; BERNAS, THE 1987 CONSTITUTION, 1188-1189 (2009); CIVIL
CODE, art. 425; Director of Forestry v. Villareal , 252 Phil. 622 (1989) [Per J.
Cruz, En Banc]; Heirs of Jose Amunategui v. Director of Forestry , 211 Phil.
260 (1983) [Per J. Gutierrez, Jr., First Division]; and Director of Lands v. Court
of Appeals, 214 Phil. 606 (1984) [Per J. Melencio-Herrera, First Division].
56. Rollo , p. 79.
57. Id. at 144.
58. Id.
59. Id.
60. Proclamation No. 2143 (1981).

61. Proclamation No. 2143 (1981).
62. Rollo , p. 140.

63. Id.
64. Id.
65. Id.
66. Id.
67. Id. at 139.

EN BANC
[G.R. No. 179987. September 3, 2013.]
HEIRS OF MARIO MALABANAN (Represented by Sally A.

Malabanan), petitioners, vs. REPUBLIC OF THE PHILIPPINES,
respondent.
RESOLUTION
BERSAMIN, J : p
For our consideration and resolution are the motions for reconsideration
of the parties who both assail the decision promulgated on April 29, 2009,
whereby we upheld the ruling of the Court of Appeals (CA) denying the
application of the petitioners for the registration of a parcel of land situated in
Barangay Tibig, Silang, Cavite on the ground that they had not established by
sufficient evidence their right to the registration in accordance with either
Section 14 (1) or Section 14 (2) of Presidential Decree No. 1529 (Property
Registration Decree). SIcEHC
Antecedents
The property subject of the application for registration is a parcel of land

situated in Barangay Tibig, Silang, Cavite, more particularly identified as Lot
9864-A, Cad-452-D, with an area of 71,324-square meters. On February 20,
1998, applicant Mario Malabanan, who had purchased the property from
Eduardo Velazco, filed an application for land registration covering the property
in the Regional Trial Court (RTC) in Tagaytay City, Cavite, claiming that the
property formed part of the alienable and disposable land of the public domain,
and that he and his predecessors-in-interest had been in open, continuous,
uninterrupted, public and adverse possession and occupation of the land for
more than 30 years, thereby entitling him to the judicial confirmation of his
title. 1
To prove that the property was an alienable and disposable land of the
public domain, Malabanan presented during trial a certification dated June 11,
2001 issued by the Community Environment and Natural Resources Office
(CENRO) of the Department of Environment and Natural Resources (DENR),
which reads:
This is to certify that the parcel of land designated as Lot No.
9864 Cad 452-D, Silang Cadastre as surveyed for Mr. Virgilio Velasco
located at Barangay Tibig, Silang, Cavite containing an area of 249,734
sq. meters as shown and described on the Plan Ap-04-00952 is verified
to be within the Alienable or Disposable land per Land Classification
Map No. 3013 established under Project No. 20-A and approved as such
under FAO 4-1656 on March 15, 1982. 2
After trial, on December 3, 2002, the RTC rendered judgment granting
Malabanan's application for land registration, disposing thusly:
WHEREFORE, this Court hereby approves this application for
registration and thus places under the operation of Act 141, Act 496
and/or P.D. 1529, otherwise known as Property Registration Law, the
lands described in Plan Csd-04-0173123-D, Lot 9864-A and containing
an area of Seventy One Thousand Three Hundred Twenty Four (71,324)
Square Meters, as supported by its technical description now forming
part of the record of this case, in addition to other proofs adduced in
the name of MARIO MALABANAN, who is of legal age, Filipino, widower,
and with residence at Munting Ilog, Silang, Cavite.
aDACcH
Once this Decision becomes final and executory, the

corresponding decree of registration shall forthwith issue.
SO ORDERED. 3
The Office of the Solicitor General (OSG) appealed the judgment to the
CA, arguing that Malabanan had failed to prove that the property belonged to
the alienable and disposable land of the public domain, and that the RTC erred
in finding that he had been in possession of the property in the manner and for
the length of time required by law for confirmation of imperfect title.
On February 23, 2007, the CA promulgated its decision reversing the RTC
and dismissing the application for registration of Malabanan. Citing the ruling in
Republic v. Herbieto (Herbieto) , 4 the CA declared that under Section 14 (1) of
the Property Registration Decree, any period of possession prior to the
classification of the land as alienable and disposable was inconsequential and
should be excluded from the computation of the period of possession. Noting
that the CENRO-DENR certification stated that the property had been declared
alienable and disposable only on March 15, 1982, Velazco's possession prior to
March 15, 1982 could not be tacked for purposes of computing Malabanan's
period of possession.
Due to Malabanan's intervening demise during the appeal in the CA, his
heirs elevated the CA's decision of February 23, 2007 to this Court through a
petition for review on certiorari.
The petitioners assert that the ruling in Republic v. Court of Appeals and
Corazon Naguit 5 (Naguit) remains the controlling doctrine especially if the
property involved is agricultural land. In this regard, Naguit ruled that any
possession of agricultural land prior to its declaration as alienable and
disposable could be counted in the reckoning of the period of possession to
perfect title under the Public Land Act (Commonwealth Act No. 141) and the
Property Registration Decree . They point out that the ruling in Herbieto, to the
effect that the declaration of the land subject of the application for registration
as alienable and disposable should also date back to June 12, 1945 or earlier,
was a mere obiter dictum considering that the land registration proceedings
therein were in fact found and declared void ab initio for lack of publication of
the notice of initial hearing. AacCIT

The petitioners also rely on the ruling in Republic v. T.A.N. Properties, Inc.
6 to support their argument that the property had been ipso jure converted into
private property by reason of the open, continuous, exclusive and notorious
possession by their predecessors-in-interest of an alienable land of the public
domain for more than 30 years. According to them, what was essential was
that the property had been "converted" into private property through
prescription at the time of the application without regard to whether the
property sought to be registered was previously classified as agricultural land
of the public domain.
As earlier stated, we denied the petition for review on certiorari because

Malabanan failed to establish by sufficient evidence possession and occupation
of the property on his part and on the part of his predecessors-in interest since
June 12, 1945, or earlier.
Petitioners' Motion for Reconsideration

In their motion for reconsideration, the petitioners submit that the mere
classification of the land as alienable or disposable should be deemed sufficient
to convert it into patrimonial property of the State. Relying on the rulings in
Spouses de Ocampo v. Arlos, 7 Menguito v. Republic 8 and Republic v. T.A.N.
Properties, Inc., 9 they argue that the reclassification of the land as alienable or
disposable opened it to acquisitive prescription under the Civil Code; that
Malabanan had purchased the property from Eduardo Velazco believing in good
faith that Velazco and his predecessors-in-interest had been the real owners of
the land with the right to validly transmit title and ownership thereof; that
consequently, the ten-year period prescribed by Article 1134 of the Civil Code,
in relation to Section 14 (2) of the Property Registration Decree, applied in their
favor; and that when Malabanan filed the application for registration on
February 20, 1998, he had already been in possession of the land for almost 16
years reckoned from 1982, the time when the land was declared alienable and
disposable by the State. ASTcaE
The Republic's Motion for Partial Reconsideration
The Republic seeks the partial reconsideration in order to obtain a

clarification with reference to the application of the rulings in Naguit and
Herbieto.
Chiefly citing the dissents, the Republic contends that the decision has
enlarged, by implication, the interpretation of Section 14 (1) of the Property
Registration Decree through judicial legislation. It reiterates its view that an
applicant is entitled to registration only when the land subject of the application
had been declared alienable and disposable since June 12, 1945 or earlier.
Ruling
We deny the motions for reconsideration.

In reviewing the assailed decision, we consider to be imperative to
discuss the different classifications of land in relation to the existing applicable
land registration laws of the Philippines.
Classifications of land according to
ownership
Land, which is an immovable property, 10 may be classified as either of

public dominion or of private ownership. 11 Land is considered of public
dominion if it either: (a) is intended for public use; or (b) belongs to the State,
without being for public use, and is intended for some public service or for the
development of the national wealth. 12 Land belonging to the State that is not
of such character, or although of such character but no longer intended for
public use or for public service forms part of the patrimonial property of the
State. 13 Land that is other than part of the patrimonial property of the State,
provinces, cities and municipalities is of private ownership if it belongs to a
private individual.
Pursuant to the Regalian Doctrine (Jura Regalia) , a legal concept first

introduced into the country from the West by Spain through the Laws of the
Indies and the Royal Cedulas, 14 all lands of the public domain belong to the
State. 15 This means that the State is the source of any asserted right to
ownership of land, and is charged with the conservation of such patrimony. 16
All lands not appearing to be clearly under private ownership are presumed to
belong to the State. Also, public lands remain part of the inalienable land of the
public domain unless the State is shown to have reclassified or alienated them
to private persons. 17 HCEcAa
Classifications of public lands

according to alienability
Whether or not land of the public domain is alienable and disposable
primarily rests on the classification of public lands made under the Constitution.
Under the 1935 Constitution, 18 lands of the public domain were classified into
three, namely, agricultural, timber and mineral. 19 Section 10, Article XIV of the
1973 Constitution classified lands of the public domain into seven, specifically,
agricultural, industrial or commercial, residential, resettlement, mineral, timber
or forest, and grazing land, with the reservation that the law might provide
other classifications. The 1987 Constitution adopted the classification under the
1935 Constitution into agricultural, forest or timber, and mineral, but added
national parks. 20 Agricultural lands may be further classified by law according
to the uses to which they may be devoted. 21 The identification of lands
according to their legal classification is done exclusively by and through a
positive act of the Executive Department. 22
Based on the foregoing, the Constitution places a limit on the type of

public land that may be alienated. Under Section 2, Article XII of the 1987
Constitution, only agricultural lands of the public domain may be alienated; all
other natural resources may not be.
Alienable and disposable lands of the State fall into two categories, to wit:
(a) patrimonial lands of the State, or those classified as lands of private
ownership under Article 425 of the Civil Code, 23 without limitation; and (b)
lands of the public domain, or the public lands as provided by the Constitution,
but with the limitation that the lands must only be agricultural. Consequently,
lands classified as forest or timber, mineral, or national parks are not
susceptible of alienation or disposition unless they are reclassified as
agricultural. 24 A positive act of the Government is necessary to enable such
reclassification, 25 and the exclusive prerogative to classify public lands under
existing laws is vested in the Executive Department, not in the courts. 26 If,
however, public land will be classified as neither agricultural, forest or timber,
mineral or national park, or when public land is no longer intended for public
service or for the development of the national wealth, thereby effectively
removing the land from the ambit of public dominion, a declaration of such
conversion must be made in the form of a law duly enacted by Congress or by a
Presidential proclamation in cases where the President is duly authorized by
law to that effect. 27 Thus, until the Executive Department exercises its
prerogative to classify or reclassify lands, or until Congress or the President
declares that the State no longer intends the land to be used for public service
or for the development of national wealth, the Regalian Doctrine is applicable.
cEaACD
Disposition of alienable public lands
Section 11 of the Public Land Act (CA No. 141) provides the manner by
which alienable and disposable lands of the public domain, i.e., agricultural
lands, can be disposed of, to wit:
Section 11. Public lands suitable for agricultural purposes can
be disposed of only as follows, and not otherwise:
(1) For homestead settlement;
(2) By sale;
(3) By lease; and
(4) By confirmation of imperfect or incomplete titles:
(a) By judicial legalization; or
(b) By administrative legalization (free patent).
The core of the controversy herein lies in the proper interpretation of

Section 11 (4), in relation to Section 48 (b) of the Public Land Act, which
expressly requires possession by a Filipino citizen of the land since June 12,
1945, or earlier, viz.:
Section 48. The following-described citizens of the
Philippines, occupying lands of the public domain or claiming to own
any such lands or an interest therein, but whose titles have not been
perfected or completed, may apply to the Court of First Instance of the
province where the land is located for confirmation of their claims and
the issuance of a certificate of title thereafter, under the Land
Registration Act, to wit:
xxx xxx xxx
(b) Those who by themselves or through their predecessors-

in-interest have been in open, continuous, exclusive, and notorious
possession and occupation of alienable and disposable lands of the
public domain, under a bona fide claim of acquisition of ownership,
since June 12, 1945, or earlier , immediately preceding the filing of
the applications for confirmation of title, except when prevented by war
or force majeure. These shall be conclusively presumed to have
performed all the conditions essential to a Government grant and shall
be entitled to a certificate of title under the provisions of this chapter.
(Bold emphasis supplied) cDCEIA
Note that Section 48 (b) of the Public Land Act used the words"lands of
the public domain" or "alienable and disposable lands of the public domain" to
clearly signify that lands otherwise classified, i.e., mineral, forest or timber, or
national parks, and lands of patrimonial or private ownership, are outside the
coverage of the Public Land Act. What the law does not include, it excludes. The
use of the descriptive phrase "alienable and disposable" further limits the
coverage of Section 48 (b) to only the agricultural lands of the public domain as
set forth in Article XII, Section 2 of the 1987 Constitution. Bearing in mind such
limitations under the Public Land Act, the applicant must satisfy the following
requirements in order for his application to come under Section 14 (1) of the
Property Registration Decree, 28 to wit:
1. The applicant, by himself or through his predecessor-in-interest,
has been in possession and occupation of the property subject of
the application;
2. The possession and occupation must be open, continuous,

exclusive, and notorious;
3. The possession and occupation must be under a bona fide claim

of acquisition of ownership;
4. The possession and occupation must have taken place since June
12, 1945, or earlier; and
5. The property subject of the application must be an agricultural

land of the public domain.
Taking into consideration that the Executive Department is vested with

the authority to classify lands of the public domain, Section 48 (b) of the Public
Land Act, in relation to Section 14 (1) of theProperty Registration Decree ,
presupposes that the land subject of the application for registration must have
been already classified as agricultural land of the public domain in order for the
provision to apply. Thus, absent proof that the land is already classified as
agricultural land of the public domain, the Regalian Doctrine applies, and
overcomes the presumption that the land is alienable and disposable as laid
down in Section 48 (b) of the Public Land Act. However, emphasis is placed on
the requirement that the classification required by Section 48 (b) of the Public
Land Act is classification or reclassification of a public land as agricultural. HcaATE
The dissent stresses that the classification or reclassification of the land

as alienable and disposable agricultural land should likewise have been made
on June 12, 1945 or earlier, because any possession of the land prior to such
classification or reclassification produced no legal effects. It observes that the
fixed date of June 12, 1945 could not be minimized or glossed over by mere
judicial interpretation or by judicial social policy concerns, and insisted that the
full legislative intent be respected.
We find, however, that the choice of June 12, 1945 as the reckoning point
of the requisite possession and occupation was the sole prerogative of
Congress, the determination of which should best be left to the wisdom of the
lawmakers. Except that said date qualified the period of possession and
occupation, no other legislative intent appears to be associated with the fixing
of the date of June 12, 1945. Accordingly, the Court should interpret only the
plain and literal meaning of the law as written by the legislators.
Moreover, an examination of Section 48 (b) of the Public Land Act

indicates that Congress prescribed no requirement that the land subject of the
registration should have been classified as agricultural since June 12, 1945, or
earlier. As such, the applicant's imperfect or incomplete title is derived only
from possession and occupation since June 12, 1945, or earlier. This means that
the character of the property subject of the application as alienable and
disposable agricultural land of the public domain determines its eligibility for
land registration, not the ownership or title over it. Alienable public land held by
a possessor, either personally or through his predecessors-in-interest, openly,
continuously and exclusively during the prescribed statutory period is
converted to private property by the mere lapse or completion of the period. 29
In fact, by virtue of this doctrine, corporations may now acquire lands of the
public domain for as long as the lands were already converted to private
ownership, by operation of law, as a result of satisfying the requisite period of
possession prescribed by the Public Land Act. 30 It is for this reason that the
property subject of the application of Malabanan need not be classified as
alienable and disposable agricultural land of the public domain for the entire
duration of the requisite period of possession. HaTDAE
To be clear, then, the requirement that the land should have been
classified as alienable and disposable agricultural land at the time of the
application for registration is necessary only to dispute the presumption that
the land is inalienable.
The declaration that land is alienable and disposable also serves to

determine the point at which prescription may run against the State. The
imperfect or incomplete title being confirmed under Section 48 (b) of the Public
Land Act is title that is acquired by reason of the applicant's possession and
occupation of the alienable and disposable agricultural land of the public
domain. Where all the necessary requirements for a grant by the Government
are complied with through actual physical, open, continuous, exclusive and
public possession of an alienable and disposable land of the public domain, the
possessor is deemed to have acquired by operation of law not only a right to a
grant, but a grant by the Government, because it is not necessary that a
certificate of title be issued in order that such a grant be sanctioned by the
courts. 31
If one follows the dissent, the clear objective of the Public Land Act to
adjudicate and quiet titles to unregistered lands in favor of qualified Filipino
citizens by reason of their occupation and cultivation thereof for the number of
years prescribed by law 32 will be defeated. Indeed, we should always bear in
mind that such objective still prevails, as a fairly recent legislative development
bears out, when Congress enacted legislation (Republic Act No. 10023) 33 in
order to liberalize stringent requirements and procedures in the adjudication of
alienable public land to qualified applicants, particularly residential lands,
subject to area limitations. 34
On the other hand, if a public land is classified as no longer intended for

public use or for the development of national wealth by declaration of Congress
or the President, thereby converting such land into patrimonial or private land
of the State, the applicable provision concerning disposition and registration is
no longer Section 48 (b) of thePublic Land Act but the Civil Code, in conjunction
with Section 14 (2) of the Property Registration Decree. 35 As such, prescription
can now run against the State.
To sum up, we now observe the following rules relative to the disposition
of public land or lands of the public domain, namely: EaIDAT
(1) As a general rule and pursuant to the Regalian Doctrine, all

lands of the public domain belong to the State and are
inalienable. Lands that are not clearly under private
ownership are also presumed to belong to the State and,
therefore, may not be alienated or disposed;
(2) The following are excepted from the general rule, to wit:
(a) Agricultural lands of the public domain are rendered

alienable and disposable through any of the exclusive
modes enumerated under Section 11 of the Public Land
Act. If the mode is judicial confirmation of imperfect
title under Section 48 (b) of the Public Land Act, the
agricultural land subject of the application needs only to
be classified as alienable and disposable as of the time
of the application, provided the applicant's possession
and occupation of the land dated back to June 12, 1945,
or earlier. Thereby, a conclusive presumption that the
applicant has performed all the conditions essential to a
government grant arises, 36 and the applicant becomes
the owner of the land by virtue of an imperfect or
incomplete title. By legal fiction, the land has already
ceased to be part of the public domain and has become
private property. 37
(b) Lands of the public domain subsequently classified or

declared as no longer intended for public use or for the
development of national wealth are removed from the
sphere of public dominion and are considered
converted into patrimonial lands or lands of private
ownership that may be alienated or disposed through
any of the modes of acquiring ownership under the Civil
Code. If the mode of acquisition is prescription, whether
ordinary or extraordinary, proof that the land has been
already converted to private ownership prior to the
requisite acquisitive prescriptive period is a condition
sine qua non in observance of the law (Article 1113,
Civil Code) that property of the State not patrimonial in
character shall not be the object of prescription.
HaSEcA
To reiterate, then, the petitioners failed to present sufficient evidence to

establish that they and their predecessors-in-interest had been in possession of
the land since June 12, 1945. Without satisfying the requisite character and
period of possession — possession and occupation that is open, continuous,
exclusive, and notorious since June 12, 1945, or earlier — the land cannot be
considered ipso jure converted to private property even upon the subsequent
declaration of it as alienable and disposable. Prescription never began to run
against the State, such that the land has remained ineligible for registration
under Section 14 (1) of the Property Registration Decree. Likewise, the land
continues to be ineligible for land registration under Section 14 (2) of the
Property Registration Decree unless Congress enacts a law or the President
issues a proclamation declaring the land as no longer intended for public
service or for the development of the national wealth.
WHEREFORE, the Court DENIES the petitioners' Motion for

Reconsideration and the respondent's Partial Motion for Reconsideration for
their lack of merit.
SO ORDERED.
Sereno, C.J., Carpio, Peralta, Del Castillo, Abad, Villarama, Jr., Perez,
Mendoza, Reyes and Perlas-Bernabe, JJ., concur.
Velasco, Jr., J., took no part due to relationship to a party.
Leonardo-de Castro, J., I submitted my vote joining the separate opinion of
Justice Brion.
Brion, J., in the result: see separate opinion.
Leonen, J., see separate concurring and dissenting opinion.
Separate Opinions
BRION, J.:
Prefatory Statement
This Separate Opinion maintains my view that, on the merits , the

petition should be denied, as the petitioners, Heirs of Mario Malabanan, failed
to establish that they and their predecessors-in-interest have a right to the
property applied for through either ordinary or extraordinary prescription. I
share this view with the majority; hence, the Court is unanimous in the
result in resolving the issue presented to us for our resolution. DSETac
As lawyers and Court watchers know, "unanimity in the result" carries a

technical meaning and implication in the lawyers' world; the term denotes that
differing views exist within the Court to support the conclusion they commonly
reached. The differences may be in the modality of reaching the unanimous
result, or there may just be differences in views on matters discussed within
the majority opinion. A little of both exists in arriving at the Court's present
result, although the latter type of disagreement predominates.
This Separate Opinion is submitted to state for the record my own (and of
those agreeing with me) view on the question of how Section 48 (b) of the
Public Land Act and Section 14 (1) and (2) of the PRD should operate,
particularly in relation with one another, with the Constitution and with the Civil
Code provisions on property and prescription .
A critical point I make relates to what I call the majority's "absurdity
argument" that played a major part in our actual deliberations. The argument,
to me, points to insufficiencies in our laws that the Court wishes to rectify in its
perennial quest "to do justice." I firmly believe though that any insufficiency
there may be — particularly one that relates to the continuing wisdom of the
law — is for the Legislature, not for this Court, to correct in light of our separate
and mutually exclusive roles under the Constitution. The Court may be all-
powerful within its own sphere, but the rule of law, specifically, the supremacy
of the Constitution, dictates that we recognize our own limitations and that we
desist when a problem already relates to the wisdom of the law before us. All
we can do is point out the insufficiency, if any, for possible legislative or
executive action. It is largely in this sense that I believe our differing views on
the grant and disposition of lands of the public domain should be written and
given the widest circulation.
I wrap up this Prefatory Statement with a cautionary note on how the

discussions in this Resolution should be read and appreciated. Many of the
divergent views expressed, both the majority's and mine, are not completely
necessary for the resolution of the direct issues submitted to us; thus, they are,
under the given facts of the case and the presented and resolved issues, mostly
obiter dicta . On my part, I nevertheless present them for the reason I have
given above, and as helpful aid for the law practitioners and the law students
venturing into the complex topic of public land grants, acquisitions, and
ownership.
Preliminary Considerations
As a preliminary matter, I submit that:
1.the hierarchy of applicable laws must be given full application

in considering lands of the public domain. Foremost in the hierarchy is the
Philippine Constitution (particularly its Article XII), followed by the applicable
special laws — Commonwealth Act No. 141 or the Public Land Act (PLA) and
Presidential Decree (PD) No. 1529 or the Property Registration Decree (PRD).
The Civil Code and other general laws apply suppletorily and to the extent
called for by the primary laws; and DCHaTc
2.the ponencia's ruling that the classification of public lands as

alienable and disposable does not need to date back to June 12, 1945 or
earlier is incorrect because:
a. under the Constitution's Regalian Doctrine, 1 classification

is a required step whose full import should be given full
effect and recognition. The legal recognition of possession
prior to classification runs counter to, and effectively
weakens, the Regalian Doctrine;
b. the terms of the PLA only find full application from the
time a land of the public domain is classified as
agricultural and declared alienable and disposable.
Thus, the possession required under Section 48 (b) of this law
cannot be recognized prior to the required classification and
declaration;
c. under the Civil Code, "[o]nly things and rights which are
susceptible of being appropriated may be the object of
possession." 2 Prior to the classification of a public land
as alienable and disposable, a land of the public
domain cannot be appropriated, hence, any claimed
possession prior to classification cannot have legal effects;
d. there are other modes of acquiring alienable and

disposable lands of the public domain under the PLA. This
legal reality renders the ponencia's absurdity argument
misplaced; and
e. the alleged absurdity of the law addresses the wisdom of
the law and is a matter for the Legislature, not for this
Court, to address.
In these lights, I submit that all previous contrary rulings (particularly,
Republic of the Phils. v. Court of Appeals [Naguit] ) 3 should — in the proper case
— be abandoned and rejected for being based on legally-flawed premises and
as aberrations in land registration jurisprudence. HCEaDI
I.THE LAWS AFFECTING PUBLIC LANDS

I likewise submit the following short overview as an aide memoire in
understanding our basic public land laws.
A. The Overall Scheme at a Glance
1. The Philippine Constitution

The Philippine Constitution is the fountainhead of the laws and rules
relating to lands of the public domain in the Philippines. It starts with the
postulate that all lands of the public domain — classified into
agricultural, forests or timber, mineral lands and national parks — are
owned by the State. 4 This principle states the Regalian Doctrine, and
classifies land according to its nature and alienability .
By way of exception to the Regalian Doctrine, the Constitution also

expressly states that "[w]ith the exception of agricultural lands [which may be
further classified by law according to the uses to which they may be devoted], 5
all other natural resources shall not be alienated." 6 Alienable lands of the
public domain shall be limited to agricultural lands. 7
2. The Public Land Act
How and to what extent agricultural lands of the public domain may be
alienated and may pass into private or non-State hands are determined under
t h e PLA, which governs the classification, grant, and disposition of
alienable and disposable lands of the public domain and, other than
the Constitution, is the country's primary substantive law on the
matter.
As a rule, alienation and disposition of lands of the public domain are
exercises in determining:
a. whether a public land is or has been classified as
agricultural (in order to take the land out of the mass of
lands of the public domain that, by the terms of the
Constitution, is inalienable);CDcaSA
b. once classified as agricultural, whether it has been

declared by the State to be alienable and disposable.
To reiterate, even agricultural lands, prior to their declaration
as alienable, are part of the inalienable lands of the public
domain; and
c. whether the terms of classification, alienation or

disposition have been complied with. In a confirmation
of imperfect title, there must be possession since June 12,
1945 or earlier, in an open, continuous, exclusive and
notorious manner, by the applicant himself or by his
predecessor-in-interest, of public agricultural land that since
that time has been declared alienable and disposable, as
clearly provided under PD No. 1073.
The Civil Code provides that "[o]nly things and rights which are
susceptible of being appropriated may be the object of
possession. " 8 Prior to the classification of a public land as
alienable and disposable, a land of the public domain cannot
be appropriated, hence, any claimed possession cannot have
legal effects;
d. upon compliance with the required period and

character of possession of alienable public
agricultural land, the possessor acquires ownership,
thus converting the land to one of private ownership and
entitling the applicant-possessor to confirmation of title under
Section 48 (b) of the PLA and registration under Section 14
(1) of the PRD.
3. Classification under the Civil Code
Separately from the classification according to the nature of land under
the Constitution, another system of classification of property is provided under
the Civil Code.
T h e Civil Code classifies property (as a general term, compared to

land which is only a species of property, labeled under the Civil Code as
immovable property) 9 in relation with the person to whom it belongs . 10
AcCTaD
Property under the Civil Code may belong to the public dominion (or
property pertaining to the State for public use, for public service or for the
development of the national wealth) 11 or it may be of private ownership
(which classification includes patrimonial property or property held in
private ownership by the State). 12 Significantly, the Civil Code expressly
provides that "[p]roperty of public dominion, when no longer intended for
public use or for public service, shall form part of the patrimonial property of
the State." 13
What is otherwise a simple classification from the point of view of the
person owning it, assumes a measure of complexity when the property is
land of the public domain, as the Constitution, in unequivocal terms,
requires classification and declarations on the means and manner of
granting, alienating, disposing, and acquiring lands of the public domain
that all originally belong to the State under the Regalian Doctrine.
In a reconciled consideration of the Constitution and the Civil Code
classifications, made necessary because they have their respective
independent focuses and purposes, certain realities will have to be recognized
or deduced:
First. As a first principle , in case of any conflict, the terms of
the Constitution prevail. No ifs and buts can be admitted with respect
to this recognition, as the Constitution is supreme over any other law
or legal instrument in the land.
Second. A necessary corollary to the first principle is that all
substantive considerations of land ownership, alienation, or
disposition must always take into account the constitutional
requirements.
Third. The classification and the requirements under the

Constitution and under the Civil Code may overlap without any
resulting violation of the Constitution.
A piece of land may fall under both classifications (i.e., under the
constitutional classification based on the legal nature of the land and
alienability, and under the civil law classification based on the ownership of the
land). This can best be appreciated in the discussion below, under the topic
"The PLA, the Civil Code and Prescription." 14 DEIHAa
4. Prescription under the Civil Code

Prescription is essentially a civil law term and is a mode of acquiring
ownership provided under the Civil Code, 15 but is not mentioned as one of the
modes of acquiring ownership of alienable public lands of the public domain
under the PLA. 16
A point of distinction that should be noted is that the PLA, under its
Section 48 (b), provides for a system that allows possession since June 12,
1945 or earlier to ripen into ownership. The PLA, however, does not refer to
this mode as acquisitive prescription but as basis for confirmation of title,
and requires a specified period of possession of alienable agricultural land, not
the periods for ordinary or extraordinary prescription required under the Civil
Code. Ownership that vests under Section 48 (b) of the PLA can be
registered under Section 14 (1) of the PRD .
The PRD, under its Section 14 (2), recognizes that registration of

title can take place as soon as ownership over private land has vested
due to prescription — "[t]hose who have acquired ownership of private lands
by prescription under the provisions of existing laws." Thus, prescription was
introduced into the PRD land registration scheme but not into the special law
governing the grant and alienation of lands of the public domain, i.e., the PLA.
An important provision that should not be missed in considering

prescription is Article 1108 of the Civil Code, which states that prescription
does not run against the State and its subdivisions. Article 1113 of the
Civil Code is a companion provision stating that " [a]ll things which are within
the commerce of men are susceptible of prescription, unless otherwise
provided. Property of the State or any of its subdivisions not
patrimonial in character shall not be the object of prescription."
The above-cited rules express civil law concepts, but their results are
effectively replicated in the scheme governing lands of the public domain since
these lands, by constitutional fiat, cannot be alienated and are thus outside the
commerce of man, except under the rigid terms of the Constitution and the
PLA. For example, confirmation of imperfect title — the possession-based rule
under the PLA — can only take place with respect to agricultural lands already
declared alienable and possessed for the required period (since June 12, 1945
or earlier). ATCEIc
5. The PRD
The PRD was issued in 1978 to update the Land Registration Act (Act
No. 496) and relates solely to the registration of property . The law does
not provide the means for acquiring title to land; it refers solely to the means or
procedure of registering and rendering indefeasible title already acquired.
The PRD mainly governs the registration of lands and places them under
the Torrens System. It does not, by itself, create title nor vest one. It
simply confirms a title already created and already vested, rendering
it forever indefeasible. 17
In a side by side comparison, the PLA is the substantive law that
classifies and provides for the disposition of alienable lands of the public
domain. On the other hand, the PRD refers to the manner of bringing
registerable title to lands, among them, alienable public lands, within
the coverage of the Torrens system ; in terms of substantive content, the
PLA must prevail. 18 On this consideration, only land of the public
domain that has passed into private ownership under the terms of the
PLA can be registered under the PRD.
II.THE CASE AND THE ANTECEDENT FACTS
The Case.
Before the Court are the motions separately filed by the petitioners and
by the respondent Republic of the Philippines, both of them seeking
reconsideration of the Court's Decision dated April 29, 2009 which denied
the petitioners' petition for review on certiorari under Rule 45 of the Rules of
Court.
The Underlying Facts

The present case traces its roots to the land registration case instituted by
the petitioners' predecessor, Mario Malabanan (Malabanan). On February 20,
1998, Malabanan filed an application for the registration of a 71,324-square
meter land, located in Barangay Tibig, Silang, Cavite, with the Regional Trial
Court (RTC) of Cavite — Tagaytay City, Branch 18. 19 Malabanan alleged that
he purchased the property from Eduardo Velazco. The property was originally
part of a 22-hectare land owned by Lino Velazco (Velazco), who was succeeded
by his four sons, among them, Eduardo Velazco. 20
Apart from his purchase of the property, Malabanan anchored his
registration petition on his and his predecessors-in-interest's open, notorious,
continuous, adverse and peaceful possession of the land for more than
30 years. Malabanan claimed that the land is an alienable and disposable land
of the public domain, presenting as proof the Certification dated June 11, 2001
of the Community Environment and Natural Resources Office of the Department
of Environment and Natural Resources. The Certification stated that the land
was "verified to be within the Alienable or Disposable land per Land
Classification Map No. 3013 established under Project No. 20-A and approved
as such under FAO 4-1656 on March 15, 1982." 21 ACaTIc
The Issue Before the Court.

In their motion for reconsideration, the petitioners submit that the mere
classification of the land as alienable or disposable should be deemed sufficient
to convert it into patrimonial property of the State. Relying on the rulings in
Spouses de Ocampo v. Arlos, 22 Menguito v. Republic, 23 and Republic v. T.A.N.
Properties, Inc., 24 they argue that the reclassification of the land as alienable
or disposable opened it to acquisitive prescription under the Civil Code; that
Malabanan had purchased the property from Velazco, believing in good faith
that Velazco and his predecessors-in-interest had been the real owners of the
land, with the right to validly transmit title and ownership thereof; that
consequently, the 10-year period prescribed by Article 1134 of the Civil Code,
in relation with Section 14 (2) of the PRD, applied in their favor; and that when
Malabanan filed his application for registration on February 20, 1998, he had
already been in possession of the land for almost 16 years, reckoned from
1982, the time when the land was declared inalienable and disposable by the
State.
The respondent seeks the partial reconsideration in order to seek

clarification with reference to the application of the rulings in Naguit and
Republic of the Phils. v. Herbieto . 25 It reiterates its view that an applicant is
entitled to registration only when the land subject of the application had been
declared alienable and disposable since June 12, 1945.
As presented in the petition and the subsequent motion for
reconsideration, the direct issue before the Court is whether there had
been acquisition of title, based on ordinary or extraordinary
prescription, over a land of the public domain declared alienable as of
March 15, 1982. The issue was not about confirmation of an imperfect title
where possession started on or before June 12, 1945 since possession had not
been proven to have dated back to or before that date.
The Antecedents and the Ruling under Review

On December 3, 2002, the RTC rendered judgment favoring Malabanan,
approving his application for registration of the land "under the operation of Act
141, Act 496 and/or PD 1529." 26 aSHAIC
The respondent, represented by the Office of the Solicitor General (OSG),

appealed the RTC decision with the Court of Appeals (CA). The OSG contended
that Malabanan failed to prove: (1) that the property belonged to the alienable
and disposable land of the public domain, and (2) that he had not been in
possession of the property in the manner and for the length of time required by
law for confirmation of imperfect title. During the pendency of the appeal
before the CA, Malabanan died and was substituted by the petitioners.
In its decision dated February 23, 2007, the CA reversed the RTC decision
and dismissed Malabanan's application for registration. Applying the Court's
ruling in Herbieto, the CA held that "under Section 14 (1) of the Property
Registration Decree any period of possession prior to the classification of the
lots as alienable and disposable was inconsequential and should be excluded
from the computation of the period of possession." 27 Since the land was
classified as alienable and disposable only on March 15, 1982, any possession
prior to this date cannot be considered.
The petitioners assailed the CA decision before this Court through a
petition for review on certiorari. On April 29, 2009, the Court denied the
petition. The Court's majority (through Justice Dante Tinga) summarized its
ruling as follows:
(1) In connection with Section 14(1) of the PRD, Section 48(b)
of the Public Land Act recognizes and confirms that "those who by
themselves or through their predecessors in interest have been in
open, continuous, exclusive, and notorious possession and occupation
of alienable and disposable lands of the public domain, under a bona
fide claim of acquisition of ownership, since June 12, 1945" have
acquired ownership of, and registrable title to, such lands based on the
length and quality of their possession.
(a) S i n c e Section 48(b) merely requires possession
since 12 June 1945 and does not require that the
lands should have been alienable and disposable
during the entire period of possession, the possessor
is entitled to secure judicial confirmation of his title thereto
as soon as it is declared alienable and disposable, subject
to the timeframe imposed by Section 47 of the Public Land
Act.
(b) The right to register granted under Section 48(b) of the
Public Land Act is further confirmed by Section 14(1) of the
Property Registration Decree. cHDAIS
(2) In complying with Section 14(2) of the Property

Registration Decree, consider that under the Civil Code, prescription is
recognized as a mode of acquiring ownership of patrimonial property.
However, public domain lands become only patrimonial property not
only with a declaration that these are alienable or disposable. There
must also be an express government manifestation that the property is
already patrimonial or no longer retained for public service or the
development of national wealth, under Article 422 of the Civil Code.
And only when the property has become patrimonial can the
prescriptive period for the acquisition of property of the public
dominion begin to run.
(a) Patrimonial property is private property of the

government. The person acquires ownership of patrimonial
property by prescription under the Civil Code is entitled to
secure registration thereof under Section 14(2) of the
Property Registration Decree.
(b) There are two kinds of prescription by which patrimonial
property may be acquired, one ordinary and other
extraordinary. Under ordinary acquisitive prescription, a
person acquires ownership of a patrimonial property
through possession for at least ten (10) years, in good faith
and with just title. Under extraordinary acquisitive
prescription, a person's uninterrupted adverse possession
of patrimonial property for at least thirty (30) years,
regardless of good faith or just title, ripens into ownership.
28
Based on this ruling, the majority denied the petition, but established the
above rules which embody principles contrary to Section 48 (b) of the
PLA and which are not fully in accord with the concept of prescription
under Section 14 (2) of the PRD, in relation with the Civil Code provisions on
property and prescription.
In its ruling on the present motions for reconsideration, the ponencia

essentially affirms the above ruling, rendering this Separate Opinion and its
conclusions necessary. DSAICa
III.DISCUSSION OF THE PRESENTED ISSUES

A.Section 48 (b) of the PLA: Confirmation of Imperfect Title
Section 48 (b) of the PLA is the core provision on the confirmation of

imperfect title and must be read with its related provision in order to fully be
appreciated.
Section 7 of the PLA delegates to the President the authority to
administer and dispose of alienable public lands. Section 8 sets out the public
lands open to disposition or concession, and the requirement that they should
be officially delimited and classified and, when practicable, surveyed. Section
11, a very significant provision, states that —
Section 11. Public lands suitable for agricultural purposes can
be disposed of only as follows, and not otherwise:
(1) For homestead settlement

(2) By sale
(3) By lease
(4)By confirmation of imperfect or incomplete title :
(a)By judicial legalization

(b) By administrative legalization (free patent).
[emphases ours]
Finally, Section 48 of the PLA, on confirmation of imperfect title ,

embodies a grant of title to the qualified occupant or possessor of an alienable
public land, under the following terms:
Section 48. The following-described citizens of the
Philippines, occupying lands of the public domain or claiming to own
any such lands or an interest therein, but whose titles have not been
perfected or completed, may apply to the Court of First Instance of the
province where the land is located for confirmation of their claims and
the issuance of a certificate of title therefor, under the Land
Registration Act, to wit: IEcaHS
(a) Those who prior to the transfer of sovereignty from Spain

to the . . . United States have applied for the purchase, composition or
other form of grant of lands of the public domain under the laws and
royal decrees then in force and have instituted and prosecuted the
proceedings in connection therewith, but have[,] with or without
default upon their part, or for any other cause, not received title
therefor, if such applicants or grantees and their heirs have occupied
and cultivated said lands continuously since the filing of their
applications.
(b)Those who by themselves or through their

predecessors in interest have been in open, continuous,
exclusive, and notorious possession and occupation of
agricultural lands of the public domain, under a bona fide claim
of acquisition or ownership, except as against the Government,
since July twenty-sixth, eighteen hundred and ninety-four,
except when prevented by war or force majeure. These shall be
conclusively presumed to have performed all the conditions
essential to a Government grant and shall be entitled to a
certificate of title under the provisions of this chapter.
(c) Members of the national cultural minorities who by
themselves or through their predecessors-in-interest have been in
open, continuous, exclusive and notorious possession and occupation
of lands of the public domain suitable to agriculture, whether
disposable or not, under a bona fide claim of ownership for at least 30
years shall be entitled to the rights granted in sub-section (b) hereof.
[emphasis ours]
Subsection (a) has now been deleted, while subsection (b) has been
amended by PD No. 1073 as follows:
Section 4. The provisions of Section 48(b) and Section 48(c),
Chapter VIII of the Public Land Act are hereby amended in the sense
that these provisions shall apply only to alienable and disposable lands
of the public domain which have been in open, continuous, exclusive
and notorious possession and occupation by the applicant himself or
thru his predecessor-in-interest, under a [bona fide] claim of acquisition
of ownership, since June 12, 1945.
Based on these provisions and a narrow reading of the "since June 12,
1945" timeline, the ponencia now rules that the declaration that the land is
agricultural and alienable can be made at the time of application for
registration and need not be from June 12, 1945 or earlier. 29 This conclusion
follows the ruling in Naguit (likewise penned by Justice Tinga) that additionally
argued that reckoning the declarations from June 12, 1945 leads to absurdity.
cATDIH
For the reasons outlined below, I cannot agree with these positions and
with the Naguit ruling on which it is based:
First. The constitutional and statutory reasons. The Constitution

classifies public lands into agricultural, mineral, timber lands and national
parks. Of these, only agricultural lands can be alienated. 30 Without the
requisite classification, there can be no basis to determine which lands of the
public domain are alienable and which are not. Hence, classification is a
constitutionally-required step whose importance should be given full
legal recognition and effect.
Otherwise stated, without classification into disposable agricultural
land, the land continues to form part of the mass of the public domain
that, not being agricultural, must be mineral, timber land or national parks that
are completely inalienable and, as such, cannot be possessed with legal
effects. To recognize possession prior to any classification is to do violence to
the Regalian Doctrine; the ownership and control that the Regalian Doctrine
embodies will be less than full if the possession — that should be with the
State as owner, but is also elsewhere without any solid legal basis — can
anyway be recognized.
Note in this regard that the terms of the PLA do not find full
application until a classification into alienable and disposable
agricultural land of the public domain is made. In this situation,
possession cannot be claimed under Section 48 (b) of the PLA.
Likewise, no imperfect title can be confirmed over lands not yet classified
as disposable or alienable because, in the absence of such classification, the
land remains unclassified public land that fully belongs to the State.
This is fully supported by Sections 6, 7, 8, 9, and 10 of the PLA. 31 If the land is
either mineral, timber or national parks that cannot be alienated, it defies legal
logic to recognize that possession of these unclassified lands can produce legal
effects.
Parenthetically, PD No. 705 or the Revised Forestry Code states that

"Those [lands of public domain] still to be classified under the present
system shall continue to remain as part of the public forest." 32 It
further declares that public forest covers "the mass of lands of the public
domain which has not been the subject of the present system of
classification for the determination of which lands are needed for forest
purposes and which are not." 33 EDIHSC
Thus, PD No. 705 confirms that all lands of the public domain that remain
unclassified are considered as forest land. 34 As forest land, these lands of the
public domain cannot be alienated until they have been reclassified as
agricultural lands. For purposes of the present case, these terms confirm the
position that re/classification is essential at the time possession is acquired
under Section 48 (b) of the PLA.
From these perspectives, the legal linkage between (1) the classification
of public land as alienable and disposable and (2) effective possession that can
ripen into a claim under Section 48 (b) of the PLA can readily be appreciated.
The Leonen Opinion

Incidentally, Justice Marvic F. Leonen opines in his Concurring and
Dissenting Opinion that the Regalian Doctrine was not incorporated in our
Constitution and that "there could be land, considered as property, where
ownership has vested as a result of either possession or prescription but still,
as yet undocumented." 35
I will respond to this observation that, although relating to the nature of
the land applied for (land of the public domain) and to the Regalian Doctrine,
still raises aspects of these matters that are not exactly material to the direct
issues presented in the present case. I respond to correct for the record and at
the earliest opportunity what I consider to be an erroneous view.
The Regalian Doctrine was incorporated in all the Constitutions of the
Philippines (1935, 1973 and 1987) and the statutes governing private
individuals' land acquisition and registration. In his Separate Opinion in Cruz v.
Sec. of Environment and Natural Resources , 36 former Chief Justice Reynato S.
Puno made a brief yet informative historical discussion on how the Regalian
Doctrine was incorporated in our legal system, especially in all our past and
present organic laws. His historical disquisition was quoted in La Bugal-B'laan
Tribal Association, Inc. v. Sec. Ramos 37 and the consolidated cases of The
Secretary of the DENR, et al. v. Yap and Sacay, et al. v. The Secretary of the
DENR, 38 which were also quoted in Justice Lucas P. Bersamin's Separate
Opinion in his very brief discussion on how the doctrine was carried over from
our Spanish and American colonization up until our present legal system.
Insofar as our organic laws are concerned, La Bugal-B'laan confirms that:
DcaECT
one of the fixed and dominating objectives of the 1935 Constitutional

Convention [was the nationalization and conservation of the natural
resources of the country.]
There was an overwhelming sentiment in the Convention in
favor of the principle of state ownership of natural resources and
the adoption of the Regalian doctrine. State ownership of natural
resources was seen as a necessary starting point to secure
recognition of the state's power to control their disposition,
exploitation, development, or utilization. The delegates [to] the
Constitutional Convention very well knew that the concept of
State ownership of land and natural resources was introduced by
the Spaniards, however, they were not certain whether it was
continued and applied by the Americans. To remove all doubts,
the Convention approved the provision in the Constitution
affirming the Regalian doctrine.
xxx xxx xxx
On January 17, 1973, then President Ferdinand E. Marcos

proclaimed the ratification of a new Constitution. Article XIV on the
National Economy and Patrimony contained provisions similar to the
1935 Constitution with regard to Filipino participation in the nation's
natural resources. Section, 8, Article XIV thereof[.]
xxx xxx xxx
The 1987 Constitution retained the Regalian doctrine. The first

sentence of Section 2, Article XII states: "All lands of the public domain,
waters, minerals, coal, petroleum, and other mineral oils, all forces of
potential energy, fisheries, forests or timber, wildlife, flora and fauna,
and other natural resources are owned by the State." 39
In these lights, I believe that, at this point in our legal history, there can
be no question that the Regalian Doctrine remains in the pure form interpreted
by this Court; it has resiliently endured throughout our colonial history, was
continually confirmed in all our organic laws, and is presently embodied in
Section 2, Article XII of our present Constitution. Short of a constitutional
amendment duly ratified by the people, the views and conclusions of this Court
on the Regalian Doctrine should not and cannot be changed. cACEHI
Second. The Civil Code reason. Possession is essentially a civil law

term that can best be understood in terms of the Civil Code in the absence of
any specific definition in the PLA, other than in terms of time of possession. 40
Article 530 of the Civil Code provides that "[o]nly things and rights which
are susceptible of being appropriated may be the object of possession." Prior to
the declaration of alienability, a land of the public domain cannot be
appropriated; hence, any claimed possession cannot have legal effects. In fact,
whether an application for registration is filed before or after the declaration of
alienability becomes immaterial if, in one as in the other, no effective
possession can be recognized prior to and within the proper period for the
declaration of alienability.
To express this position in the form of a direct question: How can

possession before the declaration of alienability be effective when the
land then belonged to the State against whom prescription does not
run?
Third. Statutory construction and the cut-off date — June 12,
1945. The ponencia concludes — based on its statutory construction reasoning
and reading of Section 48 (b) of the PLA — that the June 12, 1945 cut-off is only
required for purposes of possession and that it suffices if the land has been
classified as alienable agricultural land at the time of application for
registration. 41
This cut-off date was painstakingly set by law and its full import appears
from PD No. 1073 that amended Section 48 (b) of the PLA. While the resulting
Section 48 (b) of the PLA did not expressly state what PD No. 1073 introduced
in terms of exact wording, PD No. 1073 itself, as formulated, shows the intent to
count the alienability from June 12, 1945. To quote the exact terms of PD No.
1073: CDISAc
Section 4. The provisions of Section 48(b) and Section 48(c),

Chapter VIII of the Public Land Act are hereby amended in the sense
that these provisions shall apply only to alienable and disposable
lands of the public domain which have been in open, continuous,
exclusive and notorious possession and occupation by the applicant
himself or thru his predecessor-in-interest, under a [ bona fide] claim of
acquisition of ownership, since June 12, 1945 . [emphases and
underscores ours]
In reading this provision, it has been claimed that June 12, 1945 refers
only to the required possession and not to the declaration of alienability of the
land applied for. The terms of PD No. 1073, however, are plain and clear even
from the grammatical perspective alone. The term "since June 12, 1945" is
unmistakably separated by a comma from the conditions of both alienability
and possession, thus, plainly showing that it refers to both alienability and
possession. This construction — showing the direct, continuous and seamless
linking of the alienable and disposable lands of the public domain to June 12,
1945 under the wording of the Decree — is clear and should be respected,
particularly if read with the substantive provisions on ownership of lands of the
public domain and the limitations that the law imposes on possession.
Fourth. Other modes of acquisition of lands under the PLA. The
cited Naguit's absurdity argument that the ponencia effectively adopted is
more apparent than real, since the use of June 12, 1945 as cut-off date for the
declaration of alienability will not render the grant of alienable public lands out
of reach.
The acquisition of ownership and title may still be obtained by other
modes under the PLA. Among other laws, Republic Act (RA) No. 6940
allowed the use of free patents. 42 It was approved on March 28, 1990; hence,
counting 30 years backwards, possession since April 1960 or thereabouts
qualified a possessor to apply for a free patent. 43 Additionally, the other
administrative modes provided under Section 11 of the PLA are still open,
particularly, homestead settlement, sales and lease.
Incidentally, the ponencia mentions RA No. 10023, entitled "An Act

Authorizing the Issuance of Free Patents to Residential Lands , " in its
discussions. 44 This statute, however, has no relevance to the present case
because its terms apply to alienable and disposable lands of the public domain
(necessarily agricultural lands under the Constitution) that have been
reclassified as residential under Section 9 (b) of the PLA. 45 IEAacT
Fifth. Addressing the wisdom — or the absurdity — of the law . This

Court acts beyond the limits of the constitutionally-mandated separation of
powers in giving Section 48 (b) of the PLA, as amended by PD No. 1073, an
interpretation beyond its plain wording. Even this Court cannot read into
the law an intent that is not there even if the purpose is to avoid an
absurd situation.
If the Court believes that a law already has absurd effects because of the
passage of time, its role under the principle of separation of powers is not to
give the law an interpretation that is not there in order to avoid the perceived
absurdity. If the Court does, it thereby intrudes into the realm of policy — a role
delegated by the Constitution to the Legislature. If only for this reason, the
Court should avoid expanding — through the present ponencia and its cited
cases — the plain meaning of Section 48 (b) of the PLA, as amended by PD No.
1073.
In the United States where the governing constitutional rule is likewise the
separation of powers between the Legislative and the Judiciary, Justice Antonin
Scalia (in the book Reading Law co-authored with Bryan A. Garner) made the
pithy observation that:
To the extent that people give this view any credence, the notion
that judges may (even should) improvise on constitutional and
statutory text enfeebles the democratic polity. As Justice John Marshall
Harlan warned in the 1960s, an invitation to judicial lawmaking results
inevitably in "a lessening, on the one hand, of judicial independence
and, on the other, of legislative responsibility, thus polluting the
bloodstream of our system of government." Why these alarming
outcomes? First, when judges fashion law rather than fairly derive it
from governing texts, they subject themselves to intensified political
pressures — in the appointment process, in their retention, and in the
arguments made to them. Second, every time a court
constitutionalizes a new sliver of law — as by finding a "new
constitutional right" to do this, that, or the other — that sliver becomes
thenceforth untouchable by the political branches. In the American
system, a legislature has no power to abridge a right that has been
authoritatively held to be part of the Constitution — even if that
newfound right does not appear in the text. Over the past 50 years
especially, we have seen the judiciary incrementally take control of
larger and larger swaths of territory that ought to be settled
legislatively. IcHTED
It used to be said that judges do not "make" law — they simply

apply it. In the 20th century, the legal realists convinced everyone that
judges do indeed make law. To the extent that this was true, it was
knowledge that the wise already possessed and the foolish could not
be trusted with. It was true, that is, that judges did not really "find" the
common law but invented it over time. Yet this notion has been
stretched into a belief that judges "make" law through judicial
interpretation of democratically enacted statutes. Consider the
following statement by John P. Dawson, intended to apply to statutory
law:
It seems to us inescapable that judges should have a part

in creating law — creating it as they apply it. In deciding
the multifarious disputes that are brought before them,
we believe that judges in any legal system invariably
adapt legal doctrines to new situations and thus give
them new content.
Now it is true that in a system such as ours, in which judicial

decisions have a stare decisis effect, a court's application of a statute
to a "new situation" can be said to establish the law applicable to that
situation — that is, to pronounce definitively whether and how the
statute applies to that situation. But establishing this retail
application of the statute is probably not what Dawson meant by
"creating law," "adapt[ing] legal doctrines," and "giv[ing] them new
content." Yet beyond that retail application, good judges dealing with
statutes do not make law. They do not "give new content" to the
statute, but merely apply the content that has been there all along,
awaiting application to myriad factual scenarios. To say that they
"make law" without this necessary qualification is to invite the taffy-
like stretching of words — or the ignoring of words altogether. 46
In the Philippines, a civil law country where the Constitution is very clear
on the separation of powers and the assignment of constitutional duties, I
believe that this Court should be very careful in delineating the line between
t h e constitutionally-allowed interpretation and the prohibited judicial
legislation, given the powers that the 1987 Constitution has entrusted to this
Court. As a Court, we are given more powers than the U.S. Supreme Court;
under Section 1, Article VIII of the 1987 Constitution, we are supposed to act,
as a matter of duty, on any grave abuse of discretion that occurs anywhere
in government. While broad, this power should nevertheless be exercised with
due respect for the separation of powers doctrine that underlies our
Constitution.
B. Registration under Section 14 (1) and (2) of the PRD
Complementing the substance that the PLA provides are the provisions of
the PRD that set out the registration of the title that has accrued under the PLA.
Section 14 of the PRD provides:
SEC. 14.Who May Apply. — The following persons may file in the
proper Court of First Instance an application for registration of title to
land, whether personally or through their duly authorized
representatives: CIScaA
(1)Those who by themselves or through their

predecessors-in-interest have been in open, continuous,
exclusive and notorious possession and occupation of alienable
and disposable lands of the public domain under a bona fide
(2)Those who have acquired ownership of private lands by
prescription under the provisions of existing laws.
abandoned river beds by right of accession or accretion under the
existing laws.
manner provided for by law. [emphasis and italics ours]
As mentioned earlier, the PLA is the substantive law on the grant and
disposition of alienable lands of the public domain. The PRD, on the other hand,
sets out the manner of bringing registrable lands, among them alienable public
lands, within the coverage of the Torrens system. In this situation, in terms of
substantive content, the PLA should prevail.
1. Section 14 (1) of the PRD is practically a reiteration of Section

48 (b) of the PLA, with the difference that they govern two different aspects of
confirmation of imperfect title relating to alienable lands of the public domain.
The PLA has its own substantive focus, while Section 14 (1) of the PRD, bearing
on the same matter, defines what title may be registered. For this reason, the
discussions of Section 48 (b) apply with equal force, mutatis mutandis, to
Section 14 (1) of the PRD.
2. Section 14 (2) of the PRD is another matter. By its express

terms, the prescription that it speaks of applies only to private lands .
Thus, on plain reading, Section 14 (2) should not apply to alienable and
disposable lands of the public domain that Section 14 (1) covers. This is the
significant difference between Section 14 (1) and 14 (2). The former — Section
14 (1) — is relevant when the ownership of an alienable and disposable land of
the public domain vests in the occupant or possessor under the terms of
Section 48 (b) of the PLA, even without the registration of a confirmed title
since the land ipso jure becomes a private land. Section 14 (2), on the other
hand, applies to situations when ownership of private lands vests on the basis
of prescription. DcAaSI
The prescription that Section 14 (2) of the PRD speaks of finds no

application to alienable lands of the public domain — specifically, to Section 48
(b) of the PLA since this provision, as revised by PD No. 1073 in January 1977,
simply requires possession and occupation since June 12, 1945 or
earlier, regardless of the period the property was occupied (although
when PD No. 1073 was enacted in 1977, the property would have been
possessed for at least 32 years by the claimant if his possession commenced
exactly on June 12, 1945, or longer if possession took place earlier).
Parenthetically, my original April 29, 2009 Opinion stated that the cut-off
date of June 12, 1945 appeared to be devoid of legal significance as far as the
PLA was concerned. This statement notwithstanding, it should be appreciated
that prior to PD No. 1073, Section 48 (b) of the PLA required a 30 year
period of possession. This 30-year period was a requirement imposed under
RA No. 1942 in June 1957, under the following provision:
(b) Those who by themselves or through their predecessors in
interest have been in open, continuous, exclusive and notorious
possession and occupation of agricultural lands of the public domain,
under a bona fide claim of acquisition of ownership, for at least
thirty years immediately preceding the filing of the application for
confirmation of title, except when prevented by war or force
majeure[.]
When PD No. 1073 was enacted in 1977, it was recognized that a
claimant who had possessed the property for at least 30 years (in compliance
with RA No. 1942) might not be entitled to confirmation of title under PD No.
1073 because his possession commenced only after June 12, 1945. This
possibility constituted a violation of his vested rights that should be avoided. To
resolve this dilemma, the Court, in Abejaron v. Nabasa, 47 opined that where an
application has satisfied the requirements of Section 48 (b) of the PLA, as
amended by RA No. 1942 (prior to the effectivity of PD No. 1073), the applicant
is entitled to perfect his or her title even if possession and occupation do not
date back to June 12, 1945. CcaASE
What this leads up to is that possession of land "for the required statutory
period" becomes significant only when the claim of title is based on the
amendment introduced by RA No. 1942. The 30-year period introduced by
RA No. 1942 "did not refer or call into application the Civil Code
provisions on prescription." 48 In fact, in The Director of Lands v. IAC 49 and
the opinion of Justice Claudio Teehankee in Manila Electric Co. v. Judge Castro-
Bartolome, etc., et al., 50 cited by the ponencia, 51 both pertained to the RA No.
1942 amendment; it was in this sense that both rulings stated that mere lapse
or completion of the required period converts alienable land to private property.
In sum, if the claimant is asserting his vested right under the RA No. 1942
amendment, then it would be correct to declare that the lapse of the required
statutory period converts alienable land to private property ipso jure.
Otherwise, if the claimant is asserting a right under the PD No. 1073
amendment, then he needs to prove possession of alienable public land as of
June 12, 1945 or earlier. Although a claimant may have possessed the property
for 30 years or more, if his possession commenced after January 24, 1947
(the adjusted date based on Abejaron), the property would not be converted
into private property by the mere lapse of time.
3. As a last point, the ponencia effectively claims 52 that the

classification of property as agricultural land is only necessary at the time of
application for registration of title .
This is completely erroneous. The act of registration merely confirms
that title already exists in favor of the applicant. To require classification of the
property only on application for registration point would imply that during the
process of acquisition of title (specifically, during the period of possession prior
to the application for registration), the property might not have been alienable
for being unclassified land (or a forest land under PD No. 705) of the public
domain. This claim totally contravenes the constitutional rule that only
agricultural lands of the public domain may be alienated.
To translate all these arguments to the facts of the present case, the land
applied for was not classified as alienable on or before June 12, 1945 and was
indisputably only classified as alienable only on March 15, 1982. Under these
facts, the ponencia still asserts that following the Naguit ruling, possession of
the non-classified land during the material period would still comply with
Section 48 (b) of the PLA, provided that there is already a classification at the
time of application for registration.cSIADH
This claim involves essential contradiction in terms as only a land that

can already be registered under Section 48 (b) of the PLA can be registered
under Section 14 (1) of the PRD. Additionally, the ponencia, in effect, confirmed
that possession prior to declaration of alienability can ripen into private
ownership of a land that, under the Constitution, the PLA, and even the Civil
Code, is not legally allowed.
The ponencia's position all the more becomes legally preposterous if PD

No. 705 is considered. To recall, this Decree states that all lands of the public
domain that remain unclassified are considered forest lands that cannot be
alienated until they have been reclassified as agricultural lands and declared
alienable. 53 Applying this law to the facts of the present case, the land applied
for, prior to March 15, 1982, must have still been forest land that, under the
Constitution, cannot be alienated.
The deeper hole that the ponencia digs for itself in recognizing possession
prior to declaration of alienability becomes apparent when it now cites Naguit
as its authority. Unnoticed perhaps by the ponencia, Naguit itself explicitly
noted PD No. 705 and expressly and unabashedly pronounced that "[a]
different rule obtains for forest lands, such as those which form part of a
reservation for provincial park purposes the possession of which cannot ripen
into ownership. It is elementary in the law governing natural resources that
forestland cannot be owned by private persons. As held in Palomo v. Court of
Appeals, forest land is not registrable and possession thereof, no
matter how lengthy, cannot convert it into private property, unless
such lands are reclassified and considered disposable and alienable."
54
How the ponencia would square this Naguit statement with the realities of
PD No. 705 and its present ruling would be an interesting exercise to watch. It
would, to say the least, be in a very confused position as it previously
confirmed in Naguit the very same basic precept of law that it now debunks in
its present ruling, citing the same Naguit ruling. AaSIET
C. The PLA, the Civil Code and Prescription
In reading all the provisions of Book II of the Civil Code on the

classification of property based on the person to whom it belongs, it should not
be overlooked that these provisions refer to properties in general, i.e., to
both movable and immovable properties . 55 Thus, the Civil Code provisions
on property do not refer to land alone , much less do they refer solely to
alienable and disposable lands of the public domain. For this latter specie of
property, the PLA is the special governing law and, under the Civil Code itself,
the Civil Code provisions shall apply only in case of deficiency. 56
Whether, as in the present case, land of the public domain can be granted
and registered on the basis of extraordinary prescription (i.e., possession by the
applicant and his predecessors-in-interest for a period of at least 30 years), the
obvious answer is that the application can only effectively be allowed upon
compliance with the PLA's terms. Classification as agricultural land must first
take place to remove the land from its status as a land of the public domain
and a declaration of alienability must likewise be made to render the land
available or susceptible to alienation; the required possession, of course, has to
follow and only upon completion does the land pass to "private" hands.
Whether land classified as "agricultural" and declared "alienable and

disposable" can already be considered "patrimonial" property does not yield to
an easy answer as these concepts involve different classification systems as
discussed above. To be sure, the classification and declaration of a public land
as alienable public agricultural land do not transfer the land into private hands
nor divest it of the character of being State property that can only be acquired
pursuant to the terms of the PLA. Separate from this requirement, a property —
although already declared alienable and disposable — may conceivably still be
held by the State or by any of its political subdivisions or agencies for public
use or public service under the terms of the Civil Code. In this latter case, the
property cannot be considered patrimonial that is subject to acquisitive
prescription.
Based on these considerations, the two concepts of "disposable land of

the public domain" and "patrimonial property" cannot directly be equated with
one another. The requirements for their acquisition, however, must both be
satisfied before they can pass to private hands. aIAEcD
An inevitable related question is the manner of enforcing Article 422 of

the Civil Code that "[p]roperty of the public dominion, when no longer intended
for public use or public service, shall form part of the patrimonial property of
the State," in light of the implication that patrimonial property may be acquired
through prescription under Article 1113 of the Civil Code ("Property of the State
or any of its subdivision not patrimonial in character shall not be the object of
prescription "). This position, incidentally, is what the original decision
in this case claims.
A first simple answer is that the Civil Code provisions must yield when
considered in relation with the PLA and its requirements. In other words, when
the property involved is a land of the public domain, the consideration that it is
not for public use or for public service, or its patrimonial character, initially
becomes immaterial; any grant or alienation must first comply with the
mandates of the Constitution on lands of the public domain and with the
requirements of the PLA as a priority requirement.
Thus, if the question is whether such land, considered patrimonial solely

under the terms of Article 422 of the Civil Code, can be acquired through
prescription, the prior questions of whether the land is already alienable under
the terms of the Constitution and the PLA and whether these terms have been
complied with must first be answered. If the response is negative, then any
characterization under Article 422 of the Civil Code is immaterial; only upon
compliance with the terms of the Constitution and the PLA can Article 422 of
the Civil Code be given full force. If the land is already alienable, Article 422 of
the Civil Code, when invoked, can only be complied with on the showing that
the property is no longer intended for public use or public service.
For all these reasons, alienable and disposable agricultural land cannot be
registered under Section 14 (2) of the PRD solely because it is already alienable
and disposable. The alienability must be coupled with the required declaration
under Article 422 of the Civil Code if the land is claimed to be patrimonial and
possession under Section 14 (2) of the PRD is invoked as basis for registration.
AIHaCc
As an incidental matter, note that this PRD provision is no longer

necessary for the applicant who has complied with the required possession
under Section 48 (b) of the PLA (i.e., that there had been possession since June
12, 1945); he or she does not need to invoke Section 14 (2) of the PRD as
registration is available under Section 14 (1) of the PRD. On the other hand, if
the required period for possession under Section 48 (b) of the PLA (or Section
14 [1] of the PRD) did not take place, then the applicant's recourse would still
be under the PLA through its other available modes (because a land of the
public domain is involved), but not under its Section 48 (b).
Section 14 (2) of the PRD will apply only after the land is deemed to be
"private" or has passed through one of the modes of grant and acquisition
under the PLA, and after the requisite time of possession has passed, counted
from the time the land is deemed or recognized to be private. In short, Section
14 (2) of the PLA only becomes available to a possessor of land already held
or deemed to be in private ownership and only after such possessor complies
with the requisite terms of ordinary or extraordinary prescription. In considering
compliance with the required possession, prior to the declaration of alienability
cannot of course be recognized or given legal effect, as already extensively
discussed above.
To go back and directly answer now the issue that the petitioners directly
pose in this case, no extraordinary prescription can be recognized in their favor
as their effective possession could have started only after March 15, 1982.
Based on the reasons and conclusions in the above discussion, they have not
complied with the legal requirements, either from the point of view of the PLA
or the Civil Code. Hence, the denial of their petition must hold.
LEONEN, J., concurring and dissenting:
I concur with the denial of the Motions for Reconsideration.
I concur with the original Decision penned by Justice Dante Tinga

promulgated on April 29, 2009. I also concur with the Resolution of Justice
Lucas Bersamin with respect to the Motions for Reconsideration, but disagree
with the statements made implying the alleged overarching legal principle
called the "regalian doctrine."
Mario Malabanan filed an application for registration of a parcel of land

designated as Lot 9864-A in Silang, Cavite based on a claim that he purchased
the land from Eduardo Velazco. He also claimed that Eduardo Velazco and his
predecessors-in-interest had been in open, notorious, and continuous adverse
and peaceful possession of the land for more than thirty (30) years. 1
The application was raffled to the Regional Trial Court of Cavite-Tagaytay

City, Branch 18. 2 Malabanan's witness, Aristedes Velazco, testified that Lot
9864-A was originally part of a 22-hectare property owned by his great-
grandfather. 3 His uncle, Eduardo Velazco, who was Malabanan's predecessor-
in-interest, inherited the lot. 4
Malabanan also presented a document issued by the Community

Environment and Natural Resources Office of the Department of Natural
Resources (CENRO-DENR) on June 11, 2001. The document certified that the
subject land had already been classified as alienable and disposable since
March 15, 1982. 5
The Solicitor General, through Assistant Provincial Prosecutor Jose

Velazco, Jr., affirmed the truth of Aristedes Velazco's testimony. 6 Malabanan's
application was not challenged. 7 HCEcaT
The RTC granted Malabanan's application on December 2, 2002.
The Republic appealed the Decision to the Court of Appeals. It argued that
Malabanan failed to prove that the subject land had already been classified as
alienable and disposable. The Republic insisted that Malabanan did not meet
the required manner and length of possession for confirmation of imperfect title
under the law. 8
The Court of Appeals reversed the Decision of the RTC. The CA held that
under Section 14 (1) of Presidential Decree No. 1529 or the Property
Registration Decree, possession before the classification of land as alienable
and disposable should be excluded from the computation of the period of
possession. 9 Therefore, possession before March 15, 1982 should not be
considered in the computation of the period of possession. This is also in
accordance with the ruling in Republic v. Herbieto. 10
Malabanan's heirs (petitioners) appealed the Decision of the CA. 11

Relying on Republic v. Naguit, 12 petitioners argued that the period of
possession required for perfecting titles may be reckoned prior to the
declaration that the land was alienable and disposable. 13 Open, continuous,
exclusive, and notorious possession of an alienable land of public domain for
more than 30 years ipso jure converts it into private property. 14 Previous
classification is immaterial so long as the property had already been converted
to private property at the time of the application. 15
We dismissed the Petition because there was no clear evidence to
establish petitioners' or their predecessors-in-interest's possession since June
12, 1945. 16 Moreover, while there was evidence that the land had already
been declared alienable and disposable since 1982, there was no evidence that
the subject land had been declared as no longer intended for public use or
service. 17
Both petitioners and respondent ask for the reconsideration of Our

Decision on April 29, 2009. CDAHaE
I agree that Malabanan was not able to prove that he or his predecessors-
in-interest were in open, continuous, exclusive, and notorious possession of the
subject land since June 12, 1945. We already noted in the original Decision that
Malabanan offered no deed of sale covering the subject lot, executed by any of
the alleged predecessors-in-interest in his favor. 18 He only marked a
photocopy of a deed of sale executed by Virgilio Velazco in favor of Leila
Benitez and Benjamin Reyes. 19
On that note alone, no title can be issued in favor of Malabanan or
petitioners.
However, I do not agree that all lands not appearing to be clearly within
private ownership are presumed to belong to the State 20 or that lands remain
part of the public domain if the State does not reclassify or alienate it to a
private person. 21 These presumptions are expressions of the Regalian
Doctrine.
Our present Constitution does not contain the term, "regalian doctrine."
What we have is Article XII, Section 2, which provides:
Section 2. All lands of the public domain, waters, minerals, coal,
petroleum, and other mineral oils, all forces of potential energy,
fisheries, forests or timber, wildlife, flora and fauna, and other natural
resources are owned by the State. With the exception of agricultural
lands, all other natural resources shall not be alienated . . . .
There is no suggestion in this section that the presumption in absolutely

all cases is that all lands are public. Clearly, the provision mentions only that
"all lands of the public domain" are "owned by the state."
This is not the only provision that should be considered in determining

whether the presumption would be that the land is part of the "public domain"
or "not of the public domain." ECSHID
Article III, Section 1 of the Constitution provides:

Section 1. No person shall be deprived of life, liberty or property
without due process of law, nor shall any person be denied equal
protection of the laws.
This section protects all types of property. It does not limit its provisions
to property that is already covered by a form of paper title. Verily, there could
be land, considered as property, where ownership has vested as a result of
either possession or prescription, but still, as yet, undocumented. The original
majority's opinion in this case presents some examples.
In my view, We have properly stated the interpretation of Section 48 (b)

of Commonwealth Act No. 141 or the Public Land Act as amended 22 in relation
to Section 14 (1) and 14 (2) of Presidential Decree No. 1529 or the Property
Registration Decree. Our ratio decidendi, therefore, should only be limited to
the facts as presented in this case. We also properly implied that the titling
procedures under Property Registration Decree do not vest or create title. The
Property Registration Decree simply recognizes and documents ownership and
provides for the consequences of issuing paper titles.
We have also recognized that "time immemorial possession of land in the
concept of ownership either through themselves or through their predecessors
in interest" suffices to create a presumption that such lands "have been held in
the same way from before the Spanish conquest, and never to have been public
land." 23 This is an interpretation in Cariño v. Insular Government 24 of the
earlier version of Article III, Section 1 in the McKinley's Instructions. 25 The case
clarified that the Spanish sovereign's concept of the "regalian doctrine" did not
extend to the American colonial period and to the various Organic Acts
extended to the Philippines. cDSAEI
Thus, in Cariño:
It is true that Spain, in its earlier decrees, embodied the
universal feudal theory that all lands were held from the Crown. . . It is
true also that, in legal theory, sovereignty is absolute, and that, as
against foreign nations, the United States may assert, as Spain
asserted, absolute power. But it does not follow that, as against the
inhabitants of the Philippines, the United States assets that Spain had
such power. When theory is left on one side, sovereignty is a question
of strength, and may vary in degree. How far a new sovereign shall
insist upon the theoretical relation of the subjects to the head in the
past, and how far it shall recognize actual facts, are matters for it to
decide.
Whatever may have been the technical position of Spain, it does
not follow that, in view of the United States, [plaintiff who held the land
as owner] had lost all rights and was a mere trespasser when the
present government seized the land. The argument to that effect
seems to amount to a denial of native titles throughout an important
past of Luzon, at least, for the want of ceremonies which the Spaniards
would not have permitted and had not the power to enforce.
No one, we suppose, would deny that, so far as consistent with
paramount necessities, our first object in the internal administration of
the islands is to do justice to the natives, not to exploit their country for
private gain. By the Organic Act of July 1, 1902, c. 1369, Â§ 12, 32 Stat.
691, all the property and rights acquired there by the United States are
to be administered "for the benefit of the inhabitants thereof." 26
(Emphasis supplied) DISTcH
And with respect to time immemorial possession, Cariño mentions:

The [Organic Act of July 1, 1902] made a bill of rights, embodying the
safeguards of the Constitution, and, like the Constitution, extends
those safeguards to all. It provides that
'no law shall be enacted in said islands which shall deprive any
person of life, liberty, or property without due process of law, or deny
to any person therein the equal protection of the laws.'
Â§ 5.In the light of the declaration that we have quoted from Â§ 12, it
is hard to believe that the United States was ready to declare in the
next breath that . . . it meant by "property" only that which had
become such by ceremonies of which presumably a large part of the
inhabitants never had heard, and that it proposed to treat as public
land what they, by native custom and by long association — one of
the profoundest factors in human thought — regarded as their own.
xxx xxx xxx
It might, perhaps, be proper and sufficient to say that when, as far

back as testimony or memory goes, the land has been held by
individuals under a claim of private ownership, it will be presumed to
have been held in the same way from before the Spanish conquest,
and never to have been public land. 27 CTSHDI
Cariño is often misinterpreted to cover only lands for those considered

today as part of indigenous cultural communities. However, nothing in its
provisions limits it to that kind of application. We could also easily see that the
progression of various provisions on completion of imperfect titles in earlier
laws were efforts to assist in the recognition of these rights. In my view, these
statutory attempts should never be interpreted as efforts to limit what has
already been substantially recognized through constitutional interpretation.

There are also other provisions in our Constitution which protect the
unique rights of indigenous peoples. 28 This is in addition to our
pronouncements interpreting "property" in the due process clause through
Cariño.
It is time that we put our invocations of the "regalian doctrine" in its
proper perspective. This will later on, in the proper case, translate into practical
consequences that do justice to our people and our history.
Thus, I vote to deny the Motions for Reconsideration.
Footnotes
1.Rollo , pp. 16-17.
2.Id. at 37-38.
3.Id. at 87.
4.G.R. No. 156117, May 26, 2005, 459 SCRA 183.
5.G.R. No. 144057, January 17, 2005, 448 SCRA 442.
6.G.R. No. 154953, June 26, 2008, 555 SCRA 477.
7.G.R. No. 135527, October 19, 2000, 343 SCRA 716.

8.G.R. No. 134308, December 14, 2000, 348 SCRA 128.
9.Supra note 6.
10.Article 415 (1), Civil Code.
11.Article 419, Civil Code.

14.Cruz v. Secretary of Environment and Natural Resources , G.R. No. 135385,

December 6, 2000, 347 SCRA 128, 165.
15.Section 2, Art. XII, 1987 Constitution.
16.Republic v. Intermediate Appellate Court, No. L-71285, November 5, 1987, 155

SCRA 412, 419.
17.Republic v. Lao, G.R. No. 150413, July 1, 2003, 405 SCRA 291, 298.
18.1935 Constitution, Art. XIII, Sec. 1.

19.Krivenko v. Register of Deeds of Manila, 79 Phil. 461, 468 (1947).
20.Section 3 of Article XII, 1987 Constitution states:
Section 3. Lands of the public domain are classified into agricultural, forest
or timber, mineral lands, and national parks. Agricultural lands of the public
domain may be further classified by law according to the uses which they
may be devoted. Alienable lands of the public domain shall be limited to
agricultural lands. Private corporations or associations may not hold such
alienable lands of the public domain except by lease, for a period not
exceeding twenty-five years, renewable for not more than twenty-five years,
and not to exceed one thousand hectares in area. Citizens of the Philippines
may lease not more than five hundred hectares, or acquire not more than
twelve hectares thereof by purchase, homestead, or grant.
Taking into account the requirements of conservation, ecology, and

development, and subject to the requirements of agrarian reform, the
Congress shall determine, by law, the size of lands of the public domain
which may be acquired, developed, held, or leased and the conditions
therefor.
21.Id.
22.See Bernas, The 1987 Constitution, 2009 Ed., pp. 1188-1189.
23.Article 425. Property of private ownership, besides the patrimonial property of

the State, provinces, cities, and municipalities, consists of all property
belonging to private persons, either individually or collectively. (345a)
24.Director of Forestry v. Villareal, G.R. No. 32266, February 27, 1989, 170 SCRA
598, 608-609.
25.Heirs of Jose Amunategui v. Director of Forestry , No. L-27873, November 29,

1983, 126 SCRA 69, 75.
26.Director of Lands v. Court of Appeals , No. L-58867, June 22, 1984, 129 SCRA
689, 692.
27.Republic v. Court of Appeals , G.R. No. 127060, November 19, 2002, 392 SCRA
190, 201.
28.Section 14. Who may apply. — The following persons may file in the proper
Court of First Instance an application for registration of title to land, whether
1) Those who by themselves or through their predecessors-in-interest have

been in open, continuous, exclusive and notorious possession and occupation
of alienable and disposable lands of the public domain under a bona fide
xxx xxx xxx
29.Director of Lands v. Intermediate Appellate Court, No. L-73002, December 29,

1986, 146 SCRA 509, 518. See also the dissenting opinion of Justice
Teehankee in Manila Electric Company v. Judge Castro-Bartolome , No. L-
49623, June 29, 1982, 114 SCRA 799, 813.
30.Director of Lands v. Intermediate Appellate Court, No. L-73002, December 29,
1986, 146 SCRA 509, 521.
31.Susi v. Razon and Director of Lands, 48 Phil. 424, 428 (1925); Santos v. Court of
Appeals, G.R. No. 90380, September 13, 1990, 189 SCRA 550, 560; Cruz v.
Navarro, No. L-27644, November 29, 1973, 54 SCRA 109, 115.
32.. . . WHEREAS, it has always been the policy of the State to hasten the
settlement, adjudication and quieting of titles to unregistered lands including
alienable and disposable lands of the public domain in favor of qualified
Filipino citizens who have acquired inchoate, imperfect and incomplete titles
thereto by reason of their open, continuous, exclusive and notorious
occupation and cultivation thereof under bonafide claim of acquisition of
ownership for a number of years prescribed by law; . . . (Presidential Decree
1073).
33.An Act Authorizing the Issuance of Free Patents to Residential Lands (Approved
on March 9, 2010).
34.Republic Act No. 10023 reduces the period of eligibility for titling from 30 years
to 10 years of untitled public alienable and disposable lands which have been
zoned as residential; and enables the applicant to apply with the Community
Environment and Natural Resources Office of the Department of Environment
and Natural Resources having jurisdiction over the parcel subject of the
application, provided the land subject of the application should not exceed
200 square meters if it is in a highly urbanized city, 500 meters in other
cities, 750 meters in first-class and second-class municipalities, and 1,000
meters in third-class municipalities.
35.Section 14.Who may apply. — The following persons may file in the proper
Court of First Instance an application for registration of title to land, whether
xxx xxx xxx

2) Those who have acquired ownership of private lands by prescription
under the provisions of existing laws.
36.Republic v. Intermediate Appellate Court, No. L-75042, November 29, 1988, 168
SCRA 165, 174.
37.Dissenting opinion of Justice Teehankee in Manila Electric Company v. Castro-

Bartolome, supra, note 29.
BRION, J.:
1.CONSTITUTION, Article XII, Section 2.
2.CIVIL CODE, Article 530.

3.489 Phil. 405 (2005).
4.CONSTITUTION, Article XII, Sections 2 and 3.


11.CIVIL CODE, Article 420; Arturo Tolentino, Commentaries and Jurisprudence on
the Civil Code of the Philippines, Volume II — Property (1992 ed.), p. 30.
12.CIVIL CODE, Articles 421 and 422.

14.See: discussion below at p. 17 hereof.
15.See CIVIL CODE, Articles 712 and 1106.
16.PLA, Section 11.
17.Oswaldo D. Agcaoili, Property Registration Decree and Related Laws (2006 ed.),
pp. 14-15.
18.Substantive law is that which creates, defines and regulates rights, or which
regulates the rights and duties which give rise to a cause of action, that part
of the law which courts are established to administer, as opposed to
adjective or remedial law, which prescribes the method of enforcing rights or
obtains redress for their invasion (Primicias v. Ocampo, etc., et al. , 93 Phil.
446). It is the nature and the purpose of the law which determine whether it
is substantive or procedural, and not its place in the statute, or its inclusion
in a code (Florenz D. Regalado, Remedial Law Compendium , Volume I [Ninth
Revised Edition], p. 19). Note that Section 51 of the PLA refers to the Land
Registration Act (the predecessor law of the PRD) on how the Torrens title
may be obtained when an alienable land of public domain is acquired
through the substantive right recognized under Section 48 of the PLA.
19.See Heirs of Mario Malabanan v. Republic , G.R. No. 179987, April 29, 2009, 587
SCRA 172, 181.
20.Ibid.
21.Id. at 182; emphases and underscores ours.

22.397 Phil. 799 (2000).
23.401 Phil. 274 (2000).
24.G.R. No. 154953, June 26, 2008, 555 SCRA 477.
25.498 Phil. 227 (2005).

26.Id. at 5.
27.See Heirs of Mario Malabanan v. Republic, supra note 19, at 183.
28.Id. at 210-211; italics supplied, emphases ours, citation omitted.
29.Ponencia , pp. 11-12.

31.Section 6. The President, upon the recommendation of the Secretary of

Agriculture and Commerce, shall from time to time classify the lands of the
public domain into —
(a) Alienable or disposable;

(b) Timber, and
(c) Mineral lands,

and may at any time and in a like manner transfer such lands from one class to
another, for the purposes of their administration and disposition.
Section 7. For the purposes of the administration and disposition of
alienable or disposable public lands, the President, upon recommendation by
the Secretary of Agriculture and Commerce, shall from time to time declare
what lands are open to disposition or concession under this Act.
Section 8. Only those lands shall be declared open to disposition or

concession which have been officially delimited and classified and, when
practicable, surveyed, and which have not been reserved for public or quasi-
public uses, nor appropriated by the Government, nor in any manner become
private property, nor those on which a private right authorized and
recognized by this Act or any other valid law may be claimed, or which,
having been reserved or appropriated, have ceased to be so. However, the
President may, for reasons of public interest, declare lands of the public
domain open to disposition before the same have had their boundaries
established or been surveyed, or may, for the same reason, suspend their
concession or disposition until they are again declared open to concession or
disposition by proclamation duly published or by Act of the National
Assembly.
Section 9. For the purpose of their administration and disposition, the lands
of the public domain alienable or open to disposition shall be classified,
according to the use or purposes to which such lands are destined, as
follows:
(a) Agricultural
(b) Residential, commercial, industrial or for similar productive purposes

(c) Educational, charitable, or other similar purposes
(d) Reservations for town sites and for public and quasi-public uses.
The President, upon recommendation by the Secretary of Agriculture and

Commerce, shall from time to time make the classifications provided for in
this section, and may, at any time and in a similar manner, transfer lands
from one class to another.
Section 10. The words "alienation," "disposition," or "concession" as used in

this Act, shall mean any of the methods authorized by this Act for the
acquisition, lease, use, or benefit of the lands of the public domain other than
timber or mineral lands.
32.PD No. 705, Section 13.

33.PD No. 705, Section 3 (a).
34.Secretary of the Department of Environment and Natural Resources v. Yap , G.R.

Nos. 167707 and 173775, October 8, 2008, 568 SCRA 164, 200.
35.Concurring and Dissenting Opinion of Justice Marvic Mario Victor F. Leonen, p. 2.

36.400 Phil. 904 (2000).
37.465 Phil. 860 (2004).

38.Supra note 34.
39.Supra note 37, at 903-919; citations omitted.
41.Ponencia , p. 11.
42.Section 1. Paragraph 1, Section 44, Chapter VII of Commonwealth Act No. 141,
as amended, is hereby amended to read as follows:
"Sec. 44. Any natural-born citizen of the Philippines who is not the owner of
more than twelve (12) hectares and who, for at least thirty (30) years
prior to the effectivity of this amendatory Act, has continuously
occupied and cultivated, either by himself or through his
predecessors-in-interest a tract or tracts of agricultural public lands
subject to disposition, who shall have paid the real estate tax thereon
while the same has not been occupied by any person shall be entitled, under
the provisions of this Chapter, to have a free patent issued to him for such
tract or tracts of such land not to exceed twelve (12) hectares."
43.Under RA No. 9176, applications for free patents may be made up to December
31, 2020.
45.Section 9. For the purpose of their administration and disposition, the lands of
the public domain alienable or open to disposition shall be classified,
according to the use or purposes to which such lands are destined, as
follows:
(a) Agricultural
(b) Residential, commercial, industrial or for similar productive

purposes
(c) Educational, charitable, or other similar purposes
(d) Reservations for town sites and for public and quasi-public uses.
[emphasis ours]
Note that the classification and concession of residential lands are governed by
Title III of the PLA; Title II refers to agricultural lands.
The ponente mentioned RA No. 10023 in support of his opinion on the

government's policy of adjudicating and quieting titles to unregistered lands
(p. 13). He claims that the grant of public lands should be liberalized to
support this policy (citing the Whereas clause of PD No. 1073, which states:
"it has always been the policy of the State to hasten settlement, adjudication
and quieting of titles to unregistered lands); thus, his interpretation that
classification of the land as agricultural may be made only at the time of
registration and not when possession commenced.
To be entitled to a grant under RA No. 10023, the law states:
". . . the applicant thereof has, either by himself or through his predecessor-in-
interest, actually resided on and continuously possessed and occupied, under
a bona fide claim of acquisition of ownership, the [residential] land applied
for at least ten (10) years and has complied with the requirements prescribed
in Section 1 hereof. . ."
Notably, this requirements are not new as they are similar (except for the
period) to those required under Section 48 (b) of the PLA on judicial
confirmation of imperfect title.
46.At pp. 4-6; citations omitted.

47.411 Phil. 552, 569-570 (2001).
48.Heirs of Mario Malabanan v. Republic, supra note 19, at 201.
49.230 Phil. 590 (1986).
50.200 Phil. 284 (1982).

52.Id. at 10.
53.Id. at 6.
54.Supra note 3, at 415-416; citations omitted, italics and emphasis ours.

55.CIVIL CODE, Article 419, in relation to Article 414.
56.CIVIL CODE, Article 18, which states that "In matters which are governed by the
Code of Commerce and special laws, their deficiency shall be supplied by the
provisions of this Code."
LEONEN, J., concurring and dissenting:

1.Heirs of Mario Malabanan v. Republic , G.R. No. 179987, April 29, 2009, 587 SCRA
172, 180-181; See also note 5 of original Decision (We noted the appellate
court's observation: "More importantly, Malabanan failed to prove his
ownership over Lot 9864-A. In his application for land registration,
Malabanan alleged that he purchased the subject lot from Virgilio Velazco. . .
. As aptly observed by the Republic, no copy of the deed of sale covering Lot
9864-A, executed either by Virgilio or Eduardo Velazco, in favor of Malabanan
was marked and offered in evidence. . . . [The deed of sale marked as Exhibit
"I"] was a photocopy of the deed of sale executed by Virgilio Velazco in favor
of Leila Benitez and Benjamin Reyes. . . . Thus, Malabanan has not proved
that Virgilio or Eduardo Velazco was his predecessor-in-interest.").
2.Id. at 181.
3.Id.
4.Id.
5.Id. at 182.
6.Id.
7.Id.
8.Id. at 183.
9.Id.
10.Id. at 184; Republic v. Herbieto, G.R. No. 156177, May 26, 2005, 459 SCRA 183.
11.Id. at 184. (Malabanan died before the CA released its Decision.)
12.Republic v. Naguit, G.R. No. 144507, January 17, 2005, 448 SCRA 442.
13.Supra note 1, at 184.
14.Id. at 186.
15.Id.
16.Id. at 211.
17.Id.
18.Supra note 1.
19.Id.
20.Decision, p. 5.
21.Id.
22.Prior to Commonwealth Act No. 141, Act 926 (1903) provided for a chapter on
"Unperfected Title and Spanish Grants and Concessions." Act No. 2874 then
amended and compiled the laws relative to lands of the public domain. This
Act was later amended by Acts No. 3164, 3219, 3346, and 3517.
Commonwealth Act No. 141 or what is now the Public Land Act was
promulgated on November 7, 1936. Section 48 (b) was later on amended by
Republic Act No. 1942 (1957) and then later by Pres. Dec. 1073 (1977). The
effects of the later two amendments were sufficiently discussed in the
original majority opinion.
23.Cariño v. Insular Government, 202 U.S. 449, 460 (1909).
24.Id. (Cariño was an inhabitant of Benguet Province in the Philippines. He applied

for the registration of his land, which he and his ancestors held as owners,
without having been issued any document of title by the Spanish Crown. The
Court of First Instance dismissed the application on grounds of law. The
decision was affirmed by the U.S. Supreme Court. The case was brought back
to the U.S. Supreme Court by writ of error.)
25.President's Policy in the Philippines: His Instructions to the Members of the

Second Commission (April 7, 1900). ("Upon every division and branch of the
government of the Philippines, therefore, must be imposed these inviolable
rules: That no person shall be deprived of life, liberty, or property without
due process of law; that private property shall not be taken for public use
without just compensation . . . .")
26.Supra note 23, at 457-459.

27.Supra note 23, at 459-460.
28.CONSTITUTION, Art. XII, Sec. 5; Art. II, Sec. 22; Art. XIII, Sec. 6.

FIRST DIVISION
[G.R. No. 179990. October 23, 2013.]
REPUBLIC OF THE PHILIPPINES, petitioner, vs. DIOSDADA I.

GIELCZYK, respondent.
DECISION
REYES, J : p
The present petition is one for review under Rule 45 of the 1997 Rules
of Court. The Republic of the Philippines (petitioner) challenges the Decision
1 dated September 21, 2007 of the Court of Appeals (CA) in CA-G.R. CV No.
70078, affirming the Decision 2 of the Regional Trial Court (RTC) of Mandaue
City, Branch 56, which granted the application of Diosdada I. Gielczyk
(respondent) for the original registration of title of Lot Nos. 3135-A and
3136-A of Plans Csd-072219-004552 and Csd-072219-004551, both situated
in Jugan, Consolacion, Cebu. The petitioner prays that the Court annuls the
CA Decision dated September 21, 2007 in CA-G.R. CV No. 70078, and that it
should dismiss Land Registration Commission (LRC) Case No. N-452 for utter
lack of merit. 3
Antecedent Facts
On July 17, 1995, the respondent sought the registration under her
name of the lands denominated as Lot No. 3135-A and Lot No. 3136-A of
Plans Csd-072219-004552 and Csd-072219-004551. Both lands were
situated in Jugan, Consolacion, Cebu.
In her verified application in LRC Case No. N-452, the respondent
claimed that she is the owner of the two parcels of land, which are situated,
bounded and specifically described in Plans Csd-072219-004552 and Csd-
072219-004551, 4 to wit:
TECHNICAL DESCRIPTIONS
Lot 2007, Cad. 545-D, identical to lot
3135-A, Csd-072219-004552
(Luisa Ceniza)
A parcel of land (lot 20047, Cad. 545-D, identical to lot 3135-A,
Csd-072219-004552), being a portion of lot 3135, Cad. 545-D (new),
situated in the Barrio of Jugan, Municipality of Consolacion, Province of
Cebu, Island of Cebu. Bounded on the NE., along line 1-2 by lot 20048
(identical to lot 3135-B, Csd-072219-004552), on the SE., along line 2-3
by Camino Vicinal Road, on the SW., along line 3-4 by lot 3126, on the
NW., along line 4-1 by lot 3136, All [sic] of Cad. 545-D (New). Beginning
at a point marked "1" on plan being S. 83 deg. 17'E., 1878.69 m. from
BLLM No. 1, Consolacion, Cebu. aDSAEI
thence S. 61 deg. 20'E., 40.69 m. to point 2;

thence S. 26 deg. 14'W., 57.80 m. to point 3;
thence N. 61 deg. 26'W., 38.40 m. to point 4;
thence N. 23 deg. 59'E., 58.02 m. to point of the
beginning. Containing an area of TWO THOUSAND TWO HUNDRED

EIGHTY FIVE (2,285) SQUARE METERS, more or less. All points
referred to are indicated on the plan and are marked on the ground
as follows; points 1 and 2 by P.S. cyl. conc. mons. 15x40 cms. and the
rest are old P.S. cyl. conc. mons 15x60 cms. Bearings Grid; date of
original survey July 14, 1987-November 11, 1987, and that of the
subdivision survey executed by Geodetic Engineer Norvic S. Abella on
November 12, 1993 and approved on May 24, 1994. 5 TCADEc
TECHNICAL DESCRIPTIONS
Lot 20045, Cad. 545-D, identical to
Lot 3136-A, Csd-072219-004551
(Constancio Ceniza)
A parcel of land (lot 20045, Cad. 545-D, identical to lot 3136-A,
Csd-072219-004551), being a portion of lot 3136, Cad. 545-D (New),
situated in the Barrio of Jugan, Municipality of Consolacion, Province of
Cebu, Island of Cebu. Bounded on the SE., along line 1-2 by lot 3135,
on the SW., along line 2-3-4 by lot 3126, on the NW., along line 6-1 by
lot 20046, All [sic] of Cad. 545-D (New), on the NE., along line 6-1 by lot
20046 (identical to lot 3136-B, Csd-072219-004551). Beginning at a
point marked "1" on plan being S. 83 deg. 17'E., 1878.69 m. from
B.L.L.M. No. 1, Consolacion, Cebu.
thence S. 23 deg. 59'W., 58.02 m. to point 2;

thence N. 20 deg. 43'E., 44.05 m. to point 5;
thence N. 20 deg. 44'E., 12.48 m. to point 6;
thence S. 65 deg. 37'E., 46.79 m. to point of the
beginning. Containing an area of TWO THOUSAND SIX HUNDRED TEN

(2,610) SQUARE METERS, more or less. All points referred to are
indicated on the plan and are marked on the ground as follows; points
1 and 6 by P.S. cyl. conc. mons. 15x40 cms. and the rest are old P.S.
cyl. conc. mons 15x60 cms. Bearings Grid; date of original survey July
14, 1987-November 11, 1987, and that of the subdivision survey
executed by Geodetic Engineer Norvic S. Abella on November 19,
1993 and approved on May 26, 1994. 6 EIAScH
The respondent further alleged the following: (a) that the said parcels
of land were last assessed for taxation at P2,400.00; (b) that to the best of
her knowledge and belief, there is no mortgage nor encumbrance of any
kind affecting said land, nor any person having interest therein, legal or
equitable; (c) that she had been in open, complete, continuous, and peaceful
possession in the concept of an owner over said parcels of land up to the
present time for more than 30 years, including the possession of her
predecessors-in-interest; (d) that she acquired title to said land by virtue of
the deeds of absolute sale; and (e) that said land is not occupied. 7
The respondent, as far as known to her, also alleged that the full
names and complete addresses of the owners of all lands adjoining the
subject land are the following:
ADJOINING OWNERS OF LOT 3135-A:
North — Lot 3135-B owned by Mrs. Luisa Ceniza

Jugan, Consolacion, Cebu
East—Municipal Road
c/o Municipal Mayor
Consolacion, Cebu
South — Lot 3126 owned by Mr. Rene Pepito

West — Lot 3136-A owned by the applicant.
ADJOINING OWNERS OF LOT 3136-A:
North — Lot 3136-B, owned by Mr. Constancio Ceniza

East — Lot 3135-A, owned by the applicant;
South — Lot 3126, owned by Mr. Rogelio M. Pepito

West — Lot 3138, owned by Mr. Miguel Hortiguela

Jugan, Consolacion, Cebu 8
To prove her claim, the respondent submitted the following pieces of
evidence:
(a) Approved plans of Lot Nos. 3135-A and 3136-A; 9
(b) Approved technical descriptions of the same lots; 10
(c) Certification from the Chief, Technical Services Section,

Department of Environment and Natural Resources (DENR),
Region 7, Central Visayas Lands Management Services in lieu
of surveyor's certificates; 11
(d) Latest tax declarations of the lots; 12 TAaEIc
(e) Latest tax clearance of the same lots; 13
(f) Deeds of Sale in favor of the respondent; 14
(g) Certifications from the Community Environment and Natural

Resources Officer (CENRO), Cebu City, that the lots are
alienable and disposable; 15 and
(h) Certification from the Chief, Records Section, DENR, Region

7, Cebu City that the same lots are not subject to public land
application. 16
Furthermore, when the respondent testified in court, her testimony

sought to establish the following:
(i) That the respondent acquired Lot No. 3136-A (which is

identical to Lot 20045, and is situated in Jugan, Consolacion,
Cebu, with an area of 2,610 sq.m.), and Lot No. 3135-A
(which is identical to Lot 20047, and is situated in Jugan,
Consolacion, Cebu, with an area of 2,285 sq.m.) through
purchase from Constancio Ceniza and Luisa Ceniza
respectively; 17
(ii) That the respondent was never delinquent in paying the

taxes for the said lots. In fact the following tax declarations
were issued for Lot No. 3136-A: Tax Dec. No. 01258 for the
year 1948; Tax Dec. No. 012459 for the year 1965; Tax Dec.
No. 20846 for the year 1980; Tax Dec. No. 29200 for the year
1981; Tax Dec. No. 04210 for the year 1985; and Tax Dec.
No. 13275 for the year 1989; while the following tax
declarations were issued for Lot No. 3135-A: Tax Dec. No.
01670 for the year 1948; Tax Dec. No. 012931 for the year
1965; Tax Dec. No. 021294 for the year 1968; Tax Dec. No.
1974; Tax Dec. No. 20849 for the year 1980; Tax Dec. No.
1989; 18 IcHSCT
(iii) That the said parcels of land are alienable and disposable
and are not covered by subsisting public land application; 19
(iv) That the respondent and her respective predecessors-in-

interest had been in possession of Lot No. 3135-A and Lot No.
3136-A for more than 40 years in the concept of an owner,
exclusively, completely, continuously, publicly, peacefully,
notoriously and adversely, and no other person has claimed
ownership over the same land; 20 and
(v) That the respondent is a Filipino Citizen and that despite her
marriage to an American national, she has retained her
Filipino citizenship. 21
The petitioner filed an opposition dated September 18, 1995 to the

respondent's application for registration of title, alleging among others:
(1) That neither the respondent nor her predecessors-in-
interest have been in open, continuous, exclusive, and
notorious possession and occupation of the land in question
since June 12, 1945 or prior thereto; 22cIADaC
(2) That the muniments of title and/or the tax declarations and
tax payment receipts of the respondent attached to or
alleged in the application do not constitute competent and
sufficient evidence of a bona fide acquisition of the land
applied for or of their open, continuous, exclusive and
notorious possession and occupation thereof in the concept
of an owner since June 12, 1945, or prior thereto; and that
said muniments of title do not appear to be genuine and the
tax declarations and/or tax payment receipts indicate the
pretended possession of the respondent to be of recent
vintage; 23
(3) That the respondent can no longer avail of the claim of

ownership in fee simple on the basis of Spanish title or grant
since she has failed to file an appropriate application for
registration within the period of six months from February 16,
1976 as required by Presidential Decree (P.D.) No. 892. From
the records, the petitioner further alleged that the instant
application was filed on July 7, 1995; 24
(4) That the parcel of land applied for is a portion of the public
domain belonging to the petitioner and that the said parcel is
not subject to private appropriation. 25
On November 3, 1999, the RTC rendered its Decision 26 in favor of the

respondent, the dispositive portion of which provides: EcICSA
WHEREFORE, from all the foregoing undisputed facts supported

by oral and documentary evidence, the Court finds and so holds that
the applicant has registrable title over subject lots, and the same title
is hereby confirmed. Consequently, the Administrator, Land
Registration Authority is hereby directed to issue Decree of
Registration and Original Certificate of Title to Lots 3135-A and 3136-A
[sic], both situated at Jugan, Consolacion, Cebu in the name of the
applicant DIOSDADA I. GIELCZYK, 44 years old, Filipino, married to
Philip James Gielczyk, American national, resident of No. 4 Noel St.,
UHV, Parañaque, Metro Manila, as her exclusive paraphernal property.
Upon finality of this judgment, let a corresponding decree of
registration and original certificate of title be issued to subject lot in
accordance with Sec. 39, PD 1529. EcIDaA
SO ORDERED. 27
Not convinced of the RTC's decision, the petitioner filed an appeal

dated August 5, 2002 before the CA, which was also denied on September
21, 2007, 28 the dispositive portion of which provides:
WHEREFORE, the appeal is hereby DENIED and the assailed
Decision AFFIRMED in its entirety. 29
Thus, the petitioner filed the present Petition for Review under Rule 45
of the 1997 Rules of Court, raising the sole issue:
Issue
THE COURT OF APPEALS ERRED ON A QUESTION OF LAW IN
UPHOLDING THE RULING OF THE TRIAL COURT THAT RESPONDENT
WAS ABLE TO PROVE THAT SHE AND HER PREDECESSORS-IN-INTEREST
HAVE BEEN IN OPEN, COMPLETE, CONTINUOUS, NOTORIOUS,
EXCLUSIVE AND PEACEFUL POSSESSION OVER THE LANDS SUBJECT OF
THE APPLICATION FOR ORIGINAL REGISTRATION FOR A PERIOD OF
OVER 40 YEARS THROUGH MERE TAX DECLARATIONS AND IN THE
ABSENCE OF PROOF WHEN THE SUBJECT LOTS WERE DECLARED
ALIENABLE AND DISPOSABLE LANDS OF THE PUBLIC DOMAIN. 30
Our Ruling
It must be noted that the respondent did not file any comment on the
petition despite efforts to notify her and her counsel of record. Thus, in the
Resolution 31 dated March 30, 2011, this Court resolved to dispense with the
respondent's comment and shall decide the instant petition based on
available records. acHDTE
After a thorough study of the records, the Court resolves to grant the
petition.
The respondent failed to completely
prove that there was an expressed
State declaration that the properties
in question are no longer intended
for public use, public service, the
development of the national wealth
and have been converted into
patrimonial property, and to meet
the period of possession and
occupation required by law.
Section 14 of P.D. No. 1529 or The Property Registration Decree
enumerates the persons who may apply for the registration of title to land, to
wit:
Sec. 14. Who may apply. — The following persons may file in
the proper Court of First Instance an application for registration of title
to land, whether personally or through their duly authorized
representatives:
(1) Those who by themselves or through their predecessors-
in-interest have been in open, continuous, exclusive and notorious
possession and occupation of alienable and disposable lands of the
public domain under a bona fide claim of ownership since June 12,
1945, or earlier.
(2) Those who have acquired ownership of private lands by
prescription under the provision of existing laws. ESacHC

abandoned river beds by right of accession or accretion under the
existing laws.
manner provided for by law.
In the assailed decision granting the respondent's application for
registration of title, the CA explained that the RTC's decision was based on
Section 14 (2) of P.D. No. 1529 and not on Section 14 (1) of the same
decree. 32 The CA said:
However, a judicious scrutiny of the attendant facts would reveal
that the assailed decision of the RTC was based not on PD No. 1529,
Section 14(1), but under Section 14(2) of said issuance. The pertinent
portion of the decision is quoted as follows:
"From the documentary evidence presented and formally
offered by the applicant, the Court is convinced that she
and her predecessors-in-interest has (sic) been in open,
complete, continuous, notorious, exclusive and peaceful
possession over the lands herein applied for registration
of title, for a period of over 40 years, in the concept of an
owner and that applicant has registrable title over same
lots in accordance with Sec. 14, PD 1529."
A closer scrutiny will show that the questioned decision was

based on PD No. 1529, Section 14(2). cEaSHC
In the case of Republic of the Philippines vs. Court of Appeals and

Naguit, it was ruled that:
Did the enactment of the Property Registration Decree and
the amendatory P.D. No. 1073 preclude the application for
registration of alienable lands of the public domain, possession
over which commenced only after June 12, 1945? It did not,
considering Section 14(2) of the Property Registration Decree,
which governs and authorizes the application of "those who have
acquired ownership of private lands by prescription under the
provisions of existing laws."
"Prescription is one of the modes of acquiring
ownership under the Civil Code. There is a consistent
jurisprudential rule that properties classified as alienable
public land may be converted into private property by
reason of open, continuous and exclusive possession of at
least thirty (30) years. With such conversion, such
property may now fall within the contemplation of
"private lands" under Section 14(2), and thus susceptible
to registration by those who have acquired ownership
through prescription. Thus, even if possession of the
alienable public land commenced on a date later than
June 12, 1945, and such possession being been [sic] open,
continuous and exclusive, then the possessor may have
the right to register the land by virtue of Section 14(2) of
the Property Registration Decree."
In the instant case, applicant-appellee was able to present tax
declarations dating back from 1948. Although tax declarations and
realty tax payment of property are not conclusive evidence of
ownership, nevertheless, they are good indicia of the possession in the
concept of owner for no one in his right mind would be paying taxes for
a property that is not in his actual, or at the least constructive,
possession. They constitute proof that the holder has a claim of title
over the property. The voluntary declaration of a piece of property for
taxation purposes manifests, not only one's sincere and honest desire
to obtain title to the property, but it also announces his adverse claim
against the State and all other interested parties, including his
intention to contribute to the needed revenues of the Government. All
told, such acts strengthen one's bona fide claim of acquisition of
ownership. 33 (Citations omitted) AIcaDC
The Court agrees with the CA's finding that the RTC's grant of the
respondent's application for registration of title was based on Section 14 (2)
of P.D. No. 1529 and not on Section 14 (1) of the same decree. As the CA,
citing Republic of the Philippines v. Court of Appeals and Naguit, 34 correctly
explained, an applicant may apply for registration of title through
prescription under Section 14 (2) of P.D. No. 1529, stating that patrimonial
properties of the State are susceptible of prescription and that there is a rich
jurisprudential precedents which rule that properties classified as alienable
public land may be converted into private property by reason of open,
continuous and exclusive possession of at least 30 years. 35
In Heirs of Mario Malabanan v. Republic, 36 the Court further clarified
the difference between Section 14 (1) and Section 14 (2) of P.D. No. 1529.
The former refers to registration of title on the basis of possession, while
the latter entitles the applicant to the registration of his property on the
basis of prescription. Registration under the first mode is extended under
the aegis of the P.D. No. 1529 and the Public Land Act (PLA) while under the
second mode is made available both by P.D. No. 1529 and the Civil Code.
Moreover, under Section 48 (b) of the PLA, as amended by Republic Act No.
1472, the 30-year period is in relation to possession without regard to the
Civil Code, while under Section 14 (2) of P.D. No. 1529, the 30-year period
involves extraordinary prescription under the Civil Code, particularly Article
1113 in relation to Article 1137. 37 CSaITD
Indeed, the foregoing jurisprudence clearly shows the basis of the

respondent's application for registration of title. However, the petitioner
argued that the respondent failed to show proof of an expressed State
declaration that the properties in question are no longer intended for public
use, public service, the development of the national wealth or have been
converted into patrimonial property. It pointed out that the certification
which the respondent submitted did not indicate when the lands applied for
were declared alienable and disposable. 38
On this point, the Court cannot completely agree with the petitioner.
Indeed, the respondent attempted to show proof as to when the subject
lands were declared alienable and disposable. While the RTC and the CA
failed to cite the evidence which the respondent submitted, the Court
cannot, in the name of substantial justice and equity, close its eyes to the
September 23, 2004 Certification issued and signed by Fedencio P. Carreon
(Carreon), OIC, CENRO, which the respondent attached in her Appellee's
brief in the CA, 39 as a supplement to her earlier submissions, particularly
Annex "G" and Annex "G-1" or the June 28, 1995 Certifications issued by
Eduardo M. Inting, CENRO. 40
Carreon's Certification is reproduced here:

Republic of the Philippines
Department of Environment and Natural Resources
COMMUNITY ENVIRONMENT AND
NATURAL RESOURCES OFFICE
Cebu City
23 September 2004
CENRO, Cebu City, Lands Verification

CONSTANCIO CENIZA, ET AL. (Consolacion, Cebu)
CERTIFICATION
TO WHOM IT MAY CONCERN:
This is to certify that per projection conducted by Forester

Restituto A. Llegunas a tract of land lots 3135 and 3136, Cad 545-D
(New) containing an area of FIFTEEN THOUSAND SIX HUNDRED EIGHTY
SEVEN (15,687) square meters[,] more or less[,] situated at Jugan,
Consolacion, Cebu as shown and described in the sketch plan at the
back hereof as prepared by Geodetic Engineer Aurelio Q. Caña for
CONSTANCIO CENIZA, ET AL. was found to be within Alienable and
Disposable Block I of Land Classification Project No. 28 per L.
C. Map No. 2545 of Consolacion, Cebu certified under Forestry
Administrative Order No. 4-1063 dated September 1, 1965.
(Emphasis Supplied) TAScID
This is to certify further that the subject area is outside Kotkot-

Lusaran Watershed Reservation per Presidential Proclamation No. 1074
dated Sept. 2, 1997.
This certification is issued upon the request of Mr. Constancio
Ceniza for the purpose of ascertaining the land classification status
only and does not entitle him preferential/priority rights of possession
until determined by competent authorities.
FEDENCIO P. CARREON
OIC, Community Environment
& Natural Resources Officer
However, following our ruling in Republic of the Philippines v. T.A.N.

Properties, Inc., 41 this CENRO Certification by itself is insufficient to
establish that a public land is alienable and disposable. While the
certification refers to Forestry Administrative Order No. 4-1063 dated
September 1, 1965, the respondent should have submitted a certified true
copy thereof to substantiate the alienable character of the land. In any case,
the Court does not need to further discuss whether the respondent was able
to overcome the burden of proving that the land no longer forms part of the
public domain to support her application for original land registration
because of other deficiencies in her application. ITAaCc
Indeed, the respondent failed to meet the required period of

possession and occupation for purposes of prescription. From the time of the
declaration on September 1, 1965 that the properties in question are
purportedly alienable and disposable up to the filing of the application of the
respondent on July 17, 1995, the respondent and her predecessors-in-
interest had possessed and occupied the said properties for only 29 years
and 10 months, short of two months to complete the whole 30-year
possession period.
Granting por arguendo that the respondent and her predecessors-in-
interest had possessed and occupied the subject lots since 1948, the Court
cannot still tack those years to complete the 30-year possession period since
the said lots were only declared alienable and disposable on September 1,
1965. In Naguit, we ruled that for as long as the land was declared alienable
and disposable, the same is susceptible of prescription for purposes of
registration of imperfect title. 42 In Lim v. Republic, 43 we further clarified
that "while a property classified as alienable and disposable public land may
be converted into private property by reason of open, continuous, exclusive
and notorious possession of at least 30 years, public dominion lands become
patrimonial property not only with a declaration that these are alienable or
disposable but also with an express government manifestation that the
property is already patrimonial or no longer retained for public use, public
service or the development of national wealth. And only when the property
has become patrimonial can the prescriptive period for the acquisition of
property of the public dominion begin to run." 44
While the subject lots were supposedly declared alienable or
disposable on September 1, 1965 based on the Certifications of the CENRO,
the respondent still failed to complete the 30-year period required to grant
her application by virtue of prescription. cHSTEA
The respondent failed to present

specific acts of ownership to
substantiate her claim of open,
continuous, exclusive, notorious and
adverse possession in the concept of
an owner.
The petitioner contends that the respondent failed to present specific
acts of ownership to substantiate the latter's claim of open, continuous,
exclusive, notorious and adverse possession in the concept of an owner.
Here, the Court agrees with the petitioner's argument.
In Roman Catholic Bishop of Kalibo, Aklan v. Municipality of Buruanga,
Aklan, 45 the Court ruled that for an applicant to ipso jure or by operation of
law acquire government grant or vested title to a lot, he must be in open,
continuous, exclusive and notorious possession and occupation of the lot. 46
In the said case, the Court clarified what it actually meant when it said
"open, continuous, exclusive and notorious possession and occupation," to
wit:
The petitioner submits that even granting arguendo that the
entire Lot 138 was not assigned to it during the Spanish regime or it is
not the owner thereof pursuant to the Laws of the Indies, its open,
continuous, exclusive and notorious possession and occupation of Lot
138 since 1894 and for many decades thereafter vests ipso jure or by
operation of law upon the petitioner a government grant, a vested title,
to the subject property. It cites Subsection 6 of Section 54 of Act No.
926 and Subsection b of Section 45 of Act No. 2874.
This contention is likewise not persuasive.
One of the important requisites for the application of the
pertinent provisions of Act No. 926 and Act No. 2874 is the "open,
continuous, exclusive and notorious possession and occupation" of the
land by the applicant. 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. The
phrase "possession and occupation" was explained as follows: aIcHSC
It must be underscored that the law speaks of "possession

and occupation." Since these words are separated by the
conjunction and, the clear intention of the law is not to make one
synonymous with the order [sic]. Possession is broader than
occupation because it includes constructive possession.
When, therefore, the law adds the word occupation, it
seeks to delimit the all-encompassing effect of
constructive possession. Taken together with the words
open, continuous, exclusive and notorious , the word
occupation serves to highlight the fact that for one to
qualify under paragraph (b) of the aforesaid section, his
possession of the land must not be mere fiction. As this
Court stated, through then Mr. Justice Jose P. Laurel, in Lasam v.
The Director of Lands:
. . . Counsel for the applicant invokes the doctrine
laid down by us inRamos v. Director of Lands . But it
should be observed that the application of the
doctrine of constructive possession in that case is
subject to certain qualifications, and this court was
careful to observe that among these qualifications
is "one particularly relating to the size of the tract in
controversy with reference to the portion actually in
possession of the claimant." While, therefore,
"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," possession
under paragraph 6 of Section 54 of Act No.
926, as amended by paragraph (b) of Section
45 of Act No. 2874, is not gained by mere
nominal claim. The mere planting of a sign or
symbol of possession cannot justify a
Magellan-like claim of dominion over an
immense tract of territory. Possession as a
means of acquiring ownership, while it may
be constructive, is not a mere fiction. . . . . HIcTDE
xxx xxx xxx

Possession is open when it is patent, visible,
apparent, notorious and not clandestine. It is continuous
when uninterrupted, unbroken and not intermittent or
occasional; exclusive when the adverse possessor can
show exclusive dominion over the land and an
appropriation of it to his own use and benefit; and
notorious when it is so conspicuous that it is generally
known and talked of by the public or the people in the
neighborhood.
Use of land is adverse when it is open and
notorious.
Indisputably, the petitioner has been in open, continuous,
exclusive and notorious possession and occupation of Lot 138-B since
1894 as evidenced by the church structure built thereon. However, the
record is bereft of any evidence that would tend to show that such
possession and occupation extended to Lots 138-A and 138-C
beginning the same period. No single instance of the exercise by the
petitioner of proprietary acts or acts of dominion over these lots was
established. Its unsubstantiated claim that the construction of the
municipal building as well as the subsequent improvements thereon,
e.g., the rural health center, Buruanga community Medicare hospital
[sic], basketball court, Rizal monument and grandstand, was [sic] by its
tolerance does not constitute proof of possession and occupation on its
(the petitioner's) part.
Absent the important requisite of open, continuous, exclusive
and notorious possession and occupation thereon since 1894, no
government grant or title to Lots 138-A and 138-C had vested upon the
petitioner ipso jure or by operation of law. Possession under paragraph
6 of section 54 of Act No. 926, as amended by paragraph (b) of section
45 of Act No. 2874, is not gained by mere nominal claim. 47 (Citations
omitted and emphasis supplied)
In sum, a simple claim of "open, continuous, exclusive and notorious
possession and occupation" does not suffice. An applicant for a grant or title
over a lot must be able to show that he has exercised acts of dominion over
the property in question. The applicant's possession must not be simply a
nominal claim where he only plants a sign or symbol of possession. In other
words, his possession of the property must be patent, visible, apparent,
notorious and not clandestine; it should be uninterrupted, unbroken and not
intermittent or occasional; it should demonstrate exclusive dominion over
the land and an appropriation of it to his own use and benefit; and it should
be conspicuous, which means generally known and talked of by the public or
the people in the neighborhood. 48 HIDCTA
The Court held in Cruz v. Court of Appeals, et al., 49 that therein

petitioners were able to show clear, competent and substantial evidence
establishing that they have exercised acts of dominion over the property in
question. These acts of dominion were the following:
(a) they constructed permanent buildings on the questioned
lot;
(b) they collected rentals;
(c) they granted permission to those who sought their
consent for the construction of a drugstore and a bakery;
(d) they collected fruits from the fruit-bearing trees planted
on the said land;
(e) they were consulted regarding questions of boundaries
between adjoining properties; and
(f) they religiously paid taxes on the property. 50
However, in the present petition, the respondent failed to specifically

show that she and her predecessors-in-interest had exercised acts of
dominion over the subject lots. Admittedly, the respondent's best evidence
to prove possession and ownership were tax declarations and receipts issued
in her name or the names of her predecessors-in-interest, but these tax
declarations and receipts are not conclusive evidence of ownership or right
of possession over a piece of land. "Well settled is the rule that tax
declarations and receipts are not conclusive evidence of ownership or of the
right to possess land when not supported by any other evidence. The fact
that the disputed property may have been declared for taxation purposes in
the names of the applicants for registration or of their predecessors-in-
interest does not necessarily prove ownership. They are merely indicia of a
claim of ownership." 51 AacCIT
In the instant case, the respondent failed to show that she or her
predecessors-in-interest have exercised acts of dominion over the said
parcels of land. In fact, it was only the respondent who testified to
substantiate her allegations in the application. She did not present anyone
else to support her claim of "open, continuous, exclusive and notorious
possession and occupation." Unfortunately, her testimony simply made
general declarations without further proof, to wit:
DIRECT EXAMINATION:
Q - Mrs. Gielczyk, are you the same Diosdada Gielzcyk[,] the
applicant in this case?
A- Yes.
Q - Are you familiar with [L]ots No. 3135 and 20045, both of
Consolacion, Cebu?
A- Yes.
Court:
Excuse me, You can answer in English? You don't need an interpreter?
A- Yes[,] Your Honor.
Atty. Germino:
Who is the owner of these lots?
A- I am the one.
Q- How large is 20047?
A- It has an area of 2,286 square meters. DcCITS
Q- How much is the assessed value of Lot 20047?

A - I do not think, [P]430.00 per square meters is the assessed
value reflected in the document.
Court:
Is that reflected in the tax declaration?

Atty. Germino:
Yes[,] Your Honor. DCATHS
Court:
Then the tax declaration would be the best evidence.

Atty. Germino:
Q -Do you know if there are other persons who are interested
whatsoever over the lots you have mentioned?
A- No sir.
Atty. Germino:
Q- Are there liens and encumbrances affecting the lots?

A- No[,] sir.
Q- Who is in possession of these lots?

A- I am in possession.
Court:
Physically? I thought you are residing in Manila?
A - Because my family is living there in Consolacion and I always

come home every month. I have my parents and brothers there.
Court:
The same property?
A- Near my parents' house[,] Your Honor.

Court:
Proceed. AaITCH
Atty. Germino:
Q- How long have you been in possession of the lots?

A - Including my predecessors-in-interest, for over a period of 40
years.
Q- What is the nature of your possession?

A - Adverse against the whole world, continous [sic], peaceful[,]
open and uninterrupted.
Q- How did you acquire Lot 20047?
A- I purchased it from Luisa Ceniza.
Q- Do you know how did Luisa Ceniza acquire the same?
A- She inherited it from her father Remigio Ceniza.

Q- Do you have a deed of sale in your favor?
A- Yes, I have. 52
xxx xxx xxx
Atty. Germino:
Q - You said that includ[i]ng your predecessors-in-interest, your
possession including your predecessors-in-interest has been for
over forty (40) years. Do you have the tax declaration of Lot
20047 since 1948 until the present? SDHacT
A- Yes.
Q - Showing to you tax declaration No. 01670 in the name of the
heirs of Remigio Ceniza covering land in Consolacion for the year
1948, please examine and tell the court whether that is the tax
declaration of Lot 20047 for the year 1948?
A- Yes, this is the one.

xxx xxx xxx
Atty. Germino:
Q- Showing to you tax declaration No. 012931 in the name of heirs
of Remigio Ceniza for the year 1965, please examine the same
and tell the Honorable court what relation has that to the tax
declaration of lot 20047 for the year 1965?
A- This is the same.

xxx xxx xxx
Atty. Germino:
Q- Showing to you tax declaration No. 021294 in the name of Luisa
and Constancio Ceniza for the year 1968, please examine and
tell the court whether that is the tax declaration of Lot 20047 for
the year 1968?
A- Yes, this is the same. aCITEH
xxx xxx xxx
Atty. Germino:
Q- Showing to you tax declaration No. [no number was indicated in
the TSN] in the name of Luisa Ceniza for the year 1963 tell the
court whether that is the tax declaration for the year 1973?
A- Yes, this is the one. 53

In the continuance of her testimony, the respondent added no further
information for this Court to conclude that she indeed exercised specific acts
of dominion aside from paying taxes. She testified thus:
xxx xxx xxx
Atty. Germino:
Q- Mrs. Gielczyk, one of the last lot subject to [sic] your petition is
Lot 20045, how large is this lot?
A- 2,610 square meters.

Q- How much i[s] the assess value of this lot?
A- [P]970.00
Q- Who is in possession of this lot?
A- I am the one. cSDHEC
Q- How long have you been in possession?

A- Including my predecessors-in-interest is [sic] over a period of 40
years.
COURT: (to witness)

Q - Personally[,] how long have you been in possession of this
property?
A- If I remember right, 1985.
ATTY. GERMINO:
Q- How did you acquire lot 20045?
A- I purchased it from Constancio Ceniza.

Q- Do you have a deed of sale in your favor?
A- Yes.
COURT:
We are talking about 3136-A?

ATTY. GERMINO:
Yes, we are through with Lot 3135?

COURT:
This is 3136-A equivalent to Lot 20045. Proceed. ACIDSc
ATTY. GERMINO:
I am showing to you a deed of absolute sale by Constancio Ceniza over

lot 3136-A acknowledged before Notary Public Marino Martillano,
as Doc. No. 2637 book 4, series of 1988, please examine this
document and tell the Court if that is the deed of sale?
A- Yes.
xxx xxx xxx

Q- Are you not delinquent in the payment of taxes for lot 3136-A?
A- No, sir.
Q- Do you have a tax clearances [sic]?
A- Yes, I have. cSDHEC
Q - I am showing to you tax clearance issued by the municipal

treasurer of Consolacion, Cebu, is that the tax clearance you
referred to?
A- Yes, sir.
ATTY. GERMINO:
We ask your Honor the tax clearance be marked as double "C".
COURT:
Mark it.
xxx xxx xxx

COURT: (to witness)
Q - You said that including your predecessor-in-interest[,] your

possession of the land applied for is more than 40 years, do you
have a Tax Declaration of lot 3136-A from 1948 until the
present?
A- Yes.
Q - I am showing to you a bunch of Tax Declaration[,] 6 in all[,]

from the (sic) year 1948, 1965, 1980, 1981, 1985 and 1989,
please examine this Tax Declaration and tell us whether these
are the Tax Declarations of Lot 3136-A from 1948 until the
present in your name? cCHETI
A- These are the ones.

ATTY. GERMINO:
We ask that the Tax Declaration in bunch be marked as Exhibit double

"F" and the succeeding Tax Declaration to be marked as double
"FF-1" up to double "F-5".
COURT:
Mark it. 54
The respondent's cross-examination further revealed that she and her

predecessors-in-interest have not exercised specific acts of dominion over
the properties, to wit:
COURT:
Cross-examination?
FISCAL ALBURO:
May it please the Honorable Court.
COURT:
Proceed.
FISCAL ALBURO:
Q- Mrs. [G]ielczyk, how many lots are involved in this petition?
A- 2 portions. aSCHIT
Q- How did you acquire this lot [sic]?

A- I purchased it [sic] from Constancio Ceniza.
Q- When was that?

A- If I remember right in 1985 or 1986.
Q- In other words, you srarted [sic] possessing the property since

1985, until the present?
A- Yes.
Q- But you are not in actual occupant [sic] of the property because
you are residing in Parañaque?
A- But I have a cousin in Consolacion.

Q- But you are not residing in Consolacion?
A- I used to go back and forth Cebu and Manila.

Q- Who is in charge of your property in Consolacion?
A- My brothers.
Q - In other words, your property is being taken cared of by your
brothers? SDHTEC
A- Yes.
FISCAL ALBURO:
That is all, your Honor.
ATTY. GERMINO:
No redirect, your Honor.
COURT: (to witness)

By the way, where do you stay often?
A- Usually in Manila.
Q- Who takes care of the property in Mandaue City?
A - My brothers because there are coconut trees and some
fruits and he watched it [sic].
Q- Who is using the coconut trees and the fruits?
A - Just for consumption, there are few coconuts. 55

(Emphasis supplied) cTDECH
From the foregoing testimony of the lone witness (the applicant-

respondent herself), the Court can deduce that, besides intermittently
paying the tax dues on Lot No. 3135-A, the respondent did not exercise acts
of dominion over it. Neither can the Court give credence to the respondent's
claim that her predecessors-in-interest had exercised dominion over the
property since the respondent failed to present any witness who would
substantiate her allegation. The pieces of documentary evidence, specifically
the tax declarations and the deeds of absolute sale, can neither be relied
upon because the same revealed no indication of any improvement that
would have the Court conclude that the respondent exercised specific acts of
dominion. For instance, the deed of absolute sale simply said that the
improvements on Lot No. 3135-A consisted of two (2) coconut trees, one (1)
mango tree, one (1) caimito tree and one (1) jackfruit tree. 56 The tax
declarations have not shown any indication supporting the respondent's
claim that she exercised specific acts of dominion. 57
As to Lot No. 3136-A, the deed of absolute sale showed that there were
14 coconut trees, eight (8) jackfruit trees, and a residential building, which
was actually possessed by the vendor Constancio Ceniza. Moreover, it was
only in Tax Declaration Nos. 29200, 04210 and 13275 where it was declared
that a residential building has been built in Lot No. 3136-A. 58 And based on
the records, Tax Declaration No. 29200, where the residential building was
first indicated, is dated 1981. It may be said then that it was only in 1981
when the respondent's predecessors-in-interest exercised specific acts of
dominion over Lot No. 3136-A, the period of which consists barely of 14
years. Thus, the respondent has not completed the required 30 years of
"open, continuous, exclusive and notorious possession and occupation." ACaEcH
Clearly, from the pieces of documentary and testimonial evidence, and

considering that the respondent did not present any other witness to support
her claim, the Court has no other recourse but to declare that she has not
presented the premium of evidence needed to award her title over the two
parcels of land.
Finally, the Court cannot end this decision without reiterating the final
words of former Associate Justice Dante O. Tinga in the case of Malabanan.
59 Justice Tinga correctly pointed out the need to review our present law on
the distribution of lands to those who have held them for a number of years
but have failed to satisfy the requisites in acquiring title to such land. Justice
Tinga eloquently put the matter before us, thus:
A final word. The Court is comfortable with the correctness of the
legal doctrines established in this decision. Nonetheless, discomfiture
over the implications of today's ruling cannot be discounted. For, every
untitled property that is occupied in the country will be affected by this
ruling. The social implications cannot be dismissed lightly, and the
Court would be abdicating its social responsibility to the Filipino people
if we simply levied the law without comment.
The informal settlement of public lands, whether declared
alienable or not, is a phenomenon tied to long-standing habit and
cultural acquiescence, and is common among the so-called "Third
World" countries. This paradigm powerfully evokes the disconnect
between a legal system and the reality on the ground. The law so far
has been unable to bridge that gap. Alternative means of acquisition of
these public domain lands, such as through homestead or free patent,
have proven unattractive due to limitations imposed on the grantee in
the encumbrance or alienation of said properties. Judicial confirmation
of imperfect title has emerged as the most viable, if not the most
attractive means to regularize the informal settlement of alienable or
disposable lands of the public domain, yet even that system, as
revealed in this decision, has considerable limits.aHcACT
There are millions upon millions of Filipinos who have individually

or exclusively held residential lands on which they have lived and
raised their families. Many more have tilled and made productive idle
lands of the State with their hands. They have been regarded for
generation by their families and their communities as common law
owners. There is much to be said about the virtues of according them
legitimate states. Yet such virtues are not for the Court to translate into
positive law, as the law itself considered such lands as property of the
public dominion. It could only be up to Congress to set forth a
new phase of land reform to sensibly regularize and formalize
the settlement of such lands which in legal theory are lands of
the public domain before the problem becomes insoluble. This
could be accomplished, to cite two examples, by liberalizing
the standards for judicial confirmation of imperfect title, or
amending the Civil Code itself to ease the requisites for the
conversion of public dominion property into patrimonial.
One's sense of security over land rights infuses into every aspect
of well-being not only of that individual, but also to the person's family.
Once that sense of security is deprived, life and livelihood are put on
stasis. It is for the political branches to bring welcome closure to the
long pestering problem. 60 (Citation omitted and emphasis supplied)
Indeed, the Court can only do as much to bring relief to those who, like
herein respondent, wish to acquire title to a land that they have bought. It is
for our lawmakers to write the law amending the present ones and
addressing the reality on the ground, and which this Court will interpret and
apply as justice requires. EHCaDS
WHEREFORE, in consideration of the foregoing disquisitions, the

petition is GRANTED and the Decision dated September 21, 2007 of the
Court of Appeals in CA-G.R. CV No. 70078 is ANNULLED and SET ASIDE.
SO ORDERED.
Sereno, C.J., Leonardo-de Castro, Bersamin and Villarama, Jr., JJ.,
concur.

Footnotes
1. Penned by Associate Justice Stephen C. Cruz, with Associate Justices Isaias P.

Dicdican and Antonio L. Villamor, concurring; rollo, pp. 28-39.
2. Id. at 61-63.
3. Id. at 16-17.
4. Id. at 41 and 46-47.
5. Id. at 46.
6. Id. at 47.
7. Id. at 41 and 49-53.

8. Id. at 42.
9. Id. at 42 and 44-45.

10. Id. at 42 and 46-47.
11. Id. at 42 and 48.

12. Id. at 42 and 49-50.
13. Id. at 42 and 51.
14. Id. at 42 and 52-53.

15. Id. at 42 and 54-55.
16. Id. at 42 and 56.

17. Id. at 62 and 63.
18. Id.
19. Id.
20. Id.
21. Id. at 63.
22. Id. at 58.

23. Id. at 58-59.
24. Id. at 59.

25. Id.
26. Id. at 61-63.
27. Id. at 63.

28. Id. at 28-39.
29. Id. at 38.
30. Id. at 13.

31. Id. at 123.
32. Id. at 37.
33. Id. at 36-37.
34. 489 Phil. 405 (2005).
35. Rollo , pp. 36-37.

36. G.R. No. 179987, April 29, 2009, 587 SCRA 172.
37. Id. at 201-205.
Quoted hereunder for easy reference are Articles 1113 and 1137 of the CIVIL
CODE OF THE PHILIPPINES, to wit:
Art. 1113. All things which are within the commerce of men are susceptible
of prescription, unless otherwise provided. Property of the State or any of its
subdivisions not patrimonial in character shall not be the object of
prescription.
Art. 1137. Ownership and other real rights over immovables also prescribe
through uninterrupted adverse possession thereof for thirty years, without
need of title or of good faith.
38. Rollo , pp. 20-21.
39. CA rollo, p. 62.
40. Rollo , pp. 54-55.

41. 578 Phil. 441 (2008).
42. Supra note 34, at 414.
43. G.R. No. 158630, September 4, 2009, 598 SCRA 247.
44. Id.; see also Heirs of Malabanan v. Republic, G.R. No. 179987, September 3,
2013.
45. 520 Phil. 753 (2006).
46. Id. at 794.
47. Id. at 794-796.

48. Id.
49. 182 Phil. 184 (1979).
50. Id. at 195.
51. Republic v. Manimtim, G.R. No. 169599, March 16, 2011, 645 SCRA 520, 536,
citing Republic of the Philippines v. Dela Paz, G.R. No. 171631, November 15,
2010, 634 SCRA 610, 623.
52. Records, LRC Case No. N-452, pp. 83-84.
53. Id. at 88-91.
54. Id. at 93-97.

55. Id. at 97-98.
56. Id. at 12.
57. Id. at 49-56.
58. Id. at 67-69.

59. Supra note 36.
60. Id. at 212-213.

SECOND DIVISION
[G.R. No. 194077. December 3, 2014.]
FLORENTINO W. LEONG AND ELENA LEONG, ET AL.,

petitioners, vs. EDNA C. SEE, respondent.
DECISION
LEONEN, J : p
Factual findings of lower courts are generally deemed conclusive and

binding upon this court. 1 In any event, "even if the procurement of title was
tainted with fraud and misrepresentation, such defective title may be the
source of a completely legal and valid title in the hands of an innocent
purchaser for value." 2
This petition originated from two civil complaints involving the sale of a
parcel of land in favor of respondent Edna C. See (Edna). Before us is a petition
for review 3 assailing the Court of Appeals' (a) May 19, 2010 decision affirming
in toto the trial court's July 9, 2008 decision granting Edna possession and
ownership over the land upon finding her to be a buyer in good faith and for
value, and (b) August 25, 2010 resolution denying reconsideration.
Petitioners pray for the reversal of the Court of Appeals' decision and
resolution, as well as the trial court's decision. 4 They pray that this court
render its decision as follows:
(a) The Deed of Sale between Edna See and Carmelita Leong is
hereby declared null and void. The Register [of] Deeds for the City of
Manila is hereby directed to cancel TCT No. 231105 in the name of
Edna See and reinstating TCT No. 175628;
(b) Confirming the right of Elena Leong and those people

claiming right under her, to the possession over the subject property;
[and] DAaEIc
(c) Defendants Carmelita Leong and Edna See are declared to be

jointly and severally liable to pay plaintiff, Florentino Leong[,] the sum
of Php50,000.00 as moral damages; the sum of Php50,000.00 a[s]
Attorney's Fees; and the cost of suit. 5
The spouses Florentino Leong (Florentino) and Carmelita Leong

(Carmelita) used to own the property located at No. 539-41 Z.P. De Guzman
Street, Quiapo, Manila. 6
Petitioner Elena Leong (Elena) is Florentino's sister-in-law. 7 She had
stayed with her in-laws on the property rental-free for over two decades until
the building they lived in was razed by fire. 8 They then constructed makeshift
houses, and the rental-free arrangement continued. 9
Florentino and Carmelita immigrated to the United States and eventually
had their marriage dissolved in Illinois. 10 A provision in their marital settlement
agreement states that "Florentino shall convey and quitclaim all of his right,
title and interest in and to 540 De Guzman Street, Manila, Philippines . . . to
Carmelita." 11
The Court of Appeals found that "[a]pparently intercalated in the lower
margin of page 12 of the instrument was a long-hand scribbling of a proviso,
purporting to be a footnote remark": 12
Neither party shall evict or charge rent to relatives of the parties,
or convey title, until it has been established that Florentino has clear
title to the Malabon property. Clear title to be established by the
attorneys for the parties or the ruling of a court of competent
jurisdiction. In the event Florentino does not obtain clear title, this
court reserves jurisdiction to reapportion the properties or their values
to effect a 50-50 division of the value of the 2 remaining Philippine
properties. 13
On November 14, 1996, 14 Carmelita sold the land to Edna. 15 In lieu of

Florentino's signature of conformity in the deed of absolute sale, Carmelita
presented to Edna and her father, witness Ernesto See, a waiver of interest
notarized on March 11, 1996 in Illinois. 16 In this waiver, Florentino reiterated
his quitclaim over his right, title, and interest to the land. 17 Consequently, the
land's title, covered by TCT No. 231105, was transferred to Edna's name. 18
Edna was aware of the Leong relatives staying in the makeshift houses on
the land. 19 Carmelita assured her that her nieces and nephews would move
out, but demands to vacate were unheeded. 20
On April 1, 1997, 21 Edna filed a complaint 22 for recovery of possession
against Elena and the other relatives of the Leong ex-spouses. 23
The complaint alleged that in 1995 after the fire had razed the building on
the land, Elena erected makeshift houses on the land without Carmelita's
knowledge or consent. 24
In response, Elena alleged the title's legal infirmity for lack of Florentino's
conformity to its sale. 25 She argued that Carmelita's non-compliance with the
proviso in the property agreement — that the Quiapo property "may not be
alienated without Florentino first obtaining a clean title over the Malabon
property" 26 — annulled the transfer to Edna.
On April 23, 1997, Florentino filed a complaint 27 for declaration of nullity

of contract, title, and damages against Carmelita Leong, Edna C. See, and the
Manila Register of Deeds, alleging that the sale was without his consent. 28 The
two cases were consolidated.
The Regional Trial Court, in its decision 29 dated July 9, 2008, ruled in
favor of Edna:
WHEREFORE, in view of the foregoing, judgment is hereby
rendered as follows:
(a) Defendant Edna See is granted possession and ownership
over the subject property;
(b) Defendants Elena Leong and all other persons are directed to
vacate the premises at 539-541 Guzman Street, Quiapo, Manila; [and]
(c) Defendant Carmelita Leong is ordered to pay plaintiff,

Florentino Leong his one-half (1/2) or P2 Million with interest thereon at
the rate of 6% per annum from the date of conveyance on November
12, 1996, up to the finality of this Decision; the sum of PhP50,000.00 as
moral damages; the sum of PhP50,000.00 for attorney's fees; and, the
costs of the suit.
SO ORDERED. 30
The Court of Appeals, in its decision 31 dated May 19, 2010, affirmed in
toto the trial court's decision. 32 It likewise denied reconsideration.
Thus, this petition for review was filed.
Petitioners contend that the principle of indefeasibility of Torrens titles

does not apply when fraud exists, and respondent was a buyer in bad faith. 33
Respondent knew at the time of the purchase that Elena had actual possession
of the property, thus, she should have made inquiries on their right to the
property. 34
Petitioners argue the conjugal nature of the property, evidenced by the

title in the names of Florentino and Carmelita Leong, and the waiver relied upon
by respondent. 35 They cite Articles 3 36 and 15 37 of the Civil Code, and Articles
8 7 38 and 134 39 of the Family Code, to support their contention that
respondent should have demanded Florentino's consent to the sale. 40
Petitioners submit that Florentino's waiver is void since donations between
spouses are void. 41
Petitioners argue that respondent should bear the loss 42 of her
negligence in purchasing the property without Florentino's consent. 43 They cite
at length Aggabao v. Parulan, Jr. 44 to support their argument that respondent
failed to exercise the required due diligence in the purchase of the property. 45
Consequently, petitioners submit that the lower courts erred in ruling that
respondent was entitled to possession of the property. 46 aCTcDS
Respondent counters that only questions of law can be raised in a petition

for review on certiorari, and petitioners raise purely factual questions. 47
In any event, the lower courts correctly found that respondent is a

purchaser in good faith for value who exercised the necessary diligence in
purchasing the property. 48
First, good faith is presumed, and petitioners did not substantiate their
bold allegation of fraud. 49 Second, respondent did not rely on the clean title
alone precisely because of the possession by third parties, thus, she also relied
on Florentino's waiver of interest. 50 Respondent even verified the authenticity
of the title at the Manila Register of Deeds with her father and Carmelita. 51
These further inquiries prove respondent's good faith. 52
Respondent submits that petitioners' invocation of the Civil Code

provisions misleads this court. 53 Philippine laws cannot govern Florentino who
was already an American citizen when he executed the waiver of interest,
obtained a divorce, and signed a marital settlement agreement with Carmelita
on July 8, 1994. 54 The waiver was also a consequence of the separation of
properties and not in the nature of a donation between spouses. 55
Lastly, respondent argues that "between possessors who are not owners
and a buyer in good faith and for value, it is clear in this case that the
Respondent Edna See, the buyer in good faith, has the greater right to
possession over the subject property." 56
The sole issue for resolution is whether respondent Edna C. See is a buyer
in good faith and for value.
We affirm the Court of Appeals.
The Torrens system was adopted to "obviate possible conflicts of title by

giving the public the right to rely upon the face of the Torrens certificate and to
dispense, as a rule, with the necessity of inquiring further." 57
One need not inquire beyond the four corners of the certificate of title
when dealing with registered property. 58 Section 44 of Presidential Decree No.
1529 known as the Property Registration Decree recognizes innocent
purchasers in good faith for value and their right to rely on a clean title:
Section 44. Statutory liens affecting title. — Every registered
owner receiving a certificate of title in pursuance of a decree of
registration, and every subsequent purchaser of registered land taking
a certificate of title for value and in good faith, shall hold the same free
from all encumbrances except those noted in said certificate and any
of the following encumbrances which may be subsisting, namely:
First. Liens, claims or rights arising or existing under the laws and
Constitution of the Philippines which are not by law required to appear
of record in the Registry of Deeds in order to be valid against
subsequent purchasers or encumbrances of record.
Second. Unpaid real estate taxes levied and assessed within two
years immediately preceding the acquisition of any right over the land
by an innocent purchaser for value, without prejudice to the right of the
government to collect taxes payable before that period from the
delinquent taxpayer alone.
Third. Any public highway or private way established or

recognized by law, or any government irrigation canal or lateral
thereof, if the certificate of title does not state that the boundaries of
such highway or irrigation canal or lateral thereof have been
determined.
Fourth. Any disposition of the property or limitation on the use

thereof by virtue of, or pursuant to, Presidential Decree No. 27 or any
other law or regulations on agrarian reform. 59 (Emphasis supplied)
An innocent purchaser for value refers to someone who "buys the
property of another without notice that some other person has a right to or
interest in it, and who pays a full and fair price at the time of the purchase or
before receiving any notice of another person's claim." 60 One claiming to be an
innocent purchaser for value has the burden of proving such status. 61
The protection of innocent purchasers in good faith for value grounds on

the social interest embedded in the legal concept granting indefeasibility of
titles. Between the third party and the owner, the latter would be more familiar
with the history and status of the titled property. Consequently, an owner would
incur less costs to discover alleged invalidities relating to the property
compared to a third party. Such costs are, thus, better borne by the owner to
mitigate costs for the economy, lessen delays in transactions, and achieve a
less optimal welfare level for the entire society. 62 ATCaDE
Both lower courts found respondent to be an innocent purchaser in good

faith for value. 63 The trial court discussed:
By her overt acts, Edna See with her father verified the
authenticity of Carmelita's land title at the Registry of Deeds of Manila.
There was no annotation on the same thus deemed a clean title (page
19, TSN, 12 January 2005). Also, she relied on the duly executed and
notarized Certificate of Authority issued by the State of Illinois and
Certificate of Authentication issued by the Consul of the Republic of the
Philippines for Illinois in support to the Waiver of Interest incorporated
in the Deed of Absolute Sale presented to her by Carmelita (Exhibit 2).
Examination of the assailed Certificate of Authority shows that it is
valid and regular on its face. It contains a notarial seal. . . .
. . . The assailed Certificate of Authority is a notarized document

and therefore, presumed to be valid and duly executed. Thus, Edna
See's reliance on the notarial acknowledgment found in the duly
notarized Certificate of Authority presented by Carmelita is sufficient
evidence of good faith. . . . 64
A determination of whether a party is an innocent purchaser in good faith

and for value involves a factual issue beyond the ambit of a petition for review
on certiorari. 65
Generally, factual findings of lower courts are deemed conclusive and
binding upon this court. 66 No cogent reason exists to overturn the findings of
both lower courts.
Petitioners raise that "actual possession of the property by a person other

than the vendor should put the purchaser in inquiry and absen[t] such inquiry[,]
he cannot be regarded as a bona fide purchaser against such possessors." 67
As discussed by the Court of Appeals, respondent did conduct further

inquiry by relying not only on the certificate of title, but also on Florentino's
waiver. 68
Petitioners submit that respondent bought the property knowing that

Florentino and Carmelita were married. 69 They then invoke Civil Code and
Family Code provisions on the nature of conjugal properties and the prohibition
against donations between spouses. 70
Respondent counters that Florentino and Carmelita were already

American citizens when they executed the marital settlement agreement. 71
She even presented before the trial court Florentino's special power of attorney
executed on March 25, 1997 to prove Florentino's citizenship. 72
The trial court disregarded petitioners' argument on the applicability of

our civil laws on the validity of the sale since it already deemed respondent to
be an innocent purchaser in good faith and for value. 73 The trial court added
that since "[respondent] parted with a substantial amount of P4 Million, equity
dictates that she shall have possession of the property[,] [n]onetheless,
Florentino Leong shall get his one-half share of the purchase price." 74
On the other hand, the Court of Appeals discussed that Florentino was
estopped from questioning the transfer of the property since he already waived
all his rights, title, and interests over the same. 75 The court also found that the
intercalated proviso in the marital settlement agreement violated the mutuality
of contracts principle. 76
The question of whether Florentino and Carmelita were already American

citizens at the time of the property's sale to Edna — thus no longer covered by
our laws relating to family rights and duties 77 — involves a factual question
outside the ambit of a petition for review on certiorari.
In any event, respondent exerted due diligence when she ascertained the
authenticity of the documents attached to the deed of sale such as the marital
settlement agreement with Florentino's waiver of interest over the property.
She did not rely solely on the title. She even went to the Registry of Deeds to
verify the authenticity of the title. 78 These further inquiries were considered by
the lower courts in finding respondent to be an innocent purchaser in good faith
and for value.
Lastly, an allegation of fraud must be substantiated. Rule 8, Section 5 of

the Rules of Court provides:
SEC. 5. Fraud, mistake, condition of the mind. — In all
averments of fraud or mistake, the circumstances constituting
fraud or mistake must be stated with particularity. Malice intent,
knowledge or other condition of the mind of a person may be averred
generally. (Emphasis supplied)
In petitioners' memorandum before this court, they mentioned the rule of

fraud as an exception to the indefeasibility of title principle, but failed to
substantiate their allegation by immediately concluding as follows: EHTIcD
Petitioners beg to disagree with the ruling of the Honorable Trial

Court and the Honorable Court of Appeals. Respondent Edna See is not
a buyer in good faith. The ruling that every person can rely on the
correctness of the certificate of title and that the buyer need not go
beyond the four corners of the title to determine the condition of the
property is not absolute and admits of exception. As held in the case of
Remegia Feliciano vs. Sps. Zaldivar , G.R. No. 162593, 2006 Sep 26 the
principle of indefeasibility of a Torrens title does not apply where fraud
attended the issuance of the title. The Torrens title does not furnish a
shield for fraud. As such, a title issued based on void documents may
be annulled. 79 (Emphasis in the original removed)
Even assuming the procurement of title was tainted with fraud and
misrepresentation, "such defective title may still be the source of a completely
legal and valid title in the hands of an innocent purchaser for value." 80
Respondent, an innocent purchaser in good faith and for value with title in
her name, has a better right to the property than Elena. Elena's possession was
neither adverse to nor in the concept of owner. 81
Article 428 of the Civil Code provides:

Art. 428. The owner has the right to enjoy and dispose of a thing,
without other limitations than those established by law.
The owner has also a right of action against the holder and
possessor of the thing in order to recover it. 82
Thus, respondent had every right to pursue her claims as she did.
WHEREFORE, premises considered, the Court of Appeals' decision in CA-

G.R. CV No. 92289 is AFFIRMED.
SO ORDERED.
Carpio, Del Castillo, Villarama, Jr. * and Mendoza, JJ., concur.
Footnotes
* Designated Acting Member per Special Order No. 1888 dated November 28,
2014.
1. Sps. Villamil v. Villarosa , 602 Phil. 932, 940 (2009) [Per J. Tinga, Second
Division], citing Sigaya v. Mayuga, 504 Phil. 600, 611 (2005) [Per J. Austria-
Martinez, Second Division], citing Orquiola v. Court of Appeals, 435 Phil. 323,
331 (2002) [Per J. Quisumbing, Second Division]; Sps. Uy v. Court of Appeals,
411 Phil. 788, 798 (2001) [Per J. Melo, Third Division]; Baricuatro, Jr. v. Court
of Appeals, 382 Phil. 15, 24 (2000) [Per J. Buena, Second Division].
2. PNB v. Heirs of Estanislao and Deogracias Militar, 526 Phil. 788, 794 (2006) [Per
J. Ynares-Santiago, Special First Division], citing Cabuhat v. Court of Appeals,
418 Phil. 451, 456 (2001) [Per J. Ynares-Santiago, First Division].
3. This petition was filed pursuant to Rule 45 of the Rules of Court.

4. Rollo , p. 22.
5. Id. at 23.
6. Id. at 31-32.
7. Id. at 32.
8. Id.
9. Id.
10. Id.
11. Id.
12. Id.
13. Id. at 32-33.
14. Id. at 162. The RTC decision states the date as November 12, 1996.
15. Id. at 12 and 33.
16. Id. at 33.
17. Id. at 32-33.
18. Id. at 12.
19. Id. at 33.
20. Id.
21. Id. at 125.
22. This case was docketed as Civil Case No. 97-82757.
23. Rollo , pp. 12 and 33.
24. Id. at 12.
25. Id. at 33.
26. Id.
27. This case was docketed as Civil Case No. 97-83036.
28. Rollo , pp. 12-13.
29. CA rollo, pp. 24-27. The decision was penned by Presiding Judge Antonio I. De
Castro of the Regional Trial Court of Manila, Branch 3.
30. Id. of 27.
31. Rollo , pp. 31-38. The decision, docketed as CA-G.R. CV No. 92289, was penned
by Associate Justice Apolinario D. Bruselas, Jr. and concurred in by Associate
Justices Mario L. Guariña III and Rodil V. Zalameda of the Ninth Division.
32. Id. at 38.
33. Id. at 146.
34. Id. at 147.
35. Id. at 148.
36. CIVIL CODE, art. 3. Ignorance of the law excuses no one from compliance
therewith.

37. CIVIL CODE, art. 15. Laws relating to family rights and duties, or to the status,
condition and legal capacity of persons are binding upon citizens of the
Philippines, even though living abroad.
38. FAMILY CODE, art. 87. Every donation or grant of gratuitous advantage, direct
or indirect, between the spouse during the marriage shall be void, except
moderate gifts which the spouses may give each other on the occasion of
any family rejoicing. The prohibition shall also apply to persons living
together as husband and wife without a valid marriage.
39. FAMILY CODE, art. 134. In the absence of an express declaration in the
marriage settlements, the separation of property between spouses during
the marriage shall not take place except by judicial order. Such judicial
separation of property may either be voluntary or for sufficient cause.
40. Rollo , p. 149.
41. Id.
42. Id. at 155.
43. Id. at 150.

44. G.R. No. 165803, September 1, 2010, 629 SCRA 562 [Per J. Bersamin, Third
Division].
45. Rollo , p. 151.
46. Id. at 156.
47. Id. at 127.
48. Id. at 130.
49. Id. at 131.
50. Id. at 132.
51. Id. at 135.
52. Id. at 132.
53. Id.
54. Id.
55. Id. at 133.
56. Id. at 135-136.
57. Casimiro Development Corporation v. Mateo, G.R. No. 175485, July 27, 2011,
654 SCRA 676, 686 [Per J. Bersamin, First Division]; Republic of the
Philippines v. Guerrero, 520 Phil. 296, 307 (2006) [Per J. Garcia, Second
Division], citing J. Barredo, concurring opinion, in Republic of the Philippines
v. Court of Appeals, 183 Phil. 426, 434 (1979) [Per J. Aquino, Second
Division].
58. Casimiro Development Corporation v. Mateo, G.R. No. 175485, July 27, 2011,
654 SCRA 676, 689 [Per J. Bersamin, First Division], citing Sandoval v. Court
of Appeals, 329 Phil. 48, 60 (1996) [Per J. Romero, Second Division]; Santos
v. Court of Appeals, G.R. No. 90380, September 13, 1990, 189 SCRA 550,
558 [Per J. Gancayco, First Division]; Unchuan v. Court of Appeals, 244 Phil.
733, 739 (1988) [Per J. Cortes, Third Division]; Bailon-Casilao v. Court of
Appeals, 243 Phil. 888, 898 (1988) [Per J. Cortes, Third Division]; Director of
Lands v. Abad, 61 Phil. 479, 487 (1935) [Per J. Goddard, En Banc]; Quimson
v. Suarez , 45 Phil. 901, 906 (1924) [Per J. Ostrand, En Banc].
59. Pres. Decree No. 1529 (1978), sec. 44.
Division], citing Sps. Domingo v. Reed, 513 Phil. 339, 353 (2005) [Per J.
Panganiban, Third Division].
61. Id., citing Potenciano v. Reynoso, 449 Phil. 396, 410 (2003) [Per J. Panganiban,
Third Division].
62. See Oliver E. Williamson, Transaction-Cost Economics: The Governance of

Contractual Relations, 22 Journal of Law and Economics 233, 239-242 (1979).
63. Rollo , pp. 34 and 164.
64. Id. at 164.
Division]. See also RULES OF COURT, rule 45, sec. 1.
Division], citing Sigaya v. Mayuga, 504 Phil. 600, 611 (2005) [Per J. Austria-
Martinez, Second Division], citing Orquiola v. Court of Appeals, 435 Phil. 323,
331 (2002) [Per J. Quisumbing, Second Division]; Sps. Uy v. Court of Appeals,
411 Phil. 788, 798 (2001) [Per J. Melo, Second Division]; Baricuatro, Jr. v.
Court of Appeals, 382 Phil. 15, 24 (2000) [Per J. Buena, Second Division].
67. Rollo , p. 147.
68. Id. at 35.
69. Id. at 148.
70. Id. at 148-149.
71. Id. at 132.
72. Id. at 133.
73. Id. at 164.
74. CA rollo, p. 62.
75. Rollo , p. 36.
76. Id. CIVIL CODE, art. 1308. The contracts must bind both contracting parties; its
validity or compliance cannot be left to the will of one of them.
77. See CIVIL CODE, art. 15.
78. Rollo , p. 164.
79. Id. at 146.

80. PNB v. Heirs of Estanislao and Deogracias Militar, 526 Phil. 788, 794 (2006)
[Per J. Ynares-Santiago, Special First Division], citing Cabuhat v. Court of
Appeals, 418 Phil. 451, 456 (2001) (Per J. Ynares-Santiago, First Division].
81. Rollo , p. 35.
82. CIVIL CODE, art. 428.

THIRD DIVISION
[G.R. No. 152827. February 6, 2007.]
GERARDO MENDOZA, TRINIA and IYLENE all surnamed

MENDOZA, petitioners, vs. SOLEDAD SALINAS, respondent.
DECISION
AUSTRIA-MARTINEZ, J : p
Assailed in the present Petition for Review on Certiorari is the Order dated
April 2, 2002 issued by the Regional Trial Court (RTC) of Olongapo City, Branch
72, acting as Land Registration Court, in LRC Case No. N-04-0-97, granting
respondent's prayer for the issuance of a writ of possession in her favor. 1
The assailed Order was issued by the RTC after it rendered a favorable
judgment on respondent's application for registration in its Decision dated
November 3, 1998, and Original Certificate of Title (OCT) No. P-10053 was
issued in her name covering a parcel of land described as follows:
A parcel of land (Plan Psu-224228, LR Case No. N-04-0-97, LRA
Record No. N-68955), situated in the Barrio of Barretto, Municipality of
Olongapo, Province of Zambales, Island of Luzon, Bounded on the NW.,
points 1-3 by Road (6.00 m. wide) (unimproved); on the NE., points 3-4
by Public Land claimed by C. Panaligan; on the E., SE., and SW., points
4-19 by Makinaya River (10.00 m. wide); on the SW., points 19-29 by
Public Land; and on the NW., points 29-1 by Road (6.00 m. wide)
unimproved. Beginning at a point marked "1" on plan, being S.84 deg.
47'E., 2644.65 m. from B.L.B.M. 2, Barrio of Matain, Subic, Zambales,
thence
xxx xxx xxx
beginning; containing an area of TWENTY THOUSAND ONE HUNDRED

FORTY NINE (20,149) SQUARE METERS, more or less. . . . 2
Petitioners opposed respondent's application for the issuance of a writ of

possession claiming that they were not oppositors/parties to the registration
case and they have been in actual physical possession of the property since
1964. The RTC, however, rejected their arguments and granted respondent's
application for the issuance of a writ of possession per herein assailed Order.
Hence, the present petition.
Petitioners set forth the lone assignment of error that the RTC erred in
issuing the writ of possession and acted with grave abuse of discretion
amounting to lack and excess of jurisdiction. 3 Petitioners reiterate their
argument that they cannot be ousted of their possession of the property,
having been in actual possession of the property since 1964, as evidenced by
petitioner Gerardo C. Mendoza's Sales Application made in January 1986 over
the following property:
A parcel of land situated at Burgos St., Bo. Barretto, O.C.
Bounded on the North., by Benjamin Salinas; South., by Gloria
Montemayor; East., by Benjamin Salinas & Conrado Pilapil and West.,
Burgos St. situated in Bo. Barretto, Olongapo City, Zambales, and
containing an area of 932 square meters . . . . 4
and a Declaration of Real Property for the years 1976 and 1985, 5 among
others.
Respondent counters that the present petition should be dismissed,
arguing that the petition should have been initially with the Court of Appeals,
based on the principle of hierarchy of courts, and that the general order of
default on October 8, 1998 issued by the RTC binds them and personal notice
was not necessary. HcDSaT
The petition must be granted.

On the procedural issue, it should be pointed out that what petitioners
filed with the Court is a petition for review on certiorari under Rule 45 of the
Rules of Court of Court, and not a special civil action for certiorari under Rule
65. The principle of hierarchy of courts does not find any application in this
case. Under Section 2 (c), Rule 41 of the Rules of Court, it is provided that in all
cases where only questions of law are raised, the appeal from a decision or
order of the RTC shall be to the Supreme Court by petition for review on
certiorari in accordance with Rule 45, Section 1 of which provides:
SECTION 1. Filing of Petition with Supreme Court . — A party
desiring to appeal by certiorari from a judgment or final order or
resolution of the Court of Appeals, the Sandiganbayan, the Regional
Trial Court or other courts whenever authorized by law, may file with
the Supreme Court a verified petition for review on certiorari. The
petition shall raise only questions of law which must be distinctly set
forth.
A question of law exists when the doubt or controversy concerns the

correct application of law or jurisprudence to a certain set of facts; or when the
issue does not call for an examination of the probative value of the evidence
presented, the truth or falsehood of facts being admitted. A question of fact
exists when the doubt or difference arises as to the truth or falsehood of facts
or when the query invites calibration of the whole evidence considering mainly
the credibility of the witnesses, the existence and relevancy of specific
surrounding circumstances, as well as their relation to each other and to the
whole, and the probability of the situation. 6
The substantive issue posed for resolution in the present case pertains to
the propriety of the issuance of the writ of possession by the RTC. This,
obviously, is a question of law; consequently, direct resort to this Court is
proper.
There is no question that the writ of possession granted in this case was
made by the RTC acting as a land registration court, after finality of its Decision
dated November 3, 1998 and the corresponding OCT No. P-10053 was issued in
the name of respondent. As the soundness of the order granting the writ of
possession is a matter of judgment, the remedy is ordinary appeal by way of
petition for review on certiorari. An error of judgment committed by a court in
the exercise of its legitimate jurisdiction is not the same as "grave abuse of
discretion." Errors of judgment are correctible by appeal, while those of
jurisdiction are reviewable by certiorari. 7
Petitioners, therefore, filed the proper petition before the Court.
On the substantive issue of the propriety of the issuance of the writ of

possession, the Court finds that the RTC committed a reversible error in
granting the issuance of the writ of possession.
A writ of possession may be issued under the following instances: (1) land
registration proceedings under Sec. 17 of Act No. 496; (2) judicial foreclosure,
provided the debtor is in possession of the mortgaged realty and no third
person, not a party to the foreclosure suit, had intervened; and (3) extrajudicial
foreclosure of a real estate mortgage under Sec. 7 of Act No. 3135 as amended
by Act No. 4118.
In land registration cases, principles regarding the issuance of a writ of

possession are well-settled. A judgment confirming the title of the applicant in a
registration case and ordering its registration in his name necessarily carries
with it the delivery of possession which is an inherent element of the right of
ownership. 8 This is sanctioned by existing laws in this jurisdiction and by the
generally accepted principle upon which the administration of justice rests. 9
Also, a writ of possession may be issued not only against the person who
has been defeated in a registration case but also against anyone unlawfully and
adversely occupying the land or any portion thereof during the land registration
proceedings up to the issuance of the final decree, 10 and it is the duty of the
registration court to issue said writ when asked for by the successful claimant.
11
Based on these tenets, the issuance of a writ of possession, therefore, is

clearly a ministerial duty of the land registration court. Such ministerial duty,
however, ceases to be so with particular regard to petitioners who are actual
possessors of the property under a claim of ownership. Actual possession under
claim of ownership raises a disputable presumption of ownership. This
conclusion is supported by Article 433 of the Civil Code, which provides:
Actual possession under claim of ownership raises a disputable
presumption of ownership. The true owner must resort to judicial
process for the recovery of the property.
TaCDcE
Under said provision, one who claims to be the owner of a property

possessed by another must bring the appropriate judicial action for its physical
recovery. The term "judicial process" could mean no less than an ejectment suit
or reinvindicatory action, in which the ownership claims of the contending
parties may be properly heard and adjudicated. 12
It is noted that there already exists a final and executory decision
disregarding respondent's claim for possession over the property. In a Decision
dated January 21, 2002, rendered by the Municipal Trial Court in Cities (MTCC)
of Olongapo City, Branch 3, in Civil Case No. 4643, an action for unlawful
detainer filed by respondent and her spouse against petitioners and several
other occupants of the property, the case against petitioners was dismissed by
the MTCC for lack of cause of action. 13 While the MTCC Decision was appealed
by the other defendants, respondent and her spouse manifested that they will
not appeal the decision and, instead, will file for a writ of possession in RC Case
No. N-04-0-97.
Note should also be made that petitioners registered their opposition to

respondent's application for the issuance of a writ of possession and apprised
the RTC of their actual, peaceful, physical and uninterrupted possession since
1964, 14 including therein documents supporting their claim, consisting of
Gerardo C. Mendoza's Sales Application made on January 1986 and a
Declaration of Real Property for the years 1976 and 1985, among others. 15 The
RTC, nevertheless, disregarded their opposition and, instead, relied on the
ruling in Serra Serra v. Court of Appeals [195 SCRA 482], 16 that a writ of
possession may be issued in a land registration proceeding.
A reading of the Serra Serra case, however, supports the Court's
conclusion that a writ of possession should not have been issued in this case. It
was ruled by the Court that while a writ of possession may be issued only
pursuant to a decree of registration in an original land registration proceedings,
it cannot issue against possessors under claim of ownership, as actual
possession under claim of ownership raises a disputable presumption of
ownership, and the true owner must resort to judicial process for the recovery
of the property, not summarily through a motion for the issuance of a writ of
possession. 17
Thus, it was erroneous for the RTC to have issued the writ of possession
against petitioners. This conclusion, of course, is without prejudice to any case
that respondent may file for the recovery of the property.
WHEREFORE, the petition is GRANTED. The Order dated April 2, 2002

issued by the Regional Trial Court of Olongapo City, Branch 72, acting as Land
Registration Court, in LRC Case No. N-04-0-97, is NULLIFIED and SET ASIDE.
Respondent's application for the issuance of a writ of possession is DENIED,
without prejudice to any case that she may file for recovery of the property.
SO ORDERED.
Ynares-Santiago, Callejo, Sr. and Chico-Nazario, JJ., concur.
Footnotes
1. Rollo , p. 57.
2. Records, pp. 119-120.

3. Rollo , p. 7.
4. Id. at 19.
5. Id. at 21, 22.
6. Bukidnon Doctors' Hospital, Inc. v. Metropolitan Bank & Trust Co., G.R. No.
161882, July 8, 2005, 463 SCRA 222, 233.
7. Philippine National Bank v. Sanao Marketing Corporation, G.R. No. 153951,

July 29, 2005, 465 SCRA 287, 306. TEDaAc
8. Heirs of Avila v. Court of Appeals, 229 Phil. 536, 543-544 (1986).

9. Vencilao v. Vano , G.R. No. 25660, February 23, 1990, 182 SCRA 491, 505.
10. Barroga v. Albano, No. L-43445, January 20, 1988, 157 SCRA 131, 134.
11. Vencilao v. Vano, supra note 9, at 505.
12. Philippine National Bank v. Court of Appeals, 424 Phil. 757, 769-770 (2002).
13. Records, pp. 149-150.
14. Rollo , p. 55.

15. Id. at 21, 22.
16. Id. at 57.
17. Serra Serra v. Court of Appeals, G.R. No. 34080, March 22, 1991, 195 SCRA
482, 491-492.

FIRST DIVISION
[G.R. No. 175763. April 11, 2012.]
HEIRS OF BIENVENIDO AND ARACELI TANYAG, namely:

ARTURO TANYAG, AIDA T. JOCSON AND ZENAIDA T.
VELOSO, petitioners, vs. SALOME E. GABRIEL, NESTOR R.
GABRIEL, LUZ GABRIEL-ARNEDO married to ARTURO
ARNEDO, NORA GABRIEL-CALINGO married to FELIX
CALINGO, PILAR M. MENDIOLA, MINERVA GABRIEL-
NATIVIDAD married to EUSTAQUIO NATIVIDAD, and
ERLINDA VELASQUEZ married to HERMINIO VELASQUEZ,
respondents.
DECISION
VILLARAMA, JR., J : p
This is a petition for review under Rule 45 which seeks to reverse the
Decision 1 dated August 18, 2006 and Resolution 2 dated December 8, 2006 of
the Court of Appeals (CA) in CA-G.R. CV No. 81224. The CA affirmed the
Decision 3 dated November 19, 2003 of the Regional Trial Court of Pasig City,
Branch 267 in Civil Case No. 67846 dismissing petitioners' complaint for
declaration of nullity of Original Certificate of Title (OCT) No. 1035,
reconveyance and damages, as well as respondents' counterclaims for
damages and attorney's fees.
Subject of controversy are two adjacent parcels of land located at Ruhale,

Barangay Calzada, Municipality of Taguig (now part of Pasig City, Metro Manila).
The first parcel ("Lot 1") with an area of 686 square meters was originally
declared in the name of Jose Gabriel under Tax Declaration (TD) Nos. 1603 and
6425 issued for the years 1949 and 1966, while the second parcel ("Lot 2")
consisting of 147 square meters was originally declared in the name of Agueda
Dinguinbayan under TD Nos. 6418 and 9676 issued for the years 1966 and
1967. 4 For several years, these lands lined with bamboo plants remained
undeveloped and uninhabited.
Petitioners claimed that Lot 1 was owned by Benita Gabriel, sister of Jose
Gabriel, as part of her inheritance as declared by her in a 1944 notarized
instrument ("Affidavit of Sale") whereby she sold the said property to spouses
Gabriel Sulit and Cornelia Sanga. Said document states:
DAPAT MALAMAN NG LAHAT NG MAKABABASA
Na, akong Benita Gabriel, balo sa nasirang Calixto Lontoc, Filipina

may karapatang gulang naninirahan sa nayon ng Palingon, Tagig, Rizal,
. . . sa pamamaguitan nitoy ITEcAD

ISINASAYSAY KO AT PINAGTITIBAY
1.) Na, sarili ko at tunay na pagaari ang isang lagay na

lupang kawayanan na sapagkat itoy kabahagui ko sa aking kapatid na
[J]ose Gabriel, na itoy mana ko sa aking nasirang ama Mateo Gabriel sa
kami lamang dalawa ng aking kapatid na binabanguit ko na Jose
Gabriel siyang mga anak at tagapagmana ng aming amang nasirang
Mateo Gabriel, maliban sa amin ay wala nang iba, kayat kami ay
naghati sa mga ari-arian na na iwan sa amin ng nasirang ama namin
na Mateo Gabriel, na ang lupang kawayanang itoy may nakatanim na
walong (8) punong kawayan at na sa pook na kung pamagatan ay
Ruhale nayon ng Calzada, Tagig, Rizal, at na sa loob ng mga
kahanganan at sukat na sumusunod[:]
Na, ang kahangan sa Hilagaan Sapang Ruhale at Vicente Bunye,

sa Amihanan Felipe Pagkalinawan, sa Timugan Juan Flores, at sa
Habagatan Apolonio Ocol may sukat na 6 areas at 85 centiareas may
halagan amillarada na (P80.00) Pesos alinsunod sa Tax Blg. 20037, sa
pangalan ng aking kapatid na Jose Gabriel. Na, ang lupang itoy hindi
natatala sa bisa ng batas Blg. 496 ni sa susog gayon din sa Hipotecaria
Española itoy may mga mojon bato ang mga panulok at walang bakod.
2.) Na, alang-alang sa halagang SIYAMNAPO AT ANIM

(P96.00) na Pisong salaping guinagamit dito sa Filipinas na bago
dumating ang mga sandaling itoy tinaggap ko at ibinayad sa akin ng
boong kasiyahang loob ko ng magasawang GABRIEL SULIT AT
CORNELIA SANGA, mga Filipinos may mga karapatang gulang mga
naninirahan sa nayon ng Calzada, Tagig, Rizal, ngayon ay inilipat ko at
ipinagbili ng bilihang tuluyan (Venta real soluta) ang isinasaysay kong
lupang kawayanan sa itaas nito ng nasabi halagang SIYAMNAPO AT
ANIM (P96.00) na Piso at sa nabanguit na magasawang GABRIEL SULIT
AT CORNELIA SANGA, gayon din sa lahat ng mga tagapagmana nila,
ngayong mga arao na ito ay ang may hawak at namamahala ng lupang
itoy ang mga nakabili sa akin na magasawang GABRIEL SULIT AT
CORNELIA SANGA.
3.) Na, ang kasulatang itoy ng bilihan ay nais na itala sa bisa

ng batas Blg. 3344.
NA SA KATUNAYAN NG LAHAT NG ITOY ako ay lumagda sa

kasulatang ito dito sa Tagig, Rizal, ngayong ika-28 ng Junio 1944.HDATSI
(Nilagdaan) BENITA GABRIEL 5
Lot l allegedly came into the possession of Benita Gabriel's own daughter,
Florencia Gabriel Sulit, when her father-in-law Gabriel Sulit gave it to her as
part of inheritance of his son, Eliseo Sulit who was Florencia's husband.
Florencia Sulit sold the same lot to Bienvenido S. Tanyag, father of petitioners,
as evidenced by a notarized deed of sale dated October 14, 1964. 6 Petitioners
then took possession of the property, paid the real estate taxes due on the land
and declared the same for tax purposes, as shown by TD No. 11445 issued in
1969 in the name of Bienvenido's wife, Araceli C. Tanyag; TD No. 11445
cancelled TD No. 6425 in the name of Jose Gabriel. TD Nos. 3380 and 00486
also in the name of Araceli Tanyag were issued in the years 1974 and 1979. 7
As to Lot 2, petitioners averred that it was sold by Agueda Dinguinbayan
to Araceli Tanyag under Deed of Sale executed on October 22, 1968.
Thereupon, petitioners took possession of said property and declared the same
for tax purposes as shown by TD Nos. 11361, 3395, 120-014-00482, 120-00-
014-20-002-000, C-014-00180 and D-014-00182 issued for the years 1969,
1974, 1979, 1985, 1991 and 1994. 8 Petitioners claimed to have continuously,
publicly, notoriously and adversely occupied both Lots 1 and 2 through their
caretaker Juana Quinones; 9 they fenced the premises and introduced
improvements on the land. 10
Sometime in 1979, Jose Gabriel, father of respondents, secured TD No.

120-014-01013 in his name over Lot 1 indicating therein an increased area of
1,763 square meters. Said tax declaration supposedly cancelled TD No. 6425
over Lot 1 and contained the following inscription: 11 cAECST
Note:Portions of this Property is Also Declared

in the name of Araceli C. Tanyag under
T.D. #120-014-00858 686 sq. m.
Also inscribed on TD No. 120-014-00858 12 (1979) in the name of Araceli

Tanyag covering Lot 1 are the following:
This property is also covered by T.D. #120-014-01013
in the name of Jose P. Gabriel
1-8-80
which notation was carried into the 1985, 1990 and 1991 tax declarations,
all in the name of Araceli Tanyag.
On March 20, 2000, petitioners instituted Civil Case No. 67846 alleging
that respondents never occupied the whole 686 square meters of Lot 1 and
fraudulently caused the inclusion of Lot 2 in TD No. 120-014-01013 such that
Lot 1 consisting of 686 square meters originally declared in the name of Jose
Gabriel was increased to 1,763 square meters. They contended that the
issuance of OCT No. 1035 on October 28, 1998 over the subject land in the
name of respondents heirs of Jose Gabriel was null and void from the beginning.
13
On the other hand, respondents asserted that petitioners have no cause

of action against them for they have not established their ownership over the
subject property covered by a Torrens title in respondents' name. They further
argued that OCT No. 1035 had become unassailable one year after its issuance
and petitioners failed to establish that it was irregularly or unlawfully procured.
14
Respondents' evidence showed that the subject land was among those
properties included in the Extrajudicial Settlement of Estate of Jose P. Gabriel 15
executed on October 5, 1988, covered by TD No. B-014-00643 (1985) in the
name of Jose Gabriel. Respondents declared the property in their name but the
tax declarations (1989, 1991 and 1994) carried the notation that portions
thereof (686 sq. ms.) are also declared in the name of Araceli Tanyag. On
October 28, 1998, OCT No. 1035 16 was issued to respondents by the Register
of Deeds of Pasig, Metro Manila under Decree No. N-219177 pursuant to the
Decision dated September 20, 1996 of the Land Registration Court in LRC Case
No. N-11260, covering Lot 1836 MCadm-590-D, Taguig Cadastral Mapping, Plan
Ap-04-002253, with an area of 1,560 square meters.
On the other hand, respondents' TD Nos. D-014-00839 and D-014-01923

issued in 1993 and 1999 respectively, showed that respondents sold 468
square meters of Lot 1 to Jayson Sta. Barbara. 17 The segregation of said 468
square meters pertaining to Jayson Sta. Barbara was reflected in the approved
survey plan of Lot 1836 prepared by respondents' surveyor on March 18, 2000.
18 aSTECI
At the trial, petitioners presented their witness Arturo Tanyag, son of

Bienvenido Tanyag and Araceli Tanyag who died on March 30, 1968 and
October 30, 1993, respectively. He testified that according to Florencia Sulit,
Benita Gabriel-Lontoc and her family were the ones in possession of Lot l since
1944; Benita Gabriel had executed an Affidavit of Sale declaring said property
as her inheritance and conveying the same to spouses Gabriel and Cornelia
Sulit. He affirmed that they had been in possession of Lot 1 from the time
Bienvenido Tanyag bought the land from Florencia Sulit in 1964. Based on the
boundaries indicated in the tax declaration, they fenced the property, installed
Juana Quinones as their caretaker who also attended to the piggery, put up an
artesian well and planted some trees. From 1964 up to 1978, nobody disturbed
there in their possession or claimed ownership of the land; four years after
acquiring Lot 1, they also purchased the adjacent property (Lot 2) to expand
their piggery. Lot 2 was also separately declared for tax purposes after their
mother purchased it from Agueda Dinguinbayan. He had personally witnessed
the execution of the 1968 deed of sale including its notarization, and was also
present during the physical turn over of Lot 2 by the seller. In fact, he was one
of the instrumental witnesses to the deed of sale and identified his signature
therein. He further described the place as inaccessible at that time as there
were no roads yet and they had to traverse muddy tracks to reach their
property. 19
Arturo further testified that the first time they met Jose Gabriel was when
the latter borrowed from their mother all the documents pertaining to their
property. Jose Gabriel came looking for a piece of property which he claims as
his but he had no documents to prove it and so they showed him their
documents pertaining to the subject property; out of the goodness of her
mother's heart, she lent those documents to her brother Jose Gabriel. During
the cadastral survey conducted in 1976, they had both lots surveyed in
preparation for their consolidation under one tax declaration. However, they did
not succeed in registering the consolidated lots as they discovered that there
was another tax declaration covering the same properties and these were
applied for titling under the name of Jose Gabriel sometime in 1978 or 1980,
which was after the time said Jose Gabriel borrowed the documents from their
mother. No notice of the hearings for application of title filed by Jose Gabriel
was received by them. They never abandoned the property and their caretaker
never left the place except to report to the police when she was being harassed
by the respondents. He also recalled that respondents had filed a complaint
against them before the barangay but since no agreement was reached after
several meetings, they filed the present case. 20 HIDCTA
The next witness for petitioners was Juana Quinones, their caretaker who
testified that she had been staying on petitioners' property since 1964 or for 35
years already. She had built a nipa hut and artesian well, raised piggery and
poultry and planted some root crops and vegetables on the land. At first there
was only one parcel but later the petitioners bought an additional lot; Arturo
Tanyag gave her money which she used for the fencing of the property. During
all the time she occupied the property there was nobody else claiming it and
she also had not received any notice for petitioners concerning the property,
nor the conduct of survey on the land. On cross-examination, she admitted that
she was living alone and had no Voter's ID or any document evidencing that
she had been a resident there since 1964. Although she was living alone, she
asks for help from other persons in tending her piggery. 21
Angelita Sulit-delos Santos, cousin of petitioners and also of respondents,

testified that she came to know the subject property because according to her
paternal grandfather Gabriel Sta. Ana Sulit, her maternal grandmother Benita
Gabriel-Lontoc mortgaged the property to him. It was Benita Gabriel Lontoc who
took care of her, her siblings and cousins; they lived with her until her death.
She identified the signature of Benita Gabriel in the 1944 Affidavit of Sale in
favor of Gabriel Sulit. Lot 1 consisting of 600 square meters was vacant
property at that time but her family was in possession thereof when it was sold
to Gabriel Sulit; it was her father Eliseo Sulit and uncle Hilario Sulit, who were
incharge of their property. On cross-examination, she was asked details
regarding the supposed mortgage of Lot 1 to Gabriel Sulit but she admitted she
does not know anything as she was still very young then. 22 CTSHDI
Respondents' first witness was Roberto Gabriel Arnedo, son of Luz

Gabriel-Arnedo. He testified that when he was about 5 or 6 years old (1953 or
1954), his grandfather Jose Gabriel used to bring him along to visit the subject
property consisting of 1,763 square meters based on the tax declaration and
OCT. They had picnics and celebrate his grandfather's birthday there. He
recalled accompanying his grandfather in overseeing the planting of gumamela
which served as the perimeter fence. Jose Gabriel had not mentioned anything
about the claim of petitioners over the same land; Jose Gabriel handed the
documents pertaining to the land to his eldest aunt and hence it now belongs to
them. 23 On cross-examination, he claimed that during those years he had
visited the land together with his grandfather, he did not see Florencia Sulit and
her family. 24
Virginia Villanueva, daughter of Salome Gabriel, testified that they

acquired the subject property from their grandfather Jose Gabriel who had a tax
declaration in his name. Her mother furnished them with documents such as
tax declarations and the extrajudicial settlement of the estate of Jose Gabriel;
they also have an approved survey plan prepared for Salome Gabriel. She does
not know the petitioners in this case. 25 On cross-examination, she said that the
subject property was inherited by Jose Gabriel from his father Mateo Gabriel;
Jose Gabriel was the sole owner of the land while Benita Gabriel has separate
properties in Palingon and Langkokak. 26 Though they are not actually
occupying the property, they visit the place and she does not know anybody
occupying it, except for the portion (486 square meters) which petitioners sold
to Sta. Barbara. A nine-door apartment was built on the said portion without
their permission. She had talked to both Sta. Barbara and with Arturo Tanyag
they had meetings before the barangay; however, petitioners filed the present
case in court. She insisted that there is nobody residing in the subject property;
there is still the remaining 901 square meters which is owned by their mother.
She admitted there were plants on the land but she does not know who actually
planted them; it was her grandfather who built a wooden fence and gumamela
in the 1960s. As to the hearings on the application for title, she had not
attended the same; she does not know whether the petitioners were notified of
the said hearings. She also caused the preparation of the survey plan for
Salome Gabriel. On the increased area of the property indicated in the later tax
declarations, she admitted the discrepancy but said there were barangay roads
being built at the time. 27 TIEHSA
Esmeraldo Ramos, Municipal Assessor of Taguig, testified that he was

formerly a Land Appraiser in the Office of the Municipal Assessor of Taguig and
in the course of his duties had certified one of the tax declarations in the name
of respondents (TD No. EL-014-10585). He identified and verified said
document and the other tax declarations submitted in court by the
respondents. He admitted that on January 10, 1980, they made the entry on TD
No. 6425 in the name of Jose Gabriel that the same was cancelled by TD No.
120-014-01013 also in the name of Jose Gabriel who presented a supposed
deed of sale in favor of Araceli Tanyag which caused the earlier cancellation of
TD No. 6425 in his name. However, upon investigation they found out that the
seller Florencia Sulit was not the owner because the declared owner was Jose
Gabriel; even the deed of sale recognized that the property was declared in the
name of Jose Gabriel. They also discovered from the cadastral survey and tax
mapping of Taguig that the property is in the name of Jose Gabriel both in the
Bureau of Lands and Municipal Assessor's Office. As far as he knows, it was
Jose Gabriel who owned the subject property which he usually visited; he
recalled that around the late 70's and 80's, he ordered the fencing of barbed
wire and bamboo stalks on the land which is just 3 lots away from his own
property. As to the discrepancy in the area of the property as originally
declared by Jose Gabriel, he explained that the boundaries in the original tax
declaration do not change but after the land is surveyed, the boundaries
naturally would be different because the previous owner may have sold his
property or the present owner inherits the property from his parents. He
admitted that the tax declaration is just for tax purposes and not necessarily
proof of ownership or possession of the property it covers. 28
Respondents' last witness was Antonio Argel who testified that he had
resided for 52 years on a land near the subject property and as far as he knows
it was Jose Gabriel who owns it and planted thereon. On cross-examination, he
admitted that Jose Gabriel was not in physical possession of the property. He
just assumed that the present occupants of the property were allowed by Jose
Gabriel to stay therein because he is the owner. There is an apartment and
three small houses existing on the property, and about five families are living
there. He confirmed that there is a piggery being maintained by a certain Juana
who had been residing there maybe for fifteen years already. 29
In rebuttal, petitioners presented two witnesses who are owners of

properties adjoining that of the subject land. Rodante Domingo testified that it
was only now did he learn that the property of Arturo Tanyag is already titled in
the name of respondents. He was not aware of the titling proceeding because
he never received any notice as adjoining owner. His own property is already
titled in his name and he even asked Arturo Tanyag to act as a witness in his
application for titling. 30 On the other hand, Dado Dollado testified that he
acquired his property in 1979. He likewise affirmed that he did not receive any
notice of the proceedings for application for titling filed by respondents and it
was only now that he learned from Arturo Tanyag that the subject property was
already titled in the names of respondents. 31 cHaCAS
The last rebuttal witness for petitioners was Dominador Dinguinbayan

Ergueza, son of Agueda Dinguinbayan. He testified that the subject property
was formerly owned by his mother and the present owner is Araceli Tanyag
who bought the same from his mother in 1968. He described the boundaries of
the property in relation to the adjoining owners at that time; presently, the left
portion is already a street (Rujale St.) going towards the sea. He admitted that
his wife, Livina Ergueza was an instrumental witness in the 1968 deed of sale in
favor of Araceli Tanyag. 32
In its decision, the trial court dismissed the complaint as well as the
counterclaim, holding that petitioners failed to establish ownership of the
subject property and finding the respondents to be the declared owners and
legal possessors. It likewise ruled that petitioners were unable to prove by
preponderance of evidence that respondents acquired title over the property
through fraud and deceit.
Petitioners appealed to the CA which affirmed the trial court's ruling. The
CA found that apart from the Affidavit executed by Benita Gabriel in 1944
claiming that she inherited Lot 1 from their father, Mateo Gabriel, there is no
evidence that she, not Jose Gabriel, was the true owner thereof. It noted that
just four years after Benita Gabriel's sale of the subject property to the Sulit
spouses, Jose Gabriel declared the same under his name for tax purposes,
paying the corresponding taxes. The appellate court stressed that petitioners'
allegation of bad faith was not proven.
Petitioners' motion for reconsideration was likewise denied by the CA.

Hence, this petition.
Petitioners assail the CA in not finding that the respondents obtained OCT
No. 1035 in their names fraudulently and in bad faith. They also claim to have
acquired ownership of the subject lots by virtue of acquisitive prescription.
The issues presented are: (1) whether respondents committed fraud and
bad faith in registering the subject lots in their name; and (2) whether
petitioners acquired the property through acquisitive prescription. aSCDcH
Registration of a piece of land under the Torrens System does not create
or vest title, because it is not a mode of acquiring ownership. A certificate of
title is merely an evidence of ownership or title over the particular property
described therein. 33 Thus, notwithstanding the indefeasibility of the Torrens
title, the registered owner may still be compelled to reconvey the registered
property to its true owners. The rationale for the rule is that reconveyance does
not set aside or re-subject to review the findings of fact of the Bureau of Lands.
In an action for reconveyance, the decree of registration is respected as
incontrovertible. What is sought instead is the transfer of the property or its
title which has been wrongfully or erroneously registered in another person's
name, to its rightful or legal owner, or to the one with a better right. 34
An action for annulment of title or reconveyance based on fraud is

imprescriptible where the plaintiff is in possession of the property subject of the
a c t s . 35 The totality of the evidence on record established that it was
petitioners who are in actual possession of the subject property; respondents
merely insinuated at occasional visits to the land. However, for an action for
reconveyance based on fraud to prosper, this Court has held that the party
seeking reconveyance must prove by clear and convincing evidence his title to
the property and the fact of fraud. 36
The CA correctly observed that the only evidence of Benita Gabriel's

supposed title was the 1944 Affidavit of Sale whereby Benita Gabriel claimed
sole ownership of Lot 1 as her inheritance from their father, Mateo Gabriel. The
property until 1949 was still declared in the name Jose Gabriel despite the 1944
sale executed by Benita Gabriel in favor of spouses Gabriel and Cornelia Sulit.
As to the alleged fraud perpetrated by Jose Gabriel and respondents in securing
OCT No. 1035 in their name, this was clearly not proven as Arturo Tanyag
testified merely that Jose Gabriel borrowed their documents pertaining to the
property. No document or testimony was presented to show that Jose Gabriel
employed deceit or committed fraudulent acts in the proceedings for titling of
the property.
However, the CA did not address the issue of acquisitive prescription

raised by the petitioners. In their Complaint before the lower court, petitioners
alleged — AHcCDI
15. Defendants never occupied the whole area of the lot

covered by Tax Declaration No. 1603 (686 sq. m.) neither were they
able to set foot on the property covered by Tax Declaration No. 6542
[sic ] for the reason that those lots had been in actual, open continuous,
adverse and notorious possession of the plaintiffs against the whole
world for more than thirty years which is equivalent to title.
xxx xxx xxx 37
Such character and length of possession of a party over a parcel of land

subject of controversy is a factual issue. Settled is the rule that questions of
fact are not reviewable in petitions for review on certiorari under Rule 45 of
the Rules of Court, as only questions of law shall be raised in such petitions.
While this Court is not a trier of facts, if the inference drawn by the appellate
court from the facts is manifestly mistaken, it may, in the interest of justice,
review the evidence in order to arrive at the correct factual conclusions
based on the record. 38
In this case, the CA was mistaken in concluding that petitioners have not
acquired any right over the subject property simply because they failed to
establish Benita Gabriel's title over said property. The appellate court ignored
petitioners' evidence of possession that complies with the legal requirements of
acquiring ownership by prescription.
Acquisitive prescription is a mode of acquiring ownership by a possessor

through the requisite lapse of time. In order to ripen into ownership, possession
must be in the concept of an owner, public, peaceful and uninterrupted. 39
Possession is open when it is patent, visible, apparent, notorious and not
clandestine. 40 It is continuous when uninterrupted, unbroken and not
intermittent or occasional; exclusive when the adverse possessor can show
exclusive dominion over the land and an appropriation of it to his own use and
benefit; and notorious when it is so conspicuous that it is generally known and
talked of by the public or the people in the neighborhood. The party who
asserts ownership by adverse possession must prove the presence of the
essential elements of acquisitive prescription. 41
On the matter of prescription, the Civil Code provides:
Art. 1117. Acquisitive prescription of dominion and other real
rights may be ordinary or extraordinary.
Ordinary acquisitive prescription requires possession of things in

good faith and with just title for the time fixed by law.
ESTDIA
Art. 1134. Ownership and other real rights over immovable

property are acquired by ordinary prescription through possession of
ten years.
Art. 1137. Ownership and other real rights over immovables

also prescribe through uninterrupted adverse possession thereof for
thirty years, without need of title or of good faith . (Emphasis
supplied.)
Petitioners' adverse possession is reckoned from 1969 with the issuance

of TD No. 1145 in the name of Araceli Tanyag, which tax declaration cancelled
TD No. 6425 in the name of Jose Gabriel. 42 It is settled that tax receipts and
declarations are prima facie proofs of ownership or possession of the property
for which such taxes have been paid. Coupled with proof of actual possession of
the property, they may become the basis of a claim for ownership. 43
Petitioners' caretaker, Juana Quinones, has since lived in a nipa hut, planted
vegetables and tended a piggery on the land. Aside from paying taxes due on
the property, petitioners also exercised other acts of ownership such as selling
the 468-square meter portion to Sta. Barbara who had constructed thereon a
nine-door apartment building.
It was only in 1979 that respondents began to assert a claim over the
property by securing a tax declaration in the name of Jose Gabriel albeit over a
bigger area than that originally declared. In 1998, they finally obtained an
original certificate of title covering the entire 1,763 square meters which
included Lot 1. Did these acts of respondents effectively interrupt the
possession of petitioners for purposes of prescription?
We answer in the negative.
In the case of Heirs of Marcelina Azardon-Crisologo v. Rañon 44 this Court

citing Article 1123 of the Civil Code 45 held that civil interruption takes place
with the service of judicial summons to the possessor and not by filing of a
mere Notice of Adverse Claim. Thus: ADaSEH
Article 1123 of the Civil Code is categorical. Civil interruption

is produced by judicial summons to the possessor. Moreover,
even with the presence of judicial summons, Article 1124 sets
limitations as to when such summons shall not be deemed to have
been issued and shall not give rise to interruption, to wit: 1) if it should
be void for lack of legal solemnities; 2) if the plaintiff should desist from
the complaint or should allow the proceedings to lapse; or 3) if the
possessor should be absolved from the complaint.
Both Article 1123 and Article 1124 of the Civil Code underscore
the judicial character of civil interruption. For civil interruption to
take place, the possessor must have received judicial
summons. None appears in the case at bar. The Notice of Adverse
Claim which was filed by petitioners in 1977 is nothing more than a
notice of claim which did not effectively interrupt respondents'
possession. Such a notice could not have produced civil interruption.
We agree in the conclusion of the RTC, which was affirmed by the
Court of Appeals, that the execution of the Notice of Adverse Claim in
1977 did not toll or interrupt the running of the prescriptive period
because there remains, as yet, a necessity for a judicial determination
of its judicial validity. What existed was merely a notice. There was no
compliance with Article 1123 of the Civil Code. What is striking is that
no action was, in fact, filed by petitioners against respondents.
As a consequence, no judicial summons was received by
respondents. As aptly held by the Court of Appeals in its affirmance of
the RTC's ruling, the Notice of Adverse Claim cannot take the place of
judicial summons which produces the civil interruption provided for
under the law. In the instant case, petitioners were not able to interrupt
respondents' adverse possession since 1962. The period of
acquisitive prescription from 1962 continued to run in
respondents' favor despite the Notice of Adverse Claim.
(Emphasis supplied.)
From 1969 until the filing of this complaint by the petitioners in March
2000, the latter have been in continuous, public and adverse possession of the
subject land for 31 years. Having possessed the property for the period and in
the character required by law as sufficient for extraordinary acquisitive
prescription, petitioners have indeed acquired ownership over the subject
property. Such right cannot be defeated by respondents' acts of declaring again
the property for tax purposes in 1979 and obtaining a Torrens certificate of title
in their name in 1998.
This notwithstanding, we uphold petitioners' right as owner only with

respect to Lot 1 consisting of 686 square meters. Petitioners failed to
substantiate their claim over Lot 2 by virtue of a deed of sale from the original
declared owner, Agueda Dinguinbayan. Respondents asserted that the 147
square meters covered by the tax declarations of Dinguinbayan being claimed
by petitioners is not the same lot included in OCT No. 1035. EaTCSA
Under Article 434 of the Civil Code, to successfully maintain an action to

recover the ownership of a real property, the person who claims a better right
to it must prove two (2) things: first, the identity of the land claimed; and
second, his title thereto. In regard to the first requisite, in an accion
reinvindicatoria, the person who claims that he has a better right to the
property must first fix the identity of the land he is claiming by describing the
location, area and boundaries thereof. 46 In this case, petitioners failed to
identify Lot 2 by providing evidence of the metes and bounds thereof, so that
the same may be compared with the technical description contained in OCT No.
1035, which would have shown whether Lot 2 consisting of 147 square meters
was erroneously included in respondents' title. The testimony of Agueda
Dinguinbayan's son would not suffice because said witness merely stated the
boundary owners as indicated in the 1966 and 1967 tax declarations of his
mother. On his part, Arturo Tayag claimed that he had the lots surveyed in the
1970s in preparation for the consolidation of the two parcels. However, no such
plan was presented in court.
WHEREFORE, the petition is PARTLY GRANTED . The Decision dated
August 18, 2006 of the Court of Appeals in CA-G.R. CV No. 81224 is MODIFIED
in that petitioners heirs of Bienvenido and Araceli Tanyag are hereby declared
the owners of 686 square meters previously declared under Tax Declaration
Nos. 11445, 120-014-00486, 120-014-0085, B-014-00501, E-014-01446, C-014-
00893 and D-014-00839 all in the name of Araceli Tanyag, which lot is
presently covered by OCT No. 1035 issued by the Register of Deeds of Pasig,
Metro Manila in the name of respondents Salome Gabriel, Nestor R. Gabriel, Luz
Gabriel-Arnedo, Nora Gabriel-Calingo, Pilar Gabriel-Mendiola, Minerva Gabriel-
Natividad and Erlinda Gabriel-Velasquez. Respondents are ORDERED to
RECONVEY the said 686-square meter portion to the petitioners.
No pronouncement as to costs.
SO ORDERED.
Corona, C.J., Leonardo-de Castro, Bersamin and Del Castillo, JJ., concur.
Footnotes
1.Rollo , pp. 57-68. Penned by Associate Justice Myrna Dimaranan-Vidal with

Associate Justices Eliezer R. De Los Santos and Fernanda Lampas Peralta
concurring.
2.Id. at 135. Penned by Associate Justice Myrna Dimaranan-Vidal with Associate

Justices Juan Q. Enriquez, Jr. and Fernanda Lampas Peralta concurring.
3.Id. at 69-78. Penned by Judge Florito S. Macalino.

4.Records, pp. 204-205, 213-214.
5.Id. at 9.
6.Id. at 10-11.
7.Id. at 12-14.
8.Id. at 25-31.
9.Quintanes in some parts of the records.

10.Records, p. 4.
11.Id. at 212.
12.Id. at 15. Inscription was dated 1-8-80.
13.Id. at 2-7.
14.Id. at 39-42.
15.Id. at 199-202.
16.Id. at 33.
17.Id. at 19-20.
18.Id. at 203.
19.TSN, December 7, 2000, pp. 10-12, 14-26.

20.Id. at 17, 31-43.
21.TSN, February 13, 2001, pp. 5-15.

22.TSN, April 26, 2001, pp. 3-21.
23.TSN, June 26, 2001, pp. 3-11.

24.Id. at 15-19.
25.TSN, July 17, 2001, pp. 4-13.

26.TSN, August 30, 2001, pp. 3-9.
27.TSN, October 16, 2001, pp. 5-42.

28.TSN, November 6, 2001, pp. 4-5, 8-27; TSN, November 22, 2001, pp. 4-5, 18-19.
29.TSN, January 31, 2002, pp. 2-14.

30.TSN, April 4, 2002, pp. 9-15.
31.Id. at 16-25.
32.TSN, October 3, 2002, pp. 2-13.
33.Naval v. Court of Appeals, G.R. No. 167412, February 22, 2006, 483 SCRA 102,
113, citing Heirs of Clemente Ermac v. Heirs of Vicente Ermac, 451 Phil. 368,
377 (2003).
34.Id., citing Heirs of Pomposa Saludares v. Court of Appeals, G.R. No. 128254,
January 16, 2004, 420 SCRA 51, 56.
35.Llemos v. Llemos , G.R. No. 150162, January 26, 2007, 513 SCRA 128, 134,
citing Occeña v. Esponilla , G.R. No. 156973, June 4, 2004, 431 SCRA 116,
126 and Delfin v. Billones, G.R. No. 146550, March 17, 2006, 485 SCRA 38,
47-48.
36.Antonio v. Santos, G.R. No. 149238, November 22, 2007, 538 SCRA 1, 9, citing
Barrera v. Court of Appeals, G.R. No. 123935, December 14, 2001, 372 SCRA
312, 316.
37.Records, p. 5.
38.Heirs of Flores Restar v. Heirs of Dolores R. Cichon, G.R. No. 161720, November
22, 2005, 475 SCRA 731, 739.
39.Art. 1118, Civil Code.

Art. 1118. Possession has to be in the concept of an owner, public, peaceful and
uninterrupted.
40.Heirs of Marcelina Azardon-Crisologo v. Rañon, G.R. No. 171068, September 5,
2007, 532 SCRA 391, 404, citing Director of Lands v. Intermediate Appellate
Court, G.R. No. 68946, May 22, 1992, 209 SCRA 214, 224.
41.Id.
42.See Heirs of Flores Restar v. Heirs of Dolores Cichon, supra note 38, at 741.
43.Cequeña v. Bolante, G.R. No. 137944, April 6, 2000, 330 SCRA 216, 226-228.
44.Supra note 40 at 406-407.

45.Art. 1123. Civil interruption is produced by judicial summons to the possessor.
46.Sampaco v. Lantud, G.R. No. 163551, July 18, 2011, 654 SCRA 36, 50-51, citing
Spouses Hutchison v. Buscas, 498 Phil. 257, 262 (2005).

SECOND DIVISION
[G.R. No. 190106. January 15, 2014.]
MAGDALENA T. VILLASI , petitioner, vs. FILOMENO GARCIA,

substituted by his heirs, namely, ERMELINDA H. GARCIA,
LIZA GARCIA-GONZALEZ, THERESA GARCIA-TIANGSON,
MARIVIC H. GARCIA, MARLENE GARCIA-MOMIN, GERARDO H.
GARCIA, GIDEON H. GARCIA and GENEROSO H. GARCIA, and
ERMELINDA H. GARCIA, respondents.
DECISION
PEREZ, J : p
This is a Petition for Review on Certiorari 1 filed pursuant to Rule 45 of

the Revised Rules of Court, assailing the 19 May 2009 Decision 2 rendered
by the Sixth Division of the Court of Appeals in CA-G.R. SP No. 92587. The
appellate court affirmed the Order 3 of the Regional Trial Court (RTC) of
Quezon City, Branch 77, directing the Deputy Sheriff to suspend the conduct
of the execution sale of the buildings levied upon by him.
The Facts
Sometime in 1990, petitioner Magdalena T. Villasi (Villasi) engaged the
services of respondent Fil-Garcia Construction, Inc. (FGCI) to construct a
seven-storey condominium building located at Aurora Boulevard corner N.
Domingo Street, Cubao, Quezon City. For failure of Villasi to fully pay the
contract price despite several demands, FGCI initiated a suit for collection of
sum of money before the RTC of Quezon City, Branch 77. In its action
docketed as Civil Case No. Q-91-8187, FGCI prayed, among others, for the
payment of the amount of P2,865,000.00, representing the unpaid
accomplishment billings. Served with summons, Villasi filed an answer
specifically denying the material allegations of the complaint. Contending
that FGCI has no cause of action against her, Villasi averred that she
delivered the total amount of P7,490,325.10 to FGCI but the latter
accomplished only 28% of the project. After the pre-trial conference was
terminated without the parties having reached an amicable settlement, trial
on the merits ensued.
Finding that FGCI was able to preponderantly establish by evidence its
right to the unpaid accomplishment billings, the RTC rendered a Decision 4
dated 26 June 1996 in FGCI's favor. While the trial court brushed aside the
allegation of Villasi that an excess payment was made, it upheld the claim of
FGCI to the unpaid amount of the contract price and, thus, disposed:
WHEREFORE, judgment is hereby rendered: ISCTcH
1. Ordering [Villasi] to pay [FGCI] the sum of P2,865,000.00 as

actual damages and unpaid accomplishment billings;
2. Ordering [Villasi] to pay [FGCI] the amount of P500,000.00
representing the value of unused building materials;
3. Ordering [Villasi] to pay [FGCI] the amount of P100,000.00, as

moral damages and P100,000.00 as attorney's fees. 5
Elevated on appeal and docketed as CA-G.R. CV No. 54750, the Court

of Appeals reversed the disquisition of the RTC in its Decision 6 dated 20
November 2000. The appellate court ruled that an overpayment was made
by Villasi and thereby directed FGCI to return the amount that was paid in
excess, viz.:
WHEREFORE, premises considered, the present appeal is hereby
GRANTED and the appealed decision in Civil Case No. Q-91-8187 is
hereby REVERSED and SET ASIDE and judgment is hereby rendered
ordering the [FGCI] to return to [Villasi] the sum of P1,244,543.33 as
overpayment under their contract, and the further sum of P425,004.00
representing unpaid construction materials obtained by it from [Villasi].
[FGCI] is likewise hereby declared liable for the payment of liquidated
damages in the sum equivalent to 1/10 of 1% of the contract price for
each day of delay computed from March 6, 1991.
No pronouncement as to costs. 7 ICTaEH
Unrelenting, FGCI filed a Petition for Review on Certiorari before this

Court, docketed as G.R. No. 147960, asseverating that the appellate court
erred in rendering the 20 November 2000 Decision. This Court, however, in a
Resolution dated 1 October 2001, denied the appeal for being filed out of
time. The said resolution became final and executory on 27 November 2001,
as evidenced by the Entry of Judgment 8 made herein.
To enforce her right as prevailing party, Villasi filed a Motion for
Execution of the 20 November 2000 Court of Appeals Decision, which was
favorably acted upon by the RTC. 9 A Writ of Execution was issued on 28
April 2004, commanding the Sheriff to execute and make effective the 20
November 2000 Decision of the Court of Appeals. SDITAC
To satisfy the judgment, the sheriff levied on a building located at No.

140 Kalayaan Avenue, Quezon City, covered by Tax Declaration No. D-021-
01458, and built in the lots registered under Transfer Certificates of Title
(TCT) Nos. 379193 and 379194. While the building was declared for taxation
purposes in the name of FGCI, the lots in which it was erected were
registered in the names of the Spouses Filomeno Garcia and Ermelinda Halili-
Garcia (Spouses Garcia). After the mandatory posting and publication of
notice of sale on execution of real property were complied with, a public
auction was scheduled on 25 January 2006.
To forestall the sale on execution, the Spouses Garcia filed an Affidavit
of Third Party Claim 10 and a Motion to Set Aside Notice of Sale on Execution,
11 claiming that they are the lawful owners of the property which was
erroneously levied upon by the sheriff. To persuade the court a quo to grant
their motion, the Spouses Garcia argued that the building covered by the
levy was mistakenly assessed by the City Assessor in the name of FGCI. The
motion was opposed by Villasi who insisted that its ownership belongs to
FGCI and not to the Spouses Garcia as shown by the tax declaration.
After weighing the arguments of the opposing parties, the RTC issued
on 24 February 2005 an Order 12 directing the Sheriff to hold in abeyance
the conduct of the sale on execution, to wit:
WHEREFORE, premises considered, the Court hereby orders
Deputy Sheriff Angel Doroni to suspend or hold in abeyance the
conduct of the sale on execution of the buildings levied upon by him,
until further orders from the Court. 13
The motion for reconsideration of Villasi was denied by the trial court in
its 11 October 2005 Order. 14
Arguing that the RTC gravely abused its discretion in ordering the
suspension of the sale on execution, Villasi timely filed a Petition for
Certiorari before the Court of Appeals. In a Decision 15 dated 19 May 2009,
the appellate court dismissed the petition. In a Resolution 16 dated 28
October 2009, the Court of Appeals refused to reconsider its decision.
Villasi is now before this Court via this instant Petition for Review on
Certiorari assailing the adverse Court of Appeals Decision and Resolution and
raising the following issues: cCSTHA
The Issues
I.
WHETHER OR NOT THE HONORABLE COURT OF APPEALS GRIEVOUSLY
ERRED IN UPHOLDING THE DECISION OF THE TRIAL COURT TO
SUSPEND AND HOLD IN ABEYANCE THE SALE ON EXECUTION OF THE
BUILDINGS LEVIED UPON ON THE BASIS OF RESPONDENTS' AFFIDAVIT
OF THIRD-PARTY CLAIM[;]
II.
WHETHER OR NOT THE HONORABLE COURT OF APPEALS GRIEVOUSLY
ERRED WHEN IT HELD THAT THERE IS NO REASON TO PIERCE THE
VEIL OF [FGCI'S] CORPORATE FICTION IN THE CASE AT BAR[;] [AND]
III.
WHETHER OR NOT THE BRANCH SHERIFF OF THE REGIONAL TRIAL
COURT OF QUEZON CITY, BRANCH 77 SHOULD BE DIRECTED TO FILE
THE APPROPRIATE NOTICE OF LEVY WITH THE REGISTER OF DEEDS
OF QUEZON CITY. 17
The Court's Ruling
It is a basic principle of law that money judgments are enforceable only
against the property incontrovertibly belonging to the judgment debtor, and
if the property belonging to any third person is mistakenly levied upon to
answer for another man's indebtedness, such person has all the right to
challenge the levy through any of the remedies provided for under the Rules
of Court. Section 16, 18 Rule 39 specifically provides that a third person may
avail himself of the remedies of either terceria, to determine whether the
sheriff has rightly or wrongly taken hold of the property not belonging to the
judgment debtor or obligor, or an independent "separate action" to vindicate
his claim of ownership and/or possession over the foreclosed property.
However, the person other than the judgment debtor who claims ownership
or right over levied properties is not precluded from taking other legal
remedies to prosecute his claim. 19
Indeed, the power of the court in executing judgments extends only to
properties unquestionably belonging to the judgment debtor alone. An
execution can be issued only against a party and not against one who did
not have his day in court. The duty of the sheriff is to levy the property of
the judgment debtor not that of a third person. For, as the saying goes, one
man's goods shall not be sold for another man's debts. 20
Claiming that the sheriff mistakenly levied the building that lawfully
belongs to them, the Spouses Garcia availed themselves of the remedy of
terceria under Section 16, Rule 39 of the Revised Rules of Court. To fortify
their position, the Spouses Garcia asserted that as the owners of the land,
they would be deemed under the law as owners of the building standing
thereon. The Spouses Garcia also asserted that the construction of the
building was financed thru a loan obtained from Metrobank in their personal
capacities, and they merely contracted FGCI to construct the building.
Finally, the Spouses Garcia argued that the tax declaration, based on an
erroneous assessment by the City Assessor, cannot be made as basis of
ownership. cDHCAE
For her part, Villasi insists that the levy effected by the sheriff was
proper since the subject property belongs to the judgment debtor and not to
third persons. To dispute the ownership of the Spouses Garcia, Villasi pointed
out that the levied property was declared for tax purposes in the name of
FGCI. A Certification issued by the Office of the City Engineering of Quezon
City likewise showed that the building permit of the subject property was
likewise issued in the name of FGCI.
We grant the petition.
The right of a third-party claimant to file a terceria is founded on his
title or right of possession. Corollary thereto, before the court can exercise
its supervisory power to direct the release of the property mistakenly levied
and the restoration thereof to its rightful owner, the claimant must first
unmistakably establish his ownership or right of possession thereon. In
Spouses Sy v. Hon. Discaya , 21 we declared that for a third-party claim or a
terceria to prosper, the claimant must first sufficiently establish his right on
the property:
[A] third person whose property was seized by a sheriff to answer for
the obligation of the judgment debtor may invoke the supervisory
power of the court which authorized such execution. Upon due
application by the third person and after summary hearing, the court
may command that the property be released from the mistaken levy
and restored to the rightful owner or possessor. What said court can
do in these instances, however, is limited to a determination of
whether the sheriff has acted rightly or wrongly in the performance of
his duties in the execution of judgment, more specifically, if he has
indeed taken hold of property not belonging to the judgment debtor.
The court does not and cannot pass upon the question of title to the
property, with any character of finality. It can treat of the matter only
insofar as may be necessary to decide if the sheriff has acted
correctly or not. It can require the sheriff to restore the property to
the claimant's possession if warranted by the evidence. However, if
the claimant's proofs do not persuade the court of the
validity of his title or right of possession thereto, the claim
will be denied. 22 (emphasis and underscoring supplied). SaTAED
Our perusal of the record shows that, as the party asserting their title,
the Spouses Garcia failed to prove that they have a bona fide title to the
building in question. Aside from their postulation that as title holders of the
land, the law presumes them to be owners of the improvements built
thereon, the Spouses Garcia were unable to adduce credible evidence to
prove their ownership of the property. In contrast, Villasi was able to
satisfactorily establish the ownership of FGCI thru the pieces of evidence she
appended to her opposition. Worthy to note is the fact that the building in
litigation was declared for taxation purposes in the name of FGCI and not in
the Spouses Garcias'. While it is true that tax receipts and tax declarations
are not incontrovertible evidence of ownership, they constitute credible
proof of claim of title over the property. 23 In Buduhan v. Pakurao , 24 we
underscored the significance of a tax declaration as proof that a holder has
claim of title, and, we gave weight to the demonstrable interest of the
claimant holding a tax receipt:
Although tax declarations or realty tax payment of property are
not conclusive evidence of ownership, nevertheless, they are good
indicia of possession in the concept of owner for no one in his right
mind would be paying taxes for a property that is not in his actual or at
least constructive possession. They constitute at least proof that the
holder has a claim of title over the property. The voluntary declaration
of a piece of property for taxation purposes manifests not only one's
sincere and honest desire to obtain title to the property and announces
his adverse claim against the State and all other interested parties, but
also the intention to contribute needed revenues to the Government.
Such an act strengthens one's bona fide claim of acquisition of
ownership. 25
It likewise failed to escape our attention that FGCI is in actual
possession of the building and as the payment of taxes coupled with actual
possession of the land covered by tax declaration strongly supports a claim
of ownership. 26 Quite significantly, all the court processes in an earlier
collection suit between FGCI and Villasi were served, thru the former's
representative Filomeno Garcia, at No. 140 Kalayaan Avenue, Quezon City,
where the subject property is located. This circumstance is consistent with
the tax declaration in the name of FGCI.
The explanation proffered by the Spouses Garcia, that the City
Assessor merely committed an error when it declared the property for
taxation purposes in the name of FGCI, appears to be suspect in the absence
of any prompt and serious effort on their part to have it rectified before the
onset of the instant controversy. The correction of entry belatedly sought by
the Spouses Garcia is indicative of its intention to put the property beyond
the reach of the judgment creditor. Every prevailing party to a suit enjoys
the corollary right to the fruits of the judgment and, thus, court rules provide
a procedure to ensure that every favorable judgment is fully satisfied. 27 It is
almost trite to say that execution is the fruit and end of the suit. Hailing it as
the "life of the law," ratio legis est anima, 28 this Court has zealously guarded
against any attempt to thwart the rigid rule and deny the prevailing litigant
his right to savour the fruit of his victory. 29 A judgment, if left unexecuted,
would be nothing but an empty triumph for the prevailing party. 30 IaEASH
While it is a hornbook doctrine that the accessory follows the principal,

31 that is, the ownership of the property gives the right by accession to
everything which is produced thereby, or which is incorporated or attached
thereto, either naturally or artificially, 32 such rule is not without exception.
In cases where there is a clear and convincing evidence to prove that the
principal and the accessory are not owned by one and the same person or
entity, the presumption shall not be applied and the actual ownership shall
be upheld. In a number of cases, we recognized the separate ownership of
the land from the building and brushed aside the rule that accessory follows
the principal.
In Carbonilla v. Abiera, 33 we denied the claim of petitioner that, as the
owner of the land, he is likewise the owner of the building erected thereon,
for his failure to present evidence to buttress his position:
To set the record straight, while petitioner may have proven his
ownership of the land, as there can be no other piece of evidence more
worthy of credence than a Torrens certificate of title, he failed to
present any evidence to substantiate his claim of ownership or right to
the possession of the building. Like the CA, we cannot accept the Deed
of Extrajudicial Settlement of Estate (Residential Building) with Waiver
and Quitclaim of Ownership executed by the Garcianos as proof that
petitioner acquired ownership of the building. There is no showing that
the Garcianos were the owners of the building or that they had any
proprietary right over it. Ranged against respondents' proof of
possession of the building since 1977, petitioner's evidence pales in
comparison and leaves us totally unconvinced. 34
I n Caltex (Phil.), Inc. v. Felias, 35 we ruled that while the building is a
conjugal property and therefore liable for the debts of the conjugal
partnership, the lot on which the building was constructed is a paraphernal
property and could not be the subject of levy and sale: DAaIEc
. . . . In other words, when the lot was donated to Felisa by her

parents, as owners of the land on which the building was constructed,
the lot became her paraphernal property. The donation transmitted
to her the rights of a landowner over a building constructed on it.
Therefore, at the time of the levy and sale of the sheriff, Lot No. 107
did not belong to the conjugal partnership, but it was paraphernal
property of Felisa. As such, it was not answerable for the obligations
of her husband which resulted in the judgment against him in favor of
Caltex. 36
The rule on accession is not an iron-clad dictum. On instances where

this Court was confronted with cases requiring judicial determination of the
ownership of the building separate from the lot, it never hesitated to
disregard such rule. The case at bar is of similar import. When there are
factual and evidentiary evidence to prove that the building and the lot on
which it stands are owned by different persons, they shall be treated
separately. As such, the building or the lot, as the case may be, can be made
liable to answer for the obligation of its respective owner.
Finally, the issue regarding the piercing of the veil of corporate fiction
is irrelevant in this case. The Spouses Garcia are trying to protect FGCI from
liability by asserting that they, not FGCI, own the levied property. The
Spouses Garcia are asserting their separation from FGCI. FGCI, the judgment
debtor, is the proven owner of the building. Piercing FGCI's corporate veil will
not protect FGCI from its judgment debt. Piercing will result in the
identification of the Spouses Garcia as FGCI itself and will make them liable
for FGCI's judgment debt. aITECD
WHEREFORE, premises considered, the petition is GRANTED. The

assailed Decision and Resolution of the Court of Appeals in CA-G.R. SP No.
92587 are hereby REVERSED and SET ASIDE. The Deputy Sheriff is hereby
directed to proceed with the conduct of the sale on execution of the levied
building.
SO ORDERED. IcHTAa
Carpio, Brion, Perlas-Bernabe and Leonen, * JJ., concur.
Footnotes
*Per Raffle dated 4 December 2013.
1.Rollo , pp. 10-38.
2.Penned by Associate Justice Ricardo R. Rosario with Associate Justices Jose L.

Sabio, Jr. and Vicente S. E. Veloso, concurring. Id. at 43-51.
3.Presided by Judge Vivencio S. Baclig. Id. at 104-106.
4.Presided by Judge Ignacio L. Salvador. Id. at 54-61.
5.Id. at 61.
6.Id. at 62-69.
7.Id. at 68-69.
8.Id. at 70.
9.Id. at 72-74.
10.Id. at 76-78.
11.Id. at 97-102.
12.Id. at 104-106.
13.Id. at 106.
14.Id. at 112.
15.Id. at 43-51.
16.Id. at 53.
17.Id. at 19.
18.Sec. 16. Proceedings where property claimed by third person. — If the property
levied on is claimed by any person other than the judgment obligor or his
agent, and such person makes an affidavit of his title thereto or right to the
possession thereof, stating the grounds of such right or title, and serves the
same upon the officer making the levy and a copy thereof upon the judgment
obligee, the officer shall not be bound to keep the property, unless such
judgment obligee, on demand of the officer, files a bond approved by the
court to indemnify the third-party claimant in a sum not less than the value
of the property levied on. In case of disagreement as to such value, the same
shall be determined by the court issuing the writ of execution. No claim for
damages for the taking or keeping of the property may be enforced against
the bond unless the action therefor is filed within one hundred twenty (120)
days from the date of the filing of the bond.
The officer shall not be liable for damages for the taking or keeping of the
property, to any third-party claimant if such bond is filed. Nothing herein
contained shall prevent such claimant or any third person from vindicating
his claim to the property in a separate action, or prevent the judgment
obligee from claiming damages in the same or a separate action against a
third-party claimant who filed a frivolous or plainly spurious claim.
When the writ of execution is issued in favor of the Republic of the

Philippines, or any officer duly representing it, the filing of such bond shall not
be required, and in case the sheriff or levying officer is sued for damages as
a result of the levy, he shall be represented by the Solicitor General and if
held liable therefor, the actual damages adjudged by the court shall be paid
by the National Treasurer out of such funds as may be appropriated for the
purpose.
19.Gagoomal v. Villacorta, G.R. No. 192813, 18 January 2012, 663 SCRA 444, 454-
455.
20.Corpus v. Pascua , A.M. No. P-11-2972, 28 September 2011, 658 SCRA 239, 248.
21.260 Phil. 401 (1990).
22.Id. at 406-407.
23.Director of Lands v. Intermediate Appellate Court, G.R. No. 68946, 22 May 1992,
209 SCRA 214, 227-228.
24.518 Phil. 285 (2006).
25.Id. at 296 citing Ganila v. Court of Appeals, 500 Phil. 212, 224 (2005).
26.Heirs of Marcelina Arzadon-Crisologo v. Rañon, 559 Phil. 169, 187 (2007).
27.Solar Resources, Inc. v. Inland Trailways, Inc. , 579 Phil. 548, 560 (2008).
28.The reason is its soul.

29.Florentino v. Rivera , 515 Phil. 494, 504 (2006).
30.Id. at 505.
31.Torbela v. Rosario, G.R. Nos. 140528 and 140553, 7 December 2011, 661 SCRA
633, 675.
32.New Civil Code, Art. 440. The ownership of property gives the right by accession
to everything which is produced thereby, or which is incorporated or
attached thereto, either naturally or artificially.
33.G.R. No. 177637, 26 July 2010, 625 SCRA 461.
34.Id. at 468.
35.108 Phil. 873 (1960).
36.Id. at 877.

THIRD DIVISION
[G.R. No. 120303. July 24, 1996.]
FEDERICO GEMINIANO, MARIA GEMINIANO, ERNESTO

GEMINIANO, ASUNCION GEMINIANO, LARRY GEMINIANO,
and MARLYN GEMINIANO , petitioners, vs. COURT OF
APPEALS, DOMINADOR NICOLAS, and MARY A. NICOLAS,
respondents.
Decano and Decano Law Office for petitioners.

Bengson, Baraan, Fernandez Law Offices for private respondents.
SYLLABUS
1. CIVIL LAW; PROPERTY; OWNERSHIP; RIGHT TO FULL

REIMBURSEMENT OF USEFUL IMPROVEMENTS AND RETENTION OF THE
PREMISES UNTIL REIMBURSEMENT IS MADE, APPLIES ONLY TO A POSSESSOR IN
GOOD FAITH. — This Court has held that Article 448 of the Civil Code, in relation
to Article 546 of the same Code, which allowed full reimbursement of useful
improvements and retention of the premises until reimbursement is made,
applies only to a possessor in good faith, i.e., one who builds on land with the
belief that he is the owner thereof. It does not apply where one's only interest is
that of a lessee under a rental contract; otherwise, it would always be in the
power of the tenant to "improve" his landlord out of his property.
2. ID.; LEASE; THE RIGHT TO INDEMNITY ARISES ONLY IF THE LESSOR
OPTS TO APPROPRIATE THE IMPROVEMENTS. — The right to indemnity under
Article 1678 of the Civil Code arises only if the lessor opts to appropriate the
improvements. Once the petitioners refused to exercise that option, the private
respondents cannot compel them to reimburse the one-half value of the house
and improvements. Neither can they retain the premises until reimbursement is
made. The private respondents' sole right then is to remove the improvements
without causing any more impairment upon the property leased than is
necessary.
DECISION
DAVIDE, JR., J : p
This petition for review on certiorari has its origins in Civil Case No. 9214
of Branch 3 of the Municipal Trial Court in Cities (MTCC) in Dagupan City for
unlawful detainer and damages. The petitioners ask the Court to set aside the
decision of the Court of Appeals affirming the decision of Branch 40 of the
Regional Trial Court (RTC) of Dagupan City, which, in turn, reversed the MTCC;
ordered the petitioners to reimburse the private respondents the value of the
house in question and other improvements; and allowed the latter to retain the
premises until reimbursement was made.
It appears that Lot No. 3765-B-1 containing an area of 314 square meters
was originally owned by the petitioners' mother, Paulina Amado vda. de
Geminiano. On a 12-square-meter portion of that lot stood the petitioners'
unfinished bungalow, which the petitioners sold in November 1978 to the
private respondents for the sum of P6,000.00, with an alleged promise to sell to
the latter that portion of the lot occupied by the house. Subsequently, the
petitioners' mother executed a contract of lease over a 126 square-meter
portion of the lot, including that portion on which the house stood, in favor of
the private respondents for P40.00 per month for a period of seven years
commencing on 15 November 1978. 1 The private respondents then introduced
additional improvements and registered the house in their names. After the
expiration of the lease contract in November 1985, however, the petitioners'
mother refused to accept the monthly rentals.
It turned out that the lot in question was the subject of a suit, which
resulted in its acquisition by one Maria Lee in 1972. In 1982, Lee sold the lot to
Lily Salcedo, who in turn sold it in 1984 to the spouses Agustin and Ester
Dionisio.
On 14 February 1992, the Dionisio spouses executed a Deed of Quitclaim

over the said property in favor of the petitioners. 2 As such, the lot was
registered in the latter's names. 3
On 9 February 1993, the petitioners sent, via registered mail, a letter
addressed to private respondent Mary Nicolas demanding that she vacate the
premises and pay the rentals in arrears within twenty days from notice. 4
Upon failure of the private respondents to heed the demand, the

petitioners filed with the MTCC of Dagupan City a complaint for unlawful
detainer and damages.
During the pre-trial conference, the parties agreed to confine the issues
to: (1) whether there was an implied renewal of the lease which expired in
November 1985; (2) whether the lessees were builders in good faith and
entitled to reimbursement of the value of the house and improvements; and (3)
the value of the house.
The parties then submitted their respective position papers and the case
was heard under the Rule on Summary Procedure.
On the first issue, the court held that since the petitioners' mother was no
longer the owner of the lot in question at the time the lease contract was
executed in 1978, in view of its acquisition by Maria Lee as early as 1972, there
was no lease to speak of, much less, a renewal thereof. And even if the lease
legally existed, its implied renewal was not for the period stipulated in the
original contract, but only on a month-to-month basis pursuant to Article 1687
of the Civil Code. The refusal of the petitioners' mother to accept the rentals
starting January 1986 was then a clear indication of her desire to terminate the
monthly lease. As regards the petitioners' alleged failed promise to sell to the
private respondents the lot occupied by the house, the court held that such
should be litigated in a proper case before the proper forum, not an ejectment
case where the only issue was physical possession of the property.
The court resolved the second issue in the negative, holding that Articles
448 and 546 of the Civil Code, which allow possessors in good faith to recover
the value of improvements and retain the premises until reimbursed, did not
apply to lessees like the private respondents, because the latter knew that their
occupation of the premises would continue only during the life of the lease.
Besides, the rights of the private respondents were specifically governed by
Article 1678, which allows reimbursement of up to one-half of the value of the
useful improvements, or removal of the improvements should the lessor refuse
to reimburse.
On the third issue, the court deemed as conclusive the private

respondents' allegation that the value of the house and improvements was
P180,000.00, there being no controverting evidence presented.
The trial court thus ordered the private respondents to vacate the
premises, pay the petitioners P40.00 a month as reasonable compensation for
their stay thereon from the filing of the complaint on 14 April 1993 until they
vacated, and to pay the sum of P1,000.00 as attorney's fees, plus costs. 5
On appeal by the private respondents, the RTC of Dagupan City reversed

the trial court's decision and rendered a new judgment: (1) ordering the
petitioners to reimburse the private respondents for the value of the house and
improvements in the amount of P180,000.00 and to pay the latter P10,000.00
as attorney's fees and P2,000.00 as litigation expenses; and (2) allowing the
private respondents to remain in possession of the premises until they were
fully reimbursed for the value of the house. 6 It ruled that since the private
respondents were assured by the petitioners that the lot they leased would
eventually be sold to them, they could be considered builders in good faith, and
as such, were entitled to reimbursement of the value of the house and
improvements with the right of retention until reimbursement had been made.
On appeal, this time by the petitioners, the Court of Appeals affirmed the
decision of the RTC 7 and denied 8 the petitioners' motion for reconsideration.
Hence, the present petition.
The Court is confronted with the issue of which provision of law governs
the case at bench: Article 448 or Article 1678 of the Civil Code? The said
articles read as follows:
Art. 448. The owner of the land on which anything has been
built, sown or planted in good faith, shall have the right to appropriate
as his own the works, sowing or planting, after payment of the
indemnity provided for in articles 546 and 548, or to oblige the one
who built or planted to pay the price of the land, and the one who
sowed, the proper rent. However, the builder or planter cannot be
obliged to buy the land if its value is considerably more than that of the
building or trees. In such case, he shall pay reasonable rent, if the
owner of the land does not choose to appropriate the building or trees
after proper indemnity. The parties shall agree upon the terms of the
lease and in case of disagreement, the court shall fix the terms thereof.
xxx xxx xxx
Art. 1678. If the lessee makes, in good faith, useful

improvements which are suitable to the use for which the lease is
intended, without altering the form or substance of the property
leased, the lessor upon the termination of the lease shall pay the lessee
one-half of the value of the improvements at that time. Should the
lessor refuse to reimburse said amount, the lessee may remove the
improvements, even though the principal thing may suffer damage
thereby. He shall not, however, cause any more impairment upon the
property leased than is necessary.
With regard to ornamental expenses, the lessee shall not be

entitled to any reimbursement, but he may remove the ornamental
objects, provided no damage is caused to the principal thing, and the
lessor does not choose to retain them by paying their value at the time
the lease is extinguished.
The crux of the said issue then is whether the private respondents are
builders in good faith or mere lessees.
The private respondents claim they are builders in good faith, hence,
Article 448 of the Civil Code should apply. They rely on the lack of title of the
petitioners' mother at the time of the execution of the contract of lease, as well
as the alleged assurance made by the petitioners that the lot on which the
house stood would be sold to them.
It has been said that while the right to let property is an incident of title
and possession, a person may be a lessor and occupy the position of a landlord
to the tenant although he is not the owner of the premises let. 9 After all,
ownership of the property is not being transferred, 10 only the temporary use
and enjoyment thereof. 11
In this case, both parties admit that the land in question was originally
owned by the petitioners' mother. The land was allegedly acquired later by one
Maria Lee by virtue of an extrajudicial foreclosure of mortgage. Lee, however,
never sought a writ of possession in order that she gain possession of the
property in question. 12 The petitioners' mother therefore remained in
possession of the lot.
It is undisputed that the private respondents came into possession of a

126 square-meter portion of the said lot by virtue of a contract of lease
executed by the petitioners' mother in their favor. The juridical relation
between the petitioners' mother as lessor, and the private respondents as
lessees, is therefore well-established, and carries with it a recognition of the
lessor's title. 13 The private respondents, as lessees who had undisturbed
possession for the entire term under the lease, are then estopped to deny their
landlord's title, or to assert a better title not only in themselves, but also in
some third person while they remain in possession of the leased premises and
until they surrender possession to the landlord. 14 This estoppel applies even
though the lessor had no title at the time the relation of lessor and lessee was
created, 15 and may be asserted not only by the original lessor, but also by
those who succeed to his title. 16
Being mere lessees, the private respondents knew that their occupation of
the premises would continue only for the life of the lease. Plainly, they cannot
be considered as possessors nor builders in good faith. 17
In a plethora of cases, 18 this Court has held that Article 448 of the Civil
Code, in relation to Article 546 of the same Code, which allows full
reimbursement of useful improvements and retention of the premises until
reimbursement is made, applies only to a possessor in good faith, i.e., one who
builds on land with the belief that he is the owner thereof. It does not apply
where one's only interest is that of a lessee under a rental contract; otherwise,
it would always be in the power of the tenant to "improve" his landlord out of
his property.
Anent the alleged promise of the petitioners to sell the lot occupied by the
private respondents' house, the same was not substantiated by convincing
evidence. Neither the deed of sale over the house nor the contract of lease
contained an option in favor of the respondent spouses to purchase the said lot.
And even if the petitioners indeed promised to sell, it would not make the
private respondents possessors or builders in good faith so as to be covered by
the provisions of Article 448 of the Civil Code. The latter cannot raise the mere
expectancy of ownership of the aforementioned lot because the alleged
promise to sell was not fulfilled nor its existence even proven. The first thing
that the private respondents should have done was to reduce the alleged
promise into writing, because under Article 1403 of the Civil Code, an
agreement for the sale of real property or an interest therein is unenforceable,
unless some note or memorandum thereof be produced. Not having taken any
steps in order that the alleged promise to sell may be enforced, the private
respondents cannot bank on that promise and profess any claim nor color of
title over the lot in question.
There is no need to apply by analogy the provisions of Article 448 on

indemnity as was done in Pecson vs. Court of Appeals, 19 because the situation
sought to be avoided and which would justify the application of that provision,
is not present in this case. Suffice it to say, "a state of forced co-ownership"
would not be created between the petitioners and the private respondents. For,
as correctly pointed out by the petitioners, the rights of the private respondents
as lessees are governed by Article 1678 of the Civil Code which allows
reimbursement to the extent of one-half of the value of the useful
improvements.
It must be stressed, however, that the right to indemnity under Article

1678 of the Civil Code arises only if the lessor opts to appropriate the
improvements. Since the petitioners refused to exercise that option, 20 the
private respondents cannot compel them to reimburse the one-half value of the
house and improvements. Neither can they retain the premises until
reimbursement is made. The private respondents' sole right then is to remove
the improvements without causing any more impairment upon the property
leased than is necessary. 21
WHEREFORE, judgment is hereby rendered GRANTING the instant
petition; REVERSING and SETTING ASIDE the decision of the Court of Appeals of
27 January 1995 in CA-G.R. SP No. 34337; and REINSTATING the decision of
Branch 3 of the Municipal Trial Court in Cities of Dagupan City in Civil Case No.
9214 entitled "Federico Geminiano, et al. vs. Dominador Nicolas, et al."
Costs against the private respondents
SO ORDERED.
Narvasa, C . J ., Melo, Francisco, and Panganiban, JJ ., concur.
Footnotes
1. Rollo , CA-G.R. SP No. 34337 (CA-Rollo ), 26.

2. Id., 25.
3. Id., 24.
4. Id., 28.
5. CA-Rollo , 37. Per Judge Emilio V. Angeles.
6. Id., 20. Per Judge Deodoro J. Sison.
7. Annex "A" of Petition; Rollo, 15. Per Luna, A., J., with Barcelona, R., and
Jacinto, G., JJ. , concurring.
8. Annex "B", Id., 28.
9. 49 Am Jur 2d, Landlord and Tenant, §12, 55.
10. EDGARDO L. PARAS, Civil Code of the Philippines, vol. V [1986], 258.
11. Jovellanos vs. Court of Appeals, 210 SCRA 126, 132 [1992].
12. Joven vs. Court of Appeals, 212 SCRA 700, 708 [1992].
13. 49 Am Jur, op. cit., §120, 150.
14. §2(b), Rule 131, Rules of Court; Borre vs. Court of Appeals, 158 SCRA 560,
566 [1988]; Manuel vs. Court of Appeals, 199 SCRA 603, 607 [1991]; Munar
vs. Court of Appeals, 238 SCRA 372, 380 [1994]; 49 Am Jur, op. cit., § 129,
158.
15. Manuel vs. Court of Appeals, supra note 14, at 607-608; 49 Am Jur, op. cit.,
§ 110, 144; § 129, 158.
16. 49 Am Jur, op. cit., § 122, 152.
17. Racaza vs. Susana Realty, Inc., 18 SCRA 1172, 1178 [1966]; Vda. de
Bacaling vs. Laguna , 54 SCRA 243, 250 [1973]; Santos vs. Court of Appeals,
221 SCRA 42, 46 [1993].
18. Alburo vs. Villanueva, 7 Phil. 277, 280 [1907] referring to the provisions of
the Old Civil Code); Racaza vs. Susana Realty, Inc., supra note 17, at 1177-
1178; Bulacanag vs. Francisco, 122 SCRA 498, 502 [1983]; Gabrito vs. Court
of Appeals, 167 SCRA 771, 778-779 [1988]; Cabangis vs. Court of Appeals,
200 SCRA 414, 419-421 [1991]; Heirs of the late Jaime Binuya vs. Court of
Appeals, 211 SCRA 761, 766 [1922].
19. 244 SCRA 407 SCRA 407 [1995].
20. CA-Rollo , 15.
21. Heirs of the late Jaime Binuya vs. Court of Appeals, supra note 18, at 768.

FIRST DIVISION
[G.R. No. 182754. June 29, 2015.]
SPOUSES CRISPIN AQUINO and TERESA V. AQUINO, herein

represented by their Attorney-in-Fact, AMADOR D.
LEDESMA, petitioners, vs. SPOUSES EUSEBIO AGUILAR and
JOSEFINA V. AGUILAR, respondents.
DECISION
SERENO, C.J : p
In this Petition for Review on Certiorari 1 filed under Rule 45 of the

Rules of Court, Petitioner spouses Crispin and Teresa Aquino (petitioners)
assail the Court of Appeals (CA) Decision dated 25 April 2008 2 in CA-GR SP
No. 92778. The CA modified the Decisions of both the Metropolitan Trial
Court (MeTC) and the Regional Trial Court (RTC). The CA ruled that although
respondent spouses Eusebio and Josefina Aguilar (respondents) cannot be
considered builders in good faith, they should still be reimbursed for the
improvements they have introduced on petitioners' property. 3 aScITE
THE FACTS
Teresa Vela Aquino (Teresa) and her husband, Crispin Aquino, are the
owners of a house and lot located at No. 6948, Rosal Street, Guadalupe
Viejo, Makati City as evidenced by Transfer of Certificate Title No. 148338. 4
Since 1981, this property has been occupied by Teresa's sister, Josefina
Vela Aguilar; Josefina's spouse Eusebio; and their family. 5 It appears from
the record that respondents stayed on the property with the consent and
approval of petitioners, who were then residing in the United States. 6
While respondents were in possession of the property, the house
previously constructed therein was demolished, and a three-storey building
built in its place. 7 Respondents occupied half of the third floor of this new
building for the next 20 years without payment of rental. 8
On 22 September 2003, petitioners sent a letter to respondents
informing them that an immediate family member needed to use the
premises and demanding the surrender of the property within 10 days from
notice. 9 Respondents failed to heed this demand, prompting petitioners to
file a Complaint for ejectment against them before the office of the barangay
captain of Guadalupe Viejo. 10 The parties attempted to reach an amicable
settlement in accordance with Section 412 of the Local Government Code,
but these efforts proved unsuccessful. 11
On 19 November 2003, petitioner spouses Aquino filed a Complaint 12
with the MeTC of Makati City praying that respondents be ordered to (a)
vacate the portion of the building they were then occupying; and (b) pay
petitioner a reasonable amount for the use and enjoyment of the premises
from the time the formal demand to vacate was made. 13
In their Answer with Counterclaim, 14 respondents claimed that they
had contributed to the improvement of the property and the construction of
the building, both in terms of money and management/supervision services.
Petitioners purportedly agreed to let them contribute to the costs of
construction in exchange for the exclusive use of a portion of the building.
Respondents averred:
2.3 That the construction of the three (3) storey building was
also at the uncompensated supervision of defendant Eusebio Aguilar,
of which only P2 Million was spent by plaintiffs while defendants
spent around P1 Million as contribution to the construction cost. It
was defendants who introduced improvements on subject lot because
at the time plaintiffs bought the property it was marshy which was
filled up by defendants (sic) truck load with builders, adobe and
scumbro that elevated the ground; HEITAD
2.4 The original agreement was for my client to contribute his

share so that they will have the portion of the subject building for
their own exclusive use. It turned out later that the agreement they
had was disowned by plaintiffs when they saw the totality of the
building constructed thereon coupled by the fact, that the value of
the lot has tremendously appreciated due to the commercialization of
the vicinity which will command higher price and windfall profits
should plaintiffs sell the property which they are now contemplating
on (sic);
2.5 The portion which plaintiffs want defendants to vacate is a
portion which the latter built with their own money upon your clients
agreement and consent whom they built in good faith knowing and
hoping that later on the same will be theirs exclusively. It was never
an act of generosity, liberality and tolerance. Conversely, it was one
of the implied co-ownership or partnership, because aside from the
fact that defendants, who were then peacefully residing in Laguna,
made unquantifiable contributions in terms of money and services
arising from his uncompensated management and supervision over
the entire subject property while plaintiffs are abroad. By legal
implications he is an industrial partner responsible for the
development and improvements of the subject property. His
contribution was never without the consent of plaintiffs. Whatever
contribution defendants introduced over the said property was made
and built in good faith; 15
Since they were allegedly co-owners of the building and builders in
good faith, respondents claimed that they had the right to be compensated
for the current value of their contribution. 16 Accordingly, they prayed for the
dismissal of the Complaint and the award of P5 million as compensation for
their contributions to the construction of the building, as well as moral
damages, attorney's fees and costs of litigation. 17
THE RULING OF THE METC
In a Decision 18 dated 12 November 2004, the MeTC ruled in favor of
petitioners, stating that they had the right to enjoy possession of the
property as the registered owners thereof. 19 Since the case was merely one
for ejectment, the court held that it was no longer proper to resolve
respondents' claim of co-ownership over the building. 20 ATICcS
The MeTC also declared that respondents were builders in bad faith
who were not entitled to recover their purported expenses for the
construction of the building. 21 It emphasized that their occupation of the
property was by mere tolerance of petitioners and, as such, could be
terminated at any time. 22 The court further noted that in a letter dated 15
July 1983, petitioners had already asked respondents to refrain from
constructing improvements on the property because it was intended to be
sold. 23
The dispositive portion of the MeTC Decision, which ordered
respondents to vacate the property, reads:
WHEREFORE, premises considered, judgment is hereby
rendered ordering defendants Eusebio & Josefina Aguilar and all
persons claiming rights under them to immediately vacate the
subject property, and deliver peaceful possession thereof to the
plaintiffs. Defendants are likewise ordered to pay plaintiffs P7,000.00
monthly rental commencing 22 October 2003 until such time that
defendant finally vacate the premises, P10,000.00 as and by way of
attorney's fees, and the cost of suit. 24
On 14 September 2005, respondents appealed the MeTC's Decision to
the RTC. 25
THE RULING OF THE RTC
In their Memorandum on Appeal 26 before the RTC, respondents
assailed the MeTC's finding that petitioners, as the registered owners of the
land, were also the owners of the improvement constructed thereon. 27
Respondents asserted that they were co-owners of the building since they
built a portion thereof using their own funds, as evidenced by various
receipts they presented before the MeTC. 28
Respondents also maintained that they were builders in good faith.
They pointed out that petitioners never objected to the construction of the
improvement on their property. 29 According to respondents, petitioners'
letter dated 15 July 1983 was written at a time when an old dilapidated
house was still standing on the property. 30 Subsequently however, the
house was demolished and the new building was constructed thereon by
respondents, with petitioners' knowledge and consent. 31
In a Decision 32 dated 3 January 2006, the RTC denied the appeal and
affirmed the MeTC's Decision. According to the court, respondents did not
become co-owners of the property although they may have contributed to
the construction of the building thereon. 33 Hence, their stay in the premises
remained to be by mere tolerance of the petitioners. 34 TIADCc
The RTC also ruled that respondents cannot be considered builders in

good faith. 35 The court found that as early as 1983, petitioners had
informed respondents of the intention to eventually dispose of the property.
36 The RTC concluded that petitioners never consented to the construction of
any form of structure on the property. 37 Since respondents participated in
the construction of the building even after they had been notified that their
occupation may be terminated anytime, the RTC ruled that they did not build
the structures in good faith. 38 The RTC likewise noted that "the
improvements in question as well as other personal belongings of the
appellants were removed from the premises through a writ of demolition,
and these properties are now in their possession." 39
THE RULING OF THE CA
Aggrieved by the RTC Decision, respondents elevated the matter to the
CA. They reiterated that they owned one-half of the third floor of the building
on the property, having spent their own funds for the construction thereof.
Respondents also asserted that because they built that portion in good faith,
with no objection from petitioners, they were entitled to reimbursement of all
necessary and useful expenses incurred in the construction.
On 25 April 2008, the CA affirmed the conclusion of the lower courts
that respondents could not be considered co-owners of the property or
builders in good faith. 40 According to the appellate court, respondents were
aware that their right to possess the property had a limitation, because they
were not the owners thereof. They knew that their occupation of the building
was by mere tolerance or permission of petitioners, who were the registered
owners of the property.
The CA likewise noted that respondents failed to prove the alleged
agreement between the parties with respect to the ownership of one-half of
the third floor of the improvement. There being no contract between them,
respondents are necessarily bound to vacate the property upon demand. 41
The CA ruled:
The Supreme Court has consistently held that those who

occupy the land of another at the latter's tolerance or permission,
without any contract between them, are necessarily bound by an
implied promise that the occupants will vacate the property upon
demand. Based on the principles enunciated in Calubayan v. Pas cual,
the status of petitioners is analogous to that of a lessee or a tenant
whose term of lease has expired but whose occupancy continued by
tolerance of the owner. In such a case, the unlawful deprivation or
withholding of possession is to be reckoned from the date of the
demand to vacate. 42 (Citations omitted) AIDSTE
Nevertheless, the CA declared that respondents should be reimbursed

for the necessary and useful expenses they had introduced on petitioners'
property, pursuant to Articles 1678 and 548 of the Civil Code. 43 The
dispositive portion of the CA Decision dated 25 April 2008 44 reads:
WHEREFORE, the assailed Decision is AFFIRMED with the
following MODIFICATIONS:
1. The case is REMANDED to the court of origin for further
proceedings to determine the facts essential to the application of
Article 1678 and Article 546 of the Civil Code, specifically on the
following matters:
a) To determine the cost of necessary expenses incurred by
petitioners during their period of possession.
b) To determine the cost of useful improvements introduced by
petitioners in the construction of the building.
2. After said amounts shall have been determined by
competent evidence:
a) Respondents Aquino are ordered to pay petitioners the costs
of necessary improvements incurred during the period of
their occupation.
b) Petitioners Aguilar are to be reimbursed one half (1/2) of the
amount they expended on the construction of the building
should respondents decided to appropriate the same.
Should respondents refuse to reimburse the costs of the
improvements, petitioners may remove the improvements
even though the principal thing may suffer damage
thereby.
c) In both instances, petitioners shall have no right of retention
over the subject premises.
d) In any event, petitioners shall pay respondents the amount of
Php7,000.00 as monthly rental commencing 22 October
2003 until such time that petitioners finally vacate the
premises. No pronouncement as to costs.
SO ORDERED. 45
Respondents no longer appealed the Decision of the CA. This time,

petitioners elevated the matter to this Court through the instant Petition for
Review 46 under Rule 45 of the Rules of Court.
PROCEEDINGS BEFORE THIS COURT
In their Petition, petitioners allege that the CA seriously erred in
remanding the case to the court of origin for the purpose of ascertaining the
right of respondents to be reimbursed for the improvements introduced on
the property. 47 They emphasize that respondents were builders in bad faith,
and, as such, are not entitled to reimbursement under Articles 449, 450 and
451 of the Civil Code.
In their Comment, 48 respondents assert that the CA correctly ruled
that their status is akin to that of a lessee or tenant whose term of lease has
expired, but whose occupancy continues by virtue of the tolerance of the
owner. They aver that the CA properly upheld their entitlement to
reimbursement pursuant to Articles 1678 49 and 546 50 of the Civil Code. 51
In their Reply, 52 petitioners argue against supposed improvements
constructed by respondents from 1999 to 2003 amounting to P995,995.94.
Petitioners say this claim is highly ridiculous and unbelievable. 53 acEHCD
OUR RULING
Since respondents no longer appealed the Decision of the CA, 54 they
are considered bound by its findings and conclusions. These include its
affirmation of the earlier findings of the MeTC and the RTC that respondents
cannot be considered builders in good faith:
Both the MeTC and the RTC have rejected the idea that
petitioners are builders in good faith. We agree. The resolution of the
issues at bar calls for the application of the rules on accession under
the Civil Code. The term "builder in good faith" as used in reference
to Article 448 of the Civil Code, refers to one who, not being the
owner of the land, builds on that land believing himself to be its
owner and unaware of the land, builds on that land, believing himself
to be its owner and unaware of the defect in his title or mode of
acquisition. The essence of good faith lies in an honest belief in the
validity of one's right, ignorance of a superior claim, and absence of
intention to overreach another.
In the instant case, the Spouses Aguilar cannot be considered
as builders in good faith on account of their admission that the
subject lot belonged to the Spouses Aquino when they constructed
the building. At the onset, petitioners were aware of a flaw in their
title and a limit to their right to possess the property. By law, one is
considered in good faith if he is not aware that there exists in his title
or mode of acquisition any flaw which invalidates it. 55
Respondents are deemed to have acquiesced to the foregoing findings
when they failed to appeal the CA Decision. A party who does not appeal
from a judgment can no longer seek the modification or reversal thereof. 56
Accordingly, the only issue left for this Court to determine is that which is
now raised by petitioners — whether the CA erred in remanding this case to
the court of origin for the determination of the necessary and useful
expenses to be reimbursed to respondents pursuant to Articles 1678 and
546 of the Civil Code. SDHTEC
We resolve to PARTLY GRANT the Petition and modify the ruling of the
CA.
Article 1678 is not applicable to this case.
In its Decision, the CA found that respondents were occupants of the
property by mere tolerance or generosity of petitioners and were bound by
an implied promise to vacate the premises upon demand. 57
Based on this finding, the CA held that "the status of petitioners is
analogous to that of a lessee or a tenant whose term of lease has expired
but whose occupancy continued by tolerance of owner" 58 pursuant to this
Court's ruling in Calubayan v. Pascual . 59 As a result, the CA concluded that
Articles 1678 and 546 of the Civil Code must be applied to allow respondents
to be reimbursed for their necessary and useful expenses.
We disagree. By its express provision, Article 1678 of the Civil Code
applies only to lessees who build useful improvements on the leased
property. It does not apply to those who possess property by mere tolerance
of the owners, without a contractual right.
A careful reading of the statement made by this Court in Calubayan
would show that it did not, as it could not, modify the express provision in
Article 1678, but only noted an "analogous" situation. According to the Court,
the analogy between a tenant whose term of lease has expired and a person
who occupies the land of another at the latter's tolerance lies in their implied
obligation to vacate the premises upon demand of the owner. The Court
stated: AScHCD
To begin with, it would appear that although the defendant is

regarded by the plaintiffs as a "squatter" his occupancy of the
questioned premises had been permitted or tolerated even before the
Philippine Realty Corporation sold the lots to the plaintiffs. Otherwise,
the latter would not have found him on the premises. It may be true
that upon their acquisition of the parcels of land in 1957, plaintiffs
notified and requested defendant to see them, but despite
defendant's failure to heed these requests, plaintiffs did not choose
to bring an action in court but suffered the defendant instead to
remain in the premises for almost six years. Only on February 2,
1963, did the plaintiffs for the first time notify the defendant that
"they now need the two parcels of land in question" and requested
him to vacate the same. In allowing several years to pass without
requiring the occupant to vacate the premises nor filing an action to
eject him, plaintiffs have acquiesced to defendant's possession and
use of the premises. It has been held that a person who occupies the
land of another at the latter's tolerance or permission, without any
contract between them, is necessarily bound by an implied promise
that he will vacate upon demand, failing which a summary action for
ejectment is the proper remedy against them. The status of
defendant is analogous to that of a lessee or tenant whose term of
lease has expired but whose occupancy continued by tolerance of the
owner. In such a case, the unlawful deprivation or withholding of
possession is to be counted from the date of the demand to vacate.
60 (Emphasis in the original)
It is clear from the above that Calubayan is not sufficient basis to

confer the status and rights of a lessee on those who occupy property by
mere tolerance of the owner.
In this case, there is absolutely no evidence of any lease contract
between the parties. In fact, respondents themselves never alleged that they
were lessees of the lot or the building in question. Quite the opposite, they
insisted that they were co-owners of the building and builders in good faith
under Article 448 of the Civil Code. For that reason, respondents argue that
it was erroneous for the CA to consider them as lessees and to determine
their rights in accordance with Article 1678.
As builders in bad faith, respondents are
not entitled to reimbursement of useful
expenses.
Furthermore, even if we were to subscribe to the CA's theory that the
situation of respondents is "analogous to that of a lessee or tenant whose
term of lease has expired but whose occupancy continued by tolerance," the
absence of good faith on their part prevents them from invoking the
provisions of Article 1678. AcICHD

As discussed above, the MeTC, the RTC and the CA all rejected the
claims of respondents that they were builders in good faith. This
pronouncement is considered conclusive upon this Court, in view of
respondents' failure to appeal from the CA decision. This rule bars the
application of Article 1678 as well as Articles 448 and 576 of the Civil Code
and all other provisions requiring good faith on the part of the builder.
We are aware that in some instances, this Court has allowed the
application of Article 448 to a builder who has constructed improvements on
the land of another with the consent of the owner. 61 In those cases, the
Court found that the owners knew and approved of the construction of
improvements on the property. Hence, we ruled therein that the structures
were built in good faith, even though the builders knew that they were
constructing the improvement on land owned by another.
Although the factual circumstances in the instant case are somewhat
similar, there is one crucial factor that warrants a departure from the above-
described rulings: the presence of evidence that petitioners prohibited
respondents from building their own structure on a portion of the property.
Based on the findings of fact of the MeTC and the RTC, petitioners had
already warned respondents not to build a structure on the property as early
as 1983. The MeTC explained:
Likewise, in a letter dated 15 July 1983 sent by plaintiffs to the
defendants marked as Exhibit "2" of defendants' Position Paper,
Teresa Aquino made known to the defendants not to construct on the
premises as she planned to sell the same when the value of the
property shall increase (sic). Defendants are undoubtedly builders in
bad faith for despite the prohibition made upon them, they continued
their construction activities upon respondents' property. 62
This ruling was affirmed by the RTC in its Decision dated 3 January
2006, which reads: TAIaHE
An examination of appellants' Exhibit "2" which is a letter dated

July 15, 1983, sent to appellant Josefina Aguilar, the sister of appellee
Teresa Aquino, abundantly shows that their occupancy of the
premises in question is by tolerance of the appellees. Thus, the letter
expressly states that the appellants are advised not to put up a shop,
as the appellees had plan (sic) then of disposing the property (the
land) in question for a reasonable profit after a period of three or four
years, thereby placing on notice them (appellants) that their
possession of the said property is temporary in nature and by mere
generosity of the appellees, they being sisters.
The letter likewise advised them to apply for a housing project
so that by the time the property in question is sold, they have a place
to transfer to. All these undisputed antecedents which can be
considered as judicially admitted by the appellants being their own
evidence marked as Exhibit "2", coupled with the fact that since the
time they occupied the premises in 1983 up to the time when the
complaint was filed, they were not asked to pay any monthly rental
for the use, enjoyment and occupancy of the said property,
ineluctably established the fact that their possession of the said
property is by mere tolerance of the appellees. 63
xxx xxx xxx
Their contention that pursuant to Article 453 of the Civil Code,
they should be considered builders in good faith even if they have
acted in bad faith, since their act of introducing improvements to one-
half of the third floor of the three storey building was with knowledge
and without opposition on the part of the appellants, cannot be
sustained, principally on the ground that as stated earlier, their
Exhibit "2" is very limpid on the act that they were already
forewarned as early as 1983 not to introduce any improvements
thereon as the property is slated to be sold as it was only bought for
investment purposes. The fact that the appellees did not thereafter
remind them of this, is of no moment, as this letter was not likewise
withdrawn by a subsequent one or modified by the appellees. 64
We find no reason to depart from the conclusions of the trial courts.
Respondents were evidently prohibited by petitioners from building
improvements on the land because the latter had every intention of selling it.
That this sale did not materialize is irrelevant. What is crucial is that
petitioners left respondents clear instructions not to build on the land. cDHAES
We also agree with the RTC's ruling that the lack of constant reminders
from petitioners about the "prohibition" expressed in the 1983 letter was
immaterial. The prohibition is considered extant and continuing since there
is no evidence that this letter was ever withdrawn or modified. Moreover, no
evidence was presented to show that petitioners were aware of what was
happening: that respondents were constructing a portion of the building with
their own funds and for their exclusive use and ownership. Neither were
respondents able to present evidence that petitioners had agreed to share
the expenses with them, or that the former had given consent to the latter's
contribution, if any.
In view of the foregoing, this Court's previous rulings on Article 448
cannot be applied to this case. Hence, we hold that petitioners, as the
owners of the land, have the right to appropriate what has been built on the
property, without any obligation to pay indemnity therefor; 65 and that
respondents have no right to a refund of any improvement built therein, 66
pursuant to Articles 449 and 450 of the Civil Code:
Art. 449. He who builds, plants or sows in bad faith on the land
of another, loses what is built, planted or sown without right of
indemnity.
built, planted or sown in bad faith may demand the demolition of the
work, or that the planting or sowing be removed, in order to replace
things in their former condition at the expense of the person who
built, planted or sowed; or he may compel the builder or planter to
pay the price of the land, and the sower the proper rent.
Art. 451. In the cases of the two preceding articles, the
landowner is entitled to damages from the builder, planter or sower.
Respondents may recover the
necessary expenses incurred for the
preservation of the property but
without the right of retention. ASEcHI
Pursuant to Article 452 of the Civil Code, a builder in bad faith is

entitled to recoup the necessary expenses incurred for the preservation of
the land. 67 The CA correctly ruled that respondents in this case are similarly
entitled to this reimbursement. However, being builders in bad faith, they do
not have the right of retention over the premises. 68
While the evidence before this Court does not establish the amount of
necessary expenses incurred by respondents during their stay in the
property, we note that even petitioners do not deny that such expenses
were incurred. In fact, in a letter dated 15 July 1983, petitioners
acknowledged that respondents had spent personal money for the
maintenance of the property. Petitioners even promised to reimburse them
for those expenses. 69 In this light, we find it proper to order the remand of
this case to the court a quo for the purpose of determining the amount of
necessary expenses to be reimbursed to respondents.
With respect to the award of actual damages to petitioners, we find no
reason to reverse or modify the ruling of the CA. This Court has consistently
held that those who occupy the land of another at the latter's tolerance or
permission, even without any contract between them, are necessarily bound
by an implied promise that the occupants would vacate the property upon
demand. 70 Failure to comply with this demand renders the possession
unlawful and actual damages may be awarded to the owner from the date of
the demand to vacate 71 until the actual surrender of the property.
Accordingly, we affirm the CA's award of actual damages to petitioners
in the amount of P7,000 per month from the date of demand (22 October
2003) until the subject properties are vacated. This amount represents a
reasonable compensation for the use and occupation of respondents'
property 72 as determined by the RTC and the MeTC.
As to petitioners' prayer for attorney's fees, we find no cogent basis for
the award.
WHEREFORE, the Petition is PARTLY GRANTED.
The Court of Appeals Decision dated 25 April 2008 is REVERSED
insofar as it ordered: (a) the reimbursement of the useful expenses incurred
by respondents while in possession of the property; and (b) the
determination of the cost of these useful improvements by the court of
origin. The rest of the Decision of the Court of Appeals is hereby AFFIRMED.
ITAaHc
Accordingly, this case is REMANDED to the court of origin for the

determination of the necessary expenses of preservation of the land, if any,
incurred by respondent spouses Eusebio and Josefina Aguilar while they were
in possession of the property, which expenses shall be reimbursed to them
by petitioner spouses Crispin and Teresa Aquino.

On the other hand, respondents and all persons claiming rights under
them are ordered, upon finality of this Decision without awaiting the
resolution of the matter of necessary expenses by the trial court, to
immediately VACATE the subject property and DELIVER its peaceful
possession to petitioners. Respondents are likewise ordered to PAY
petitioners P7,000 as monthly rental plus interest thereon at the rate of 6%
per annum, to be computed from 22 October 2003 until the finality of this
Decision.
SO ORDERED.
Leonardo-De Castro, Bersamin, Perez and Perlas-Bernabe, JJ., concur.
Footnotes
1. Rollo , pp. 29-39.
2. Id. at 41-52; penned by Associate Justice Ricardo R. Rosario and concurred in

by Associate Justices Arcangelita Romillo-Lontok and Mariano C. Del
Castillo (now a member of this Court).
3. Id. at 51-52.
4. Id. at 85-86.
5. Id. at 42.
6. Id. at 148-149.
7. Id. at 261.
8. Id. at 250.
9. Id. at 78.
10. Id. at 250.

11. Id. at 251.
12. Id. at 77-82.

13. Id. at 79-80.
14. Id. at 95-102.

15. Id. at 96-97.
16. Id. at 99.

17. Id. at 100.
18. Id. at 250-253; penned by Judge Perpetua Atal-Paño.

19. Id. at 251.
20. Id.
21. Id. at 252.

22. Id.
23. Id. at 252-253.

24. Id. at 253.
25. Id. at 34.

26. Id. at 103-116.
27. Id. at 110-112.

28. Id. at 106.
29. Id. at 112-115.

30. Id. at 112.
31. Id.
32. Id. at 127-131; penned by Judge Cesar D. Santamaria.
33. Id. at 129.

34. Id. at 130.
35. Id.
36. Id.
37. Id.
38. Id.
39. Id. at 131.

40. Id. at 48.
41. Id. at 49.

42. Id.
43. Id. at 50.

44. Id. at 9-20; CA-G.R. SP No. 92778 penned by Associate Justice Ricardo R.
Rosario and concurred in by Associate Justices Arcangelita Romillo-Lontok
and Mariano C. del Castillo (now a member of this court).
45. Id. at 51-52.
46. Id. at 29-39.

47. Id. at 34.
48. Id. at 211-214.

49. Article 1678 of the Civil Code states:
Art. 1678. If the lessee makes, in good faith, useful improvements which are
suitable to the use for which the lease is intended, without altering the
form or substance of the property leased, the lessor upon the termination
of the lease shall pay the lessee one-half of the value of the improvements
at the time. Should the lessor refuse to reimburse said amount, the lessee
may remove the improvements, even though the principal thing may
suffer damage thereby. He shall not, however, cause any more
impairment upon the property leased than is necessary.
With regard to ornamental expenses, the lessee shall not be entitled to any
reimbursement, but he may remove the ornamental objects, provided no
damage is caused to the principal thing, and the lessor does not choose to
retain them by paying their value at the time the lease is extinguished.
50. Article 546 of the Civil Code provides:
Art. 546. Necessary expenses shall be refunded to every possessor; but only the
possessor in good faith may retain the thing until he has been reimbursed
therefor.
Useful expenses shall be refunded only to the possessor in good faith with the
same right of retention, the person who has defeated him in the
possession having the option of refunding the amount of the expenses or
of paying the increase in value which the thing may have acquired by
reason thereof.
51. Id. at 212.

52. Id. at 220-223.
53. Id. at 220.

54. Id. at 41-52.
55. Id. at 48.

56. Taganito Mining Corporation v. Commissioner of Internal Revenue, G.R. No.
197591, 18 June 2014; Raquel-Santos, et al. v. Court of Appeals and
Finvest Securities Co., Inc., 601 Phil. 631, 651 (2009).
57. Rollo , p. 17.
58. Id. at 49.

59. 128 Phil. 160-165 (1967).
60. Id.
61. Spouses Ismael and Teresita Macasaet v. Spouses Vicente and Rosario
Macasaet, 482 Phil 853-876, (2004); Boyer-Roxas v. Court of Appeals, G.R.
No. 100866, 14 July 1992, 211 SCRA 470; De Guzman v. De la Fuente, 55
Phil. 501-504 (1930); Aringo v. Arena, 14 Phil. 263-270 (1909); Javier v.
Javier, 7 Phil. 261-268 (1907).
62. Rollo , p. 252.
63. Id. at 130.
64. Id.
65. Heirs of Durano, Sr. v. Spouses Uy, 398 Phil. 125-127 (2000).
66. Tan Queto v. Court of Appeals , 232 Phil. 57-64 (1983).

Art. 452. The builder, planter or sower in bad faith is entitled to reimbursement
for the necessary expenses of preservation of the land.

ART. 546. Necessary expenses shall be refunded to every possessor; but only the
possessor in good faith may retain the thing until he has been reimbursed
therefor.
same right of retention, the person who has defeated him in the
possession having the option of refunding the amount of the expenses or
of paying the increase in value which the thing may have acquired by
reason thereof.
69. Rollo , pp. 148-149.
70. Spouses Cruz v. Spouses Fernando , 513 Phil 280-293 (2005); Rivera v. Rivera ,
453 Phil 404-41 (2003); Spouses Pengson v. Ocampo, Jr., 412 Phil 860-868
(2001); Arcal v. Court of Appeals , 348 Phil 813-830 (1998); Spouses
Refugia v. Court of Appeals, 327 Phil 982-1011 (1996).
71. Lopez v. David, GR No. 152145, 30 March 2004, 426 SCRA 535; Arcal v. Court
of Appeals, 348 Phil. 813, 823 (1998); Villaluz v. Court of Appeals , 344
Phil. 77, 89 (1997).
72. See Reyes v. Court of Appeals , 148 Phil. 135 (1971).

THIRD DIVISION
[G.R. No. 108894. February 10, 1997.]
TECNOGAS PHILIPPINES MANUFACTURING CORPORATION ,

petitioner, vs. COURT OF APPEALS (FORMER SPECIAL
SEVENTEENTH DIVISION) and EDUARDO UY, respondents.
De Jesus Paguio and Manimtim for petitioner.

M.R. Pamaran Law Offices for private respondent.
Acebes Del Carmen Cinco & Cordova for private respondent.
SYLLABUS
1. CIVIL LAW; PROPERTY; POSSESSION; GOOD FAITH, PRESUMED. —

When petitioner purchased the land from Pariz Industries, the buildings and
other structures were already in existence. The record is not clear as to who
actually built those structures, but it may well be assumed that petitioner's
predecessor-in-interest, Pariz Industries, did so. Article 527 of the Civil Code
presumes good faith, and since no proof exists to show that the encroachment
over a narrow, needle-shaped portion of private respondent's land was done in
bad faith by the builder of the encroaching structures, the latter should be
presumed to have built them in good faith. It is presumed that possession
continues to be enjoyed in the same character in which it was acquired, until
the contrary is proved. 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.
Hence, such good faith, by law passed on to Pariz's successor, petitioner in this
case. Further, "(w)here one derives title to property from another, the act,
declaration, or omission of the latter, while holding the title, in relation to the
property, is evidence against the former." And possession acquired in good
faith does not lose this character except in case and from the moment facts
exist which show that the possessor is not unaware that he possesses the thing
improperly or wrongfully. The good faith ceases from the moment defects in
the title are made known to the possessor, by extraneous evidence or by suit
for recovery of the property by the true owner.
2. ID.; ID.; OWNERSHIP; RIGHT OF ACCESSION; IMMOVABLE PROPERTY;
BUILDER IN GOOD FAITH CAN COMPEL THE LANDOWNER TO EXERCISE HIS
OPTION UNDER ART. 448; APPLICABLE TO BUYER IN GOOD FAITH. — The builder
in good faith under Article 448 of the Civil Code, instead of being outrightly
ejected from the land, can compel the landowner to make a choice between the
two options: (1) to appropriate the building by paying the indemnity required by
law, or (2) sell the land to the builder. The landowner cannot refuse to exercise
either option and compel instead the owner of the building to remove it from
the land. The same benefit can be invoked by petitioner who is not the builder
of the offending structures but possesses them in good faith as buyer.
Petitioner is deemed to have stepped into the shoes of the seller in regard to all
rights of ownership over the immovable sold, including the right to compel the
private respondent to exercise either of the two options provided under Article
448 of the Civil Code.
3. ID.; ID.; ID.; ID.; ID.; ID.; ID. — Petitioner did not lose its rights under
Article 448 of the Civil Code on the basis merely of the fact that some years
after acquiring the property in good faith, it learned about — and aptly
recognized — the right of private respondent to a portion of the land occupied
by its building. The supervening awareness of the encroachment by petitioner
does not militate against its right to claim the status of a builder in good faith.
In fact, a judicious reading of said Article 448 will readily show that the
landowner's exercise of his option can only take place after the builder shall
have come to know of the intrusion — in short, when both parties shall have
become aware of it. Only then will the occasion for exercising the option arise,
for it is only then that both parties will have been aware that a problem exists
in regard to their property rights.
4. ID.; ID.; ID.; ID.; ID.; ARTICLE 148; APPLICATION IN CASE AT BAR;
ATTORNEY'S FEES, AWARD OF, UNWARRANTED. — In line with the case of
Depra vs. Dumlao, this case will have to be remanded to the trial court for
further proceedings to fully implement the mandate of Art. 448. It is a rule of
procedure for the Supreme Court to strive to settle the entire controversy in a
single proceeding leaving no root or branch to bear the seeds of future
litigation. Petitioner, however, must also pay the rent for the property occupied
by its building as prescribed by respondent Court from October 4, 1979, but
only up to the date private respondent serves notice of its option upon
petitioner and the trial court; that is, if such option is for private respondent to
appropriate the encroaching structure. In such event, petitioner would have a
right of retention which negates the obligation to pay rent. The rent should
however continue if the option chosen is compulsory sale, but only up to the
actual transfer of ownership. The award of attorney's fees by respondent Court
against petitioner is unwarranted since the action appears to have been filed in
good faith. Besides, there should be no penalty on the right to litigate.
DECISION
PANGANIBAN, J : p
The parties in this case are owners of adjoining lots in Parañaque, Metro
Manila. It was discovered in a survey that a portion of a building of petitioner,
which was presumably constructed by its predecessor-in-interest, encroached
on a portion of the lot owned by private respondent. What are the rights and
obligations of the parties? Is petitioner considered a builder in bad faith
because, as held by respondent Court, he is "presumed to know the metes and
bounds of his property as described in his certificate of title"? Does petitioner
succeed into the good faith or bad faith of his predecessor-in-interest which
presumably constructed the building?
These are the questions raised in the petition for review of the Decision1
dated August 28, 1992, in CA-G.R. CV No. 28293 of respondent Court 2 where
the disposition reads: 3
"WHEREFORE, premises considered, the Decision of the Regional
Trial Court is hereby reversed and set aside and another one entered
—
1. Dismissing the complaint for lack of cause of action;
2. Ordering Tecnogas to pay the sum of P2,000.00 per month

as reasonable rental from October 4, 1979 until appellee
vacates the land;
3. To remove the structures and surrounding walls on the

encroached area;
4. Ordering appellee to pay the value of the land occupied by

the two-storey building;
5. Ordering appellee to pay the sum of P20,000.00 for and as

attorney's fees;
6. Costs against appellee."
Acting on the motions for reconsideration of both petitioner and private

respondent, respondent Court ordered the deletion of paragraph 4 of the
dispositive portion in an Amended Decision dated February 9, 1993, as follows:
4
"WHEREFORE, premises considered, our decision of August 28,

1992 is hereby modified deleting paragraph 4 of the dispositive portion
of our decision which reads:
'4. Ordering appellee to pay the value of the land occupied by
the two-storey building.'
The motion for reconsideration of appellee is hereby DENIED for

lack of merit."
The foregoing Amended Decision is also challenged in the instant petition.
The Facts
The facts are not disputed. Respondent Court merely reproduced the
factual findings of the trial court, as follows: 5
"That plaintiff (herein petitioner) which is a corporation duly
organized and existing under and by virtue of Philippine laws is the
registered owner of a parcel of land situated in Barrio San Dionisio,
Parañaque, Metro Manila known as Lot 4331-A (should be 4531-A) of
Lot 4531 of the Cadastral Survey of Parañaque, Metro Manila, covered
by Transfer Certificate of Title No. 409316 of the Registry of Deeds of
the Province of Rizal; that said land was purchased by plaintiff from
Pariz Industries, Inc. in 1970, together with all the buildings and
improvements including the wall existing thereon; that the defendant
(herein private respondent) is the registered owner of a parcel of land
known as Lot No. 4531-B of Lot 4531 of the Cadastral Survey of
Parañaque, LRC (GLRO) Rec. No. 19645 covered by Transfer Certificate
of Title No. 279838, of the Registry of Deeds for the Province of Rizal;
that said land which adjoins plaintiff's land was purchased by
defendant from a certain Enrile Antonio also in 1970; that in 1971,
defendant purchased another lot also adjoining plaintiff's land from a
certain Miguel Rodriguez and the same was registered in defendant's
name under Transfer Certificate of Title No. 31390, of the Registry of
Deeds for the Province of Rizal; that portions of the buildings and wall
bought by plaintiff together with the land from Pariz Industries are
occupying a portion of defendant's adjoining land; that upon learning
of the encroachment or occupation by its buildings and wall of a portion
of defendant's land, plaintiff offered to buy from defendant that
particular portion of defendant's land occupied by portions of its
buildings and wall with an area of 770 square meters, more or less, but
defendant, however, refused the offer. In 1973, the parties entered
into a private agreement before a certain Col. Rosales in Malacañang,
wherein plaintiff agreed to demolish the wall at the back portion of its
land thus giving to defendant possession of a portion of his land
previously enclosed by plaintiff's wall; that defendant later filed a
complaint before the office of Municipal Engineer of Parañaque, Metro
Manila as well as before the Office of the Provincial Fiscal of Rizal
against plaintiff in connection with the encroachment or occupation by
plaintiff's buildings and walls of a portion of its land but said complaint
did not prosper; that defendant dug or caused to be dug a canal along
plaintiff's wall, a portion of which collapsed in June, 1980, and led to
the filing by plaintiff of the supplemental complaint in the above-
entitled case and a separate criminal complaint for malicious mischief
against defendant and his wife which ultimately resulted into the
conviction in court of defendant's wife for the crime of malicious
mischief; that while trial of the case was in progress, plaintiff filed in
Court a formal proposal for settlement of the case but said proposal,
however, was ignored by defendant."
After trial on the merits, the Regional Trial Court 6 of Pasay City, Branch
117, in Civil Case No. PQ-7631-P, rendered a decision dated December 4, 1989
in favor of petitioner who was the plaintiff therein. The dispositive portion
reads: 7
"WHEREFORE, judgment is hereby rendered in favor of plaintiff
and against defendant and ordering the latter to sell to plaintiff that
portion of land owned by him and occupied by portions of plaintiff's
buildings and wall at the price of P2,000.00 per square meter and to
pay the former:
1. The sum of P44,000.00 to compensate for the losses in

materials and properties incurred by plaintiff through
thievery as a result of the destruction of its wall;
2. The sum of P7,500.00 as and by way of attorney's fees;

and

3. The costs of this suit."
Appeal was duly interposed with respondent Court, which as previously

stated, reversed and set aside the decision of the Regional Trial Court and
rendered the assailed Decision and Amended Decision. Hence, this recourse
under Rule 45 of the Rules of Court.
The Issues
The petition raises the following issues: 8
"(A)
Whether or not the respondent Court of Appeals erred in holding

the petitioner a builder in bad faith because it is 'presumed to know the
metes and bounds of his property.'
(B)
Whether or not the respondent Court of Appeals erred when it

used the amicable settlement between the petitioner and the private
respondent, where both parties agreed to the demolition of the rear
portion of the fence, as estoppel amounting to recognition by petitioner
of respondent's right over his property including the portions of the
land where the other structures and the building stand, which were not
included in the settlement.
(C)
Whether or not the respondent Court of Appeals erred in ordering

the removal of the 'structures and surrounding walls on the encroached
area' and in withdrawing its earlier ruling in its August 28, 1992
decision for the petitioner 'to pay for the value of the land occupied' by
the building, only because the private respondent has 'manifested its
choice to demolish' it despite the absence of compulsory sale where
the builder fails to pay for the land, and which 'choice' private
respondent deliberately deleted from its September 1, 1980 answer to
the supplemental complaint in the Regional Trial Court."
In its Memorandum, petitioner poses the following issues:

"A.
The time when to determine the good faith of the builder under
Article 448 of the New Civil Code, is reckoned during the period when it
was actually being built; and in a case where no evidence was
presented nor introduced as to the good faith or bad faith of the builder
at that time, as in this case, he must be presumed to be a 'builder in
good faith,' since 'bad faith cannot be presumed.' 9
B.
In a specific 'boundary overlap situation' which involves a builder

in good faith, as in this case, it is now well settled that the lot owner,
who builds on the adjacent lot is not charged with 'constructive notice'
of the technical metes and bounds contained in their torrens titles to
determine the exact and precise extent of his boundary perimeter. 10
C.
The respondent court's citation of the twin cases of Tuason & Co .

v. Lumanlan and Tuason & Co . v. Macalindong is not the 'judicial
authority' for a boundary dispute situation between adjacent torrens
titled lot owners, as the facts of the present case do not fall within nor
square with the involved principle of a dissimilar case. 11
D.
Quite contrary to respondent Uy's reasoning, petitioner Tecnogas

continues to be a builder in good faith, even if it subsequently
built/repaired the walls/other permanent structures thereon while the
case a quo was pending and even while respondent sent the petitioner
many letters/filed cases thereon. 12
D. (E.)
The amicable settlement between the parties should be

interpreted as a contract and enforced only in accordance with its
explicit terms, and not over and beyond that agreed upon; because the
courts do not have the power to create a contract nor expand its
scope. 13
E. (F.)
As a general rule, although the landowner has the option to

choose between: (1) ' buying the building built in good faith', or (2)
'selling the portion of his land on which stands the building' under
Article 448 of the Civil Code; the first option is not absolute, because an
exception thereto, once it would be impractical for the landowner to
choose to exercise the first alternative, i.e. buy that portion of the
house standing on his land, for the whole building might be rendered
useless. The workable solution is for him to select the second
alternative, namely, to sell to the builder that part of his land on which
was constructed a portion of the house." 14
Private respondent, on the other hand, argues that the petition is

"suffering from the following flaws: 15
1. It did not give the exact citations of cases decided by the
Honorable Supreme Court that allegedly contradicts the ruling of the
Hon. Court of Appeals based on the doctrine laid down in Tuason vs.
Lumanlan case citing also Tuason vs. Macalindong case (Supra).
2. Assuming that the doctrine in the alleged Co Tao vs. Chico

case is contradictory to the doctrine in Tuason vs. Lumanlan and
Tuason vs. Macalindong, the two cases being more current, the same
should prevail."
Further, private respondent contends that the following "unmistakably"

point to the bad faith of petitioner: (1) private respondent's purchase of the two
lots, "was ahead of the purchase by petitioner of the building and lot from Pariz
Industries"; (2) the declaration of the General Manager of Tecnogas that the
sale between petitioner and Pariz Industries "was not registered" because of
some problems with China Banking Corporation; and (3) the Deed of Sale in
favor of petitioner was registered in its name only in "the month of May 1973."
16
The Court's Ruling

The petition should be granted.
Good Faith or Bad Faith

Respondent Court, citing the cases of J. M. Tuason & Co ., Inc. vs. Vda. de
Lumanlan 17 and J. M. Tuason & Co ., Inc. vs. Macalindong, 18 ruled that
petitioner "cannot be considered in good faith" because as a land owner, it is
"presumed to know the metes and bounds of his own property, specially if the
same are reflected in a properly issued certificate of title. One who erroneously
builds on the adjoining lot should be considered a builder in (b)ad (f)aith, there
being presumptive knowledge of the Torrens title, the area, and the extent of
the boundaries." 19 cda
We disagree with respondent Court. The two cases it relied upon do not
support its main pronouncement that a registered owner of land has
presumptive knowledge of the metes and bounds of its own land, and is
therefore in bad faith if he mistakenly builds on an adjoining land. Aside from
the fact that those cases had factual moorings radically different from those
obtaining here, there is nothing in those cases which would suggest, however
remotely, that bad faith is imputable to a registered owner of land when a part
of his building encroaches upon a neighbor's land, simply because he is
supposedly presumed to know the boundaries of his land as described in his
certificate of title. No such doctrinal statement could have been made in those
cases because such issue was not before the Supreme Court. Quite the
contrary, we have rejected such a theory in Co Tao vs . Chico, 20 where we held
that unless one is versed in the science of surveying, "no one can determine
the precise extent or location of his property by merely examining his paper
title."
There is no question that when petitioner purchased the land from Pariz
Industries, the buildings and other structures were already in existence. The
record is not clear as to who actually built those structures, but it may well be
assumed that petitioner's predecessor-in-interest, Pariz Industries, did so.
Article 527 of the Civil Code presumes good faith, and since no proof exists to
show that the encroachment over a narrow, needle-shaped portion of private
respondent's land was done in bad faith by the builder of the encroaching
structures, the latter should be presumed to have built them in good faith. 21 It
is presumed that possession continues to be enjoyed in the same character in
which it was acquired, until the contrary is proved. 22 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. 23 Hence, such good faith, by law, passed on to
Pariz's successor, petitioner in this case. Further, "(w)here one derives title to
property from another, the act, declaration, or omission of the latter, while
holding the title, in relation to the property, is evidence against the former." 24
And possession acquired in good faith does not lose this character except in
case and from the moment facts exist which show that the possessor is not
unaware that he possesses the thing improperly or wrongfully. 25 The good
faith ceases from the moment defects in the title are made known to the
possessor, by extraneous evidence or by suit for recovery of the property by
the true owner. 26
Recall that the encroachment in the present case was caused by a very
slight deviation of the erected wall (as fence) which was supposed to run in a
straight line from point 9 to point 1 of petitioner's lot. It was an error which, in
the context of the attendant facts, was consistent with good faith.
Consequently, the builder, if sued by the aggrieved landowner for recovery of
possession, could have invoked the provisions of Art. 448 of the Civil Code,
which reads:
"The owner of the land on which anything has been built, sown or
planted in good faith, shall have the right to appropriate as his own the
works, sowing or planting, after payment of the indemnity provided for
in articles 546 and 548, or to oblige the one who built or planted to pay
the price of the land, and the one who sowed, the proper rent.
However, the builder or planter cannot be obliged to buy the land if its
value is considerably more than that of the building or trees. In such
case, he shall pay reasonable rent, if the owner of the land does not
choose to appropriate the building or trees after proper indemnity. The
parties shall agree upon the terms of the lease and in case of
disagreement, the court shall fix the terms thereof."
The obvious benefit to the builder under this article is that, instead of
being outrightly ejected from the land, he can compel the landowner to make a
choice between the two options: (1) to appropriate the building by paying the
indemnity required by law, or (2) sell the land to the builder. The landowner
cannot refuse to exercise either option and compel instead the owner of the
building to remove it from the land. 27
The question, however, is whether the same benefit can be invoked by

petitioner who, as earlier stated, is not the builder of the offending structures
but possesses them as buyer.
We answer such question in the affirmative.
In the first place, there is no sufficient showing that petitioner was aware
of the encroachment at the time it acquired the property from Pariz Industries.
We agree with the trial court that various factors in evidence adequately show
petitioner's lack of awareness thereof. In any case, contrary proof has not
overthrown the presumption of good faith under Article 527 of the Civil Code,
as already stated, taken together with the disputable presumptions of the law
on evidence. These presumptions state, under Section 3 (a) of Rule 131 of the
Rules of Court, that the person is innocent of a crime or wrong; and under
Section 3 (ff) of Rule 131, that the law has been obeyed. In fact, private
respondent Eduardo Uy himself was unaware of such intrusion into his property
until after 1971 when he hired a surveyor, following his purchase of another
adjoining lot, to survey all his newly acquired lots. Upon being apprised of the
encroachment, petitioner immediately offered to buy the area occupied by its
building — a species of conduct consistent with good faith.
In the second place, upon delivery of the property by Pariz Industries, as
seller, to the petitioner, as buyer, the latter acquired ownership of the property.
Consequently and as earlier discussed, petitioner is deemed to have stepped
into the shoes of the seller in regard to all rights of ownership over the
immovable sold, including the right to compel the private respondent to
exercise either of the two options provided under Article 448 of the Civil Code.
Estoppel
Respondent Court ruled that the amicable settlement entered into
between petitioner and private respondent estops the former from questioning
the private respondent's "right" over the disputed property. It held that by
undertaking to demolish the fence under said settlement, petitioner recognized
private respondent's right over the property, and "cannot later on compel"
private respondent "to sell to it the land since" private respondent "is under no
obligation to sell." 28
We do not agree. Petitioner cannot be held in estoppel for entering into
the amicable settlement, the pertinent portions of which read: 29
"That the parties hereto have agreed that the rear portion of the
fence that separates the property of the complainant and respondent
shall be demolished up to the back of the building housing the
machineries which demolision (sic) shall be undertaken by the
complainant at anytime.
That the fence which serve(s) as a wall housing the electroplating

machineries shall not be demolished in the mean time which portion
shall be subject to negotiation by herein parties."
From the foregoing, it is clear that petitioner agreed only to the

demolition of a portion of the wall separating the adjoining properties of the
parties — i.e. "up to the back of the building housing the machineries." But that
portion of the fence which served as the wall housing the electro-plating
machineries was not to be demolished. Rather, it was to "be subject to
negotiation by herein parties." The settlement may have recognized the
ownership of private respondent but such admission cannot be equated with
bad faith. Petitioner was only trying to avoid a litigation, one reason for entering
into an amicable settlement.
As was ruled in Osmeña vs. Commission on Audit, 30

"A compromise is a bilateral act or transaction that is expressly
acknowledged as a juridical agreement by the Civil Code and is therein
dealt with in some detail. 'A compromise,' declares Article 2208 of said
Code, 'is a contract whereby the parties, by making reciprocal
concessions, avoid a litigation or put an end to one already
commenced.'
xxx xxx xxx
The Civil Code not only defines and authorizes compromises, it in

fact encourages them in civil actions. Art. 2029 states that 'The Court
shall endeavor to persuade the litigants in a civil case to agree upon
some fair compromise.' . . ."
In the context of the established facts, we hold that petitioner did not lose
its rights under Article 448 of the Civil Code on the basis merely of the fact that
some years after acquiring the property in good faith, it learned about — and
aptly recognized — the right of private respondent to a portion of the land
occupied by its building. The supervening awareness of the encroachment by
petitioner does not militate against its right to claim the status of a builder in
good faith. In fact, a judicious reading of said Article 448 will readily show that
the landowner's exercise of his option can only take place after the builder shall
have come to know of the intrusion — in short, when both parties shall have
become aware of it. Only then will the occasion for exercising the option arise,
for it is only then that both parties will have been aware that a problem exists
in regard to their property rights.
Options of Private Respondent

What then is the applicable provision in this case which private
respondent may invoke as his remedy: Article 448 or Article 450 31 of the Civil
Code?
In view of the good faith of both petitioner and private respondent, their
rights and obligations are to be governed by Art. 448. The essential fairness of
this codal provision has been pointed out by Mme. Justice Ameurfina Melencio-
Herrera, citing Manresa and applicable precedents, in the case of Depra vs.
Dumlao, 32 to wit:
"Where the builder, planter or sower has acted in good faith, a
conflict of rights arises between the owners, and it becomes necessary
to protect the owner of the improvements without causing injustice to
the owner of the land. In view of the impracticality of creating a state of
forced co-ownership, the law has provided a just solution by giving the
owner of the land the option to acquire the improvements after
payment of the proper indemnity, or to oblige the builder or planter to
pay for the land and the sower to pay the proper rent. It is the owner of
the land who is authorized to exercise the option, because his right is
older, and because, by the principle of accession, he is entitled to the
ownership of the accessory thing (3 Manresa 213; Bernardo vs.
Bataclan, 37 Off. Gaz. 1382; Co Tao vs. Chan Chico, G. R. No. 49167,
April 30, 1949; Article applied; see Cabral, et al. vs. Ibañez [S.C.] 52
Off. Gaz. 217; Marfori vs. Velasco, [C.A.] 52 Off. Gaz. 2050)."
The private respondent's insistence on the removal of the encroaching

structures as the proper remedy, which respondent Court sustained in its
assailed Decisions, is thus legally flawed. This is not one of the remedies
bestowed upon him by law. It would be available only if and when he chooses to
compel the petitioner to buy the land at a reasonable price but the latter fails to
pay such price. 33 This has not taken place. Hence, his options are limited to: (1)
appropriating the encroaching portion of petitioner's building after payment of
proper indemnity, or (2) obliging the latter to buy the lot occupied by the
structure. He cannot exercise a remedy of his own liking.

Neither is petitioner's prayer that private respondent be ordered to sell
the land 34 the proper remedy. While that was dubbed as the "more workable
solution in Grana and Torralba vs . The Court of Appeals, et al., 35 it was not the
relief granted in that case as the landowners were directed to exercise "within
30 days from this decision their option to either buy the portion of the
petitioners' house on their land or sell to said petitioners the portion of their
land on which it stands." 36 Moreover, in Grana and Torralba , the area involved
was only 87 square meters while this case involves 520 square meters 37 . In
line with the case of Depra vs. Dumlao, 38 this case will have to be remanded to
the trial court for further proceedings to fully implement the mandate of Art.
448. It is a rule of procedure for the Supreme Court to strive to settle the entire
controversy in a single proceeding leaving no root or branch to bear the seeds
of future litigation. 39
Petitioner, however, must also pay the rent for the property occupied by
its building as prescribed by respondent Court from October 4, 1979, but only
up to the date private respondent serves notice of its option upon petitioner
and the trial court; that is, if such option is for private respondent to
appropriate the encroaching structure. In such event, petitioner would have a
right of retention which negates the obligation to pay rent. 40 The rent should
however continue if the option chosen is compulsory sale, but only up to the
actual transfer of ownership.
The award of attorney's fees by respondent Court against petitioner is
unwarranted since the action appears to have been filed in good faith. Besides,
there should be no penalty on the right to litigate. 41
WHEREFORE, premises considered, the petition is hereby GRANTED and

the assailed Decision and the Amended Decision are REVERSED and SET ASIDE.
In accordance with the case of Depra vs. Dumlao, 42 this case is REMANDED to
the Regional Trial Court of Pasay City, Branch 117, for further proceedings
consistent with Articles 448 and 546 43 of the Civil Code, as follows: cdt
1. The trial court shall determine:
a) the present fair price of private respondent's 520

square-meter area of land;
b) the increase in value ("plus value") which the said area

of 520 square meters may have acquired by reason of
the existence of the portion of the building on the area;
c) the fair market value of the encroaching portion of the
building; and
d) whether the value of said area of land is considerably

more than the fair market value of the portion of the
building thereon.
2. After said amounts shall have been determined by
competent evidence, the regional trial court shall render
judgment as follows:
a) The private respondent shall be granted a period of
fifteen (15) days within which to exercise his option
under the law (Article 448, Civil Code), whether to
appropriate the portion of the building as his own by
paying to petitioner its fair market value, or to oblige
petitioner to pay the price of said area. The amounts to
be respectively paid by petitioner and private
respondent, in accordance with the option thus
exercised by written notice of the other party and to the
court, shall be paid by the obligor within fifteen (15)
days from such notice of the option by tendering the
amount to the trial court in favor of the party entitled to
receive it;
b) If private respondent exercises the option to oblige

petitioner to pay the price of the land but the latter
rejects such purchase because, as found by the trial
court, the value of the land is considerably more than
that of the portion of the building, petitioner shall give
written notice of such rejection to private respondent
and to the trial court within fifteen (15) days from
notice of private respondent's option to sell the land. In
that event, the parties shall be given a period of fifteen
(15) days from such notice of rejection within which to
agree upon the terms of the lease, and give the trial
court formal written notice of the agreement and its
provisos. If no agreement is reached by the parties, the
trial court, within fifteen (15) days from and after the
termination of the said period fixed for negotiation,
shall then fix the terms of the lease provided that the
monthly rental to be fixed by the Court shall not be less
than two thousand pesos (P2,000.00) per month,
payable within the first five (5) days of each calendar
month. The period for the forced lease shall not be
more than two (2) years, counted from the finality of
the judgment, considering the long period of time since
1970 that petitioner has occupied the subject area. The
rental thus fixed shall be increased by ten percent
(10%) for the second year of the forced lease. Petitioner
shall not make any further constructions or
improvements on the building. Upon expiration of the
two-year period, or upon default by petitioner in the
payment of rentals for two (2) consecutive months,
private respondent shall be entitled to terminate the
forced lease, to recover his land, and to have the
portion of the building removed by petitioner or at
latter's expense. The rentals herein provided shall be
tendered by petitioner to the trial court for payment to
private respondent, and such tender shall constitute
evidence of whether or not compliance was made
within the period fixed by the said court.
c) In any event, petitioner shall pay private respondent an
amount computed at two thousand pesos (P2,000.00)
per month as reasonable compensation for the
occupancy of private respondent's land for the period
counted from October 4, 1979, up to the date private
respondent serves notice of its option to appropriate
the encroaching structures, otherwise up to the actual
transfer of ownership to petitioner or, in case a forced
lease has to be imposed, up to the commencement
date of the forced lease referred to in the preceding
paragraph;
d) The periods to be fixed by the trial court in its decision
shall be non-extendible, and upon failure of the party
obliged to tender to the trial court the amount due to
the obligee, the party entitled to such payment shall be
entitled to an order of execution for the enforcement of
payment of the amount due and for compliance with
such other acts as may be required by the prestation
due the obligee.
No costs.
SO ORDERED.
Narvasa, C .J ., Davide, Jr., Melo and Francisco, JJ ., concur.
Footnotes
1. Rollo , pp. 10-17.

2. Special Seventeenth Division composed of J. Antonio M. Martinez, ponente,
and JJ. Serafin V.C. Guingona and Salome A. Montoya, concurring.
3. Rollo , pp. 16-17.

4. Ibid., pp. 20-21.
5. Ibid., pp. 11-12.
6. Presided by Judge Leonardo M. Rivera.
7. Rollo , p. 10.
8. Ibid., pp. 106-107.
9. Ibid., p. 392.
10. Ibid., p. 399.
11. Ibid., p. 402.
12 Ibid., p. 410.
13. Ibid., p. 416.
14. Ibid., p. 423.
15. Ibid., p. 247.
16. Ibid., pp. 253-255.
17. 23 SCRA 230, April 26, 1968.
18. 6 SCRA 938, December 29, 1962.

19. Rollo , p. 14.
20. 83 Phil. 543 (1949).
21. U.S. vs. Rapiñan, 1 Phil. 294, 296 (1902); City of Manila vs. del Rosario, 5
Phil. 277, 231 (1905); Gabriel , et al. vs. Bartolome, et al., 7 Phil. 699, 706
(1907); Sideco vs. Pascua , 13 Phil. 342, 344 (1909); Arriola vs . Gomez De la
Serna , 14 Phil. 627, 629 (1909); Cea vs. Villanueva, 18 Phil. 538, 542 (1911);
Bondad vs. Bondad, 34 Phil. 232, 233 (1916); Serra vs. National Bank, 45
Phil. 907 (1924); Escritor vs. Intermediate Appellate Court, 155 SCRA 577,
583, November 12, 1987.
22. Article 529 of the Civil Code.
23. Pleasantville Development Corporation vs. Court of Appeals, 253 SCRA 10,
18, February 1, 1996.
24. Robleza vs . Court of Appeals, 174 SCRA 354, 365, June 28, 1989 citing
Section 28, Rule 130, Rules of Court.

26 Ortiz vs. Kayanan, 92 SCRA 146, 159, July 30, 1979 citing Article 528, Civil
Code.
27. Ignacio vs. Hilario, 76 Phil. 605 (1946); Sarmiento vs . Agana, 129 SCRA
122, April 30, 1984.
28. Rollo , p. 14.

29. Original Records, p. 179.
30. 238 SCRA 463, 470-471, November 29, 1994.

31. Article 450. The owner of the land on which anything has been built,
planted or sown in bad faith may demand the demolition of the work, or that
the planting or sowing be removed, in order to replace things in their former
condition at the expense of the person who built, planted or sowed; or he
may compel the builder or planter to pay the price of the land, and the sower
the proper rent.
32. 136 SCRA 475, 483, May 16, 1985.
33. Ignacio vs. Hilario, supra. In Sarmiento vs . Agana (129 SCRA 122, 126, April
30, 1984), it was held that:

"The owner of the building erected in good faith on a land owned by
another, is entitled to retain the possession of the land until he is paid the
value of his building, under Article 453 (now Article 546). The owner of the
land, upon the other hand, has the option, under Article 361 (now Article
448), either to pay for the building or to sell his land to the owner of the
building. But he cannot, as respondents here did, refuse both to pay for the
building and to sell the land and compel the owner of the building to remove
it from the land where it is erected. He is entitled to such remotion only
when, after having chosen to sell his land, the other party fails to pay for the
same."
34. Rollo , pp. 423-426.
35. 109 Phil. 260, 264 (1960).
36. at p. 265.
37. In view of the compromise agreement, the encroaching wall was torn down.
As explained in private respondent's Memorandum, the area encroached by
petitioner's building is only 520 square meters, no longer the original 770
referred to in the statement of facts narrated by the two lower courts. ( Rollo ,
p. 467).
38. Supra.
39. Heirs of Crisanta Y . Gabriel-Almoradie vs. Court of Appeals, 229 SCRA 15,
29, January 4, 1994.
40. Grana vs. Court of Appeals, supra.

41. Castillo vs . Court of Appeals, 205 SCRA 529, 537, January 27, 1992, citing
Ilocos Norte Electric Company vs. Court of Appeals, 179 SCRA 5, November 6,
1989 and Espiritu vs. Court of Appeals, 137 SCRA 50, June 19, 1985.
42. Supra, at pp. 483-486.
43. Article 546. Necessary expenses shall be refunded to every possessor; but
only the possessor in good faith may retain the thing until he has been
reimbursed therefor.
Useful expenses shall be refunded only to the possessor in good faith with
the same right of retention, the person who has defeated him in the
possession having the option of refunding the amount of the expenses or of
paying the increase in value which the thing may have acquired by reason
thereof.

THIRD DIVISION
[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.
Mirano, Mirano & Associates Law Offices for petitioner.

Abraham D. Caña for Wilson Kee.
SYLLABUS
1. CIVIL LAW; PROPERTY; OWNERSHIP; BUILDER IN GOOD FAITH; BUILDER

IN GOOD FAITH DEFINED; APPLICATION IN CASE AT BAR. — 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. 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. cdll
2. ID.; AGENCY; PETITIONER, AS PRINCIPAL, IS RESPONSIBLE FOR THE

NEGLIGENCE OF ITS AGENT, CTTEI, WHICH ACTED WITHIN THE SCOPE OF ITS
AUTHORITY. — 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. 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.
3. ID.; DAMAGES; AMOUNT OF DAMAGES TO BE AWARDED IS A FACTUAL

ISSUE WHICH SHOULD BE DETERMINED AFTER EVIDENCE IS ADDUCED. — 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.
4. LEGAL ETHICS; ATTORNEY'S FEES; THE AWARD OF ATTORNEY'S FEES
LIES WITHIN THE DISCRETION OF THE COURT AND DEPENDS UPON THE
CIRCUMSTANCES OF EACH CASE. — The award of attorney's fees lies within the
discretion of the court and depends upon the circumstances of each case. We
shall not interfere with the discretion of the Court of Appeals. Jardinico was
compelled to litigate for the protection of his interests and for the recovery of
damages sustained as a result of the negligence of petitioner's agent.
DECISION
PANGANIBAN, J : p
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
Decision 1 of the Court of Appeals 2 in CA-G.R. SP No. 11040, promulgated on
August 20, 1987. cda
By resolution dated November 13, 1995, the First Division of this Court
resolved to transfer this case (along with several others) to the Third Division.
After due deliberation and consultation, the Court assigned the writing of this
Decision to the undersigned ponente.
The Facts
The facts, as found by respondent Court, are as follows:
Edith Robillo purchased from petitioner a parcel of land designated as Lot

9, Phase II and located at Taculing Road, Pleasantville Subdivision, Bacolod City.
In 1975, respondent Eldred Jardinico bought the rights to the lot from Robillo. At
that time, Lot 9 was vacant.
Upon completing all payments, Jardinico secured from the Register of

Deeds of Bacolod City on December 19, 1978 Transfer Certificate of Title No.
106367 in his name. It was then that he discovered that improvements had
been introduced on Lot 9 by respondent Wilson Kee, who had taken possession
thereof.
It appears that on March 26, 1974, Kee bought on installment Lot 8 of the
same subdivision from C.T. Torres Enterprises, Inc. (CTTEI), the exclusive real
estate agent of petitioner. Under the Contract to Sell on Installment, Kee could
possess the lot even before the completion of all installment payments. On
January 20, 1975, Kee paid CTTEI the relocation fee of P50.00 and another
P50.00 on January 27, 1975, for the preparation of the lot plan. These amounts
were paid prior to Kee's taking actual possession of Lot 8. After the preparation
of the lot plan and a copy thereof given to Kee, CTTEI through its employee,
Zenaida Octaviano, accompanied Kee's wife, Donabelle Kee, to inspect Lot 8.
Unfortunately, the parcel of land pointed by Octaviano was Lot 9. Thereafter,
Kee proceeded to construct his residence, a store, an auto repair shop and
other improvements on the lot.
After discovering that Lot 9 was occupied by Kee, Jardinico confronted

him. The parties tried to reach an amicable settlement, but failed.

On January 30, 1981, Jardinico's lawyer wrote Kee, demanding that the
latter remove all improvements and vacate Lot 9. When Kee refused to vacate
Lot 9, Jardinico filed with the Municipal Trial Court in Cities, Branch 3, Bacolod
City (MTCC), a complaint for ejectment with damages against Kee.
Kee, in turn, filed a third-party complaint against petitioner and CTTEI.
The MTCC held that the erroneous delivery of Lot 9 to Kee was
attributable to CTTEI. It further ruled that petitioner and CTTEI could not
successfully invoke as a defense the failure of Kee to give notice of his intention
to begin construction required under paragraph 22 of the Contract to Sell on
Installment and his having built a sari-sari store without the prior approval of
petitioner required under paragraph 26 of said contract, saying that the
purpose of these requirements was merely to regulate the type of
improvements to be constructed on the lot. 3
However, the MTCC found that petitioner had already rescinded its
contract with Kee over Lot 8 for the latter's failure to pay the installments due,
and that Kee had not contested the rescission. The rescission was effected in
1979, before the complaint was instituted. The MTCC concluded that Kee no
longer had any right over the lot subject of the contract between him and
petitioner. Consequently, Kee must pay reasonable rentals for the use of Lot 9,
and, furthermore, he cannot claim reimbursement for the improvements he
introduced on said lot.
The MTCC thus disposed:

"IN VIEW OF ALL THE FOREGOING, judgment is hereby rendered
as follows:
1. Defendant Wilson Kee is ordered to vacate the premises of Lot

9, covered by TCT No. 106367 and to remove all structures and
improvements he introduced thereon;
2. Defendant Wilson Kee is ordered to pay to the plaintiff rentals

at the rate of P15.00 a day computed from the time this suit was filed
on March 12, 1981 until he actually vacates the premises. This amount
shall bear interests (sic ) at the rate of 12 per cent (sic ) per annum .
3. Third-Party Defendant C.T. Torres Enterprises, Inc. and

Pleasantville Subdivision are ordered to pay the plaintiff jointly and
severally the sum of P3,000.00 as attorney's fees and P700.00 as cost
and litigation expenses." 4
On appeal, the Regional Trial Court, Branch 48, Bacolod City (RTC) ruled
that petitioner and CTTEI were not at fault or were not negligent, there being no
preponderant evidence to show that they directly participated in the delivery of
Lot 9 to 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
CITEI, and that such wrong delivery was likewise imputable to its principal,
petitioner herein. The appellate court also ruled that the award of rentals was
without basis.
Thus, the Court of Appeals disposed:

"WHEREFORE, the petition is GRANTED, the appealed decision is
REVERSED, and judgment is rendered as follows:
1. Wilson Kee is declared a builder in good faith with respect to the

improvements he introduced on Lot 9, and is entitled to the
rights granted him under Articles 448, 546 and 548 of the New
Civil Code.
2. Third-party defendants C.T. Torres Enterprises, Inc. and

Pleasantville Development Corporation are solidarily liable under
the following circumstances:
a. If Eldred Jardinico decides to appropriate the

improvements and, thereafter, remove these
structures, the third-party defendants shall answer for
all demolition expenses and the value of the
improvements thus destroyed or rendered useless;
b. If Jardinico prefers that Kee buy the land, the third-party

defendants shall answer for the amount representing
the value of Lot 9 that Kee should pay to Jardinico.
3. Third-party defendants C.T. Torres Enterprises, Inc. and

Pleasantville Development Corporation are ordered to pay in
solidum the amount of P3,000.00 to Jardinico as attorney's fees,
as well as litigation expenses.
4. The award of rentals to Jardinico is dispensed with.
"Furthermore, the case is REMANDED to the court of origin for

the determination of the actual value of the improvements and the
property (Lot 9), as well as for further proceedings in conformity with
Article 448 of the New Civil Code." 7
Petitioner then filed the instant petition against Kee, Jardinico and CTTEI.
The Issues
The petition submitted the following grounds to justify a review of the
respondent Court's Decision, as follows:
"1. The Court of Appeals has decided the case in a way probably
not in accord with law or the the (sic ) applicable decisions of the
Supreme Court on third-party complaints, by ordering third-party
defendants to pay the demolition expenses and/or price of the land;
"2. The Court of Appeals has so far departed from the accepted
course of judicial proceedings, by granting to private respondent Kee
the rights of a builder in good faith in excess of what the law provides,
thus enriching private respondent Kee at the expense of the petitioner;
"3. In the light of the subsequent events or circumstances which

changed the rights of the parties, it becomes imperative to set aside or
at least modify the judgment of the Court of Appeals to harmonize with
justice and the facts;
"4. Private respondent Kee in accordance with the findings of

facts of the lower court is clearly a builder in bad faith, having violated
several provisions of the contract to sell on installments;
"5. The decision of the Court of Appeals, holding the principal,

Pleasantville Development Corporation (liable) for the acts made by
the agent in excess of its authority is clearly in violation of the
provision of the law; cdlex
"6. The award of attorney's fees is clearly without basis and is

equivalent to putting a premium in ( sic ) court litigation."
From these grounds, the issues could be re-stated as follows:
(1) Was Kee a builder in good faith?
(2) What is the liability, if any, of petitioner and its agent, C.T.
Torres Enterprises, Inc.? and
(3) Is the award of attorney's fees proper?
The First Issue: Good Faith

Petitioner contends that the Court of Appeals erred in reversing the RTC's
ruling that Kee was a builder in bad faith.
Petitioner fails to persuade this Court to abandon the findings and
conclusions of the Court of Appeals that Kee was a builder in good faith. We
agree with the following observation of the Court of Appeals:
"The roots of the controversy can be traced directly to the errors
committed by CTTEI, when it pointed the wrong property to Wilson Kee
and his wife. It is highly improbable that a purchaser of a lot would
knowingly and willingly build his residence on a lot owned by another,
deliberately exposing himself and his family to the risk of being ejected
from the land and losing all improvements thereon, not to mention the
social humiliation that would follow.
"Under the circumstances, Kee had acted in the manner of a

prudent man in ascertaining the identity of his property. Lot 8 is
covered by Transfer Certificate of Title No. T-69561, while Lot 9 is
identified in Transfer Certificate of Title No. T-106367. Hence, under
the Torrens system of land registration, Kee is presumed to have
knowledge of the metes and bounds of the property with which he is
dealing. . . .
xxx xxx xxx
"But as Kee is a layman not versed in the technical description of

his property, he had to find a way to ascertain that what was described
in TCT No. 69561 matched Lot 8. Thus, he went to the subdivision
developer's agent and applied and paid for the 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. Lex Libris
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. LLpr
The rule is that the principal is responsible for the acts of the agent, done
within the scope of his authority, and should bear the damage caused to third
persons. 14 On the other hand, the agent who exceeds his authority is
personally liable for the damage. 15
CTTEI was acting within its authority as the sole real estate
representative of petitioner when it made the delivery to Kee. In acting
within its scope of authority, it was, however, negligent. It is this negligence
that is the basis of petitioner's liability, as principal of CTTEI, per Articles
1909 and 1910 of the Civil Code.
Pending resolution of the case before the Court of Appeals, Jardinico
and Kee on July 24, 1987 entered into a deed of sale, wherein the former
sold Lot 9 to Kee. Jardinico and Kee did not inform the Court of Appeals of
such deal.
The deed of sale contained the following provision:

"1. That Civil Case No. 3815 entitled "Jardinico vs. Kee" which is
now pending appeal with the Court of Appeals, regardless of the
outcome of the decision shall be mutually disregarded and shall not be
pursued by the parties herein and shall be considered dismissed and
without effect whatsoever;" 16
Kee asserts though that the "terms and conditions in the said deed of
sale are strictly for the parties thereto" and that "(t)here is no waiver made
by either of the parties in said deed of whatever favorable judgment or
award the honorable respondent Court of Appeals may make in their favor
against herein petitioner Pleasantville Development Corporation and/or
private respondent C.T. Torres Enterprises, Inc." 17
Obviously, the deed of sale can have no effect on the liability of

petitioner. As we have earlier stated, petitioner's liability is grounded on the
negligence of its agent. On the other hand, what the deed of sale regulates
are the reciprocal rights of Kee and Jardinico; it stressed that they had
reached an agreement independent of the outcome of the case.
Petitioner further assails the following holding of the Court of Appeals:

"2. Third-party defendants C.T. Torres Enterprises, Inc. and
Pleasantville Development Corporation are solidarily liable under the
following circumstances:
"a. If Eldred Jardinico decides to appropriate the improvements

and, thereafter, remove these structures, the third-party
defendants shall answer for all demolition expenses and the
value of the improvements thus destroyed or rendered
useless;
"b. If Jardinico prefers that Kee buy the land, the third-party
defendants shall answer for the amount representing the
value of Lot 9 that Kee should pay to Jardinico." 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. cda
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 law (i.e., Arts.
448, 546 and 548 of the Civil Code). It was error for the Court of Appeals to
make a "slight modification" in the application of such law, on the ground of
"equity". At any rate, as it stands now, Kee and Jardinico have amicably
settled through their deed of sale their rights and obligations with regards to
Lot 9. Thus, we delete items 2 (a) and (b) of the dispositive portion of the
Court of Appeals' Decision [as reproduced above] holding petitioner and
CTTEI solidarily liable.
The Third Issue: Attorney's Fees
The MTCC awarded Jardinico attorney's fees and costs in the amount of
P3,000.00 and P700.00, respectively, as prayed for in his complaint. The RTC
deleted the award, consistent with its ruling that petitioner was without fault
or negligence. The Court of Appeals, however, reinstated the award of
attorney's fees after ruling that petitioner was liable for its agent's
negligence.
The award of attorney's fees lies within the discretion of the court and
depends upon the circumstances of each case. 19 We shall not interfere with
the discretion of the Court of Appeals. Jardinico was compelled to litigate for
the protection of his interests and for the recovery of damages sustained as
a result of the negligence of petitioner's agent. 20
In sum, we rule that Kee is a builder in good faith. The disposition of
the Court of Appeals that Kee "is entitled to the rights granted him under the
Articles 448, 546 and 548 of the New Civil Code" is deleted, in view of the
deed of sale entered into by Kee and Jardinico, which deed now governs the
rights of Jardinico and Kee as to each other. There is also no further need, as
ruled by the appellate Court, to remand the case to the court of origin "for
determination of the actual value of the improvements and the property (Lot
9), as well as for further proceedings in conformity with Article 448 of the
New Civil Code."
WHEREFORE, the petition is partially GRANTED. The Decision of the Court

of Appeals is hereby MODIFIED as follows:
(1) Wilson Kee is declared a builder in good faith;
(2) Petitioner Pleasantville Development Corporation and
respondent C.T. Torres Enterprises, Inc. are declared
solidarily liable for damages due to negligence; however,
since the amount and/or extent of such damages was proven
during the trial, the same cannot now be quantified and
awarded;
(3) Petitioner Pleasantville Development Corporation and

respondent C.T. Torres Enterprises, Inc. are ordered to pay in
solidum the amount of P3,000.00 to Jardinico as attorney's
fees, as well as litigation expenses; and
(4) The award of rentals to Jardinico is dispensed with.
SO ORDERED.
Narvasa, C.J., Davide, Jr., and Melo, JJ., concur.

Francisco, J., took no part. Member of the division in the CA which
rendered the assailed decision.
Footnotes
1. Rollo, pp. 37–46
2. Eleventh Division, composed of J. Alfredo L. Benipayo, ponente, and JJ. Lorna S.

Lombos-dela Fuente, chair, and Ricardo J. Francisco, member.
3. Rollo, pp. 28–29.
4. Rollo, pp. 30–31.
5. Rollo, p. 34.
6. Rollo, p. 35.
7. Rollo, pp. 45–46.
8. Rollo, pp. 43–44.
9. Floreza vs. Evangelista, 96 SCRA 130 (February 21, 1980); cf. Art. 526, Civil
Code of the Philippines.
10. Art. 527, Civil Code of the Philippines.
11. Rollo, p. 17.
12. Art. 6, Civil Code of the Philippines; see Cañete vs. San Antonio Agro-Industrial
Development Corp., 113 SCRA 723 (April 27, 1982).
13. Rollo, p. 19.
14. Lopez vs. Alvendia, 120 Phil. 1424 (December 24, 1964); cf. Art. 1910, Civil
Code.

15. BA Finance Corporation vs. Court of Appeals, 211 SCRA 112 (July 3, 1992); Art.
1897, Civil Code.
16. Rollo, p. 47
17. Rollo, p. 61.
18. Rollo, pp. 9–10.

19. Universal Shipping Lines, Inc. vs. Intermediate Appellate Court, 188 SCRA 170
(July 31, 1990).
20. Art. 2208, Civil Code of the Philippines.

FIRST DIVISION
[G.R. No. 215820. March 20, 2017.]
ERLINDA DINGLASAN DELOS SANTOS and her daughters,

namely, VIRGINIA, AUREA, and BINGBING, all surnamed
DELOS SANTOS, petitioners, vs. ALBERTO ABEJON and the
estate of TERESITA DINGLASAN ABEJON, respondents.
DECISION
PERLAS-BERNABE, J : p
Assailed in this petition for review on certiorari 1 are the Decision 2

dated March 19, 2014 and the Resolution 3 dated December 11, 2014 of the
Court of Appeals (CA) in CA-G.R. CV No. 96884, which affirmed with
modification the Decision 4 dated August 25, 2010 of the Regional Trial Court
of Makati City, Branch 132 (RTC), and accordingly, ordered petitioners
Erlinda Dinglasan-Delos Santos (Erlinda) and her daughters, Virginia, Aurea,
and Bingbing, all surnamed Delos Santos (petitioners), to pay respondents
Alberto Abejon and the estate of his spouse, Teresita Dinglasan-Abejon
(Teresita; collectively, respondents) the aggregate amount of P2,200,000.00
plus legal interest, among others.
The Facts
The instant case arose from a Complaint for Cancellation of Title with
collection of sum of money 5 filed by respondents against petitioners before
the RTC. The complaint alleged that Erlinda and her late husband Pedro
Delos Santos (Pedro) borrowed the amount of P100,000.00 from the former's
sister, Teresita, as evidenced by a Promissory Note dated April 8, 1998. As
security for the loan, Erlinda and Pedro mortgaged their property consisting
of 43.50 square meters situated at 2986 Gen. Del Pilar Street, Bangkal,
Makati City covered by Transfer Certificate of Title (TCT) No. 131753 (subject
land) which mortgage was annotated on the title. After Pedro died, Erlinda
ended up being unable to pay the loan, and as such, agreed to sell the
subject land to Teresita for P150,000.00, or for the amount of the loan plus
an additional P50,000.00. On July 8, 1992, they executed a Deed of Sale and
a Release of Mortgage, and eventually, TCT No. 131753 was cancelled and
TCT No. 180286 was issued in the name of "Teresita, Abejon[,] married to
Alberto S. Abejon." Thereafter, respondents constructed a three (3)-storey
building worth P2,000,000.00 on the subject land. Despite the foregoing,
petitioners refused to acknowledge the sale, pointing out that since Pedro
died in 1989, his signature in the Deed of Sale executed in 1992 was
definitely forged. As such, respondents demanded from petitioners the
amounts of P150,000.00 representing the consideration for the sale of the
subject land and P2,000,000.00 representing the construction cost of the
three (3)-storey building, but to no avail. Thus, respondents filed the instant
case. 6
In defense, petitioners denied any participation relative to the spurious
Deed of Sale, and instead, maintained that it was Teresita who fabricated
the same and caused its registration before the Register of Deeds of Makati
City. They likewise asserted that Erlinda and Pedro never sold the subject
land to Teresita for P150,000.00 and that they did not receive any demand
for the payment of P100,000.00 representing the loan, as well as the
P2,000,000.00 representing the construction cost of the building. Finally,
they claimed that the improvements introduced by Teresita on the subject
land were all voluntary on her part. 7
During the pre-trial proceedings, the parties admitted and/or stipulated
that: (a) the subject land was previously covered by TCT No. 131753 in the
name of Erlinda and Pedro, but such title was cancelled and replaced by TCT
No. 180286 in the name of Teresita; (b) the Deed of Sale and Release of
Mortgage executed on July 8, 1992 were forged, and thus, should be
cancelled; (c) in view of said cancellations, TCT No. 180286 should likewise
be cancelled and TCT No. 131753 should be reinstated; (d) from the time
when the spurious Deed of Sale was executed until the present, petitioners
have been the actual occupants of the subject land as well as all
improvements therein, including the three (3)-storey building constructed by
respondents; and (e) the P100,000.00 loan still subsists and that
respondents paid for the improvements being currently occupied by
petitioners, i.e., the three (3)-storey building. In view of the foregoing
stipulations and admissions, the RTC limited the issue as to who
among the parties should be held liable for damages and attorney's
fees. 8 CAIHTE
The RTC Ruling

In a Decision 9 dated August 25, 2010, the RTC: (a) declared the Deed
of Sale null and void; (b) ordered the cancellation of TCT No. 180286 and the
reinstatement of TCT No. 131753; and (c) ordered petitioners to pay
respondents the following amounts: (1) P100,000.00 plus twelve percent
(12%) per annum computed from July 8, 1992 until fully paid representing
the loan obligation plus legal interest; (2) P2,000,000.00 representing the
construction cost of the three (3)-storey building; and (3) another
P100,000.00 as attorney's fees and litigation expenses. 10
The RTC ruled that respondents should be reimbursed for the amount
of the loan, as well as the expenses incurred for the construction of the three
(3)-storey building in view of petitioners' categorical admission of their
indebtedness to her, as well as the construction of the building from which
they derived benefit being the actual occupants of the property. 11 Finally, it
found that respondents are entitled to attorney's fees for being forced to
litigate. 12
Aggrieved, petitioners appealed to the CA. 13
The CA Ruling
In a Decision 14 dated March 19, 2014, the CA affirmed the RTC ruling
with modifications: (a) cancelling the Release of Mortgage; (b) adjusting the
twelve percent (12%) per annum interest imposed on the loan obligation, in
that it should be computed from November 25, 1997, or from the filing of the
instant complaint; and (c) imposing a six percent (6%) interest per annum
on the construction cost of the three (3)-storey building from the finality of
the decision until its full satisfaction. 15
Anent the loan obligation, the CA ruled that since petitioners admitted
their indebtedness to Teresita during the pre-trial proceedings, respondents
should be allowed to recover the amount representing the same, including
the appropriate interest. In this relation, the CA opined that while it is true
that the loan obligation was contracted by Erlinda and Pedro and not by their
children, the children (who joined Erlinda in this case as petitioners) may still
be held liable for such obligation having inherited the same from Pedro upon
the latter's death. 16
As to the construction cost of the three (3)-storey building, the CA held
that in view of petitioners' admission that they knew of and allowed said
construction of the building, and thereafter, started occupying the same for
more than two (2) decades up to the present, it is only proper that they
reimburse respondents of the cost of such building. 17
Undaunted, petitioners moved for reconsideration, 18 which was,
however, denied in a Resolution 19 dated December 11, 2014; hence, this
petition.
The Issue before the Court
The core issue for the Court's resolution is whether or not the CA
correctly held that petitioners should be held liable to respondents in the
aggregate amount of P2,200,000.00, consisting of the loan obligation of
P100,000.00, the construction cost of the three (3)-storey building in the
amount of P2,000,000.00, and attorney's fees and costs of suit amounting to
P100,000.00.
The Court's Ruling
The petition is partly meritorious.

At the outset, it must be emphasized that a pre-trial is a procedural
device intended to clarify and limit the basic issues raised by the parties and
to take the trial of cases out of the realm of surprise and maneuvering. More
significantly, a pre-trial has been institutionalized as the answer to the
clarion call for the speedy disposition of cases. Hailed as the most important
procedural innovation in Anglo-Saxon justice in the nineteenth century, it
paves the way for a less cluttered trial and resolution of the case. It is, thus,
mandatory for the trial court to conduct pre-trial in civil cases in order to
realize the paramount objective of simplifying, abbreviating, and expediting
trial. 20
In the case at bar, it must be reiterated that during the pre-trial
proceedings, the parties agreed/stipulated that: (a) the subject land was
previously covered by TCT No. 131753 in the name of Erlinda and Pedro, but
such title was cancelled and replaced by TCT No. 180286 in the name of
Teresita; (b) the Deed of Sale and Release of Mortgage both executed on
July 8, 1992 were forged, and thus, should be cancelled; (c) in view of said
cancellations, TCT No. 180286 should likewise be cancelled and TCT No.
131753 should be reinstated; (d) from the time when the spurious deed of
sale was executed until the present, petitioners have been the actual
occupants of the subject land as well as all improvements therein, including
the three (3)-storey building constructed by respondents; and (e) the
P100,000.00 loan still subsists and that respondents paid for the
improvements being currently occupied by petitioners, i.e., the three (3)-
storey building. 21 As such, the parties in this case are bound to honor the
admissions and/or stipulations they made during the pre-trial. 22
Thus, in view of the foregoing admissions and/or stipulations, there is
now a need to properly determine to whom the following liabilities should
devolve: (a) the P100,000.00 loan obligation; (b) the P50,000.00 extra
consideration Teresita paid for the sale of the subject land, which was
already declared void — a matter which the RTC and the CA completely
failed to resolve; and (c) the P2,000,000.00 construction cost of the three
(3)-storey building that was built on the subject land.
I.
While petitioners admitted the existence of the P100,000.00 loan

obligation as well as respondents' right to collect on the same, it does not
necessarily follow that respondents should collect the loan amount from
petitioners, as concluded by both the RTC and the CA. It must be pointed out
that such loan was contracted by Erlinda, who is only one (1) out of the four
(4) herein petitioners, and her deceased husband, Pedro, during the latter's
lifetime and while their marriage was still subsisting. 23 As they were married
before the effectivity of the Family Code of the Philippines 24 and absent any
showing of any pre-nuptial agreement between Erlinda and Pedro, it is safe
to conclude that their property relations were governed by the system of
conjugal partnership of gains. Hence, pursuant to Article 121 25 of the Family
Code, the P100,000.00 loan obligation, including interest, if any, is
chargeable to Erlinda and Pedro's conjugal partnership as it was a debt
contracted by the both of them during their marriage; and should the
conjugal partnership be insufficient to cover the same, then Erlinda and
Pedro (more particularly, his estate as he is already deceased) shall be
solidarily liable for the unpaid balance with their separate properties. While
the portion attributable to Pedro was not considered extinguished by his
death, it is merely passed on to his estate; and thus, his heirs, i.e., herein
petitioners, could not be held directly answerable for the same, contrary to
the CA's conclusion. 26 In sum, both the RTC and the CA erred in holding
petitioners liable to respondents for the loan obligation in the amount of
P100,000.00. HEITAD
Alternative to the collection of the said sum, respondents may also

choose to foreclose the mortgage on the subject land as the same was duly
constituted to secure the P100,000.00 loan obligation. In other words,
respondents have the option to either file a personal action for collection of
sum of money or institute a real action to foreclose on the mortgage
security. The aforesaid remedies are alternative, meaning the choice of one
will operate to preclude the other. 27
II.
It is settled that "the declaration of nullity of a contract which is voidab

initio operates to restore things to the state and condition in which they were
found before the execution thereof." 28 Pursuant to this rule, since the Deed
of Sale involving the subject land stands to be nullified in view of the parties'
stipulation to this effect, it is incumbent upon the parties to return what they
have received from said sale. Accordingly, Erlinda and the rest of petitioners
(as Pedro's heirs) are entitled to the return of the subject land as stipulated
during the pre-trial. To effect the same, the Register of Deeds of Makati City
should cancel TCT No. 180286 issued in the name of Teresita, and
thereafter, reinstate TCT No. 131753 in the name of Pedro and Erlinda and,
restore the same to its previous state before its cancellation, i.e., with the
mortgage executed by the parties annotated thereon. On the other hand,
respondents, as Teresita's successors-in-interest, are entitled to the refund
of the additional P50,000.00 consideration she paid for such sale. However,
it should be clarified that the liability for the said amount will not fall on all
petitioners, but only on Erlinda, as she was the only one among the
petitioners who was involved in the said sale. Pursuant to Nacar v. Gallery
Frames, 29 the amount of P50,000.00 shall be subjected to legal interest of
six percent (6%) per annum from the finality of this Decision until fully paid.
30
III.
As correctly argued by petitioners, it is more accurate to apply31 the

rules on accession with respect to immovable property, specifically with
regard to builders, planters, and sowers, 32 as this case involves a situation
where the landowner (petitioners) is different from the owner of the
improvement built therein, i.e., the three (3)-storey building (respondents).
Thus, there is a need to determine whether petitioners as landowners on the
one hand, and respondents on the other, are in good faith or bad faith.
The terms builder, planter, or sower in good faith as used in reference
to Article 448 of the Civil Code, refers to one who, not being the owner of the
land, builds, plants, or sows on that land believing himself to be its owner
and unaware of the defect in his title or mode of acquisition. "The essence of
good faith lies in an honest belief in the validity of one's right, ignorance of a
superior claim, and absence of intention to overreach another." 33 On the
other hand, bad faith may only be attributed to a landowner when the act of
building, planting, or sowing was done with his knowledge and without
opposition on his part. 34
In this case, it bears stressing that the execution of the Deed of Sale
involving the subject land was done in 1992. However, and as keenly
pointed out by Justice Alfredo Benjamin S. Caguioa during the deliberations
of this case, Teresita was apprised of Pedro's death as early as 1990 when
she went on a vacation in the Philippines. 35 As such, she knew all along that
the aforesaid Deed of Sale — which contained a signature purportedly
belonging to Pedro, who died in 1989, or three (3) years prior to its execution
— was void and would not have operated to transfer any rights over the
subject land to her name. Despite such awareness of the defect in their title
to the subject land, respondents still proceeded in constructing a three (3)-
storey building thereon. Indubitably, they should be deemed as builders in
bad faith.
On the other hand, petitioners knew of the defect in the execution of
the Deed of Sale from the start, but nonetheless, still acquiesced to the
construction of the three (3)-storey building thereon. Hence, they should
likewise be considered as landowners in bad faith.
In this relation, Article 453 of the Civil Code provides that where both
the landowner and the builder, planter, or sower acted in bad faith, they
shall be treated as if both of them were in good faith, viz.:
Article 453. If there was bad faith, not only on the part of
the person who built, planted or sowed on the land of another, but
also on the part of the owner of such land, the rights of one and the
other shall be the same as though both had acted in good faith.
It is understood that there is bad faith on the part of the
landowner whenever the act was done with his knowledge and
without opposition on his part.
Whenever both the landowner and the builder/planter/sower are in
good faith (or in bad faith, pursuant to the afore-cited provision), the
landowner is given two (2) options under Article 448 36 of the Civil Code,
namely: (a) he may appropriate the improvements for himself after
reimbursing the buyer (the builder in good faith) the necessary and useful
expenses under Articles 546 37 and 548 38 of the Civil Code; or (b) he may
sell the land to the buyer, unless its value is considerably more than that of
the improvements, in which case, the buyer shall pay reasonable rent. 39
Applying the aforesaid rule in this case, under the first option,
petitioner may appropriate for themselves the three (3)-storey building on
the subject land after payment of the indemnity provided for in Articles 546
and 548 of the Civil Code, as applied in existing jurisprudence. Under this
option, respondents would have a right of retention over the three (3)-storey
building as well as the subject land until petitioners complete the
reimbursement. Under the second option, petitioners may sell the subject
land to respondents at a price equivalent to the current market value
thereof. However, if the value of the subject land is considerably more than
the value of the three (3)-storey building, respondents cannot be compelled
to purchase the subject land. Rather, they can only be obliged to pay
petitioners reasonable rent. 40
Thus, following prevailing jurisprudence, the instant case is remanded
to the court a quo for the purpose of determining matters necessary for the
proper application of Articles 448 and 453, in relation to Articles 546 and 548
of the Civil Code, 41 as applied in existing jurisprudence.
IV.
Finally, anent the issue on attorney's fees, the general rule is that the
same cannot be recovered as part of damages because of the policy that no
premium should be placed on the right to litigate. They are not to be
awarded every time a party wins a suit. 42 The power of the court to award
attorney's fees under Article 2208 43 of the Civil Code demands factual,
legal, and equitable justification. In this case, the Court finds no justification
for the award of attorney's fees to either party. Accordingly, any award for
attorney's fees made by the courts a quo must be deleted. ATICcS
WHEREFORE, the petition is PARTIALLY GRANTED . The Decision

dated March 19, 2014 and the Resolution dated December 11, 2014 of the
Court of Appeals in CA-G.R. CV No. 96884 are hereby AFFIRMED with
MODIFICATIONS as follows:
(a) The Deed of Sale and the Release of Mortgage both dated July
8, 1992 are declared NULL and VOID;
(b) The Register of Deeds of Makati City is ordered to CANCEL
Transfer Certificate of Title No. 180286 in the name of Teresita D. Abejon,
married to Alberto S. Abejon, and REINSTATE Transfer Certificate of Title
No. 131753 in the name of Pedro Delos Santos and Erlinda Dinglasan-Delos
Santos, and restore the same to its previous state before its cancellation, i.e.,
with the mortgage executed by the parties annotated thereon; and
(c) The entire fourth paragraph 44 of the dispositive portion of the
Decision dated March 19, 2014 of the Court of Appeals is hereby SET ASIDE,
and in lieu thereof:
I. The P100,000.00 loan obligation is DECLARED to be the liability
of the conjugal partnership of petitioner Erlinda Dinglasan Delos Santos
and her deceased husband Pedro Delos Santos which may be
recovered by herein respondents in accordance with this Decision;
II. Petitioner Erlinda Dinglasan Delos Santos is ORDERED to return
to respondents the amount of P50,000.00 representing the additional
consideration Teresita D. Abejon paid for in the sale, with legal interest
of six percent (6%) per annum from the finality of this Decision until
fully paid;
III. For the purpose of determining the proper indemnity for the 3-
storey building, the case is REMANDED to the Regional Trial Court of
Makati City, Branch 132 for further proceedings consistent with the
proper application of Articles 448, 453, 546, and 548 of the Civil Code,
as applied in existing jurisprudence; and
IV. The award of attorney's fees and litigation expenses in the
amount of P100,000.00 is DELETED.
SO ORDERED.
Sereno, C.J., Leonardo-de Castro, Del Castillo and Caguioa, JJ., concur.
Footnotes
1. Rollo , pp. 14-25.
2. Id. at 26-40. Penned by Associate Justice Stephen C. Cruz with Associate Justices
Magdangal M. De Leon and Eduardo B. Peralta, Jr. concurring.
3. Id. at 41-42.
4. Id. at 43-49. Penned by Judge Rommel O. Baybay.
5. Not attached to the rollo.
6. Rollo , pp. 27-28.
7. Id. at 29.
8. Id. at 29. See also id. at 45 and 48.
9. Id. at 43-49.
10. Id. at 49.
11. Id. at 48-49.
12. Id. at 49.
14. Rollo , pp. 26-40.
15. Id. at 38-39.
16. Id. at 32-38.
17. Id.
18. Id. at 50-55.
19. Id. at 41-42.
20. Parañaque Kings Enterprises, Inc. v. Santos , G.R. No. 194638, July 2, 2014, 729
SCRA 35, 47; citations omitted.
21. Rollo , p. 29. See also pp. 45 and 48.
22. See Interlining Corporation v. Philippine Trust Company , 428 Phil. 584, 589
(2002).
23. See rollo, p. 27. The Promissory Note reads:
Promissory Note
FOR VALUE RECEIVED, we, PEDRO DE LOS SANTOS and ERLINDA

DINGLASAN DE LOS SANTOS, spouses, both Filipino, of legal age, with address at
[2986 Gen. Del Pilar] Street, Bangkal, Makati, Metro Manila, hereby promise to
pay TERESITA DINGLASAN, Filipino, of legal age and with address at 7230 Alakoko
St., Honolulu, Hawaii the amount of One Hundred Thousand Pesos (P100,000.00)
with interest at the rate of twelve percent (12%) per annum on or before 31
March 1989.
It is agreed that in case of default, we shall be liable to pay, aside from the
principal amount and interest charges, penalty charges in an amount equivalent
to two percent (2%) of the principal amount per month until the entire obligation
is paid. x x x
24. Executive Order No. 209 entitled "THE FAMILY CODE OF THE PHILIPPINES,"
which, according to the Supreme Court, took effect on August 3, 1988.
25. Pertinent portions of Article 121 of the Family Code reads:
Art. 121. The conjugal partnership shall be liable for:
xxx xxx xxx
(2) All debts and obligations contracted during the marriage by the
designated administrator-spouse for the benefit of the conjugal partnership
of gains, or by both spouses or by one of them with the consent of the other;
If the conjugal partnership is insufficient to cover the foregoing liabilities, the
spouses shall be solidarily liable for the unpaid balance with their separate
properties.
26. See Stronghold Insurance Company, Inc. v. Republic-Asahi Glass Corporation ,

525 Phil. 270, 277-281 (2006). See also Genato v. Bayhon , 613 Phil. 318,
325-328 (2009).
27. See Flores v. Spouses Lindo, Jr., 664 Phil. 210, 216-217; citations omitted.
28. Development Bank of the Philippines v. CA, 319 Phil. 447, 454-455 (1995).
29. 716 Phil. 267 (2013).
30. Id. at 278-283.
31. "Equity, which has been aptly described as 'justice outside legality,' is applied
only in the absence of, and never against, statutory law or judicial rules of
procedure. Positive rules prevail over all abstract arguments based on equity
contra legem." (Cheng v. Spouses Donini , 608 Phil. 206, 216 (2009); citations
omitted)
32. See Articles 445-455 of the Civil Code.
33. See Aquino v. Aguilar, G.R No. 182754, June 29, 2015, 760 SCRA 444, 456.
34. See Article 453 of the Civil Code.
35. See rollo, p. 46.
36. Article 448 of the Civil Code reads:
Article 448. The owner of the land on which anything has been built, sown or
planted in good faith, shall have the right to appropriate as his own the
works, sowing or planting, after payment of the indemnity provided for in
Articles 546 and 548, or to oblige the one who built or planted to pay the
price of the land, and the one who sowed, the proper rent. However, the
builder or planter cannot be obliged to buy the land if its value is
considerably more than that of the building or trees. In such case, he shall
pay reasonable rent, if the owner of the land does not choose to appropriate
the building or trees after proper indemnity. The parties shall agree upon the
terms of the lease and in case of disagreement, the court shall fix the terms
thereof.
Article 546. Necessary expenses shall be refunded to every possessor; but

only the possessor in good faith may retain the thing until he has been
reimbursed therefor.
same right of retention, the person who has defeated him in the possession
having the option of refunding the amount of the expenses or of paying the
increase in value which the thing may have acquired by reason thereof.
Article 548. Expenses for pure luxury or mere pleasure shall not be refunded
to the possessor in good faith; but he may remove the ornaments with which
he has embellished the principal thing if it suffers no injury thereby, and if his
successor in the possession does not prefer to refund the amount expended.
39. See Communities Cagayan, Inc. v. Spouses Nanol , 698 Phil. 648, 663-664
(2012), citing Tuatis v. Escol, 619 Phil. 465, 482-483 (2009).
40. Id. at 665.
41. Id. at 667.
42. Vergara v. Sonkin , G.R. No. 193659, June 15, 2015, 757 SCRA 442, 457, citing
The President of the Church of Jesus Christ of Latter Day Saints v. BTL
Construction Corporation, G.R. No. 176439, January 15, 2014, 713 SCRA 455,
472-473.
43. Article 2208 of the Civil Code reads:
Article 2208. In the absence of stipulation, attorney's fees and expenses of

litigation, other than judicial costs, cannot be recovered, except:
(1) When exemplary damages are awarded;
(2) When the defendant's act or omission has compelled the plaintiff to
litigate with third persons or to incur expenses to protect his interest;
(3) In criminal cases of malicious prosecution against the plaintiff;
(4) In case of a clearly unfounded civil action or proceeding against the

plaintiff;
(5) Where the defendant acted in gross and evident bad faith in refusing to
satisfy the plaintiff's plainly valid, just and demandable claim;
(6) In actions for legal support;
(7) In actions for the recovery of wages of household helpers, laborers and
skilled workers;
(8) In actions for indemnity under workmen's compensation and employer's

liability laws;
(9) In a separate civil action to recover civil liability arising from a crime;
(10) When at least double judicial costs are awarded;
(11) In any other case where the court deems it just and equitable that
attorney's fees and expenses of litigation should be recovered.
In all cases, the attorney's fees and expenses of litigation must be
reasonable.
44. See rollo, p. 39. Paragraph 4 of the dispositive portion of the CA Decision dated
March 19, 2014 reads:
4. Defendants-appellants ([petitioners]) are liable to pay plaintiffs-appellees

([respondents]) the sum of:
a) P100,000.00 with interest at the rate of 12% per annum reckoned from
November 25, 1997, when the case was filed before the trial court until its
full satisfaction;
b) P2,000,000.00 representing the costs of the construction of the 3-storey

building with interest computed at the rate of 6% per annum from the date of
finality of this decision until its full satisfaction;
c) P100,000.00 as and for attorney's fees and litigation expenses.

THIRD DIVISION
[G.R. No. 179518. November 19, 2014.]
BANK OF THE PHILIPPINE ISLANDS, petitioner, vs. VICENTE

VICTOR C. SANCHEZ, HEIRS OF KENNETH NEREO SANCHEZ,
represented by FELISA GARCIA YAP, and HEIRS OF IMELDA
C. VDA. DE SANCHEZ, represented by VICENTE VICTOR C.
SANCHEZ, respondents.
[G.R. No. 179835. November 19, 2014.]
GENEROSO TULAGAN, HEIRS OF ARTURO MARQUEZ,

represented by ROMMEL MARQUEZ, and VARIED TRADERS
CONCEPT, INC., represented by its President and General
Manager, ANTHONY QUINA, petitioners, vs. VICENTE VICTOR
C. SANCHEZ, HEIRS OF KENNETH NEREO SANCHEZ,
represented by FELISA GARCIA YAP, and HEIRS OF IMELDA
C. VDA. DE SANCHEZ, represented by VICENTE VICTOR C.
SANCHEZ, JESUS V. GARCIA, and TRANSAMERICAN SALES &
EXPOSITION, INC., respondents.
[G.R. No. 179954. November 19, 2014.]
REYNALDO V. MANIWANG, petitioner, vs. VICENTE VICTOR C.

SANCHEZ and FELISA GARCIA YAP, respondents.
DECISION
VELASCO, JR., J : p
The Case
These are consolidated Petitions for Review on Certiorari under Rule 45 of
the Rules of Court assailing the November 6, 2006 Decision 1 and August 31,
2007 Resolution of the Court of Appeals in CA-G.R. No. 83236 entitled Vicente
Victor C. Sanchez, Heirs of Kenneth Nereo Sanchez represented by Felisa Garcia
Yap, and Heirs of Imelda C. Vda. de Sanchez represented by Vicente Victor C.
Sanchez v. Jesus V. Garcia and Transamerican Sales and Exposition, Inc . The
assailed Decision affirmed with modification the Decision dated July 14, 2004 of
the Regional Trial Court, Branch 89 in Quezon City, in Civil Case No. Q-90-4690.
The Facts
The facts of the case are as follows:

Vicente Victor C. Sanchez (Vicente), Kenneth Nereo Sanchez and Imelda
C. Vda. De Sanchez owned a parcel of land located at No. 10 Panay Avenue,
Quezon City consisting of 900 square meters. The property was registered
under Transfer Certificate of Title No. (TCT) 156254 of the Registry of Deeds of
Quezon City (the Subject Property). 2
On October 10, 1988, Jesus V. Garcia (Garcia), doing business under the
name TransAmerican Sales and Exposition, Inc. (TSEI), wrote a letter 3 to
Vicente offering to buy the Subject Property for One Million Eight Hundred
Thousand Pesos (P1,800,000) under the following terms and conditions:
Following are my basic terms and conditions in buying the above-
mentioned property:
1. P50,000.00 — Reservation/earnest money to be paid upon

execution of reservation agreement
2. P1,750,000.00 — To be paid to seller as soon as all pertinent

sales documents, including a Deed of Absolute Sale are
prepared and executed in my favor.
3. As per standard practice, the capital gain [sic] tax,

documentary stamps, brokers commission of 5% and Deed
of Sale documents shall be in the account of the Seller.
4. Registration expenses and transfer tax shall be my obligations

[sic]. 4
The offer was good for only seven (7) days. The period elapsed with the
parties failing to come to an agreement.
Sometime in the third week of October 1988, Felisa Yap (Yap), the widow
of Kenneth Nereo Sanchez, and Garcia had a meeting at the Quezon City Sports
Club wherein the parties agreed to the sale of the subject property under the
following terms and conditions:
1.7.1. Garcia shall buy the property for P1.850 million payable in
cash immediately after the occupants thereof shall have vacated the
property.
1.7.2. Garcia shall immediately pay (the) amount of P50,000.00

creditable against the total purchase. HSIDTE
1.7.3. Garcia shall take care of all documentation necessary for

the transfer of the title in his favor, including the reconstitution of the
original title . . . and the extrajudicial settlement of the property,
considering that, as stated, the title is still registered in the names of
plaintiff Sanchez, the late Kenneth Nereo Sanchez and the late Imelda
C. Vda. De Sanchez. For this purpose, the original owner's copy of
Transfer Certificate of Title, the copy of the application for the
reconstitution of title of the property, and copies of receipts of real
estate taxes were to be entrusted to defendant Garcia;
1.7.4. Garcia shall cause the demolition of the old house standing
on the property and shall sell the scrap materials thereof for not less
than P50,000.00. All proceeds to be realized on account of said
demolition shall be turned over to the [Sanchezes]. 5
Pursuant to this agreement, Yap turned over to Garcia the original owner's
copy of TCT 156254, the copy of the filed Application for Restitution of Title to
the property, and copies of all receipts for the payment of real estate taxes on
the property, while Garcia paid Yap P50,000 as earnest money. 6
Afterwards, Yap required the occupants of the subject property to vacate

the same. Immediately after it was vacated, Garcia, without Yap's knowledge
and consent, took possession of the lot and installed his own caretaker thereon
with strict instructions not to allow anyone to enter the property. Yap later
learned that Garcia had also demolished the house on the property and
advertised the construction and sale of "TransAmerican Townhouse V" thereon.
The foregoing developments notwithstanding and despite numerous demands,
Garcia failed to pay the balance of the purchase price as agreed upon. 7
Then, on December 5, 1988, Yap was informed that the checks

representing the purchase price of the subject property were ready but that
Vicente must pick up his checks personally. On December 8, 1988, Vicente
came to Manila from Laguna and proceeded to Garcia's office to get the checks.
However, out of the six (6) checks that were presented to them, four (4) of
them were post-dated, further delaying their overdue payment. 8 In order to
properly document such check payments, the parties executed an Agreement
dated December 8, 1988, 9 paragraphs 3 to 8 of which relevantly provide:
3. That the total consideration of sale of the rights, interest,
participation and title of the First (Yap) and Second (Vicente) Parties of
the aforestated parcel of land to the Third Party (Garcia) shall be One
Million Eight Hundred Fifty Thousand Pesos (P1,850,000.00), Philippine
Currency, payable in check, as follows:
a) RBC Check No. 290258 to be drawn in favor of Felisa G.

Yap and dated December 8, 1988 for the sum of P250,000.00;
b) RBC Check No. 290257 to be drawn in favor of Vicente

Victor Sanchez and dated December 8, 1988 for the sum of
P250,000.00;
c) RBC Check No. 290261 to be drawn in favor of Felisa G.

d) RBC Check No. 290260 to be drawn in favor of Vicente

P250,000.00;
e) RBC Check No. 290263 to be drawn in favor of Felisa G.

and
f) RBC Check No. 290262 to be drawn in favor of Vicente
P400,000.00.
4. That the parties hereto agree that once the aforestated checks
are honored by the bank and encashed by the payees thereof, the First
and Second Parties shall execute an EXTRA-JUDICIAL SETTLEMENT OF
ESTATE WITH SALE distributing and dividing among themselves the
aforestated parcel of land and conveying in the said instrument all
their rights, interest, share, title and participation in the said property
to the Third Party for the consideration stated in the preceding
paragraph.
5. That once the aforestated EXTRA-JUDICIAL SETTLEMENT OF

ESTATE WITH SALE is executed, the First and Second Parties shall
immediately deliver the said document to the Third Party who, on the
strength of the same, shall reconstitute the burned Title of the
aforesaid Transfer Certificate of Title No. 156254, copy attached, in the
Registry of Deed of Quezon City and thereafter effect the transfer and
registration of the said property in his name; it being understood
however that all necessary expenses necessary for such reconstitution
of title, transfer and registration, shall be borne by the Third Party
while the inheritance tax, capital gains tax and documentary stamps
required to be paid therefor shall be borne by the First and Second
Parties, but in no case shall it exceed the combined amount of
P_________. DaTISc
6. That it is agreed by the parties hereof that if at any time one of

the aforestated checks is dishonored by the bank, the First and Second
Parties may opt to rescind this contract and that in the event of
rescission, the First and Second Parties shall forfeit the earnest money
of P50,000.00 and retain or withhold the amount representing the
value of damage effected by way of demolition by the Third Party on
the property standing and situated on the aforestated parcel of land,
which value shall not exceed the sum of P290,000 — depreciated cost
of the building therein and that whatever then remain as proceeds of
the aforestated checks shall be returned to the Third Party.
7. It is also agreed that after the delivery of the EXTRA-JUDICIAL

SETTLEMENT OF ESTATE WITH SALE by the First and Second Parties
after the encashment of the last check, the Third Party shall also pay
the balance of the demolition proceeds in the amount of P20,000.00.
8. That after the delivery of the EXTRA-JUDICIAL SETTLEMENT OF

ESTATE WITH SALE to the Third Party, the First and Second Parties
shall, except those stipulated above, then have only the remaining
obligation to deliver to the Third Party any document in their
possession or what they can lawfully and validly execute in accordance
with their rights as aforestated and/or shown in the aforementioned
title. 10
Subsequently, the first four (4) checks were deposited with no issue.
However, the last two (2) checks, amounting to P400,000 each, were
dishonored for the reason of "DAIF" or drawn against insufficient funds. 11
Thus, Yap wrote a letter dated December 26, 1988 12 to Garcia informing
him that the two (2) checks were dishonored and asking that the checks be
replaced within five (5) days from receipt of the letter. Such request was left
unheeded.
On January 10, 1989, Yap informed Garcia in a letter 13 that she and
Vicente were rescinding the Agreement while demanding the return of the
original owner's copy of TCT 156254. This prompted Garcia to offer two (2)
manager's checks in the aggregate amount of P300,000 which Yap flatly
refused, reiterating the rescission of their Agreement and demanding for the
return of all documents entrusted to Garcia through a January 21, 1989 letter.
14
However, in a letter dated January 27, 1989, 15 Garcia's counsel, Atty.

Francisco Beato, Jr. (Beato), informed Yap that they (Garcia, Vicente and Yap)
had an agreement that the P800,000 balance of the purchase price was due to
be paid by Garcia only upon Yap and Vicente's payment of the realty,
inheritance and capital gains taxes due on the transfer of the property. Thus,
Garcia effectively refused to return the documents and to vacate the subject
property.
Yap referred Beato's letter to her own counsel, Atty. Julian S. Yap, who
wrote back in a letter dated February 16, 1989, refuting the claim of Garcia that
the P800,000 was not yet due and reiterating their decision to rescind the
Agreement and demanding that Garcia vacate the property and return the
documents that were surrendered to him by Yap. 16
In the meantime, on February 19, 1989, Yap and Vicente discovered that
Garcia posted an advertisement in the classified ads of the Manila Bulletin
offering to sell units at the TransAmerican Townhouse V situated at the subject
property. 17
Thus, on February 27, 1989, Atty. Yap wrote the Housing and Land Use
Regulatory Board (HLURB) informing the latter of the existing public
advertisement of TSEI offering for sale townhouses illegally constructed on the
subject property and urging the HLURB to cancel any existing permit or license
to sell the said townhouse units or to deny any application therefor. 18
On March 17, 1989, the HLURB issued a Cease and Desist Order 19 (CDO)
enjoining TSEI and Garcia from further developing and selling the townhouses.
In the said order, Commissioner Amado B. Celoria of the HLURB certified that
respondents Garcia and TSEI have not been issued any permit by said Board for
the townhouse Project on the subject lot. Respondents Garcia and TSEI were
directed to immediately stop from further developing the project. Additionally,
such cease and desist order as well as warnings to possible buyers of the
townhouses were published with the Philippine Daily Inquirer on April 16, 1989,
and with the Manila Bulletin on April 19, 1989. 20 On May 5, 1989, the HLURB
issued another letter to TSEI reiterating its previous directive for it to cease and
desist from selling the townhouse units. 21 In compliance, Garcia and TSEI
stopped construction of the townhouses units on March 30, 1989. 22
In a delayed response to the CDO, TSEI wrote a letter to the HLURB

alleging that only ground leveling works were being undertaken on the project.
This was rebuffed by the HLURB in a letter dated May 8, 1989 23 stating that
ocular inspections of the project revealed that 2nd floor construction on the
townhouses were already being undertaken. Thus, the HLURB ordered TSEI to
explain in writing why administrative sanctions should not be meted out against
it and reiterating its earlier cease and desist order. Undeterred, TSEI continued
its construction and selling activities for the townhouses. Thus, the HLURB
issued an Order dated June 1, 1989 24 fining TSEI in the amount of P10,000. AcSHCD
To further protect their interests, Yap and Vicente also inquired from the
City Building Official of Quezon City, whether a building permit had been issued
for the construction on the Subject Property. In a letter dated March 14, 1989,
the office found that the construction on the subject property was indeed illegal
and at its 5% initial stage. 25 Additionally, Yap also wrote a letter dated April 3,
1989 26 to the Register of Deeds in Quezon City informing it that TCT 156254
was no longer in their possession and requesting that the office clear the
matter with them first before acting on any transaction pertaining to the
subject property.
In the meantime, the HLURB issued another letter dated June 22, 1989 27
denying TSEI's proposed compromise penalty of P2,500 and directing TSEI to
pay the P10,000 fine. And on June 23, 1989, it issued another letter 28 to TSEI
refuting the latter's claim that they were not selling townhouses by citing
advertisements of TransAmerican Townhouse V units at No. 10, Panay Avenue
in the Philippine Daily Inquirer (PDI) and the Manila Bulletin (MB).
Then, on August 21, 1989, Yap filed a formal complaint 29 with the Office
of the City Building Official of Quezon City. The complaint was set for hearing
on August 30, 1989 with an order for Garcia and TSEI to produce their building
permit. 30 However, both Garcia and TSEI failed to attend the said hearing.
Thereafter, on February 15, 1990, Yap and Vicente, in his own behalf and
representing the heirs of Imelda C. Vda. De Sanchez, filed before the Regional
Trial Court (RTC) in Quezon City, Branch 89 a Complaint dated February 14,
1990 31 for the rescission of contract, restitution and damages with prayer for
TRO/preliminary injunction against TSEI and Garcia, docketed as Civil Case No.
Q-90-4690.
Meanwhile, Garcia managed to cause the cancellation of TCT 156254 and

its replacement with TCT 383697 in the name of TSEI. 32 TCT 383697, however,
bore the date of issuance as June 9, 1988, way before the parties agreed on the
sale sometime in October 1988. Garcia apparently used TCT 383697 to entice
several buyers to buy the townhouse units being constructed by TSEI on the
subject lot. Claiming to have bought townhouse units sometime in early 1989,
the following intervened in the instant case: the spouses Jose and Visitacion
Caminas (Caminas), Reynaldo V. Maniwang (Maniwang), Generoso C. Tulagan
(Tulagan), Varied Traders Concept, Inc. (VTCI), and Arturo Marquez (Marquez).
The records reveal that on January 31, 1989, TSEI sold to Tulagan a 52-
square meter portion of TCT 156254 and the townhouse unit that was going to
be built upon it for the amount of P800,000 as evidenced by a Conditional Deed
of Sale of even date. 33 Later, Tulagan bought another unit from TSEI this time
for P600,000 as shown by a Contract to Sell dated February 21, 1989. 34 Then,
Maniwang bought a unit from TSEI for P700,000 through an Absolute Deed of
Sale dated February 22, 1989. 35 Later, Marquez purchased a townhouse unit
from TSEI for P800,000 in a Contract to Sell dated March 13, 1989. 36
Afterwards, TSEI sold to Caminas a townhouse unit for P650,000 through an
Absolute Deed of Sale dated March 21, 1989. 37 Thereafter, VTCI bought three
(3) townhouses from TSEI for P700,000 each in three (3) separate Absolute
Deeds of Sale all dated October 30, 1989. 38 TSEI left the townhouse units
unfinished, leaving these intervenors to finish their townhouses by themselves.
Notably, except for the Absolute Deeds of Sale executed between TSEI
and VTCI, all the other intervenors' contracts conveying townhouses in their
favor identified their purchased lots as covered by TCT 156254 (the title of the
Sanchezes). As culled from the transcripts, the intervenors Caminas, 39
Maniwang, 40 Tulagan, 41 and Marquez 42 asserted that they were all shown TCT
383697 in the name of TSEI but nevertheless signed their respective contracts
with TSEI indicating the subject property as covered by TCT 156254.
Subsequently, they all got a photocopy of TCT 383697 and verified the same
with the Registry of Deeds of Quezon City, which confirmed that the title was
clean. On the other hand, only the Absolute Deed of Sale in favor of VTCI, dated
October 30, 1987, reflected that the property sold was covered by TCT 383697.
43
Far East Bank and Trust Company (FEBTC) entered into a Loan Agreement
44 dated May 22, 1989 with TSEI secured by a Real Estate Mortgage over TCT
156254. FEBTC later merged with the Bank of the Philippine Islands (BPI) with
the latter as the surviving bank. Garcia purportedly explained to FEBTC that the
parties were still in the process of transferring the title. Afterwards, Garcia
submitted a copy of TCT 383697 in TSEI's name. Upon default, FEBTC (now BPI)
foreclosed the subject lot and had the Foreclosure Certificate of Sale annotated
on TCT 383697.
The Ruling of the Regional Trial Court
On July 14, 2004, the RTC rendered a Decision in favor of the Sanchezes
as plaintiffs, the dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered as follows: ADEaHT
1. Declaring the legality and validity of the Extrajudicial

Rescission effected by the plaintiffs on the Contract to Sell on the
subject property, covered by TCT No. 156254 in their names;
2. Ordering the defendants and all persons acting on their behalf

to return to the plaintiffs the Owner's Copy of TCT No. 156254,
including all the documents entrusted to them in consideration of their
Contract to Sell;
3. Ordering defendants and all persons, including the intervenors

and all persons claiming rights under them to return and surrender to
the plaintiffs the peaceful possession of the subject property covered
by TCT No. 156254 located at No. 10 Panay Avenue, Quezon City;
4. Ordering the defendants jointly and severally to pay the

plaintiffs the sum of One Hundred Thousand (P100,000.00) Pesos,
Philippine Currency as and by way of attorney's fees;
plaintiffs the sum of Two Hundred Thousand (P200,000.00) Pesos,
Philippine Currency as and by way of moral damages;

Philippine Currency as and by way of exemplary damages to serve as
correction or example for the public good;

plaintiffs the sum of Two Hundred Ninety Thousand (P290,000.00)
Pesos, representing the depreciated cost of the plaintiffs' demolished
building per their Agreement (Exhibit "D");
8. Dismissing defendants' counterclaim as well as intervenors'

counterclaims/complaints and answers in intervention against the
plaintiffs;
9. Ordering the plaintiffs to return to the defendants, after

deducting the damages herein awarded, the remaining amount on the
sum paid by the defendants on the subject property;
10. Dismissing the counterclaim of plaintiffs against all

intervenors;
11. Ordering the defend is to return to intervenors, Jose and

Visitacion Caminas, Reynaldo Maniwang, Generoso "Gener" Tulagan,
and VTCI, and Arturo Marquez, the following sum to wit:
1. CAMINAS — P650,000.00 (Absolute Deed

of Sale dated 14 March
1989);
2. MANIWANG — P700,000.00 (Absolute Deed

of Sale dated 22 February
1989);
3. TULAGAN — P1.4 Million, representing the

following:
P600,000.00 — (Contract To
3.1
Sell
dated 21 February 1989);
P800,000.00 — (Conditional
3.2
Deed
of Sale dated 31 January
1989);
4. VTCI — P2.1 Million, representing the

following.
P700,000.00 — (Absolute
4.1
Deed
of Sale dated 30 October
1989
— Lot 1-K);
P700,000.00 — (Absolute
4.2
Deed
1989
— Lot 1-I);
P700,000.00 — (Absolute
4.3
Deed
1989
— Lot 1-F);
P600,000.00 (Contract To
5. MARQUEZ —
Sell
dated 8 March 1989);
6. BPI — Declaring the intervention of

the Bank without merit.
respectively, representing the full and/or partial purchase price

of their respective units, all with six (6) percent interest per annum
counted from the time of their filing of their intervention of judicial
demand, and twelve (12) percent per annum upon the finality of this
decision.
With costs against defendants.
SO ORDERED. 45
The RTC declared that the Sanchezes have the right to rescind the
Agreement they entered into with Garcia and TSEI under proviso no. 6 46 of the
Agreement. In fact, the RTC enunciated that because the Agreement is in the
nature of a contract to sell, the ownership over the subject property remained
with the Sanchezes as the suspensive condition — that the check payments
shall be honored — was not complied with. Thus, the RTC concluded that there
was not even any need for rescission in this case. Moreover, the RTC found that
TSEI and Garcia were builders in bad faith as the Sanchezes never consented to
the construction of the townhouses. Furthermore, the presentation by Garcia
and TSEI to the intervenors of TCT 383697 in TSEI's name sufficiently shows
their bad faith. Anent the rights of intervenors, the RTC found the Sanchezes to
have a better right over the subject property considering that the transactions
between Garcia/TSEI and the intervenors suffered from several irregularities,
which they, the intervenors, in bad faith, ignored.
The Ruling of the Court of Appeals
Upon appeal by the intervenors-appellants, the CA rendered, on

November 6, 2006, the assailed Decision affirming the RTC Decision with
modifications, the decretal portion of which reads:
WHEREFORE, the judgment appealed from is hereby AFFIRMED
with MODIFICATIONS in that (1) the Register of Deeds of Quezon City is
hereby directed to cancel the Transfer Certificate of Title No. 383697 in
the name of TransAmerican Sales and Exposition, Inc. and to reinstate
Transfer Certificate of Title No. 156254 in the name of the [sic] Kenneth
Nereo Sanchez, Vicente Victor Sanchez and Imelda C. Vda. de Sanchez
in its original status prior to the claim of the intervenors-appellants;
and (2) the plaintiffs and the defendants are ordered to follow the
provisions of Article 448 of the Civil Code of the Philippines as regards
the improvements constructed on the subject property. The questioned
decision is affirmed in all other respects.
SO ORDERED. 47
Thus, the CA ordered the cancellation of TCT 383697 in TSEI's name and
the reinstatement of TCT 156254 in the names of the Sanchezes. However, the
appellate court found the Sanchezes equally in bad faith with TSEI and Garcia,
and gave the Sanchezes the option either to appropriate the townhouses by
paying for them or to oblige TSEI and Garcia to pay the price of the land, unless
the subject lot's value is considerably more than that of the structures built
thereon in which case TSEI and Garcia would have to pay the Sanchezes
reasonable rent for the use of the subject property.
Hence, these petitions under Rule 45 separately interposed by the

intervenors.
The Issues
In G.R. No. 179518, BPI raises the following issues:

V.
Grounds for this Appeal
A. The Court of Appeals erred in decreeing the rescission of the

Agreement between plaintiffs Sanchez, et al. and defendants TSE
and Garcia.
i. Sanchez, et al. had no intention of rescinding their Agreement.
ii. Rescission cannot take place because the property was

already acquired by third person who acted in good faith.
iii. Sanchez, et al. should bear all the losses arising from their
own negligence.
B. The Court of Appeals erred in ordering the annulment of TCT No.

383697 in a collateral action.
C. The Court of Appeals erred in ordering the annulment of TCT No.

383697 notwithstanding that it had no jurisdiction to do so, since
such relief was never prayed for in the complaint.
D. The Court of Appeals erred in decreeing rescission, notwithstanding

that it would result in the unjust enrichment of plaintiffs Sanchez,
et al., at the expense of BPI.
E. Assuming that Article 448 of the Civil Code is applicable, the Court of
Appeals erred in not ruling that BPI already acquired the rights of
defendants under the said article. 48
In G.R. No. 179835, Tulagan, the heirs of Marquez and VTCI raise the
following issue:
Whether or not the herein petitioners, as buyers and possessors
of their respective units that were constructed by respondent Garcia in
the subject property, are entitled, to the same benefit granted to the
latter (who was subsequently declared by the Court of Appeals as a
builder in good faith of the improvements he introduced in the subject
property), under the provision of Article 448 of the Civil Code of the
Philippines. 49 ISaCTE
While in G.R. No. 179954, Maniwang raises the following issues:

Grounds for the Petition
With all due respect, the Honorable Court of Appeals failed to

apply the pertinent provisions of law and utterly failed to consider
prevailing jurisprudence when it totally disregarded the perfected
Contract of Sale under the nomenclature "Contract to Sell" entered into
by respondents and defendants prior to the "Agreement" entered into
by them.
With all due respect, the Honorable Court of Appeals utterly

neglected to apply pertinent provisions of the Civil Code and prevailing
jurisprudence on the matter when it affirmed the trial court's decision
granting the respondents' prayer for rescission.
With all due respect, it is respectfully submitted that the
Honorable Court of Appeals erred in not finding that petitioner
Reynaldo Maniwang is an innocent purchaser in good faith, thus
resulting in the total disregard of his rights over the subject property
when it applied to the instant case the provisions of Article 448 of the
Civil Code of the Philippines. 50
The essential common issues presented by intervenors-petitioners are:

first, whether the parties all acted in bad faith; second, whether there was a
valid rescission of the Agreement between the Sanchezes and TSEI/Garcia; and
third, whether TCT 383697 in the name of TSEI may be cancelled.
The Court's Ruling
The petitions in these consolidated cases must be denied.
The Sanchezes are not guilty

of negligence
Petitioners would lay the blame on the Sanchezes and argue that there
was negligence on the latter's part when they turned over the owner's original
duplicate copy of TCT 156254 despite receiving only the P50,000 earnest
money, which led to the fraudulent transfer of title over the subject lot by
Garcia and the issuance of TCT 383697 in the name of TSEI. They also argue
that the Sanchezes were also negligent for surrendering possession of the
subject property to Garcia and TSEI, and for failing to stop the construction of
the townhouses on the subject property.
It must be stated that the CA already ruled that the issue of the
Sanchezes' negligence was never raised at the pre-trial. As such, it can no
longer be raised on appeal. Nevertheless, even if such issue were to be passed
upon, the Sanchezes cannot be considered negligent, much less in bad faith.
As explained by the CA:
It must be noted that defendant Garcia committed himself that,
upon full payment of the purchase price, he would personally
undertake the preparation and execution of the Extrajudicial
Settlement with Sale as well as the reconstitution of the original copy of
TCT No. 156254 on file with the Register of Deeds of Quezon City.
Thus, it was inevitably for plaintiff-appellant/appellee Felisa Yap to
surrender to defendant Garcia the owner's duplicate copy of the
aforesaid title as well as the other documents pertinent for such
documentation and reconstitution. To Our mind, this does not
constitute negligence on the part of the plaintiffs-appellants/appellees
as the surrender was purely to comply with and in pursuance to their
earlier agreement with the defendants.
As regards the alleged relinquishment of possession of the

subject property, We also do not find any negligence on the part of the
plaintiffs-appellants/appellees. The records would disclose that the
plaintiffs-appellants/appellees did not voluntarily surrender possession
thereof to defendants. On the contrary, it was defendant Garcia who
took possession of the subject property, without plaintiffs-
appellants/appellees knowledge, posted his own caretaker therein with
strict instructions not to allow anyone to enter the same. The latter
also caused the demolition of the old house standing thereon and
advertised the same for sale by placing a large billboard in front of the
subject property. In fact, had it not been for persistent efforts of
plaintiffs-appellants/appellees, the Agreement which eventually
protected the latter's rights over the subject property, could not have
been executed. 51
Negligence is the omission of that diligence required by the nature of the

obligation and corresponds to the circumstances of the persons, of the time and
of the place. 52 The Sanchezes could not be found negligent as they relied upon
the assurances of Garcia after their oral agreement to sell was negotiated. The
Sanchezes trusted Garcia and entrusted to him — per their oral agreement —
the owner's original duplicate of TCT 156254 in order to facilitate the
documentation required under the terms of agreement for the sale of the
subject lot. It must be pointed out that the parties in this case were not dealing
on equal terms. The Sanchezes had insufficient knowledge in the legalities of
transacting with real estate. This is evidenced by the fact that they already
considered an oral agreement for the sale of real property as sufficient. Had
they been knowledgeable in such matters, they would have known that such
oral agreement is unenforceable and instead sought the production of a written
agreement. Moreover, the facts show that the Sanchezes did not simply
surrender possession of the property to TSEI and Garcia, but that such
possession was taken from them without their consent. SDHETI

The Sanchezes did not act in
bad faith
Contrary to the finding of the CA, the Sanchezes cannot be considered to
be in bad faith for failing to file an action for injunction against the construction
of the townhouses on the subject property. The CA stated:
. . . However, it appears that plaintiffs/appellants/appellees did
not take any step to forestall the continued construction of the
townhouses. The records do no [sic] show that the
plaintiffs/appellants/appellees filed any case for injunction to at least
restrain the defendants from continuing with the construction.
Conversely, they allowed the same to continue despite the fact that
they were not as yet fully paid of the purchase price on the subject
property and no contract of sale has been executed by them in
defendants' favor. Under these circumstances, the provision of Article
453 of the Civil Code should have been applied by the trial court. 53
Such ruling is erroneous.

Article 453 of the Civil Code relevantly states:
Article 453. If there was bad faith, not only on the part of the
person who built, planted or sowed on the land of another, but also on
the part of the owner of such land, the rights of one and the other shall
be the same as though both had acted in good faith.
It is understood that there is bad faith on the part of the
landowner whenever the act was done with his knowledge and
without opposition on his part. (emphasis supplied)
The second paragraph of the provision clearly reads that a landowner is

considered in bad faith if he does not oppose the unauthorized construction
thereon despite knowledge of the same. It does not, however, state what form
such opposition should take. The fact of the matter is that the Sanchezes did
take action to oppose the construction on their property by writing the HLURB
and the City Building Official of Quezon City. As a result, the HLURB issued two
(2) Cease and Desist Orders and several directives against Garcia/TSEI which,
however, were left unheeded.
In addition, the Sanchezes could not be faulted for not having been able
to enjoin the sale of the townhouses by Garcia and TSEI to the intervenors Sps.
Caminas, Maniwang, Tulagan, and Marquez who bought their townhouse units
during the same period that the Sanchezes were demanding the full payment
of the subject lot and were exercising their right of extrajudicial rescission of
the Agreement. As the intervenors asserted having bought the townhouse units
in early 1989, it can be seen that the pre-selling was done almost immediately
after the Sanchezes and Garcia/TSEI agreed on the terms of the sale of the
subject lot, or shortly after Garcia and TSEI had taken over the property and
demolished the old house built thereon. In either case, the pre-selling already
commenced and was continuing when the two postdated checks amounting to
the remaining balance of P800,000 bounced. And when the Sanchezes
informed Garcia and TSEI that they were rescinding the Agreement in early
1989, the intervenors apparently were already in the process of closing their
deals with TSEI for the purchase of townhouse units.
As to the transactions between FEBTC and Garcia/TSEI and that between
VTCI and Garcia/TSEI, it is suffice to state that the Sanchezes, despite the
actions they undertook, were not aware of the said dealings.
Garcia, TSEI, BPI, and the

intervenors acted in bad faith
a. Garcia and TSEI acted in
bad faith
The Court agrees with both the RTC and the CA that Garcia and/or TSEI
are builders in bad faith. They knew for a fact that the property still belonged to
the Sanchezes and yet proceeded to build the townhouses not just without the
authority of the landowners, but also against their will. Thus, the CA wrote:
Anent the improvements constructed on the subject property, the
defendants were undoubtedly builders in bad faith. As borne out by the
evidence, the defendants took possession of the subject property and
constructed the 20-unit townhouses thereon without prior consent of
the plaintiffs-appellants/appellees. On top of this, defendant Garcia was
aware that the defendants have not as yet fully paid the purchase price
thereof and therefore are not yet owner/s of the subject property. In
fact, no contract of sale over the subject property has been executed
by the plaintiffs/appellants/appellees in defendants' favor. 54 . . .
The next query: are the intervenors purchasers in good faith?

The Court rules otherwise.
b. Intervenors Sps. Caminas,

Maniwang, Tulagan, and
Marquez acted in bad faith
Prevailing jurisprudence reveals the following established rules:
1. Well settled is the rule that all persons dealing with property
covered by a torrens certificate of title are not required to go
beyond what appears on the face of the title. When there is
nothing on the certificate of title to indicate any cloud or vice in
the ownership of the property, or any encumbrance thereon, the
purchaser is not required to explore further than what the torrens
title upon its face indicates in quest for any hidden defect or
inchoate right that may subsequently defeat his right thereto. 55
2. This rule, however, admits of an exception as where the
purchaser or mortgagee has knowledge of a defect or lack
of title in the vendor, or that he was aware of sufficient
facts to induce a reasonably prudent man to inquire into
the status of the property in litigation. 56 (emphasis
supplied) HCEcAa
3. Likewise, one who buys property with full knowledge of the flaws and
defects in the title of the vendor is enough proof of his bad faith
and estopped from claiming that he acquired the property in
good faith against the owners. 57
4. To prove good faith, the following conditions must be present: (a)

the seller is the registered owner of the land; (b) the owner is in
possession thereof; and (3) at the time of the sale, the buyer was
not aware of any claim or interest of some other person in the
property, or of any defect or restriction in the title of the seller or
in his capacity to convey title to the property. All these
conditions must be present, otherwise, the buyer is under
obligation to exercise extraordinary diligence by scrutinizing the
certificates of title and examining all factual circumstances to
enable him to ascertain the seller's title and capacity to transfer
any interest in the property. 58
The factual milieu of the case reveals that intervenors are buyers in bad
faith for the following reasons, viz.:
Firstly, they admitted that they executed either contracts of sale or
contracts to sell indicating that the lot is covered by TCT No. 156254 registered
under the name of the respondent Sanchezes. While the established rule is that
persons dealing with property covered by a Torrens certificate of title are not
required to go beyond what appears on the face of the title, intervenors cannot
seek haven from such doctrine as the title of the lot does not pertain to the
vendor (Garcia or TSEI) they dealt with. The fact that the lot being sold to them
belonged to persons other than TSEI or Garcia should have driven the
intervenors, as prudence would dictate, to investigate the true status of the
property. They should have gone to the Register of Deeds of Quezon City (RD)
to verify if in fact TCT No. 156254 had already been cancelled and a new title
has been issued to TSEI or Garcia. They should have asked for the deed of
absolute sale filed and registered with the RD to find out if the Sanchezes
indeed sold the lot in question to TSEI. They could have verified from the
primary entry book of said office if the deed of absolute sale from the
Sanchezes in favor of TSEI was registered in said book, which, under the
Property Registration Decree (PD No. 1529), is considered as an effective and
legal notice to third persons and the whole world of such transfer. Evidently, the
intervenors failed to do so.
Secondly, the intervenors know, based on the contract of sale or contract

to sell, that the property is registered under TCT No. 156254 in the name of the
Sanchezes. As such, they should have insisted that they talk to the Sanchezes
before executing said conveyances. Had they done so, they would have known
that the Sanchezes have not executed a written deed of absolute sale in favor
of TSEI for the latter's failure to pay the consideration in full. Having failed to
ferret out the truth from the Sanchezes, intervenors cannot be considered
innocent purchasers for failure to exercise utmost caution and extra diligence in
determining the true owner of the property.
Thirdly, the intervenors should have been suspicious of the explanation of
Garcia that TCT No. 383697, reflecting TSEI as the owner of the property, has
been burned and that he is in the process of reconstituting the title. Before
signing the contract of sale or contract to sell, they should have asked Garcia
where the reconstitution case has been filed or is pending and proceeded to
verify with the said court the status of the reconstitution. Had they done so,
they would have known that neither Garcia nor TSEI had a deed of absolute
sale executed in their favor over the lot in question. The truth of the matter is
that it is the duplicate certificate of title of TCT No. 156254 that has been lost
or misplaced, and is being sought to be reconstituted, not TCT No. 383697. Had
intervenors been prudent enough to verify with the court the status of the
alleged TCT No. 383697, they would have known that Garcia planned to
deceive them in the sale of the subject property.
Fourthly, the intervenors knew that they were buying a townhouse over a
subdivision lot from TSEI and Garcia. Such being the case, they should have
verified with the HLURB whether said project is registered with said housing
agency and if a license to sell has been issued to TSEI or Garcia. Had they made
such an inquiry, they would have known that instead of a permit for the project
and a license to sell the property, a cease and desist order was issued by the
HLURB precisely to enjoin TSEI and Garcia from selling said property to the
public. Similarly, they could have inquired from the City Building Official of
Quezon City if a building permit was issued to TSEI and Garcia for the
construction of the townhouses, which would have yielded the same negative
result.
c. VCTI acted in bad faith

As compared to the other purchasers, the Deeds of Absolute Sale of
intervenor VTCI cited TCT 383697 in the name of VTCI and not TCT 156254.
Nevertheless, the Court finds that respondent VTCI is a purchaser in bad faith
for the following reasons: SECHIA
Firstly, respondent VTCI has not shown that it verified with the RD if the
alleged TCT 383697 of respondent TSEI is valid and genuine. It did not present
any certified true copy of said TCT 383697 to demonstrate that based on the
RD's records, said title exists and that it is genuine and valid. It should be
remembered that the duplicate certificate of TCT 156254 was lost and subject
of reconstitution. Yet respondents Garcia and TSEI were not able to show that it
was already reconstituted. In addition, there was no deed of absolute sale
executed by the Sanchezes in favor of TSEI as the latter failed to pay the last
two (2) installments and subsequently, the agreement to sell was rescinded by
the Sanchezes for non-payment. There being no deed of absolute sale, there is,
consequently, no ground for the RD to cancel TCT No. 156254 and subsequently
issue TCT 383697 in the name of TSEI. This goes to show that TCT 383697 of
TSEI appears to be spurious and a fake title. This is buttressed by the fact that
the date of the issuance of TCT 383697 is June 9, 1988, pre-dating the
execution of the Agreement between the Sanchezes and TSEI on December 8,
1988. With the failure of VTCI to exert earnest efforts to verify the authenticity
of TCT 383697, then it is not a purchaser in good faith.
Secondly, Garcia and TSEI stopped the construction of the townhouses on

March 30, 1989 pursuant to the CDO of the HLURB. Thus, the townhouses were
not fully finished and completed. Yet on December 27, 1989 (date of
notarization), VTCI entered into three (3) Deeds of Absolute sale over three (3)
townhouses on three (3) lots covered by TCT 383697 and despite the non-
completion of the townhouses, it still fully paid the uniform price of P700,000
for the townhouse on each of the 3 lots — 1st lot with an area of 52.5 square
meters; 2nd lot with an area of 72.5 square meters; and 3rd lot with an area of
42.5 square meters. The price of P700,000 was even applied to all lots even if
ordinarily a bigger lot will commend a higher price. These are doubtful
transactions since a man of average intellect will not fully pay the price of a
townhouse which has not yet been completed. The alleged purchases are not in
accord with the normal business practice and common behavior of an ordinary
human being. These circumstances sway the Court to believe that said alleged
conveyances are not genuine and that VTCI is not a purchaser in good faith.
Thirdly, with the CDO and the warnings to the public and prospective
buyers published in the Philippine Daily Inquirer on April 16, 1989 and in the
Manila Bulletin on April 19, 2014, VTCI should have been aware of the
irregularities in the proposed sale of townhouses by Garcia and TSEI. The failure
of VTCI to heed the warnings and prohibition to buy said townhouses tends to
show that said respondent is not a purchaser in good faith.
Fourthly, with the issuance of the CDO by the HLURB and the notices in
the major dailies, VTCI should have inquired with the said HLURB if Garcia and
TSEI have a permit to sell the townhouses. Had it done so, it would have
discovered that the project, as it lacks the necessary permits, is unauthorized
and that the title over the townhouses is questionable.
Fifthly, a buyer of a townhouse will ordinarily visit the project site and look
at and investigate the lot, the title and the townhouses being sold. If it
inspected the site of the construction project, it would have known from the
other purchasers that the project has no permit from the HLURB and that
construction has been stopped because of the CDO. Had VTCI done the
inspection and investigation, then it would not have entered into the deeds of
absolute sale with Garcia and TSEI. Thus, respondent VTCI cannot be
considered as a purchaser in good faith.
From the foregoing, the fact that all the intervenors turned a blind eye to
the flaws and defects in the ownership of TSEI over the property and miserably
failed to undertake measures required of a reasonably prudent man to
investigate the title of the pseudo owner and the legality of the townhouse
project constitutes bad faith for which there is no available relief under the law.
d. BPI cannot be considered a

mortgagee in good faith
Even as the intervenors have been found to be in bad faith, BPI, the
successor of FEBTC, cannot be considered a mortgagee in good faith,
considering the glaring anomalies in the loan transaction between TSEI and
FEBTC. This can be gleaned from several undisputed factual circumstances:
Firstly, when Garcia gave TCT 156254 to FEBTC for the processing of a
loan secured by a mortgage, it indubitably showed that Garcia/TSEI did not yet
own the subject property as said title was in the name of the Sanchezes. But
FEBTC did not require Garcia/TSEI to submit a Special Power of Attorney (SPA)
in their favor authorizing them to mortgage the subject property covered by
TCT 156254.
Secondly, considering that Garcia/TSEI were already selling the

townhouse units to the public as early as January 1989, FEBTC was also remiss
in not requiring Garcia/TSEI to submit a written approval from the HLURB for
the mortgage of the subject property where the townhouse units were being
constructed as required under Sec. 18 59 of Presidential Decree No. (PD) 957. 60
Thirdly, considering further that Garcia presented the Agreement between

the Sanchezes and Garcia/TSEI as basis for ownership of the subject property
covered by TCT 156254, FEBTC was remiss in neither ascertaining whether the
full payment of the P1.8 million covered by six (6) checks in view of the proviso
number 6 of the Agreement nor requiring the presentment of the EXTRA-
JUDICIAL SETTLEMENT OF ESTATE WITH SALE from the Sanchezes in favor of
Garcia/TSEI. cDCEIA
Fourthly, FEBTC was again negligent in not scrutinizing the TCT 383697
considering that the title has the purported issuance date of June 9, 1988 way
before the December Agreement was executed and when the loan was
negotiated. More, the purported issuance of TCT 383697 was made more than
six (6) months before Garcia/TSEI approached the bank for the loan. Thus,
FEBTC should have been placed on guard as to why Garcia/TSEI initially gave it
TCT 156254 in the name of the Sanchezes when TCTC 383697 was purportedly
already issued and in Garcia's possession way before the bank loan was
negotiated. Again, FEBTC did not exercise the due diligence required of banks.
Fifthly, the Court notes that FEBTC released portions of the loan proceeds
in April even before it approved the loan secured by a real estate mortgage on
May 22, 1989. And more anomalous is the fact that FEBTC had TCT 383697
verified for its veracity and genuineness way after it approved the loan to
Garcia/TSEI. The Certification 61 from the Register of Deeds was issued only on
June 13, 1989 upon the request of Garcia.
Verily, given the foregoing anomalies, the general rule that a mortgagee
need not look beyond the title does not apply to banks and other financial
institutions as greater care and due diligence are required of them, 62 and
FEBTC should have exercised the appropriate due diligence review and made
the requisite inquiries about the subject property which was offered to secure
the loan applied for by Garcia/TSEI under a real estate mortgage. FEBTC (now
BPI) was negligent and cannot be considered as a mortgagee in good faith.
The effects of attributing bad
faith to the intervenors, BPI,
TSEI, and Garcia
a. Rescission of the Agreement
was not barred by the
subsequent transfer
Article 1191 of the Civil Code states that rescission is available to a party
in a reciprocal obligation where one party fails to comply therewith:
Article 1191. The power to rescind obligations is implied in
reciprocal ones, in case one of the obligors should not comply
with what is incumbent upon him.
The injured party may choose between the fulfillment and the
rescission of the obligation, with the payment of damages in either
case. He may also seek rescission, even after he has chosen fulfillment,
if the latter should become impossible.
The court shall decree the rescission claimed, unless there be

just cause authorizing the fixing of a period.
This is understood to be without prejudice to the rights of third

persons who have acquired the thing, in accordance with Articles 1385
and 1388 and the Mortgage Law. (emphasis supplied)
Article 1385 of the Civil Code does provide that rescission shall not take
place if the subject matter of the prior agreement is already in the hands of a
third party who did not act in bad faith, to wit:
Article 1385. Rescission creates the obligation to return the
things which were the object of the contract, together with their fruits,
and the price with its interest; consequently, it can be carried out only
when he who demands rescission can return whatever he may be
obliged to restore.
Neither shall rescission take place when the things which

are the object of the contract are legally in the possession of
third persons who did not act in bad faith.
In this case, indemnity for damages may be demanded from the

person causing the loss. (emphasis added)
In the extant case, the failure of TSEI to pay the consideration for the sale
of the subject property entitled the Sanchezes to rescind the Agreement. And in
view of the finding that the intervenors acted in bad faith in purchasing the
property, the subsequent transfer in their favor did not and cannot bar
rescission.
b. The Sanchezes are to elect

their option under the Arts.
449-450 of the New Civil Code
Moreover, bad faith on the part of TSEI, Garcia and the intervenors leads
to the application of Articles 449-450 of the New Civil Code, which provide:
Article 449. He who builds, plants or sows in bad faith on the land
of another, loses what is built, planted or sown without right to
indemnity.

Article 450. The owner of the land on which anything has been
built, planted or sown in bad faith may demand the demolition of the
work, or that the planting or sowing be removed, in order to replace
things in their former condition at the expense of the person who built,
planted or sowed; or he may compel the builder or planter to pay the
price of the land, and the sower the proper rent. THCASc
Consequently, the Sanchezes have the following options: (1) acquire the
property with the townhouses and other buildings and improvements that may
be thereon without indemnifying TSEI or the intervenors; 63 (2) demand from
TSEI or the intervenors to demolish what has been built on the property at the
expense of TSEI or the intervenors; or (3) ask the intervenors to pay the price of
the land. 64 As such, the Sanchezes must choose from among these options
within thirty (30) days from finality of this Decision. Should the Sanchezes opt
to ask from the intervenors the value of the land, the case shall be remanded to
the RTC for the sole purpose of determining the fair market value of the lot at
the time the same were taken from the Sanchezes in 1988.
If the Sanchezes decide to appropriate the townhouses, other structures
and improvements as their own pursuant to Article 449 of the Civil Code, then
the intervenors-purchasers Caminas, Maniwang, Tulagan, Marquez and VCTI
shall be ordered to vacate said premises within a reasonable time from notice
of the finality of the decision by the Sanchezes. They have a right to recover
their investment in the townhouses from Garcia and TSEI. If the Sanchezes do
not want to make use of the townhouses and improvements on the subject lot,
then the purchasers can be ordered to demolish said townhouses or if they
don't demolish the same within a reasonable time, then it can be demolished at
their expense. On the 3rd option, if the Sanchezes do not want to appropriate
the townhouses or have the same demolished, then they can ask that the
townhouse purchasers pay to them the fair market value of the respective
areas allotted to their respective townhouses subject of their deeds of sale.
The suit is not a collateral

attack on TSEI's title
Finally, BPI argues that the CA erred in ordering the cancellation of TCT
383697 considering that Section 48 of Presidential Decree No. 1529, or the
Property Registration Decree, states that a Torrens certificate of title cannot be
cancelled except in a direct attack thereon. The provision reads:
Section 48. Certificate not subject to collateral attack. A
certificate of title shall not be subject to collateral attack. It cannot be
altered, modified, or canceled except in a direct proceeding in
accordance with law.
In Sarmiento v. Court of Appeals, 65 the Court differentiated a direct and a

collateral attack in this wise:
An action is deemed an attack on a title when the object of the
action or proceeding is to nullify the title, and thus challenge the
judgment pursuant to which the title was decreed. The attack is direct
when the object of the action is to annul or set aside such judgment, or
enjoin its enforcement. On the other hand, the attack is indirect or
collateral when, in an action to obtain a different relief, an attack on
the judgment is nevertheless made as an incident thereof.
In the instant case, contrary to the contention of BPI, although the case
was originally an action for rescission, it became a direct attack on TCT
383697. To be sure, there is no indication that when the Sanchezes filed their
complaint with the RTC they already knew of the existence of TCT 383697.
However, when they were confronted with the title through the filing of the
various Answers of the intervenors, the Sanchezes directly stated that the title
was a fake. Thus, in their Answer with Counterclaims to Complaint in
Intervention filed by Varied Traders Concept, Inc. dated April 2, 1991,
paragraph 2.1. thereof states:
2.1. Like the rest of the intervenors herein, VTCI is claiming rights
under a forged deed and a fake or absolutely void title. There was
never any Deed of Absolute Sale between plaintiffs and defendants.
Much less was there any valid land title issued to defendants. Whatever
deeds defendants may have shown VTCI are definitely fakes or
foregeries, hence, null and void. Thus, no rights to plaintiff's property
ever passed to VTCI. 66
An identical paragraph is also contained in the Sanchezes' Answer with

Counterclaims to Intervention filed by Far East Bank and Trust Company and
Supplement to Complaint dated January 11, 1993. 67 Thus, the complaint filed
by the Sanchezes later became a direct attack against TCT 383697 and the CA
correctly ordered the cancellation thereof.
WHEREFORE, the instant petitions are DENIED. The assailed November

6, 2006 Decision of the Court of Appeals in CA-G.R. CV No. 83236 is hereby
AFFIRMED with MODIFICATION. The dispositive portion of the RTC Decision in
Civil Case No. Q-90-4690, as affirmed by the CA, is hereby modified to read:
WHEREFORE, judgment is hereby rendered as follows:
1. Directing the Register of Deeds of Quezon City to cancel
Transfer Certificate of Title No. 383697 in the name of TransAmerican
Sales and Exposition, Inc. and to reinstate Transfer Certificate of Title
No. 156254 in the name of the [sic] Kenneth Nereo Sanchez, Vicente
Victor Sanchez and Imelda C. Vda. de Sanchez in its original status
prior to the claim of the intervenors-appellants without need to pay any
registration fee, transfer tax, documentary stamp tax and other
expenses in relation to transfer of title. cHCIDE
2. Granting to the Sanchezes the right to inform the Regional

Trial Court of Quezon City, Branch 89 in Civil Case No. Q-90-4690
within thirty (30) days from date of finality of decision whether or not
they will appropriate the townhouses and improvements on the lot
covered by TCT No. 156254 as their own without need to pay
indemnity therefor pursuant to Article 449 of the Civil Code.
In such a case, the intervenors and all their successors-in-interest

shall vacate the subject property and surrender possession thereof to
the Sanchezes within Thirty (30) Days from notice of their decision.
If the Sanchezes opt for the second option, the defendants or
intervenors shall demolish the townhouses and all other improvements
on the property at their own expense within ninety (90) days from
notice of the Sanchezes' decision. If they fail to do so, the Sanchezes
can have the same demolished and the expenses of demolition shall be
charged to the intervenors on a pro rata basis based on the respective
areas of their townhouses.
Finally, if the Sanchezes choose the third option, the case shall
be remanded to the RTC to determine the fair market value of the land
at the time of the taking thereof in 1988 and the intervenors-
townhouse owners shall pay such value to the Sanchezes within Thirty
(30) days from the finality of the determination of the RTC of such fair
market value;
3. Declaring the legality and validity of the Extrajudicial
Rescission effected by the plaintiffs on the Contract to Sell on the
subject property, covered by TCT No. 156254 in their names;
4. Ordering the defendants and all persons acting on their behalf

to return to the plaintiffs the Owner's Copy of TCT No. 156254,
including all the documents entrusted to them in consideration of their
Contract to Sell;
5. Ordering defendants and all persons, including the intervenors

and all persons claiming rights under them to return and surrender to
the plaintiffs the peaceful possession of the subject property covered
by TCT No. 156254 located at No. 10 Panay Avenue, Quezon City in the
event plaintiffs Sanchezes decide to appropriate the townhouses and
improvements for their own without need of payment of indemnity;

plaintiffs the sum of One Hundred Thousand (P100,000.00) Pesos,
Philippine Currency as and by way of attorney's fees;

Philippine Currency as and by way of moral damages; HDITCS

Philippine Currency as and by way of exemplary damages to serve as
correction or example for the public good;
plaintiffs the sum of Two Hundred Ninety Thousand (P290,000.00)
Pesos, representing the depreciated cost of the plaintiffs' demolished
building per their Agreement (Exhibit "D");
10. Dismissing defendants' counterclaim as well as intervenors'

counterclaims/complaints and answers in intervention against the
plaintiffs;
11. Ordering the plaintiffs to return to the defendants, after

deducting the damages herein awarded, the remaining amount on the
sum paid by the defendants on the subject property;
12. Dismissing the counterclaim of plaintiffs against all
intervenors except as awarded to the former in this Decision;
13. Ordering the defendants jointly and severally to return to

intervenors, Jose and Visitacion Caminas, Reynaldo Maniwang,
Generoso "Gener" Tulagan, and VTCI, and Arturo Marquez, the
following sum to wit:
1. CAMINAS — P650,000.00 (Absolute Deed
of Sale dated 14 March
1989);
2. MANIWANG — P700,000.00 (Absolute Deed

of Sale dated 22 February
1989);
3. TULAGAN — P1.4 Million, representing the

following:
P600,000.00 — (Contract To
3.1
Sell
dated 21 February 1989);
P800,000.00 — (Conditional
3.2
Deed
of Sale dated 31 January
1989);
4. VTCI — P2.1 Million, representing the

following.
P700,000.00 — (Absolute
4.1
Deed
1989
— Lot 1-K);
P700,000.00 — (Absolute
4.2
Deed
1989
— Lot 1-I);
P700,000.00 — (Absolute
4.3
Deed
1989
— Lot 1-F);
P600,000.00 (Contract To
5. MARQUEZ —
Sell
dated 8 March 1989);
6. BPI — Declaring the intervention of

the Bank without merit.
respectively, representing the full and/or partial purchase price of

their respective units, all with six (6) percent interest per annum
counted from the time of their filing of their intervention of judicial
demand until fully paid.
With costs against defendants. DcITHE
SO ORDERED.
Peralta, Villarama, Jr., Reyes and Jardeleza, JJ., concur.
Footnotes
1. Penned by Associate Justice Jose L. Sabio, Jr. and concurred in by Associate

Justices Rosalinda Asuncion Vicente and Ramon M. Bato, Jr.
2. Records, Vol. 1, pp. 153-154.

3. Id. at 155.
4. Id.
5. Id. at 58-59.
6. CA rollo, p. 48.
7. Id.
8. Id. at 49-50.
9. Id. at 117-119.
10. Records, Vol. 1, pp. 158-159.

11. Id. at 160-161.
12. Id. at 162.
13. Id. at 163-164.
14. Id. at 165.

15. Id. at 166.
16. Id. at 167.
17. Id. at 171.
18. Id. at 168-169.

19. Id. at 174.
20. Id. at 176-177.
21. Id. at 178-179.
22. Rollo , pp. 17 & 20.

23. Records, Vol. 1, p. 180.
24. Id. at 181.
25. Id. at 173.
26. Id. at 175.

27. Id. at 182.
28. Id. at 183.
29. Id. at 192.

30. Id. at 193.
31. Id. at 1-21.
32. Records, Vol. 2, pp. 89-90.
33. Records, Vol. 1, pp. 364-367.

34. Id. at 368-371.
35. Id. at 333-335.
36. Records, Vol. 2, pp. 45-48.
37. Records, Vol. 1, pp. 272-274.

38. Id. at 376-384.
39. TSN, November 6, 2001, p. 13.
40. TSN, February 20, 2001, pp. 12-13.
41. TSN, March 6, 2001, p. 5.

42. TSN, January 22, 2002, p. 10.
43. Records, Vol. 1, pp. 376-384.
44. Records, Vol. 2, pp. 60-69.
45. Id. at 194-196.

46. Id. at 118-119, which states as follows:
6. That it is agreed by the parties hereof that if at any time one of the aforestated
checks is dishonored by the bank, the First and Second Parties may opt to
rescind this contract and that in the event of rescission . . . .
47. Rollo (G.R. No. 179518), p. 89.

48. Id. at 19-20.
49. Rollo (G.R. No. 179835), p. 27.
50. Rollo (G.R. No. 179954), pp. 7-8.
51. Rollo (G.R. No. 179518), pp. 78-79.

52. Cang v. Cullen, G.R. No. 163078, November 25, 2009, 605 SCRA 391, 404.
53. Rollo (G.R. No. 179518), pp. 86-87.
54. Rollo , p. 86.
55. Centeno v. Court of Appeals, No. L-40105, November 11, 1985, 139 SCRA 545.
56. Home Bankers Savings and Trust Co. v. Court of Appeals, G.R. No. 128354,
April 26, 2005, 457 SCRA 167.
57. Toledo-Banaga v. CA, G.R. No. 127941, January 28, 1999, 302 SCRA 331.
58. Bautista v. Jalandoni, G.R. No. 171464, November 27, 2013.

59. SEC. 18. Mortgages. — No mortgage of any unit or lot shall be made by the
owner or developer without prior written approval of the [HLURB]. Such
approval shall not be granted unless it is shown that the proceeds of the
mortgage loan shall be used for the development of the condominium or
subdivision project . . . . The loan value of each lot or unit covered by the
mortgage shall be determined and the buyer thereof, if any, shall be notified
before the release of the loan. The buyer may, at his option, pay his
installment for the lot or unit directly to the mortgagee who shall apply the
payments to the corresponding mortgage indebtedness secured by the
particular lot or unit being paid for . . . . (emphasis supplied)
60. The Subdivision and Condominium Buyers' Protective Decree, issued on July 12,
1976.
61. Records, Vol. 3, p. 34.
62. Alano v. Planters' Development Bank, G.R. No. 171628, June 13, 2011, 651
SCRA 766, 774; citing Metropolitan Bank and Trust Co. v. Pascual, G.R. No.
163744, February 12, 2010, 612 SCRA 493, 496.
63. Metropolitan Waterworks and Sewerage System v. Court of Appeals, No. L-

54526, August 25, 1986, 143 SCRA 623.
64. 2 A. Tolentino, COMMENTARIES AND JURISPRUDENCE ON THE CIVIL CODE OF
THE PHILIPPINES 119 (1992).
65. G.R. No. 152267, September 16, 2005, 470 SCRA 99, 107-108.
66. Records, Vol. 2, p. 409.

67. Id. at 161-180.

FIRST DIVISION
[G.R. No. 146259. September 13, 2007.]
FLORENTINO, TROADIO and PEDRO, all surnamed OCHOA ,

petitioners, vs. MAURO APETA and APOLONIA ALMAZAN ,
respondents.
DECISION
SANDOVAL-GUTIERREZ, J : p
Challenged in this Petition for Review on Certiorari under Rule 45 of the

1997 Rules of Civil Procedure, as amended, are the Decision 1 dated
September 8, 2000 and Resolution 2 dated November 20, 2000 of the Court
of Appeals in CA G.R. CV No. 56109.
The facts are:
Since 1910, the above-named petitioners and their predecessors-in-
interest have been occupying Lot No. 1580 consisting of 886 square meters
situated in Malaban, Biñan, Laguna. The lot is covered by Transfer Certificate
of Title (TCT) No. T-40624 of the Registry of Deeds of that province. They
built their houses and apartment building thereon.
Sometime in May 10, 1982, Mauro Apeta and Apolonia Almazan,
respondents, found that they are the true owners of Lot No. 1580 being
occupied by petitioners.
On January 22, 1988, respondents filed with the Regional Trial Court
(RTC), Branch 24, Biñan, Laguna a complaint for recovery of possession and
damages against petitioners, docketed as Civil Case No. B-2777.
Respondents alleged in the main that they are the lawful owners of Lot No.
1580 covered by Certificate of Title No. RT-599 (10731) issued by the
Registry of Deeds of Laguna.
In their answer to the complaint, petitioners specifically denied the
allegations in the complaint, contending that they are the owners of Lot No.
1580 as shown by TCT No. T-40624 issued by the Registry of Deeds of
Laguna.
During the proceedings before the RTC, upon agreement of the parties,
the trial judge commissioned Engr. Romulo Unciano of the Bureau of Lands
of Region IV to conduct a resurvey of the disputed property. The result of the
resurvey (approved by the Bureau of Lands) shows that Lot No. 1580,
occupied by petitioners, was registered in the name of Margarita Almada,
respondents' predecessor-in-interest; and that the lot covered by TCT No. T-
40624 is not Lot No. 1580, but Lot No. 1581 registered in the name of
Servillano Ochoa, petitioners' predecessor-in-interest. This lot has been
occupied by Isidro Jasmin.
On March 24, 1995, the trial court rendered a Decision in favor of
respondents, thus:
WHEREFORE, premises considered, judgment is hereby rendered
in favor of the plaintiffs and against the defendants as follows:
1. Declaring plaintiffs as the true and lawful owners of Lot

1580 of the Biñan Estate Subdivision covered by Transfer Certificate of
Title No. RT-599 (10731) and declaring the defendants without right
whatsoever to continue in possession thereof.
2. Ordering the defendants and all those acting in their behalf

to deliver peacefully the physical possession of Lot 1580 to the
plaintiffs and to remove their houses and apartment building thereon.
3. Ordering the defendants to pay, jointly and severally to
plaintiffs the amount of P30,000 as and for attorneys fees and litigation
expenses.
SO ORDERED. 3
On appeal, the Court of Appeals, in its Decision dated September 8,

2000, affirmed the judgment of the RTC.
Petitioners filed a motion for reconsideration, but it was denied by the
appellate court in its Resolution 4 dated November 20, 2000.
Hence, the instant petition.
Petitioners contend that Lot No. 1580 belongs to them and that
respondents' action is barred by prescription.
Petitioners' contention lacks merit.
On petitioners' claim that they are the owners of Lot No. 1580, it is a
well-established principle that in an appeal via a petition for review on
certiorari, only questions of law may be raised. Here, the issue posed by
petitioners requires us to weigh anew the evidence submitted by the parties
already passed upon by the Court of Appeals. It is basic that this Court is not
a trier of facts. Thus, it may not review the findings of the Court of Appeals
except, among others: (a) when its factual findings and those of the trial
court are contradictory; (b) when its inference is manifestly mistaken or
absurd; (c) when its judgment is premised on its misapprehension of the
facts; and (d) when it failed to resolve relevant facts which, if properly
considered, would justify a modification or reversal of the decision of the
appellate court. 5 The issue raised by petitioners that they are the actual
owners of Lot No. 1580 is factual in nature and requires a review of the
pieces of evidence presented by the parties. Thus, we can no longer pass
upon and evaluate the lower courts' finding that based on the evidence
presented before them, specifically the result of the resurvey conducted by
Engr. Romulo Unciano, respondents are "the true and lawful owners of Lot
1580."
Anent petitioners' second contention that respondents' action has been
barred by prescription, suffice it to state that no title to registered land in
derogation to that of the registered owner shall be acquired by prescription
or adverse possession. 6 Neither can prescription be allowed against the
hereditary successors of the registered owner, because they step into the
shoes of the decedent and are merely the continuation of the personality of
their predecessor-in-interest. 7
Verily, the Court of Appeals did not err when it ruled that respondents
are the true and lawful owners of Lot No. 1580. Hence, they "should now be
placed in possession thereof."
Parenthetically, considering that petitioners and their predecessors-in-
interest have built their houses and apartment building on Lot No. 1580,
should respondents be allowed to take possession of those improvements?
In order to settle this matter, we should determine whether petitioners were
builders in good faith.
Good faith is an intangible and abstract quality with no technical
meaning or statutory definition, and it encompasses, among other things, an
honest belief, the absence of malice and the absence of design to defraud or
to seek an unconscionable advantage. It implies honesty of intention, and
freedom from knowledge of circumstances which ought to put the holder
upon inquiry. 8 The essence of good faith lies in an honest belief in the
validity of one's right, ignorance of a superior claim and absence of intention
to overreach another. 9 Applied to possession, one is considered in good
faith if he is not aware that there exists in his title or mode of acquisition
any flaw which invalidates it. 10
Using the above parameters, we are convinced that petitioners and
their predecessors-in-interest were in good faith when they built their houses
and apartment building on Lot No. 1580 since they were convinced it was
covered by their TCT No. T-40624.
The following provisions of the Civil Code are relevant:
Article 448. The owner of the land on which anything has
been built, sown or planted in good faith, shall have the right to
appropriate as his own the works, sowing or planting, after payment of
the indemnity provided for in Articles 546 and 548, or to oblige the one
who built or planted to pay the price of the land, and the one who
obliged to buy the land if its value is considerably more than that of the
building or trees. In such case, he shall pay reasonable rent, if the
lease and in case of disagreement, the court shall fix the terms thereof.
Article 546. Necessary expenses shall be refunded to every

possessor; but only the possessor in good faith may retain the thing
until he has been reimbursed therefor.
Useful expenses shall be refunded only to the possessor in good

faith with the same right of retention, the person who has defeated him
in the possession having the option of refunding the amount of the
expenses or of paying the increase in value which the thing may have
acquired by reason thereof.
Article 548. Expense for pure luxury or mere pleasure shall

not be refunded to the possessor in good faith; but he may remove the
ornaments with which he has embellished the principal thing if it
suffers no injury thereby, and if his successors in the possession do not
prefer to refund the amount expended.
Under the foregoing provisions, the landowner can make a choice —

either by appropriating the building by paying the proper indemnity or
obliging the builder to pay the price of the land. The choice belongs to the
owner of the land, a rule that accords with the principle of accession that the
accessory follows the principal and not the other way around. He must
choose only one.
Following the above provisions, respondents, as owners of Lot No.
1580, may choose between appropriating as their own the houses and
apartment building constructed thereon by petitioners and their
predecessors-in-interest by paying the proper indemnity or value; or obliging
petitioners to pay the price of Lot No. 1580 which is not more than that of
the improvements.
WHEREFORE, we DENY the petition. The assailed Decision and
Resolution of the Court of Appeals in CA G.R. CV No. 56109 are AFFIRMED
with MODIFICATION in the sense that respondents have the option to pay for
the houses and apartment building constructed by petitioners and their
predecessors-in-interest on Lot No. 1580; or to oblige petitioners to pay the
price of the lot in an amount not more than the value of the said
improvements.
SO ORDERED.
Puno, C.J., Corona, Azcuna and Garcia, JJ., concur.
Footnotes
1. Penned by Associate Justice Martin S. Villarama and concurred in by

Associate Justice Salome A. Montoya (retired) and Associate Justice Romeo J.
Callejo, Sr. (retired member of the Supreme Court), Rollo, pp. 38-42.
2. Id., p. 44.
3. Id., p. 38.
4. Id., p. 44.
5. Fuentes v. Court of Appeals, G.R. No. 109849, February 29, 1997, 268 SCRA
703, citing Cordial v. Miranda, G.R. No. 135495, December 14, 2000, 348
SCRA 158; Cabataje v. Puduman, G.R. No. 134712, August 13, 2004, 436
SCRA 423.
6. Section 47 of P.D. 1529 or the Property Registration Decree; Alcantara-Daus

v. De Leon , G.R. No. 149750, June 16, 2003, 404 SCRA 74, citing Jose v.
Court of Appeals, 192 SCRA 735 (1990) and Ferrer-Lopez v. Court of Appeals,
150 SCRA 393 (1987).
7. Bailon-Casilao v. Court of Appeals, No. L-35767, April 15, 1988, 160 SCRA
738.
8. Philippine National Bank v. De Jesus, G.R. No. 149295, September 23, 2003,
411 SCRA 557.
9. Id., citing Bernardo v. Bernardo , 95 Phil. 202, and Negrete v. CFI of

Marinduque, 48 SCRA 113 (1972).

FIRST DIVISION
[G.R. No. 199353. April 4, 2018.]
LEVISTE MANAGEMENT SYSTEM, INC., petitioner, vs. LEGASPI

TOWERS 200, INC., and VIVIAN Y. LOCSIN and PITONG
MARCORDE, respondents.
ENGR. NELSON Q. IRASGA, in his capacity as Municipal

Building Official of Makati, Metro Manila and HON. JOSE P.
DE JESUS, in his capacity as Secretary of the Dept. of Public
Works and Highways, third party respondents.
[G.R. No. 199389. April 4, 2018.]
LEGASPI TOWERS 200, INC., petitioner, vs. LEVISTE

MANAGEMENT SYSTEM, INC., ENGR. NELSON Q. IRASGA, in
his capacity as Municipal Bldg. Official of Makati, Metro
Manila, and HON. JOSE P. DE JESUS, in his capacity as
Secretary of the Department of Public Works and
Highways, respondents.
DECISION
LEONARDO-DE CASTRO, ** J : p
The Civil Code provisions on builders in good faith presuppose that the
owner of the land and the builder are two distinct persons who are not
bound either by specific legislation on the subject property or by contract.
Properties recorded in accordance with Section 4 1 of Republic Act No. 4726
2 (otherwise known as the Condominium Act) are governed by said Act; while
the Master Deed and the By Laws of the condominium corporation establish
the contractual relations between said condominium corporation and the unit
owners. HTcADC
These are consolidated petitions under Rule 45 filed by Leviste

Management System, Inc. (LEMANS) and Legaspi Towers 200, Inc. (Legaspi
Towers), both assailing the Decision 3 dated May 26, 2011 of the Court of
Appeals in CA-G.R. CV No. 88082. The assailed Decision 4 affirmed the
October 25, 2005 Decision of the Regional Trial Court (RTC), Branch 135 of
Makati City in Civil Case No. 91-634.
The facts, as culled by the Court of Appeals from the records, follow:
Legaspi Towers is a condominium building located at Paseo de
Roxas, Makati City. It consists of seven (7) floors, with a unit on the
roof deck and two levels above said unit called Concession 2
and Concession 3. The use and occupancy of the condominium
building is governed by the Master Deed with Declaration of
Restrictions of Legaspi Towers (hereafter "Master Deed") annotated
on the transfer certificate of title of the developer, Legaspi Towers
Development Corporation.
Concession 3 was originally owned by Leon Antonio Mercado.
On 9 March 1989, Lemans, through Mr. Conrad Leviste, bought
Concession 3 from Mercado.
Sometime in 1989, Lemans decided to build another unit
(hereafter "Concession 4") on the roof deck of Concession 3. Lemans
was able to secure the building permit for the construction of
Concession 4 and commenced the construction thereof on October
1990.
Despite Legaspi Corporation's notice that the construction of
Concession 4 was illegal, Lemans refused to stop its construction.
Due to this, Legaspi Corporation forbade the entry of Lemans'
construction materials to be used in Concession 4 in the
condominium. Legaspi Corporation similarly wrote letters to the
Building Official Nelson Irasga ("hereafter Irasga"), asking that the
[building] permit of Lemans for Concession 4 be cancelled. Irasga,
however, denied the requested cancellation, stating that the
applicant complied with the requirements for a building permit and
that the application was signed by the then president of Legaspi
Corporation.
Lemans filed the Complaint dated February 20, 1991 with the
RTC, praying among others that a writ of mandatory injunction be
issued to allow the completion of the construction of Concession 4. On
3 April 1991, the RTC issued the writ prayed for by Lemans.
Later, Legaspi Corporation filed the Third Party Complaint dated
October 7, 1991. This was against Irasga, as the Municipal Building
Official of Makati, and Jose de Jesus (hereafter "De Jesus"), as the
Secretary of Public Works and Highways (collectively referred to as
the "third-party defendants-appellees") so as to nullify the building
permit issued in favor of Lemans for the construction of Concession 4.
After the parties had presented and formally offered their
respective pieces of evidence, but before the rendition of a judgment
on the main case, the RTC, in its Order dated May 24, 2002, found the
application of Article 448 of the Civil Code and the ruling in the Depra
vs. Dumlao [case] (hereafter "Depra Case") to be proper.
Lemans moved for the reconsideration o[f] the aforementioned
order. The RTC denied this and further ruled:
The main issue in this case is whether or not
[LEMANS] owns the air space above its condominium unit.
As owner of the said air space, [LEMANS] contends that
its construction of another floor was in the exercise of its
rights.
It is the [finding] of the Court that [LEMANS] is not
the owner of the air space above its unit. [LEMANS'] claim
of ownership is without basis in fact and in law. The air
space which [LEMANS] claims is not on top of its unit but
also on top of the condominium itself, owned and
operated by defendant Legaspi Towers.
Since it appears that both plaintiff and defendant
Legaspi Towers were in good faith, the Court finds the
applicability of the ruling in Depra vs. Dumlao, 136 SCRA
475.
From the foregoing, Lemans filed the Petition for Certiorari
dated November 13, 2002 with the [Court of Appeals], docketed as
CA G.R. SP. No. 73621, which was denied in the Decision promulgated
on March 4, 2004. The Court did not find grave abuse of discretion,
amounting to lack or excess of jurisdiction, on the RTC's part in
issuing the above orders. Lemans sought reconsideration of this
decision but failed. aScITE
Meanwhile, Lemans adduced evidence before the RTC to

establish that the actual cost for the construction of Concession 4 was
Eight Hundred Thousand Eight Hundred Ninety-Seven and 96/100
Pesos (PhP800,897.96) and that the fair market value of Concession 4
was Six Million Pesos (PhP6,000,000.00). Afterwards, the RTC
rendered the Assailed Decision. 5
Reiterating its previous ruling regarding the applicability of Article 448
of the Civil Code to the case, the RTC in its October 25, 2005 Decision
disposed of the dispute in this wise:
WHEREFORE, judgment is hereby rendered ordering defendant
Legaspi Towers 200, Inc. to exercise its option to appropriate the
additional structure constructed on top of the penthouse owned by
plaintiff Leviste Management Systems, Inc. within sixty [60] days
from the time the Decision becomes final and executory. Should
defendant Legaspi Towers 200, Inc. choose not to appropriate the
additional structure after proper indemnity, the parties shall agree
upon the terms of the lease and in case of disagreement, the Court
shall fix the terms thereof.
For lack of merit, the third party complaint and the
counterclaims are hereby dismissed.
Costs against the plaintiff. 6
When the parties' respective motions for reconsideration were denied
by the trial court, both elevated the matter to the Court of Appeals.
On May 26, 2011, the Court of Appeals, acting on the consolidated
appeals of LEMANS and Legaspi Towers, rendered its Decision affirming the
decision of the RTC of Makati City.
The Court of Appeals held that the appeal of LEMANS should be
dismissed for failure to comply with Section 13, Rule 44 in relation to Section
1 (f), Rule 50 of the Rules of Court, as the subject index of LEMANS' brief did
not contain a digest of its arguments and a list of textbooks and statutes it
cited. 7 For this reason, the appellate court no longer passed upon the sole
issue raised by LEMANS, i.e., whether its construction of Concession 4 should
be valued at its actual cost or its market value.
As regards the appeal of Legaspi Towers, the Court of Appeals held
that while Concession 4 is indeed a nuisance, LEMANS has been declared a
builder in good faith, and noted that Legaspi Towers failed to contest this
declaration. Since Concession 4 was built in good faith, it cannot be
demolished. The Court of Appeals likewise affirmed the validity of the
building permit for Concession 4, holding that if the application and the plans
appear to be in conformity with the requirements of governmental
regulation, the issuance of the permit may be considered a ministerial duty
of the building official. 8
The Motion for Partial Reconsideration of Legaspi Towers and the
Motion for Reconsideration of LEMANS were denied for lack of merit in the
appellate court's Resolution 9 dated November 17, 2011.
Consequently, LEMANS and Legaspi Towers filed separate Petitions for
Review on Certiorari with this Court based on the following grounds:
[LEMANS PETITION:]
I
THE COURT OF APPEALS ERRED WHEN IT FAILED TO APPLY THE
DEPRA VS. DUMLAO DOCTRINE WHEN IT REFUSED TO RULE ON THE
PROPER VALUATION OF THE SUBJECT PROPERTY FOR THE PURPOSE
OF DETERMINING THE PURCHASE PRICE IN THE EVENT THAT
RESPONDENT LEGASPI TOWERS EXERCISES ITS OPTION TO
PURCHASE THE PROPERTY.
II
THE COURT OF APPEALS ERRED WHEN, REFUSING TO RULE ON THE
VALUATION OF THE SUBJECT PROPERTY, IT DISREGARDED THE
EVIDENCE ALREADY SUBMITTED AND PART OF THE RECORDS. 10
[LEGASPI TOWERS PETITION:]
I. THE COURT OF APPEALS ERRED IN NOT HOLDING THAT [LEGASPI
TOWERS] HAS THE RIGHT TO DEMOLISH CONCESSION 4 FOR
BEING AN ILLEGAL CONSTRUCTION.
II. THE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE
BUILDING PERMIT OF CONCESSION 4 IS NOT VALIDLY ISSUED. 11
At the crux of the present controversy is the legal issue whether Article
448 of the Civil Code and our ruling in Depra v. Dumlao 12 are applicable to
the parties' situation.
Prior to answering this key question, we dispose of a procedural
matter. LEMANS has taken the position that in light of the finality of the trial
court's Order dated May 24, 2002 holding that Article 448 of the Civil Code
and the Depra case should be applied in this case, Legaspi Towers is now
bound by same and may no longer question the former's status as a builder
in good faith. The Court of Appeals in its assailed Decision appears to
subscribe to the same view when it ruled that, despite the fact that
Concession 4 was a nuisance, the previous declaration that LEMANS is a
builder in good faith limits Legaspi Towers' options to those provided in
Article 448.
The Court does not agree with LEMANS and the Court of Appeals.
At the outset, it must be pointed out that the May 24, 2002 RTC Order
is an interlocutory order that did not finally dispose of the case and, on the
contrary, set the case for hearing for reception of evidence on the amount of
expenses spent by LEMANS in the construction of Concession 4. For this
reason, it is apropos to discuss here the remedies available to a party
aggrieved by interlocutory orders of the trial court.
Section 1, Rule 41 of the Rules of Court pertinently states:
RULE 41
Appeal from the Regional Trial Courts
SECTION 1. Subject of appeal. — An appeal may be taken
from a judgment or final order that completely disposes of the case,
or of a particular matter therein when declared by these Rules to be
appealable. HEITAD
No appeal may be taken from:

(a) An order denying a motion for new trial or
reconsideration;
(b) An order denying a petition for relief or any similar motion
seeking relief from judgment;
(c) An interlocutory order;
(d) An order disallowing or dismissing an appeal;
(e) An order denying a motion to set aside a judgment by
consent, confession or compromise on the ground of fraud,
mistake or duress, or any other ground vitiating consent;
(f) An order of execution;
(g) A judgment or final order for or against one or more of
several parties or in separate claims, counterclaims, cross-
claims and third-party complaints, while the main case is
pending, unless the court allows an appeal therefrom; and
(h An order dismissing an action without prejudice.
In all the above instances where the judgment or final order is
not appealable, the aggrieved party may file an appropriate special
civil action under Rule 65. (Emphases supplied.)
Hence, we explained in Crispino v. Tansay 13 that:
The remedy against an interlocutory order is not appeal but a
special civil action for certiorari under Rule 65 of the Rules of Court.
The reason for the prohibition is to prevent multiple appeals in a
single action that would unnecessarily cause delay during trial. In
Rudecon v. Singson:
The rule is founded on considerations of orderly
procedure, to forestall useless appeals and avoid undue
inconvenience to the appealing party by having to assail
orders as they are promulgated by the court, when all
such orders may be contested in a single appeal.
Faced with an interlocutory order, parties may instantly
avail of the special civil action of certiorari. This would entail
compliance with the strict requirements under Rule 65 of the
Rules of Court. Aggrieved parties would have to prove that the
order was issued without or in excess of jurisdiction or with grave
abuse of discretion amounting to lack or excess of jurisdiction and
that there is neither appeal nor any plain, speedy, and adequate
remedy in the ordinary course of law.
This notwithstanding, a special civil action for certiorari
is not the only remedy that aggrieved parties may take
against an interlocutory order, since an interlocutory order
may be appealed in an appeal of the judgment itself. In
Investments, Inc. v. Court of Appeals it was held:
Unlike a "final" judgment or order, which is appealable, as
above pointed out, an "interlocutory" order may not
be questioned on appeal except only as part of an
appeal that may eventually be taken from the final
judgment rendered in the case. (Emphases supplied;
citations omitted.)
From the foregoing disquisition in Crispino, a party who wishes to assail
an interlocutory order may (a) immediately file a petition for certiorari if
appropriate and compliant with the stringent requirements of Rule 65 or (b)
await judgment and question the interlocutory order in the appeal of the
main decision. Notably, in the case at bar, LEMANS filed a petition for
certiorari against the RTC's May 24, 2002 14 and August 19, 2002 15 Orders
while Legaspi Towers chose to simply appeal the main decision.
This Court is not bound by the interlocutory orders of the trial court nor
by the Court of Appeals' Decision dated March 4, 2004 in CA-G.R. SP No.
73621, i.e., LEMANS' petition for certiorari of said interlocutory orders.
To begin with, the Court of Appeals' decision in CA-G.R. SP No. 73621
was never elevated to this Court. Secondly, in resolving LEMANS' petition for
certiorari, the Court of Appeals itself ruled, among others, that:
It is noteworthy to state that the petitioner imputes grave
abuse of discretion on the part of the respondent judge in ruling that
Article 448 and the case of Depra v. Dumlao (136 SCRA 475) are
applicable in the case at bar. At most, these are considered mere
errors of judgment, which are not proper for resolution in a
petition for certiorari under Rule 65.
The error is not jurisdictional, and certiorari is not available
to correct errors in judgment or conclusions of law and fact
not amounting to excess or lack of jurisdiction. In the
extraordinary writ of certiorari, neither questions of fact nor even of
law are entertained, but only questions of lack or excess of
jurisdiction or grave abuse of discretion. 16 (Emphases supplied.)
We are not so constrained in these consolidated petitions under Rule
45 for as we observed in E.I. Dupont De Nemours and Co. v. Francisco: 17
The special civil action of certiorari under Rule 65 is intended to
correct errors of jurisdiction. Courts lose competence in relation to an
order if it acts in grave abuse of discretion amounting to lack or
excess of jurisdiction. A petition for review under Rule 45, on
the other hand, is a mode of appeal intended to correct
errors of judgment. Errors of judgment are errors committed by a
court within its jurisdiction. This includes a review of the
conclusions of law of the lower court and, in appropriate
cases, evaluation of the admissibility, weight, and inference
from the evidence presented. (Emphases supplied; citations
omitted.)
In all, there is no procedural bar for this Court to pass upon the
previous interlocutory orders of the court a quo and examine the legal
conclusions therein in the present consolidated appeals of the trial court's
decision. We are compelled to undertake such a review in light of the novelty
of the main issue presented in these petitions. The Court, after all, is the
final arbiter of all legal questions properly brought before it. 18
We proceed to the merits of these consolidated cases.
First, we find no cogent reason to disturb the finding of the lower
courts that it is Legaspi Towers which owns the air space above Concession
3 as the same is in keeping with the facts and the applicable law. We quote
with approval the following discussion from the Court of Appeals Decision
dated March 4, 2004 in CA-G.R. SP No. 73621:
As correctly pointed out by the private respondent Legaspi, the
air space wherein Concession 4 was built is not only above
Concession 3, but above the entire condominium building. The
petitioner's [LEMANS'] ownership of Concession 3 does not
necessarily extend to the area above the same, which is actually the
"air space" of the entire condominium building. The ownership of the
air space above Concession 3 is not a necessary incident of the
ownership of Concession 3. ATICcS
It may be well to state here the following provisions of Republic

Act No. 4726, otherwise known as The Condominium Act:
Section 2. A condominium is an interest in real
property consisting of a separate interest in a unit in a
residential, industrial or commercial building and an
undivided interest in common directly or indirectly, in the
land on which it is located and in other common areas of
the building. A condominium may include, in addition, a
separated interest on other portions of such real
property. Title to the common areas, including the land,
or the appurtenant interests in such areas, may be held
by a corporation specially formed for the purpose
(hereinafter known as the "condominium corporation") in
which the holders of separate interests shall
automatically be members or shareholders, to the
exclusion of others, in proportion to the appurtenant
interest of their respective units in the common areas.
(RA 4726, The Condominium Act)
Section 3 (d). "Common areas" means the entire
project excepting all units separately granted or held or
reserved.
Section 6. Unless otherwise expressly provided
in the enabling or master deed or the declaration of
restrictions, the incidents of the condominium grant are
as follows:
(a) The boundary of the unit granted are the interior
surfaces of the perimeter walls, ceilings, windows and
doors thereof. The following are not part of the unit
— bearing walls, columns, walls, roofs, foundations
and other common structural elements of the
building x x x.
Evidently, what a unit includes is only the four walls, ceilings,
windows and doors thereof. It certainly does not include the roof or
the areas above it.
In a condominium, common areas and facilities are "portions of
the condominium property not included in the units," whereas, a unit
is "a part of the condominium property which is to be subject to
private ownership." Inversely, that which is not considered a unit
should fall under common areas and facilities.
Inasmuch as the air space or the area above Concession 3 is
not considered as part of the unit, it logically forms part of the
common areas.
The petitioner's efforts to establish that Concession 3 and the
open area in the roof deck are reserved and separately granted from
the condominium project are futile, inasmuch as even if the same is
established, it would not prove that the area above it is not part of
the common area. Admittedly, there is nothing in the Master Deed
which prohibits the construction of an additional unit on top of
Concession 3, however, there is also nothing which allows the same.
The more logical inference is that the unit is limited to that stated in
the Condominium Act, considering that the Master Deed with
Declaration of Restrictions does not expressly declare otherwise.
To allow the petitioner's claim over the air space would not
prevent the petitioner from further constructing another unit on top of
Concession 4 and so on. This would clearly open the door to further
"impairment of the structural integrity of the condominium building"
which is explicitly proscribed in the Master Deed. 19
Significantly, the parties are no longer questioning before us the past
rulings regarding Legaspi Towers' ownership of the air space above
Concession 3 which is the air space above the condominium building itself.
The principal bones of contention here are the legal consequences of such
ownership and the applicability of Article 448 of the Civil Code and our ruling
in Depra v. Dumlao 20 on the factual antecedents of these cases.
The ruling of this Court in Depra v. Dumlao extensively cited by both
parties pertains to the application of Articles 448 and 546 of the Civil Code,
which respectively provide:
built, sown or planted in good faith, shall have the right to
appropriate as his own the works, sowing or planting, after
payment of the indemnity provided for in Articles 546 and
548, or to oblige the one who built or planted to pay the price
of the land, and the one who sowed, the proper rent. However, the
builder or planter cannot be obliged to buy the land if its value is
considerably more than that of the building or trees. In such case, he
shall pay reasonable rent, if the owner of the land does not choose to
appropriate the building or trees after proper indemnity. The parties
shall agree upon the terms of the lease and in case of disagreement,
the court shall fix the terms thereof.
Art. 546. Necessary expenses shall be refunded to every
possessor; but only the possessor in good faith may retain the thing
until he has been reimbursed therefor.
Useful expenses shall be refunded only to the possessor in
good faith with the same right of retention, the person who has
defeated him in the possession having the option of refunding the
amount of the expenses or of paying the increase in value which the
thing may have acquired by reason thereof.
To recap, the defendant in Depra constructed his house on his lot but,
in good faith, encroached on an area of 34 square meters of the property of
plaintiff on which defendant's kitchen was built. The Court ruled that
pursuant to Article 448 of the Civil Code, plaintiff, as the owner of the land,
has the option either to pay for the encroaching part of the kitchen, or to sell
the encroached 34 square meters of his lot to the defendant, the builder in
good faith. The owner of the land cannot refuse to pay for the encroaching
part of the building and to sell the encroached part of the land. Pursuant to
Articles 448 and 546 of the Civil Code, the Court remanded the case to the
RTC to determine the following:
(1) the present fair price of the 34-square meter encroached area of
the land;
(2) the amount of expenses spent in building the kitchen;
(3) the increase in value the area may have acquired by reason of
the building; and TIADCc
(4) whether the value of the 34-square meter area is considerably

more than that of the kitchen built thereon.
After the RTC has determined the four items above, the RTC shall grant
the owner a period of 15 days to exercise his option whether (a) to
appropriate the kitchen by paying the amount of expenses spent for building
the same or the increase of such area's value by reason of the building or
(b) to oblige the builder in good faith to pay the price of said area. The Court
thereafter provided for further contingencies based on the RTC finding in the
fourth item.
In the case at bar, LEMANS prays that, pursuant to Depra, the Court
should determine the value of Concession 4, and find such value to be Six
Million Eight Hundred Thousand Eight Hundred Ninety-Seven and 96/100
Pesos (P6,800,897.96) plus legal interest. Legaspi Towers, on the other
hand, prays for the extrajudicial abatement of Concession 4, on the ground
that the applicable provision of the Civil Code is Article 699, which provides:
Article 699. The remedies against a public nuisance are:
(1) A prosecution under the Penal code or any local
ordinance; or
(2) A civil action; or
(3) Abatement, without judicial proceedings.
Legaspi Towers also argues that Concession 4 is an illegal construction,
for being in violation of the Condominium Act and the By Laws of Legaspi
Towers. Legaspi Towers stresses that LEMANS failed to comply with the
Condominium Act, which requires the consent of the registered owners of
the condominium project for the amendment of the Master Deed.
Indeed, the last paragraph of Section 4 of the Condominium Act
provides:
The enabling or master deed may be amended or revoked upon
registration of an instrument executed by the registered owner or
owners of the property and consented to by all registered holders of
any lien or encumbrance on the land or building or portion thereof.
The term "registered owner" shall include the registered owners of
condominiums in the project. Until registration of a revocation, the
provisions of this Act shall continue to apply to such property.
The Master Deed of Legaspi Towers 21 states the number of stories and
basements, and the number of units and accessories, and contains as an
attachment a diagrammatic floor plan of the building as required by Section
4 (b) 22 of the Condominium Act. Section 2 of the Master Deed states:
Section 2. The Building and the Units. — The building
included in the condominium project is a commercial building
constructed of reinforced concrete and consisting of seven (7) storeys
with a basement, a ground floor, a deck roof, and two levels above
the deck roof. x x x. 23
The construction by LEMANS of Concession 4 contravenes the Master
Deed by adding a third level above the roof deck. As pointed out by Legaspi
Towers and shown in the records, the Master Deed was never amended to
reflect the building of Concession 4. Furthermore, LEMANS failed to procure
the consent of the registered owners of the condominium project as required
in the last paragraph of Section 4 of the Condominium Act.
The By-Laws of Legaspi Towers 24 specifically provides that
extraordinary improvements or additions must be approved by the members
in a regular or special meeting called for the purpose prior to the
construction:
ARTICLE V
IMPROVEMENTS AND ADDITIONS
xxx xxx xxx
Section 2. Extraordinary Improvements. — Improvements or
additions to the common areas which shall cost more than
P100,000.00 or which involve structural construction or modification
must be approved by the members in a regular or special meeting
called for the purpose before such improvements or additions are
made. x x x. 25
Said By-Laws also provides for the process by which violations of the
Master Deed are redressed, and the same coincides with the prayer of
Legaspi Towers:
ARTICLE VII
ABATEMENT OF VIOLATIONS
Section 1. Power to Abate Violations. — In the event that
any member or his tenant or lessee fails or refuses to comply with
any limitation, restriction, covenant or condition of the Master Deed
with Declaration of Restrictions, or with the rules and regulations on
the use, enjoyment and occupancy of office/units or other property in
the project, within the time fixed in the notice given him by the Board
of Directors, the latter or its duly authorized representative shall have
the right to enjoin, abate or remedy the continuance of such breach
or violation by appropriate legal proceedings.
The Board shall assess all expenses incurred in abatement of
the violation, including interest, costs and attorney's fees, against the
defaulting member. 26
Instead of procuring the required consent by the registered owners of
the condominium project pursuant to the Condominium Act, or having
Concession 4 approved by the members in a regular or special meeting
called for the purpose pursuant to the By-Laws, LEMANS merely had an
internal arrangement with the then president of Legaspi Towers. The same,
however, cannot bind corporations, which includes condominium
corporations such as Legaspi Towers, as they can act only through their
Board of Directors. 27
Unperturbed, LEMANS argues that the internal arrangement shows its
good faith in the construction of Concession 4, and claims the application of
the aforementioned Articles 448 and 546 of the Civil Code. For reference,
Article 448 provides:
built, sown or planted in good faith, shall have the right to
appropriate as his own the works, sowing or planting, after payment
of the indemnity provided for in Articles 546 and 548, or to oblige the
one who built or planted to pay the price of the land, and the one who
obliged to buy the land if its value is considerably more than that of
the building or trees. In such case, he shall pay reasonable rent, if the
lease and in case of disagreement, the court shall fix the terms
thereof. AIDSTE
Firstly, it is recognized in jurisprudence that, as a general rule, Article

448 on builders in good faith does not apply where there is a contractual
relation between the parties. 28
Morever, in several cases, this Court has explained that theraison
d'etre for Article 448 of the Civil Code is to prevent the impracticability of
creating a state of forced co-ownership:
The rule that the choice under Article 448 of the Civil Code
belongs to the owner of the land is in accord with the principle of
accession, i.e., that the accessory follows the principal and not the
other way around. Even as the option lies with the landowner, the
grant to him, nevertheless, is preclusive. The landowner cannot
refuse to exercise either option and compel instead the owner of the
building to remove it from the land.
The raison d'etre for this provision has been enunciated thus:
Where the builder, planter or sower has acted in good faith, a conflict
of rights arises between the owners, and it becomes necessary to
protect the owner of the improvements without causing injustice to
the owner of the land. In view of the impracticability of creating a
state of forced co-ownership, the law has provided a just solution by
giving the owner of the land the option to acquire the improvements
after payment of the proper indemnity, or to oblige the builder or
planter to pay for the land and the sower the proper rent. He cannot
refuse to exercise either option. It is the owner of the land who is
authorized to exercise the option, because his right is older, and
because, by the principle of accession, he is entitled to the ownership
of the accessory thing. 29
In the case at bar, however, the land belongs to a condominium
corporation, wherein the builder, as a unit owner, is considered a stockholder
or member in accordance with Section 10 of the Condominium Act, which
provides:
SECTION 10. Whenever the common areas in a
condominium project are held by a condominium corporation, such
corporation shall constitute the management body of the project. The
corporate purposes of such a corporation shall be limited to the
holding of the common areas, either in ownership or any other
interest in real property recognized by law, to the management of the
project, and to such other purposes as may be necessary, incidental
or convenient to the accomplishment of said purposes. The articles of
incorporation or by-laws of the corporation shall not contain any
provision contrary to or inconsistent with the provisions of this Act,
the enabling or master deed, or the declaration of restrictions of the
project. 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.
The builder is therefore already in a co-ownership with other unit
owners as members or stockholders of the condominium corporation, whose
legal relationship is governed by a special law, the Condominium Act. It is a
basic tenet in statutory construction that between a general law and a
special law, the special law prevails. Generalia specialibus non derogant. 30
The provisions of the Civil Code, a general law, should therefore give way to
the Condominium Act, a special law, with regard to properties recorded in
accordance with Section 4 31 of said Act. Special laws cover distinct
situations, such as the necessary co-ownership between unit owners in
condominiums and the need to preserve the structural integrity of
condominium buildings; and these special situations deserve, for
practicality, a separate set of rules.
Articles 448 and 546 of the Civil Code on builders in good faith are
therefore inapplicable in cases covered by the Condominium Act where the
owner of the land and the builder are already bound by specific
legislation on the subject property (the Condominium Act), and by contract
(the Master Deed and the By-Laws of the condominium corporation). This
Court has ruled that upon acquisition of a condominium unit, the purchaser
not only affixes his conformity to the sale; he also binds himself to a contract
with other unit owners. 32
In accordance therefore with the Master Deed, the By-Laws of Legaspi
Towers, and the Condominium Act, the relevant provisions of which were
already set forth above, Legaspi Towers is correct that it has the right to
demolish Concession 4 at the expense of LEMANS. Indeed, the application of
Article 448 to the present situation is highly iniquitous, in that an owner, also
found to be in good faith, will be forced to either appropriate the illegal
structure (and impliedly be burdened with the cost of its demolition) or to
allow the continuance of such an illegal structure that violates the law and
the Master Deed, and threatens the structural integrity of the condominium
building upon the payment of rent. The Court cannot countenance such an
unjust result from an erroneous application of the law and jurisprudence.
We will no longer pass upon the issue of the validity of building permit
for Concession 4 as the same has no bearing on the right of Legaspi Towers
to an abatement of Concession 4.
Finally, we are constrained to deny the Petition of LEMANS in view of
our ruling that the doctrine in Depra and Articles 448 and 546 of the Civil
Code were improperly applied in these cases.
WHEREFORE, the Petition in G.R. No. 199353 is hereby DENIED for
lack of merit. The Petition in G.R. No. 199389 is GRANTED. The Decision
dated May 26, 2011 and Resolution dated November 17, 2011 of the Court
of Appeals in CA-G.R. CV No. 88082 are REVERSED and SET ASIDE. Leviste
Management System, Inc. is ORDERED to remove Concession 4 at its own
expense.
SO ORDERED.
Del Castillo, Jardeleza and Tijam, JJ., concur.
Sereno, * C.J., is on leave.
Footnotes
* On leave.
** Per Special Order No. 2540 dated February 28, 2018.
1. Section 4. The provisions of this Act shall apply to property divided or to be
divided into condominiums 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, if the latter had been
patented or registered under either the Land Registration or Cadastral Acts,
an enabling or master deed which shall contain, among others, the following
x x x[.]
2. AN ACT TO DEFINE CONDOMINIUM, ESTABLISH REQUIREMENTS FOR ITS

CREATION, AND GOVERN ITS INCIDENTS.
3. Rollo (G.R. No. 199353), pp. 41-50; penned by Associate Justice Florito S.
Macalino with Associate Justices Juan Q. Enriquez, Jr. and Ramon M. Bato, Jr.
concurring.
4. Id. at 118-122.
5. Id. at 42-44.
6. Id. at 122.
7. Id. at 47-48.
8. Id. at 48-49.
9. Id. at 52-53.
10. Id. at 24.

11. Rollo (G.R. No. 199389), p. 41.
12. 221 Phil. 168 (1985).

13. G.R. No. 184466, December 5, 2016.
14. Rollo (G.R. No. 199389), pp. 148-149.

15. Id. at 150-151. To recall, in the August 19, 2002 Order, the trial court denied
LEMANS motion for reconsideration of the May 24, 2002 Order and held:
The main issue in this case is whether or not plaintiff owns the air space
above its condominium unit. As owner of the said air space, plaintiff contends
that its construction of another floor was in the exercise of its rights.
It is the findings [sic] of the Court that plaintiff [LEMANS] is not the
owner of the air space above its unit. Plaintiff[']s claim of ownership is
without basis in fact and in law. The air space which plaintiff claims is not
only on top of its unit but also on top of the condominium itself, owned and
operated by defendant Legaspi Towers.
Since it appears that both plaintiff and defendant Legaspi Towers
were in good faith, the Court finds the applicability of the ruling in Depra v.
Dumlao, 136 SCRA 475.
WHEREFORE, for lack of merit the motion is hereby DENIED. (Emphases
supplied.)
16. Id. at 162.

17. G.R. No. 174379, August 31, 2016, 801 SCRA 629, 642-643.
18. See Presidential Decree No. 1271 Committee v. De Guzman, G.R. Nos. 187291
& 187334, December 5, 2016.
19. Rollo (G.R. No. 199389), pp. 160-161.

20. Supra note 12.
21. Rollo (G.R. No. 199389), pp. 78-88.

22. SECTION 4. The provisions of this Act shall apply to property divided or to be
an enabling or master deed which shall contain, among others, the following:
xxx xxx xxx
(b) Description of the building or buildings, stating the number of stories and
basements, the number of units and their accessories, if any;
xxx xxx xxx
(g) The following plans shall be appended to the deed as integral parts
thereof:
(1) A survey plan of the land included in the project, unless a survey plan of
the same property had previously bee[n] filed in said office;
(2) A diagrammatic floor plan of the building or buildings in the project, in

sufficient detail to identify each unit, its relative location and approximate
dimensions;
23. Rollo (G.R. No. 199389), p. 80.

24. Id. at 301-311.
25. Id. at 308.

26. Id. at 308-309.
27. Section 23 of the Corporation Code:

SECTION 23. The Board of Directors or Trustees. — Unless otherwise
provided in this Code, the corporate powers of all corporations formed under
this Code shall be exercised, all business conducted and all property of such
corporations controlled and held by the board of directors or trustees to be
elected from among the holders of stocks, or where there is no stock, from
among the members of the corporation, who shall hold office for one (1) year
and until their successors are elected and qualified.
28. Communities Cagayan, Inc. v. Nanol, 698 Phil. 648, 660 (2012), citing Arturo M.
Tolentino, CIVIL CODE OF THE PHILIPPINES, Vol. II, 116 (1998). In his
Commentaries, Tolentino had the occasion to expound that:
[Article 448] and the following articles are not applicable to cases where
there is a contractual relation between the parties, such as lease of land,
construction contract, usufruct, etc., in which cases the stipulations of the
parties and the pertinent legal provisions shall apply. The owner of
the land and that of the improvements may validly settle the conflict of their
rights by contract, and it is only in the absence of contrary stipulation
that the alternative solutions provided by Article 448 are applicable.
(Emphases supplied.)
29. Tuatis v. Escol, 619 Phil. 465, 488-489 (2009); Espinoza v. Mayandoc , G.R. No.
211170, July 3, 2017.
30. National Power Corp. v. Presiding Judge, RTC, 10th Judicial Region, Br. XXV,
Cagayan De Oro City, 268 Phil. 507, 513 (1990).
31. Section 4. The provisions of this Act shall apply to property divided or to be
an enabling or master deed which shall contain, among others, the
following[.]
32. Limson v. Wack Wack Condominium Corp., 658 Phil. 124, 133 (2011).

SECOND DIVISION
[G.R. No. 98045. June 26, 1996.]
DESAMPARADO VDA. DE NAZARENO and LETICIA

NAZARENO TAPIA, petitioners, vs. THE COURT OF APPEALS,
MR. & MRS. JOSE SALASALAN, MR. & MRS. LEO RABAYA,
AVELINO LABIS, HON. ROBERTO G. HILARIO, ROLLEO I.
IGNACIO, ALBERTO M. GILLERA and HON. ABELARDO G.
PALAD, JR., in their official and/or private capacities ,
respondents.
Manolo L. Tagarda, Sr. for petitioners.

Arturo R. Legaspi for private respondents.
SYLLABUS
1. CIVIL LAW; OWNERSHIP; RIGHTS OF ACCESSION WITH RESPECT TO

IMMOVABLE PROPERTY; ARTICLE 457; REQUISITES. — In the case of Meneses
vs. CA, this Court held that accretion, as a mode of acquiring property under
Art. 457 of the Civil Code, requires the concurrence of these requisites: (1) that
the deposition of soil or sediment be gradual and imperceptible; (2) that it be
the result of the action of the waters of the river (or sea); and (3) that the land
where accretion takes place is adjacent to the banks of rivers (or the sea coast).
These are called the rules on alluvion which if present in a case, give to the
owners of lands adjoining the banks of rivers or streams any accretion gradually
received from the effects of the current of waters.
2. ID.; ID.; ID.; ID.; ID.; NOT PRESENT IN CASE AT BAR. — Where the
accretion was formed by the dumping of boulders, soil and other filling
materials on portions of the Balacanas Creek and the Cagayan River bounding
petitioner's land, it cannot be claimed that the accumulation was gradual and
imperceptible, resulting from the action of the waters or the current of the
creek and the river. In Hilario vs. City of Manila, this Court held that the word
"current" indicates the participation of the body of water in the ebb and flow of
waters due to high and low tide. Not having met the first and second
requirements of the rules of alluvion, petitioners cannot claim the rights of a
riparian owner.
3. ID.; ID.; ID.; ID.; ID.; THAT DEPOSIT IS DUE TO THE CURRENT OF THE
RIVER, MANDATORY. — In Republic vs. CA, this Court ruled that the requirement
that the deposit should be due to the effect of the current of the river is
indispensable. This excludes from Art. 457 of the Civil Code all deposits caused
by human intervention. Putting it differently, alluvion must be the exclusive
work of nature. Thus, in Tiongco vs. Director of Lands, et al., where the land
was not formed solely by the natural effect of the water current of the river
bordering said land but is also the consequence of the direct and deliberate
intervention of man, it was deemed a man-made accretion and as such, part of
the public domain. In the case at bar, the subject land was the direct result of
the dumping of sawdust by the Sun Valley Lumber Co. consequent to its
sawmill operations.
4. ID.; PUBLIC LANDS; FINDINGS AS SUCH BY THE BUREAU OF LANDS,

RESPECTED. — The mere filing of the Miscellaneous Sales Application
constituted an admission that the land being applied for was public land,
having been the subject of a Survey Plan wherein said land was described as an
orchard. Furthermore, the Bureau of Lands classified the subject land as an
accretion area which was formed by deposits of sawdust in the Balacanas
Creek and the Cagayan river, in accordance with the ocular inspection
conducted by the Bureau of Lands. This Court has often enough held that
findings of administrative agencies which have acquired expertise because
their jurisdiction is confined to specific matters are generally accorded not only
respect but even finality. Again, when said factual findings are affirmed by the
Court of Appeals, the same are conclusive on the parties and not reviewable by
this Court.
5. ID.; PUBLIC LAND LAW; JURISDICTION OVER PUBLIC LANDS. —

Having determined that the subject land is a public land, a fortiori, the Bureau
of Lands, as well as the Office of the Secretary of Agriculture and Natural
Resources have jurisdiction over the same in accordance with the Public Land
Law. Under Sections 3 and 4 thereof, the Director of Lands has jurisdiction,
authority and control over public lands. Here respondent Palad as Director of
Lands, is authorized to exercise executive control over any form of concession,
disposition and management of the lands of the public domain. He may issue
decisions and orders as he may see fit under the circumstances as long as they
are based on the findings of fact. In the case of Calibo vs. Ballesteros, this Court
held that where, in the disposition of public lands, the Director of Lands bases
his decision on the evidence thus presented, he clearly acts within his
jurisdiction, and if he errs in appraising the evidence, the error is one of
judgment, but not an act of grave abuse of discretion annullable by certiorari.
6. ADMINISTRATIVE LAW; ADMINISTRATIVE REMEDIES; EXHAUSTED IN

CASE AT BAR. — The administrative remedies have been exhausted. Petitioners
could not have intended to appeal to respondent Ignacio as an Officer-In-
Charge of the Bureau of Lands. The decision being appealed from was the
decision of respondent Hilario who was the Regional Director of the Bureau of
Lands. Said decision was made "for and by authority of the Director of Lands."
It would be incongruous to appeal the decision of the Regional Director of the
Bureau of Lands acting for the Director of the Bureau of Lands to an Officer-In-
Charge of the Bureau of Lands. In any case, respondent Ignacio's official
designation was "Undersecretary of the Department of Agriculture and Natural
Resources." He was only an "Officer-In-Charge" of the Bureau of Lands. When
he acted on the late Antonio Nazareno's motion for reconsideration by affirming
or adopting respondent Hilario's decision, he was acting on said motion as an
Undersecretary on behalf of the Secretary of the Department. In the case of
Hamoy vs. Secretary of Agriculture and Natural Resources, this Court held that
the Undersecretary of Agriculture and Natural Resources may modify, adopt, or
set aside the orders or decisions of the Director of Lands with respect to
questions involving public lands under the administration and control of the
Bureau of Lands and the Department of Agriculture and Natural Resources. He
cannot, therefore, be said to have acted beyond the bounds of his jurisdiction
under Sections 3, 4 and 5 of Commonwealth Act No. 141.
DECISION
ROMERO, J : p
Petitioners Desamparado Vda. de Nazareno and Leticia Nazareno Tapia

challenge the decision of the Court of Appeals which affirmed the dismissal
of petitioners' complaint by the Regional Trial Court of Misamis Oriental,
Branch 22. The complaint was for annulment of the verification, report and
recommendation, decision and order of the Bureau of Lands regarding a
parcel of public land.
The only issue involved in this petition is whether or not petitioners
exhausted administrative remedies before having recourse to the courts.
The subject of this controversy is a parcel of land situated in Telegrapo,
Puntod, Cagayan de Oro City. Said land was formed as a result of sawdust
dumped into the dried-up Balacanas Creek and along the banks of the
Cagayan river.
Sometime in 1979, private respondents Jose Salasalan and Leo Rabaya
leased the subject lots on which their houses stood from one Antonio
Nazareno, petitioners' predecessor-in-interest. In the latter part of 1982,
private respondents allegedly stopped paying rentals. As a result, Antonio
Nazareno and petitioners filed a case for ejectment with the Municipal Trial
Court of Cagayan de Oro City, Branch 4. A decision was rendered against
private respondents, which decision was affirmed by the Regional Trial Court
of Misamis Oriental, Branch 20.
The case was remanded to the municipal trial court for execution of
judgment after the same became final and executory. Private respondents
filed a case for annulment of judgment before the Regional Trial Court of
Misamis Oriental, Branch 24 which dismissed the same. Antonio Nazareno
and petitioners again moved for execution of judgment but private
respondents filed another case for certiorari with prayer for restraining order
and/or writ of preliminary injunction with the Regional Trial Court of Misamis
Oriental, Branch 25 which was likewise dismissed. The decision of the lower
court was finally enforced with the private respondents being ejected from
portions of the subject lots they occupied.
Before he died, Antonio Nazareno caused the approval by the Bureau
of Lands of the survey plan designated as Plan Csd-106-00571 with a view to
perfecting his title over the accretion area being claimed by him. Before the
approved survey plan could be released to the applicant, however, it was
protested by private respondents before the Bureau of Lands.
In compliance with the order of respondent District Land Officer Alberto
M. Gillera, respondent Land Investigator Avelino G. Labis conducted an
investigation and rendered a report to the Regional Director recommending
that Survey Plan No. MSI-10-06-000571-D (equivalent to Lot No. 36302, Cad.
237) in the name of Antonio Nazareno, be cancelled and that private
respondents be directed to file appropriate public land applications.
Based on said report, respondent Regional Director of the Bureau of
Lands Roberto Hilario rendered a decision ordering the amendment of the
survey plan in the name of Antonio Nazareno by segregating therefrom the
areas occupied by the private respondents who, if qualified, may file public
land applications covering their respective portions.
Antonio Nazareno filed a motion for reconsideration with respondent
Rolleo Ignacio, Undersecretary of the Department of Natural Resources and
Officer-in-Charge of the Bureau of Lands who denied the motion. Respondent
Director of Lands Abelardo Palad then ordered him to vacate the portions
adjudicated to private respondents and remove whatever improvements
they have introduced thereon. He also ordered that private respondents be
placed in possession thereof.
Upon the denial of the late Antonio Nazareno's motion for
reconsideration, petitioners Desamparado Vda. de Nazareno and Leticia
Tapia Nazareno, filed a case before the RTC, Branch 22 for annulment of the
following: order of investigation by respondent Gillera, report and
recommendation by respondent Labis, decision by respondent Hilario, order
by respondent Ignacio affirming the decision of respondent Hilario and order
of execution by respondent Palad. The RTC dismissed the complaint for
failure to exhaust administrative remedies which resulted in the finality of
the administrative decision of the Bureau of Lands.
On appeal, the Court of Appeals affirmed the decision of the RTC

dismissing the complaint. Applying Section 4 of C.A. No. 141, as amended, it
contended that the approval of the survey plan belongs exclusively to the
Director of Lands. Hence, factual findings made by the Metropolitan Trial
Court respecting the subject land cannot be held to be controlling as the
preparation and approval of said survey plans belong to the Director of
Lands and the same shall be conclusive when approved by the Secretary of
Agriculture and Natural Resources. 1
Furthermore, the appellate court contended that the motion for
reconsideration filed by Antonio Nazareno cannot be considered as an
appeal to the Office of the Secretary of Agriculture and Natural Resources,
as mandated by C.A. No. 141 inasmuch as the same had been acted upon by
respondent Undersecretary Ignacio in his capacity as Officer-in-Charge of the
Bureau of Lands and not as Undersecretary acting for the Secretary of
Agriculture and Natural Resources. For the failure of Antonio Nazareno to
appeal to the Secretary of Agriculture and Natural Resources, the present
case does not fall within the exception to the doctrine of exhaustion of
administrative remedies. It also held that there was no showing of
oppressiveness in the manner in which the orders were issued and executed.
Hence, this petition.
Petitioners assign the following errors:
I. PUBLIC RESPONDENT COURT OF APPEALS IN A WHIMSICAL,
ARBITRARY AND CAPRICIOUS MANNER AFFIRMED THE DECISION OF
THE LOWER COURT WHICH IS CONTRARY TO THE PREVAILING FACTS
AND THE LAW ON THE MATTER;
II. PUBLIC RESPONDENT COURT OF APPEALS IN A WHIMSICAL,

ARBITRARY AND CAPRICIOUS MANNER AFFIRMED THE DECISION OF
THE LOWER COURT DISMISSING THE ORIGINAL CASE WHICH FAILED TO
CONSIDER THAT THE EXECUTION ORDER OF PUBLIC RESPONDENT
ABELARDO G. PALAD, JR., DIRECTOR OF LANDS, MANILA, PRACTICALLY
CHANGED THE DECISION OF PUBLIC RESPONDENT ROBERTO HILARIO,
REGIONAL DIRECTOR, BUREAU OF LANDS, REGION 10, THUS MAKING
THE CASE PROPER SUBJECT FOR ANNULMENT WELL WITHIN THE
JURISDICTION OF THE LOWER COURT.
The resolution of the above issues, however, hinges on the question of

whether or not the subject land is public land. Petitioners claim that the
subject land is private land being an accretion to his titled property, applying
Article 457 of the Civil Code which provides:
"To the owners of land adjoining the banks of rivers belong the
accretion which they gradually receive from the effects of the current
of the waters."
In the case of Meneses v. CA, 2 this Court held that accretion, as a

mode of acquiring property under Art. 457 of the Civil Code, requires the
concurrence of these requisites: (1) that the deposition of soil or sediment
be gradual and imperceptible; (2) that it be the result of the action of the
waters of the river (or sea); and (3) that the land where accretion takes place
is adjacent to the banks or rivers (or the sea coast). These are called the
rules on alluvion which if present in a case, give to the owners of lands
adjoining the banks of rivers or streams any accretion gradually received
from the effects of the current of waters.
For petitioners to insist on the application of these rules on alluvion to
their case, the above-mentioned requisites must be present. However, they
admit that the accretion was formed by the dumping of boulders, soil and
other filling materials on portions of the Balacanas Creek and the Cagayan
River bounding their land. 3 It cannot be claimed, therefore, that the
accumulation of such boulders, soil and other filling materials was gradual
and imperceptible, resulting from the action of the waters or the current of
the Balacanas Creek and the Cagayan River. In Hilario v. City of Manila, 4 this
Court held that the word "current" indicates the participation of the body of
water in the ebb and flow of waters due to high and low tide. Petitioners'
submission not having met the first and second requirements of the rules on
alluvion, they cannot claim the rights of a riparian owner.

In any case, this court agrees with private respondents that petitioners
are estopped from denying the public character of the subject land, as well
as the jurisdiction of the Bureau of Lands when the late Antonio Nazareno
filed his Miscellaneous Sales Application MSA (G-6) 571. 5 The mere filing of
said Application constituted an admission that the land being applied for was
public land, having been the subject of Survey Plan No. MSI-10-06-000571-D
(Equivalent to Lot No. 36302, Cad-237) which was conducted as a
consequence of Antonio Nazareno's Miscellaneous Sales Application wherein
said land was described as an orchard. Said description by Antonio Nazareno
was, however, controverted by respondent Labis in his investigation report
to respondent Hilario based on the findings of his ocular inspection that said
land actually covers a dry portion of Balacanas Creek and a swampy portion
of Cagayan River. The investigation report also states that, except for the
swampy portion which is fully planted to nipa palms, the whole area is fully
occupied by a part of a big concrete bodega of petitioners and several
residential houses made of light materials, including those of private
respondents which were erected by themselves sometime in the early part
of 1978. 6
Furthermore, the Bureau of Lands classified the subject land as an
accretion area which was formed by deposits of sawdust in the Balacanas
Creek and the Cagayan river, in accordance with the ocular inspection
conducted by the Bureau of Lands. 7 This Court has often enough held that
findings of administrative agencies which have acquired expertise because
their jurisdiction is confined to specific matters are generally accorded not
only respect but even finality. 8 Again, when said factual findings are
affirmed by the Court of Appeals, the same are conclusive on the parties and
not reviewable by this Court. 9
It is this Court's irresistible conclusion, therefore, that the accretion
was man-made or artificial. In Republic v. CA, 10 this Court ruled that the
requirement that the deposit should be due to the effect of the current of the
river is indispensable. This excludes from Art. 457 of the Civil Code all
deposits caused by human intervention. Putting it differently, alluvion must
be the exclusive work of nature. Thus, in Tiongco v. Director of Lands, et al.,
11 where the land was not formed solely by the natural effect of the water
current of the river bordering said land but is also the consequence of the
direct and deliberate intervention of man, it was deemed a man-made
accretion and, as such, part of the public domain.
In the case at bar, the subject land was the direct result of the dumping
of sawdust by the Sun Valley Lumber Co. consequent to its sawmill
operations. 12 Even if this Court were to take into consideration petitioners'
submission that the accretion site was the result of the late Antonio
Nazareno's labor consisting in the dumping of boulders, soil and other filling
materials into the Balacanas Creek and Cagayan River bounding his land, 13
the same would still be part of the public domain.
Having determined that the subject land is public land, a fortiori, the
Bureau of Lands, as well as the Office of the Secretary of Agriculture and
Natural Resources have jurisdiction over the same in accordance with the
Public Land Law. Accordingly, the court a quo dismissed petitioners'
complaint for non-exhaustion of administrative remedies which ruling the
Court of Appeals affirmed.
However, this Court agrees with petitioners that administrative
remedies have been exhausted. Petitioners could not have intended to
appeal to respondent Ignacio as an Officer-in-Charge of the Bureau of Lands.
The decision being appealed from was the decision of respondent Hilario who
was the Regional Director of the Bureau of Lands. Said decision was made
"for and by authority of the Director of Lands". 14 It would be incongruous to
appeal the decision of the Regional Director of the Bureau of Lands acting for
the Director of the Bureau of Lands to an Officer-In-Charge of the Bureau of
Lands.
In any case, respondent Rolleo Ignacio's official designation was
"Undersecretary of the Department of Agriculture and Natural Resources."
He was only an "Officer-In-Charge" of the Bureau of Lands. When he acted
on the late Antonio Nazareno's motion for reconsideration by affirming or
adopting respondent's Hilario's decision, he was acting on said motion as an
Undersecretary on behalf of the Secretary of the Department. In the case of
Hamoy v. Secretary of Agriculture and Natural Resources, 15 this Court held
that the Undersecretary of Agriculture and Natural Resources may modify,
adopt, or set aside the orders or decisions of the Director of Lands with
respect to questions involving public lands under the administration and
control of the Bureau of Lands and the Department of Agriculture and
Natural Resources. He cannot, therefore, be said to have acted beyond the
bounds of his jurisdiction under Sections 3, 4 and 5 of Commonwealth Act
No. 141. 16
As borne out by the administrative findings, the controverted land is
public land, being an artificial accretion of sawdust. As such, the Director of
Lands has jurisdiction, authority and control over the same, as mandated
under Sections 3 and 4 of the Public Land Law (C.A. No. 141) which states,
thus:
"Sec. 3. The Secretary of Agriculture and Natural Resources
shall be the exclusive officer charged with carrying out the provisions
of this Act through the Director of Lands who shall act under his
immediate control.
Sec. 4. Subject to said control, the Director of Lands shall

have direct executive control of the survey, classification, lease, sale or
any other form of concession or disposition and management of the
lands of the public domain, and his decisions as to questions of fact
shall be conclusive when approved by the Secretary of Agriculture and
Natural Resources."
In connection with the second issue, petitioners ascribe whim,

arbitrariness or capriciousness in the execution order of public respondent
Abelardo G. Palad, the Director of Lands. This Court finds otherwise since
said decision was based on the conclusive finding that the subject land was
public land. Thus, this Court agrees with the Court of Appeals that the
Director of Lands acted within his rights when he issued the assailed
execution order, as mandated by the aforecited provisions.
Petitioners' allegation that respondent Palad's execution order
directing them to vacate the subject land practically changed respondent
Hilario's decision is baseless. It is incorrect for petitioners to assume that
respondent Palad awarded portions of the subject land to private
respondents Salasalans and Rayabas as they had not yet been issued
patents or titles over the subject land. The execution order merely directed
the segregation of petitioners' titled lot from the subject land which was
actually being occupied by private respondents before they were ejected
from it. Based on the finding that private respondents were actually in
possession or were actually occupying the subject land instead of
petitioners, respondent Palad, being the Director of Lands and in the
exercise of this administrative discretion, directed petitioners to vacate the
subject land on the ground that private respondents have a preferential
right, being the occupants thereof.
While private respondents may not have filed their application over the
land occupied by them, they nevertheless filed their protest or opposition to
petitioners' Miscellaneous Sales Application, the same being preparatory to
the filing of an application as they were in fact directed to do so. In any case,
respondent Palad's execution order merely implements respondent Hilario's
order. It should be noted that petitioners' own application still has to be
given due course. 17
As Director of Lands, respondent Palad is authorized to exercise
executive control over any form of concession, disposition and management
of the lands of the public domain. 18 He may issue decisions and orders as
he may see fit under the circumstances as long as they are based on the
findings of fact.
In the case of Calibo v. Ballesteros, 19 this Court held that where, in the
disposition of public lands, the Director of Lands bases his decision on the
evidence thus presented, he clearly acts within his jurisdiction, and if he errs
in appraising the evidence, the error is one of judgment, but not an act or
grave abuse of discretion annullable by certiorari. Thus, except for the issue
of non-exhaustion of administrative remedies, this Court finds no reversible
error nor grave abuse of discretion in the decision of the Court of Appeals.
WHEREFORE, the petition is DISMISSED for lack of merit.
SO ORDERED.
Regalado, Puno, Mendoza and Torres, JJ ., concur.
Footnotes
1. Decision in CA-G.R. No. 22927 penned by Justice Segundino Chua, pp. 55-
56, Rollo .
2. 246 SCRA 374 (1995).

3. Petition, p. 16, Rollo .
4. 19 SCRA 931 (1967).
5. Memorandum for Private Respondents, p. 118, Rollo .
6. Annex "C", Investigation Report, p. 30, Rollo .
7. Appendices "D" and "E", pp. 33-37, Rollo .
8. COCOFED v. Trajano, 241 SCRA 362 (1995).

9. Coca-Cola Bottlers Philippines, Inc. v. CA, 229 SCRA 533 (1994).
10. 132 SCRA 514 (1984).
11. 16 C.A. Rep. 211.
12. Investigation Report, Appendix "C", p. 30, Rollo.
13. Petition, p. 16, Rollo .
14. Appendix "D", p. 33, Rollo .
15. 106 Phil. 1046 (1960).
16. Hamoy v. Secretary of Agriculture and Natural Resources, supra.

17. Appendix "D", p. 35, Rollo .
18. Pineda v. CFI of Davao, 1 SCRA 1020.

19. 15 SCRA 37 (1965).

FIRST DIVISION
[G.R. No. 68166. February 12, 1997.]
HEIRS OF EMILIANO NAVARRO , petitioner, vs. INTERMEDIATE

APPELLATE COURT AND HEIRS OF SINFOROSO PASCUAL ,
respondents.
Yolanda Quisumbing - Javellana & Associates for petitioner.

Joracio R. Viola, Sr. for private respondents.
SYLLABUS
1. CIVIL LAW; PROPERTY; ACCRETION AS A MODE OF ACQUIRING

PROPERTY; REQUISITES; LEGAL CONSEQUENCES. — Accretion as a mode of
acquiring property under Article 457 of the Civil Code, requires the concurrence
of the following requisites: (1) that the accumulation of soil or sediment be
gradual and imperceptible; (2) that it be the result of the action of the waters of
the river: and (3) that the land where the accretion takes place is adjacent to
the bank of the river. Accretion is the process whereby the soil is deposited,
while alluvium is the soil deposited on the estate fronting the river bank; the
owner of such estate is called the riparian owner. Riparian owners are, strictly
speaking, distinct from littoral owners, the latter being owners of lands
bordering the shore of the sea or lake or other tidal waters. The alluvium, by
mandate of Article 457 of the Civil Code, is automatically owned by the riparian
owner from the moment the soil deposit can be seen hut is not automatically
registered property, hence, subject to acquisition through prescription by third
persons.
2. ID.; ID.; ID.; THIRD REQUISITE NOT PRESENT IN CASE AT BAR. —
There is no dispute as to the location of: (a) the disputed land; (b) petitioners'
own tract of land: (c) the Manila Bay; and, (d) the Talisay and Bulacan Rivers.
Petitioners' own land lies between the Talisay and Bulacan Rivers; in front of
their land on the northern side lies now the disputed land where before 1948,
there lay the Manila Bay. If the accretion were to be attributed to the action of
either or both of the Talisay and Bulacan Rivers, the alluvium should have been
deposited on either or both of the eastern and western boundaries of
petitioners' own tract of land, not on the northern portion thereof which is
adjacent to the Manila Bay. Clearly lacking, thus, is the third requisite of
accretion, which is, that the alluvium is deposited on the portion of claimant's
land which is adjacent to the river bank.
3. ID.; ID.; ID.; ID.; THE DISPUTED LAND IS AN ACCRETION NOT ON A
RIVER BANK BUT ON A SEA BANK; THE APPLICABLE LAW IS NOT ARTICLE 457 OF
THE CIVIL CODE BUT ARTICLE 4 OF THE SPANISH LAW OF WATERS OF 1866. —
There is no dispute as to the fact that petitioners' own tract of land adjoins the
Manila Bay. Manila Bay is obviously not a river, and jurisprudence is already
settled as to what kind of body of water the Manila Bay is. It is to be
remembered that we held in Ignacio vs. Director of Lands and Valeriano (108
Phil. 336, 338 [1960]) that: "Appellant next contends that . . . Manila Bay
cannot be considered as a sea. We find said contention untenable. A bay is part
of the sea, being a mere indentation of the same: 'Bay, — An opening into the
land where the water is shut in on all sides except at the entrance; an inlet of
the sea; an arm of the sea, distinct from a river, a bending or curbing of the
shore of the sea or of a lake,' 7 C.J. 1013-1014." The disputed land, thus, is an
accretion not on a river bank but on a sea bank, or on what used to be the
foreshore of Manila Bay which adjoined petitioners' own tract of land on the
northern side. As such, the applicable law is not Article 457 of the Civil Code
but Article 4 of the Spanish Law of Waters of 1866.
4. ID.; ID.; ID.; THE DISPUTED PROPERTY IS AN ACCRETION ON A SEA
BANK, MANILA BAY BEING AN INLET OR AN ARM OF THE SEA; AS SUCH, THE
DISPUTED PROPERTY IS UNDER ARTICLE 4 OF THE SPANISH LAW OF WATERS
OF 1866, PART OF THE PUBLIC DOMAIN. — The instant controversy brings a
situation calling for the application of Article 4 of the Spanish Law of Waters of
1866, the disputed land being an accretion on the foreshore of Manila Bay
which is, for all legal purposes, considered a sea. Article 4 of the Spanish Law of
Waters of August 3, 1866 provides as follows: "Lands added to the shores by
accretions and alluvial deposits caused by the action of the sea, form part of
the public domain. When they are no longer washed by the waters of the sea
and are not necessary for purposes of public utility, or for the establishment of
special industries, or for the coast-guard service, the Government shall declare
them to be the property of the owners of the estates adjacent thereto and as
increment thereof." In the light of the aforecited vintage but still valid law,
unequivocal is the public nature of the disputed land in this controversy, the
same being an accretion on a sea bank which, for all legal purposes, the
foreshore of Manila Bay is. As part of the public domain, the herein disputed
land is intended for public uses, and "so long as the land in litigation belongs to
the national domain and is reserved for public uses, it is not capable of being
appropriated by any private person, except through express authorization
granted in due form by a competent authority." Only the executive and possibly
the legislative departments have the right and the power to make the
declaration that the lands so gained by action of the sea is no longer necessary
for purposes of public utility or for the cause of establishment of special
industries or for coast guard services. Petitioners utterly fail to show that either
the executive or legislative department has already declared the disputed land
1966, to be the property of petitioners as owners of the estates adjacent
thereto.
DECISION
HERMOSISIMA, JR., J : p
Unique is the legal question visited upon the claim of an applicant in a

Land Registration case by oppositors thereto, the Government and a
Government lessee, involving as it does ownership of land formed by alluvium.
The applicant owns the property immediately adjoining the land sought to
be registered. His registered property is bounded on the east by the Talisay
River, on the west by the Bulacan River, and on the north by the Manila Bay.
The Talisay River and the Bulacan River flow down towards the Manila Bay and
act as boundaries of the applicant's registered land on the east and on the
west.
The land sought to be registered was formed at the northern tip of the
applicant's land. Applicant's registered property is bounded on the north by the
Manila Bay.
The issue: May the land sought to be registered be deemed an accretion
in the sense that it naturally accrues in favor of the riparian owner or should
the land be considered as foreshore land?
Before us is a petition for review of: (1) the decision 1 and (2) two
subsequent resolutions 2 of the Intermediate Appellate Court 3 (now the Court of
Appeals) in Land Registration Case No. N-84, 4 the application over which was
filed by private respondents' predecessor-in-interest, Sinforoso Pascual, now
deceased, before the Court of First Instance 5 (now the Regional Trial Court) of
Balanga, Bataan.
There is no dispute as to the following facts:
On October 3, 1946, Sinforoso Pascual, now deceased, filed an application

for foreshore lease covering a tract of foreshore land in Sibocon, Balanga,
Bataan, having an area of approximately seventeen (17) hectares. This
application was denied on January 15, 1953. So was his motion for
reconsideration.
Subsequently, petitioners' predecessor-in-interest, also now deceased,

Emiliano Navarro, filed a fishpond application with the Bureau of Fisheries
covering twenty five (25) hectares of foreshore land also in Sibocon, Balanga,
Bataan. Initially, such application was denied by the Director of Fisheries on the
ground that the property formed part of the public domain. Upon motion for
reconsideration, the Director of Fisheries, on May 27, 1988, gave due course to
his application but only to the extent of seven (7) hectares of the property as
may be certified by the Bureau of Forestry as suitable for fishpond purposes.
The Municipal Council of Balanga, Bataan, had opposed Emiliano

Navarro's application. Aggrieved by the decision of the Director of Fisheries, it
appealed to the Secretary of Natural Resources who, however, affirmed the
grant. The then Executive Secretary, acting in behalf of the President of the
Philippines, similarly affirmed the grant.
On the other hand, sometime in the early part of 1960, Sinforoso Pascual
filed an application to register and confirm his title to a parcel of land, situated
in Sibocon, Balanga, Bataan, described in Plan Psu-175181 and said to have an
area of 146,611 square meters. Pascual claimed that this land is an accretion to
his property, situated in Barrio Puerto Rivas, Balanga, Bataan, and covered by
Original Certificate of Title No. 6830. It is bounded on the eastern side by the
Talisay River, on the western side by the Bulacan River, and on the northern
side by the Manila Bay. The Talisay River as well as the Bulacan River flow
downstream and meet at the Manila Bay thereby depositing sand and silt on
Pascual's property resulting in an accretion thereon. Sinforoso Pascual claimed
the accretion as the riparian owner.
On March 25, 1960, the Director of Lands, represented by the Assistant

Solicitor General, filed an opposition thereto stating that neither Pascual nor his
predecessors-in-interest possessed sufficient title to the subject property, the
same being a portion of the public domain and, therefore, it belongs to the
Republic of the Philippines. The Director of Forestry, through the Provincial
Fiscal, similarly opposed Pascual's application for the same reason as that
advanced by the Director of Lands. Later on, however, the Director of Lands
withdrew his opposition. The Director of Forestry become the sole oppositor.
On June 2, 1960, the court a quo issued an order of general default

excepting the Director of Lands and the Director of Forestry. lexlib
Upon motion of Emiliano Navarro, however, the order of general default

was lifted and, on February 13, 1961, Navarro thereupon filed an opposition to
Pascual's application. Navarro claimed that the land sought to be registered has
always been part of the public domain, it being a part of the foreshore of Manila
Bay; that he was a lessee and in possession of a part of the subject property by
virtue of a fishpond permit issued by the Bureau of Fisheries and confirmed by
the Office of the President; and that he had already converted the area covered
by the lease into a fishpond.
During the pendency of the land registration case, that is, on November
6, 1960, Sinforoso Pascual filed a complaint for ejectment against Emiliano
Navarro, one Marcelo Lopez and their privies, alleged by Pascual to have
unlawfully claimed and possessed, through stealth, force and strategy, a
portion of the subject property covered by Plan Psu-175181. The defendants in
the case were alleged to have built a provisional dike thereon: thus they have
thereby deprived Pascual of the premises sought to be registered. This,
notwithstanding repeated demands for defendants to vacate the property.
The case was decided adversely against Pascual. Thus, Pascual appealed
to the Court of First Instance (now Regional Trial Court) of Balanga, Bataan, the
appeal having been docketed as Civil Case No. 2873. Because of the similarity
of the parties and the subject matter, the appealed case for ejectment was
consolidated with the land registration case and was jointly tried by the court a
quo.
During the pendency of the trial of the consolidated cases, Emiliano
Navarro died on November 1, 1961 and was substituted by his heirs, the herein
petitioners.
Subsequently, on August 26, 1962, Pascual died and was substituted by

his heirs, the herein private respondents.
On November 10, 1975, the court a quo rendered judgment finding the
subject property to be foreshore land and, being a part of the public domain, it
cannot be the subject of land registration proceedings.
The decision's dispositive portion reads:

"WHEREFORE, judgment is rendered:
(1) Dismissing plaintiff [private respondent] Sinforoso Pascual's

complaint for ejectment in Civil Case No. 2873;
(2) Denying the application of Sinforoso Pascual for land

registration over the land in question; and
(3) Directing said Sinforoso Pascual, through his heirs, as plaintiff in

Civil Case No. 2873 and as applicant in Land Registration Case
No. N-84 to pay costs in both instances." 6
The heirs of Pascual appealed and, before the respondent appellate court,
assigned the following errors:
"1. The lower court erred in not finding the land in question as an
accretion by the action of the Talisay and Bulacan Rivers to the
land admittedly owned by applicants-appellants [private
respondents].
2. The lower court erred in holding that the land in question is
foreshore land.
3.. The lower court erred in not ordering the registration of the and
is controversy in favor of applicants-appellants [private
respondents].
4. The lower court erred in not finding that the applicants-

appellants [private respondents] are entitled to eject the
oppositor-appellee [petitioners]." 7
On appeal, the respondent court reversed the findings of the court a quo
and granted the petition for registration of the subject property but excluding
therefrom fifty (50) meters from corner 2 towards corner 1; and fifty meters
(50) meters from corner 5 towards corner 6 of the Psu-175181.
The respondent appellate court explained the reversal in this wise:

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

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

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

between these two rivers and it is precisely appellants' [private
respondents'] land which acts as a barricade preventing these two
rivers to meet. Thus, since the flow of the two is downwards to the
Manila Bay the sediments of sand and silt are deposited at their
mouths.
It is, therefore, difficult to see how the Manila Bay could have
been the cause of the deposit thereat for in the natural course of
things, the waves of the sea eat the land on the shore, as they suge
[sic] inland. It would not therefore add anything to the land but instead
subtract from it due to the action of the waves and the wind. It is then
more logical to believe that the two rivers flowing towards the bay
emptied their cargo of sand, silt and clay at their mouths, thus causing
[private respondents'] land to accumulate therein
However, our distinguished colleage [sic], Mr. Justice Serrano, do

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

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

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

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

government should be withdrawn, except for the portion
recommended by the land investigator in his report dated May 2,
1960, to be excluded and considered foreshore. . . .'
Because of this report, no less than the Solicitor General

representing the Bureau of Lands withdrew his opposition dated March
25, 1960, and limited 'the same to the northern portion of the land
applied for, compromising a strip 50 meters wide along the Manila Bay,
which should be declared public land as part of the foreshore' . . . . 8
Pursuant to the aforecited decision, the respondent appellate court ordered

the issuance of the corresponding decree of registration in the name of
private respondents and the reversion to private respondents of the
possession of the portion of the subject property included in Navarro's
fishpond permit.
On December 20, 1978, petitioners filed a motion for reconsideration of

the aforecited decision. The Director of Forestry also moved for the
reconsideration of the same decision. Both motions were opposed by private
respondents on January 27, 1979.
On November 21, 1980, respondent appellate court promulgated a
resolution denying the motion for reconsideration filed by the Director of
Forestry. It, however, modified its decision, to read, viz:
"(3). Ordering private oppositors Heirs of Emiliano Navarro to
vacate that portion included in their fishpond permit covered by Plan
Psu-175181 and hand over possession of said portion to applicants-
appellants, if the said portion is not within the strip of land fifty (50)
meters wide along Manila Bay on the northern portion of the land
subject of the registration proceedings and which area is more
particularly referred to as fifty (50) meters from corner 2 towards
corner 1; and fifty (50) meters from corner 5 towards corner 6 of Plan
Psu-175181 . . ." 9
On December 15, 1980, we granted the Solicitor General, acting as

counsel for the Director of Forestry, an extension of time within which to file in
this court, a petition for review of the decision dated November 29, 1978 of the
respondent appellate court and of the aforecited resolution dated November
21, 1980.
Thereafter, the Solicitor General, in behalf of the Director of Forestry, filed
a petition for review entitled, "The Director of Forestry vs. the Court of
Appeals." 10 We, however, denied the same in a minute resolution dated July
20, 1981, such petition having been prematurely filed at a time when the Court
of Appeals was yet to resolve petitioners' pending motion to set aside the
resolution dated November 21, 1980.
On October 9, 1981, respondent appellate court denied petitioners'

motion for reconsideration of the decision dated November 29, 1978.
On October 17, 1981, respondent appellate court made an entry of

judgment stating that the decision dated November 29, 1978 had become final
and executory as against herein petitioners as oppositors in L.R.C. Case No. N-
84 and Civil Case No. 2873 of the Court of First Instance (now the Regional Trial
Court) of Balanga, Bataan.
On October 26, 1981, a second motion for reconsideration of the decision

dated November 29, 1978 was filed by petitioners' new counsel.
On March 26, 1982, respondent appellate court issued a resolution

granting petitioners' request for leave to file a second motion for
reconsideration.
On July 13, 1984, after hearing, respondent appellate court denied

petitioners' second motion for reconsideration on the ground that the same was
filed out of time, citing Rule 52, Section 1 of the Rules of Court which provides
that a motion for reconsideration shall be made ex-parte and filed within fifteen
(15) days from the notice of the final order or judgment.
Hence this petition where the respondent appellate court is imputed to

have palpably erred in appreciating the facts of the case and to have gravely
misapplied statutory and case law relating to accretion, specifically, Article 457
of the Civil Code.
We find no merit in the petition.
The disputed property was brought forth by

both the withdrawal of the waters of Manila
Bay and the accretion formed on the
exposed foreshore land by the action of the
sea which brought soil and sand sediments
in turn trapped by the palapat and bakawan
trees planted thereon by petitioner Sulpicio
Pascual in 1948.
Anchoring their claim of ownership on Article 457 of the Civil Code,
petitioners vigorously argue that the disputed 14-hectare land is an accretion
caused by the joint action of the Talisay and Bulacan Rivers which run their
course on the eastern and western boundaries, respectively, of petitioners' own
tract of land.
Accretion as a mode of acquiring property under said Article 457, requires

the concurrence of the following requisites: (1) that the accumulation of soil or
sediment be gradual and imperceptible; (2) that it be the result of the action of
the waters of the river; and (3) that the land where the accretion takes place is
adjacent to the bank of the river. 11 Accretion is the process whereby the soil is
deposited, while alluvium is the soil deposited on the estate fronting the river
bank 12 ; the owner of such estate is called the riparian owner. Riparian owners
are, strictly speaking, distinct from littoral owners, the latter being owners of
lands bordering the shore of the sea or lake or other tidal waters. 13 The
alluvium, by mandate of Article 457 of the Civil Code, is automatically owned by
the riparian owner from the moment the soil deposit can be seen 14 but is not
automatically registered property, hence, subject to acquisition through
prescription by third persons. 15
Petitioners' claim of ownership over the disputed property under the

principle of accretion, is misplaced.
First, the title of petitioners' own tract of land reveals its northeastern
boundary to be Manila Bay. Petitioners' land, therefore, used to adjoin, border
or front the Manila Bay and not any of the two rivers whose torrential action,
petitioners insist, is to account for the accretion on their land. In fact, one of the
petitioners, Sulpicio Pascual, testified in open court that the waves of Manila
Bay used to hit the disputed land being part of the bay's foreshore but, after he
had planted palapat and bakawan trees thereon in 1948, the land began to
rise. 16
Moreover, there is no dispute as to the location of: (a) the disputed land;
(b) petitioners' own tract of land; (c) the Manila Bay; and, (d) the Talisay and
Bulacan Rivers. Petitioners' own land lies between the Talisay and Bulacan
Rivers; in front of their land on the northern side lies now the disputed land
where before 1948, there lay the Manila Bay. If the accretion were to be
attributed to the action of either or both of the Talisay and Bulacan Rivers, the
alluvium should have been deposited on either or both of the eastern and
western boundaries of petitioners' own tract of land, not on the northern portion
thereof which is adjacent to the Manila Bay. Clearly lacking, thus, is the third
requisite of accretion, which is, that the alluvium is deposited on the portion of
claimant's land which is adjacent to the river bank.
Second, there is no dispute as to the fact that petitioners' own tract of

land adjoins the Manila Bay. Manila Bay is obviously not a river, and
jurisprudence is already settled as to what kind of body of water the Manila Bay
is. It is to be remembered that we held that:
"Appellant next contends that . . . Manila Bay cannot be
considered as a sea. We find said contention untenable. A bay is part
of the sea, being a mere indentation of the same:
'Bay. — An opening into the land where the water is shut in

on all sides except at the entrance; an inlet of the sea; an arm of
the sea, distinct from a river, a bending or curbing of the shore of
the sea or of a lake.' 7 C.J. 1013-1014." 17
The disputed land, thus, is an accretion not on a river bank but on a sea
bank, or on what used to be the foreshore of Manila Bay which adjoined
petitioners' own tract of land on the northern side. As such, the applicable law
is not Article 457 of the Civil Code but Article 4 of the Spanish Law of Waters of
1866.
The process by which the disputed land was formed, is not difficult to
discern from the facts of the case. As the trial court correctly observed:
"A perusal of the survey plan . . . of the land subject matter of
these cases shows that on the eastern side, the property is bounded by
Talisay River, on the western side by Bulacan River, on the southern
side by Lot 1436 and on the northern side by Manila Bay. It is not
correct to state that the Talisay and Bulacan Rivers meet a certain
portion because the two rivers both flow towards Manila Bay. The
Talisay River is straight while the Bulacan River is a little bit
meandering and there is no portion where the two rivers meet before
they end up at Manila Bay. The land which is adjacent to the property
belonging to Pascual cannot be considered an accretion caused by the
action of the two rivers].
Applicant Pascual . . . has not presented proofs to convince the

Court that the land he has applied for registration is the result of the
settling down on his registered land of soil, earth or other deposits so
as to be rightfully be considered as an accretion [caused by the action
of the two rivers]. Said Art. 457 finds no applicability where the
accretion must have been caused by action of the bay." 18
The conclusion formed by the trial court on the basis of the foregoing
observation is that the disputed land is part of the foreshore of Manila Bay and
therefore, part of the public domain. The respondent appellate court, however,
perceived the fact that petitioners' own land lies between the Talisay and
Bulacan Rivers, to be basis to conclude that the disputed land must be an
accretion formed by the action of the two rivers because petitioners' own land
acted as a barricade preventing the two rivers to meet and that the current of
the two rivers carried sediments of sand and silt downwards to the Manila Bay
which accumulated somehow to a 14-hectare land. These conclusions,
however, are fatally incongruous in the light of the one undisputed critical fact:
the accretion was deposited, not on either the eastern or western portion of
petitioners' land where a river each runs, but on the northern portion of
petitioners' land which adjoins the Manila Bay. Worse, such conclusions are
further eroded of their practical logic and consonance with natural experience
in the light of Sulpicio Pascual's admission as to having planted palapat and
bakawan trees on the northern boundary of their own land. In amplification of
this, plainly more reasonable and valid are Justice Mariano Serrano's
observations in his dissenting opinion when he stated that:
"As appellants' (titled) land . . . acts as a barricade that prevents
the two rivers to meet, and considering the wide expanse of the
boundary between said land and the Manila Bay, measuring some
593.00 meters . . . it is believed rather farfetched for the land in
question to have been formed through 'sediments of sand and salt [sic]
. . . deposited at their [rivers'] mouths.' Moreover, if 'since the flow of
the two rivers is downwards to the Manila Bay the sediments of sand
and silt are deposited at their mouths,' why then would the alleged
cargo of sand, silt and clay accumulate at the northern portion of
appellants' titled land facing Manila Bay instead of merely at the
mouths and banks of these two rivers? That being the case, the
accretion formed at said portion of appellants' titled [land] was not
caused by the current of the two rivers but by the action of the sea
(Manila Bay) into which the rivers empty.
The conclusion . . . is not supported by any reference to the

evidence which, on the contrary, shows that the disputed land was
formed by the action of the sea. Thus, no less than Sulpicio Pascual,
one of the heirs of the original applicant, testified on cross-examination
that the land in dispute was part of the shore and it was only in 1948
that he noticed that the land was beginning to get higher after he had
planted trees thereon in 1948. . . .cdasia
. . . it is established that before 1948 sea water from the Manila

Bay at high tide could reach as far as the dike of appellants' fishpond
within their titled property, which dike now separates this titled
property from the land in question. Even in 1948 when appellants had
already planted palapat and bakawan trees in the land involved,
inasmuch as these trees were yet small, the waves of the sea could still
reach the dike. This must be so because in . . . the survey plan of the
titled property approved in 1918, said titled land was bounded on the
north by Manila Bay. So Manila Bay was adjacent to it on the north. It
was only after the planting of the aforesaid trees in 1948 that the land
in question began to rise or to get higher in elevation.
The trees planted by appellants in 1948 became a sort of strainer
of the sea water and at the same time a kind of block to the strained
sediments from being carried back to the sea by the very waves that
brought them to the former shore at the end of the dike, which must
have caused the shoreline to recede and dry up eventually raising the
former shore leading to the formation of the land in question." 19
In other words, the combined and interactive effect of the planting of

palapat and bakawan trees, the withdrawal of the waters of Manila Bay
eventually resulting in the drying up of its former foreshore, and the regular
torrential action of the waters of Manila Bay, is the formation of the disputed
land on the northern boundary of petitioners' own tract of land.
The disputed property is an accretion on a
sea bank, Manila Bay being an inlet or an
arm of the sea; as such, the disputed
property is, under Article 4 of the Spanish
Law of Waters of 1866, part of the public
domain
At the outset, there is a need to distinguish between Manila Bay and
Laguna de Bay.
While we held in the case of Ignacio v. Director of Lands and Valeriano 20
that Manila Bay is considered a sea for purposes of determining which law on
accretion is to be applied in multifarious situations, we have ruled differently
insofar as accretions on lands adjoining the Laguna de Bay are concerned.
In the cases of Government of the P.I. v. Colegio de San Jose 21 , Republic
v. Court of Appeals 22 , Republic v. Alagad 23 , and Meneses v. Court of Appeals
24 , we categorically ruled that Laguna de Bay is a lake the accretion on which,
by the mandate of Article 84 of the Spanish Law of Waters of 1866, belongs to
the owner of the land contiguous thereto.
The instant controversy, however, brings a situation calling for the

application of Article 4 of the Spanish Law of Waters of 1866, the disputed land
being an accretion on the foreshore of Manila Bay which is, for all legal
purposes, considered a sea.
Article 4 of the Spanish Law of Waters of August 3, 1866 provides as
follows:
"Lands added to the shores by accretions and alluvial deposits
caused by the action of the sea, form part of the public domain. When
they are no longer washed by the waters of the sea and are not
necessary for purposes of public utility, or for the establishment of
special industries, or for the coast-guard service, the Government shall
declare them to be the property of the owners of the estates adjacent
thereto and as increment thereof."
In the light of the aforecited vintage but still valid law, unequivocal is the
public nature of the disputed land in this controversy, the same being an
accretion on a sea bank which, for all legal purposes, the foreshore of Manila
Bay is. As part of the public domain, the herein disputed land is intended for
public uses, and "so long as the land in litigation belongs to the national domain
and is reserved for public uses, it is not capable of being appropriated by any
private person, except through express authorization granted in due form by a
competent authority." 25 Only the executive and possibly the legislative
departments have the right and the power to make the declaration that the
lands so gained by action of the sea is no longer necessary for purposes of
public utility or for the cause of establishment of special industries or for coast
guard services. 26 Petitioners utterly fail to show that either the executive or
legislative department has already declared the disputed land as qualified,
under Article 4 of the Spanish Law of Waters of 1866, to be the property of
petitioners as owners of the estates adjacent thereto.
WHEREFORE, the instant Petition for Review is hereby DENIED and

DISMISSED.
Costs against petitioners.

SO ORDERED.
Padilla, Bellosillo and Kapunan, JJ., concur.

Vitug, J., concurs: The amendatory provisions of the Water Code (P.D.
1067) did not affect Article 4 of the Spanish Law of Waters of 1866.
Footnotes
1. In CA G.R. No. 59044-K dated November 29, 1978, penned by Associate
Justice Porfirio V. Sison and concurred in by Associate Justices Nestor B.
Alampay, Jorge R. Coquia, and Rafael C. Climaco, with Associate Justice
Mariano Serrano, dissenting; Rollo , pp. 39-54.
2. Resolution (on the First Motion for Reconsideration) dated November 21,
1980, penned by Associate Justice Porfirio V. Sison and concurred in by
Associate Justices B.S. de la Fuente, Nestor B. Alampay, Jorge R. Coquia, and
Elias B. Asuncion; Rollo , pp. 68-69; and Resolution (on the Second Motion for
Reconsideration) dated March 28, 1982, penned by Associate Justice Porfirio
V. Sison and concurred in by Associate Justices B.S. de la Fuente, Nestor B.
Alampay, Elias B. Asuncion, and Hugo E. Gutierrez, Jr., Rollo , pp. 90-91.
3. Fourth Civil Cases Division.

4. L.R.C. Case No. 18607.
5. Branch 1.
6. Decision in CA G.R. No. 59044 dated November 29, 1978, pp. 2-3; Rollo , pp.
40-41.
7. Id., p. 3; Rollo , p. 41.
8. Id., pp. 3-6; Rollo , pp. 41-44.
9. Resolution in CA-G.R. No. 59044-R dated November 21, 1980, p. 1; Rollo , p.
68.
10. Docketed as G.R. No. 55584.
11. Desamparado Vda. de Nazareno and Leticia Nazareno Tapia v. Court of

Appeals, et al., G.R. No. 98045, June 26, 1996; Meneses v. Court of Appeals,
246 SCRA 374 [1995]: Reynante v. Court of Appeals , 207 SCRA 794, 799
[1992]; Binalay v. Manalo, 195 SCRA 374, 385 [1991].
12. Paras, Edgardo, Civil Code of the Philippines, Vol. 3, 1984 Edition, p. 211.
13. Santulan v. The Executive Secretary, 80 SCRA 548, 556 [1977].

14. Paras, supra, at p. 212, citing Cortez v. City of Manila, 10 Phil. 567; Roxas v.
Tuason, 9 Phil. 408; 3 Manresa 236.
15. Id., at p. 216, citing Grande, et al. v. Court of Appeals, L-17652, June 30,
1962.
16. The pertinent portion of Sulpicio Pascual's testimony is as follows:

"Q: Is that portion contiguous to Manila Bay?
A: Near but not contiguous.

Q: During the high tide is that portion reached by water?
A: Before 1948.
Q: Before you introduced palapat and bakawan in that area?
A: Yes, sir.
Q: It was only after you have planted palapat and bakawan . . .
when
the sea water no longer reaches that area?
A: I only planted few trees in 1948 to serve as boundary and as

marker. . . .
Q: Was it only in 1948 that you observed that portion was

becoming
higher?
A: At the beginning of 1948 I noticed that land was getting higher."

(TSN, June 11, 1969, pp. 9-11).
17. Ignacio v. Director of Lands and Valeriano, 108 Phil. 336, 338 [1960].
18. Petition pp. 6-7; Rollo , pp. 122-123.
19. Dissenting Opinion of Associate Justice Mariano Serrano; Rollo , pp. 48-51.
20. 108 Phil 335 [1960].
21. 53 Phil. 423 [1929].

22. 31 SCRA 532 [1984].
23. 169 SCRA 455 [1989].

24. 246 SCRA 162 [1995].
25. Insular Government v. Aldecoa & Co., 19 Phil. 505, 517 [1911].

26. Joven y Monteverde, et al. v. The Director of Lands, 93 Phil. 134, 136-137
[1953].

THIRD DIVISION
[G.R. No. 123509. March 14, 2000.]
LUCIO ROBLES, EMETERIA ROBLES, ALUDIA ROBLES and

EMILIO ROBLES, petitioners, vs. COURT OF APPEALS, Spouses
VIRGILIO SANTOS and BABY RUTH CRUZ, RURAL BANK OF
CARDONA, Inc., HILARIO ROBLES, ALBERTO PALAD JR. in his
capacity as Director of Lands, and JOSE MAULEON in his
capacity as District Land Officer of the Bureau of Lands,
respondents.
Remigio D. Saladero, Jr. for petitioners.

The Solicitor General for public respondent.
Mariano Cervo for private respondents.
SYNOPSIS
Petitioners inherited the disputed property from their father, Silvino

Robles, whose predecessor has been occupying the same since 1916.
Allegedly, the payment of taxes thereof was entrusted to their co-heir,
respondent Hilario. In 1962, however, the tax declaration of the land was
transferred to Exequiel Bellena, father-in-law of Hilario; later, transferred to
Antipolo Rural Bank, and then, to the name of Hilario and wife Andrea, who
mortgaged the same to the Cardona Rural Bank. The property was eventually
foreclosed, transferred to the Bank's name and sold to respondent spouses
Santos. Petitioners, who discovered the mortgage, attempted but failed to
redeem the property while respondent spouses Santos took possession of the
same and were able to secure Free Patent in their names.
Evidently, there was no valid transfer of the disputed property from the
heirs of Silvino to Exequiel in 1962. Thus, the property still belong to the heirs
of the late Silvino and the mortgage executed by Hilario to the Rural Bank of
Cardona was made in his capacity as mere co-owner thereof. The Rural Bank of
Cardona, Inc. is considered a mortgagee in bad faith as it did not fully ascertain
the title of Hilario and thus failed to observe due diligence. Hence, as what was
mortgaged was only the undivided share of Hilario, respondent spouses Santos
can only acquire the same. The free patent granted to the spouses Santos was
void as the disputed land has already become a private land as petitioners are
claiming ownership thereof based on their possession of the land in the concept
of owners for more than 30 years. It has become beyond the authority of the
Director of Lands.
SYLLABUS

1. CIVIL LAW; PROPERTY; OWNERSHIP; QUIETING OF TITLE,
DISCUSSED. — Based on Art. 476 of the Civil Code, an action to quiet title is a
common-law remedy for the removal of any cloud or doubt or uncertainty on
the title to real property. It is essential for the plaintiff or complainant to have a
legal or an equitable title to or interest in the real property which is the subject
matter of the action. Also, the deed, claim, encumbrance or proceeding that is
being alleged as a cloud on plaintiff's title must be shown to be in fact invalid
or inoperative despite its prima facie appearance of validity or legal efficacy.
2. ID.; ID.; ID.; CO-OWNERSHIP; PRESCRIPTION IN FAVOR OF A CO-
OWNER. — It is a fundamental principle that a co-owner cannot acquire by
prescription the share of the other co-owners, absent any clear repudiation of
the co-ownership. In order that the title may prescribe in favor of a co-owner,
the following requisites must concur: (1) the co-owner has performed
unequivocal acts of repudiation amounting to an ouster of the other co-owners;
(2) such positive acts of repudiation have been made known to the other co-
owners; and (3) the evidence thereof is clear and convincing.
3. ID.; ID.; ID.; ID.; NO REPUDIATION THEREOF IN CASE AT BAR. — In
the present case, Hilario did not have possession of the subject property;
neither did he exclude the petitioners from the use and the enjoyment thereof,
as they had indisputably shared in its fruits. Likewise, his act of entering into a
mortgage contract with the bank cannot be construed to be a repudiation of the
co-ownership. As absolute owner of his undivided interest in the land, he had
the right to alienate his share, as he in fact did. Neither should his payment of
land taxes in his name, as agreed upon by the co-owners, be construed as a
repudiation of the co-ownership. The assertion that the declaration of
ownership was tantamount to repudiation was belied by the continued
occupation and possession of the disputed property by the petitioners as
owners.
4. ID.; SPECIAL CONTRACTS; REAL ESTATE MORTGAGE; WHEN
MORTGAGOR MERE CO-OWNER OF THE PROPERTY MORTGAGED. — In a real
estate mortgage contract, it is essential that the mortgagor be the absolute
owner of the property to be mortgaged; otherwise, the mortgage is void. In the
present case, it is apparent that Hilario Robles was not the absolute owner of
the entire subject property; and that the Rural Bank of Cardona, Inc., in not fully
ascertaining his title thereto, failed to observe due diligence and, as such, was
a mortgagee in bad faith. In Rural Bank of Compostela v. Court of Appeals, the
Court invalidated a real estate mortgage after a finding that the bank had not
been in good faith. The Court explained: "The rule that persons dealing with
registered lands can rely solely on the certificate of title does not apply to
banks." At any rate, considering that Hilario can be deemed to have mortgaged
the disputed property not as absolute owner but only as a co-owner, he can be
adjudged to have disposed to the Rural Bank of Cardona, Inc. only his undivided
share therein. The said bank, being the immediate predecessor of the Santos
spouses, was a mortgagee in bad faith. Thus, justice and equity mandate the
entitlement of the Santos spouses, who merely stepped into the shoes of the
bank, only to what legally pertains to the latter — Hilario's share in the disputed
property.
5. ID.; LAND TITLES; FREE PATENT; NOT VALID WHEN ISSUED AGAINST
A PRIVATE LAND. — In the light of their open, continuous, exclusive and
notorious possession and occupation of the land, petitioners are "deemed to
have acquired, by operation of law, a right to a grant, a government grant,
without the necessity of a certificate of title being issued." The land was
"segregated from the public domain." Accordingly, the director of lands had no
authority to issue a free patent thereto in favor of another person. Verily,
jurisprudence holds that a free patent covering private land is null and void. It is
apparent that petitioners are claiming ownership of the disputed property on
the basis of their possession thereof in the concept of owners — openly,
peacefully, publicly, continuously and adversely since 1916. Because they and
their predecessors-in-interest have occupied, possessed and cultivated it as
owners for more than thirty years, only one conclusion can be drawn — it has
become private land and is therefore beyond the authority of the director of
land.
DECISION
PANGANIBAN, J : p
To be entitled to the remedy of quieting of title, petitioners must show

that they have title to the real property at issue, and that some deed or
proceeding beclouds its validity or efficacy. Buyers of unregistered real
property, especially banks, must exert due diligence in ascertaining the titles of
mortgagors and sellers, lest some innocent parties be prejudiced. Failure to
observe such diligence may amount to bad faith and may result in the nullity of
the mortgage, as well as of the subsequent foreclosure and/or auction sale.
Unless the co-ownership is clearly repudiated, a co-owner cannot, by
prescription, acquire title to the shares of the other co-owners. cdrep
The Case
Before us is a Petition for Review under Rule 45, assailing the June 15,
1995 Decision and the January 15, 1996 Resolution of the Court of Appeals 1
(CA) in CA-GR CV No. 34213. 2 In its Decision, the CA ruled: 3
"WHEREFORE, the trial court's June 17, 1991 decision is
REVERSED and SET ASIDE, and in lieu thereof a new one is hereby
entered ordering the dismissal of the plaintiffs-appellees['] second
amended complaint."
Earlier, the trial court had disposed as follows:

"WHEREFORE, premises considered, judgment is hereby
1. Declaring free patent Title No. IV-1-010021 issued by the

Bureau of Lands as null and void;
2. Ordering the defendant spouses Vergel Santos and Ruth
Santos to deliver the property subject of this case to the plaintiff; and
3. Declaring the heirs of Silvino Robles as the absolute owner

of the land in controversy."
The January 15, 1996 CA Resolution denied petitioners' Motion for

Reconsideration. cdphil
The Facts
The present Petition is rooted in a case for quieting of title before the
Regional Trial Court of Morong, Rizal, filed on March 14, 1988, 4 by Petitioners
Lucio Robles, Emeteria Robles, Aludia Robles and Emilio Robles. The facts were
narrated by the trial court in this wise:
"There seems to be no dispute that Leon Robles primitively
owned the land situated in Kay Taga, Lagundi, Morong, Rizal with an
area of 9,985 square meters. He occupied the same openly and
adversely. He also declared the same in his name for taxation purposes
as early as 1916 covered by Tax Declaration No. 17865 (Exh. "I") and
paid the corresponding taxes thereon (Exh. "B"). When Leon Robles
died, his son Silvino Robles inherited the land, who took possession of
the land, declared it in his name for taxation purposes and paid the
taxes thereon.
"Upon the death of Silvino Robles in 1942, his widow Maria de la

Cruz and his children inherited the property. They took adverse
possession of said property and paid taxes thereon. The task of
cultivat[ing] the land was assigned to plaintiff Lucio Robles who
planted trees and other crops. He also built a nipa hut on the land. The
plaintiffs entrusted the payment of the land taxes to their co-heir and
half-brother, Hilario Robles.
"In 1962, for unknown reasons, the tax declaration of the parcel
of land in the name of Silvino Robles was canceled and transferred to
one Exequiel Ballena (Exh. "19"), father of Andrea Robles who is the
wife of defendant Hilario Robles. Thereafter, Exequiel Ballena secured
a loan from the Antipolo Rural Bank, using the tax declaration as
security. Somehow, the tax declaration was transferred [to] the name
of Antipolo Rural Bank (Exh. "17") and later on, was transferred [to] the
name of defendant Hilario Robles and his wife (Exh. "16").
"In 1996, Andrea Robles secured a loan from the Cardona Rural
Bank, Inc., using the tax declaration as security. Andrea Robles
testified without contradiction that somebody else, not her husband
Hilario Robles, signed the loan papers because Hilario Robles was
working in Marinduque at that time as a carpenter.
"For failure to pay the mortgage debt, foreclosure proceedings

were had and defendant Rural Bank emerged as the highest bidder
during the auction sale in October 1968.
"The spouses Hilario Robles failed to redeem the property and so

the tax declaration was transferred in the name of defendant Rural
Bank. On September 25, 1987, defendant Rural Bank sold the same to
the Spouses Vergel Santos and Ruth Santos. cdrep
"In September 1987, plaintiff discovered the mortgage and

attempted to redeem the property, but was unsuccessful. On May 10,
1988, defendant spouses Santos took possession of the property in
question and was able to secure Free Patent No. IV-1-010021 in their
names." 5
On the other hand, the Court of Appeals summarized the facts of the case
as follows:
"The instant action for quieting of title concerns the parcel of land
bounded and more particularly described as follows:
"A parcel of land located at Kay Taga, Lagundi, Morong,

Rizal. Bounded [i]n the north by the property of Venancio Ablay y
Simeon Ablay; [i]n the east by the property of Veronica Tulak y
Dionisio Ablay; [i]n the south by the property of Simeon Ablay y
Dionisio Ablay; and [i]n the west by the property of Dionisio
Ablay y Simeon Ablay, with an area of 9,985 square meters,
more or less, assessed in the year 1935 at P60.00 under Tax
Declaration No. 23219.'
"As the heirs of Silvino Robles who, likewise inherited the above-
described parcel from Leon Robles, the siblings Lucio, Emeteria, Aludia
and Emilio, all surnamed Robles, commenced the instant suit with the
filing of their March 14, 1988 complaint against Spouses Virgilio and
Ruth Santos, as well as the Rural Bank of Cardona, Inc. Contending that
they had been in possession of the land since 1942, the plaintiff
alleged, among other matters, that it was only in September of 1987
that they came to know of the foreclosure of the real estate mortgage
constituted thereon by the half-brother, Hilario Robles, in favor of
defendant Rural Bank; and that they likewise learned upon further
inquiry, that the latter had already sold the self-same parcel in favor of
the Santos spouses (pp. 1-3, orig. rec.). Twice amended to implead
Hilario Robles (pp. 76-80, orig. rec) and, upon subsequent discovery of
the issuance of Free Patent No. IV-I-010021 in favor of the defendant
spouses, the Director of Lands and the District Land Officer of the
Bureau of Lands as parties-defendants (pp. 117-121, orig. rec). The
plaintiffs' complaint sought the following reliefs on the theory that the
encumbrance of their half-brother, constituted on the land, as well as
all proceedings taken subsequent thereto, were null and void, to wit:
Wherefore, it is respectfully prayed that (a) a preliminary

mandatory injunction be issued forthwith restoring plaintiffs to
their possession of said parcel of land; (b) an order be issued
annulling said Free Patent No. IV-I-010021 in the name of
defendants spouses Vergel Santos and Ruth C. Santos, the deed
of sale aforementioned and any tax declaration which have been
issued in the name of defendants; and (c) ordering defendants
jointly and severally, to pay plaintiffs the sum of P10,000.00 as
attorney's fees.cda
"Plaintiffs pray for other relief as [may be] just and

equitable under the premises." (pp. 120-121, orig. rec.)
xxx xxx xxx'
"With the termination of the pre-trial stage upon the parties-

litigants' agreement (p. 203, orig. rec.) the trial court proceeded to try
the case on the merits. It thereafter rendered the challenged June 17,
1991 decision upon the following findings and conclusions:
"The real estate mortgage allegedly executed by Hilario

Robles is not valid because his signature in the mortgage deed
was forged. This fact, which remains unrebutted, was admitted
by Andrea Robles.
'Inasmuch as the real estate mortgage executed allegedly

by Hilario Robles in favor of the defendant Cardona Rural Bank,
Inc. was not valid, it stands to reason that the foreclosure
proceedings therein were likewise not valid. Therefore, the
defendant bank did not acquire any right arising out of the
foreclosure proceedings. Consequently, defendant bank could not
have transferred any right to the spouses Santos.
'The fact that the land was covered by a free patent will
not help the defendant Santos any.
'There can be no question that the subject [property was

held] in the concept of owner by Leon Robles since 1916.
Likewise, his successor-in-interest, Silvino Robles, his wife Maria
de la Cruz and the plaintiffs occupied the property openly,
continuously and exclusively until they were ousted from their
possession in 1988 by the spouses Vergel and Ruth Santos.
'Under the circumstances, therefore, and considering that

'open, exclusive and undisputed possession of alienable public
lands for the period prescribed by law (30 years), creates the
legal fiction whereby the land, upon completion of the requisite
period, ipso jure and without the need of judicial or other action,
ceases to be public land and becomes private property.
Possession of public land . . . which is [of] the character and
duration prescribed by the statute is the equivalent of an express
grant from the State, considering the dictum of the statute
itself[:]; 'The possessor . . . shall be conclusively presumed to
have performed all the conditions essential to a government
grant and shall be entitled to a certificate of title . . . .' No proof is
admissible to overcome a conclusive presumption[,] and
confirmation proceedings would be a little more than a formality,
at the most limited to ascertaining whether the possession
claimed is of the required character and length of time.
Registration thereunder would not confer title, but simply
recognize a title already vested. (Cruz v. IAC , G.R. No. 75042,
November 29, 1988) The land in question has become private
land. cdll
'Consequently, the issuance of [a] free patent title to the

Spouses Vergel Santos and Ruth C. Santos is not valid because at
the time the property subject of this case was already private
land, the Bureau of Lands having no jurisdiction to dispose of the
same.' (pp. 257-259, orig. rec.)'
"Dissatisfied with the foregoing decision, the Santos spouses and
the defendant Rural Bank jointly filed their July 6, 1991 Notice of
Appeal (p. 260, orig. rec.) . . . ." 6
Ruling of the Court of Appeals

In reversing the trial court, the Court of Appeals held that petitioners no
longer had any title to the subject property at the time they instituted the
Complaint for quieting of title. The CA ratiocinated as follows:
"As correctly urged by the appellants, the plaintiff-appellees no
longer had any title to the property at the time of the institution of the
instant complaint. (pp. 25-27, rec.) The latter's claim of continuous
possession notwithstanding (pp. 3-5, TSN, July 5, 1990; p. 12, TSN, July
12, 1990), the aforesaid loss of title is amply evidenced by the
subsequent declaration of the subject realty for taxation purposes not
only in the name of Exequiel Ballena (Exhibits "1" and "2", pp. 23-24,
orig. rec.) but also in the name of the Rural Bank of Antipolo (Exhibit
17, vol. II, orig. rec.). On the theory that tax declarations can be
evincive of the transfer of a parcel of land or a portion thereof (Gacos v.
Court of Appeals, 212 SCRA 214), the court a quo clearly erred in
simply brushing aside the apparent transfers [which] the land in
litigation had undergone. Whether legal or equitable, it cannot, under
the circumstances, be gainsaid that the plaintiff-appellees no longer
had any title to speak of when Exequiel Ballena executed the
November 7, 1966 Deed of Absolute Sale transferring the land in favor
of the spouses Hilario and Andrea Robles (Exhibit "3", p. 25, orig. rec.)
"Even on the theory that the plaintiffs-appellees and their half-

brother, Hilario Robles, are co-owners of the land left behind by their
common father, Silvino Robles, such title would still be effectively
discounted by what could well serve as the latter's acts of repudiation
of the co-ownership, i.e., his possession (p. 22, TSN, November 15,
1990) and declaration thereof for taxation purposes in his own name
(Exhibit "4", p. 26, orig. rec.). In view of the plaintiffs-appellees'
inaction for more than twenty (20) years from the time the subject
realty was transferred in favor of Hilario Robles, the appellants
correctly maintain that prescription had already set in. While it may be
readily conceded that an action to quiet title to property in the
possession of the plaintiff is imprescriptible ( Almanza vs. Arguelles, 156
SCRA 718; Coronel vs. Intermediate Appellate Court, 155 SCRA 270;
Caragay-Layno vs. Court of Appeals, 133 SCRA 718; Charon Enterprises
vs. Court of Appeals, 124 SCRA 784; Faja vs. Court of Appeals , 75 SCRA
441; Burton vs. Gabar, 55 SCRA 4999), it equally bears emphasis that a
co-owner or, for that matter, the said co-owner[']s successors-in-
interest who occupy the community property other than as co-owner[s]
can claim prescription as against the other co-owners (De Guzman vs.
Austria, 148 SCRA 75; Ramos vs. Ramos , 45 Phil. 362; Africa vs. Africa ,
42 Phil. 902; Bargayo vs. Camumot, 40 Phil. 857; De Castro vs. Echarri,
20 Phil. 23). If only in this latter sense, the appellants correctly argue
that the plaintiffs-appellees have lost their cause of action by
prescription. cdtai
"Over and above the foregoing considerations, the court a quo

gravely erred in invalidating the real estate mortgage constituted on
the land solely on the basis of Andrea Robles' testimony that her
husband's signature thereon was forged (p. 257, orig. rec.),
xxx xxx xxx
"In according to the foregoing testimony . . . credibility which,

while admittedly unrebutted, was altogether uncorroborated, the trial
court lost sight of the fact that the assailed deed of real estate
mortgage (Exhibit "5", Vol. II, orig. rec.) is a public document, the
acknowledgment of which is a prima facie evidence of its due
execution (Chua vs. Court of Appeals, 206 SCRA 339). As such, it
retains the presumption of validity in the absence of a full, clear and
convincing evidence to overcome such presumption (Agdeppa vs. Ibe,
220 SCRA 584).
"The foregoing principles take even more greater [sic] when it is,
moreover, borne in mind that Hilario Robles made the following
admissions in his March 8, 1989 answer, viz:
'3. The complaint filed against herein answering defendant

has no legal basis considering that as the lawful owner of
the subject real property, defendant Hilario Robles has the
right to mortgage the said real property and could dispose
the same in whatever manner he wishe[s] to do." (p. 96,
orig. rec.)
"Appropriately underscored by the appellants, the foregoing

admission is binding against Hilario [Robles]. Judicial admissions,
verbal or written, made by the parties in the pleadings or in the course
of the trial or other proceedings in the same case are conclusive, no
evidence being required to prove the same. They cannot be
contradicted unless shown to have been made through [a] palpable
mistake or [unless] no such admission was actually made ( Philippine
American General Insurance, Inc. vs. Sweet Lines, Inc., 212 SCRA 194).
"It does not help the plaintiffs-appellees' cause any that, aside
from complying with the requirements for the foreclosure of the subject
real estate mortgage (Exhibits "6", "7", "8" and "10", Volume II[)], the
appellant Rural Bank had not only relented to the mortgagor's request
to postpone the (Exhibit "g", Vol. II, orig. rec.) but had likewise granted
the latter's request for an extension of the redemption period therefor
(Exhibits "11" and "12", pp. 35-36, orig. rec.). Without going into
minute detail in discussing the Santos spouses' rights as purchasers for
value and in good faith (Exhibit "21", Vol. II, orig. rec.), the mortgagor
and the plaintiffs'-appellees cannot now be heard to challenge the
validity of the sale of the land after admittedly failing to redeem the
same within the extension the appellant Rural Bank granted (pp. 10-11,
TSN, November 15, 1990).
"Being dependent on the supposed invalidity of the constitution

and foreclosure of the subject real estate mortgage, the plaintiffs-
appellees' attack upon . . . Free Patent No. IV-I must necessarily fail.
The trial court, therefore, misread, and ignored the evidence o[n]
record, to come up with erroneous conclusion." cdasia

Contending that such ruling was contrary to law and jurisprudence,
Petitioners Lucio, Emeteria, Aludia and Emilio — all surnamed Robles — filed
this Petition for Review. 7
The Assigned Error

Petitioners ascribe the following error to the respondent court:
"Respondent Court of Appeals grievously erred in ruling that with
the transfers of the tax declaration over the parcel of land in question
from Silvino Robles to Exequiel Ballena, then to the Rural Bank of
Antipolo, then to Respondent Hilario Robles, then to Respondent Rural
Bank of Cardona Inc., and then finally to Respondent Spouses Santos,
petitioners, who by themselves and their predecessors in interest have
been in open, actual and adverse possession of said parcel of land
since 1916 up to their forced removal therefrom in 1988, have lost
their title to said property by prescription to their half-brother,
Respondent Hilario Robles, and then finally, to Respondent Spouses
Santos." 8
For a better understanding of the case, the above issue will be broken
down into three points: first, the nature of the remedy of quieting of title;
second, the validity of the real estate mortgage; and third, the efficacy of the
free patent granted to the Santos spouses.
First Issue:
Quieting of Title
Article 476 of the Civil Code provides:
"Whenever there is cloud on title to real property or any interest
therein, by reason of any instrument, record, claim, encumbrance or
proceeding which is apparently valid or effective but is in truth and in
fact invalid, ineffective, voidable or unenforceable, and may be
prejudicial to said title, an action may be brought to remove such cloud
or to quiet title.
"An action may also be brought to prevent a cloud from being

cast upon title to real property or any interest therein."
Based on the above definition, an action to quiet title is a common-law

remedy for the removal of any cloud or doubt or uncertainty on the title to real
property. 9 It is essential for the plaintiff or complainant to have a legal or an
equitable title to or interest in the real property which is the subject matter of
the action. 10 Also, the deed, claim, encumbrance or proceeding that is being
alleged as a cloud on plaintiff's title must be shown to be in fact invalid or
inoperative despite its prima facie appearance of validity or legal efficacy. 11
That there is an instrument or a document which, on its face, is valid and

efficacious is clear in the present case. Petitioners allege that their title as
owners and possessors of the disputed property is clouded by the tax
declaration and, subsequently, the free patent thereto granted to Spouses
Vergel and Ruth Santos. The more important question to be resolved, however,
is whether the petitioners have the appropriate title that will entitle them to
avail themselves of the remedy of quieting of title. prcd
Petitioners anchor their claim to the disputed property on their continued

and open occupation and possession as owners thereof. They allege that they
inherited it from their father, Silvino, who in turn had inherited it from his
father, Leon. They maintain that after their father's death, they agreed among
themselves that Petitioner Lucio Robles would be tending and cultivating it for
everyone, and that their half-brother Hilario would be paying the land taxes.
Petitioners insist that they were not aware that from 1962 until 1987, the
subject property had been declared in the names of Exequiel Ballena, the Rural
Bank of Antipolo, Hilario Robles, the Rural Bank of Cardona, Inc., and finally,
Spouses Vergel and Ruth Santos. Maintaining that, as co-owners of the subject
property, they did not agree to the real estate mortgage constituted on it,
petitioners insist that their shares therein should not have been prejudiced by
Hilario's actions.
On the other hand, Private Respondents Vergel and Ruth Santos trace
their claim to the subject property to Exequiel Ballena, who had purportedly
sold it to Hilario and Andrea Robles. According to private respondents, the
Robles spouses then mortgaged it to the Rural Bank of Cardona, Inc. — not as
co-owners but as absolute owners — in order to secure an agricultural loan
worth P2,000. Upon their failure to pay their indebtedness, the mortgage was
foreclosed and the property sold to the bank as the highest bidder. Thereafter,
private respondents purchased the property from the bank.
Undisputed is the fact that the land had previously been occupied by Leon
and later by Silvino Robles, petitioners' predecessors-in-interest, as evidenced
by the different tax declarations issued in their names. Also undisputed is the
fact that the petitioners continued occupying and possessing the land from the
death of Silvino in 1942 until they were allegedly ousted therefrom in 1988. In
1962, the subject property was declared in the name of Exequiel for taxation
purposes. On September 30, 1965, it was again declared in the same name; on
October 28, 1965, in the name of the Rural Bank of Antipolo; on November 7,
1966, in the name of Hilario and Andrea; and thereafter, in the name of the
Rural Bank of Cardona and, finally, in the name of the Santos spouses. cdll
Ostensibly, the Court of Appeals failed to consider irregularities in the

transactions involving the disputed property. First, while it was declared in the
name of Exequiel in 1962, there was no instrument or deed of conveyance
evidencing its transfer from the heirs of Silvino to him. This fact is important,
considering that the petitioners are alleging continued possession of the
property. Second , Exequiel was the father-in-law of Hilario, to whom petitioners
had entrusted the payment of the land taxes. Third, considering that the
subject property had been mortgaged by Exequiel to the Rural Bank of Antipolo,
and that it was foreclosed and in fact declared in the bank's name in 1965, why
was he able to sell it to Spouses Hilario and Andrea in 1966? Lastly, inasmuch
as it was an unregistered parcel of land, the Rural Bank of Cardona, Inc., did not
observe due diligence in determining Hilario's title thereto.

The failure to show the indubitable title of Exequiel to the property in
question is vital to the resolution of the present Petition. It was from him that
Hilario had allegedly derived his title thereto as owner, an allegation which
thereby enabled him to mortgage it to the Rural Bank of Cardona. The
occupation and the possession thereof by the petitioners and their
predecessors-in-interest until 1962 was not disputed, and Exequiel's acquisition
of the said property by prescription was not alleged. Thus, the deed of
conveyance purportedly evidencing the transfer of ownership and possession
from the heirs of Silvino to Exequiel should have been presented as the best
proof of that transfer. No such document was presented, however.
Therefore, there is merit to the contention of the petitioners that Hilario
mortgaged the disputed property to the Rural Bank of Cardona in his capacity
as a mere co-owner thereof. Clearly, the said transaction did not divest them of
title to the property at the time of the institution of the Complaint for quieting of
title.
Contrary to the disquisition of the Court of Appeals, Hilario effected no

clear and evident repudiation of the co-ownership. It is a fundamental principle
that a co-owner cannot acquire by prescription the share of the other co-
owners, absent any clear repudiation of the co-ownership. In order that the title
may prescribe in favor of a co-owner, the following requisites must concur: (1)
the co-owner has performed unequivocal acts of repudiation amounting to an
ouster of the other co-owners; (2) such positive acts of repudiation have been
made known to the other co-owners; and (3) the evidence thereof is clear and
convincing. 12
In the present case, Hilario did not have possession of the subject
property; neither did he exclude the petitioners from the use and the
enjoyment thereof, as they had indisputably shared in its fruits. 13 Likewise, his
act of entering into a mortgage contract with the bank cannot be construed to
be a repudiation of the co-ownership. As absolute owner of his undivided
interest in the land, he had the right to alienate his share, as he in fact did. 14
Neither should his payment of land taxes in his name, as agreed upon by the
co-owners, be construed as a repudiation of the co-ownership. The assertion
that the declaration of ownership was tantamount to repudiation was belied by
the continued occupation and possession of the disputed property by the
petitioners as owners. cdll
Second Issue:
Validity of the Real Estate Mortgage
In a real estate mortgage contract, it is essential that the mortgagor be
the absolute owner of the property to be mortgaged; otherwise, the mortgage
is void. 15 In the present case, it is apparent that Hilario Robles was not the
absolute owner of the entire subject property; and that the Rural Bank of
Cardona, Inc., in not fully ascertaining his title thereto, failed to observe due
diligence and, as such, was a mortgagee in bad faith.
First, the bank was utterly remiss in its duty to establish who the true
owners and possessors of the subject property were. It acted with precipitate
haste in approving the Robles spouses' loan application, as well as the real
estate mortgage covering the disputed parcel of land. 16 Had it been more
circumspect and assiduous, it would have discovered that the said property was
in fact being occupied by the petitioners, who were tending and cultivating it.
Second , the bank should not have relied solely on the Deed of Sale
purportedly showing that the ownership of the disputed property had been
transferred from Exequiel Ballena to the Robles spouses, or that it had
subsequently been declared in the name of Hilario. Because it was dealing with
unregistered land, and the circumstances surrounding the transaction between
Hilario and his father-in-law Exequiel were suspicious, the bank should have
exerted more effort to fully determine the title of the Robleses. Rural Bank of
Compostela v. Court of Appeals 17 invalidated a real estate mortgage after a
finding that the bank had not been in good faith. The Court explained: "The rule
that persons dealing with registered lands can rely solely on the certificate of
title does not apply to banks." In Tomas v. Tomas, the Court held:
". . . . Banks, indeed, should exercise more care and prudence in
dealing even with registered lands, than private individuals, for their
business is one affected with public interest, keeping in trust money
belonging to their depositors, which they should guard against loss by
not committing any act of negligence which amounts to lack of good
faith by which they would be denied the protective mantle of land
registration statute, Act 496, extended only to purchasers for value
and in good faith, as well as to mortgagees of the same character and
description. . . . ." 18
Lastly, the Court likewise finds it unusual that, notwithstanding the bank's
insistence that it had become the owner of the subject property and had paid
the land taxes thereon, the petitioners continued occupying it and harvesting
the fruits therefrom. 19
Considering that Hilario can be deemed to have mortgaged the disputed
property not as absolute owner but only as a co-owner, he can be adjudged to
have disposed to the Rural Bank of Cardona, Inc., only his undivided share
therein. The said bank, being the immediate predecessor of the Santos
spouses, was a mortgagee in bad faith. Thus, justice and equity mandate the
entitlement of the Santos spouses, who merely stepped into the shoes of the
bank, only to what legally pertains to the latter — Hilario's share in the disputed
property. LLjur
Third Issue:
Efficacy of Free Patent Grant
Petitioners repeatedly insist that the disputed property belongs to them
by private ownership and, as such, it could not have been awarded to the
Santos spouses by free patent. They allege that they possessed it in the
concept of owners — openly, peacefully, publicly and continuously as early as
1916 until they were forcibly ousted therefrom in 1988. They likewise contend
that they cultivated it and harvested its fruits. Lucio Robles testified:
"xxx xxx xxx
Q By the way, why do you know this parcel of land?
A Because before my father died, he showed me all the documents.
Q Before the death of your father, who was the owner of this parcel
of land?
A My father, sir.
Q How did your father acquire this parcel of land?
A My father knew that it [was] by inheritance, sir.
Q From whom?
A From his father, Leon Robles, sir.
Q And do you know also [from] whom Leon Robles acquired this
land?
A It was inherited from his father, sir.
Q What is the nature of this parcel of land?
A It's an agricultural land, sir.
Q Now, at the time of the death of your father, this land was
planted with what crops?
A Mango trees, santol trees, and I was the one who planted those
trees, sir.
Q When did you plant those trees?
A Before the death of my father, sir.
Q Now, after the death of your father, who cultivated this parcel of
land?
A I took charge of the land after the death of my father, sir.
Q Up to when?
A Up to the present, sir, after this case was already filed." 20
The preceding claim is an assertion that the subject property is private

land. The petitioners do not concede, and the records do not show, that it was
ever an alienable land of the public domain. They allege private ownership
thereof, as evidenced by their testimonies and the tax declarations issued in
the names of their predecessors-in-interest. It must be noted that while their
claim was not corroborated by other witnesses, it was not controverted by the
other parties, either. prcd
Carlos Dolores insisted that the Rural Bank of Cardona, Inc., of which he
was the manager, had acquired and possessed the subject property. He did
not, however, give any reason why the petitioners had continued occupying it,
even as he admitted on the stand that he had visited it twice. 21
In the light of their open, continuous, exclusive and notorious possession
and occupation of the land, petitioners are "deemed to have acquired, by
operation of law, a right to a grant, a government grant, without the necessity
of a certificate of title being issued." 22 The land was "segregated from the
public domain." Accordingly, the director of lands had no authority to issue a
free patent thereto in favor of another person. Verily, jurisprudence holds that a
free patent covering private land is null and void. 23
Worth quoting is the disquisition of the Court in Agne v. Director of Lands,

24 in which it held that a riparian owner presently in possession had a better
right over an abandoned river bed than had a registered owner by virtue of a
free patent.
"Under the provisions of Act 2874 pursuant to which the title of
private respondents' predecessor-in-interest was issued, the President
of the Philippines, or his alter ego, the Director of Lands, has no
authority to grant a free patent for land that has ceased to be a public
land and has passed to private ownership and a title so issued is null
and void. The nullity arises, not from fraud or deceit, but from the fact
that the land is not under the jurisdiction of the Bureau of Lands. The
jurisdiction of the Director of Lands is limited only to public lands and
does not cover lands publicly owned. The purpose of the Legislature in
adopting the former Public Land Act, Act No. 2874, was and is to limit
its application to lands of the public domain, and lands held in private
ownership are not included therein and are not affected in any manner
whatsoever thereby. Land held in freehold or fee title, or of private
ownership, constitutes no part of the public domain, and cannot
possibly come within the purview of said act 2874, inasmuch as the
'subject' of such freehold or private land is not embraced in any
manner in the title of the Act and the same is excluded from the
provisions of the text thereof.
"We reiterate that private ownership of land is not affected by
the issuance of the free patent over the same land because the Public
Land Act applies only to lands of the public domain. Only public land
may be disposed of by the Director of Lands. Since as early as 1920,
the land in dispute was already under the private ownership of herein
petitioners and no longer a part of the lands of the public domain, the
same could not have been the subject matter of a free patent. The
patentee and his successors-in-interest acquired no right or title to said
land. Necessarily, Free Patent No. 23263 issued to Herminigildo
Agpoon is null and void and the subsequent titles issued pursuant
thereto cannot become final and indefeasible. Hence we ruled in
Director of Lands v. Sicsican, et al., that if at the time the free patents
were issued in 1953 the land covered therein were already private
property of another and, therefore, not part of the disposable land of
the public domain, then applicants patentees acquired no right or title
to the land.
"Now, a certificate of title fraudulently secured is null and void ab
initio if the fraud consisted in misrepresenting that the land is part of
the public domain, although it is not. As earlier stated, the nullity
arises, not from the fraud or deceit, but from the fact that the land is
not under the jurisdiction of the Bureau of Lands. Being null and void,
the free patent granted and the subsequent titles produce no legal
effect whatsoever. Quod nullum est, nullum producit effectum .
"A free patent which purports to convey land to which the

government did not have any title at the time of its issuance does not
vest any title in the patentee as against the true owner. The Court has
previously held that the Land Registration Act and the Cadastral Act do
not give anybody who resorts to the provisions thereof a better title
than what he really and lawfully has.
xxx xxx xxx

"We have, therefore, to arrive at the unavoidable conclusion that
the title of herein petitioners over the land in dispute is superior to the
title of the registered owner which is a total nullity. The long and
continued possession of petitioners under a valid claim of title cannot
be defeated by the claim of a registered owner whose title is defective
from the beginning."
The Santos spouses argue that petitioners do not have the requisite
personality to question the free patent granted them, inasmuch as "it is a well-
settled rule that actions to nullify free patents should be filed by the Office of
the Solicitor General at the behest of the Director of Lands." 25
Private respondents' reliance on this doctrine is misplaced. Indeed, the

Court held in Peltan Development, Inc. v. Court of Appeals 26 that only the
solicitor general could file an action for the cancellation of a free patent. Ruling
that the private respondents, who were applicants for a free patent, were not
the proper parties in an action to cancel the transfer certificates covering the
parcel of land that was the subject of their application, the Court ratiocinated
thus:
"The Court also holds that private respondents are not the proper
parties to initiate the present suit. The complaint, praying as it did for
the cancellation of the transfer certificates of title of petitioners on the
ground that they were derived from a "spurious" OCT No. 4216,
assailed in effect the validity of said title. While private respondents
did not pray for the reversion of the land to the government, we agree
with the petitioners that the prayer in the complaint will have the same
result of reverting the land to the government under the Regalian
Doctrine. Gabila v. Barinaga 27 ruled that only the government is
entitled to this relief. . . . ."
Because the cancellation of the free patent as prayed for by the private
respondents in Peltan would revert the property in question to the public
domain, the ultimate beneficiary would be the government, which can be
represented by the solicitor general only. Therefore, the real party-in-interest is
the government, not the private respondents. LibLex
This ruling does not, however, apply to the present case. While the private
respondents in Peltan recognized that the disputed property was part of the
public domain when they applied for free patent, 28 herein petitioners asserted
and proved private ownership over the disputed parcel of land by virtue of their
open, continued and exclusive possession thereof since 1916.
Neither does the present case call for the reversion of the disputed
property to the State. By asking for the nullification of the free patent granted
to the Santos spouses, the petitioners are claiming the property which, they
contend, rightfully belongs to them.
Indeed, the same issue was resolved by this Court in Heirs of Marciano
Nagano v. Court of Appeals. 29 In that case, the trial court dismissed a
Complaint seeking the declaration of nullity of an Original Certificate of Title
issued pursuant to a free patent, reasoning that the action should have been
instituted by the solicitor general. In reversing the trial court, the Supreme
Court held:
"It is settled that a Free Patent issued over private land is null
and void, and produces no legal effect whatsoever. Quod nullum est,
nullum producit effectum. Moreover, private respondents' claim of
open, peaceful, continuous and adverse possession of the 2,250 square
meter portion since 1920, and its illegal inclusion in the Free Patent of
petitioners and in their original certificate of title, gave private
respondents a cause of action for quieting of title which is
imprescriptible."
In any event, the Office of the Solicitor General was afforded an

opportunity to express its position in these proceedings. But it manifested that
it would not file a memorandum, because "this case involves purely private
interests." 30
The foregoing considered, we sustain the contention of petitioners that
the free patent granted to the Santos spouses is void. It is apparent that they
are claiming ownership of the disputed property on the basis of their possession
thereof in the concept of owners — openly, peacefully, publicly, continuously
and adversely since 1916. Because they and their predecessors-in-interest
have occupied, possessed and cultivated it as owners for more than thirty
years, 31 only one conclusion can be drawn — it has become private land and is
therefore beyond the authority of the director of lands. LibLex
Epilogue
We recognize that both the petitioners and the Santos spouses fell victim
to the dubious transaction between Spouses Hilario and Andrea Robles and the
Rural Bank of Cardona, Inc. However, justice and equity mandate that we
declare Petitioners Lucio, Emerita, Aludia and Emilio Robles to have the
requisite title essential to their suit for quieting of title. Considering the
circumstances peculiar to this complicated problem, the Court finds this
conclusion the logical and just solution.
The claim that petitioners were guilty of laches in not asserting their
rights as owners of the property should be viewed in the light of the fact that
they thought their brother was paying the requisite taxes for them, and more
important, the fact that they continued cultivating it and harvesting and gaining
from its fruits.
From another viewpoint, it can even be said that it was the Rural Bank of
Cardona, Inc., which was guilty of laches because, granting that it had acquired
the subject property legally, it failed to enforce its rights as owner. It was
oblivious to the petitioners' continued occupation, cultivation and possession
thereof. Considering that they had possessed the property in good faith for
more than ten years, it can even be argued that they thus regained it by
acquisitive prescription. In any case, laches is a remedy in equity, and
considering the circumstances in this case, the petitioners cannot be held guilty
of it.
In sum, the real estate mortgage contract covering the disputed property
— a contract executed between Spouses Hilario and Andrea on the one hand
and the Rural Bank of Cardona, Inc., on the other — is hereby declared null and
void insofar as it prejudiced the shares of Petitioners Lucio, Emerita, Aludia and
Emilio Robles; it is valid as to Hilario Robles' share therein. Consequently, the
sale of the subject property to the Santos spouses is valid insofar as it pertained
to his share only. Likewise declared null and void is Free Patent No. IV-1-
010021 issued by the Bureau of Lands covering the subject property. LLphil
WHEREFORE, the Petition is hereby GRANTED. The assailed Decision is

REVERSED and SET ASIDE. Except as modified by the last paragraph of this
Decision, the trial court's Decision is REINSTATED. No costs.
SO ORDERED.
Melo, Vitug, Purisima and Gonzaga-Reyes, JJ., concur.
Footnotes
1. First Division composed of Justice Nathanael P. De Pano Jr., Division chairman

and ponente concurred in by Justices Salome A. Montoya and Hector L.
Hofileña.
2. Entitled "Lucio Robles, et al. v. Spouses Virgilio Santos and Baby Ruth Cruz,
et al."
3. CA Decision, p. 12; rollo, p. 32.
4. Docketed as Civil Case No. 250-M.

5. RTC Decision, pp. 2-3; Original Records, pp. 256-257.
6. CA Decision, pp. 3-7; rollo, pp. 23-27.
7. The case was deemed submitted for decision on November 15, 1999, upon
the receipt by the Court of the solicitor general's Manifestation and Motion in
lieu of Memorandum signed by Solicitor General Ricardo P. Galvez, Assistant
Solicitor General Amparo M. Cabotaje-Tang and Associate Solicitor
Christopher B. Arpon. Private respondent's Memorandum, signed by Atty.
Mariano H.G. Cervo, was filed on June 19, 1998; while petitioners'
Memorandum, signed by Atty. Remigio D. Saladero, was received by the
Court on August 5, 1997.
8. Rollo , pp. 13-14.
9. Vitug, Compendium of Civil Law and Jurisprudence, 1993 rev. ed., p. 295, as
quoted in Vda. de Aviles v. Court of Appeals, 264 SCRA 473, November 21,
1996.
10. Art. 477, Civil Code. "The plaintiff must have legal or equitable title to, or an
interest in the real property which is the subject matter of the action. He
need not be in possession of said property." See also Amagan v. Marayag,
GR No. 138377, February 28, 2000.
11. Tolentino, Civil Code of the Philippines, Vol. II, 1992 ed., p. 150.
12. Deiparine et al. v. Court of Appeals, 299 SCRA 668, December 4, 1998;
Heirs of Salamat v. Tamayo, 298 SCRA 313, October 30, 1998; Trinidad v.
Court of Appeals, 289 SCRA 188, April 20, 1998.
13. TSN, Nov. 15, 1990, p. 22. Andrea Robles testified:
"Q And who planted the trees planted [o]n the land?
A My children were going to that land and planted trees.

Q And who took care of those trees?
A They and us, sir.

Q When you said they, to whom [we]re you referring?
A Plaintiffs in this case, sir.

xxx xxx xxx
Q And you and the plaintiffs participated in the harvest of these plants,
is that correct?
A Yes sir, and I was giving them their share.

xxx xxx xxx"
14. Art. 493, Civil Code. "Each co-owner shall have the full ownership of his part
and of the fruits and benefits pertaining thereto, and he may therefore
alienate, assign or mortgage it, and even substitute another person in its
enjoyment, except when personal rights are involved. But the effect of the
alienation or the mortgage, with respect to the co-owners, shall be limited to
the portion which may be allotted to him in the division upon the termination
of the co-ownership."
15. Article 2085, Civil Code. "The following requisites are essential to the
contracts of pledge and mortgage:
(1) That they be constituted to secure the fulfillment of a principal

obligation;
(2) That the pledgor or mortgagor be the absolute owner of the thing
pledged or mortgaged.
(3) That the persons constituting the pledge or mortgage have the free
disposal of their property, and in the absence thereof, that they be legally
authorized for the purpose." (Italics supplied)
16. Hilario and Andrea Robles, who had declared the disputed property under
their names on November 7, 1966, following the alleged sale to them by
Exequiel Ballena of the said property on the same day, applied for an
agricultural loan on November 19, 1966. On November 24, 1966, the Robles
spouses executed a real estate mortgage upon the said property. On
November 29, 1966, the loan was released to them. (RTC Records, Vol. III,
exhibits for the plaintiffs and the defendants.)
17. 271 SCRA 76, April 8, 1997, per Davide, Jr. J. (Now CJ). See also GSIS v.
Court of Appeals, 287 SCRA 204, March 6, 1998.
18. 98 SCRA 280, 286, June 25, 1980, per De Castro, J. See also Rural Bank of
Sariaya v. Yacon, 175 SCRA 62, July 5, 1989; Gonzales v. Intermediate
Appellate Court, 157 SCRA 587, January 29, 1988; Pichay v. Celestino, 20
SCRA 314, May 30, 1967.
19. TSN, July 5, 1990, pp. 4-5; TSN, July 12, 1990, pp. 6-12.
20. TSN, July 5, 1990, pp. 4-5. Emeteria Robles' testimony supports her brother
Lucio Robles' assertions regarding the fact of possession, occupation and
cultivation of the property in question. See TSN, July 12, 1990, pp. 6-12.
21. TSN, August 16, 1990, p. 21. Carlos Dolores testified:
"Q By the way, have you visited these properties from the time that
your bank acquired the same from the auction sale?
A I went there after the foreclosure, sir.
Q And after that date, have you ever gone to these properties?
A Yes, sir.
Q When?
A 1987, sir."
22. Herico v. Dar, 95 SCRA 437, 443, January 22, 1980, per De Castro, J.
23. Mesina v. Vda. de Sonza et al., 108 Phil. 251, May 25, 1960; Herico v. Dar,
95 SCRA 437, January 22, 1980; Azarcon v. Vallarta, 100 SCRA 450, October
28, 1980; Mendoza v. Navarette, 214 SCRA 337, September 30, 1992; Heirs
of Marciano Nagaño v. Court of Appeals, 282 SCRA 43, November 17, 1997.
24. 181 SCRA 793, February 6, 1990, per Regalado, J.; italics supplied.
25. Memorandum of the Santos spouses, p. 6; rollo, p. 81.
26. 270 SCRA 82, March 19, 1997, per Panganiban, J. In this case, the private
respondents, as plaintiffs before the trial court, filed a Complaint for
Cancellation of Titles and Damages, alleging that they had been in
possession of the disputed property for many years, occupying and
cultivating it until they were forcibly ousted therefrom by one of the
defendants. They maintained that the processing and the eventual approval
of their free patent application were held in abeyance because of the alleged
existence of several certificates of title, which had been derived from a
fictitious or spurious original certificate of title.
27. 41 SCRA 131, September 30, 1971.

28. The private respondents even averred in their Complaint before the trial
court that "as citizens and taxpayers of this country, they [also] have a
legitimate interest in the disposition of alienable lands of the State . . . ."
(Peltan, supra, at p. 87).

29. 282 SCRA 43, November 17, 1997, per Davide, Jr. J. (Now CJ).
30. Manifestation and Motion in lieu of Memorandum, p. 1; rollo, p. 101.
31. Art. 1137 of the Civil Code provides:

"Ownership and other real rights over immovables also prescribe through
uninterrupted adverse possession thereof for thirty years, without need of
title or good faith."

THIRD DIVISION
[G.R. No. 95748. November 21, 1996.]
ANASTACIA VDA. DE AVILES, ET AL. , petitioners, vs. COURT

OF APPEALS and CAMILO AVILES, respondents.
Ulysses T. Sevilla for petitioners.

Teodoro C. Fernandez and Manuel Y. Fernandez for private respondent.
SYLLABUS
1. REMEDIAL LAW; SPECIAL CIVIL ACTIONS; QUIETING OF TITLE; A

BOUNDARY DISPUTE IS NOT COGNIZABLE IN A SPECIAL CIVIL ACTION TO QUIET
TITLE. — The facts presented unmistakably constitute a clear case of boundary
dispute, which is not cognizable in a special civil action to quiet title. Quieting
of title is a common law remedy for the removal of any cloud upon or doubt or
uncertainty with respect to title to real property. The Civil Code authorizes the
said remedy in the following language: "Art. 476. Whenever there is a cloud on
title to real property or any interest therein, by reason of any instrument,
record, claim, encumbrance or proceeding which is apparently valid or effective
but is, in truth and in fact, invalid, ineffective, voidable, or unenforceable, and
may be prejudicial to said title, an action may be brought to remove such cloud
or to quiet the title. An action may also be brought to prevent a cloud from
being cast upon a title to real property or any interest therein." In fine, to avail
of the remedy of quieting of title, a plaintiff must show that there is an
instrument, record, claim, encumbrance or proceeding which constitutes or
casts a cloud, doubt, question or shadow upon the owner's title to or interest in
real property. Thus, petitioners have wholly misapprehended the import of the
foregoing rule by claiming that respondent Court erred in holding that there
was "no . . . evidence of any muniment of title, proceeding, written contract, . .
.," and that there were, as a matter of fact, two such contracts, viz., (i) the
Agreement of Partition executed by private respondent and his brothers
(including the petitioners' father and predecessor-in-interest), in which their
respective shares in the inherited property were agreed upon, and (ii) the Deed
of Sale evidencing the redemption by petitioner Anastacia Vda. de Aviles of the
subject property in a foreclosure sale. However, these documents in no way
constitute a cloud or cast a doubt upon the title of petitioners. Rather, the
uncertainty arises from the parties' failure to situate and fix the boundary
between their respective properties. An action to quiet title or to remove cloud
may not be brought for the purpose of settling a boundary dispute. CaATDE
2. ID.; ID.; DECLARATORY RELIEF; A BOUNDARY DISPUTE IS LIKEWISE

NOT COGNIZABLE IN AN ACTION FOR DECLARATORY RELIEF UNDER RULE 64 OF
THE RULES OF COURT. — Rule 64 of the Rules of Court, dealing with actions for
declaratory relief, specifies in Section 1 thereof the grounds, conditions
precedent or requisites for bringing such petitions. This Court has previously
held that — "Under this rule, only a person who is interested 'under a deed, will,
contract or other written instrument, and whose rights are affected by a statute
or ordinance, may bring an action to determine any question of construction or
validity arising under the instrument or statute and for a declaration of his
rights or duties thereunder.' This means that the subject matter must refer to a
deed, will, contract or other written instrument, or to a statute or ordinance, to
warrant declaratory relief. Any other matter not mentioned therein is deemed
excluded This is under the principle of expressio unius est exclusio alterius."
Inasmuch as the enumeration of the causes, grounds or conditions precedent in
the first paragraph of said Sec. 1 is exclusive, by parity of reasoning, it follows
that similar remedies provided for in the second paragraph of the same section
would also be marked with the same exclusivity as to bar any other cause
possibly clouding one's title as a ground for such petitions. Thus, even
assuming arguendo that the action to quiet title had been brought under Rule
64, the same would still not have prospered, the subject matter thereof not
referring to "a deed, will, contract or other written instrument, or to a statute or
ordinance," but to a boundary dispute, and therefore not warranting the grant
of declaratory relief.
3. ID.; ID.; THE PROPER ACTION TO SETTLE A BOUNDARY DISPUTE IS

EITHER AN ACTION FOR FORCIBLE ENTRY UNDER RULE 70, OR AN ACTION FOR
RECOVERY OF POSSESSION DE FACTO . — From another perspective, we hold
that the trial court (and likewise the respondent Court) cannot, in an action for
quieting of title, order the determination of the boundaries of the claimed
property, as that would be tantamount to awarding to one or some of the
parties the disputed property in an action where the sole issue is limited to
whether the instrument, record, claim, encumbrance or proceeding involved
constitutes a cloud upon the petitioners' interest or title in and to said property.
Such determination of boundaries is appropriate in adversarial proceedings
where possession or ownership may properly be considered and where
evidence aliunde, other than the "instrument, record, claim, encumbrance or
proceeding" itself, may be introduced. An action for forcible entry, whenever
warranted by the period prescribed in Rule 70, or for recovery of possession de
facto, also within the prescribed period, may be availed of by the petitioners, in
which proceeding the boundary dispute may be fully threshed out. ISDCHA
DECISION
PANGANIBAN, J : p
Is the special civil action of Quieting of Title under Rule 64 the proper
remedy for settling a boundary dispute? Did the respondent Court 1 commit a
reversible error when it did not declare the respective rights of the parties over
the disputed property in said action?
These are the key issues raised in this petition to review on certiorari the
Decision 2 of the respondent Court promulgated on September 28, 1990 in CA-
G.R. CV No. 18155, which affirmed the decision dated December 29, 1987 of
the Regional Trial Court, Branch 38, 3 Lingayen, Pangasinan, dismissing a
complaint for quieting of title.
The Facts
In an action for quieting of title commenced before the aforementioned
trial court, the following facts, "stripped of unnecessary verbiage" were
established by the respondent Court: 4
"PLAINTIFFS aver that they are the actual possessors of a parcel
of land situated in Malawa, Lingayen, Pangasinan, more particularly
described as fishpond, cogonal, unirrigated rice and residential land,
bounded on the N by Camilo Aviles; on the E by Malawa River, on the S
by Anastacio Aviles and on the W by Juana and Apolonio Joaquin, with
an area of 18,900 square meters and declared under Tax Declaration
No. 31446. This property is the share of their father, Eduardo Aviles
and brother of the defendant, in the estate of their deceased parents,
Ireneo Aviles and Anastacia Salazar.
SINCE 1957, Eduardo Aviles was in actual possession of the

afore-described property. In fact, the latter mortgaged the same with
the Rural Bank and Philippine National Bank branch in Lingayen. When
the property was inspected by a bank representative, Eduardo Aviles,
in the presence of the boundary owners, namely, defendant Camilo
Aviles, Anastacio Aviles and Juana and Apolonio Joaquin(,) pointed to
the inspector the existing earthen dikes as the boundary limits of the
property and nobody objected. When the real estate mortgage was
foreclosed, the property was sold at public auction but this was
redeemed by plaintiffs' mother and the land was subsequently
transferred and declared in her name.
ON March 23, 1983, defendant Camilo Aviles asserted a color of
title over the northern portion of the property with an area of
approximately 1,200 square meters by constructing a bamboo fence
(thereon) and moving the earthen dikes, thereby molesting and
disturbing the peaceful possession of the plaintiffs over said portion.
UPON the other hand, defendant Camilo Aviles admitted the

agreement of partition (Exh. '1') executed by him and his brothers,
Anastacio and Eduardo. In accordance therewith, the total area of the
property of their parents which they divided is 46,795 square meters
and the area alloted (sic) to Eduardo Aviles is 16,111 square meters
more or less, to Anastacio Aviles is 16,214 square meters more or less,
while the area alloted to defendant Camilo Aviles is 14,470 square
meters more or less. The respective area(s) alloted to them was agreed
and measured before the execution of the agreement but he was not
present when the measurement was made. Defendant agreed to have
a smaller area because his brother Eduardo asked him that he wanted
a bigger share because he has several children to support. The portion
in litigation however is part of the share given to him in the agreement
of partition. At present, he is only occupying an area of 12,686 square
meters which is smaller than his actual share of 14,470 square meters.
Tax Declarations Nos. 23575, 481 and 379 covering his property from
1958 (Exhs. '7', '8' and '9') show that the area of his property is 14,470
square meters. The riceland portion of his land is 13,290 square
meters, the fishpond portion is 500 square meters and the residential
portion is 680 square meters, or a total of 14,470 square meters. That
the topography of his land is not the same, hence, the height of his
pilapils are likewise not the same."
In its decision dated December 29, 1987, the trial court disposed of the
case thus: 5
"WHEREFORE, premises considered, judgment is hereby
1. Ordering the parties to employ the services of a Land

Surveyor of the Bureau of Lands, Region I, San Fernando, La Union, to
relocate and determine the extent and the boundary limit of the land of
the defendant on its southern side in order that the fourteen thousand
four hundred seventy (14,470) square meters which is the actual area
given to the defendant be determined;
2. Ordering the complaint dismissed for lack of basis and

merits;
3. Ordering the plaintiffs to pay the defendant the sum of two

thousand (P2,000.00) pesos as attorney's fees and to further pay the
costs of the proceedings;
4. All other claims are denied for lack of basis."
Dissatisfied with the trial court's decision, petitioners appealed to the

respondent appellate Court. In its now-assailed Decision, the Court of Appeals
affirmed in part the decision of the trial court, reasoning that a special civil
action for quieting of title is not the proper remedy for settling a boundary
dispute, and that petitioners should have instituted an ejectment suit instead.
The dispositive portion of the impugned Decision reads as follows:
"WHEREFORE, in view of the foregoing, the decision dated
December 29, 1987 dismissing the complaint is hereby AFFIRMED but
without necessarily agreeing with the ration d'etre (sic) proferred by
the Court a quo. The portion thereof ordering the parties to employ the
service of a land surveyor to relocate and determine the extent and
boundary limit of the land of the defendant on its southern portion in
order that the fourteen thousand four hundred seventy (14,470) square
meters which is the actual area given to the defendant be determined
is hereby REVERSED and SET ASIDE. Costs against plaintiffs-appellants.
The Issues
Disagreeing with the respondent Court, petitioners now raise the following
issues: 6
"a. Whether or not the Hon. Court of Appeals is correct when
it opined that the . . . complaint for quieting of title instituted by the
petitioners against private respondent before the court a quo is not the
proper remedy but rather, it should be a case for ejectment (sic).

b. Whether or not the Hon. Court of Appeals is correct in
rendering a decision, now subject of the instant petition, without fully
determining the respective rights of the herein parties."
Petitioners deem to be "without basis" the respondent Court's holding

that quieting of title is not the proper remedy in the case a quo. They assert
that private respondent is occupying the disputed lot because he claimed it to
be part of his share in the partitioned property of his parents, whereas
petitioners are claiming the said lot as part and parcel of the land allotted to
Eduardo Aviles, petitioners' predecessor-in-interest. They contend that they
have been occupying the aforesaid land as heirs of Eduardo Aviles in "open,
actual, continuous, peaceful, public and adversed (sic) (possession) against the
whole world." Further, they argue that, if indeed the disputed lot belonged to
private respondent, why then did it take him "almost 26 long years from June
27, 1957 or until March 27, 1983" to assert his ownership; why did he not
"assert his ownership" over the property when Eduardo Aviles was still alive;
and why did he not take any "action" when the mortgage over the disputed
property was foreclosed? 7
Private respondent corrects the petitioners' claim in regard to the date

when he had the bamboo fence constructed. He alleges that the petitioners
maliciously concocted the story that private respondent had purportedly
encroached some 1,200 meters on their property when, in fact, "he was merely
repairing the old bamboo fence existing where it had always been since 1957."
8
The Court 's Ruling

First Issue: Quieting of Title Not Proper Remedy For
Settling Boundary Dispute
We agree with respondent Court. The facts presented unmistakably
constitute a clear case of boundary dispute, which is not cognizable in a special
civil action to quiet title.
Quieting of title is a common law remedy for the removal of any cloud
upon or doubt or uncertainty with respect to title to real property. 9
The Civil Code authorizes the said remedy in the following language:
"Art. 476. Whenever there is a cloud on title to real property
or any interest therein, by reason of any instrument, record, claim,
encumbrance or proceeding which is apparently valid or effective but
is, in truth and in fact, invalid, ineffective, voidable, or unenforceable,
and may be prejudicial to said title, an action may be brought to
remove such cloud or to quiet the title.
An action may also be brought to prevent a cloud from being cast

upon a title to real property or any interest therein."
In fine, to avail of the remedy of quieting of title, a plaintiff must show

that there is an instrument, record, claim, encumbrance or proceeding which
constitutes or casts a cloud, doubt, question or shadow upon the owner's title to
or interest in real property. Thus, petitioners have wholly misapprehended the
import of the foregoing rule by claiming that respondent Court erred in holding
that there was "no . . . evidence of any muniment of title, proceeding, written
contract, . . .", and that there were, as a matter of fact,two such contracts, viz.,
(i) the Agreement of Partition executed by private respondent and his brothers
(including the petitioners' father and predecessor-in-interest), in which their
respective shares in the inherited property were agreed upon, and (ii) the Deed
of Sale evidencing the redemption by petitioner Anastacia Vda. de Aviles of the
subject property in a foreclosure sale. However, these documents in no way
constitute a cloud or cast a doubt upon the title of petitioners. Rather, the
uncertainty arises from the parties' failure to situate and fix the boundary
between their respective properties.
As correctly held by the respondent Court," (i)n fact, both plaintiffs and
defendant admitted the existence of the agreement of partition dated June 8,
1957 and in accordance therewith, a fixed area was alloted (sic) to them and
that the only controversy is whether these lands were properly measured.
There is no adverse claim by the defendant "which is apparently valid, but is, in
truth and in fact, invalid, ineffective, voidable, or unenforceable" and which
constitutes a cloud thereon.
Corollarily, and equally as clear, the construction of the bamboo fence
enclosing the disputed property and the moving of earthen dikes are not the
"clouds" or "doubts" which can be removed in an action for quieting of title.
An action to quiet title or to remove cloud may not be brought for the
purpose of settling a boundary dispute. The precedent on this matter cited by
the respondent Court in its Decision is herewith reproduced in full: 10
"In Ashurst v. McKenzie (1890) 92 Ala. 484, 9 So. 262, where the
complainants' predecessor in title and the defendant had, during their
occupancy, destroyed and obliterated the boundary line between their
adjoining tracts of land, and there was now a dispute as to its location,
it was held that a bill did not lie to remove a cloud on the
complainants' title. The court said: 'There is no allegation or evidence
of any muniment of title, proceeding, written contract, or paper
showing any color of title in the defendant, which could cast a shadow
on the title of complainants to any part of the land; there is no
overlapping of description in the muniments held by either. The land of
complainants and defendant join. The line which separates them is in
dispute and is to be determined by evidence aliunde. Each admits that
the other has title up to his line wherever it may be, and the title
papers of neither fix its precise location. So that there is no paper the
existence of which clouds the title of either party, and nothing could be
delivered up and cancelled under the decree of the court undertaking
to remove a cloud. "
Another similarly instructive precedent reported in the same reference is also
quoted below:
"In Kilgannon v. Jenkinson (1883) 51 Mich. 240, 16 N.W. 390, the
court, dismissing a bill to quiet title, said: "The fundamental dispute is
about the correct position of the line between lots 3 and 7. The case is
not one where a complainant in possession of a specific piece of land,
and a defendant out of possession, but claiming some right or title, are
contending as to which one has the better right to that same parcel;
but it is a case where the titles are not opposed, and the basis and
existence of all right and claim depend simply upon where the original
line runs. When that is once settled, there can remain no semblance of
claim or cloud to be passed on, and the issue on that particular
question is one regularly triable at law . . . " 11
Second Issue: Should Parties' Rights Have Been Declared?

Petitioners also chide the respondent Court (and the trial court) for not
declaring the respective rights of the parties with respect to the land in
question, arguing that "when one is disturbed in any form in his rights of
property over an immovable by the unfounded claims of others, he has the
right to ask from the competent courts: . . . that their respective rights be
determined . . .". As support for their thesis, petitioners cite the ancient case of
Bautista vs. Exconde. 12
Rule 64 of the Rules of Court, dealing with actions for declaratory relief,
specifies in Section 1 thereof the grounds, conditions precedent or requisites
for bringing such petitions. 13 This Court has previously held that —
"Under this rule, only a person who is interested 'under a deed,
will, contract or other written instrument, and whose rights are affected
by a statute or ordinance, may bring an action to determine any
question of construction or validity arising under the instrument or
statute and for a declaration of his rights or duties thereunder.' This
means that the subject matter must refer to a deed, will, contract or
other written instrument, or to a statute or ordinance, to warrant
declaratory relief. Any other matter not mentioned therein is deemed
excluded. This is under the principle of expressio unius est exclusio
alterius." 14
Inasmuch as the enumeration of the causes, grounds or conditions
precedent in the first paragraph of said Sec. 1 is exclusive, by parity of
reasoning, it follows that similar remedies provided for in the second paragraph
of the same section would also be marked with the same exclusivity as to bar
any other cause possibly clouding one's title as a ground for such petitions.
Thus, even assuming arguendo that the action to quiet title had been brought
under Rule 64, the same would still not have prospered, the subject matter
thereof not referring to "a deed, will, contract or other written instrument, or to
a statute or ordinance," but to a boundary dispute, and therefore not
warranting the grant of declaratory relief.
From another perspective, we hold that the trial court (and likewise the
respondent Court) cannot, in an action for quieting of title, order the
determination of the boundaries of the claimed property, as that would be
tantamount to awarding to one or some of the parties the disputed property in
an action where the sole issue is limited to whether the instrument, record,
claim, encumbrance or proceeding involved constitutes a cloud upon the
petitioners' interest or title in and to said property. Such determination of
boundaries is appropriate in adversarial proceedings where possession or
ownership may properly be considered and where evidence aliunde, other than
the "instrument, record, claim, encumbrance or proceeding" itself, may be
introduced. An action for forcible entry, whenever warranted by the period
prescribed in Rule 70, or for recovery of possession de facto, also within the
prescribed period, may be availed of by the petitioners, in which proceeding the
boundary dispute may be fully threshed out.
WHEREFORE, in view of the foregoing considerations, the instant petition

is hereby DENIED and the Decision appealed from is AFFIRMED. Costs against
petitioners.
SO ORDERED.
Narvasa, C .J ., Davide, Jr., Melo, and Francisco, JJ., concur.
Footnotes
1. Thirteenth Division, composed of J. Jainal D. Rasul, ponente, and JJ. Manuel C.

Herrera and Eduardo R. Bengzon, concurring.
2. Rollo , pp. 21-25.

3. Presided by Judge Antonio M. Belen.
4. Decision, pp. 2-3; rollo, pp. 22-23.
5. Rollo , pp. 21-22.

6. Petitioners' Memorandum, p. 8; rollo, p. 97.
7. Petitioners' Memorandum, pp. 10-11; rollo, pp. 99-100.
8. Comment, p. 4; rollo, p. 42.
9. Vitug, Compendium of Civil Law and Jurisprudence, 1993 Rev. Ed., p. 295.
10. 78 ALR 58. (italics supplied.)
11. 78 ALR 59. (italics supplied.)
12. 40 O.G. 8th S., No. 12, p. 231, June 29, 1940.
13. Section 1 of Rule 64 is reproduced hereinbelow for ease of reference:
"Section 1. Who may file petition. — Any person interested under

a deed, will, contract or other written instrument, or whose rights are
affected by a statute, executive order or regulation, or ordinance, may,
before breach or violation thereof, bring an action to determine any
question of construction or validity arising under the instrument or statute
and for a declaration of his rights or duties thereunder.
An action for reformation of an instrument, to quiet title to real

property or remove clouds therefrom, or to consolidate ownership under
Article 1607 of the Civil Code, may be brought under this rule."
14. Lerum vs. Cruz, 87 Phil. 652, November 29, 1950.

THIRD DIVISION
[G.R. No. 181596. January 30, 2017.]
JENESTOR B. CALDITO and MARIA FILOMENA T. CALDITO ,

petitioners, vs. ISAGANI V. OBADO and GEREON V. OBADO ,
respondents.
DECISION
REYES, J : p
Assailed in this petition for review on certiorari 1 under Rule 45 of

Revised Rules of Court are the Decision 2 dated July 17, 2007 and the
Resolution 3 dated January 29, 2008 of the Court of Appeals (CA) in CA-G.R.
CV No. 87021, which reversed and set aside the Decision 4 dated December
23, 2005 of the Regional Trial Court (RTC) of Laoag City, Ilocos Norte, Branch
12, in Civil Case No. 12932-12. HTcADC
The Facts
This petition stemmed from a complaint 5 for quieting of ownership
over a parcel of land covering the 272.33 square meters eastern portion of
Lot No. 1633 situated at Barangay No. 5, San Vicente, Sarrat, Ilocos Norte,
filed by Spouses Jenestor B. Caldito and Ma. Filomena Tejada Caldito
(Filomena) (petitioners) against Isagani V. Obado (Isagani) and Gereon V.
Obado (respondents).
The record showed that as early as 1921, Lot No. 1633 was declared
for taxation purposes in the name of Felipe Obado (Felipe). After Felipe's
death, Paterno Obado (Paterno), whom Felipe treated like his own son,
subsequently occupied Lot No. 1633 and continued to pay the realty taxes of
the same. 6
Sometime in 1995, Antonio Ballesteros (Antonio) executed an Affidavit
of Ownership dated February 23, 1995 narrating his claim over the subject
parcel of land. In his affidavit, Antonio claimed that Lot No. 1633 was co-
owned by Felipe with his five siblings, namely: Eladia, Estanislao, Maria,
Severino and Tomasa, all surnamed Obado. 7
On the next day following the execution of the said affidavit or on
February 24, 1995, Antonio and Elena Ballesteros (Spouses Ballesteros) sold
the subject parcel of land to the petitioners for the sum of P70,000.000 n
evidenced by a Deed of Absolute Sale. Thereafter, the petitioners declared
the subject lot for taxation purposes and paid the realty taxes thereon. 8
In 2002, the petitioners attempted to build a house on the subject
parcel of land but the respondents prevented them from completing the
same. The respondents then filed a complaint before the barangay but no
amicable settlement was reached between the parties. 9 Hence, on
December 8, 2003, the petitioners instituted a complaint for quieting of
ownership against the respondents before the RTC, as well as an injunctive
writ to prevent the respondents from interfering with the construction of
their house. 10
For their part, the respondents averred that the Spouses Ballesteros
were not the owners and possessors of the subject parcel of land. They
maintained that Lot No. 1633 was inherited by their father, Paterno, from its
original owner Felipe, and they have been paying the real property taxes for
the entire property. They asserted that the petitioners are buyers in bad
faith since their family had been in possession of the entire Lot No. 1633
since 1969 and had been in open, peaceful and uninterrupted possession of
the whole property up to the present or for more than 30 years in the
concept of an owner. 11
After trial, the court a quo rendered its judgment in favor of the
petitioners. The trial court upheld the validity of the sale between the
petitioners and the Spouses Ballesteros and dismissed the respondents'
claim of ownership over Lot No. 1633. The trial court held that the
petitioners presented convincing evidence of ownership over the subject
parcel of land which consists of the following: (a) the Deed of Absolute Sale
executed between the petitioners and the Spouses Ballesteros; (b) the tax
declarations all paid by the petitioners only; and (c) the Affidavit of
Ownership allegedly executed by Antonio. The trial court also found that the
respondents have no successional rights over the property of Felipe based
on the governing law and on the order of intestate succession at that time
and the established facts. Thus, the RTC disposed as follows:
WHEREFORE, IN VIEW OF ALL THE FOREGOING
PREMISES, the preponderance of evidence having substantially and
sufficiently tilted in favor of the [petitioners] herein and against the
[respondents] herein named and their siblings, this Court hereby
renders judgment declaring the validity of the 272.33 square meters
eastern portion of Lot No. 1633 in favor of the [petitioners] and, the
[respondents] are hereby ordered to do the following: aScITE
1. to respect, recognize and not to molest the lawful

ownership and possession of the [petitioners] over
the 272.33 square meters located at the eastern
portion of Lot No. 1633 of the Sarrat Cadastre;
2. to pay jointly and severally to the [petitioners] the
total sum of:
2.a. P118,453.50 — as and for actual
damages;
2.b. P400,000.00 — as and for moral damages;
2.c. P100,000.00 — as and for nominal
damages;
2.d. P200,000.00 — as and for temperate
damages; and
2.e. P300,000.00 — as and for exemplary
damages or corrective.
With costs against the [respondents].
SO ORDERED. 12 (Emphasis and italics in the original)
On appeal, the CA reversed and set aside the RTC decision upon finding
that: (1) the petitioners failed to prove the title of their immediate
predecessors-in-interest, the Spouses Ballesteros; (2) the petitioners failed to
support their claim that Felipe and his siblings, Eladia, Estanislao, Maria,
Severino and Tomasa, co-owned Lot No. 1633; (3) Antonio should have been
called to the witness stand to testify on the contents of his Affidavit of
Ownership; (4) the Deed of Absolute Sale is not a sufficient and convincing
evidence that the petitioners' predecessors-in-interest have a title on the
subject parcel of land which they can transfer; (5) the petitioners are not
innocent purchasers for value since the subject lot is not registered and is in
the possession of another person, other than the Spouses Ballesteros; (6)
nothing in the record could establish the relationship between Felipe and his
supposed legal heirs; and (7) the respondents enjoy a legal presumption of
just title in their favor since they are in possession of the entire Lot No. 1633.
The CA then ruled that:
For a party seeking to quiet their "ownership" of the portion in
litigation, [the petitioners] have, for starters, miserably failed to prove
the title of their immediate predecessors-in-interest, the [Spouses
Ballesteros]. Except for the February 23, 1995 Affidavit of
Ownership executed by [Antonio], there is, in fact, no evidence on
record to support the claim that the subject parcel was, indeed, co-
owned by [Felipe] [and] his siblings, Eladia, Estanislao, Maria,
Severino and Tomasa, all surnamed Obado. To our mind, the fact that
[Antonio] was not even called to the witness stand to testify on the
contents of his Affidavit of Ownership should have immediately
impelled the trial court to discount its probative value and, with it, the
very foundation of [the respondents'] supposed cause of action.
xxx xxx xxx
With even greater reason are we disposed towards the reversal
of the trial court's holding that, pursuant to the provisions of the
Spanish Civil Code of 1889 on intestate succession, Eladia,
Estanislao, Maria, Severino and Tomasa, all surnamed Obado were
the ones who have rightfully inherited the subject parcel from their
brother, [Felipe]. Except for the aforesaid February 23, 1995
Affidavit of Ownership executed by [Antonio], [the respondents]
correctly argue that there is nothing on record from which the
relationship of said decedent and his supposed legal heirs may be
reasonably deduced. Even if said relationship were, moreover,
assumed, the absence of evidence showing that [Felipe] predeceased
all of his supposed siblings impel us to regard, with considerable
askance, the trial court's disposition of the case by application of said
rules on intestate succession. Litigations cannot be properly resolved
by suppositions, deductions, or presumptions, with no basis in
evidence for the truth must have to be determined by the hard rules
on admissibility and proof. This is particularly true of the case at
bench where the successional rights determined by the trial court are
diametrically opposed to [Antonio's] Affidavit of Ownership which
dubiously claimed that the subject parcel was, in fact, co-owned by
[Felipe] and his ostensible siblings and had already been partitioned
by and among them. 13 HEITAD
The petitioners moved for reconsideration 14 but the same was denied.
15 Hence, this petition.
The Issue
WHETHER OR NOT THE PETITIONERS WERE ABLE TO PROVE
OWNERSHIP OVER THE SUBJECT PARCEL OF LAND.
Ruling of the Court
The petition has no merit.
At the outset, it bears to emphasize that there is no dispute with
respect to the fact that Felipe was the original owner of the entire parcel of
unregistered land known as Lot No. 1633 which he started declaring as his
property for taxation purposes as early as 1921. When Felipe died without
issue, Lot No. 1633 was subsequently occupied by Paterno who then
declared the same for taxation purposes and paid the realty taxes thereon.
The petitioners' complaint styled as being for the "quieting of
ownership" is in fact an action for quieting of title. The petitioners anchor
their cause of action upon the Deed of Sale and the Affidavit of Ownership
executed by Antonio. On the other hand, the respondents countered that: (1)
they inherited from their father, Paterno, Lot No. 1633, of which the herein
disputed subject parcel of land is part; and (2) they have been in possession
of the same for more than 30 years in the concept of an owner.
Essentially, the issues raised center on the core question of whether
the petitioners were able to prove ownership over the subject parcel of land.
In resolving this issue, the pertinent point of inquiry is whether the
petitioners' predecessors-in-interest, the Spouses Ballesteros, have lawful
title over the subject parcel of land.
While the question raised is essentially one of fact, of which the Court
normally abstains from, yet, considering the incongruent factual conclusions
of the courts below, the Court is constrained to go by the exception to the
general rule and proceed to reassess the factual circumstances of the case
and make its own assessment of the evidence and documents on record. But
even if the Court were to re-evaluate the evidence presented, there is still no
reason to depart from the CA's ruling that Lot No. 1633 is owned by the
respondents.
The Court concurs with the disquisition of the CA that the petitioners
failed to: (1) prove the title of their immediate predecessors-in-interest, the
Spouses Ballesteros; and (2) present evidence supporting the claim that Lot
No. 1633 was co-owned by Felipe and his siblings, Eladia, Estanislao, Maria,
Severino and Tomasa. Also, the Court finds that the RTC mistakenly relied
upon the Affidavit of Ownership, executed by Antonio, to conclude that the
petitioners were possessors in good faith and with just title who acquired the
subject parcel of land through a valid deed of sale.
In this case, the petitioners' cause of action relates to an action to
quiet title which has two indispensable requisites, namely: (1) the plaintiff or
complainant has a legal or an equitable title to or interest in the real
property subject of the action; and (2) the deed, claim, encumbrance or
proceeding claimed to be casting cloud on his title must be shown to be in
fact invalid or inoperative despite its prima facie appearance of validity or
legal efficacy. 16
From the foregoing provisions, it is clear that the petitioners' cause of
action must necessarily fail mainly in view of the absence of the first
requisite since the petitioners were not able to prove equitable title or
ownership over the subject parcel of land.
The petitioners' claim of legal title over the subject parcel of land by
virtue of the Deed of Sale and Affidavit of Ownership issued by Antonio
cannot stand because they failed to prove the title of their immediate
predecessors-in-interest, the Spouses Ballesteros. The Court cannot give full
credence to Antonio's Affidavit of Ownership for he simply made general and
self-serving statements therein which were favorable to him, and which were
not supported with documentary evidence, with no specifics as to when their
predecessors-in-interest acquired the subject parcel of land, and when the
Donations Propter Nuptias were made. Indeed, such is hardly the well-nigh
incontrovertible evidence required in cases of this nature. The petitioners
must present proof of specific acts of ownership to substantiate his claim
and cannot just offer general statements which are mere conclusions of law
than factual evidence of possession. 17 Moreso, Antonio was not even called
to the witness stand to testify on the contents of his Affidavit of Ownership,
thus, making the affidavit hearsay evidence and its probative value
questionable. Accordingly, this affidavit must be excluded from the judicial
proceedings being inadmissible hearsay evidence. ATICcS
Furthermore, the said affidavit was executed by Antonio only a day

before the subject parcel of land was sold to the petitioners. 18 The trial
court should have considered this in evaluating the value of the said affidavit
in relation to the ownership of the subject parcel of land. The trial court's
reliance on the Affidavit of Ownership executed by Antonio that the entire
Lot No. 1633 was co-owned by Felipe and his siblings, Eladia, Estanislao,
Maria, Severino and Tomasa is misplaced, considering that nothing on record
shows the relationship between Felipe and his supposed legal heirs. It also
indicates the fact that there is no evidence showing Felipe predeceasing all
his supposed siblings. 19 Moreover, no other piece of evidence was ever
presented to prove that Lot No. 1633 was ever subdivided. In fact, the
petitioners admitted that the subject lot has always been declared for
taxation purposes in the name of Felipe and that the Spouses Ballesteros or
the siblings of Felipe have never declared the same for taxation purposes in
their names.
While the petitioners submitted official receipts and tax declarations to
prove payment of taxes, nowhere in the evidence was it shown that Spouses
Ballesteros declared the subject parcel of land in their name for taxation
purposes or paid taxes due thereon. True, a tax declaration by itself is not
sufficient to prove ownership. Nonetheless, it may serve as sufficient basis
for inferring possession. 20 In fact, what the petitioners presented as their
pieces of evidence are receipts and tax declarations which they, as the new
owners of the subject parcel of land, have paid. Thus, the petitioners could
not also rely on these tax declarations and receipts because those are of
recent vintage and do not reflect the fact that their predecessors-in-interest
have been paying realty taxes for the subject parcel of land.
Be that as it may, the rights of the respondents as owners of Lot No.
1633 were never alienated from them despite the sale of the subject parcel
of land by the Spouses Ballesteros to the petitioners nor does the fact that
the petitioners succeeded in paying the real property taxes of the subject
parcel of land. Besides, it seems that the petitioners knew of the fact that
they did not have a title to the subject parcel of land and could not,
therefore, have validly registered the same, because of the respondents'
possession of the entire property.
The respondents also presented the following pieces of evidence: (1)
old certified photocopies of declarations of real property and original copy of
tax receipts from year 1921 to 1944 in the name of Felipe, covering
payments by the latter for Lot No. 1633 from which the subject parcel of
land was taken; 21 (2) original copy of tax receipts from year 1961 to year
1989 in the name of the respondents' father Paterno, covering payments by
the latter for Lot No. 1633; 22 (3) original copy of tax receipt dated July 21,
2004 in the name of Isagani, covering payments by the latter for Lot No.
1633; 23 (4) original copy of the Certification issued by the Municipal
Treasurer of Sarrat, Ilocos Norte that Lot No. 1633 covered by Tax
Declaration No. 03-001-00271 declared in the name of Felipe is not
delinquent in the payment of realty taxes. 24
Although tax declarations or realty tax payment of property are not
conclusive evidence of ownership, as in the instant case, they are good
indicia of possession in the concept of owner, for no one in his right mind
would be paying taxes for a property that is not in his actual or constructive
possession. 25 They constitute evidence of great weight in support of the
claim of title of ownership by prescription when considered with the actual
possession of the property by the applicant. 26 TIADCc
Indeed, the respondents' presentation of the tax declarations and tax

receipts which all are of ancient era indicates possession in the concept of
an owner by the respondents and their predecessors-in-interests. The tax
declarations in the name of Paterno take on great significance because the
respondents can tack their claim of ownership to that of their father. It is
worthy to note that the respondents' father Paterno to whom they inherited
the entire Lot No. 1633 paid the taxes due under his name from 1961 to
1989; and subsequently, the respondents paid the taxes due after the death
of Paterno in 2003. 27 Granting without admitting that Felipe's possession of
Lot No. 1633 cannot be tacked with the respondents' possession, the latter's
possession can be tacked with that of Paterno. Thus, from 1961 to the time
of the filing of the quieting of title by the petitioners in 2003, the
respondents have been in possession of the entire Lot No. 1633 in the
concept of an owner for almost 42 years. This period of time is sufficient to
vest extraordinary acquisitive prescription over the property on the
respondents. As such, it is immaterial now whether the respondents
possessed the property in good faith or not.
Admittedly, the respondents built their house at the western portion of
Lot No. 1633, and Isagani has declared that the eastern part was their
family's garden. Thus, it was fenced with bamboo and was planted with
banana trees and different vegetables. Clearly, there is no doubt that the
respondents did not only pay the taxes due for the whole Lot No. 1633, in
which the eastern portion is a part, but rather, the respondents were able to
prove that they have possession of the whole lot.
While the findings of the CA that the petitioners were a buyer in bad
faith is in accord with the evidence on record, it must be pointed out,
however, that they overlooked the fact that Lot No. 1633 is an unregistered
piece of land. The Court had already ruled that the issue of good faith or bad
faith of a buyer is relevant only where the subject of the sale is a registered
land but not where the property is an unregistered land. One who purchases
an unregistered land does so at his peril. His claim of having bought the land
in good faith, i.e., without notice that some other person has a right to, or
interest in, the property, would not protect him if it turns out that the seller
does not actually own the property. 28 All the same, the application of this
doctrine will not affect the outcome of this case.
Obviously, the petitioners cannot benefit from the deed of sale of the
subject parcel of land, executed by the Spouses Ballesteros in their favor, to
support their claim of possession in good faith and with just title. The Court
noted that in Filomena's testimony, she even admitted that the respondents
own the bigger portion of Lot No. 1633. 29 Thus, it is clear that the
petitioners chose to close their eyes to facts which should have put a
reasonable man on his guard. The petitioners failed to ascertain whether the
Spouses Ballesteros were the lawful owner of the subject parcel of land
being sold. Far from being prudent, the petitioners placed full faith on the
Affidavit of Ownership that Antonio executed. Hence, when the subject
parcel of land was bought by the petitioners, they merely stepped into the
shoes of the Spouses Ballesteros and acquired whatever rights and
obligations appertain thereto.
It is also worthy to note of the respondents' reaction when the
petitioners tried to construct a house in the subject parcel of land in 2002.
Upon learning that a house was being built on the eastern portion of Lot No.
1633, the respondents went to the barangay to file a complaint. 30 Clearly,
this indicates the respondents' vigilance to protect their property. The Court
also notes that in the respondent's possession of the entire Lot No. 1633 for
almost 42 years, there was no instance during this time that the petitioners
or their predecessors-in-interest, for that matter, questioned the
respondents' right over Lot No. 1633.
From the foregoing disquisitions, it is clear that the petitioners were
not able to prove equitable title or ownership over the subject parcel of land.
Except for their claim that they merely purchased the same from the
Spouses Ballesteros, the petitioners presented no other justification to
disprove the ownership of the respondents. Since the Spouses Ballesteros
had no right to sell the subject parcel of land, the petitioners cannot be
deemed to have been the lawful owners of the same.
WHEREFORE, the petition is DENIED. The Decision dated July 17,
2007 and the Resolution dated January 29, 2008 of the Court of Appeals in
CA-G.R. CV No. 87021 are AFFIRMED.
SO ORDERED.
Velasco, Jr., Bersamin, Jardeleza and Caguioa, * JJ., concur.
Footnotes
* Designated Fifth Member of the Third Division per Special Order No. 2417 dated
January 4, 2017.
1. Rollo , pp. 9-28.
2. Penned by Associate Justice Rebecca De Guia-Salvador, with Associate Justices

Magdangal M. De Leon and Ricardo R. Rosario concurring; id . at 224-241.
3. Id. at 248.
4. Id. at 147-175.
5. Id. at 31-35.
6. Id. at 225-226.
7. Id. at 226.
8. Id. at 228.
9. Id.
10. Id. at 31-35.
11. Id. at 229.
12. Id. at 175.
13. Id. at 235-238.
14. Id. at 242-247.
15. Id. at 248.
16. Heirs of Delfin and Maria Tappa v. Heirs of Jose Bacud, Henry Calabazaron and
Vicente Malupeng, G.R. No. 187633, April 4, 2016.
17. Republic of the Philippines v. Carrasco, 539 Phil. 205, 216 (2006).
18. Rollo , pp. 235-236.
19. Id. at 238.
20. Republic of the Philippines v. Carrasco, supra note 17.

21. Records, pp. 136-152.
22. Id. at 153-160.
23. Id. at 161.
24. Id. at 162.
25. Larena v. Mapili, 455 Phil. 944, 953 (2003).
26. Borillo v. Court of Appeals, 284-A Phil. 576, 594 (1992).
27. Records, pp. 153-162.
28. Rural Bank of Siaton (Negros Oriental), Inc. v. Macajilos, 527 Phil. 456, 471
(2006).
29. TSN, October 6, 2004, p. 11.
30. Id. at 91-92.
n Note from the Publisher: Copied verbatim from the official document.

THIRD DIVISION
[G.R. No. 179011. April 15, 2013.]
REY CASTIGADOR CATEDRILLA, petitioner, vs. MARIO and

MARGIE 1 LAURON, respondents.
DECISION
PERALTA, J : p
Assailed in this petition for review on certiorari is the Decision 2 dated

February 28, 2007 of the Court of Appeals (CA) in CA-G.R. SP No. 00939, as well
as its Resolution 3 dated July 11, 2007 which denied petitioner's motion for
reconsideration.
On February 12, 2003, petitioner Rey Castigador Catedrilla filed with the
Municipal Trial Court (MTC) of Lambunao, Iloilo a Complaint 4 for ejectment
against the spouses Mario and Margie Lauron alleging as follows: that Lorenza
Lizada is the owner of a parcel of land known as Lot 183, located in Mabini
Street, Lambunao, Iloilo, which was declared for taxation purposes in her name
under Tax Declaration No. 0363; 5 that on February 13, 1972, Lorenza died and
was succeeded to her properties by her sole heir Jesusa Lizada Losañes, who
was married to Hilarion Castigador (Castigador); that the spouses Jesusa and
Hilarion Castigador had a number of children, which included Lilia Castigador
(Lilia), who was married to Maximo Catedrilla (Maximo); that after the death of
the spouses Castigador, their heirs agreed among themselves to subdivide Lot
183 and, pursuant to a consolidation subdivision plan 6 dated January 21, 1984,
the parcel of lot denominated as Lot No. 5 therein was to be apportioned to the
heirs of Lilia since the latter already died on April 9, 1976; Lilia was succeeded
by her heirs, her husband Maximo and their children, one of whom is herein
petitioner; that petitioner filed the complaint as a co-owner of Lot No. 5; that
sometime in 1980, respondents Mario and Margie Lauron, through the
tolerance of the heirs of Lilia, constructed a residential building of strong
materials on the northwest portion of Lot No. 5 covering an area of one
hundred square meters; that the heirs of Lilia made various demands for
respondents to vacate the premises and even exerted earnest efforts to
compromise with them but the same was unavailing; and that petitioner
reiterated the demand on respondents to vacate the subject lot on January 15,
2003, but respondents continued to unlawfully withhold such possession. cCAaHD
In their Answer, 7 respondents claimed that petitioner had no cause of

action against them, since they are not the owners of the residential building
standing on petitioner's lot, but Mildred Kascher (Mildred), sister of respondent
Margie, as shown by the tax declaration in Mildred's name; 8 that in 1992,
Mildred had already paid P10,000.00 as downpayment for the subject lot to
Teresito Castigador; 9 that there were several instances that the heirs of Lilia
offered the subject Lot 183 for sale to respondents and Mildred and demanded
payment, however, the latter was only interested in asking money without any
intention of delivering or registering the subject lot; that in 1998, Maximo,
petitioner's father, and respondent Margie entered into an amicable settlement
10 before the Barangay Lupon of Poblacion Ilawod, Lambunao, Iloilo wherein
Maximo offered the subject lot to the spouses Alfons and Mildred Kascher in the
amount of P90,000.00 with the agreement that all documents related to the
transfer of the subject lot to Maximo and his children be prepared by Maximo,
but the latter failed to comply; and that the amicable settlement should have
the force and effect of a final judgment of a court, hence, the instant suit is
barred by prior judgment. Respondents counterclaimed for damages.
On November 14, 2003, the MTC rendered its Decision, 11 the dispositive
portion of which reads:
WHEREFORE, in view of the foregoing, judgment is hereby
rendered in favor of the plaintiff ordering the defendants:
1. To vacate the lot in question and restore possession to the

plaintiff;
2. To pay plaintiff in the reduced amount of TWENTY THOUSAND
PESOS (P20,000.00) as Atty's fees, plus ONE THOUSAND (P1,000.00)
per Court appearance;
3. To pay plaintiff reasonable compensation for the use of the lot

in question ONE THOUSAND (P1,000.00) pesos yearly counted from
the date of demand;
4. To pay the cost of litigation. AIaDcH
No award of moral and exemplary damages.
Defendants' counterclaim is hereby dismissed for lack of

sufficient evidence. 12
The MTC found that from the allegations and evidence presented, it
appeared that petitioner is one of the heirs of Lilia Castigador Catedrilla, the
owner of the subject lot and that respondents are occupying the subject lot;
that petitioner is a party who may bring the suit in accordance with Article 487
13 of the Civil Code; and as a co-owner, petitioner is allowed to bring this action
for ejectment under Section 1, Rule 70 14 of the Rules of Court; that

respondents are also the proper party to be sued as they are the occupants of
the subject lot which they do not own; and that the MTC assumed that the
house standing on the subject lot has been standing thereon even before 1992
and only upon the acquiescence of the petitioner and his predecessor-in-
interest.
The MTC found that respondents would like to focus their defense on the
ground that Mildred is an indispensable party, because she is the owner of the
residential building on the subject lot and that there was already a perfected
contract to sell between Mildred and Maximo because of an amicable
settlement executed before the Office of the Punong Barangay. However, the
MTC, without dealing on the validity of the document and its interpretation,
ruled that it was clear that respondent Margie was representing her parents,
Mr. and Mrs. Bienvenido Loraña, in the dispute presented with the Punong
Barangay. It also found that even Mildred's letter to petitioner's father Maximo
recognized the title of petitioner's father over the subject lot and that it had not
been established by respondents if Teresito Castigador, the person who signed
the receipt evidencing Mildred's downpayment of P10,000.00 for the subject
lot, is also one of the heirs of Lilia. The MTC concluded that respondents could
not be allowed to deflect the consequences of their continued stay over the
property, because it was their very occupation of the property which is the
object of petitioner's complaint; that in an action for ejectment, the subject
matter is material possession or possession de facto over the real property, and
the side issue of ownership over the subject lot is tackled here only for the
purpose of determining who has the better right of possession which is to prove
the nature of possession; that possession of Lot 183 should be relinquished by
respondents to petitioner, who is a co-owner, without foreclosing other
remedies that may be availed upon by Mildred in the furtherance of her
supposed rights. TAaCED
Respondents filed their appeal with the Regional Trial Court (RTC) of Iloilo
City, raffled off to Branch 26. On March 22, 2005, the RTC rendered its Order, 15
the dispositive portion of which reads:
WHEREFORE, circumstances herein-above considered, the
decision of the court dated November 14, 2003 is hereby AFFIRMED,
except for the payment of P20,000.00 as attorney's fees.
SO ORDERED. 16
The RTC found that petitioner, being one of the co-owners of the subject
lot, is the proper party in interest to prosecute against any intruder thereon. It
found that the amicable settlement signed and executed by the representatives
of the registered owner of the premises before the Lupon is not binding and
unenforceable between the parties. It further ruled that even if Mildred has her
name in the tax declaration signifying that she is the owner of the house
constructed on the subject lot, tax declarations are not evidence of ownership
but merely issued to the declarant for purposes of payment of taxes; that she
cannot be considered as an indispensable party in a suit for recovery of
possession against respondents; that Mildred should have intervened and
proved that she is an indispensable party because the records showed that she
was not in actual possession of the subject lot. The RTC deleted the attorney's
fees, since the MTC decision merely ordered the payment of attorney's fees
without any basis.
Respondents' motion for reconsideration was denied in an Order 17 dated

June 8, 2005.
Dissatisfied, respondents filed with the CA a petition for review. Petitioner

filed his Comment thereto.
On February 28, 2007, the CA issued its assailed decision, the dispositive
portion of which reads:
IN LIGHT OF ALL THE FOREGOING , this petition for review is
GRANTED. The assailed decision of the Regional Trial Court, Br. 26,
Iloilo City, dated March 22, 2005, that affirmed the MTC Decision dated
November 14, 2003, is REVERSED and SET ASIDE.
Consequently, the complaint for ejectment of the respondent is

DISMISSED. 18 aIHCSA
The CA found that only petitioner filed the case for ejectment against
respondents and ruled that the other heirs should have been impleaded as
plaintiffs citing Section 1, 19 Rule 7 and Section 7, 20 Rule 3 of the Rules of
Court; that the presence of all indispensable parties is a condition sine qua non
for the exercise of judicial power; that when an indispensable party is not
before the court, the action should be dismissed as without the presence of all
the other heirs as plaintiffs, the trial court could not validly render judgment
and grant relief in favor of the respondents.
The CA also ruled that while petitioner asserted that the proper parties to
be sued are the respondents as they are the actual possessors of the subject lot
and not Mildred, petitioner still cannot disclaim knowledge that it was to Mildred
to whom his co-owners offered the property for sale, thus, he knew all along
that the real owner of the house on the subject lot is Mildred and not
respondents; that Mildred even paid P10,000.00 out of the total consideration
for the subject lot and required respondents' relatives to secure the documents
that proved their ownership over the subject lot; that Maximo and Mildred had
previously settled the matter regarding the sale of the subject lot before the
Barangay as contained in an amicable settlement signed by Maximo and
respondent Margie. Thus, the question in this case extends to mere possessory
rights and non-inclusion of indispensable parties made the complaint fatally
defective. From the facts obtaining in this case, ejectment being a summary
remedy is not the appropriate action to file against the alleged deforciant of the
property.
Hence, this petition for review wherein petitioner raises the following
issues: aCIHcD
THE COURT OF APPEALS ERRED AND GRAVELY ABUSED ITS

DISCRETION WHEN IT HELD THAT THE DECISION OF THE TRIAL
COURT WAS A NULLITY.
II
THE COURT OF APPEALS ERRED AND GRAVELY ABUSED ITS

DISCRETION WHEN IT HELD THAT PETITIONER KNEW ALL ALONG
THAT MILDRED KASCHER, AND NOT RESPONDENTS, WERE THE REAL
OWNERS OF THE RESIDENTIAL BUILDING. 21
The CA found that petitioner's co-heirs to the subject lot should have been
impleaded as co-plaintiffs in the ejectment case against respondents, since
without their presence, the trial court could not validly render judgment and
grant relief in favor of petitioner.
We do not concur.
Petitioner can file the action for ejectment without impleading his co-
owners. In Wee v. De Castro , 22 wherein petitioner therein argued that the
respondent cannot maintain an action for ejectment against him, without
joining all his co-owners, we ruled in this wise:
Article 487 of the New Civil Code is explicit on this point:
ART. 487. Any one of the co-owners may bring an action in

ejectment. —
This article covers all kinds of action for the recovery of
possession, i.e., forcible entry and unlawful detainer (accion
interdictal), recovery of possession (accion publiciana), and recovery of
ownership (accion de reivindicacion). As explained by the renowned
civilest, Professor Arturo M. Tolentino:
A co-owner may bring such an action, without the

necessity of joining all the other co-owners as co-
plaintiffs, because the suit is deemed to be instituted for
the benefit of all. If the action is for the benefit of the plaintiff
alone, such that he claims possession for himself and not for the
co-ownership, the action will not prosper.
In the more recent case of Carandang v. Heirs of De Guzman,

this Court declared that a co-owner is not even a necessary party to an
action for ejectment, for complete relief can be afforded even in his
absence, thus:
In sum, in suits to recover properties, all co-owners are real

parties in interest. However, pursuant to Article 487 of the Civil
Code and the relevant jurisprudence, any one of them may bring
an action, any kind of action for the recovery of co-owned
properties. Therefore only one of the co-owners, namely the co-
owner who filed the suit for the recovery of the co-owned
property, is an indispensable party thereto. The other co-owners
are not indispensable parties. They are not even necessary
parties, for a complete relief can be afforded in the suit even
without their participation, since the suit is presumed to have
been filed for the benefit of all co-owners. 23
DCcSHE
In this case, although petitioner alone filed the complaint for unlawful
detainer, he stated in the complaint that he is one of the heirs of the late Lilia
Castigador, his mother, who inherited the subject lot, from her parents.
Petitioner did not claim exclusive ownership of the subject lot, but he filed the
complaint for the purpose of recovering its possession which would redound to
the benefit of the co-owners. Since petitioner recognized the existence of a co-
ownership, he, as a co-owner, can bring the action without the necessity of
joining all the other co-owners as co-plaintiffs.
Petitioner contends that the CA committed a reversible error in finding

that Mildred Kascher is an indispensable party and that her non-inclusion as a
party defendant in the ejectment case made the complaint fatally defective,
thus, must be dismissed.
We agree with petitioner.
The CA based its findings that Mildred is an indispensable party because it

found that petitioner knew all along that Mildred is the owner of the house
constructed on the subject lot as shown in the affidavits 24 of Maximo and
petitioner stating that petitioner's co-owners had offered for sale the subject lot
to Mildred, and that Maximo, petitioner's father, and Mildred had previously
settled before the Barangay the matter regarding the sale of the subject lot to
the latter as contained in the amicable settlement.
We find that the affidavits of Maximo and petitioner merely stated that
the lot was offered for sale to Mildred, but nowhere did it admit that Mildred is
the owner of the house constructed on the subject lot.
Also, it appears that the amicable settlement 25 before the Barangay

wherein it was stated that Maximo will sell the subject lot to the spouses Alfons
and Mildred Kascher was signed by Maximo on behalf of his children and
respondent Margie on behalf of Mr. and Mrs. Bienvenido Loraña. Thus, there is
no basis for the CA's conclusion that it was Mildred and Maximo who had
previously settled the sale of the subject lot.
Moreover, it appears however, that while there was a settlement, Liah C.

Catedrilla, one of petitioner's co-heirs, wrote a letter 26 dated October 30, 2002,
to the Spouses Loraña and respondent Margie stating that the latter had made
a change on the purchase price for the subject lot which was different from that
agreed upon in the amicable settlement. Records neither show that respondent
Margie had taken steps to meet with Liah or any of her co-heirs to settle the
matter of the purchase price nor rebut such allegation in the letter if it was not
true. The letter 27 dated July 5, 2003 of respondent Margie's counsel addressed
to petitioner's counsel, stating that his client is amenable in the amount as
proposed in the amicable settlement, would not alter the fact of respondents'
non-compliance with the settlement since the letter was sent after the
ejectment case had already been filed by petitioner. CaAcSE
In Chavez v. Court of Appeals, 28 we explained the nature of the amicable

settlement reached after a barangay conciliation, thus:
Indeed, the Revised Katarungang Pambarangay Law provides
that an amicable settlement reached after barangay conciliation
proceedings has the force and effect of a final judgment of a court if
not repudiated or a petition to nullify the same is filed before the
proper city or municipal court within ten (10) days from its date. It
further provides that the settlement may be enforced by execution by
the lupong tagapamayapa within six (6) months from its date, or by
action in the appropriate city or municipal court, if beyond the six-
month period. This special provision follows the general precept
enunciated in Article 2037 of the Civil Code, viz.:

A compromise has upon the parties the effect and authority of
res judicata; but there shall be no execution except in compliance with
a judicial compromise.
Thus, we have held that a compromise agreement which is not

contrary to law, public order, public policy, morals or good customs is a
valid contract which is the law between the parties themselves. It has
upon them the effect and authority of res judicata even if not judicially
approved, and cannot be lightly set aside or disturbed except for vices
of consent and forgery.
However, in Heirs of Zari, et al. v. Santos, we clarified that the

broad precept enunciated in Art. 2037 is qualified by Art. 2041 of the
same Code, which provides:
If one of the parties fails or refuses to abide by the

compromise, the other party may either enforce the compromise
or regard it as rescinded and insist upon his original demand.
We explained, viz.: ETAICc
[B]efore the onset of the new Civil Code, there was no right
to rescind compromise agreements. Where a party violated the
terms of a compromise agreement, the only recourse open to the
other party was to enforce the terms thereof.
When the new Civil Code came into being, its Article 2041 .
. . created for the first time the right of rescission. That provision
gives to the aggrieved party the right to "either enforce the
compromise or regard it as rescinded and insist upon his original
demand." Article 2041 should obviously be deemed to qualify the
broad precept enunciated in Article 2037 that "[a] compromise
has upon the parties the effect and authority of res judicata.
In exercising the second option under Art. 2041, the aggrieved
party may, if he chooses, bring the suit contemplated or involved in his
original demand, as if there had never been any compromise
agreement, without bringing an action for rescission. This is because
he may regard the compromise as already rescinded by the breach
thereof of the other party. 29
While the amicable settlement executed between Maximo and respondent

Margie before the Barangay had the force and effect of a final judgment of a
court, it appears that there was non-compliance thereto by respondent Margie
on behalf of her parents which may be construed as repudiation. The
settlement is considered rescinded in accordance with the provision of Article
2041 of the Civil Code. Since the settlement was rescinded, petitioner, as a co-
owner, properly instituted the action for ejectment to recover possession of the
subject lot against respondents who are in possession of the same.
Even the receipt 30 signed by a certain Teresito Castigador,

acknowledging having received from Mildred the amount of P10,000.00 as
downpayment for the purchase of the subject lot, would not also prove
respondents' allegation that there was already a perfected contract to sell the
subject lot to Mildred, since the authority of Teresito to sell on behalf of the
heirs of Lilia Castigador was not established. SCEHaD
In ejectment cases, the only issue to be resolved is who is entitled to the

physical or material possession of the property involved, independent of any
claim of ownership set forth by any of the party-litigants. 31 In an action for
unlawful detainer, the real party-in-interest as party-defendant is the person
who is in possession of the property without the benefit of any contract of lease
and only upon the tolerance and generosity of its owner. 32 Well settled is the
rule that a person who occupies the land of another at the latter's tolerance or
permission, without any contract between them, is bound by an implied
promise that he will vacate the same upon demand, failing which a summary
action for ejectment is the proper remedy against him. 33 His status is
analogous to that of a lessee or tenant whose term of lease has expired but
whose occupancy continued by tolerance of the owner. 34
Here, records show that the subject lot is owned by petitioner's mother,
and petitioner, being an heir and a co-owner, is entitled to the possession of the
subject lot. On the other hand, respondent spouses are the occupants of the
subject lot which they do not own. Respondents' possession of the subject lot
was without any contract of lease is they failed to present any, thus lending
credence to petitioner's claim that their stay in the subject lot is by mere
tolerance of petitioner and his predecessors. It is indeed respondents spouses
who are the real parties-in-interest who were correctly impleaded as
defendants in the unlawful detainer case filed by petitioner.
WHEREFORE, premises considered, the petition is hereby GRANTED. The

Decision dated February 28, 2007 and the Resolution dated July 11, 2007 of the
Court of Appeals are hereby REVERSED and SET ASIDE. The Order dated
March 22, 2005 of the Regional Trial Court, Branch 26, Iloilo City, in Civil Case
No. 04-27978, is hereby REINSTATED.
SO ORDERED. cADaIH
Velasco, Jr., Abad, Mendoza and Leonen, JJ., concur.
Footnotes
1.Sometimes spelled as Mergie in some pleadings.
2.Penned by Associate Justice Pampio A. Abarintos, with Associate Justices Antonio

L. Villamor and Stephen C. Cruz, concurring; rollo, pp. 22-32.
3.Id. at 21.
4.Docketed as Civil Case No. 516, records, pp. 5-8.
5.Rollo , p. 158.
6.Id. at 157.
7.Id. at 27-30.
8.Id. at 77.
9.Id. at 93.
10.Id. at 94.
11.Per Judge Augusto L. Nobleza; rollo, pp. 137-142.
12.Id. at 142. (Citations omitted)
13.Art. 487. Anyone of the co-owners may bring an action in ejectment.
14.Rule 70. Forcible Entry and Unlawful Detainer. —

Section 1. Who may institute proceedings, and when. — Subject to the
provisions of the next succeeding section, a person deprived of the
possession of any land or building by force, intimidation, threat, strategy, or
stealth, or a lessor, vendor, vendee, or other person against whom the
possession of any land or building is unlawfully withheld after the expiration
or termination of the right to hold possession, by virtue of any contract,
express or implied, or the legal representatives or assigns of any such lessor,
vendor, vendee, or other person, may, at any time within one (1) year after
such unlawful deprivation or withholding of possession, bring an action in the
proper Municipal Trial Court against the person or persons unlawfully
withholding or depriving of possession, or any person or persons claiming
under them, for the restitution of such possession, together with damages
and costs.
15.Per Judge Antonio M. Natino, rollo, pp. 65-75.
16.Id. at 75.
17.Id. at 76.
18.Id. at 31.
19.Section 1.Caption. — The caption sets forth the name of the court, the title of
the action, and the docket number if assigned.
The title of the action indicates the names of the parties. They shall all be
named in the original complaint or petition; but in subsequent pleadings, it
shall be sufficient if the name of the first party on each side be stated with an
appropriate indication when there are other parties.
Their respective participation in the case shall be indicated.
20.Section 7. Compulsory joinder of indispensable parties. — Parties in interest

without whom no final determination can be had of an action shall be joined
either as plaintiffs or defendants.
21.Rollo , p. 10.
22.G.R. No. 176405, August 20, 2008, 562 SCRA 695.
23.Id. at 710-711.
24.Rollo , pp. 160-161; 168-169, respectively.
8. My family offered the lot being occupied now by the Laurons for sale to
them and more particularly to her sister, Mildred Kascher, however,
negotiations for the sale failed. (Rollo , p. 161)
25.Id. at 94.
We, complainants and respondents in the above-captioned case, do hereby

agree to settle our dispute as follows:
1. The complainant/owner, Mr. Maximo Catedrilla, in behalf of his children

agree to sell Lot No. 54 to spouses Alfons and Mildred Kascher in the amount
of P90,000.00.
2. The buyer agrees to buy at the price stated, payment will be made at
the time the documents showing his ownership and the Deed of Sale shall
have been finished.
3. In case the owner fails to gather the necessary documents pertaining to

his ownership on time, he has the option to extend the time of execution of
the Deed of Sale until such time that the documents have been completed.
4. In case the buyer fails to pay the amount at the time that the Deed of
Sale is ready for execution they will lose their right to purchase and the
owner shall give a warning to remove all the improvements they have made
on the said lot.
5. Date of execution of the Deed of Sale shall be on September 30, 1998.
26.Rollo , p. 97.
27.Id. at 96.
28.G.R. No. 159411, March 18, 2005, 453 SCRA 843.
29.Id. at 849-851.
30.Rollo , p. 93.
31.Lao v. Lao, G.R. No. 149599, May 16, 2005, 458 SCRA 539, 546.
32.Id. at 547.
33.Arambulo v. Gungab , 508 Phil. 612, 621-622 (2005), citing Boy v. Court of
Appeals, 471 Phil. 102, 114 (2004).
34.Lao v. Lao, supra note 31, at 547.

SECOND DIVISION
[G.R. No. 108228. February 1, 2001.]
SPOUSES MANUEL and SALVACION DEL CAMPO , petitioners,

vs. HON. COURT OF APPEALS and HEIRS OF JOSE
REGALADO, SR., respondents.
De Jesus Paguio & Associates for petitioners.

Atty. Alberto L. Deslate for private respondents.
SYNOPSIS
A piece of land measuring about 27,179 sq. m. was divided in aliquot
shares under Original Certificate of Title (OCT) No. 18047 among the Bornales
children who became co-owners thereof. One of the co-owners, Salome, sold a
part of her share to Soledad Daynolo. Soledad mortgaged the property to Jose
Regalado, Sr. Thereafter, in 1948, three of the eight co-owners, including
Salome, sold 24,993 sq. m. to Jose Regalado, Sr. Meanwhile, in 1951, the
property mortgaged to Regalado, Sr. was redeemed by Simplicio Distajo, as
heir of deceased Soledad Daynolo. A deed of discharge of mortgage was issued
to Distajo, who on the same day sold the redeemed property to the herein
petitioners. For his part, Jose Regalado, Sr. caused the reconstitution of OCT
No. 18047. As a result, the title to the property was transferred in his name.
The property was subdivided into smaller lots. About ten years later in 1987,
petitioners brought this complaint for repartition, resurvey and reconveyance
against the heirs of now deceased Jose Regalado, Sr. Petitioners claimed to own
1,544-sq. m. of the lot erroneously included in the TCT in the name of
Regalado. Petitioners alleged that they occupied the disputed area as
residential dwelling ever since they purchased the property from the Distajos in
1951. The trial court, however, dismissed their complaint. It ruled that while
Salome could alienate her pro-indiviso share in the lot, she could not validly sell
an undivided part thereof by metes and bounds to Soledad, from whom the
petitioners derived their title. On appeal, the Court of Appeals affirmed the trial
court's decision. Hence, this petition.
According to the Supreme Court, Salome's right to sell part of her
undivided interest in the co-owned property was absolute in accordance with
the well-settled doctrine that a co-owner has full ownership of his pro-indiviso
share and has the right to alienate, assign or mortgage it, and substitute
another person in its enjoyment. The vendee therefore may step into the shoes
of the vendor as co-owner and may acquire a proportionate abstract share in
the property held in common. The Court also ruled that the subject area in this
petition had been effectively segregated from the mother lot even before title
was issued in favor of Regalado in 1977. Since petitioners bought and took
possession of the property in 1951, 26 years had already lapsed; such
undisturbed possession of the co-owned property entitled the possessors to the
definite portion of the lot that they occupied. Failure to disclose the fact of
actual physical possession of the lot by another person constituted fraud, which
was what happened in the case at bar. Therefore, the attendance of fraud in
the issuance of title to Regalado created an implied trust in favor of the
petitioners and gave them the right to seek reconveyance of the parcel
wrongfully obtained by the former. According to the Court, when the right of the
true and real owner was recognized, said action is imprescriptible, being in the
nature of a suit for quieting of title. The petition herein was granted by the
Court.
SYLLABUS
1. CIVIL LAW; PROPERTY; CO-OWNERSHIP; CO-OWNER'S RIGHT TO

SELL UNDIVIDED INTEREST IN CO-OWNED PROPERTY, ABSOLUTE; RATIONALE;
IN CASE AT BAR. — The mere fact that Salome purportedly transferred a
definite portion of the co-owned lot by metes and bounds to Soledad, however,
does not per se render the sale a nullity. This much is evident under Article 493
of the Civil Code and pertinent jurisprudence on the matter. More particularly in
Lopez vs. Vda. De Cuaycong, et al. which we find relevant, the Court, speaking
through Mr. Justice Bocobo, held that: . . . The fact that the agreement in
question purported to sell a concrete portion of the hacienda does not render
the sale void, for it is a well-established principle thatthe binding force of a
contract must be recognized as far as it legally possible to do so. "Quando res
non valet ut ago, valeat quantum valere potest." (When a thing is of no force as
I do it, it shall have as much force as it can have.) Applying this principle to the
instant case, there can be no doubt that the transaction entered into by Salome
and Soledad could be legally recognized in its entirety since the object of the
sale did not even exceed the ideal shares held by the former in the co-
ownership. As a matter of fact, the deed of sale executed between the parties
expressly stipulated that the portion of Lot 162 sold to Soledad would be taken
from Salome's 4/16 undivided interest in said lot, which the latter could validly
transfer in whole or in part even without the consent of the other co-owners.
Salome's right to sell part of her undivided interest in the co-owned property is
absolute in accordance with the well-settled doctrine that a co-owner has full
ownership of his pro-indiviso share and has the right to alienate, assign or
mortgage it, and substitute another person in its enjoyment. Since Salome's
clear intention was to sell merely part of her aliquot share in Lot 162, in our
view no valid objection can be made against it and the sale can be given effect
to the full extent.
2. ID.; ID.; ID.; EFFECT THEREOF; CASE AT BAR. — We are not unaware
of the principle that a co-owner cannot rightfully dispose of a particular portion
of a co-owned property prior to partition among all the co-owners. However, this
should not signify that the vendee does not acquire anything at all in case a
physically segregated area of the co-owned lot is in fact sold to him. Since the
co-owner/vendor's undivided interest could properly be the object of the
contract of sale between the parties, what the vendee obtains by virtue of such
a sale are the same rights as the vendor had as co-owner, in an ideal share
equivalent to the consideration given under their transaction. In other words,
the vendee steps into the shoes of the vendor as co-owner and acquires a
proportionate abstract share in the property held in common. cAaDCE
3. ID.; ID.; ID.; CO-OWNER CANNOT ALIENATE MORE THAN HIS SHARE
IN THE CO-OWNERSHIP. — Resultantly, Soledad became a co-owner of Lot 162
as of the year 1940 when the sale was made in her favor. It follows that
Salome, Consortia and Alfredo could not have sold the entire Lot 162 to Jose
Regalado, Sr. on April 14, 1948 because at that time, the ideal shares held by
the three co-owners/vendors were equivalent to only 10/16 of the undivided
property less the aliquot share previously sold by Salome to Soledad. Based on
the principle that "no one can give what he does not have," Salome, Consorcia
and Alfredo could not legally sell the shares pertaining to Soledad since a co-
owner cannot alienate more than his share in the co-ownership. We have ruled
many times that even if a co-owner sells the whole property as his, the sale will
affect only his own share but not those of the other co-owners who did not
consent to the sale. Since a co-owner is entitled to sell his undivided share, a
sale of the entire property by one co-owner will only transfer the rights of said
co-owner to the buyer, thereby making the buyer a co-owner of the property.
4. ID.; ID.; ID.; EFFECTIVE SEGREGATION FROM THE MOTHER LOT,"

WHEN RECOGNIZED, CASE AT BAR. — Be that as it may, this petition had
already been effectively segregated from the 'mother lot' even before title was
issued in favor of Regalado. It must be noted that 26 years had lapsed from the
time petitioners bought and took possession of the property in 1951 until
Regalado procured the issuance of TCT No. 14566. Additionally, the intervening
years between the date of petitioners' purchase of the property and 1987 when
petitioners filed the instant complaint, comprise all of 36 years. However, at no
instance during this time did respondents or Regalado, for that matter,
question petitioners' right over the land in dispute. In the case of Vda. de
Cabrera vs. Court of Appeals, we had occasion to hold that where the
transferees of an undivided portion of the land allowed a co-owner of the
property to occupy a definite portion thereof and had not disturbed the same
for a period too long to be ignored, the possessor is in a better condition or
right than said transferees. (Potior est condition possidentis). Such undisturbed
possession had then effect of a partial partition of the co-owned property
entitles the possessor to the definite portion which he occupies. Conformably,
petitioners are entitled to the disputed land, having enjoyed uninterrupted
possession thereof for a total of 49 years up to the present.
5. ID.; LAND REGISTRATION; FAILURE AND INTENTIONAL OMISSION TO

DISCLOSE THE FACT OF ACTUAL PHYSICAL POSSESSION BY ANOTHER PERSON
DURING REGISTRATION PROCEEDINGS CONSTITUTES ACTUAL FRAUD; PRESENT
IN CASE AT BAR. — Failure and intentional omission to disclose the fact of
actual physical possession by another person during registration proceedings
constitutes actual fraud. Likewise, it is fraud to knowingly omit or conceal a
fact, upon which benefit is obtained to the prejudice of a third person. In this
case, we are convinced that Regalado knew of the fact that he did not have a
title to the entire lot and could not, therefore, have validly registered the same
in his name alone because he was aware of petitioners' possession of the
subject Portion as well as the sale between Salome and Soledad. That Regalado
had notice of the fact that the disputed portion of Lot 162 was under claim of
ownership by petitioners and the latter's predecessor is beyond question.
Records show that the particular area subject of this case was mortgaged by
Soledad and her husband to Jose Regalado, Sr. as early as May 1, 1947 or one
year prior to the alienation of the whole lot in favor of the latter. Regalado
never questioned the ownership of the lot given by Soledad as security for the
P400.00 debt and he must have at least known that Soledad bought the subject
portion from Salome since he could not have reasonably accepted the lot as
security for the mortgage debt if such were not the case. By accepting the said
portion of Lot 162 as security for the mortgage obligation, Regalado had in fact
recognized Soledad's ownership of this definite portion of Lot 162. Regalado
could not have been ignorant of the fact that the disputed portion is being
claimed by Soledad and subsequently, by petitioners, since Regalado even
executed a Release of Mortgage on May 4, 1951, three years after the entire
property was supposedly sold to him. It would certainly be illogical for any
mortgagee to accept property as security, purchase the mortgaged property
and, thereafter, claim the very same property as his own while the mortgage
was still subsisting.
6. ID.; ID.; ID.; PRINCIPLE OF ESTOPPEL BY DEED; BARS A PARTY FROM

ASSERTING OWNERSHIP OVER THE SUBJECT LAND; APPLICATION IN CASE AT
BAR. — Consequently, respondents are estopped from asserting that they own
the subject land in view of the Deed of Mortgage and Discharge of Mortgage
executed between Regalado and petitioners' predecessor-in-interest. As
petitioners correctly contend, respondents are barred from making this
assertion under the equitable principle of estoppel by deed, whereby a party to
a deed and his privies are precluded from asserting as against the other and his
privies any right or title in derogation of the deed, or from denying the truth of,
any material fact asserted in it. A perusal of the documents evidencing the
mortgage would readily reveal that Soledad, as mortgagor, had declared
herself absolute owner of the piece of land now being litigated. This declaration
of fact was accepted by Regalado as mortgagee and accordingly, his heirs
cannot now be permitted to deny it.
7. ID.; ID.; CERTIFICATE OF TITLE; INDEFEASIBLE AND

INCONTROVERTIBLE NATURE THEREOF; WHEN MAY NOT BE INVOKED;
RATIONALE; CASE AT BAR. — Although Regalado's certificate of title became
indefeasible after the lapse of one year from the date of the decree of
registration, the attendance of fraud in its issuance created an implied trust in
favor of petitioners and gave them the right to seek reconveyance of the parcel
wrongfully obtained by the former. An action for reconveyance based on an
implied trust ordinarily prescribes in ten years. But when the right of the true
and real owner is recognized, expressly or implicitly such as when he remains
undisturbed in his possession, the said action is imprescriptible, it being in the
nature of a suit for quieting of title. Having established by clear and convincing
evidence that they are the legal owners of the litigated portion included in TCT
No. 14566, it is only proper that reconveyance of the property be ordered in
favor of petitioners. The alleged incontrovertibility of Regalado's title cannot be
successfully invoked by respondents because certificates of title merely confirm
or record title already existing and cannot be used to protect a usurper from
the true owner or be used as a shield for the commission of fraud. HAIaEc
DECISION
QUISUMBING, J : p
This is a petition for review on certiorari of a decision of the Court of

Appeals which affirmed the judgment of the Regional Trial Court of Roxas City,
Branch 15 in Civil Case No. V-5369, ordering the dismissal of the action for
repartition, resurvey and reconveyance filed by petitioners.
Pure questions of law are raised in this appeal as the following factual
antecedents are undisputed:
Salome, Consorcia, Alfredo, Maria, Rosalia, Jose, Quirico and Julita, all
surnamed Bornales, were the original co-owners of Lot 162 of the Cadastral
Survey of Pontevedra, Capiz under Original Certificate of Title No. 18047. As
appearing therein, the lot, which consisted of a total area of 27,179 square
meters was divided in aliquot shares among the eight (8) co-owners as follows:
Salome Bornales 4/16
Consorcia Bornales 4/16
Alfredo Bornales 2/16
Maria Bornales 2/16
Jose Bornales 1/16
Quirico Bornales 1/16
Rosalia Bornales 1/16
Julita Bornales 1/16
On July 14, 1940, Salome sold part of her 4/16 share in Lot 162 for
P200.00 to Soledad Daynolo. In the Deed of Absolute Sale signed by Salome
and two other co-owners, Consorcia and Alfredo, the portion of Lot 162 sold
to Soledad was described as having more or less the following
measurements:
63-1/2 meters from point "9" to "10", 35 meters from point "10"
to point "11", 30 meters from point "11" to a certain point parallel to a
line drawn from points "9" to "10"; and then from this "Certain Point" to
point "9" and as shown in the accompanying sketch, and made an
integral part of this deed, to SOLEDAD DAYNOLO, her heirs and
assigns. 1
Thereafter, Soledad Daynolo immediately took possession of the land

described above and built a house thereon. A few years later, Soledad and her
husband, Simplicio Distajo, mortgaged the subject portion of Lot 162 as
security for a P400.00 debt to Jose Regalado, Sr. This transaction was
evidenced by a Deed of Mortgage 2 dated May 1, 1947.
On April 14, 1948, three of the eight co-owners of Lot 162, specifically,
Salome, Consorcia and Alfredo, sold 24,993 square meters of said lot to Jose
Regalado, Sr.
On May 4, 1951, Simplicio Distajo, heir of Soledad Daynolo who had since
died, paid the mortgage debt and redeemed the mortgaged portion of Lot 162
from Jose Regalado, Sr. The latter, in turn, executed a Deed of Discharge of
Mortgage 3 in favor of Soledad's heirs, namely: Simplicio Distajo, Rafael Distajo
and Teresita Distajo-Regalado. On same date, the said heirs sold the redeemed
portion of Lot 162 for P1,500.00 to herein petitioners, the spouses Manuel Del
Campo and Salvacion Quiachon.
Meanwhile, Jose Regalado, Sr. caused the reconstitution of Original

Certificate of Title No. 18047. The reconstituted OCT No. RO-4541 initially
reflected the shares of the original co-owners in Lot 162. However, title was
transferred later to Jose Regalado, Sr. who subdivided the entire property into
smaller lots, each covered by a respective title in his name. One of these small
lots is Lot No. 162-C-6 with an area of 11,732 square meters which was
registered on February 24, 1977 under TCT No. 14566.
In 1987, petitioners Manuel and Salvacion del Campo brought this

complaint for "repartition, resurvey and reconveyance" against the heirs of the
now deceased Jose Regalado, Sr. Petitioners claimed that they owned an area
of 1,544 square meters located within Lot 162-C-6 which was erroneously
included in TCT No. 14566 in the name of Regalado. Petitioners alleged that
they occupied the disputed area as residential dwelling ever since they
purchased the property from the Distajos way back in 1951. They also declared
the land for taxation purposes and paid the corresponding taxes.
On April 1, 1987, summons were served on Regalado's widow, Josefina

Buenvenida, and two of her children, Rosemarie and Antonio. Josefina and
Rosemarie were declared in default on May 10, 1989 because only Antonio filed
an answer to the complaint.
During trial, petitioners presented the Deed of Absolute Sale 4 executed

between Soledad Daynolo and Salome Bornales as well as the Deed of
Mortgage 5 and Deed of Discharge 6 signed by Jose Regalado, Sr. The Deed of
Absolute Sale 7 showing the purchase by the Del Campos of the property from
the Distajos was likewise given in evidence.
Despite the filing of an answer, Antonio failed to present any evidence to

refute the claim of petitioners. Thus, after considering Antonio to have waived
his opportunity to present evidence, the trial court deemed the case submitted
for decision.
On November 20, 1990, the trial court rendered judgment dismissing the
complaint. It held that while Salome could alienate her pro-indiviso share in Lot
162, she could not validly sell an undivided part thereof by metes and bounds
to Soledad, from whom petitioners derived their title. The trial court also
reasoned that petitioners could not have a better right to the property even if
they were in physical possession of the same and declared the property for
taxation purposes, because mere possession cannot defeat the right of the
Regalados who had a Torrens title over the land.
On appeal, the Court of Appeals affirmed the trial court's judgment, with
no pronouncement as to costs. 8
Petitioners now seek relief from this Court and maintain that:
I.
THE FACT THAT THE SALE OF THE SUBJECT PORTION CONSTITUTES A

SALE OF A CONCRETE OR DEFINITE PORTION OF LAND OWNED IN
COMMON DOES NOT ABSOLUTELY DEPRIVE HEREIN PETITIONERS OF
ANY RIGHT OR TITLE THERETO;
II.
IN ANY EVENT, HEREIN PRIVATE RESPONDENTS ARE ALL ESTOPPED

FROM DENYING THE RIGHT AND TITLE OF HEREIN PETITIONERS. 9
In resolving petitioners' appeal, we must answer the following questions:

Would the sale by a co-owner of a physical portion of an undivided property
held in common be valid? Is respondent estopped from denying petitioners'
right and title over the disputed area? Under the facts and circumstances duly
established by the evidence, are petitioners entitled to 'repartition, resurvey
and reconveyance' of the property in question?
On the first issue, it seems plain to us that the trial court concluded that
petitioners could not have acquired ownership of the subject land which
originally formed part of Lot 162, on the ground that their alleged right springs
from a void sale transaction between Salome and Soledad. The mere fact that
Salome purportedly transferred a definite portion of the co-owned lot by metes
and bounds to Soledad, however, does not per se render the sale a nullity. This
much is evident under Article 493 10 of the Civil Code and pertinent
jurisprudence on the matter. More particularly in Lopez vs. Vda. De Cuaycong,
et al. 11 which we find relevant, the Court, speaking through Mr. Justice Bocobo,
held that:
. . . The fact that the agreement in question purported to sell a
concrete portion of the hacienda does not render the sale void, for it is
a well-established principle that the binding force of a contract must be
recognized as far as it is legally possible to do so. "Quando res non
valet ut ago, valeat quantum valere potest." (When a thing is of no
force as I do it, it shall have as much force as it can have.) 12
Applying this principle to the instant case, there can be no doubt that the
transaction entered into by Salome and Soledad could be legally recognized in
its entirety since the object of the sale did not even exceed the ideal shares
held by the former in the co-ownership. As a matter of fact, the deed of sale
executed between the parties expressly stipulated that the portion of Lot 162
sold to Soledad would be taken from Salome's 4/16 undivided interest in said
lot, which the latter could validly transfer in whole or in part even without the
consent of the other co-owners. Salome's right to sell part of her undivided
interest in the co-owned property is absolute in accordance with the well-
settled doctrine that a co-owner has full ownership of his pro-indiviso share and
has the right to alienate, assign or mortgage it, and substitute another person
in its enjoyment 13 Since Salome's clear intention was to sell merely part of her
aliquot share in Lot 162, in our view no valid objection can be made against it
and the sale can be given effect to the full extent.
We are not unaware of the principle that a co-owner cannot rightfully

dispose of a particular portion of a co-owned property prior to partition among
all the co-owners. However, this should not signify that the vendee does not
acquire anything at all in case a physically segregated area of the co-owned lot
is in fact sold to him. Since the co-owner/vendor's undivided interest could
properly be the object of the contract of sale between the parties, what the
vendee obtains by virtue of such a sale are the same rights as the vendor had
as co-owner, in an ideal share equivalent to the consideration given under their
transaction. In other words, the vendee steps into the shoes of the vendor as
co-owner and acquires a proportionate abstract share in the property held in
common.
Resultantly, Soledad became a co-owner of Lot-162 as of the year 1940

when the sale was made in her favor. It follows that Salome, Consorcia and
Alfredo could not have sold the entire Lot 162 to Jose Regalado, Sr. on April 14,
1948 because at that time, the ideal shares held by the three co-
owners/vendors were equivalent to only 10/16 of the undivided property less
the aliquot share previously sold by Salome to Soledad. Based on the principle
that "no one can give what he does not have," 14 Salome, Consorcia and Alfredo
could not legally sell the shares pertaining to Soledad since a co-owner cannot
alienate more than his share in the co-ownership. We have ruled many times
that even if a co-owner sells the whole property as his, the sale will affect only
his own share but not those of the other co-owners who did not consent to the
sale. Since a co-owner is entitled to sell his undivided share, a sale of the entire
property by one co-owner will only transfer the rights of said co-owner to the
buyer, thereby making the buyer a co-owner of the property. 15
In this case, Regalado merely became a new co-owner of Lot 162 to the
extent of the shares which Salome, Consorcia and Alfredo could validly convey.
Soledad retained her rights as co-owner and could validly transfer her share to
petitioners in 1951. The logical effect of the second disposition is to substitute
petitioners in the rights of Soledad as co-owner of the land. Needless to say,
these rights are preserved notwithstanding the issuance of TCT No. 14566 in
Regalado's name in 1977.
Be that as it may, we find that the area subject matter of this petition had
already been effectively segregated from the 'mother lot' even before title was
issued in favor of Regalado. It must be noted that 26 years had lapsed from the
time petitioners bought and took possession of the property in 1951 until
Regalado procured the issuance of TCT No. 14566. Additionally, the intervening
years between the date of petitioners' purchase of the property and 1987 when
petitioners filed the instant complaint, comprise all of 36 years. However, at no
instance during this time did respondents or Regalado, for that matter,
question petitioners' right over the land in dispute. In the case of Vda. de
Cabrera vs. Court of Appeals, 16 we had occasion to hold that where the
transferees of an undivided portion of the land allowed a co-owner of the
property to occupy a definite portion thereof and had not disturbed the same
for a period too long to be ignored, the possessor is in a better condition or
right than said transferees. (Potior est condition possidentis). Such undisturbed
possession had the effect of a partial partition of the co-owned property which
entitles the possessor to the definite portion which he occupies. Conformably,
petitioners are entitled to the disputed land, having enjoyed uninterrupted
possession thereof for a total of 49 years up to the present.
The lower court's reliance on the doctrine that mere possession cannot
defeat the right of a holder of a registered Torrens title over property is
misplaced, considering that petitioners were deprived of their dominical rights
over the said lot through fraud and with evident bad faith on the part of
Regalado. Failure and intentional omission to disclose the fact of actual physical
possession by another person during registration proceedings constitutes
actual fraud. Likewise, it is fraud to knowingly omit or conceal a fact, upon
which benefit is obtained to the prejudice of a third person. 17 In this case, we
are convinced that Regalado knew of the fact that he did not have a title to the
entire lot and could not, therefore, have validly registered the same in his
name alone because he was aware of petitioners' possession of the subject
portion as well as the sale between Salome and Soledad.
That Regalado had notice of the fact that the disputed portion of Lot 162
was under claim of ownership by petitioners and the latter's predecessor is
beyond question. Records show that the particular area subject of this case was
mortgaged by Soledad and her husband to Jose Regalado, Sr. as early as May
1, 1947 or one year prior to the alienation of the whole lot in favor of the latter.
Regalado never questioned the ownership of the lot given by Soledad as
security for the P400.00 debt and he must have at least known that Soledad
bought the subject portion from Salome since he could not have reasonably
accepted the lot as security for the mortgage debt if such were not the case. By
accepting the said portion of Lot 162 as security for the mortgage obligation,
Regalado had in fact recognized Soledad's ownership of this definite portion of
Lot 162. Regalado could not have been ignorant of the fact that the disputed
portion is being claimed by Soledad and subsequently, by petitioners, since
Regalado even executed a Release of Mortgage on May 4, 1951, three years
after the entire property was supposedly sold to him. It would certainly be
illogical for any mortgagee to accept property as security, purchase the
mortgaged property and, thereafter, claim the very same property as his own
while the mortgage was still subsisting.
Consequently, respondents are estopped from asserting that they own the
subject land in view of the Deed of Mortgage and Discharge of Mortgage
executed between Regalado and petitioners' predecessor-in-interest. As
petitioners correctly contend, respondents are barred from making this
assertion under the equitable principle of estoppel by deed, whereby a party to
a deed and his privies are precluded from asserting as against the other and his
privies any right or title in derogation of the deed, or from denying the truth of
any material fact asserted in it. 18 A perusal of the documents evidencing the
mortgage would readily reveal that Soledad, as mortgagor, had declared
herself absolute owner of the piece of land now being litigated. This declaration
of fact was accepted by Regalado as mortgagee and accordingly, his heirs
cannot now be permitted to deny it.
Although Regalado's certificate of title became indefeasible after the

lapse of one year from the date of the decree of registration, the attendance of
fraud in its issuance created an implied trust in favor of petitioners and gave
them the right to seek reconveyance of the parcel wrongfully obtained by the
former. An action for reconveyance based on an implied trust ordinarily
prescribes in ten years. But when the right of the true and real owner is
recognized, expressly or implicitly such as when he remains undisturbed in his
possession, the said action is imprescriptible, it being in the nature of a suit for
quieting of title. 19 Having established by clear and convincing evidence that
they are the legal owners of the litigated portion included in TCT No. 14566, it
is only proper that reconveyance of the property be ordered in favor of
petitioners. The alleged incontrovertibility of Regalado's title cannot be
successfully invoked by respondents because certificates of title merely confirm
or record title already existing and cannot be used to protect a usurper from
the true owner or be used as a shield for the commission of fraud. 20
WHEREFORE, the petition is GRANTED. The assailed decision of the Court

of Appeals in CA-G.R. CV No. 30438 is REVERSED and SET ASIDE. The parties
are directed to cause a SURVEY for exact determination of their respective
portions in Lot 162-C-6. Transfer Certificate of Title No. 14566 is declared
CANCELLED and the Register of Deeds of Capiz is ordered to ISSUE a new title
in accordance with said survey, upon finality of this decision.
Costs against respondents.
SO ORDERED.
Bellosillo, Mendoza, Buena and De Leon, Jr., JJ., concur.
Footnotes
1. Rollo , pp. 46-47.

2. Id. at 49.
3. Id at 51.
4. Id. at 46-48.
5. Supra, note 2.
6. Supra. note 3.
7. Supra, note 1 at 52.
8. Id. at 17.
9. Id. at 27 & 31.
10. Art. 493. Each co-owner shall have the full ownership of his part and of
the fruits and benefits pertaining thereto, and he may therefore alienate,
assign or mortgage it, and even substitute another person in its enjoyment,
except when personal rights are involved. But the effect of the alienation or
the mortgage, with respect to the co-owners, shall be limited to the portion
which may be allotted to him in the division upon the termination of the co-
ownership.
11. 74 Phils. 601 (1944).

12. Id. at 609 (Emphasis ours).
13. Nufable vs. Nufable, 309 SCRA 692, 700 (1999).
14. Ibid.
15. Tomas Claudio Memorial College, Inc. vs. Court of Appeals, et al., 316 SCRA
502, 509 (1999).
16. 267 SCRA 339, 357 (1997)
17. Heirs of Manuel A. Roxas vs. Court of Appeals, 270 SCRA 309, 320 (1997).
18. Civil Code of the Philippines Annotated, 1989 Edition, Edgardo L. Paras, p.
776 citing 31 CJS 195.
19. David, et al. vs. Malay, et al., G. R No. 132644, November 19, 1999, pp. 8-
10 citing: Armamento vs. Guerrero, 96 SCRA 178 (1980); Javier vs. CA, 231
SCRA 498 (1994); Alzona, et. al. vs. Capunitan & Reyes, 114 Phil. 377 (1962);
Gonzales vs. Jimenez, Sr., 13 SCRA 80 (1965); Cuaycong, et. al. vs.
Cuaycong, et al., 21 SCRA 1192 (1967); Faja vs. CA, 75 SCRA 441 (1977) &
Heirs of Jose Olviga vs. CA, 227 SCRA 330 (1993).
20 Esquivias vs. Court of Appeals, 272 SCRA 803, 816 (1997).

FIRST DIVISION
[G.R. No. 191090. October 13, 2014.]
EXTRAORDINARY DEVELOPMENT CORPORATION , petitioner,

vs. HERMINIA F. SAMSON-BICO and ELY B. FLESTADO ,
respondents.
DECISION
PEREZ, J : p
This treats of the petition for review filed by Extraordinary Development

Corporation (EDC) assailing the 31 July 2009 Decision 1 and 22 January 2010
Resolution 2 of the Court of Appeals 10th Division in CA-G.R. CV. No. 91358,
which affirmed with modification the Decision 3 of the Regional Trial Court (RTC)
of Binangonan, Rizal, Branch 68 in Civil Case No. 03-035, a "Complaint for
Annulment of Contract and Tax Declaration No. 00-BI-030-3512 and
Reconveyance of Possession with Damages."
As borne by the records, the facts are as follow:
Apolonio Ballesteros (Apolonio) and Maria Membrebe (Maria) were

husband and wife. They begot two (2) children, namely, Juan M. Ballesteros
(Juan), who married Leonarda Tambongco (Leonarda) and Irenea Ballesteros
(Irenea), who married Santiago Samson (Santiago). Juan and Leonarda begot six
(6) children, namely, Leonardo T. Ballesteros (Leonardo), Marcelina T.
Ballesteros-Abad (Marcelina), Lydia T. Ballesteros-De Lara (Lydia), Cresencia T.
Ballesteros-Lirio (Cresencia), Lourdes T. Ballesteros-Tan (Lourdes), and Juan T.
Ballesteros, Jr. (Juan Jr.), while Irenea and Santiago begot two (2) children,
namely, Herminia B. Samson-Bico (Herminia) and Merlita Samson Flestado, who
married Ely D. Flestado (Ely).
During his lifetime, Apolonio owned a parcel of land consisting of 29,748

square meters situated at Barangay Pantok, Binangonan, Rizal covered by Tax
Declaration No. BI-030-1509. When Apolonio and Maria died, the property was
inherited by Juan and Irenea. When the latter died, the heirs of Juan and Irenea
became co-owners of the property. SECcIH
On 16 April 2002, the heirs of Juan, without the consent of respondents,

the heirs of Irenea executed in favor of petitioner EDC a Deed of Absolute Sale 4
covering the subject property for P2,974,800.00. Prior to the sale, respondents
claimed that they learned that the property had been the subject of a contract
to sell between the heirs of Juan and EDC. On 7 March 2000, respondents wrote
to EDC informing it of the existence of co-ownership over the subject property.
5 EDC wrote back that it will look into the matter and asked respondents to
further establish the basis of their claims. 6

EDC was able to cause the registration of the Deed of Absolute Sale with
the Office of the Provincial Assessor Rizal and transfer the tax declaration over
the subject property in its name. This prompted respondents to file the
Complaint for Annulment of Contract and Tax Declaration No. 00-BI-030-3512
and Reconveyance of Possession with Damages. 7
In its Answer, EDC alleged that it is a buyer in good faith and for value of
the subject property because it was of the honest belief that the heirs of Juan
are the only heirs of the late Apolonio. EDC counterclaimed for damages. 8
On the other hand, the heirs of Juan asserted that respondents were
aware of and were parties to the contract to sell entered into by them and EDC.
The heirs of Juan claimed that respondents received their share in the
downpayment made by EDC but they were both unpaid of the balance on the
cost of the land. 9
After presentation of respondents' testimonial and documentary

evidence, the case was called for hearing on 25 April 2007. The case for the
presentation of defendants' evidence was reset by the trial court to 25 June
2007 for failure of their respective lawyers to appear without any explanation.
10 On 25 June 2007, the case was once again reset for the same reason.11 On
13 August 2007, Juan appeared and informed the court that his lawyer is sick
while a certain Reggie Angulo appeared before the court and manifested that
EDC has not yet hired a lawyer. The trial court reset the case to 3 October 2007
and required the parties to secure a new lawyer. The trial court warned the
defendants, petitioner here, and the heirs of Juan that if they fail to do so, their
right to present evidence would be waived. 12 On 5 November 2007, the lawyer
of the heirs of Juan still failed to appear, while the counsel of the plaintiffs sent
a representative to move for the resetting of the case. 13 Finally, on 5
December 2007, the counsel of the heirs of Juan once again failed to appear so
upon motion of respondent's counsel, the case was submitted for resolution. 14
On 3 January 2008, the RTC ruled in favor of respondents. The dispositive

portion of the Decision reads:
WHEREFORE, judgment is rendered as follows:
1. The Deed of Absolute Sale dated April 16, 2002 covering a

property consisting of 29,748 square meters covered by Tax
Declaration No. BI-030-1509 is hereby declared null and void to the
extent of one half of the property sold or 14,874 square meters.
2. That the Tax Declaration No. 00-BI-030-3512 in the name of

[EDC] is hereby declared null and void and the Provincial Assessor of
Rizal or defendant Municipal Assessor of Binangonan, Rizal is hereby
ordered to cancel the same, and the Tax Declaration covering the
subject parcel of land be reinstated in the name of the heirs of Apolonio
Ballesteros and Maria Membrebe.
3. That the [EDC] is hereby ordered to vacate, surrender or

reconvey ownership and possession of the parcel of land subject of the
Deed of Absolute Sale to [respondents] or the heirs of Apolonio
Ballesteros or that they be reinstated to the lawful ownership of one-
half (1/2) of the property sold or 14,874 square meters.
4. The defendants are hereby ordered to pay the following

damages to the [respondents] jointly and severally:
a. Moral damages — P100,000.00
b. Exemplary damages — [P]100,000.00
c. Attorney's fees — [P]100,000.00
5. The defendants are hereby ordered to pay the costs of suit. 15
The trial court found that respondents and the heirs of Juan are co-owners
of the subject property; that at the time of sale, the heirs of Juan did not have
the right to sell the one half share of the heirs of Irenea; that the sale did not
bind the heirs of Irenea; that there was fraud in the execution of the Deed of
Absolute Sale when the heirs of Juan failed to disclose to EDC that one half of
the property sold is owned by respondents; and that EDC was not a buyer in
good faith because it knew that respondents were co-owners of the subject
property because Herminia informed EDC of such fact through a letter dated 9
March 2000.
EDC appealed to the Court of Appeals and assigned the following errors:
IEHSDA
I.
THE TRIAL COURT COMMITTED GRAVE ERROR WHEN IT

RENDERED A DECISION HOLDING APPELLEES THE LAWFUL OWNER OF
ONE-HALF OF THE SUBJECT PROPERTY.
II.

ANNULLED THE 16 APRIL 2002 DEED OF ABSOLUTE SALE AND
INVALIDATED THE TITLE OF THE APPELLANT CORPORATION TO THE
SUBJECT PROPERTY DESPITE THE COMPLETE ABSENCE OF ANY
EVIDENCE TO SUPPORT THE APPELLEES' CLAIM OF OWNERSHIP OVER
ONE-HALF OF THE SUBJECT PROPERTY.
III.

AWARDED MORAL AND EXEMPLARY DAMAGES AND ATTORNEY'S FEES
AND LITIGATION EXPENSES IN FAVOR OF THE APPELLEES DESPITE THE
UTTER ABSENCE OF EVIDENCE WHICH CAN PROVE THEY ARE ENTITLED
TO THE SAME.
IV.
THE TRIAL COURT COMMITTED GRAVE ERROR AND VIOLATED

THE RIGHT TO DUE PROCESS OF THE DEFENDANT CORPORATION
WHEN IT SUBMITTED THE CASE FOR RESOLUTION WITHOUT PROVIDING
THE APPELLANT THE OPPORTUNITY TO PRESENT EVIDENCE IN
SUPPORT OF ITS CLAIMS AND DEFENSES. 16
The heirs of Juan and respondents failed to file their brief so the Court of
Appeals submitted the case for resolution.
On 31 July 2009, the Court of Appeals partially granted the appeal. The
dispositive portion of the Decision reads:
WHEREFORE, premises considered, appeal is PARTLY
GRANTED. The Decision dated 03 January 2008 of the Regional Trial
Court of Binangonan, Rizal, Branch 68 in Civil Case No. 03-035 is
AFFIRMED with the following MODIFICATIONS:
1. Defendants-appellants Leonardo T. Ballesteros, Marcelina T.

Ballesteros-Abad, Lydia T. Ballesteros-De Lara, Cresencia T.
Ballesteros-Lirio, Lourdes T. Ballesteros-Tan and Juan T.
Ballesteros, Jr. are hereby ORDERED to return to defendant-
appellant Extraordinary Development Corporation the amount of
P1,487,400.00 or one-half of the purchase price as stated in the
Deed of Absolute Sale dated 16 April 2002;
2. The Deed of Absolute Sale in favor of the [EDC] is valid only to the
extent of one-half of the subject property or 14,874 square
meters, but not as to the other half of 14,874 square meters
which is co-owned by [respondents];
3. The Provincial Assessor of Rizal is hereby ORDERED to CANCEL Tax

Declaration No. 00-BI-030-3512 in the name of [EDC] and to
ISSUE a new one in the names of co-owners [EDC] (one-half of
the subject property) and [respondents] (the other half); and
4. The award of moral damages, exemplary damages, and attorney's

fees in the amount of P100,000.00 each is hereby DELETED.
No pronouncement as to costs. 17
The Court of Appeals ruled that respondents were able to establish their
co-ownership over one-half of the subject property. The appellate court pointed
out that the heirs of Juan categorically admitted in their Answer, as well as
during the hearing the existence of co-ownership. The appellate court agreed
with the trial court's finding that the heirs of Juan, as co-owners, could only
alienate or convey to EDC their one-half portion of the subject property which
may be allotted to them in the division upon the termination of the co-
ownership. Thus, the sale will affect only their share but not those of the other
co-owners who did not consent to the sale. The appellate court disputed the
submission of EDC that whatever admissions made by the heirs of Juan
regarding the ownership of the subject property is effective only insofar as they
are concerned but such do not bind or affect the defenses it raised. The
appellate court declared that the execution by the heirs of Juan of the Deed of
Absolute Sale over the subject property which they do not exclusively own but
is admittedly co-owned by them together with respondents, was valid only to
the extent of the former's undivided one-half share thereof, as they had no title
or interest to transfer the other one-half portion which pertains to the appellees
without the latter's consent. EDC's invocation of it being a buyer in good faith
was not considered by the appellate court because the subject property is an
unregistered land and the defense of having purchased the property in good
faith may be availed of only where registered land is involved and the buyer
had relied in good faith on the clear title of the registered owner. The appellate
court sustained the trial court's finding that there was no denial of due process
as EDC was given the opportunity to advocate its cause and defend its interest.
However, the appellate court reversed the ruling of the trial court that the
Deed of Absolute Sale is null and void. According to the appellate court, the
same is valid with respect to the transfer of the rights of the co-owners-sellers
heirs of Juan over the one-half portion or 14,874 square meters of the subject
property, thereby making EDC a co-owner thereof. Consequently, the appellate
court ordered the heirs of Ballesteros to return to EDC the amount of
P1,487,400.00 or one-half of the purchase price of P2,974,800.00. The award of
moral and exemplary damages, as well as attorney's fees, were deleted for lack
of legal and factual bases. DHEaTS
Aggrieved, EDC filed this present petition, ascribing the following errors to
the Court of Appeals:
43.1 The Court of Appeals committed grave error in ruling that
the Respondents are entitled to 1/2 of the Subject Property despite
their utter failure to present evidence which can prove their claim
thereto.
43.2 The Court of Appeals gravely erred in failing to recognize

that Petitioner is an innocent party to the instant dispute and is a buyer
in good faith and for value. 18
Interestingly, it was EDC who pursued this petition and insist that
respondents failed to prove co-ownership presumably to validate in its entirety
the Deed of Absolute Sale it entered into with the heirs of Juan. EDC reiterates
its argument that the testimony of Herminia is insufficient to prove that
respondents are entitled to inherit one-half of the subject property from
Apolonio. According to EDC, respondents should have established that Irenea is
a legitimate child of Apolonio; that Irenea and Juan are the only legitimate
compulsory heirs of Apolonio; that Apolonio predeceased Irenea and Juan; that
Hermina and Merlita are the legitimate children of Irenea; and that Irenea
predeceased Herminia. EDC also maintains that it is a buyer in good faith and
that it was respondents who acted in bad faith, thus it prays for damages.
We deny the petition.
As borne by the records, respondents were able to convincingly establish

their co-ownership over one-half of the subject property.
Herminia has successfully established her successional rights over the

subject property through her clear testimony and admitted by the opposing
counsel, viz.:
DIRECT EXAMINATION BY
ATTY. ROGELIO SILVESTRE, JR.,
ON WITNESS HERMINIA BICO
Q: Mrs. Bico, are you the same Herminia Bico, one of the plaintiffs in
this case?
A: Yes, sir.
Q: Do you know the defendants Ballesteros in this case?
A: I know them, sir.
Q: Why do you know them?
A: Because they are my relatives, sir.

Q: Why did you say that they are your relatives?
A: [Their] father and my mother are brother and sister, sir.
Q: What is the name of your mother?
A: Irenea Ballesteros, sir.
Q: What is the name of the father of the defendants Ballesteros?
A: Juan Ballesteros, sir.
Q: So, you mean that they are brother and sister, what is the name of
the mother of Irenea Ballesteros and [Juan] Ballesteros?
A: Maria Membrebe, sir.
Q: What about the father of Irenea Ballesteros and Juan Ballesteros?
A: Apolonio Ballesteros, sir.

Q: So, you are saying that Irenea Ballesteros and Juan Ballesteros
being brother and sister they are the children of Maria Membrede
and Apolonio Ballesteros?
A: Yes, sir.
Q: Do you have proof that your mother is Irenea?
ATTY. CERVO
I admit the relationship.
ATTY. SILVESTRE
However, Your Honor, the defendant Extra-Ordinary is denying.
COURT
But they are not here.
ATTY. CERVO
As far as I am concerned. . .
COURT
As far as the Ballesteros. . .
ATTY. CERVO
As far as the Ballesteros are concerned they are admitting the
relationship.
ATTY. SILVESTRE
But on the next hearing the counsel for the Extra-Ordinary will appear.
cdphil
COURT
The admission is effective only insofar as the client of Atty. Cervo is

concerned.
ATTY. SILVESTRE
That is the reason why I am asking these questions.
COURT
They are not here. So, if they will question it later on they are not
here. I think the objection will be too late. If they do not object
right now the objection is waived.
ATTY. SILVESTRE
I went over the record of the case, the complainant and the Answer
filed by the defendant now when I read the Answer filed by
defendant Ballesteros, defendant Ballesteros are practically
admitting everything except for a few allegations.
COURT
Are they disputing relationship?
ATTY. SILVESTRE
No, Your Honor.
COURT
So, if it is not disputed in the Answer, it is considered admitted.
ATTY. SILVESTRE
Okay, Your Honor.
Would counsel for the defendant stipulate that the parents,

grandparents as well as the father and the mother are already
dead?
ATTY. CERVO
Yes admitted, Your Honor.
COURT
How can you deny that they are already dead?
ATTY. SILVESTRE
We would like to proceed to the markings, Your Honor of the exhibits.

COURT
Proceed.
ATTY. SILVESTRE
There being no objections, we would like to mark the Certificate of

Baptism of Irenea Ballesteros, child of Apolonio Ballesteros and
Maria Membrebe as Exhibit "A".
COURT
Mark it.
ATTY. SILVESTRE
The name Apolonio Ballesteros and Maria Membrebe be bracketed and

marked as Exhibit "A-1".
COURT
Mark it.
ATTY. SILVESTRE
The Death Certificate of Irenea Samson as Exhibit "B". The name of
husband Santiago Samson be bracketed and marked as Exhibit
"B-1". The Certificate of Death of Santiago Samson be marked as
Exhibit "C".
COURT
Mark them.
ATTY. SILVESTRE
The name Herminia Bico followed by the word daughter be marked as

our Exhibit "C-1".
COURT
Mark it.
ATTY. SILVESTRE
The certificate of Live Birth of Herminia Samson be marked as Exhibit

"D".
COURT
Mark it.
ATTY. SILVESTRE
The Certificate of Baptism of Merlita Samson as Exhibit "B".
COURT DTCAES
Mark it.
ATTY. SILVESTRE
The name Santiago Samson and Herminia Ballesteros be bracketed
and marked as Exhibit "E-1".
COURT
Mark it.
ATTY. SILVESTRE
Will counsel for defendants Ballesteros stipulate that prior to the death
of the sister of the witness Merlita Samson she married the other
co-plaintiff Ely Flestado?
ATTY. CERVO
Yes.
ATTY. SILVESTRE
We would like to mark, Your Honor, the Marriage Contract executed by

and between Merlita Samson and Ely Flestado as Exhibit "F".
COURT
Mark it.
ATTY. SILVESTRE
The Certificate of Death of Merlita Flestado be marked as Exhibit "G".
COURT
Mark it.
ATTY. SILVESTRE
One of the entries in the Certificate of Death, Herminia Bico followed

by the name sister be bracketed and marked as Exhibit "G-1".
COURT
Mark it. 19
We also took into consideration the admissions made by the heirs of Juan
in their Answer to the Complaint filed by respondents before the trial court. For
ready reference, we shall reproduce the pertinent portion of the Answer and
the Complaint:
ANSWER
xxx xxx xxx
2. The defendants BALLESTEROS admit the allegations in

paragraphs 8, 9, 10, 11, 12 and 13 of the complaint; 20
COMPLAINT
8. [Respondents] together with defendants-Ballesteros and

defendant Juan T. Ballesteros, Jr., are co-owners of a parcel of land
measuring TWENTY-NINE THOUSAND SEVEN HUNDRED FORTY-EIGHT
(29,748) SQUARE METERS situated at Barangay Pantok, Binangonan,
Rizal by virtue of succession;
9. [Herminia], defendants Ballesteros and defendant Juan T.

Ballesteros are the Heirs of the late Spouses Apolonio Ballesteros and
Maria Membrebe who were the parents of the late Juan M. Ballesteros
and the late Irenea M. Ballesteros-Samson . . .;
10. During her lifetime, Irenea M. Ballesteros married Santiago

Samson, now deceased, with whom she had two (2) children, namely:
[Herminia] and Merlita B. Samson . . .;
11. Merlita B. Samson married [respondent] Ely and later died

childless and intestate . . .;
12. In his lifetime, Juan M. Ballesteros married Leonarda

Tambongco, now deceased, with whom she had six (6) children,
namely: defendants Ballesteros and defendant Juan T. Ballesteros, Jr.;
13. Likewise, during the lifetime of Apolonio Ballesteros, he was

the owner of the parcel of land mentioned in paragraph 8 hereof and
the same was declared for taxation purposes under his name . . .; 21
Furthermore, Juan testified during the 12 March 2007 hearing that

respondents are co-owners of the subject property, to wit:
COURT
Asan si Ballesteros?
ATTY. CERVO
He is in court, Your Honor.
COURT (to Ballesteros)
Q: Alam mo ba na ang may-ari ng lupa na binenta ninyo ay isa sa may-

ari sya?
A: Opo.
Q: So, hindi lang kayo ang may-ari ng lupa? Ang ina nya kasama doon
sa may-ari at kalahati lang ang sa inyo?
A: Hindi pa naparti.
Q: Kahit hindi pa naparte narerecognize ninyo na ang nanay niya ay isa

sa may-ari ng lupa kasama ang tatay mo, hindi ba?
A: Opo.
Q: So, kalahati ang interest ninyo sa lupa, tama?
A: Opo.
Q: Why did you sell all?
A: Hindi pa po bayad lahat, ang hinahabol nila magkabayaran. Kulang

pa po ng isang milyon.

Q: Ang tanong saiyo, kalahati ng lupa may karapatan ka, you have a
right [to] only to one of the property?
A: Opo.
Q: Bakit sa Deed of Sale ibinenta lahat? Wala silang pirma.
A: Nakalimutan ko. 22
A party may make judicial admissions in (a) the pleadings, (b) during the
trial, either by verbal or written manifestations or stipulations, or (c) in other
stages of the judicial proceeding. 23 Sec. 4, Rule 129 of the Revised Rules of
Court provides:
Sec. 4. Judicial admissions. — An admission, verbal or written,
made by a party in the course of the proceedings in the same case,
does not require proof. The admission may be contradicted only by
showing that it was made through palpable mistake or that no such
admission was made.
The Answer submitted by the heirs of Juan, as well as the testimony of

Juan constitute judicial admissions. Well-settled is the rule that a judicial
admission conclusively binds the party making it. He cannot thereafter take a
position contradictory to, or inconsistent with his pleadings. Acts or facts
admitted do not require proof and cannot be contradicted unless it is shown
that the admission was made through palpable mistake or that no such
admission was made. 24
EDC avers that said judicial admission should not bind it because it was
an innocent purchaser in good faith. The Court of Appeals debunked this
contention and correctly ruled, as follow:
In a contract of sale, it is essential that the seller is the owner of
the property he is selling. Under Article 1458 of the Civil Code, the
principal obligation of a seller is to transfer the ownership of the
property sold. Also, Article 1459 of the Civil Code provides that the
thing must be licit and the vendor must have a right to transfer the
ownership thereof at the time it is delivered. The execution by
appellants Ballesteros of the Deed of Absolute Sale over the subject
property which they do not exclusively own but is admittedly co-owned
by them together with the [respondents], was valid only to the extent
of the former's undivided one-half share thereof, as they had no title or
interest to transfer the other one-half portion which pertains to the
[respondents] without the latter's consent. It is an established principle
that no one can give what one does not have — nemo dot quod non
habet. Accordingly, one can sell only what one owns or is
authorized to sell, and the buyer can acquire no more than
what the seller can transfer legally. Thus, since appellant
EDC's rights over the subject property originated from sellers-
appellants Ballesteros, said corporation merely stepped into
the shoes of its sellers and cannot have a better right than
what its sellers have. Indeed, a spring cannot rise higher than its
source. 25 (Emphasis ours)
Moreover, EDC was given an ample opportunity to be heard through

counsel. The essence of due process is the right to be heard. Due process is
satisfied when the parties are afforded a fair and reasonable opportunity to
explain their respective sides of the controversy. Thus, when the party seeking
due process was in fact given several opportunities to be heard and air his side,
but it is by his own fault or choice he squanders these chances, then his cry for
due process must fail. 26
It is apparent that despite numerous resetting of the case for EDC, it
failed to appear because of the absence of its counsel. On 3 October 2007, EDC
was required by the court to secure a new lawyer for the next hearing but
during the two hearings that followed, no counsel appeared for EDC. It is of no
moment that on some dates the resetting was on motion of the other parties to
the case. The fact remains that EDC's counsel failed to appear on 25 April, 25
June, 13 August, 5 November and 5 December 2007. Therefore, EDC was not
deprived of its day in court and he cannot feign denial of due process.
Having established respondents' co-ownership rights over the subject
property, we find no error in the appellate court's ruling sustaining the validity
of the Deed of Absolute Sale but only with respect to the rights of the heirs of
Juan over one-half of the property.
Article 493 of the Civil Code recognizes the absolute right of a co-owner to
freely dispose of his pro indiviso share as well as the fruits and other benefits
arising from that share, independently of the other co-owners, 27 thus:
Art. 493. Each co-owner shall have the full ownership of his part
of the fruits and benefits pertaining thereto, and he may therefore
alienate, assign or mortgage it, and even substitute another person in
its enjoyment, except when personal rights are involved. But the effect
of the alienation or the mortgage, with respect to the co-owners, shall
be limited to the portion which may be allotted to him in the division
upon the termination of the co-ownership.
I n Spouses Del Campo v. Court of Appeals, 28 we had the occasion to

expound the rights of a co-owner vis-à-vis the vendee, thus:
. . . Would the sale by a co-owner of a physical portion of an
undivided property held in common be valid? . . .
On the first issue, it seems plain to us that the trial court

concluded that petitioners could not have acquired ownership of the
subject land which originally formed part of Lot 162, on the ground
that their alleged right springs from a void sale transaction between
Salome and Soledad. The mere fact that Salome purportedly
transferred a definite portion of the co-owned lot by metes and bounds
to Soledad, however, does not per se render the sale a nullity. This
much is evident under Article 493 of the Civil Code and pertinent
jurisprudence on the matter. More particularly in Lopez vs. Vda. De
Cuaycong, et al. which we find relevant, the Court, speaking through
Mr. Justice Bocobo, held that:
. . . The fact that the agreement in question purported to sell a
concrete portion of the hacienda does not render the sale void,
for it is a well-established principle that the binding force of a
contract must be recognized as far as it is legally possible to do
so. "Quando res non valet ut ago, valeat quantum valere potest."
(When a thing is of no force as I do it, it shall have as much force
as it can have.)
Applying this principle to the instant case, there can be no doubt
that the transaction entered into by Salome and Soledad could be
legally recognized in its entirety since the object of the sale did not
even exceed the ideal shares held by the former in the co-ownership.
As a matter of fact, the deed of sale executed between the parties
expressly stipulated that the portion of Lot 162 sold to Soledad would
be taken from Salome's 4/16 undivided interest in said lot, which the
latter could validly transfer in whole or in part even without the consent
of the other co-owners. Salome's right to sell part of her undivided
interest in the co-owned property is absolute in accordance with the
well-settled doctrine that a co-owner has full ownership of his pro-
indiviso share and has the right to alienate, assign or mortgage it, and
substitute another person in its enjoyment. Since Salome's clear
intention was to sell merely part of her aliquot share in Lot 162, in our
view no valid objection can be made against it and the sale can be
given effect to the full extent.
We are not unaware of the principle that a co-owner cannot
rightfully dispose of a particular portion of a co-owned property prior to
partition among all the co-owners. However, this should not signify that
the vendee does not acquire anything at all in case a physically
segregated area of the co-owned lot is in fact said to him. Since the co-
owner/vendor's undivided interest could properly be the object of the
contract of sale between the parties, what the vendee obtains by virtue
of such a sale are the same rights as the vendor had as co-owner, in an
ideal share equivalent to the consideration given under their
transaction. In other words, the vendee steps into the shoes of the
vendor as co-owner and acquires a proportionate abstract share in the
property held in common. 29
We are also in full accord with the appellate court's order for the heirs of
Juan to return one-half of the purchase price to EDC. There is unjust enrichment
when a person unjustly retains a benefit to the Loss of another, or when a
person retains money or property of another against the fundamental principles
of justice, equity and good conscience. 30 Therefore, it is correct for the Court
of Appeals to order the heirs of Juan to return the amount of P1,487,400.00,
representing one-half of the purchase price to prevent unjust enrichment at the
expense of EDC.
Lastly, and likewise correctly, the prayer for moral and exemplary
damages and attorney's fees being unsubstantiated had to be denied. aEAcHI
WHEREFORE, the instant petition is DENIED and the assailed Decision

dated 31 July 2009 and Resolution dated 22 January 2010 of the Court of
Appeals in CA-G.R. CV No. 91358 is AFFIRMED in toto. IDTSEH
SO ORDERED.

Sereno, C.J., Leonardo-de Castro, Bersamin and Perlas-Bernabe, JJ.,
concur.
Footnotes
1. Rollo , 30-59; Penned by Associate Justice Celia C. Librea-Leagogo with Associate
Justices Juan Q. Enriquez, Jr. and Antonio L. Villamor concurring.
2. Id. at 61-65.
3. Records, pp. 177-180; Presided by Judge John C. Quirante.

4. Id. at 21-22.
5. Rollo , p. 84.
6. Id. at 85.
7. Id. at 66-75.
8. Id. at 91-98.
9. Id. at 101-104.
10. Id. at 133.
11. Id. at 134.

12. Id. at 135.
13. Id. at 136.

14. Id. at 137.
15. Id. at 140-141.

16. Id. at 42-43.
17. Id. at 55-56.

18. Id. at 13.
19. TSN, 12 March 2007, pp. 4-10.

20. Rollo , p. 101.
21. Id. at 68-69.

22. TSN, 12 March 2007, pp. 19-20.
23. Spouses Binarao v. Plus Builders, Inc. , 524 Phil. 361, 365 (2006) citing
Regalado, Remedial Law Compendium, Volume Two, Seventh Revised Edition
at 650.
24. Cahilig v. Terencio , G.R. No. 164470, 28 November 2011, 661 SCRA 261, 271
citing Maagad v. Maagad , G.R. No. 171762, 5 June 2009, 588 SCRA 649.
25. Rollo , pp. 51-52.

26. Heirs of Bugarin v. Republic, G.R. No. 174431, 6 August 2012, 678 SCRA 209,
225 citing Lacson v. Executive Secretary, G.R. Nos. 165399, 165475, 165404
and 165489, 30 May 2011, 649 SCRA 142, 155; Estrada v. People , 505 Phil.
339, 353-354 (2005).
27. Heirs of Cayetano Pangan and Consuelo Pangan v. Spouses Perreras, G.R. No.
157374, 27 August 2009, 597 SCRA 253, 260.
28. 403 Phil. 707 (2001).

29. Id. at 715-717.
30. Reyes v. Lim , 456 Phil. 1, 14 (2003).

FIRST DIVISION
[G.R. No. 215038. October 17, 2016.]
NORMA C. MAGSANO, ISIDRO C. MAGSANO, RICARDO C.

MAGSANO, ROQUE C. MAGSANO, JR., NIDA M. CAGUIAT,
PERLITA MAGSANO, and SALVADOR C. MAGSANO, petitioners,
vs. PANGASINAN SAVINGS AND LOAN BANK, INC. and
SPOUSES EDDIE V. MANUEL and MILAGROS C.
BALLESTEROS, substituted by her heirs: GEMMA C.
MANUEL-PEREZ, ANGELO JOHNDREW MANUEL, and RESSY
C. MANUEL, respondents.
DECISION
PERLAS-BERNABE, J : p
Before the Court is a petition for review on certiorari 1 assailing the

Decision 2 dated February 14, 2014 and the Resolution 3 dated October 2,
2014 of the Court of Appeals (CA) in CA-G.R. CV No. 99519, which affirmed
the Decision 4 dated April 27, 2012 of the Regional Trial Court of Dagupan
City, Branch 41 (RTC) dismissing the complaint for annulment of real estate
mortgage, certificate of sale, sheriff's final sale, deed of sale, and Transfer
Certificate of Title (TCT) No. 48754 5 filed by herein petitioners Norma, Isidro,
Ricardo, Roque, Jr., Perlita, and Salvador, all surnamed Magsano, and Nida M.
Caguiat (petitioners) against herein respondent Pangasinan Savings and
Loan Bank, Inc. 6 (respondent bank), respondents-spouses Eddie V. Manuel
and Milagros C. Ballesteros (Sps. Manuel), and Sheriff Reynaldo C. Daroy
(Sheriff Daroy), but deleted the awards of exemplary damages, attorney's
fees, appearance fee, and litigation expenses in the latter's favor.
The Facts
On July 1, 1991, spouses Roque Magsano (Roque) and Susana Capelo
(Susana; collectively, mortgagors), the parents of petitioners, 7 purportedly
executed in favor of respondent bank a Real Estate Mortgage 8 over a 418
square-meter parcel of land located in Dagupan City, covered by TCT No.
48754, 9 as well as the improvements thereon (subject property), as security
for the payment of their P35,000.00 loan. 10
The mortgagors, however, defaulted in the payment of their loan
obligation when it fell due, causing respondent bank to extra-judicially
foreclose the mortgaged property 11 in accordance with Act No. 3135, 12 as
amended, with notice to the mortgagors, 13 and, in the process, respondent
bank emerged as the highest bidder in the public auction sale held on March
21, 1994 for a total bid price of P65,826.69. 14 The mortgagors then failed to
redeem the property within the redemption period 15 which led to the
cancellation of TCT No. 48754 and the issuance of TCT No. 65394 16 in the
name of respondent bank. 17 The latter subsequently sold 18 the same to
Sps. Manuel who were issued TCT No. 67491. 19
Despite repeated demands, the mortgagors refused to vacate the
premises; hence, respondent bank applied for 20 and was granted a writ of
possession 21 over the subject property and, thereafter, a writ of demolition,
22 resulting in the demolition of petitioners' houses. 23
Consequently, on September 6, 2004, petitioners filed a complaint 24

for annulment of Real Estate Mortgage, Certificate of Sale, Sheriff's Final
Sale, Deed of Sale, and TCT No. 48754 25 against respondent bank, Sps.
Manuel, and Sheriff Daroy (defendants) before the RTC, docketed as Civil
Case No. 2004-0316-D, which they amended 26 on September 3, 2007. 27
They averred that Roque had already passed away on April 17, 1991, 28 or
prior to the execution of the Real Estate Mortgage on July 1, 1991; hence,
the said mortgage was null and void, and could not have conferred any right
on the subject property in favor of respondent bank which it could pass to
Sps. Manuel. 29 They further claimed that the said property is their family
home, but the consent of the majority of the beneficiaries had not been
secured. They likewise asserted that Sps. Manuel were aware that: ( a) the
foreclosure proceedings were invalid; and (b) petitioners were in possession
of the subject property, hence, purchasers in bad faith. 30 cSEDTC
For their part, 31 defendants denied knowledge of the death of Roque,

32 and averred that petitioners have no cause of action to seek the
annulment of the Real Estate Mortgage since they were not parties thereto.
33 They contended that assuming that the latter have a cause of action, the
same had prescribed pursuant to Articles 1144, 1149, and 1150 of the Civil
Code. 34 They further argued that petitioners are estopped from questioning
the validity of the Real Estate Mortgage, considering that they: ( a) are bound
by the acts of their mother, Susana, who signed the same, and is presumed
to be the author of the misrepresentation/falsification, and benefited from
the proceeds of the loan; 35 and (b) participated in the proceedings for the
issuance of the writ of possession. 36
The RTC Ruling
In a Decision 37 dated April 27, 2012, the RTC dismissed the complaint
for lack of merit. 38 It declared that petitioners have no cause of action
against the defendants, 39 holding them bound by the misrepresentation of
their mother who signed the Real Estate Mortgage, the authenticity of whose
signature they never contested. 40 And even assuming that petitioners have
a cause of action, the RTC ruled that the same is barred by prescription,
considering that the action to annul the Real Estate Mortgage and the
foreclosure sale was filed beyond the prescriptive period from the time their
causes of action accrued, 41 pursuant to Articles 1144, 42 1149, 43 and 1150
44 of the Civil Code. Moreover, the RTC deemed it proper to grant respondent
bank's claims for attorney's fees, appearance fees, litigation expenses,

exemplary damages, and costs of suit. 45
Aggrieved, petitioners elevated 46 the matter before the CA.
The CA Ruling
In a Decision 47 dated February 14, 2014, the CA affirmed the RTC's
findings, but deleted the awards of exemplary damages, attorney's fees,
appearance fees, and litigation expenses for lack of factual and legal bases.
48 On the main, it held that while the Real Estate Mortgage was void as to
the share of Roque who was shown to be already deceased at the time the
same was executed, rendering respondent bank a mortgagee in bad faith, it
declared Sps. Manuel innocent purchasers for value whose rights may not be
prejudiced. 49
Petitioners filed a motion for reconsideration, 50 which was, however,
denied in a Resolution 51 dated October 2, 2014; hence, the instant petition.
The Issues before the Court
The essential issues for the Court's resolution are whether or not: (a)
the Real Estate Mortgage was void; and ( b) Sps. Manuel were purchasers in
good faith.
The Court's Ruling
The petition is partly granted.
Preliminarily, the rule is settled that the remedy of appeal by certiorari
under Rule 45 of the Rules of Court contemplates only questions of law, not
of fact. While it is not the function of the Court to re-examine, winnow and
weigh anew the respective sets of evidence of the parties, 52 there are,
however, recognized exceptions, 53 one of which is when the inference
drawn from the facts was manifestly mistaken, as in this case.
It is undisputed that at the time the Real Estate Mortgage was
constituted on July 1, 1991, Roque was already deceased. Upon his death on
April 17, 1991, the conjugal partnership between him and his spouse,
Susana, was dissolved pursuant to Article 126 (1) 54 of the Family Code, 55
and an implied ordinary co-ownership arose among Susana and the other
heirs of Roque with respect to his share in the assets of the conjugal
partnership pending liquidation. The ensuing implied ordinary co-ownership
is governed by Article 493 of the Civil Code, 56 to wit: SDAaTC
Art. 493. Each co-owner shall have the full ownership of his
part and of the fruits and benefits pertaining thereto, and he may
therefore alienate, assign or mortgage it, and even substitute another
person in its enjoyment, except when personal rights are involved.
But the effect of the alienation or the mortgage, with respect
to the co-owners, shall be limited to the portion which may be
allotted to him in the division upon the termination of the co-
ownership. (Emphasis supplied)
Thus, although Susana is a co-owner with her children with respect to
Roque's share in the conjugal partnership, she could not yet assert or claim
title to any specific portion thereof without an actual partition of the property
being first done either by agreement or by judicial decree. 57 While she
herself as co-owner had the right to mortgage or even sell her undivided
interest in the subject property, she could not mortgage or otherwise dispose
of the same in its entirety without the consent of the other co-owners.
Consequently, the validity of the subject Real Estate Mortgage and the
subsequent foreclosure proceedings therefor conducted in favor of
respondent bank should be limited only to the portion which may be allotted
to it, as Susana's successor-in-interest, in the event of partition, thereby
making it a co-owner 58 with petitioners pending partition. Thus, in Rural
Bank of Cabadbaran, Inc. v. Melecio-Yap, 59 the Court held:
While Erna, as herself a co-owner, by virtue of Article 493 of the Civil
Code, had the right to mortgage or even sell her undivided interest in
the said properties, she, could not, however, dispose of or mortgage
the subject properties in their entirety without the consent of the
other co-owners. Accordingly, the validity of the subject real estate
mortgage and the subsequent foreclosure proceedings therefor
conducted in favor of RBCI should be limited only to the portion
which may be allotted to it (as the successor-in-interest of
Erna) in the event of partition. In this relation, the CA's directive
to remand the case to the RTC in order to determine the exact extent
of the respective rights, interests, shares and participation of
respondents and RBCI over the subject properties, and thereafter,
effect a final division, adjudication and partition in accordance with
law remains in order. Meanwhile, the writ of possession issued in
favor of RBCI, and all proceedings relative thereto should be set aside
considering that the latter's specific possessory rights to the said
properties remain undetermined. 60 (Emphasis and underscoring
supplied)
Moreover, although the Court concurs with the CA's finding that
respondent bank was a mortgagee in bad faith for having failed to exercise
greater care and due diligence in verifying the ownership of the subject
property, 61 contrary to the CA, the Court finds that Sps. Manuel are not
innocent purchasers for value who can acquire title to the subject entire
property.
While the rule is that every person dealing with registered land may
safely rely on the correctness of the certificate of title issued therefor and
the law will in no way oblige him to go beyond the certificate to determine
the condition of the property, where the land sold is in the possession
of a person other than the vendor, as in this case , the purchaser
must go beyond the certificate of title and make inquiries
concerning the actual possessor. 62 As this Court explained in the case
of Sps. Mathay v. CA: 63 acEHCD
Although it is a recognized principle that a person dealing [with] a

registered land need not go beyond its certificate of title, it is also a
firmly settled rule that where there are circumstances which would
put a party on guard and prompt him to investigate or inspect the
property being sold to him, such as the presence of
occupants/tenants thereon, it is, of course, expected from the
purchaser of a valued piece of land to inquire first into the
status or nature of possession of the occupants, i.e., whether or
not the occupants possess the land en concepto de dueño, in concept
of owner. As is the common practice in the real estate industry, an
ocular inspection of the premises involved is a safeguard a cautious
and prudent purchaser usually takes. Should he find out that the land
he intends to buy is occupied by anybody else other than the seller
who, as in this case, is not in actual possession, it would then be
incumbent upon the purchaser to verify the extent of the occupant's
possessory rights. The failure of a prospective buyer to take
such precautionary steps would mean negligence on his part
and would thereby preclude him from claiming or invoking
the rights of a "purchaser in good faith." 64 (Emphases and
underscoring supplied)
Here, petitioners were in possession of the subject property when Sps.
Manuel bought the same on February 19, 1997 (and even up to the filing of
the amended complaint before the RTC on September 3, 2007). 65 However,
records do not show that Sps. Manuel inspected the property and inquired
into the nature of petitioners' possession and/or the extent of their
possessory rights as a measure of precaution which may reasonably be
required of a prudent man in a similar situation, and thereby discover the
irregularity in the acquisition of title by the respondent bank. Sps. Manuel,
therefore, failed to exercise the diligence required in protecting their rights;
as such, the Court cannot ascribe good faith to them. 66
Furthermore, as correctly pointed out 67 by petitioners, the claim that
one is an innocent purchaser for value is a matter of defense. 68 Hence,
while petitioners alleged that Sps. Manuel were purchasers in bad faith, 69
the rule is that he who asserts the status of a purchaser in good faith and for
value has the burden of proving the same, and this onus probandi cannot be
discharged by mere invocation of the legal presumption of good faith, i.e.,
that everyone is presumed to act in good faith. 70
Besides, the fact that respondent bank succeeded in consolidating
ownership over the subject property in its name did not terminate the
existing co-ownership between it and petitioners. 71 In Nufable v. Nufable, 72
the Court had the occasion to rule:
[A] co-owner does not lose his part ownership of a co-owned property
when his share is mortgaged by another co-owner without the
former's knowledge and consent as in the case at bar. It has likewise
been ruled that the mortgage of the inherited property is not binding
against co-heirs who never benefitted. SDHTEC
xxx xxx xxx

. . . [W]hen the subject property was mortgaged by Angel Custodio,
he had no right to mortgage the entire property but only with respect
to his 1/4 pro indiviso share as the property was subject to the
successional rights of the other heirs of the late Esdras. Moreover, in
case of foreclosure, a sale would result in the transmission of
title to the buyer which is feasible only if the seller can be in
a position to convey ownership of the things sold. And in one
case, it was held that a foreclosure would be ineffective unless the
mortgagor has title to the property to be foreclosed. Therefore, as
regards the remaining 3/4 pro indiviso share, the same was
held in trust for the party rightfully entitled thereto, who are
the private respondents herein.
Pursuant to Article 1451 of the Civil Code, when land passes by
succession to any person and he causes the legal title to be put in the
name of another, a trust is established by implication of law for the
benefit of the true owner. Likewise, under Article 1456 of the same
Code, if property is acquired through mistake or fraud, the person
obtaining it is, by force of law, considered a trustee of an implied trust
for the benefit of the person from whom the property comes. In the
case of Noel vs. [CA], this Court held that "a buyer of a parcel of
land at a public auction to satisfy a judgment against a widow
acquired only one-half interest on the land corresponding to
the share of the widow and the other half belonging to the
heirs of her husband became impressed with a constructive
trust in behalf of said heirs."
Neither does the fact that DBP succeeded in consolidating
ownership over the subject property in its name terminate the
existing co-ownership. Registration of property is not a means of
acquiring ownership. When the subject property was sold to and
consolidated in the name of DBP, it being the winning bidder in the
public auction, DBP merely held the 3/4 portion in trust for the private
respondents. When petitioner Nelson purchased the said
property, he merely stepped into the shoes of DBP and
acquired whatever rights and obligations appertain thereto.
73 (Emphases supplied)
In light of the foregoing, Sps. Manuel merely stepped into the shoes of
respondent bank and acquired only the rights and obligations appertaining
thereto. Thus, while they have been issued a certificate of title over the
entire property, they shall: (a) only acquire what validly pertains to
respondent bank as successor-in-interest of Susana in the event of partition;
and (b) hold the shares therein pertaining to the co-owners who did not
consent to the mortgage, i.e., petitioners, in trust for the latter 74 pending
partition.
WHEREFORE, the petition is PARTLY GRANTED. The Decision dated
February 14, 2014 and the Resolution dated October 2, 2014 of the Court of
Appeals in CA-G.R. CV No. 99519 are hereby REVERSED and SET ASIDE. A
new judgment is ENTERED as follows:
(1) DECLARING the Real Estate Mortgage dated July 1, 1991 VOID
with respect to the share of deceased Roque Magsano;
(2) DECLARING respondents-spouses Eddie V. Manuel and Milagros
C. Ballesteros (Sps. Manuel) as co-owners of the subject property with
respect to the undivided share of Susana Capelo therein, together with
petitioners Norma, Isidro, Ricardo, Roque, Jr., Perlita, and Salvador, all
surnamed Magsano, and Nida M. Caguiat (petitioners);
(3) CANCELLING Transfer Certificate of Title No. 67491 in the
name of Sps. Manuel; and
(4) REMANDING the records of the case to the Regional Trial Court
of Dagupan City to determine the exact extent of the respective rights,
interests, shares, and participation of petitioners and Sps. Manuel over the
subject property and, thereafter, effect a final division, adjudication, and
partition in accordance with law.
The Writ of Possession issued in favor of respondent Pangasinan
Savings and Loan Bank, Inc., formerly Pangasinan Savings and Loan
Association, Inc., and all proceedings relative thereto, are further SET
ASIDE, considering that the latter's specific possessory rights to the said
properties remain undetermined.
SO ORDERED.
Sereno, C.J., Leonardo-de Castro and Bersamin, JJ., concur.
Caguioa, J., see separate concurring opinion.
Separate Opinions
CAGUIOA, J., concurring:
I concur in the result.

In sustaining the validity of the mortgage on the subject conjugal
property insofar as the aliquot or pro-indiviso share or interest of Susana is
concerned, the ponencia relies on Article 493 of the Civil Code. I believe this
is inaccurate. Article 493 provides: cSEDTC
ART. 493. Each co-owner shall have the full ownership of his
part and of the fruits and benefits pertaining thereto, and he may
therefore alienate, assign or mortgage it, and even substitute another
person in its enjoyment, except when personal rights are involved.
But the effect of the alienation or mortgage, with respect to the co-
owners, shall be limited to the portion which may be allotted to him in
the division upon the termination of the co-ownership.
This article recognizes the absolute ownership by a co-owner of his
aliquot or undivided share and his right to alienate, assign or mortgage and
even substitute another person in its enjoyment. However, the co-owner's
right to alienate is limited to only his undivided share and does not in any
way affect any definite portion of the thing owned in common since before
partition a co-owner will not know what portion of the property will actually
belong to him. 1
The situation in this case involved Susana, the surviving spouse,
executing a mortgage over the entire subject conjugal property without the
consent of the other heirs of Roque, Susana's deceased husband. This is a
situation different from Article 493 because, clearly, Susana did not
mortgage only her pro-indiviso share therein, but the entire property. That
being the case, the ruling of the Supreme Court in Estoque v. Pajimula , 2
through Justice J. B. L. Reyes, observed:
. . . The deed of sale to Estoque . . . clearly specifies the object
sold as the southeastern third portion of Lot 802 of the Rosario
Cadastre, with an area of 840 square meters, more or less. Granting
that the seller, Crispina Perez Vda. de Aquitania could not have sold
this particular portion of the lot owned in common by her and her two
brothers, Lorenzo and Ricardo Perez, by no means does it follow that
she intended to sell to appellant Estoque her 1/3 undivided interest in
the lot aforementioned. There is nothing in the deed of sale to justify
such inference. That the seller could have validly sold her one-third
undivided interest to appellant is no proof that she did choose to sell
the same. Ab posse ad actu non valet illatio.
In Estoque, a specific portion of a co-owned property was sold, albeit a
specific portion of a land that was owned in common. I believe that this is no
different from the situation of Susana who sold the entire co-owned property,
that is, a specific parcel of land when she only had an undivided interest
therein. Stated differently, the rationale for not recognizing the effectivity of
the disposition over a specific portion equally applies to the disposition by a
co-owner of the entire co-owned or undivided property that is more than the
undivided share rightfully pertaining to the disposing co-owner.
Estoque characterizes the contract entered into by the disposing co-
owner as "ineffective, for lack of power in the vendor to sell the specific
portion described in the deed." 3 This characterization makes room for a
subsequent ratification of the contract by the other co-owners or validation
in case the disposing co-owner acquires subsequently the undivided interests
of the other co-owners. Such subsequent ratification or acquisition will
validate and make the contract fully effective.
Estoque was a decision rendered by this Court en banc, and has not
been expressly overturned; 4 hence, it remains a sound case law, which I
believe should be the controlling jurisprudence.
Even if Article 493 is inapplicable in this case, I concur in the conclusion
that the validity of the mortgage executed by Susana binds her undivided
interest in the subject conjugal property based on the principle of estoppel.
Under Article 1431 of the Civil Code, "[t]hrough estoppel an admission or
representation is rendered conclusive upon the person making it, and cannot
be denied or disproved as against the person relying thereon."
Footnotes
1. Rollo , pp. 8-18.
2. Id. at 24-37. Penned by Associate Justice Vicente S.E. Veloso with Associate
Justices Jane Aurora C. Lantion and Nina G. Antonio-Valenzuela
concurring.
3. Id. at 39.
4. Id. at 85-96. Penned by Judge Emma M. Torio.
5. Should be TCT No. 65394 and all derivative titles therefrom.
6. Formerly "Pangasinan Savings and Loan Association, Inc."
7. See rollo, pp. 41-42.
8. Id. at 46-47.
10. See rollo, pp. 68 and 86.

11. See id.
12. Entitled "AN ACT TO REGULATE THE SALE OF PROPERTY UNDER SPECIAL
POWERS INSERTED IN OR ANNEXED TO REAL ESTATE MORTGAGES"
(March 6. 1924).
14. See Certificate of Sale dated April 5, 1994 signed by Sheriff IV Vinez A.
Hortaleza for Clerk of Court & City Sheriff, Ex-Officio Alicia Bravo-Fabia; id.
at 48, including dorsal portion.
15. See Sheriff's Final Sale dated February 12, 1996; id. at 49-50.
16. Id. at 51, including dorsal portion.
17. See id. at 86.
18. See Deed of Absolute Sale dated February 19, 1997, id. at 67, including dorsal
portion.
19. Id. at 52, including dorsal portion.
20. See Ex-Parte Motion/Petition for Issuance of Writ of Possession dated June 6,
1997; id. at 53-56.
22. See Order dated July 20, 2004 signed by Judge Silverio O. Castillo; rollo, p. 66.
23. See id. at 69 and 72.
24. Not attached to the rollo. See id. at 9.
25. Should be TCT No. 65394 and all derivative titles therefrom.
26. See Amended Complaint dated August 30, 2007; rollo, pp. 41-45.
27. See id. at 9.
28. See Certificate of Death; id. at 56A, including dorsal portion.
29. See id. at 43-44.
30. See id. at 43.
31. Except Milagros C. Ballesteros who is already dead at the time of the filing of
defendants' answer. See Amended Answer with Counterclaim and
Affirmative Defenses dated March 18, 2009; id. at 57-63.
32. Id. at 57.
33. Id. at 59.
34. See id. at 60.
35. See id. at 61.
36. See id. at 60.
37. Id. at 85-96.

38. Id. at 96.
39. Id. at 92.
40. Id. at 93-94.
41. See id. at 95.
42. Art. 1144. The following actions must be brought within ten years from the
time the right of action accrues:
(1) Upon a written contract;
(2) Upon an obligation created by law;
(3) Upon a judgment.
43. Art. 1149. All other actions whose periods are not fixed in this Code or in
other laws must be brought within five years from the time the right of
action accrues.
44. Art. 1150. The time for prescription for all kinds of actions, when there is no
special provision which ordains otherwise, shall be counted from the day
they may be brought.
46. See Brief for the Plaintiffs-Appellants dated February 4, 2013; id. at 74-84.
47. Id. at 24-37.
48. Id. at 35-37.
49. See id. at 33-35.
51. Rollo , p. 39.
52. Almagro v. Sps. Amaya, Sr. , 711 Phil. 493,503 (2013).
53. Recognized exceptions to the rule are: (1) when the findings are rounded
entirely on speculation, surmises or conjectures; (2) when the inference
made is manifestly mistaken, absurd or impossible; (3) when there is
grave abuse of discretion; (4) when the judgment is based on
misapprehension of facts; (5) when the findings of fact are conflicting; (6)
when in making its findings the CA went beyond the issues of the case, or
its findings are contrary to the admissions of both the appellee and the
appellant; (7) when the findings are contrary to the trial court; (8) when
the findings are conclusions without citation of specific evidence on which
they are based; (9) when the facts set forth in the petition as well as in
the petitioner's main and reply briefs are not disputed by the respondent;
(10) when the findings of fact are premised on the supposed absence of
evidence and contradicted by the evidence on record; or (11) when the CA
manifestly overlooked certain relevant facts not disputed by the parties,
which, if properly considered, would justify a different conclusion. (See
footnote 20 of Almagro v. Sps. Amaya, Sr. , id. at 503-504; citations
omitted.)

54. Art. 126. The conjugal partnership terminates:
(1) Upon the death of either spouse;
xxx xxx xxx
55. In relation thereto, Article 105, Chapter 4 of the Family Code provides that
"the provisions of this Chapter shall also apply to conjugal partnerships of
gains already established between spouses before the effectivity of this
Code . . . ."
56. See Heirs of Protacio Go, Sr. and Marta Barola v. Servacio , 672 Phil. 447, 457
(2011).
57. See id.
58. See id. at 458.
59. G.R. No. 178451, July 30, 2014, 731 SCRA 244.
60. Id. at 257-259.
62. See Sia Tio v. Abayata, 578 Phil. 731, 746 (2008).
63. 356 Phil. 870 (1998).

64. Id. at 892.
65. See rollo, pp. 41-43 and 67.

66. See Rufloe v. Burgos, 597 Phil. 261, 272 (2009).

68. See Pabalan v. Santarin, 441 Phil. 462, 473 (2002).

70. Spouses Mathay v. CA, supra note 63, at 891; citations omitted.
71. See Nufable v. Nufable, 369 Phil. 135, 148 (1999).

72. Id.
73. Id. at 146-148; citations omitted.

74. See id. at 147-148.
CAGUIOA, J., concurring:

1. Ramirez v. Bautista , 14 Phil. 528 (1909).
2. 133 Phil. 55, 58 (1968).

3. Estoque v. Pajimula, id. at 58-59.
4. 1987 CONSTITUTION, Article VIII, Section 4 (3) states that "Cases or matters
heard by a division shall be decided or resolved with the concurrence of a
majority of the members who actually took part in the deliberations on the
issues in the case and voted thereon, and in no case, without the
concurrence of at least three of such members. When the required
number is not obtained, the case shall be decided en banc: Provided,
that no doctrine or principle of law laid down by the court in a decision
rendered en banc or in division may be modified or reversed except by
the court sitting en banc."

THIRD DIVISION
[G.R. No. 210252. June 16, 2014.]
VILMA QUINTOS, represented by her Attorney-in-Fact FIDEL

I. QUINTOS, JR.; FLORENCIA I. DANCEL, represented by her
Attorney-in-Fact FLOVY I. DANCEL; and CATALINO L.
IBARRA, petitioners, vs. PELAGIA I. NICOLAS, NOLI L. IBARRA,
SANTIAGO L. IBARRA, PEDRO L. IBARRA, DAVID L. IBARRA,
GILBERTO L. IBARRA, HEIRS OF AUGUSTO L. IBARRA,
namely CONCHITA R. IBARRA, APOLONIO IBARRA, and
NARCISO IBARRA, and the spouses RECTO CANDELARIO and
ROSEMARIE CANDELARIO, respondents.
DECISION
VELASCO, JR., J : p
The Case
Before the Court is a Petition for Review on Certiorari filed under Rule
45 challenging the Decision 1 and Resolution 2 of the Court of Appeals (CA) in
CA-G.R. CV No. 98919 dated July 8, 2013 and November 22, 2013,
respectively. The challenged rulings affirmed the May 7, 2012 Decision 3 of
the Regional Trial Court (RTC), Branch 68 in Camiling, Tarlac that petitioners
and respondents are co-owners of the subject property, which should be
partitioned as per the subdivision plan submitted by respondent spouses
Recto and Rosemarie Candelario.
The Facts
As culled from the records, the facts of the case are as follows:
Petitioners Vilma Quintos, Florencia Dancel, and Catalino Ibarra, and
respondents Pelagia Nicolas, Noli Ibarra, Santiago Ibarra, Pedro Ibarra, David
Ibarra, Gilberto Ibarra, and the late Augusto Ibarra are siblings. Their
parents, Bienvenido and Escolastica Ibarra, were the owners of the subject
property, a 281 sq.m. parcel of land situated along Quezon Ave., Poblacion
C, Camiling, Tarlac, covered by Transfer Certificate Title (TCT) No. 318717.
By 1999, both Bienvenido and Escolastica had already passed away,
leaving to their ten (10) children ownership over the subject property.
Subsequently, sometime in 2002, respondent siblings brought an action for
partition against petitioners. The case was docketed as Civil Case No. 02-52
and was raffled to the RTC, Branch 68, Camiling, Tarlac. However, in an
Order 4 dated March 22, 2004, the trial court dismissed the case disposing as
follows:
For failure of the parties, as well as their counsels, to appear
despite due notice, this case is hereby DISMISSED.
SO ORDERED.
As neither set of parties appealed, the ruling of the trial court became
final, as evidenced by a Certificate of Finality 5 it eventually issued on
August 22, 2008.
Having failed to secure a favorable decision for partition, respondent
siblings instead resorted to executing a Deed of Adjudication 6 on September
21, 2004 to transfer the property in favor of the ten (10) siblings. As a result,
TCT No. 318717 was canceled and in lieu thereof, TCT No. 390484 was
issued in its place by the Registry of Deeds of Tarlac in the names of the ten
(10) heirs of the Ibarra spouses. ScCDET
Subsequently, respondent siblings sold their 7/10 undivided share over

the property in favor of their co-respondents, the spouses Recto and
Rosemarie Candelario. By virtue of a Deed of Absolute Sale 7 dated April 17,
2007 executed in favor of the spouses Candelario and an Agreement of
Subdivision 8 purportedly executed by them and petitioners, TCT No. 390484
was partially canceled and TCT No. 434304 was issued in the name of the
Candelarios, covering the 7/10 portion.
On June 1, 2009, petitioners filed a complaint for Quieting of Title and
Damages against respondents wherein they alleged that during their
parents' lifetime, the couple distributed their real and personal properties in
favor of their ten (10) children. Upon distribution, petitioners alleged that
they received the subject property and the house constructed thereon as
their share. They likewise averred that they have been in adverse, open,
continuous, and uninterrupted possession of the property for over four (4)
decades and are, thus, entitled to equitable title thereto. They also deny any
participation in the execution of the aforementioned Deed of Adjudication
dated September 21, 2004 and the Agreement of Subdivision.
Respondents countered that petitioners' cause of action was already
barred by estoppel when sometime in 2006, one of petitioners offered to buy
the 7/10 undivided share of the respondent siblings. They point out that this
is an admission on the part of petitioners that the property is not entirely
theirs. In addition, they claimed that Bienvenido and Escolastica Ibarra
mortgaged the property but because of financial constraints, respondent
spouses Candelario had to redeem the property in their behalf. Not having
been repaid by Bienvenido and Escolastica, the Candelarios accepted from
their co-respondents their share in the subject property as payment. Lastly,
respondents sought, by way of counterclaim, the partition of the property.
Docketed as Civil Case No. 09-15 of the RTC of Camiling, Tarlac, the
quieting of title case was eventually raffled to Branch 68 of the court, the
same trial court that dismissed Civil Case No. 02-52. During pre-trial,
respondents, or defendants a quo, admitted having filed an action for
partition, that petitioners did not participate in the Deed of Adjudication that
served as the basis for the issuance of TCT No. 390484, and that the
Agreement of Subdivision that led to the issuance of TCT No. 434304 in favor
of respondent spouses Candelario was falsified. 9
Despite the admissions of respondents, however, the RTC, through its
May 27, 2012 Decision, dismissed petitioners' complaint. The court did not
find merit in petitioners' asseverations that they have acquired title over the
property through acquisitive prescription and noted that there was no
document evidencing that their parents bequeathed to them the subject
property. Finding that respondent siblings were entitled to their respective
shares in the property as descendants of Bienvenido and Escolastica Ibarra
and as co-heirs of petitioners, the subsequent transfer of their interest in
favor of respondent spouses Candelario was then upheld by the trial court.
The dispositive portion of the Decision reads:
WHEREFORE, premises considered, the above-entitled case is
hereby Dismissed.
Also, defendants-spouses Rosemarie Candelario and Recto
Candelario are hereby declared as the absolute owners of the 7/10
portion of the subject lot.
Likewise, the court hereby orders the partition of the subject lots
between the herein plaintiffs and the defendants-spouses Candelarios.
SO ORDERED. THaCAI
Aggrieved, petitioners appealed the trial court's Decision to the CA,

pleading the same allegations they averred in their underlying complaint for
quieting of title. However, they added that the partition should no longer be
allowed since it is already barred by res judicata, respondent siblings having
already filed a case for partition that was dismissed with finality, as admitted
by respondents themselves during pre-trial.
On July 8, 2013, the CA issued the assailed Decision denying the
appeal. The fallo reads:
WHEREFORE, premises considered, the Decision dated May 7,
2012 of the Regional Trial Court of Camiling, Tarlac, Branch 68, in Civil
Case No. 09-15, is hereby AFFIRMED.
SO ORDERED.
Similar to the trial court, the court a quo found no evidence on record
to support petitioners' claim that the subject property was specifically
bequeathed by Bienvenido and Escolastica Ibarra in their favor as their share
in their parents' estate. It also did not consider petitioners' possession of the
property as one that is in the concept of an owner. Ultimately, the appellate
court upheld the finding that petitioners and respondent spouses Candelario
co-own the property, 30-70 in favor of the respondent spouses.
As regards the issue of partition, the CA added:
. . . Since it was conceded that the subject lot is now co-owned
by the plaintiffs-appellants, (with 3/10 undivided interest) and
defendants-appellees Spouses Candelarios (with 7/10 undivided
interest) and considering that plaintiffs-appellants had already
constructed a 3-storey building at the back portion of the property,
then partition, in accordance with the subdivision plan (records, p. 378)
undertaken by defendants-appellants [sic] spouses, is in order. 10
On November 22, 2013, petitioners' Motion for Reconsideration was
denied. Hence, the instant petition.
Issues
In the present petition, the following errors were raised:
I. THE COURT OF APPEALS MANIFESTLY OVERLOOKED RELEVANT
AND UNDISPUTED FACTS WHICH, IF PROPERLY CONSIDERED, WOULD
JUSTIFY PETITIONERS' CLAIM OF EQUITABLE TITLE.
II. THE COURT OF APPEALS ERRED WHEN IT AFFIRMED THE
ORDER OF PARTITION DESPITE THE FACT THAT THE COUNTERCLAIM
FOR PARTITION, BASED ON THE DEED OF ABSOLUTE SALE EXECUTED
IN 2007, IS BARRED BY LACHES.
III. THE COURT OF APPEALS RENDERED A SUBSTANTIALLY
FLAWED JUDGMENT WHEN IT NEGLECTED TO RULE ON PETITIONERS'
CONTENTION THAT THE COUNTERCLAIM FOR PARTITION IS ALSO
BARRED BY PRIOR JUDGMENT, DESPITE ITS HAVING BEEN SPECIFICALLY
ASSIGNED AS ERROR AND PROPERLY ARGUED IN THEIR BRIEF, AND
WHICH, IF PROPERLY CONSIDERED, WOULD JUSTIFY THE DISMISSAL OF
THE COUNTERCLAIM.
IV. THE COURT OF APPEALS ERRED WHEN IT ORDERED
PARTITION IN ACCORDANCE WITH THE SUBDIVISION PLAN MENTIONED
IN ITS DECISION, IN CONTRAVENTION OF THE PROCEDURE
ESTABLISHED IN RULE 69 OF THE RULES OF CIVIL PROCEDURE. 11
To simplify, the pertinent issues in this case are as follows: ISCTcH
1. Whether or not the petitioners were able to prove ownership over

the property;
2. Whether or not the respondents' counterclaim for partition is already
barred by laches or res judicata; and
3. Whether or not the CA was correct in approving the subdivision
agreement as basis for the partition of the property.
The Court's Ruling
The petition is meritorious in part.
Petitioners were not able to prove equitable
title or ownership over the property
Quieting of title is a common law remedy for the removal of any cloud,
doubt, or uncertainty affecting title to real property. 12 For an action to quiet
title to prosper, two indispensable requisites must concur, namely: (1) the
plaintiff or complainant has a legal or equitable title to or interest in the real
property subject of the action; and (2) the deed, claim, encumbrance, or
proceeding claimed to be casting cloud on the title must be shown to be in
fact invalid or inoperative despite its prima facie appearance of validity or
efficacy. 13 In the case at bar, the CA correctly observed that petitioners'
cause of action must necessarily fail mainly in view of the absence of the
first requisite.
At the outset, it must be emphasized that the determination of whether
or not petitioners sufficiently proved their claim of ownership or equitable
title is substantially a factual issue that is generally improper for Us to delve
into. Section 1, Rule 45 of the Rules of Court explicitly states that the
petition for review on certiorari "shall raise only questions of law, which must
be distinctly set forth." In appeals by certiorari, therefore, only questions of
law may be raised, because this Court is not a trier of facts and does not
normally undertake the re-examination of the evidence presented by the
contending parties during the trial. 14 Although there are exceptions 15 to
this general rule as eloquently enunciated in jurisprudence, none of the
circumstances calling for their application obtains in the case at bar. Thus,
We are constrained to respect and uphold the findings of fact arrived at by
both the RTC and the CA.
In any event, a perusal of the records would readily show that
petitioners, as aptly observed by the courts below, indeed, failed to
substantiate their claim. Their alleged open, continuous, exclusive, and
uninterrupted possession of the subject property is belied by the fact that
respondent siblings, in 2005, entered into a Contract of Lease with the Avico
Lending Investor Co. over the subject lot without any objection from the
petitioners. 16 Petitioners' inability to offer evidence tending to prove that
Bienvenido and Escolastica Ibarra transferred the ownership over the
property in favor of petitioners is likewise fatal to the latter's claim. On the
contrary, on May 28, 1998, Escolastica Ibarra executed a Deed of Sale
covering half of the subject property in favor of all her 10 children, not in
favor of petitioners alone. 17
The cardinal rule is that bare allegation of title does not suffice. The
burden of proof is on the plaintiff to establish his or her case by
preponderance of evidence. 18 Regrettably, petitioners, as such plaintiff, in
this case failed to discharge the said burden imposed upon them in proving
legal or equitable title over the parcel of land in issue. As such, there is no
reason to disturb the finding of the RTC that all 10 siblings inherited the
subject property from Bienvenido and Escolastica Ibarra, and after the
respondent siblings sold their aliquot share to the spouses Candelario,
petitioners and respondent spouses became co-owners of the same.
The counterclaim for partition is not barred by prior judgment
This brings us to the issue of partition as raised by respondents in their
counterclaim. In their answer to the counterclaim, petitioners countered that
the action for partition has already been barred by res judicata.
The doctrine of res judicata provides that the judgment in a first case is
final as to the claim or demand in controversy, between the parties and
those privy with them, not only as to every matter which was offered and
received to sustain or defeat the claim or demand, but as to any other
admissible matter which must have been offered for that purpose and all
matters that could have been adjudged in that case. 19 It precludes parties
from relitigating issues actually litigated and determined by a prior and final
judgment. 20 As held in Yusingco v. Ong Hing Lian: 21
It is a rule pervading every well-regulated system of
jurisprudence, and is put upon two grounds embodied in various
maxims of the common law; the one, public policy and necessity, which
makes it to the interest of the state that there should be an end to
litigation — republicae ut sit, finis litium; the other, the hardship on the
individual that he should be vexed twice for the same cause — nemo
debet bis vexari et eadem causa. A contrary doctrine would subject the
public peace and quiet to the will and neglect of individuals and prefer
the gratitude identification of a litigious disposition on the part of
suitors to the preservation of the public tranquility and happiness. 22 AICDSa
The rationale for this principle is that a party should not be vexed twice
concerning the same cause. Indeed, res judicata is a fundamental concept in
the organization of every jural society, for not only does it ward off endless
litigation, it ensures the stability of judgment and guards against
inconsistent decisions on the same set of facts. 23
There is res judicata when the following requisites are present: (1) the
formal judgment or order must be final; (2) it must be a judgment or order
on the merits, that is, it was rendered after a consideration of the evidence
or stipulations submitted by the parties at the trial of the case; (3) it must
have been rendered by a court having jurisdiction over the subject matter
and the parties; and (4) there must be, between the first and second actions,
identity of parties, of subject matter and of cause of action. 24
In the case at bar, respondent siblings admit that they filed an action
for partition docketed as Civil Case No. 02-52, which the RTC dismissed
through an Order dated March 22, 2004 for the failure of the parties to
attend the scheduled hearings. Respondents likewise admitted that since
they no longer appealed the dismissal, the ruling attained finality. Moreover,
it cannot be disputed that the subject property in Civil Case No. 02-52 and in
the present controversy are one and the same, and that in both cases,
respondents raise the same action for partition. And lastly, although
respondent spouses Candelario were not party-litigants in the earlier case for
partition, there is identity of parties not only when the parties in the case are
the same, but also between those in privity with them, such as between
their successors-in-interest. 25
With all the other elements present, what is left to be determined now
is whether or not the dismissal of Civil case No. 02-52 operated as a
dismissal on the merits that would complete the requirements of res
judicata.
In advancing their claim, petitioners cite Rule 17, Sec. 3 of the Rules of
Court, to wit:
Section 3. Dismissal due to fault of plaintiff. — If, for no
justifiable cause, the plaintiff fails to appear on the date of the
presentation of his evidence in chief on the complaint, or to prosecute
his action for an unreasonable length of time, or to comply with these
Rules or any order of the court, the complaint may be dismissed upon
motion of the defendant or upon the court's own motion, without
prejudice to the right of the defendant to prosecute his counterclaim in
the same or in a separate action. This dismissal shall have the
effect of an adjudication upon the merits, unless otherwise
declared by the court.
The afore-quoted provision enumerates the instances when a
complaint may be dismissed due to the plaintiff's fault: (1) if he fails to
appear on the date for the presentation of his evidence in chief on the
complaint; (2) if he fails to prosecute his action for an unreasonable length
of time; or (3) if he fails to comply with the Rules or any order of the court.
The dismissal of a case for failure to prosecute has the effect of adjudication
on the merits, and is necessarily understood to be with prejudice to the filing
of another action, unless otherwise provided in the order of dismissal. Stated
differently, the general rule is that dismissal of a case for failure to prosecute
is to be regarded as an adjudication on the merits and with prejudice to the
filing of another action, and the only exception is when the order of dismissal
expressly contains a qualification that the dismissal is without prejudice. 26
In the case at bar, petitioners claim that the Order does not in any language
say that the dismissal is without prejudice and, thus, the requirement that
the dismissal be on the merits is present.
Truly, We have had the occasion to rule that dismissal with prejudice
under the above-cited rule amply satisfies one of the elements of res
judicata. 27 It is, thus, understandable why petitioners would allege res
judicata to bolster their claim. However, dismissal with prejudice under Rule
17, Sec. 3 of the Rules of Court cannot defeat the right of a co-owner to ask
for partition at any time, provided that there is no actual adjudication of
ownership of shares yet.
Pertinent hereto is Article 494 of the Civil Code, which reads:
Article 494. No co-owner shall be obliged to remain in the
co-ownership. Each co-owner may demand at any time the
partition of the thing owned in common, insofar as his share is
concerned.
Nevertheless, an agreement to keep the thing undivided for a
certain period of time, not exceeding ten years, shall be valid. This
term may be extended by a new agreement. EaICAD
A donor or testator may prohibit partition for a period which shall

not exceed twenty years.
Neither shall there be any partition when it is prohibited by law.
No prescription shall run in favor of a co-owner or co-heir against his

co-owners or co-heirs so long as he expressly or impliedly recognizes
the co-ownership. (emphasis supplied)
From the above-quoted provision, it can be gleaned that the law

generally does not favor the retention of co-ownership as a property relation,
and is interested instead in ascertaining the co-owners' specific shares so as
to prevent the allocation of portions to remain perpetually in limbo. Thus, the
law provides that each co-owner may demand at any time the partition of
the thing owned in common.
Between dismissal with prejudice under Rule 17, Sec. 3 and the right
granted to co-owners under Art. 494 of the Civil Code, the latter must
prevail. To construe otherwise would diminish the substantive right of a co-
owner through the promulgation of procedural rules. Such a construction is
not sanctioned by the principle, which is too well settled to require citation,
that a substantive law cannot be amended by a procedural rule. 28 This
further finds support in Art. 496 of the New Civil Code, viz.:
Article 496. Partition may be made by agreement between the
parties or by judicial proceedings. Partition shall be governed by the
Rules of Court insofar as they are consistent with this Code .
Thus, for the Rules to be consistent with statutory provisions, We hold
that Art. 494, as cited, is an exception to Rule 17, Sec. 3 of the Rules of
Court to the effect that even if the order of dismissal for failure to prosecute
is silent on whether or not it is with prejudice, it shall be deemed to be
without prejudice.
This is not to say, however, that the action for partition will never be
barred by res judicata. There can still be res judicata in partition cases
concerning the same parties and the same subject matter once the
respective shares of the co-owners have been determined with finality by a
competent court with jurisdiction or if the court determines that partition is
improper for co-ownership does not or no longer exists.
So it was that in Rizal v. Naredo, 29 We ruled in the following wise:
Article 484 of the New Civil Code provides that there is co-
ownership whenever the ownership of an undivided thing or right
belongs to different persons. Thus, on the one hand, a co-owner of an
undivided parcel of land is an owner of the whole, and over the whole
he exercises the right of dominion, but he is at the same time the
owner of a portion which is truly abstract. On the other hand, there
is no co-ownership when the different portions owned by
different people are already concretely determined and
separately identifiable, even if not yet technically described.
Pursuant to Article 494 of the Civil Code, no co-owner is obliged
to remain in the co-ownership, and his proper remedy is an action for
partition under Rule 69 of the Rules of Court, which he may bring at
anytime in so far as his share is concerned. Article 1079 of the Civil
Code defines partition as the separation, division and assignment of a
thing held in common among those to whom it may belong. It has been
held that the fact that the agreement of partition lacks the technical
description of the parties' respective portions or that the subject
property was then still embraced by the same certificate of title could
not legally prevent a partition, where the different portions allotted to
each were determined and became separately identifiable.
The partition of Lot No. 252 was the result of the approved
Compromise Agreement in Civil Case No. 36-C, which was immediately
final and executory. Absent any showing that said Compromise
Agreement was vitiated by fraud, mistake or duress, the court cannot
set aside a judgment based on compromise. It is axiomatic that a
compromise agreement once approved by the court settles the rights
of the parties and has the force of res judicata. It cannot be disturbed
except on the ground of vice of consent or forgery.
Of equal significance is the fact that the compromise judgment in
Civil Case No. 36-C settled as well the question of which specific
portions of Lot No. 252 accrued to the parties separately as their
proportionate shares therein. Through their subdivision survey plan,
marked as Annex "A" of the Compromise Agreement and made an
integral part thereof, the parties segregated and separately assigned
to themselves distinct portions of Lot No. 252. The partition was
immediately executory, having been accomplished and completed on
December 1, 1971 when judgment was rendered approving the same.
The CA was correct when it stated that no co-ownership exist
when the different portions owned by different people are
already concretely determined and separately identifiable,
even if not yet technically described. (emphasis supplied)
In the quoted case, We have held that res judicata applied because
after the parties executed a compromise agreement that was duly approved
by the court, the different portions of the owners have already been
ascertained. Thus, there was no longer a co-ownership and there was
nothing left to partition. This is in contrast with the case at bar wherein the
co-ownership, as determined by the trial court, is still subsisting 30-70 in
favor of respondent spouses Candelario. Consequently, there is no legal bar
preventing herein respondents from praying for the partition of the property
through counterclaim. DSAEIT
The counterclaim for partition is not barred by laches

We now proceed to petitioners' second line of attack. According to
petitioners, the claim for partition is already barred by laches since by 1999,
both Bienvenido and Escolastica Ibarra had already died and yet the
respondent siblings only belatedly filed the action for partition, Civil Case No.
02-52, in 2002. And since laches has allegedly already set in against
respondent siblings, so too should respondent spouses Candelario be barred
from claiming the same for they could not have acquired a better right than
their predecessors-in-interest.
The argument fails to persuade.
Laches is the failure or neglect, for an unreasonable and unexplained
length of time, to do that which — by the exercise of due diligence — could
or should have been done earlier. It is the negligence or omission to assert a
right within a reasonable period, warranting the presumption that the party
entitled to assert it has either abandoned or declined to assert it. 30 The
principle is a creation of equity which, as such, is applied not really to
penalize neglect or sleeping upon one's right, but rather to avoid recognizing
a right when to do so would result in a clearly inequitable situation. As an
equitable defense, laches does not concern itself with the character of the
petitioners' title, but only with whether or not by reason of the respondents'
long inaction or inexcusable neglect, they should be barred from asserting
this claim at all, because to allow them to do so would be inequitable and
unjust to petitioners. 31
As correctly appreciated by the lower courts, respondents cannot be
said to have neglected to assert their right over the subject property. They
cannot be considered to have abandoned their right given that they filed an
action for partition sometime in 2002, even though it was later dismissed.
Furthermore, the fact that respondent siblings entered into a Contract of
Lease with Avico Lending Investor Co. over the subject property is evidence
that they are exercising rights of ownership over the same.
The CA erred in approving the Agreement for Subdivision
There is merit, however, in petitioners' contention that the CA erred in
approving the proposal for partition submitted by respondent spouses. Art.
496, as earlier cited, provides that partition shall either be by agreement of
the parties or in accordance with the Rules of Court. In this case, the
Agreement of Subdivision allegedly executed by respondent spouses
Candelario and petitioners cannot serve as basis for partition, for, as stated
in the pre-trial order, herein respondents admitted that the agreement was a
falsity and that petitioners never took part in preparing the same. The
"agreement" was crafted without any consultation whatsoever or any
attempt to arrive at mutually acceptable terms with petitioners. It, therefore,
lacked the essential requisite of consent. Thus, to approve the agreement in
spite of this fact would be tantamount to allowing respondent spouses to
divide unilaterally the property among the co-owners based on their own
whims and caprices. Such a result could not be countenanced.
To rectify this with dispatch, the case must be remanded to the court
of origin, which shall proceed to partition the property in accordance with the
procedure outlined in Rule 69 of the Rules of Court.
WHEREFORE, premises considered, the petition is hereby PARTLY
GRANTED. The assailed Decision and Resolution of the Court of Appeals in
CA-G.R. CV No. 98919 dated July 8, 2013 and November 22, 2013,
respectively, are hereby AFFIRMED with MODIFICATION. The case is
hereby REMANDED to the RTC, Branch 68 in Camiling, Tarlac for purposes
of partitioning the subject property in accordance with Rule 69 of the Rules
of Court.
SO ORDERED.
Peralta, Villarama, Jr., * Mendoza and Leonen, JJ., concur.
Footnotes
* Acting member per Special Order No. 1691 dated May 22, 2014.
1. Rollo , pp. 191-199. Penned by Associate Justice Jose C. Reyes, Jr. and concurred
in by Associate Justices Mario V. Lopez and Socorro B. Inting.
2. Id. at 207.
3. Id. at 119-128.
4. Id. at 116.
5. Id. at 117.
6. Id. at 55.
7. Id. at 60.
8. Id. at 62.
9. Id. at 99-100.
10. Id. at 198.
11. Id. at 13-14.
12. Oño v. Lim , G.R. No. 154270, March 9, 2010, 614 SCRA 514, 521.
13. Mananquil v. Moico , G.R. No. 180076, November 21, 2012, 686 SCRA 123, 130-
131.
14. Angeles v. Pascual , G.R. No. 157150, September 21, 2011, 658 SCRA 23, 28-
29.
15. Id. at 29-30.
16. Rollo , p. 126.
17. Id. at 125.
18. Beltran v. Villarosa , G.R. No. 165376, April 16, 2009, 585 SCRA 283, 293.
19. Baricuatro v. Caballero, G.R. No. 158643, June 19, 2007, 525 SCRA 70, 75-76.
20. Yusingco v. Ong Hing Lian , No. L-26523 December 24, 1971, 42 SCRA 591,
601.
21. Id.
22. Id. at 601-602.

23. Baricuatro v. Caballero, supra note 19, at 76.
24. Medija v. Patcho, No. L-30310, October 23, 1984, 132 SCRA 540.
25. Heirs of Sotto v. Palicte, G.R. No. 159691, June 13, 2013, 698 SCRA 294.
26. Gomez v. Alcantara , G.R. No. 179556, February 13, 2009, 579 SCRA 782, 483.
27. Id.
28. Philippine National Bank v. Asuncion , 170 Phil. 356 (1977).

29. G.R. No. 151898, March 14, 2012, 668 SCRA 114, 128-130.
30. Catholic Bishop of Balanga v. Court of Appeals, G.R. No. 112519, November 14,
1996, 264 SCRA 181, 192-193.
31. Id.

SECOND DIVISION
[G.R. No. 135602. April 28, 2000.]
HEIRS OF QUIRICO SERASPI AND PURIFICACION R. SERASPI,

petitioners, v s . COURT OF APPEALS AND SIMEON RECASA,
respondents.
Public Attorney's Office for petitioner.

Cyril Tagle for private respondent.
SYNOPSIS
Marcelino Recasa was the owner of two parcels of land. As he contracted

three marriages during his lifetime, his intestate estate was partitioned into
three parts. The share to the estate of the heirs of the first marriage was sold to
Dominador Recasa, an heir of the second marriage. Subsequently, Dominador,
representing the heirs of the second marriage, in turn sold the share of the
heirs to Quirico and Purificacion Seraspi. The Seraspis obtained a loan from the
Kalibo Rural Bank with the lands as security. Unable to pay the loan, the
mortgage was foreclosed and the lands were sold to KRBI as the highest bidder.
Subsequently, the lands were sold to Manuel Rata. Quirico was allowed by Rata
to administer the property but in 1974, Simeon Recasa, Marcelino's child by his
third wife, entered the lands in question and took possession thereof. Later, in
1983, the Seraspis purchased the lands from Rata and in 1987, filed a
complaint against Simeon Recasa for recovery of possession of the lands. The
trial court ruled in favor of the Seraspis, but the Court of Appeals reversed the
same on the ground that the action was barred by the statute of limitations.
The issue here is whether Simeon Recasa has acquired the ownership of
the two lands by prescription. Private respondent Recasa contended that he
acquired ownership of the questioned property by ordinary prescription through
adverse possession for ten years. This contention, however, has no merit
because he has neither just title nor good faith. Hence, the decision of the
Court of Appeals was reversed and private respondent Simeon Recasa was
ordered to return the possession of the contested parcels of land to petitioners
as heirs of the Seraspis. EAIcCS
SYLLABUS
1. CIVIL LAW; MODES OF ACQUIRING OWNERSHIP; PRESCRIPTION OF

ACTIONS; REAL ACTIONS. — What is involved here is extinctive prescription,
and the applicable law is Art. 1141 of the Civil Code which provides: Real
actions over immovables prescribe after thirty years. This provision is without
prejudice to what is established for the acquisition of ownership and other real
rights by prescription.
2.ID.;ID.;PRESCRIPTION OF OWNERSHIP AND OTHER REAL RIGHTS;
ACQUISITIVE PRESCRIPTION; ORDINARY PRESCRIPTION; NOT PROPER IN THE
ABSENCE OF JUST TITLE AND GOOD FAITH. — Acquisitive prescription of
dominion and other real rights may be ordinary or extraordinary, depending on
whether the property is possessed in good faith and with just title for the time
fixed by law. Private respondent contends that he acquired the ownership of
the questioned property by ordinary prescription through adverse possession
for ten (10) years. The contention has no merit, because he has neither just title
nor good faith. Private respondent did not acquire possession of the property
through any of the modes recognized by the Civil Code, to wit: (1) occupation,
(2) intellectual creation, (3) law, (4) donation, (5) succession, (6) tradition in
consequence of certain contracts, and (7) prescription. Private respondent
could not have acquired ownership over the property through occupation since,
under Art. 714 of the Civil Code, the ownership of a piece of land cannot be
acquired by occupation. Nor can he base his ownership on succession for the
property was not part of those distributed to the heirs of the third marriage, to
which private respondent belongs. Neither can private respondent claim good
faith in his favor. Good faith consists in the reasonable belief that the person
from whom the possessor received the thing was its owner but could not
transmit the ownership thereof. Private respondent entered the property
without the consent of the previous owner. For all intents and purposes, he is a
mere usurper.
3.ID.; SALES; CONTRACT OF SALE; OWNERSHIP NOT TRANSFERRED UNTIL

DELIVERY OF THE PROPERTY; RIGHT OF BUYER PREVAILS OVER UNLAWFUL
POSSESSOR. — The basis of petitioners' claim of ownership is the contract of
sale they had with Rata, but this by itself is insufficient to make them owners of
the property. For while a contract of sale is perfected by the meeting of minds
upon the thing which is the object of the contract and upon the price, the
ownership of the thing sold is not transferred to the vendee until actual or
constructive delivery of the property. Hence, the maxim non nudis pactis, sed
traditione dominia dominica rerum transferuntur (not mere agreements but
tradition transfers the ownership of things). Consequently, petitioners are not
the owners of the property since it has not been delivered to them. At the time
they bought the property from Rata, the property was in the possession of
private respondent. However, this does not give private respondent a right to
remain in possession of the property. Petitioners' title to the property prevails
over private respondents' possession in fact but without basis in law. As held in
Waite v. Peterson , when the property belonging to a person is unlawfully taken
by another, the former has the right of action against the latter for the recovery
of the property. Such right maybe transferred by the sale or assignment of the
property, and the transferee can maintain such action against the wrongdoer.
DECISION
MENDOZA, J: p

This case is here for review of the decision 1 of the Court of Appeals, dated
May 15, 1998, reversing the decision of Branch 1 of the Regional Trial Court,
Kalibo, Aklan and dismissing, on the ground of prescription, the complaint filed
by petitioners for the recovery of possession and ownership of two parcels of
land in Banga, Aklan.
The facts are as follows: LLjur
Marcelino Recasa was the owner of two parcels of land described as

follows:
PARCEL I: A parcel of cocal land located at Barangay Lapnag,
Banga, Aklan, with an area of 770 square meters, more or less;
bounded North by Lazaro Navarra, now Flocerfina Ibit; South by Celsa
Retis; East by Banga-Libacao Provincial Road; and West by Aklan River,
which parcel of land declared in the name of Marcelino Recasa under
Tax Declaration No. 3721, Series of 1984, with an assessed value of
P2,440.00;
PARCEL II: A parcel of cocal land with an area of 3,648 square

meters, more or less, located in Barangay Lapnag, Banga, Aklan;
bounded North by Concepcion Navarra; South by Diosdado Navarra;
East by Gabriel Reloj; and West by National Road; covered by Tax
Declaration No. 11079 in the name of Purificacion Seraspi, Series of
1984, and having an assessed value of P1,650.00.
During his lifetime, Marcelino contracted three (3) marriages. At the time
of his death in 1943, he had fifteen (15) children from his three marriages. In
1948, his intestate estate was partitioned into three parts by his heirs, each
part corresponding to the share of the heirs in each marriage.
In the same year, Patronicio Recasa, representing the heirs of the first
marriage, sold the share of the heirs in the estate to Dominador Recasa, an heir
of the second marriage. On June 15, 1950, Dominador, representing the heirs of
the second marriage, in turn sold the share of the heirs to Quirico and
Purificacion Seraspi whose heirs are the present petitioners. Included in this
sale was the property sold by Patronicio to Dominador.
In 1958, the Seraspis obtained a loan from the Kalibo Rural Bank, Inc.
(KRBI) on the security of the lands in question to finance improvements on the
lands. However, they failed to pay the loan for which reason the mortgage was
foreclosed and the lands were sold to KRBI as the highest bidder. Subsequently,
the lands were sold by KRBI to Manuel Rata, brother-in-law of Quirico Seraspi. It
appears that Rata, as owner of the property, allowed Quirico Seraspi to
administer the property.
In 1974, private respondent Simeon Recasa, Marcelino’s child by his third

wife, taking advantage of the illness of Quirico Seraspi, who had been paralyzed
due to a stroke, forcibly entered the lands in question and took possession
thereof.
In 1983, the Seraspis purchased the lands from Manuel Rata and
afterwards filed a complaint against Simeon Recasa for recovery of possession
of the lands.
The trial court ruled in favor of the Seraspis, stating that they had
acquired the property through a sale and acquisitive prescription. However, on
appeal, the Court of Appeals reversed on the ground that the action of the
Seraspis was barred by the statute of limitations. Hence, this petition filed by
Quirico Seraspi who, in the meantime, had passed away and was thus
substituted by his heirs.
Two issues are presented: (1) whether petitioners’ action is barred by
extinctive prescription; and (2) whether private respondent Simeon Recasa
acquired ownership of the properties in question through acquisitive
prescription.
We rule for petitioners.
The Court of Appeals, while ruling that petitioners were able to establish
the identity of the property as well as the credibility of their title Â¾ the
elements required to prove one’s claim for recovery of property 2 Â¾
nonetheless held that the action was barred by prescription. Citing Arradaza v.
Court of Appeals, 3 it held that an action for recovery of title or possession of
real property or an interest therein can only be brought within ten (10) years
after the cause of action has accrued. Since the action for recovery of
possession and ownership was filed by petitioners only on April 12, 1987, i.e.,
thirteen (13) years after their predecessor-in-interest had been allegedly
deprived of the possession of the property by private respondent, it was held
that the action had prescribed.
Arradaza involves acquisitive, not extinctive, prescription. What is more,

the facts in that case arose before the effectivity of the Civil Code. Accordingly,
what was applied was Â§41 of the Code of Civil Procedure which provides that
title by prescription is acquired after ten (10) years, in whatever manner
possession may have been commenced or continued, and regardless of good
faith or with just title. On the other hand, what is involved here is extinctive
prescription, and the applicable law is Art. 1141 of the Civil Code which
provides:
Real actions over immovables prescribe after thirty years.
This provision is without prejudice to what is established for the

acquisition of ownership and other real rights by prescription.
The question, therefore, is whether private respondent has acquired the

ownership of the two lands by prescription. On this point, the Civil Code
provides:
ARTICLE 1117. Acquisitive prescription of dominion and other
real rights may be ordinary or extraordinary.
Ordinary acquisitive prescription requires possession of things in

good faith and with just title for the time fixed by law.
ARTICLE 1134. Ownership and other real rights over immovable

property are acquired by ordinary prescription through possession of
ten years.
ARTICLE 1137. Ownership and other real rights over immovables

also prescribe through uninterrupted adverse possession thereof for
thirty years, without need of title or of good faith.
Cdpr
Thus, acquisitive prescription of dominion and other real rights may be

ordinary or extraordinary, depending on whether the property is possessed in
good faith and with just title for the time fixed by law. 4 Private respondent
contends that he acquired the ownership of the questioned property by
ordinary prescription through adverse possession for ten (10) years.
The contention has no merit, because he has neither just title nor good
faith. As Art. 1129 provides:
For the purposes of prescription, there is just title when the
adverse claimant came into possession of the property through one of
the modes recognized by law for the acquisition of ownership or other
real rights, but the grantor was not the owner or could not transmit any
right.
In the case at bar, private respondent did not acquire possession of the
property through any of the modes recognized by the Civil Code, to wit: (1)
occupation, (2) intellectual creation, (3) law, (4) donation, (5) succession, (6)
tradition in consequence of certain contracts, and (7) prescription. 5
Private respondent could not have acquired ownership over the property
through occupation since, under Art. 714 of the Civil Code, the ownership of a
piece of land cannot be acquired by occupation. Nor can he base his ownership
on succession for the property was not part of those distributed to the heirs of
the third marriage, to which private respondent belongs. It must be
remembered that in the partition of the intestate estate of Marcelino Recasa,
the properties were divided into three parts, each part being reserved for each
group of heirs belonging to one of the three marriages Marcelino entered into.
Since the contested parcels of land were adjudicated to the heirs of the first
and second marriages, it follows that private respondent, as heir of the third
marriage, has no right over the parcels of land. While, as heir to the intestate
estate of his father, private respondent was co-owner of all of his father's
properties, such co-ownership rights were effectively dissolved by the partition
agreed upon by the heirs of Marcelino Recasa.
Neither can private respondent claim good faith in his favor. Good faith
consists in the reasonable belief that the person from whom the possessor
received the thing was its owner but could not transmit the ownership thereof. 6
Private respondent entered the property without the consent of the previous
owner. For all intents and purposes, he is a mere usurper.
Like private respondent, petitioners have not acquired the property

through any of the modes recognized by law for the acquisition of ownership.
The basis of petitioners’ claim of ownership is the contract of sale they had with
Rata, but this by itself is insufficient to make them owners of the property. For
while a contract of sale is perfected by the meeting of minds upon the thing
which is the object of the contract and upon the price, 7 the ownership of the
thing sold is not transferred to the vendee until actual or constructive delivery
of the property. 8 Hence, the maxim non nudis pactis, sed traditione dominia
dominica rerum transferuntur (not mere agreements but tradition transfers the
ownership of things).
Consequently, petitioners are not the owners of the property since it has
not been delivered to them. At the time they bought the property from Rata in
1983, the property was in the possession of private respondent.
However, this does not give private respondent a right to remain in
possession of the property. Petitioners’ title to the property prevails over
private respondents’ possession in fact but without basis in law. As held in
Waite v. Peterson, 9 when the property belonging to a person is unlawfully
taken by another, the former has the right of action against the latter for the
recovery of the property. Such right may be transferred by the sale or
assignment of the property, and the transferee can maintain such action
against the wrongdoer.
WHEREFORE, the decision of the respondent Court of Appeals is hereby

REVERSED, and private respondent Simeon Recasa is ordered to return the
possession of the contested parcels of land to petitioners as heirs of Quirico
and Purificacion Seraspi. cdphil
SO ORDERED.
Bellosillo, Quisumbing, Buena and De Leon, Jr., JJ., concur.
Footnotes
1. Per Justice Eugenio S. Labitoria and concurred in by Justices Jainal D. Rasul and
Marina L. Buzon.
2. CIVIL CODE, Art. 434. In an action to recover, the property must be identified,
and the plaintiff must rely on the strength of his title and not on the
weakness of the defendant’s claim.
3. 170 SCRA 12 (1989)
4. CIVIL CODE, Art. 1117.
5. Id., Art. 712. Ownership is acquired by occupation and by intellectual creation.
Ownership and other real rights over property are acquired and transmitted by law,
by donation, by testate and intestate succession, and in consequence of
certain contracts, by tradition.
They may also be acquired by means of prescription.
6. Id., Art. 1127.
7. Id., Art. 1475.

8. Id., Art. 1477.
9. 8 Phil 235 (1907)

THIRD DIVISION
[G.R. No. 109262. November 21, 1996.]
DOMINGO R. CATAPUSAN, MINELIO R. CATAPUSAN, and

FILOMENO R. CATAPUSAN , petitioners, vs. THE COURT OF
APPEALS, VICENTE CATAPUSAN, JR., CIPRIANO CATAPUSAN,
GREGORIA CATAPUSAN, SEGUNDA BAUTISTA CATAPUSAN,
NICANOR T. CATAPUSAN, NARCISA T. CATAPUSAN,
GREGORIO T. CATAPUSAN, BENIGNO T. CATAPUSAN,
REYNALDO T. CATAPUSAN, CATALINA T. CATAPUSAN,
GERTRUDES CATAPUSAN and FLORA DIAZ CATAPUSAN ,
respondents.
Aladdin F. Trinidad for petitioners.

Sumulong Law Offices and Rafael B. Hilao for private respondents.
SYLLABUS
1. REMEDIAL LAW; PROVISIONAL REMEDIES; PARTITION; THE COURT MUST

INITIALLY SETTLE THE ISSUE OF OWNERSHIP AT THE FIRST STAGE OF THE
ACTION. — In actions for partition, the court cannot properly issue an order to
divide the property, unless it first makes a determination as to the existence of
co-ownership. The court must initially settle the issue of ownership, the first
stage in an action for partition. Needless to state, an action for partition will not
lie if the claimant has no rightful interest over the subject property. In fact,
Section 1 of Rule 69 requires the party filing the action to state in his complaint
the "nature and extent of his title" to the real estate. Until and unless the issue
of ownership is definitely resolved, it would be premature to effect a partition of
the properties. cdasia
2. ID.; EVIDENCE; BURDEN OF PROOF LIES UPON THE PARTY MAKING THE
ALLEGATIONS; APPLICATION IN CASE AT BAR. — It is a basic rule of evidence
that the party making an allegation has the burden of proving it by
preponderance of evidence. In this case, petitioners' evidence of their father's
(Bonifacio) ownership of the Wawa lot are the tax declarations of the adjacent
lot owners and the testimonies of some witnesses who merely saw Bonifacio
working on the lot. On the other hand, respondents presented tax declarations
which indicated that the same lot is owned by their predecessors-in-interest,
the children of the first marriage, evidence which carry more weight as they
constitute proof of respondents' ownership of the land in their possession.
3. ID.; ID., CLAIM OF OWNERSHIP THRU ACQUISITIVE PRESCRIPTION;
WHEN TAX DECLARATIONS AND RECEIPTS MAY BE USED TO SUPPORT A CLAIM.
— Although tax declarations and receipts are not direct proofs of ownership,
yet when accompanied by proof of actual possession for the required period,
they become strong evidence to support the claim of ownership thru acquisitive
prescription. The possession contemplated as foundation for prescriptive right
must be one under claim of title or adverse to or in concept of owner.
Possession by tolerance is not the kind of possession that may lead to title by
prescription. It is the respondents' open, continuous, adverse and uninterrupted
possession far beyond the 30-year extraordinary period for acquisitive
prescription, coupled with the tax declarations of their predecessors-in-interest,
that constitutes a superior weight of evidence that clinched their claim. TCASIH
4. ID.; ID.; ID.; PETITIONERS MUST RELY ON THE STRENGTH OF THEIR

OWN TITLE. — Petitioners' bare and unsubstantiated allegation that
respondents' tax declarations were fraudulently issued is insufficient to sustain
the imputation of fraud considering that good faith is always presumed.
Besides, respondents' tax declarations are deemed regularly issued. Being an
action involving property, the petitioners must rely on the strength of their own
title and not on the weakness of the respondents' claim.
5. ID.; ID.; FACTUAL FINDINGS OF THE LOWER COURT; NOT USUALLY

REVIEWED BY THE SUPREME COURT. — It is a settled doctrine that factual
findings of the lower court when supported by substantial evidence on the
record is not usually reviewed by the Supreme Court, especially when it is
affirmed by the Court of Appeals. No cogent evidence appears from the records
of this case for us to apply the above doctrine differently. No essential facts
were overlooked by the courts below, which if considered, may produce a
different outcome. Besides, the credence of the evidence and the assessment
of the weight and evidentiary value of the testimonies presented are best
appreciated by the trial court judge having observed that elusive and
incommunicable evidence of the witness' deportment on the stand. TEcAHI
RESOLUTION
FRANCISCO, J : p
The parties in this case are the children of the second marriage
(petitioners) and the heirs of the first marriage (respondents) contracted by
Bonifacio Catapusan, claiming ownership of a parcel of land located in Wawa,
Tanay, Rizal (hereinafter referred to as Wawa lot). 1 The facts:
Bonifacio Catapusan was first married to Narcissa Tanjuatco, the only

surviving heir of Dominga Piguing. 2 They had four (4) children namely, Felix,
Vicente, Benicio and Loreto. 3 Narcissa died in 1910. In 1927, Bonifacio married
Paula Reyes and out of their wedlock petitioners Domingo, Minelio and
Filomeno Catapusan were born. Bonifacio died in 1940. 4 Felix, Vicente and
Benicio, Bonifacio's sons from the first marriage, died before the institution of
this case, survived by their respective widows and children, respondents herein.
The petitioners filed on June 11, 1974, an action for partition of the Wawa
lot, which they allegedly co-own with their half-brothers and half-sisters. 5
Petitioners contend that the said lot belongs to their father Bonifacio and
should therefore be partitioned among the heirs of the first and second
marriages. 6 In support thereof, they presented the tax declarations of the
Wawa lot's four (4) adjacent lot owners. These four tax declarations state that
each of them bounds on one side the Wawa lot declared in the name of
Bonifacio. Stated differently, the petitioner's proof of Bonifacio's ownership of
the Wawa lot are the tax declarations of the adjoining lot owners which noted
that they each border on one side the Wawa lot declared in the name of
Bonifacio. 7
In their answer with counterclaim, respondents asserted that the Wawa
lot was originally owned by Dominga and inherited by Narcissa as her
paraphernal property. 8 Upon Narcissa's death, the Wawa lot passed to her four
children who are the predecessor-in-interest of respondent These children
possessed and occupied the Wawa lot 9 and secured tax declarations thereon in
their names. Respondents likewise alleged that they had been in open,
continuous and uninterrupted possession of the said lot for more than 50 years
when the suit was filed in 1974. 10 They also invoke laches and prescription
against petitioner's action. In response, petitioners argue that their action had
not lapsed since respondents repudiated the co-ownership only in 1968. 11
They also questioned the respondents' lack of documentary proof (like "titulo
real") with regard to Dominga and Narcissa's title, as the two lived during the
Spanish era. 12
After trial, the lower court dismissed the complaint, 13 declared the
respondents as the true and lawful owners of the Wawa lot and granted the
counterclaim for P10,000.00 attorney's fees. 14 On appeal, the Court of Appeals
(CA) affirmed the RTC, but set aside the award of attorney's fees. 15 Petitioners'
motion for reconsideration was denied. 16 Hence, this appeal raising three
issues: (1) whether an action for partition includes the question of ownership;
(2) whether Bonifacio had title to the Wawa lot, and (3) whether petitioner's
action is barred by laches and/or prescription. 17
In actions for partition, the court cannot properly issue an order to divide
the property, unless it first makes a determination as to the existence of co-
ownership. The court must initially settle the issue of ownership, the first stage
in an action for partition. 18 Needless to state, an action for partition will not lie
if the claimant has no rightful interest over the subject property. In fact, Section
1 of Rule 69 requires the party filing the action to state in his complaint the
"nature and extent of his title" to the real estate. Until and unless the issue of
ownership is definitely resolved, it would be premature to effect a partition of
the properties. 19 Hence, on the first issue we rule in the affirmative. cda
Anent the second and third issues, it is a basic rule of evidence that the
party making an allegation has the burden of proving 20 it by preponderance of
evidence. 21 In this case, petitioners' evidence of their father's (Bonifacio)
ownership of the Wawa lot are the tax declarations of the adjacent lot owners
and the testimonies of some witnesses who merely saw Bonifacio working on
the lot. On the other hand, respondents presented tax declarations which
indicated that the same lot is owned by their predecessors-in-interest, the
children of the first marriage, evidence which carry more weight as they
constitute proof of respondents' ownership of the land in their possession. The
statement in the neighboring lot owners' tax declarations is not a conclusive
proof that Bonifacio owned the surrounded lot. In fact, petitioners cannot show
any tax receipts or declarations of their ownership over the same lot. Although
tax declarations and receipts are not direct proofs of ownership, yet when
accompanied by proof of actual possession for the required period, they
become strong evidence to support the claim of ownership thru acquisitive
prescription. The possession contemplated as foundation for prescriptive right
must be one under claim of title or adverse to or in concept of owner. 22
Possession by tolerance, as in the case of petitioners, is not the kind of
possession that may lead to title by prescription. It is the respondents' open,
continuous, adverse and uninterrupted possession far beyond the 30-year
extraordinary period for acquisitive prescription, 23 coupled with the tax
declarations of their predecessors-in-interest, that constitutes a superior weight
of evidence that clinched their claim. Moreover, petitioners' bare and
unsubstantiated allegation that respondents' tax declarations were fraudulently
issued is insufficient to sustain the imputation of fraud considering that good
faith is always presumed. Besides, respondents' tax declarations are deemed
regularly issued. Being an action involving property, the petitioners must rely
on the strength of their own title and not on the weakness of the respondents'
claim. 24
In any event, the second and third issues pertain to factual findings of the
courts below. It is a settled doctrine that factual findings of the lower court
when supported by substantial evidence on the record is not usually reviewed
by the Supreme Court, especially when it is affirmed by the Court of Appeals, as
in this case. 25 No cogent evidence appears from the records of this case for us
to apply the above doctrine differently. No essential facts were overlooked by
the courts below, which if considered, may produce a different outcome.
Besides, the credence of the evidence and the assessment of the weight and
evidentiary value of the testimonies presented are best appreciated by the trial
court judge having observed that elusive and incommunicable evidence of the
witness' deportment on the stand. 26
WHEREFORE, finding no reversible error, the instant appeal is DENIED and

the decision of the Court of Appeals is AFFIRMED in toto.
SO ORDERED.
Narvasa, C .J ., Davide, Jr., Melo, and Panganiban, JJ ., concur.
Footnotes
1. Rollo , p. 44.
2. Rollo , pp. 17, 51.
3. Rollo , p. 17.
4. Rollo , p. 114.

5. Petition, p. 5; Rollo , p. 12.
6. Petition, p. 6; Rollo , p. 13.

7. Court of Appeals Decision, p. 3; Rollo , p. 46.
8. Rollo , p. 218.
9. Rollo , p. 221.
10. Ibid.
11. Rollo , p. 282.
12. Rollo , pp. 22, 276-277.
13. RTC Decision, dated January 9, 1986, penned by Judge Rafael dela Cruz.
14. Rollo , p. 121.
15. Rollo , p. 61.
16. Rollo , p. 80; CA Resolution promulgated on March 17, 1993.
17. Rollo , pp. 11-12.
18. De Mesa v. CA, 231 SCRA 773.
19. Fabrica vs. CA, 146 SCRA 250.
20. Sec. 1 Rule 131.
21. Sec. 1, Rule 133; Misa v. CA, 212 SCRA 217
22. De Jesus v. CA, 217 SCRA 307.
23. Art. 1157, Old Civil Code, now Art. 1134, New Civil Code.
24. Misa v. CA, supra, Javier v. CA, 231 SCRA 498.
25. Meneses v. CA, 246 SCRA 162; Salvador v. CA, 313 Phil. 36.
26. Sapu-an v. CA, 214 SCRA 701; Heirs of Juan Oclarit v. CA, 233 SCRA 239.

FIRST DIVISION
[G.R. No. 109972. April 29, 1996.]
ZOSIMA VERDAD, petitioner, vs. THE HON. COURT OF

APPEALS, SOCORRO C. ROSALES, AURORA ROSALES,
NAPOLEON ROSALES, ANTONIO ROSALES, FLORENDA
ROSALES, ELENA ROSALES AND VIRGINIA ROSALES,
respondents.
Jessie C. Ligan for petitioner.

Federico A. Calo for private respondents.
SYLLABUS
1. CIVIL LAW; SUCCESSION; RIGHT TO REDEEM PROPERTY AS LEGAL

HEIR OF HUSBAND, PART OF WHOSE ESTATE IS A SHARE IN HIS MOTHER'S
INHERITANCE. — The thrust of the petition before us is the alleged incapacity of
private respondent Socorro C. Rosales to redeem the property, she being
merely the spouse of David Rosales, a son of Macaria, and not being a co-heir
herself in the intestate estate of Macaria. Socorro's right to the property is not
because she rightfully can claim heirship in Macaria's estate but that she is a
legal heir of her husband, David Rosales, part of whose estate is a share in his
mother's inheritance. David Rosales, incontrovertibly, survived his mother's
death. When Macaria died her estate passed on to her surviving children,
among them David Rosales, who thereupon became co-owners of the property.
When David Rosales himself later died, his own estate, which included his
undivided interest over the property inherited from Macaria, passed on to his
widow Socorro and her co-heirs pursuant to the law on succession. Socorro and
herein private respondents, along with the co-heirs of David Rosales, thereupon
became co-owners of the property that originally descended from Macaria.
2. ID.; ID.; RIGHT OF REDEMPTION; WRITTEN NOTICE OF SALE,

MANDATORY. — When their interest in the property was sold by the Burdeos
heirs to petitioner, a right of redemption arose in favor of private respondents.
This right of redemption was timely exercised by private respondents.
Concededly, no written notice of the sale was given by the Burdeos heirs
(vendors) to the co-owners required under Article 1623 of the Civil Code. The
thirty-day period of redemption had yet to commence when private respondent
Rosales sought to exercise the right of redemption on 31 March 1987, a day
after she discovered the sale from the Office of the City Treasurer of Butuan
City, or when the case was initiated, on 16 October 1987, before the trial court.
The written notice of sale is mandatory. This Court has long established the rule
that notwithstanding actual knowledge of a co-owner, the latter is still entitled
to a written notice from the selling co-owner in order to remove all uncertainties
about the sale, its terms and conditions, as well as its efficacy and status.

DECISION
VITUG, J : p
The petitioner, Zosima Verdad, is the purchaser of a 248-square meter

residential lot (identified to be Lot No. 529, Ts-65 of the Butuan Cadastre,
located along Magallanes Street, now Marcos M. Calo St., Butuan City). Private
respondent, Socorro Codero Vda. De Rosales, seeks to exercise a right of legal
redemption over the subject property and traces her title to the late Macaria
Atega, her mother-in-law, who died intestate on 08 March 1956.
During her lifetime, Macaria contracted two marriages: the first with Angel
Burdeos and the second, following the latter's death, with Canuto Rosales. At
the time of her own death, Macaria was survived by her son Ramon A. Burdeos
and her grandchild (by her daughter Felicidad A. Burdeos) Estela Lozada of the
first marriage and her children of the second marriage, namely, David Rosales,
Justo Rosales, Romulo Rosales, and Aurora Rosales.
Socorro Rosales is the widow of David Rosales who himself, some time
after Macaria's death, died intestate without an issue.
In an instrument, dated 14 June 1982, the heirs of Ramon Burdeos,
namely, his widow Manuela Legaspi Burdeos and children Felicidad and Ramon,
Jr., sold to petitioner Zosima Verdad (their interest on) the disputed lot
supposedly for the price of P55,460.00. In a duly notarized deed of sale, dated
14 November 1982, it would appear, however, that the lot was sold for only
P23,000.00. Petitioner explained that the second deed was intended merely to
save on the tax on capital gains.
Socorro discovered the sale on 30 March 1987 while she was at the City
Treasurer's Office. On 31 March 1987, she sought the intervention of the
Lupong Tagapayapa of Barangay 9, Princess Urduja, for the redemption of the
property. She tendered the sum of P23,000.00 to Zosima. The latter refused to
accept the amount for being much less than the lot's current value of
P80,000.00. No settlement having been reached before the Lupong
Tagapayapa, private respondents, on 16 October 1987, initiated against
petitioner an action for "Legal Redemption with Preliminary Injunction" before
the Regional Trial Court of Butuan City.
On June 29 1990, following the reception of evidence, the trial court
handed down its decision holding, in fine, that private respondents' right to
redeem the property had already lapsed.
An appeal to the Court of Appeals was interposed by private respondents.

The appellate court, in its decision of 22 April 1993, reversed the court a quo;
thus:
"WHEREFORE, premises considered, the judgment appealed from
is hereby REVERSED, and a new one is accordingly entered declaring
plaintiff-appellant, Socorro C. Rosales, entitled to redeem the
inheritance rights (Art. 1088, NCC) or pro indiviso share (Art. 1620,
NCC) of the Heirs of Ramon Burdeos, Sr. in Lot 529, Ts-65 of the Butuan
Cadastre, within the remaining ELEVEN (11) DAYS from finality hereon,
unless written notice of the sale and its terms are received in the
interim, under the same terms and conditions appearing under Exhibit
'J' and after returning the purchase price of P23,000.00 within the
foregoing period. No cost." 1
In her recourse to this Court, petitioner assigned the following "errors:"

That —
"The Honorable Court of Appeals erred in declaring Socorro C.
Rosales is entitled to redeem the inheritance rights (Article 1088, NCC)
or pro-indiviso share (Article 1620, NCC) of the heirs of Ramon Burdeos,
Sr. in Lot 529, Ts-65 of the Butuan Cadastre, for being contrary to law
and evidence.
"The Honorable Court of Appeals erred in ignoring the peculiar

circumstance, in that, the respondents' actual knowledge, as a factor
in the delay constitutes laches.
"The Honorable Court of Appeals erred in concluding that Socorro
C. Rosales, in effect, timely exercised the right of legal redemption
when referral to Barangay by respondent signifies bonafide intention to
redeem and; that, redemption is properly made even if there is no
offer of redemption in legal tender.
"The Honorable Court of Appeals erred in ruling that the running

of the statutory redemption period is stayed upon commencement of
Barangay proceedings." 2
Still, the thrust of the petition before us is the alleged incapacity of

private respondent Socorro C. Rosales to redeem the property, she being
merely the spouse of David Rosales, a son of Macaria, and not being a co-heir
herself in the intestate estate of Macaria.
We rule that Socorro can. It is true that Socorro, a daughter-in-law (or, for
that matter, a mere relative by affinity), is not an intestate heir of her parents-
in-law; 3 however, Socorro's right to the property is not because she rightfully
can claim heirship in Macaria's estate but that she is a legal heir of her
husband, David Rosales, part of whose estate is a share in his mother's
inheritance.
David Rosales, incontrovertibly, survived his mother's death. When

Macaria died on 08 March 1956 her estate passed on to her surviving children,
among them David Rosales, who thereupon became co-owners of the property.
When David Rosales himself later died, his own estate, which included his
undivided interest over the property inherited from Macaria, passed on to his
widow Socorro and her co-heirs pursuant to the law on succession.
"ARTICLE 995. In the absence of legitimate descendants and
ascendants, and illegitimate children and their descendants, whether
legitimate or illegitimate, the surviving spouse shall inherit the entire
estate, without prejudice to the rights of brothers and sisters, nephews
and nieces, should there be any, under Article 1001.
"xxx xxx xxx
ARTICLE 1001. Should brothers and sisters or their children

survive with the widow or widower, the latter shall be entitled to one-
half of the inheritance and the brothers and sisters or their children to
the half." 4
Socorro and herein private respondents, along with the co-heirs of David
Rosales, thereupon became co-owners of the property that originally
descended from Macaria.
When their interest in the property was sold by the Burdeos heirs to
petitioner, a right of redemption arose in favor of private respondents; thus:
"ARTICLE 1619. Legal redemption is the right to be
subrogated, upon the same terms and conditions stipulated in the
contract, in the place of one who acquires a thing by purchase or
dation in payment, or by any other transaction whereby ownership is
transmitted by onerous title."
"ARTICLE 1620. A co-owner of a thing may exercise the right

of redemption in case the shares of all the other co-owners or of any of
them, are sold to a third person. If the price of the alienation is grossly
excessive, the redemptioner shall pay only a reasonable one."
We hold that the right of redemption was timely exercised by private

respondents. Concededly, no written notice of the sale was given by the
Burdeos heirs (vendors) to the co-owners 5 required under Article 1623 of the
Civil Code —
"ARTICLE 1623. The right of legal pre-emption or redemption
shall not be exercised except within thirty days from the notice in
writing by the prospective vendor, or by the vendor, as the case may
be. The deed of sale shall not be recorded in the Registry of Property,
unless accompanied by an affidavit of the vendor that he has given
written notice thereof to all possible redemptioners."
Hence, the thirty-day period of redemption had yet to commence when

private respondent Rosales sought to exercise the right of redemption on 31
March 1987, a day after she discovered the sale from the Office of the City
Treasurer of Butuan City, or when the case was initiated, on 16 October
1987, before the trial court.
The written notice of sale is mandatory. This Court has long established
the rule that notwithstanding actual knowledge of a co-owner, the latter is still
entitled to a written notice from the selling co-owner in order to remove all
uncertainties about the sale, its terms and conditions, as well as its efficacy and
status. 6
Even in Alonzo vs. Intermediate Appellate Court, 7 relied upon by

petitioner in contending that actual knowledge should be an equivalent to a
written notice of sale, the Court made it clear that it was not reversing the
prevailing jurisprudence; said the Court:
"We realize that in arriving at our conclusion today, we are
deviating from the strict letter of the law, which the respondent court
understandably applied pursuant to existing jurisprudence. The said
court acted properly as it had no competence to reverse the doctrines
laid down by this Court in the above-cited cases. In fact, and this
should be clearly stressed, we ourselves are not abandoning the De
Conejero and Buttle doctrines. What we are doing simply is adopting an
exception to the general rule, in view of the peculiar circumstances of
this case." 8
In Alonzo, the right of legal redemption was invoked several years, not
just days or months, after the consummation of the contracts of sale. The
complaint for legal redemption itself was there filed more than thirteen
years after the sales were concluded.
Relative to the question posed by petitioner on private respondent's
tender of payment, it is enough that we quote, with approval, the appellate
court; viz:
"In contrast, records clearly show that an amount was offered, as
required in Sempio vs. Del Rosario , 44 Phil. 1 and Daza vs. Tomacruz ,
58 Phil. 414, by the redemptioner-appellant during the barangay
conciliation proceedings (Answer, par. 8) but was flatly rejected by the
appellee, not on the ground that it was not the purchase price (though
it appeared on the face of the deed of sale, Exh. 'J-1'), nor that it was
offered as partial payment thereof, but rather that it was
'unconscionable' based upon its 'present value.' (Answer, par. 8)." 9
All given, we find no error in the appellate court's finding that private
respondents are entitled to the redemption of the subject property.
WHEREFORE, the petition is DENIED and the assailed decision of the Court
of Appeals is AFFIRMED. Costs against petitioner.
SO ORDERED.
Padilla, Bellosillo, Kapunan and Hermosisima, Jr., JJ., concur.
Footnotes
1. Rollo , p. 49.
2. Rollo , p. 23.
3. Rosales vs. Rosales , 148 SCRA 69.
4. Civil Code of the Philippines.
5. See Rollo , p. 174, Felicidad Burdeos, Deposition, p. 4.
6. See Cabrera vs. Villanueva, 160 SCRA 672; also Conejero vs. Court of
Appeals, 16 SCRA 775.

7. 150 SCRA 259.
8. Pp. 267-268.

THIRD DIVISION
[G.R. No. 108558. June 21, 2001.]
ANDREA TABUSO and RENATO BISMORTE , petitioners, vs.

COURT OF APPEALS and the HEIRS OF ESTEBAN ABAD
represented by Nemesio Abad and Ana Abad Paghubasan,
respondents.
Public Attorney's Office for petitioners.

Jose C. Gonzales for private respondents.
SYNOPSIS
Private respondents obtained a favorable judgment in an action for

declaration of ownership of an unregistered parcel of land. The trial court ruled
that abundant proof was presented establishing private respondents' ownership
over the lot and that possession of a portion of the lot by petitioners was by
mere tolerance. Evidences considered were tax declarations in private
respondents' names for the years 1923 to 1982, a demand letter to vacate sent
to petitioners who had built a "barong barong" or a small house on the lot, a
contract of lease executed by Nemesio Abad in favor of Valentin Poblete, the
deed of donation executed by Maria Montes in favor of Isabel Elaba who in turn
sold the land to Esteban Abad, and the testimony of Atty. Jose Gonzales,
counsel of private respondents who was presented by petitioners. Atty.
Gonzales testified that on his personal knowledge, private respondents are the
owners of the lot in question, and that as owner of an adjacent lot, he
frequently visited his land and passed by the land in question. Petitioners
appealed to the Court of Appeals claiming that private respondents are not in
actual possession of the land and questioned the validity of the deed of
donation. The appellate court affirmed the ruling of the trial court. Hence, this
recourse challenging factual conclusions of the Court of Appeals.
It was held that parties are barred by laches for failure to assail the
validity of the documents executed 60 years ago. Moreover, issues cannot be
raised for the first time on appeal; that factual conclusions of the Court of
Appeals which affirmed those of the trial courts are given great weight and
even finality; and that owners of unregistered land are not required to actually
stay on the land as long as acts of ownership are exercised like payment of
taxes and execution of lease contract affecting said property.
SYLLABUS
1. REMEDIAL LAW; EVIDENCE; FACTUAL CONCLUSIONS OF THE COURT

OF APPEALS AFFIRMING THOSE OF THE TRIAL COURT, GIVEN GREAT WEIGHT
AND EVEN FINALITY; CASE AT BAR. — "It is settled that great weight, and even
finality, is given to the factual conclusions of the Court of Appeals which affirm
those of the trial courts. Only where it is shown that such findings are
whimsical, capricious, and arbitrary can they be overturned." We agree with the
findings of the Court of Appeals that for a period of more than 60 years, private
respondents have been able to establish that they are the owners of the lot;
and that for said period, they have been in open, continuous and uninterrupted
possession of the same. DaHSIT
2. ID.; ACTIONS; PARTIES BOUND BY THEIR EVIDENCE. — Both the trial

and the appellate courts were likewise correct in giving weight to the testimony
of Atty. Jose Gonzales. He testified that being, the owner of the adjacent land,
he had personal knowledge of the simple fact that the land in question was
owned by private respondents, who were in actual, open and continuous
possession thereof. Significantly, while he was private respondents' counsel, he
was presented by petitioners themselves. Having done so, they are bound by
his testimony; even if it is hostile.
3. CIVIL LAW; PROPERTY OWNERSHIP AND ITS MODIFICATION;

OWNERSHIP DIFFERENTIATED FROM POSSESSION. — It must be stressed "that
possession and ownership are distinct legal concepts. Ownership exists when a
thing pertaining to one person is completely subjected to his will in a manner
not prohibited by law and consistent with the rights of others. Ownership
confers certain rights to the owner, one of which is the right to dispose of the
thing by way of sale. . . . . On the other hand, possession is defined as the
holding of a thing or the enjoyment of a right. Literally, to possess means to
actually and physically occupy a thing with or without right. Possession may be
had in one of two ways: possession in the concept of an owner and possession
of a holder. Possessors in the concept of owners may be the owners themselves
or those who claim to be so. On the other hand, those who possess as mere
holders acknowledge in another a superior right which he believes to be
ownership, whether his belief be right or wrong."
4. ID.; ID.; OWNER NEED NOT POSSESS PROPERTY. — The claim of

petitioners that private respondents are not in actual possession of the land is
unsubstantiated. Besides, it is not necessary that the latter actually stay on the
property in order to prove ownership of the same. As found by both the trial
and the appellate courts, since the acquisition of the subject property by
private respondents, they had religiously paid the taxes due thereon. Further,
one of the co-owners executed a lease contract over it in favor of a tenant.
These acts are clearly consistent with ownership.
5. REMEDIAL LAW; ACTIONS; APPEALS; ISSUE CANNOT BE RAISED FOR

FIRST TIME ON APPEAL. — Petitioners point out that the Deed of Donation
executed by Maria Montes to Isabel Elaba, who in turn sold the lot to private
respondents, is spurious since the Deed was executed on September 23, 1923;
whereas the death certificate issued by the Holy Rosary Cathedral Parish of
Naval, Leyte, shows that Maria Montes was buried on February 21, 1919.
However, the Court of Appeals was correct in stating that petitioners were
barred by laches from questioning the validity of the Deed. "Laches has been
defined as the failure or neglect, for an unreasonable and unexplained length of
time, to do that which by exercising due diligence could or should have been
done earlier; it is negligence or omission to assert a right within a reasonable
time, warranting [the] presumption that the party entitled to it either has
abandoned it or declined to assert it." It is too late for private respondents to
raise this issue now, considering that the Deed of Donation was executed more
than 60 years ago. Moreover, they are precluded from raising this argument,
because it is being raised for the first time on appeal.
6. ID.; ID.; DEATH CERTIFICATE NOT MARKED IN EVIDENCE NOR

SUBJECT TO CROSS-EXAMINATION, INADMISSIBLE. — In addition, private
respondents have not proven that the Maria Montes mentioned in the Death
Certificate is the same Maria Montes who executed the Deed of Donation. The
two have been shown to have different sets of parents, thus raising serious
doubts on the identity of the person mentioned in the Death Certificate. Lastly,
the Death Certificate was not marked in evidence, nor was it subjected to
cross-examination. It is thus inadmissible in evidence.
7. CIVIL LAW; PUBLIC LAND ACT; LANDS DEFINED BY BOUNDARIES,
NOT BY NUMERICAL DATA. — Lastly, petitioners argue that private respondents
own only 3,267 square meters of the questioned lot. This is the area that
appears on their Tax Declarations. On the other hand, the entire lot that was
adjudicated measures 11,927 square meters. Petitioners' contention deserves
scant consideration, because they have not substantiated, by any means
whatsoever, their claim to any part of the disputed land. Hence, they are not
entitled to ownership thereof. Besides, what defines a piece of land is not the
numerical data indicated as its area, but the boundaries or "metes and bounds"
specified in its description as enclosing the land and indicating its limits.
DECISION
PANGANIBAN, J : p
It is settled that great weight, and even finality, is accorded to the factual
conclusions of the Court of Appeals which affirm those of the trial courts. Only
when it is clearly shown that such findings are whimsical, capricious, and
arbitrary can they be overturned.
Statement of the Case

Before us is an appeal under Rule 45 of the Rules of Court, assailing the
July 29, 1992 Decision 1 of the Court of Appeals 2 (CA) in CA-GR CV No. 26047
and its January 14, 1993 Resolution 3 denying reconsideration. The CA affirmed
in toto the Decision of the Regional Trial Court, which had found abundant proof
of appellees' ownership of the land, as opposed to the scanty evidence offered
by appellants. The dispositive portion of the assailed Decision reads as follows:
"WHEREFORE, [there being] no reversible error in the decision
appealed from[,] the same is hereby affirmed in toto. Costs against
appellants." 4
The Facts
The undisputed facts of the case are summarized by the Court of Appeals
as follows:
"This case involves declaration of ownership filed before the
Regional Trial Court of Naval, Leyte, [in] Biliran, Leyte, of an
unregistered parcel of land at Antipolo, Naval, Leyte with an area of
3,267 square meters.
"The plaintiffs' evidence consists of the following:
"a) A tax declaration No. 3705 (Exh. A) in the name of Ignacio

Montes for the year 1912. However, the land taxes thereon for the
years 1944 to 1947 were paid only in 1981 (Exh. F and series).
"b) Plaintiff Andrea Tabuso claims to be the owner as

successor in interest (granddaughter) of one Andrea Elaba, daughter of
Maria Montes and Borja Elaba, Maria Montes appears to be a sister of
Ignacio Montes, in whose name the tax declaration for the property in
question was issued for the year 1912 (Exh. A).
"c) The property in question has been in the possession of the

defendants (heirs of Esteban Abad), although the house standing
thereon appears to have been constructed by Marcelo Tabuso, father
of plaintiff Andrea Tabuso.
"On the other hand, evidence for the defendants tends to

establish the following:
"a) The land in question originally owned by Maria Montes

was donated to Isabel Elaba through an ancient document executed on
September 24, 1923 (Exh. F). Isabel in turn sold the land to Esteban
Abad on May 5, 1948 (Exh. 4).
"b) The original tax declaration in the name of Ignacio Montes

(Exh. A) was superseded by Tax Declaration Nos. 6422 and 1450 both
in the name of Isabel Elaba (Exh. 6-D; 6- E)[;] Declaration No. 1450 for
the year 1948 was superseded by Tax Declaration No. 6959 for 1960
(Exh. 6-C) in the name of Esteban Abad; and the latter was superseded
in 1969 by Tax Declaration No. 1661 (Exh. 6-B) in the name of Esteban
Abad. In 1974 a new tax declaration No. 19 (Exh. 6-A) was issued in the
name of Esteban Abad with Nemesio Abad and his co-heirs as
administrators. The last tax declaration No. 22 (Exh. 6) for 1982 was in
the name of Esteban Abad. The land taxes due thereon for the years
1947 to 1982 were paid by Isabel Elaba[,] Esteban Abad and Nemesio
Abad (Exhs. 7 to 7-W).
"c) The land in question is tenanted by one Valentin Poblete

in accordance with a lease contract executed by defendant Nemesio
[Abad], one of the heirs and co-owners of the land.
"On the basis of the foregoing evidence, the court dismissed the
complaint and declared the defendant the lawful owners of the land in
question." 5
The trial court 6 concluded that there was abundant proof of private
respondents' ownership of the lot in question as against the scanty evidence
offered by petitioners. And even if the latter had built a house thereon, such
action was only tolerated by private respondents, who had originally allowed
one Marcelo Tabuso (father of Petitioner Andrea Tabuso), to construct a house
on the same lot. Besides, Petitioner Tabuso is not a compulsory heir of Ignacio
Montes, from whom she claims to have inherited the lot, subject of this
litigation. In addition, the tax declaration in his name has long been revised.
The trial court likewise gave credit to the testimony of Atty. Jose Gonzales,
private respondents' counsel who had been presented by petitioners as their
own witness. He testified that the land in question, which was adjacent to the
land he himself possessed, had been in the possession of Esteban Abad's heirs,
herein private respondents. The trial court also took note of the various tax
declarations covering the property, indicating that it was owned by private
respondents.

The Court of Appeals upheld the findings of the trial court. It ruled as
follows:
"The only issue presented to [u]s for resolution is the question of
ownership. After a careful review of the records, [w]e agree with the
trial court that the preponderance of evidence supports the claim of
ownership of defendants-appellees.
"As regards the first assigned error, [the] trial court cannot be
faulted for giving weight to the testimony of Atty. Jose Gonzales. He
testified that the land in question had been in the possession of
appellees; that he personally [knew] this as he own[ed] the land
adjacent to the land in question at the northern point; that he inherited
said land from his late father; and that he frequently visit[ed] his land
and passe[d] by the land in question. Thus, he testified of his own
personal knowledge regarding the fact of possession. Moreover, Atty.
Gonzales, although a counsel for appellees, was presented by
appellants as their own witness; hence, they are bound by his
testimony.
"As to the validity of the document of donation executed by

appellants' predecessor in interest, Maria Montes in 1923, or more than
sixty (60) years ago, it is too late in the day to raise the question of the
validity of said document. Appellants are barred by laches to raise the
same. Moreover, the issue is being raised for the first time on appeal,
which is not allowed.
"It also appears that since 1923 to the present, or for more than
60 years, appellees have been able to establish by the tax declarations
in their name and that of their predecessors in interest that they have
been in open, continuous, uninterrupted and adverse possession of the
land in question. DaHISE
xxx xxx xxx
"Finally, the area of the land appears to be immaterial. Whether

it is only 3,267 square meters as contained in the tax declaration, or
11,927 square meters, as found by the court-appointed commissioner,
the important thing to consider is that appellants have not
substantiated their claim by a preponderance of evidence adverse to
the claim of ownership and possession of appellees." 7
Issues
In their Memorandum, 8 petitioners raise the following issues:
"I
The findings and conclusion of the Honorable Court of Appeals
that private respondents are in possession and owners of the land in
dispute are contradicted by the evidence on record.
"II
The Honorable Court of Appeals committed grave abuse of

discretion amounting to lack of jurisdiction when it upheld the validity
of the Deed of Donation dated September 23, 1923 which is [a]
spurious document as it was executed by Maria Montes who was
already dead as early as 1919.
"III
The Honorable Court of Appeals gravely erred in holding private

respondents as owners of the land notwithstanding the undisputed fact
that they (private respondents) admitted the facts set forth by
appellants[,] now petitioners in their appellants brief[,] as the former
(private respondents[)] did not file their appellees brief[.]
"IV
The Order of the respondent Court of Appeals to deliver the

entire 11,927 sq. meters to private respondent is illegal and
unsupported by evidence.
"V
The Court of Appeals gravely erred in concluding that private

respondents are the owners of the land merely on the basis of their tax
declarations without evidence of actual physical possession." 9
In sum, the main issue that needs to be resolved in the case at bar is the
ownership of the land in question. The other issues presented by petitioners are
merely ancillary and will be discussed in conjunction with this main issue.
The Court's Ruling

The Petition is devoid of merit. 10
Main Issue:
Ownership of the Property
After a careful examination of the issues involved, the evidence adduced,
and the arguments or issues raised by both parties, this Court rules that the
totality of the evidence presented leans heavily in favor of herein private
respondents.
"It is settled that great weight, and even finality, is given to the factual
conclusions of the Court of Appeals which affirm those of the trial courts. Only
where it is shown that such findings are whimsical, capricious, and arbitrary can
they be overturned." 11
We agree with the findings of the Court of Appeals that for a period of
more than 60 years, private respondents have been able to establish that they
are the owners of the lot; and that for said period, they have been in open,
continuous and uninterrupted possession of the same.
Both the trial and the appellate courts were likewise correct in giving
weight to the testimony of Atty. Jose Gonzales. He testified that, being the
owner of the adjacent land, he had personal knowledge of the simple fact that
the land in question was owned by private respondents, who were in actual,
open and continuous possession thereof. Significantly, while he was private
respondents' counsel, he was presented by petitioners themselves. Having
done so, they are bound by his testimony, even if it is hostile.
The only substantial argument of petitioners supporting their claim of

ownership is their construction of a small house (barong-barong) on the
property, as acknowledged in private respondents' letter, which reads:
"Notice to Vacate
Naval, Leyte
September 24, 1981
To: Mr. & Mrs. Renato Bismorte

Barangay Calumpang
Naval, Leyte
Greetings:
You are advised to vacate the area/lot where your 'Barong-

Barong House' [was] temporarily constructed for we, the lawful owners,
shall have to use it. You are given three (3) months grace period upon
receipt thereof within which to transfer or completely vacate the
area/lot.
[Should there be f]ailure to comply [with] this notice or advise[,]

an ejectment proceeding shall be instituted or filed against you before
the proper court. Hence, compliance is hereby desired.
(Signed) Mr. NEMESIO E. ABAD
Co-Owner
(Signed) ANA A. PAGHUBASAN
Co-Owner
(Signed) NESTORA DELA CUALA" 12

Obviously, the claim of private respondents that they are the owners of
the land is supported by the above letter, in which they were asking petitioners
to vacate the property. Moreover, considering its size, which is 11,927 square
meters as found by the court-appointed commissioner, the fact that petitioners'
house is only a barong barong or make-shift shanty lends support to private
respondents' claim that the former's presence on the property was merely
tolerated.
It must be stressed "that possession and ownership are distinct legal

concepts. Ownership exists when a thing pertaining to one person is completely
subjected to his will in a manner not prohibited by law and consistent with the
rights of others. Ownership confers certain rights to the owner, one of which is
the right to dispose of the thing by way of sale. . . . . On the other hand,
possession is defined as the holding of a thing or the enjoyment of a right.
Literally, to possess means to actually and physically occupy a thing with or
without right. Possession may be had in one of two ways: possession in the
concept of an owner and possession of a holder. Possessors in the concept of
owners may be the owners themselves or those who claim to be so. On the
other hand, those who possess as mere holders acknowledge in another a
superior right which he believes to be ownership, whether his belief be right or
wrong." 13
In this case, the evidence shows that the occupation of the property by
petitioners is not in the concept of owners, because their stay is merely
tolerated. This finding is bolstered by the fact that Petitioner Andrea Tabuso is
the daughter of Marcelo Tabuso, who was merely allowed by the previous
owner, Esteban Abad, to construct a small house on the lot. As held in Caniza v.
Court of Appeals, 14 "an owner's act of allowing another to occupy his house,
rent-free[,] does not create a permanent and indefeasible right of possession in
the latter's favor." 15
Lastly, the claim of petitioners that private respondents are not in actual
possession of the land is unsubstantiated. Besides, it is not necessary that the
latter actually stay on the property in order to prove ownership of the same. As
found by both the trial and the appellate courts, since the acquisition of the
subject property by private respondents, they had religiously paid the taxes
due thereon. Further, one of the co-owners executed a lease contract over it in
favor of a tenant. These acts are clearly consistent with ownership.
Deed of Donation Not
Proven to Be Invalid
Petitioners point out that the Deed of Donation executed by Maria Montes
to Isabel Elaba, who in turn sold the lot to private respondents, is spurious since
the Deed was executed on September 23, 1923; whereas the death certificate
issued by the Holy Rosary Cathedral Parish of Naval, Leyte, shows that Maria
Montes was buried on February 21, 1919.
However, the Court of Appeals was correct in stating that petitioners were
barred by laches from questioning the validity of the Deed. "Laches has been
defined as the failure or neglect, for an unreasonable and unexplained length of
time, to do that which by exercising due diligence could or should have been
done earlier; it is negligence or omission to assert a right within a reasonable
time, warranting [the] presumption that the party entitled to it either has
abandoned it or declined to assert it. 16 It is too late for private respondents to
raise this issue now, considering that the Deed of Donation was executed more
than 60 years ago. Moreover, they are precluded from raising this argument,
because it is being raised for the first time on appeal. 17
In addition, private respondents have not proven that the Maria Montes
mentioned in the Death Certificate is the same Maria Montes who executed the
Deed of Donation. The two have been shown to have different sets of parents,
thus raising serious doubts on the identity of the person mentioned in the
Death Certificate. Lastly, the Death Certificate was not marked in evidence, nor
was it subjected to cross-examination. It is thus inadmissible in evidence.
Size of Lot Immaterial

to Private Respondents'
Claim of Ownership
Lastly, petitioners argue that private respondents own only 3,267 square
meters of the questioned lot. This is the area that appears on their Tax
Declarations. On the other hand, the entire lot that was adjudicated measures
11,927 square meters. Petitioners' contention deserves scant consideration,
because they have not substantiated, by any means whatsoever, their claim to
any part of the disputed land. Hence, they are not entitled to ownership thereof.
Besides, what defines a piece of land is not the numerical data indicated as its
area, but the boundaries or "metes and bounds" specified in its description as
enclosing the land and indicating its limits. 18
WHEREFORE, the Petition is hereby DISMISSED and the assailed Decision

and Resolution AFFIRMED. Costs against petitioners.
SO ORDERED.
Melo, Vitug, Gonzaga-Reyes and Sandoval-Gutierrez, JJ., concur.
Footnotes
1. Rollo , pp. 71-75.

2. Twelfth Division. Written by J. Nicolas P. Lapena Jr., ponente; concurred in by
JJ. Manuel C. Herrera (Division chairman) and Maria Alicia M. Austria
(member).
3. Rollo , p. 87.
4. Assailed Decision, p. 5; rollo, p. 75.
5. Assailed Decision, pp. 1-3; rollo, pp. 71-73.
6. Regional Trial Court, Branch 16, Naval, Subprovince of Biliran, Leyte.

7. Assailed Decision, pp. 3-5; rollo, pp. 73-75.
8. Rollo , pp. 129-151. Petitioners' Memorandum was signed by Atty. Arceli A.

Rubin of the Public Attorney's Office.
9. Memorandum for Petitioners, pp. 4-5; rollo, pp. 132-133.
10. To eradicate its backlog of old cases, the Court on February 27, 2001
resolved to redistribute long-pending cases to justices who had no backlog,
and who were thus tasked to prioritize them. Consequently, this case was
raffled and assigned to the undersigned ponente for study and report.
11. Compania Maritima, Inc . v. Court of Appeals, 318 SCRA 169, November 16,
1999, per Mendoza, J. See also American Home Assurance Company v. Chua,
309 SCRA 250, June 28, 1999; and Rosales v. Court of Appeals, 298 SCRA
495, November 16, 1998.
12. Memorandum for Petitioners, p. 8; rollo, p. 136.
13. Garcia v. Court of Appeals, 312 SCRA 180, August 10, 1999, per Puno, J.
14. 268 SCRA 640, February 24, 1997.
15. Caniza v. Court of Appeals, 268 SCRA 640, February 24, 1997, per Narvasa,
CJ.
16. Traders Royal Bank v. Court of Appeals, 315 SCRA 190, September 24,
1999, per Kapunan, J.
17. City of Cebu v. Heirs of Rubi, 306 SCRA 408, April 29, 1999; Keng Hua Paper
Products v. Court of Appeals, 286 SCRA 257, February 12, 1998.
18. People v. Court of Appeals, 301 SCRA 475, January 21, 1999, Panganiban, J.

THIRD DIVISION
[G.R. No. 204626. June 9, 2014.]
PAUL P. GABRIEL, JR., IRENEO C. CALWAG, THOMAS L.

TINGGA-AN, and the Heirs of JULIET B. PULKERA, petitioners,
vs. CARMELING CRISOLOGO, respondent.
DECISION
MENDOZA, J : p
Assailed in this petition for review on certiorari under Rule 45 is the

June 14, 2012 Decision 1 of the Court of Appeals (CA) and its November 14,
2012 Resolution 2 which reversed the April 18, 2011 Decision 3 of the
Regional Trial Court, Branch 6, Baguio City (RTC), and reinstated the
September 15, 2009 Decision 4 of the Municipal Trial Court in Cities, Branch
1, Baguio City (MTCC), in Civil Case No. 13209, a complaint for recovery of
possession.
The Facts
Records show that Carmeling Crisologo (Crisologo), represented by her
attorney-in-fact, Pedro Isican (Isican), filed her complaint 5 for Recovery of
Possession and/or Ownership with Damages against Juliet B. Pulkera, Paul P.
Gabriel, Ireneo C. Calwag, and Thomas L. Tingga-an (petitioners) before the
MTCC.
Crisologo alleged, among others, that she was the registered owner of
two parcels of land with a total area of approximately 2,000 square meters,
described in, and covered by, two (2) certificates of title — Transfer
Certificate of Title (TCT) Nos. T-13935 and T-13936; that the properties were
covered by an Assessment of Real Property; that the payments of realty
taxes on the said properties were updated; that sometime in 2006, she
discovered that petitioners unlawfully entered, occupied her properties by
stealth, by force and without her prior consent and knowledge, and
constructed their houses thereon; that upon discovery of their illegal
occupation, her daughter, Atty. Carmelita Crisologo, and Isican personally
went to the properties and verbally demanded that petitioners vacate the
premises and remove their structures thereon; that the petitioners begged
and promised to buy the said properties for []3,500.00 per square meter;
that she gave petitioners time to produce the said amount, but they reneged
on their promise to buy them; that petitioners refused to vacate the subject
properties despite several demands; that the petitioners knew full well that
the subject premises they were occupying were titled properties but they
insisted on unlawfully holding the same; and that she was unlawfully
dispossessed and displaced from the subject properties due to petitioners'
illegal occupation.
On the other hand, petitioners countered that the titles of Crisologo
were products of Civil Registration Case No. 1, Record 211, which were
declared void by the Supreme Court in Republic v. Marcos, 6 and reiterated in
Republic v. Marcos ; 7 that the said case was later enacted into law,
Presidential Decree (P.D.) No. 1271, entitled "An Act Nullifying Decrees of
Registration and Certificates of Title within the Baguio Townsite Reservation
Case No. 1, GLRO Record No. 211, pursuant to Act No. 931, as amended, but
Considering as Valid Certain Titles of Lands that are Alienable and
Disposable under Certain Conditions and for Other Purposes" which took
effect on December 22, 1977; that Crisologo failed to comply with the
conditions provided in Section 1 of P.D. No. 1271 for the validation of said
titles, hence, the titles were void; that petitioners had been in open, actual,
exclusive, notorious, uninterrupted, and continuous possession of the subject
land, in good faith; and that Crisologo was never in prior possession and had
no valid title over the subject land. 8
MTCC Ruling
On September 15, 2009, the MTCC rendered a decision in favor of
Crisologo, the dispositive portion of which reads: cSHIaA
WHEREFORE, the Court renders JUDGMENT in favor of the

plaintiff directing the defendants, their heirs, assigns, representatives
and/or any person acting for and in their behalves to:
a) Immediately vacate the subject properties, and to
demolish/dismantle all their houses and other structures on
the properties; should defendants refuse to comply, the
plaintiff may demolish/dismantle them at the expense of
the defendants;
b) Pay reasonable rentals of the use and occupation of the
subject properties at Php4,000.00 per month from January
2006 for each of the defendants;
c) Pay Php20,000.00 as attorney's fees, and
d) Costs of litigation.
SO ORDERED.
The MTCC ruled that Crisologo was the registered owner of the subject
parcels of land, who, as such, had declared these properties for taxation
purposes since 1969 and regularly paid the realty taxes thereon. It stated
that with Crisologo being the owner, petitioners were illegally occupying the
land.
The MTCC added that petitioners could not question Crisologo's titles
over the subject parcels of land in an ordinary civil action for recovery of
possession because such defense was a collateral attack which was
prohibited under P.D. No. 1529, otherwise known as the Property
Registration Decree. Thus, it could not inquire into the intrinsic validity of
Crisologo's titles.
Ruling of the RTC
On April 18, 2011, the RTC reversed and set aside the decision of the
MTCC. It was of the view that petitioners' assertion of the TCTs' invalidity
was not a collateral attack. It cited the rulings in Republic v. Marcos , 9 and
Republic v. Marcos , 10 which perpetually prohibited the reopening of Civil
Reservation Case No. 1, LRC Rec. No. 211, and, therefore, the registration of
parcels of lands. For said reason, the titles of Crisologo were products of
illegal proceedings nullified by this Court. She also failed to comply with the
conditions set forth in P.D. No. 1271. Accordingly, the titles were void and
the same could not be a legal basis for Crisologo to justify the eviction of
petitioners from the subject premises. Having been nullified, these
certificates of title ceased to be the best proof of ownership.
Ruling of the CA
On June 14, 2012, the CA rendered the assailed decision, setting aside
the RTC decision and reinstating that of the MTCC.
The CA held that Crisologo was entitled to the possession of the subject
parcels of land. It explained that her possession was established when she
acquired the same by sale sometime in 1967 and when the certificates of
title covering the properties were subsequently issued. It added that her
payment of realty taxes due on the said properties since 1969 further
strengthened her claim of possession. Moreover, her appointment of Isican
as administrator of the subject properties and her offer to sell the lots to the
petitioners showed that she had control over the same. Accordingly, the CA
concluded that Crisologo's right to remain in possession of the subject lots
should be preferred over the petitioners' possession regardless of the actual
condition of her titles. Hence, the petitioners, who used force in occupying
her properties, should respect, restore and not disturb her lawful possession
of the subject parcels of land.
Unsatisfied with the CA decision, the petitioners instituted this petition
anchored on the following:
ASSIGNMENT OF ERRORS
(1)
THE HONORABLE COURT OF APPEALS COMMITTED A

REVERSIBLE ERROR IN LAW WHEN IT RULED THAT
RESPONDENT HAS ACTUAL OR WAS IN PRIOR POSSESSION OF
THE LANDS INVOLVED CONTRARY TO THE EVIDENCE, THE
FACTS AND THE CIRCUMSTANCES OF THIS CASE.
(2)
THE HONORABLE COURT OF APPEALS COMMITTED A SERIOUS

ERROR IN FINDING THAT THE PURPORTED EXECUTION AND
REGISTRATION OF THE PUBLIC INSTRUMENTS RELATIVE TO
THE SALE IN 1967 OF THE SUBJECT LANDS AND THE
SUBSEQUENT ISSUANCE OF THE TITLES IN HER NAME
ESTABLISH POSSESSION.
(3)

ERROR IN FINDING THAT THE TAX DECLARATIONS AND
RECEIPTS IN THE NAME OF THE RESPONDENT ESTABLISH HER
POSSESSION OVER THE SUBJECT LOTS.
(4)

ERROR IN FINDING THAT THE SUPPOSED APPOINTMENT OF
PEDRO ISICAN AS ADMINISTRATOR ESTABLISHES HER
POSSESSION OVER THE LANDS IN DISPUTE.
(5)
THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN

RULING THAT RESPONDENT IS THE PRESENT POSSESSOR OF
THE SUBJECT LANDS REGARDLESS OF THE ACTUAL CONDITION
OF HER TITLES, IGNORING THE PRINCIPLE OF STARE DECISIS
AND ADHERENCE TO LAW.
(6)

FINDING THAT PETITIONERS DISTURBED THE POSSESSION OF
HEREIN RESPONDENT BY FORCE.
(7)

RULING THAT RESPONDENT'S SUPPOSED POSSESSION OVER
THE SUBJECT LOTS SHOULD BE PREFERRED DESPITE THE
NATURE OR CONDITION OF THE PROPERTY AS PART OF THE
PUBLIC DOMAIN. 11
Petitioners' position
Petitioners aver that Crisologo failed to show documentary or
testimonial evidence that she acquired the subject properties by sale or by
any other mode of acquisition from its previous owner. Her only bases in
claiming them were the titles issued in her name, without a deed of sale. ETDHSa
Petitioners further argue that assuming that there was really a sale
that took place, its execution and registration cannot establish her right of
possession, whether actual or constructive. First, the validity of the subject
titles was stricken down by Republic vs. Marcos cases and P.D. No. 1271.
Hence, the TCTs could not be sources of legal rights. Second, Crisologo never
took actual possession of the subject properties after the alleged sale in
1967. She appointed an administrator over the said property only in 2006.
Moreover, petitioners claim that her tax declarations and receipts
evidencing payment of taxes cannot prove her possession or ownership over
the subject properties without proof of actual possession.
Finally, petitioners submit that there are facts and circumstances that
militate against her claim of possession. They point out that the titles over
the subject properties have no encumbrances or annotations whatsoever;
that for more than forty (40) years, the subject lots have not been subjected
to any deed, agreement, contract, mortgage or any other property dealings;
that the said titles are not validated up to the present as certified by the
Register of Deeds of Baguio City; that she presented no witnesses to prove
her intention to possess the subject lots; that the documents she presented
are not reliable because they were issued only in 2008; that no
improvements were introduced by her; and that she is guilty of laches due to
her inaction to validate her titles.
Respondent's position
Crisologo opposes the petition mainly on technical grounds. First, she
argues that the supposed representatives of the petitioners who filed this
petition and signed the certification on non-forum shopping have no
authority to do so. Hence, they have no standing to prosecute because they
are not the real parties in interest. Second, she claims that the petitioners
failed to furnish the CA a copy of their motion for extension of time to file
this petition for review.
The Court's Ruling
The only question that needs to be resolved in this petition is — who
between petitioners and respondent Crisologo have a better right of
possession over the subject parcels of land. Both contending parties claim
that they have a superior possessory right over the disputed lands.
After a careful review of the records, the Court holds that Crisologo has
a better right of possession over the subject parcels of land.
Accion Publiciana: its nature and purpose
Also known as accion plenaria de posesion, accion publiciana is an
ordinary civil proceeding to determine the better right of possession of realty
independently of title. It refers to an ejectment suit filed after the expiration
of one year from the accrual of the cause of action or from the unlawful
withholding of possession of the realty.
The objective of the plaintiffs in accion publiciana is to recover
possession only, not ownership. When parties, however, raise the issue of
ownership, the court may pass upon the issue to determine who between the
parties has the right to possess the property. This adjudication, nonetheless,
is not a final and binding determination of the issue of ownership; it is only
for the purpose of resolving the issue of possession, where the issue of
ownership is inseparably linked to the issue of possession. The adjudication
of the issue of ownership, being provisional, is not a bar to an action
between the same parties involving title to the property. The adjudication, in
short, is not conclusive on the issue of ownership. 12
In her complaint, Crisologo prayed that she be declared in prior actual
possession of the properties in dispute and that petitioners vacate the same
and demolish their houses therein. She alleged, among others, that she was
the registered owner of the subject parcels of land and that petitioners
unlawfully entered her properties by stealth, force and without her prior
consent and knowledge. Clearly, she primarily wanted to recover possession
of the subject parcels of land from petitioners. Hence, the case is an accion
publiciana. cSaADC
Nonetheless, the petitioners have raised the issue of ownership in their

pleadings. They mainly argue that Crisologo's titles on the subject properties
are void and that they have been in open, actual, exclusive, notorious,
uninterrupted and continuous possession over the subject properties in good
faith.
The nullity of the decrees of registration
and certificates of titles in Section 1 of
P.D. No. 1271 is not absolute
Although Section 1 of P.D. No. 1271 13 invalidated decrees of
registration and certificates of title within the Baguio Townsite Reservation
Case No. 1, GLRO Record No. 211, the nullity, however, is not that sweeping.
The said provision expressly states that "all certificates of titles issued on or
before July 31, 1973 shall be considered valid and the lands covered by
them shall be deemed to have been conveyed in fee simple to the registered
owners" upon 1) showing proof that the land covered by the subject title is
not within any government, public or quasi-public reservation, forest,
military or otherwise, as certified by appropriating government agencies;
and 2) compliance by the title holder with the payment to the Republic of the
Philippines of the correct assessed value of the land within the required
period.
In the case at bench, the records show that the subject parcels of land
were registered on August 24, 1967. The titles are, thus, considered valid
although subject to the conditions set. But whether or not Crisologo complied
with the said conditions would not matter because, this would be a collateral
attack on her registered titles, as would be discussed later.
At any rate, petitioners, as private individuals, are not the proper
parties to question the status of the respondent's registered titles. Section 6
of P.D. No. 1271 14 expressly states that the "Solicitor General shall
institute such actions or suits as may be necessary to recover possession of
lands covered by all void titles not validated under this Decree."
The respondent's certificates of title
give her the better right to possess
the subject parcels of land
It is settled that a Torrens title is evidence of indefeasible title to
property in favor of the person in whose name the title appears. It is
conclusive evidence with respect to the ownership of the land described
therein. It is also settled that the titleholder is entitled to all the attributes of
ownership of the property, including possession. Thus, in Arambulo v.
Gungab, 15 this Court declared that the "age-old rule is that the person who
has a Torrens title over a land is entitled to possession thereof." 16
The records show that TCT No. T-13935 17 and TCT No. T-13936 18 bear
the name of Carmeling P. Crisologo, as the registered owner. Petitioners do
not dispute the fact that she has a Torrens title over the subject parcels of
land.
The respondent's Torrens certificates of title
are immune from a collateral attack.
As a holder of a Torrens certificate of title, the law protects Crisologo
from a collateral attack on the same. Section 48 of P.D. No. 1529, otherwise
known as the Property Registration Decree, provides that a certificate of title
cannot be the subject of a collateral attack. Thus:
SEC. 48. Certificate not subject to collateral attack. — A
certificate of title shall not be subject to collateral attack. It
cannot be altered, modified, or canceled except in a direct proceeding
in accordance with law.
This rule has been applied in innumerable cases, one of which was
Francisco Madrid v. Spouses Mapoy, 19 where it was written:
Registration of land under the Torrens system, aside from
perfecting the title and rendering it indefeasible after the lapse of the
period allowed by law, also renders the title immune from collateral
attack. A collateral attack transpires when, in another action to obtain
a different relief and as an incident of the present action, an attack is
made against the judgment granting the title. This manner of attack is
to be distinguished from a direct attack against a judgment granting
the title, through an action whose main objective is to annul, set aside,
or enjoin the enforcement of such judgment if not yet implemented, or
to seek recovery if the property titled under the judgment had been
disposed of. To permit a collateral attack on respondents-plaintiffs' title
is to water down the integrity and guaranteed legal indefeasibility of a
Torrens title. DTIaCS
The petitioners-defendants' attack on the validity of respondents-

plaintiffs' title, by claiming that fraud attended its acquisition, is a
collateral attact on the title. It is an attack incidental to their
quest to defend their possession of the properties in an
"accion publiciana," not in a direct action whose main objective
is to impugn the validity of the judgment granting the title. This
is the attack that possession of a Torrens Title specifically guards
against; hence, we cannot entertain, much less accord credit to, the
petitioners-defendants' claim of fraud to impugn the validity of the
respondents-plaintiffs' title to their property.
As the lawful possessor, the respondent
has the right to eject the petitioners
The Court agrees with the CA that the only question that needs to be
resolved in this suit to recover possession is who between the parties is
entitled to the physical or material possession of the subject parcels of land.
Therefore, the foremost relevant issue that needs to be determined here is
simply possession, not ownership.
The testimonial and documentary evidence on record prove that
Crisologo has a preferred claim of possession over that of petitioners. It
cannot be denied that she bought the subject properties from the previous
owner in 1967, which was why the transfer certificates of title were
subsequently issued in her name. Records further show that she has been
paying the realty taxes on the said properties since 1969. She likewise
appointed Isican as administrator of the disputed lands. More importantly,
there is no question that she offered to sell to petitioners the portions of the
subject properties occupied by them. Hence, she deserves to be respected
and restored to her lawful possession as provided in Article 539 of the New
Civil Code. 20
WHEREFORE, the petition is DENIED.
SO ORDERED.
Velasco, Jr., Peralta, Villarama, Jr.* and Leonen, JJ., concur.
Footnotes
* Designated Acting Member in view of the vacancy in the Third Division, per
Special Order No. 1691 dated May 22, 2014.
1. Rollo , pp. 34-45, (Penned by Associate Justice Mariflor P. Punzalan Castillo and
concurred in by Associate Justice Franchito N. Diamante and Associate
Justice Edwin D. Sorongon).
2. Id. at 46-47.
3. Id. at 264-270.
4. Id. at 224-236.
5. Id. at 48-53.
6. G.R. No. L-29675, September 30, 1969, 29 SCRA 517.
7. 152 Phil. 204 (1973).
8. Rollo , pp. 54-59.
9. Supra note 6.
10. Supra note 7.
11. Rollo , pp. 19-20.
12. Asuncion Urieta Vda. De Aguilar v. Spouses Alfaro, G.R. No. 164402, July 5,
2010, 623 SCRA 130, 140-141.
13. Section 1. All orders and decisions issued by the Court of First
Instance of Baguio and Benguet in connection with the proceedings for the
reopening of Civil Reservation Case No. 1, GLRO Record No. 211, covering
lands within the Baguio Townsite Reservation, and decreeing such lands in
favor of private individuals or entities, are hereby declared null and void and
without force and effect; PROVIDED, HOWEVER, that all certificates of titles
issued on or before July 31, 1973 shall be considered valid and the lands
covered by them shall be deemed to have been conveyed in fee simple to
the registered owners upon a showing of, and compliance with, the following
conditions:
(a) The lands covered by the titles are not within any government,
public or quasi-public reservation, forest, military or otherwise, as certified by
appropriating government agencies;
(b) Payment by the present title holder to the Republic of the
Philippines of an amount equivalent to fifteen per centum (15%) of the
assessed value of the land whose title is voided as of revision period 1973
(P.D. 76), the amount payable as follows: Within ninety (90) days of the
effectivity of this Decree, the holders of the titles affected shall manifest their
desire to avail of the benefits of this provision and shall pay ten per centum
(10%) of the above amount and the balance in two equal installments, the
first installment to be paid within the first year of the effectivity of this
Decree and the second installment within a year thereafter.
14. Section 6. The Secretary of Justice, as Chairman, the Solicitor General and the
Director of Lands, as members, are hereby constituted as a committee which
shall promulgate rules and regulations necessary and appropriate to
implement this Decree. They or their representatives shall assure compliance
with this Decree and may call upon any government agency or office for
assistance in the performance of this task.
The Solicitor General shall institute such actions or suits as may be

necessary to recover possession of lands covered by all void titles not
validated under this Decree.
15. 508 Phil. 612, 621 (2005).
16. Asuncion Urieta Vda. De Aguilar v. Spouses Alfaro, supra note 12 at 141.
17. Rollo , p. 205.
18. Id. at 207.
19. G.R. No. 150887, August 14, 2009, 596 SCRA 14, 26-27.
20. Art. 539. Every possessor has a right to be respected in his possession; and
should he be disturbed therein he shall be protected in or restored to said
possession by the means established by the laws and the Rules of the Court.

THIRD DIVISION
[G.R. No. 137944. April 6, 2000.]
FERNANDA MENDOZA CEQUENA and RUPERTA MENDOZA

LIRIO, petitioners, vs. HONORATA MENDOZA BOLANTE ,
respondent.
Romeo M. Flores for petitioners.

Public Attorney's Office for respondent.
SYNOPSIS
On October 15, 1975, respondent Honorata Bolante and Miguel Mendoza,

brother of petitioners, had a dispute on the ownership of the land during the
cadastral survey. Because of this dispute, herein petitioners filed a civil case
against respondent claiming ownership and possession of the parcel of land in
question. After trial, the court a quo rendered its judgment in favor of
petitioners awarding the questioned property to petitioners and ordered herein
respondent to vacate the property subject of the case and deliver possession
thereof to the heirs of Margarito Mendoza. Aggrieved by the decision,
respondent filed an appeal to the Court of Appeals. The appellate court
reversed the trial court's decision. Hence, this Petition.
The Supreme Court found the petition not meritorious. The Court ruled
that the appellate court was correct in not giving credence to the affidavit
presented by the petitioner for the reason that it cannot be admitted as an
exception to the hearsay rule under the dead man's statute. Likewise, the
affidavit cannot be considered an ancient document as the petitioner failed to
explain how the purported signature of one of the respondents could have been
affixed as she was an illiterate woman who had never had any formal schooling.
Tax declarations and receipts are not conclusive evidence of ownership. At
most, they constitute mere prima facie proof of ownership or possession of the
property for which taxes had been paid. In the absence of actual public and
adverse possession, the declaration of the land for tax purposes does not prove
ownership. In sum, the petitioners' claim of ownership of the whole parcel has
no legal basis. Accordingly, the Court denied the petition and the assailed
decision and resolution of the appellate court were affirmed. EHSADa
SYLLABUS
1. REMEDIAL LAW; EVIDENCE; HEARSAY RULE; DEAD MAN'S STATUTE;

REQUISITES; A DECLARATION AGAINST INTEREST IS NOT ADMISSIBLE IF THE
DECLARANT IS AVAILABLE TO TESTIFY AS WITNESS. — Before a private
document offered as authentic can be received in evidence, its due execution
and authenticity must be proved first. And before a document is admitted as an
exception to the hearsay rule under the Dead Man's Statute, the offeror must
show (a) that the declarant is dead, insane or unable to testify; (b) that the
declaration concerns a fact cognizable by the declarant; (c) that at the time the
declaration was made, he was aware that the same was contrary to his
interest; and (d) that circumstances render improbable the existence of any
motive to falsify. In this case, one of the affiants happens to be the respondent,
who is still alive and who testified that the signature in the affidavit was not
hers. A declaration against interest is not admissible if the declarant is available
to testify as a witness. Such declarant should be confronted with the statement
against interest as a prior inconsistent statement.
2. ID.; ID.; ANCIENT DOCUMENT; AFFIDAVIT; REQUISITES TO BE

CONSIDERED AN ANCIENT DOCUMENT; AN AFFIDAVIT DOES NOT
AUTOMATICALLY BECOME A PUBLIC DOCUMENT JUST BECAUSE IT CONTAINS A
NOTARIAL JURAT. — The affidavit cannot be considered an ancient document
either. An ancient document is one that is (1) more than 30 years old, (2) found
in the proper custody, and (3) unblemished by any alteration or by any
circumstance of suspicion. It must on its face appear to be genuine. The
petitioners herein failed, however, to explain how the purported signature of
Eduarda Apiado could have been affixed to the subject affidavit if, according to
the witness, she was an illiterate woman who never had any formal schooling.
This circumstance casts suspicion on its authenticity. Not all notarized
documents are exempted from the rule on authentication. Thus, an affidavit
does not automatically become a public document just because it contains a
notarial jurat. Furthermore, the affidavit in question does not state how the
ownership of the subject land was transferred from Sinforoso Mendoza to
Margarito Mendoza. By itself, an affidavit is not a mode of acquiring ownership.
3. CIVIL LAW; PROPERTY; OWNERSHIP; BASIS OF A CLAIM FOR

OWNERSHIP THROUGH PRESCRIPTION. — Ownership of immovable property is
acquired by ordinary prescription through possession for ten years. Being the
sole heir of her father, respondent showed through his tax receipt that she had
been in possession of the land for more than ten years since 1932. When her
father died in 1930, she continued to reside there with her mother. When she
got married, she and her husband engaged in kaingin inside the disputed lot for
their livelihood. Respondent's possession was not disturbed until 1953 when
the petitioners' father claimed the land. But by then, her possession, which was
in the concept of owner — public, peaceful, and uninterrupted — had already
ripened into ownership. Furthermore she herself, after her father's demise,
declared and paid realty taxes for the disputed land. Tax receipts and
declarations of ownership for taxation, when coupled with proof of actual
possession of the property, can be the basis of a claim for ownership through
prescription.
4. ID.; ID.; ID.; CANNOT BE ACQUIRED BY MERE OCCUPATION. — In

contrast, the petitioners, despite thirty-two years of farming the subject land,
did not acquire ownership. It is settled that ownership cannot be acquired by
mere occupation. Unless coupled with the element of hostility toward the true
owner, occupation and use, however long, will not confer title by prescription or
adverse possession. Moreover, the petitioners cannot claim that their
possession was public, peaceful and uninterrupted. Although their father and
brother arguably acquired ownership through extraordinary prescription
because of their adverse possession for thirty-two years (1953-1985), this
supposed ownership cannot extend to the entire disputed lot, but must be
limited to the portion that they actually farmed. We cannot sustain the
petitioners' contention that their ownership of the disputed land was
established before the trial court through the series of tax declarations and
receipts issued in the name of Margarito Mendoza. Such documents prove that
the holder has a claim of title over the property. Aside from manifesting a
sincere desire to obtain title thereto, they announce the holder's adverse claim
against the state and other interested parties.
5. ID.; ID.; ID.; TAX DECLARATIONS AND RECEIPTS ARE NOT

CONCLUSIVE EVIDENCE OF OWNERSHIP. — However, tax declarations and
receipts are not conclusive evidence of ownership. At most, they constitute
mere prima facie proof of ownership or possession of the property for which
taxes have been paid. In the absence of actual public and adverse possession,
the declaration of the land for tax purposes does not prove ownership. In sum,
the petitioners' claim of ownership of the whole parcel has no legal basis.
DECISION
PANGANIBAN, J : p
Tax receipts and declarations are prima facie proofs of ownership or

possession of the property for which such taxes have been paid. Coupled with
proof of actual possession of the property, they may become the basis of a
claim for ownership. By acquisitive prescription, possession in the concept of
owner — public, adverse, peaceful and uninterrupted — may be converted to
ownership. On the other hand, mere possession and occupation of land cannot
ripen into ownership.
The Case
Before us is a Petition for Review on Certiorari of the March 19, 1999
Decision 1 of the Court of Appeals 2 (CA) in CA-GR CV No. 43423. The assailed
Decision disposed as follows: 3
"WHEREFORE, for all the foregoing, the decision of the trial court
appealed from is REVERSED and SET ASIDE. In lieu thereof, judgment is
hereby rendered declaring . . . Honorata Mendoza Bolante the rightful
owner and possessor of the parcel of land which is the subject of this
appeal."
The Facts
The Petition herein refers to a parcel of land situated in Barangay Bangad,
Binangonan, Province of Rizal, having an area of 1,728 square meters and
covered by Tax Declaration No. 26-0027. LLjur
The undisputed antecedents of this case are narrated by the Court of

Appeals as follows: 4
"The facts not disputed revealed that prior to 1954, the land was
originally declared for taxation purposes in the name of Sinforoso
Mendoza, father of [respondent] and married to Eduarda Apiado.
Sinforoso died in 1930. [Petitioners] were the daughters of Margarito
Mendoza. On the basis of an affidavit, the tax declaration in the name
of Sinforoso Mendoza of the contested lot was cancelled and
subsequently declared in the name of Margarito Mendoza. Margarito
and Sinforoso are brothers. [Respondent] is the present occupant of
the land. Earlier, on October 15, 1975, [respondent] and Miguel
Mendoza, another brother of [petitioners], during the cadastral survey
had a dispute on [the] ownership of the land.
"During the pre-trial conference, parties stipulated the following

facts:
‘1) The land subject of the case was formerly declared for
taxation purposes in the name of Sinforoso Mendoza prior
to 1954 but is now declared in the name of Margarito
Mendoza.
‘2) The parties agree[d] as to the identity of the land subject

of instant case.
‘3) [Petitioners] are the daughters of Margarito Mendoza while

the [respondent] is the only daughter of Sinforoso
Mendoza.
'4) Margarito Mendoza and Sinforoso Mendoza [were]

brothers, now deceased.
‘5) During the cadastral survey of the property on October

15, 1979 there was already a dispute between Honorata M.
Bolante and Miguel Mendoza, brother of [petitioners].
‘6) [Respondent was] occupying the property in question.
‘The only issue involved [was] who [was] the lawful owner
and possessor of the land subject of the case.’
"After trial, the court a quo rendered its judgment in favor of

[petitioners], the dispositive portion of which reads as follows:
‘Wherefore, in view of the foregoing considerations,

judgment is hereby rendered for the [petitioners] and against the
[respondent]:
‘1. Declaring that the parcel of land situated in Bangad,
Binangonan, Rizal covered by tax declaration no. 26-0027
in the name of Margarito Mendoza belong to his heirs, the
[petitioners] herein;
‘2. Ordering [respondent] to vacate the property subject of

the case and deliver possession thereof to the heirs of
Margarito Mendoza.
‘3. Ordering the [respondent] to indemnify the [petitioners] in

the sum of P10,000.00, as actual damages.
‘4. Ordering the [respondent] to pay the costs.’"

The Court of Appeals reversed the trial court because the genuineness
and the due execution of the affidavit allegedly signed by the respondent and
her mother had not been sufficiently established. The notary public or anyone
else who had witnessed the execution of the affidavit was not presented. No
expert testimony or competent witness ever attested to the genuineness of the
questioned signatures.
The CA further ruled that the affidavit was insufficient to overcome the
denial of respondent and her mother. The former testified that the latter, never
having attended school, could neither read nor write. Respondent also said that
she had never been called "Leonor," which was how she was referred to in the
affidavit.
Moreover, the appellate court held that the probative value of petitioners'
tax receipts and declarations paled in comparison with respondent's proof of
ownership of the disputed parcel. Actual, physical, exclusive and continuous
possession by respondent since 1985 indeed gave her a better title under
Article 538 of the Civil Code.
Hence, this Petition. 5
Issues
Insisting that they are the rightful owners of the disputed land, the
petitioners allege that the CA committed these reversible errors: 6
"1. . . . [I]n not considering the affidavit as an exception to
the general rule that an affidavit is classified as hearsay evidence,
unless the affiant is placed on the witness stand; and
"2. . . . [I]n holding that respondent has been in actual and

physical possession, coupled with . . . exclusive and continuous
possession of the land since 1985, which are evidence of the best kind
of circumstance proving the claim of the title of ownership and enjoys
the presumption of preferred possessor."
The Court's Ruling

The Petition has no merit.
First Issue: Admissibility of the Affidavit

Petitioners dispute the CA's ruling that the affidavit was not the best
evidence of their father's ownership of the disputed land, because the "affiant
was not placed on the witness stand." They contend that it was unnecessary to
present a witness to establish the authenticity of the affidavit because it was a
declaration against respondent's interest and was an ancient document. As a
declaration against interest, it was an exception to the hearsay rule. As a
necessary and trustworthy document, it was admissible in evidence. And
because it was executed on March 24, 1953, it was a self-authenticating
ancient document. LexLib
We quote below the pertinent portion of the appellate court's ruling:7

"While it is true that the affidavit was signed and subscribed
before a notary public, the general rule is that affidavits are classified
as hearsay evidence, unless affiants are placed on the witness stand
(People's Bank and Trust Company vs. Leonidas, 207 SCRA 164).
Affidavits are not considered the best evidence, if affiants are available
as witnesses (Vallarta vs. Court of Appeals, 163 SCRA 587). The due
execution of the affidavit was not sufficiently established. The notary
public or others who saw that the document was signed or at least
[could] confirm its recitals [were] not presented. There was no expert
testimony or competent witness who attested to the genuineness of
the questioned signatures. Worse, [respondent] denied the
genuineness of her signature and that of her mother . . . [Respondent]
testified that her mother was an illiterate and as far as she knew her
mother could not write because she had not attended school (p. 7,
ibid). Her testimony was corroborated by Ma. Sales Bolante Basa, who
said the [respondent's] mother was illiterate."
The petitioners' allegations are untenable. Before a private document

offered as authentic can be received in evidence, its due execution and
authenticity must be proved first. 8 And before a document is admitted as an
exception to the hearsay rule under the Dead Man's Statute, the offeror must
show (a) that the declarant is dead, insane or unable to testify; (b) that the
declaration concerns a fact cognizable by the declarant; (c) that at the time the
declaration was made, he was aware that the same was contrary to his
interest; and (d) that circumstances render improbable the existence of any
motive to falsify. 9
In this case, one of the affiants happens to be the respondent, who is still
alive and who testified that the signature in the affidavit was not hers. A
declaration against interest is not admissible if the declarant is available to
testify as a witness. 10 Such declarant should be confronted with the statement
against interest as a prior inconsistent statement.
The affidavit cannot be considered an ancient document either. An

ancient document is one that is (1) more than 30 years old, (2) found in the
proper custody, and (3) unblemished by any alteration or by any circumstance
of suspicion. 11 It must on its face appear to be genuine. The petitioners herein
failed, however, to explain how the purported signature of Eduarda Apiado
could have been affixed to the subject affidavit if, according to the witness, she
was an illiterate woman who never had any formal schooling. This circumstance
casts suspicion on its authenticity.
Not all notarized documents are exempted from the rule on

authentication. Thus, an affidavit does not automatically become a public
document just because it contains a notarial jurat. Furthermore, the affidavit in
question does not state how the ownership of the subject land was transferred
from Sinforoso Mendoza to Margarito Mendoza. By itself, an affidavit is not a
mode of acquiring ownership.
Second Issue: Preference of Possession

The CA ruled that the respondent was the preferred possessor under
Article 538 of the Civil Code because she was in notorious, actual, exclusive
and continuous possession of the land since 1985. Petitioners dispute this
ruling. They contend that she came into possession through force and violence,
contrary to Article 536 of the Civil Code.
We concede that despite their dispossession in 1985, the petitioners did

not lose legal possession because possession cannot be acquired through force
or violence. 12 To all intents and purposes, a possessor, even if physically
ousted, is still deemed the legal possessor. 13 Indeed, anyone who can prove
prior possession, regardless of its character, may recover such possession. 14
However, possession by the petitioners does not prevail over that of the
respondent. Possession by the former before 1985 was not exclusive, as the
latter also acquired it before 1985. The records show that the petitioners’ father
and brother, as well as the respondent and her mother were simultaneously in
adverse possession of the land.
Before 1985, the subject land was occupied and cultivated by the
respondent's father (Sinforoso), who was the brother of petitioners' father
(Margarito), as evidenced by Tax Declaration No. 26425. 15 When Sinforoso died
in 1930, Margarito took possession of the land and cultivated it with his son
Miguel. At the same time, respondent and her mother continued residing on the
lot.
When respondent came of age in 1948, she paid realty taxes for the years
1932-1948. 16 Margarito declared the lot for taxation in his name in 1953 17 and
paid its realty taxes beginning 1952. 18 When he died, Miguel continued
cultivating the land. As found by the CA, the respondent and her mother were
living on the land, which was being tilled by Miguel until 1985 when he was
physically ousted by the respondent. 19
Based on Article 538 of the Civil Code, the respondent is the preferred
possessor because, benefiting from her father's tax declaration of the subject
lot since 1926, she has been in possession thereof for a longer period. On the
other hand, petitioners' father acquired joint possession only in 1952.
Third Issue: Possession of Better Right

Finally, the petitioners challenge the CA ruling that "actual and physical
coupled with the exclusive and continuous possession [by respondent] of the
land since 1985" proved her ownership of the disputed land. The respondent
argues that she was legally presumed to possess the subject land with a just
title since she possessed it in the concept of owner. Under Article 541 of the
Code, she could not be obliged to show or prove such title.
The respondent's contention is untenable. The presumption in Article 541

of the Civil Code is merely disputable; it prevails until the contrary is proven. 20
That is, one who is disturbed in one's possession shall, under this provision, be
restored thereto by the means established by law. 21 Article 538 settles only the
question of possession, and possession is different from ownership. Ownership
in this case should be established in one of the ways provided by law.
To settle the issue of ownership, we need to determine who between the

claimants has proven acquisitive prescription. 22
Ownership of immovable property is acquired by ordinary prescription

through possession for ten years. 23 Being the sole heir of her father,
respondent showed through his tax receipt that she had been in possession of
the land for more than ten years since 1932. When her father died in 1930, she
continued to reside there with her mother. When she got married, she and her
husband engaged in kaingin inside the disputed lot for their livelihood. 24
Respondent's possession was not disturbed until 1953 when the

petitioners' father claimed the land. But by then, her possession, which was in
the concept of owner — public, peaceful, and uninterrupted 25 — had already
ripened into ownership. Furthermore she herself, after her father's demise,
declared and paid realty taxes for the disputed land. Tax receipts and
declarations of ownership for taxation, when coupled with proof of actual
possession of the property, can be the basis of a claim for ownership through
prescription. 26
In contrast, the petitioners, despite thirty-two years of farming the subject

land, did not acquire ownership. It is settled that ownership cannot be acquired
by mere occupation. 27 Unless coupled with the element of hostility toward the
true owner, 28 occupation and use, however long, will not confer title by
prescription or adverse possession. Moreover, the petitioners cannot claim that
their possession was public, peaceful and uninterrupted. Although their father
and brother arguably acquired ownership through extraordinary prescription
because of their adverse possession for thirty-two years (1953-1985), 29 this
supposed ownership cannot extend to the entire disputed lot, but must be
limited to the portion that they actually farmed.
We cannot sustain the petitioners' contention that their ownership of the

disputed land was established before the trial court through the series of tax
declarations and receipts issued in the name of Margarito Mendoza. Such
documents prove that the holder has a claim of title over the property. Aside
from manifesting a sincere desire to obtain title thereto, they announce the
holder's adverse claim against the state and other interested parties. 30
However, tax declarations and receipts are not conclusive evidence of

ownership. 31 At most, they constitute mere prima facie proof of ownership or
possession of the property for which taxes have been paid. 32 In the absence of
actual public and adverse possession, the declaration of the land for tax
purposes does not prove ownership. 33 In sum, the petitioners' claim of
ownership of the whole parcel has no legal basis.
WHEREFORE, the Petition is DENIED and the assailed Decision and

Resolution AFFIRMED. Costs against petitioners. LibLex
SO ORDERED.
Melo, Vitug, Purisima and Gonzaga-Reyes, JJ., concur.
Footnotes
1. Rollo , pp. 30-39.

2. Seventh Division composed of JJ. Mariano M. Umali (ponente); Fermin A.
Martin Jr. (Division chairman) and Romeo J. Callejo Sr. (member), both
concurring.
4. CA Decision, pp. 2-5; rollo, pp. 31-34.
5. This case was deemed submitted for decision on November 29, 1999, upon
simultaneous receipt by this Court of the parties’ Memoranda. Petitioners’
Memorandum was signed by Atty. Romeo M. Flores while that of respondent
was signed by Attys. Arceli A. Rubin and Rogel F. Quijano.
6. Petitioners' Memorandum, pp. 5-6; rollo, pp. 85-86.
8. Rule 132, Sec. 20, Rules of Court.
9. Rule 130, Sec. 38, Rules of Court; Fuentes Jr. v. Court of Appeals, 253 SCRA
430, 435, February 9, 1996; People v. Bernal, 274 SCRA 197, 203, June 19,
1997.
10. Lichauco v. Atlantic, Gulf & Pacific Co ., 84 Phil. 330, 342, August 23, 1949.
11. Rule 132, Sec. 21, Rules of Court; Heirs of Salud Dizon Salamat v. Tamayo,
298 SCRA 313, 318, October 30, 1998; and Heirs of Demetria Lacsa v. Court
of Appeals, 197 SCRA 234, 242, May 20, 1991.
12. Art. 536, Civil Code; Bishop of Lipa v. Municipality of San Jose, 27 Phil. 571,
575, August 29, 1914.
13. Ayala de Roxas v. Maglonso, 8 Phil. 745, 749, April 27, 1906.
14. Heirs of Placido Miranda v. Court of Appeals, 255 SCRA 368, 379, March 29,
1996.
15. Exhibit "1," RTC Records, p. 94.
16. Exhibit "2," RTC Records, p. 95.
17. Exh. "D," RTC Records, p. 77. Petitioners also submitted Tax Declaration
Nos. 10410 for 1965, 13481 for 1974, and 26-0027 for 1985. RTC Records,
pp. 78-79 & 57.

18. Exh. "B-17," RTC Records, p. 75. Real Property Tax receipts submitted by
the petitioners covered the years 1953-1979. RTC Records, pp. 58-75.
19. CA Decision, p. 8; rollo, p. 37. TSN, November 13, 1992, p. 11.
20. Arturo M. Tolentino, Commentaries & Jurisprudence on the Civil Code of the
Philippines, Vol. II, 1992 ed., p. 284; City of Manila v. Del Rosario, 5 Phil. 227,
231, November 10, 1905; Chan v. Court of Appeals, 33 SCRA 737, 745, June
30, 1970; and Perez v. Mendoza, 65 SCRA 480, 490, July 25, 1975.
21. Art. 539, Civil Code.
22. Article 540 of the Civil Code provides: "Only the possession acquired and
enjoyed in the concept of owner can serve as a title for acquiring dominion."

24. Comment, p. 8; rollo, p. 53; TSN, January 4, 1993, p. 3.
26. Heirs of Miranda v. CA, supra, p. 375.

28. Corporation de PP. Dominicos v. Lazaro, 42 Phil. 119, 122 & 126-127,
September 10, 1921.
29. Heirs of Miranda v. CA, supra, p. 368; and Heirs of Segunda Maningding v.
Court of Appeals, 276 SCRA 601, 605, July 31, 1997.
30. Republic v. Court of Appeals, 258 SCRA 712, 720, July 12, 1996.
31. Director of Lands v. Intermediate Appellate Court, 195 SCRA 38, 44, March
11, 1991.
32. Heirs of Vencilao Sr. v. Court of Appeals, 288 SCRA 574, 581-582, April 1,
1998; Deiparine v. Court of Appeals, 299 SCRA 668, 675, December 4, 1998;
Titong v. Court of Appeals , 287 SCRA 102, 115, March 6, 1998.
33. De Luna v. Court of Appeals, 212 SCRA 276, 280, August 6, 1992.

SECOND DIVISION
[G.R. No. 193426. September 29, 2014.]
SUBIC BAY LEGEND RESORTS AND CASINOS, INC. , petitioner,

vs. BERNARD C. FERNANDEZ, respondent.
DECISION
DEL CASTILLO, J : p
This Petition for Review on Certiorari 1 assails the April 27, 2010 Decision
2 and August 24, 2010 Resolution 3 of the Court of Appeals (CA) in CA-G.R. CV
No. 91758, entitled "Bernard C. Fernandez, Plaintiff-Appellee, versus Subic Bay

Legend Resorts and Casinos, Inc., Defendant Appellant ," which affirmed in toto
the May 17, 2006 Decision 4 of the Regional Trial Court (RTC) of Olongapo City,
Branch 74, in Civil Case No. 237-0-97.
Factual Antecedents
Petitioner Subic Bay Legend Resorts and Casinos, Inc., a duly organized
and existing corporation operating under Philippine laws, operates the Legenda
Hotel and Casino (Legenda) located in the Subic Bay Freeport Zone in
Zambales. On the other hand, respondent Bernard C. Fernandez is the plaintiff
in Civil Case No. 237-0-97 prosecuted against petitioner in Olongapo RTC.
As determined by the CA, the facts of the case are as follows:

At around eleven o'clock in the evening of 6 June 1997, the
appellee's 5 brother[,] Ludwin Fernandez[,] visited the Legenda Hotel
and Casino . . . owned and operated by the appellant 6 and located
along the Waterfront Road, Subic Bay Freeport Zone. Legenda had
strategically installed several closed-circuit television (CCTV) cameras
as part of security measures required by its business. The monitors
revealed that Ludwin changed . . . $5,000.00 worth of chips into
smaller denominations. Legenda admitted in its brief that its
surveillance staff paid close attention to Ludwin simply because it was
"unusual" for a Filipino to play using dollar-denominated chips. After
Ludwin won $200.00 in a game of baccarat, he redeemed the value of
chips worth $7,200.00. A review of the CCTV recordings showed that
the incident was not the first time Ludwin visited the Casino, as he had
also been there on 5 June 1997.
An operation was launched by Legenda to zero-in on Ludwin

whose picture was furnished its security section. Thus, unbeknownst to
him, he was already closely watched on 13 June 1997 when he went
with another brother, Deoven[,] to the casino at around the same time
or at 11:17 p.m. After playing (and losing $100.00) only one round of
baccarat, the siblings had their chips encashed at two separate
windows. Since the cashiers were apprised of a supposed irregularity,
they "froze" the transaction.
Shortly thereafter, Legenda's internal security officers accosted

Ludwin and Deoven and ordered them to return the cash and they
complied without ado because they were being pulled away. The two
were eventually escorted to private rooms where they were separately
interrogated about the source of the chips they brought. They were
held for about seven hours until the wee hours of the morning, without
food or sleep. The ultimatum was simple: they confess that the chips
were given by a certain employee, Michael Cabrera, or they would not
be released from questioning. The same line of questioning confronted
them when they were later turned-over for blotter preparation to the
Intelligence and Investigation Office of the Subic Bay Metropolitan
Authority (IIO SBMA). Finally, the brothers succumbed to Legenda's
instruction to execute a joint statement implicating Cabrera as the
illegal source of the chips. Due to hunger pangs and fatigue, they did
not disown the statement even when they subscribed the same before
the prosecutor in whose office they were [later] brought. On the other
hand, they signed for basically the same reason a document purporting
to show that they were "released to [their] brother's custody in good
condition." At the time, Deoven was about 21 years old, in his second
year of engineering studies and was not familiar with the so-called
"estafa" with which the security personnel threatened to sue him for;
although he was quite aware of the consequences of a crime such as
direct assault because he had previously been convicted thereof. About
two weeks later, Deoven executed a retraction in Baguio City where he
took up his engineering course. 7
DTSaIc
On July 1, 1997, respondent filed Civil Case No. 237-0-97 for recovery of
sum of money with damages against petitioner, on the premise that on June 13,
1997, he went to Legenda with his brothers Ludwin and Deoven; that he
handed over Legenda casino chips worth US$6,000.00, which belonged to him,
to his brothers for the latter to use at the casino; that petitioner accosted his
brothers and unduly and illegally confiscated his casino chips equivalent to
US$5,900.00; and that petitioner refused and continues to refuse to return the
same to him despite demand. His Complaint 8 prayed for the return of the
casino chips and an award of P50,000.00 moral damages, P50,000.00
exemplary damages, P30,000.00 attorney's fees, P20,000.00 litigation
expenses, and costs.
Petitioner's Answer with Compulsory Counterclaim 9 essentially alleged
that right after Ludwin and Deoven's transactions with the Legenda cashier
were frozen on June 13, 1997, they voluntarily agreed to proceed to the
Legenda security office upon invitation, where Ludwin voluntarily informed
security officers that it was a certain Michael Cabrera (Cabrera) — a Legenda
table inspector at the time — who gave him the casino chips for encashment,
taught him how to play baccarat and thereafter encash the chips, and rewarded
him with P1,000.00 for every $1,000.00 he encashed; that Ludwin pointed to a
picture of Cabrera in a photo album of casino employees shown to him; that
Ludwin and Deoven were then brought to the IIO SBMA, where they reiterated
their statements made at the Legenda security office; that they volunteered to
testify against Cabrera; that respondent himself admitted that it was Cabrera
who gave him the casino chips; that Ludwin and Deoven voluntarily executed a
joint affidavit before the Olongapo City Prosecutor's Office, which they
subsequently recanted; that respondent had no cause of action since the
confiscated casino chips worth US$5,900.00 were stolen from it, and thus it has
the right to retain them. By way of counterclaim, petitioner sought an award of
P1 million moral damages, P1 million exemplary damages, and P.5 million
attorney's fees and litigation expenses.
Respondent filed his Answer 10 to petitioner's counterclaim.
Ruling of the Regional Trial Court

After pre-trial and trial, the trial court rendered its May 17, 2006 Decision,
which decreed as follows:
WHEREFORE, finding that the evidence preponderates in favor of
the plaintiff, judgment is rendered against the defendant ordering it to:
1) Return to plaintiff casino chips worth USD$5,900.00 or its

equivalent in Philippine Peso at the rate of P38.00 to USD$1 in 1997. DHIETc
2) Pay plaintiff attorney's fees in the amount of P30,000.00.
3) [Pay] [c]ost of this suit.
SO DECIDED. 11
In arriving at the above conclusion, the trial court held:

The primordial issue is whether or not plaintiff can be considered
the lawful owner of the USD$5,900 worth of casino chips that were
confiscated.
There is no dispute that the subject chips were in the possession

of the plaintiff. He claims he got hold of them as payment for car
services he rendered to a Chinese individual. Defendant however,
contends that said chips were stolen from the casino and it is the
lawful owner of the same.
The onus fell on defendant to prove that the casino chips were
stolen. The proof adduced however, is wanting. The statements of
Deoven and Ludwin C. Fernandez, confessing to the source of the chips
were recanted hence, have little probative value. The testimony of
defendant's witnesses narrated defendant's action responding to the
suspicious movements of the Fernandez brothers based on surveillance
tapes. The tapes, however, do not show how these persons got hold of
the chips. The alleged source in the person of Mike Cabrera, a table
inspector of the casino[,] was based on the recanted declarations of the
brothers. No criminal charge was shown to have been filed against him
nor the plaintiff and his brothers. Neither was there an explanation
given as to how those chips came into the possession of Mike Cabrera
much less that he passed them on to the brothers for the purpose of
encashing and dividing the proceeds amongst themselves. All told
therefore, there is no direct evidence to prove the theory of the
defendant and the circumstantial evidence present is, to the mind of
the court, not sufficient to rebut the legal presumption that a person in
possession of personal property is the lawful owner of the same (Art.
559, Civil Code of the Philippines). 12
Petitioner appealed the May 17, 2006 Decision of the trial court, arguing
that Ludwin and Deoven's admission in their joint affidavit before the Olongapo
City Prosecutor's Office that it was Cabrera who gave them the casino chips
strongly indicates that the chips were stolen from Legenda; that the
subsequent recantation by Ludwin and Deoven of their joint affidavit should be
looked upon with disfavor, given that recanted testimony is unreliable and
recantations can be easily secured from poor and ignorant witnesses and for
monetary consideration or through intimidation; that respondent's explanation
that he gave the chips to his brothers Ludwin and Deoven for them to play in
the casino is highly doubtful; that the true purpose of Ludwin and Deoven was
to encash the stolen chips; that no force or intimidation attended the treatment
accorded Ludwin and Deoven when they were accosted and asked to explain
their possession of the chips; and that the trial court erred in awarding
attorney's fees and costs for the filing of a baseless suit solely aimed at unjustly
enriching respondent at petitioner's expense.
On April 27, 2010, the CA issued the assailed Decision which affirmed the
trial court's May 17, 2006 Decision. Petitioner's Motion for Reconsideration was
rebuffed as well. AEDISC
In deciding against petitioner, the CA held that, applying Article 559 of the
Civil Code, 13 respondent had the legal presumption of title to or ownership of
the casino chips. This conclusion springs from respondent's admission during
trial that the chips represented payment by a Chinese customer for services he
rendered to the latter in his car shop. The CA added that since respondent
became the owner of the chips, he could very well have given them to Ludwin
and Deoven, who likewise held them as "possessors in good faith and for value"
and with "presumptive title" derived from the respondent. On the other hand,
petitioner failed to convincingly show that the chips were stolen; for one, it did
not even file a criminal case against the supposed mastermind, Cabrera — nor
did it charge Ludwin or Deoven — for the alleged theft or taking of its chips.
The CA likewise held that Ludwin's and Deoven's statements and

admissions at the Legenda security office are inadmissible because they were
obtained in violation of their constitutional rights: they were held in duress,
denied the right to counsel and the opportunity to contact respondent, and
deprived of sleep, which is one of the "more subtler [sic] techniques of physical
and psychological torture to coerce a confession." 14 It found that the actions
and methods of the Legenda security personnel in detaining and extracting
confessions from Ludwin and Deoven were illegal and in gross violation of
Ludwin's and Deoven's constitutional rights. 15
Finally, the CA held that petitioner was guilty of bad faith in advancing its
theory and claim against respondent by unduly accusing him of dealing in
stolen casino chips, which thus entitles respondent to the reduced award of
attorney's fees in the amount of P30,000.00.
Issues
Petitioner raises the following issues:

a) The Honorable Court seriously erred in ruling that the
recanted statements of Deoven Fernandez and Ludwin C. Fernandez
have [no] probative value;
b) The Honorable Court seriously erred in ruling that the

circumstantial evidence present is not sufficient to rebut the legal
presumption that a person in possession of personal property is the
lawful owner of the same;
c) The Honorable Court seriously erred in finding that the

evidence preponderates in favor of the herein respondent; [and]
d) The Honorable Court seriously erred in awarding attorney's

fees and costs of suit in favor of the respondent. 16
Petitioner's Arguments
In its Petition and Reply, 17 petitioner mainly argues that the assailed
dispositions are grounded entirely on speculation, and the inferences made are
manifestly mistaken and based on a misappreciation of the facts and law; that
the CA failed to consider the testimonial and documentary evidence it
presented to prove the fact that the casino chips were missing and were stolen
by Cabrera, who thereafter gave them to respondent's brothers, Ludwin and
Deoven. Petitioner maintains that the presumption of title under Article 559
cannot extend to respondent's brothers, who admitted during the investigation
at the Legenda security office and in their Joint Affidavit 18 that the chips came
from Cabrera, and not respondent; that the subsequent Sworn Statement 19
recanting the Joint Affidavit should not be given credence, as affidavits of
recantation can easily be secured — which thus makes them unreliable; and
that no duress attended the taking of the brothers' Joint Affidavit, which was
prepared by Henry Marzo of the Intelligence and Investigation Office (IIO) of the
Subic Bay Metropolitan Authority (SBMA).
Petitioner asserts that it is unbelievable that respondent would give

US$6,000.00 worth of casino chips to his brothers with which to play at the
casino; that with the attending circumstances, the true intention of
respondent's brothers was to encash the stolen chips which Cabrera handed to
them, and not to play at the casino. Petitioner thus concludes that no coercion
could have attended the investigation of Ludwin and Deoven; that their
subsequent recantation should not be given weight; and that for suing on a
baseless claim, respondent is not entitled to attorney's fees and costs of
litigation.
Petitioner thus prays for the reversal of the assailed dispositions and the
corresponding dismissal of Civil Case No. 237-0-97.
Respondent's Arguments
In his Comment, 20 respondent generally echoes the pronouncement of
the CA. He likewise notes that petitioner has raised only questions of fact; that
the Petition is being prosecuted to delay the proceedings; that the trial and
appellate courts are correct in finding that petitioner failed to prove its case and
show that the casino chips were stolen; that petitioner failed to rebut the
presumption that a person in possession of personal property is the lawful
owner of the same, pursuant to Article 559 of the Civil Code; and that the
P30,000.00 award of attorney's fees should be increased to P100,000.00.
Our Ruling
The Petition is denied.
Petitioner's underlying theory is that the subject casino chips were in fact
stolen by its employee Cabrera, then handed over to respondent's brothers,
Ludwin and Deoven, for encashment at the casino; that Ludwin and Deoven
played at the casino only for show and to conceal their true intention, which is
to encash the chips; that respondent's claim that he owned the chips, as they
were given to him in payment of services he rendered to a Chinese client, is
false. These arguments require the Court to examine in greater detail the facts
involved. However, this may not be done because the Court is not a trier of
facts and does not normally undertake the re-examination of the evidence
presented during trial; the resolution of factual issues is the function of lower
courts, whose findings thereon are received with respect and are binding on the
Court subject only to specific exceptions. 21 In turn, the factual findings of the
Court of Appeals carry even more weight when they are identical to those of
the trial court's. 22
Besides, a question of fact cannot properly be raised in a petition for

review on certiorari. 23
Moreover, if petitioner should stick to its theory that Cabrera stole the
subject casino chips, then its failure to file a criminal case against the latter —
including Ludwin and Deoven for that matter — up to this point certainly does
not help to convince the Court of its position, especially considering that the
supposed stolen chips represent a fairly large amount of money. Indeed, for
purposes of this proceeding, there appears to be no evidence on record —
other than mere allegations and suppositions — that Cabrera stole the casino
chips in question; such conclusion came unilaterally from petitioner, and for it
to use the same as foundation to the claim that Ludwin, Deoven and
respondent are dealing in stolen chips is clearly irregular and unfair. HaECDI
Thus, there should be no basis to suppose that the casino chips found in
Ludwin's and Deoven's possession were stolen; petitioner acted arbitrarily in
confiscating the same without basis. Their Joint Affidavit — which was later
recanted — does not even bear such fact; it merely states that the chips came
from Cabrera. If it cannot be proved, in the first place, that Cabrera stole these
chips, then there is no more reason to suppose that Ludwin and Deoven were
dealing in or possessed stolen goods; unless the independent fact that Cabrera
stole the chips can be proved, it cannot be said that they must be confiscated
when found to be in Ludwin's and Deoven's possession.
It is not even necessary to resolve whether Ludwin's and Deoven's Joint
Affidavit was obtained by duress or otherwise; the document is irrelevant to
petitioner's cause, as it does not suggest at all that Cabrera stole the subject
casino chips. At most, it only shows that Cabrera gave Ludwin and Deoven
casino chips, if this fact is true at all — since such statement has since been
recanted.
The fact that Ludwin and Deoven appear to be indecisive as to who gave
them the casino chips does not help petitioner at all. It cannot lead to the
conclusion that Cabrera stole the chips and then gave them to the two; as
earlier stated, petitioner had to prove this fact apart from Ludwin's and
Deoven's claims, no matter how incredible they may seem.
Though casino chips do not constitute legal tender, 24 there is no law

which prohibits their use or trade outside of the casino which issues them. In
any case, it is not unusual — nor is it unlikely — that respondent could be paid
by his Chinese client at the former's car shop with the casino chips in question;
said transaction, if not common, is nonetheless not unlawful. These chips are
paid for anyway; petitioner would not have parted with the same if their
corresponding representative equivalent — in legal tender, goodwill, or
otherwise — was not received by it in return or exchange. Given this premise —
that casino chips are considered to have been exchanged with their
corresponding representative value — it is with more reason that this Court
should require petitioner to prove convincingly and persuasively that the chips
it confiscated from Ludwin and Deoven were indeed stolen from it; if so, any
Tom, Dick or Harry in possession of genuine casino chips is presumed to have
paid for their representative value in exchange therefor. If petitioner cannot
prove its loss, then Article 559 cannot apply; the presumption that the chips
were exchanged for value remains.
Finally, the Court sustains the award of attorney's fees. Under Article
2208 of the Civil Code, 25 attorney's fees may be recovered when the defendant
acted in gross and evident bad faith in refusing to satisfy the plaintiff's plainly
valid, just and demandable claim, or in any other case where the court deems it
just and equitable that attorney's fees and expenses of litigation should be
recovered. Petitioner's act of arbitrarily confiscating the casino chips and
treating Ludwin and Deoven the way it did, and in refusing to satisfy
respondent's claim despite the fact that it had no basis to withhold the chips,
confirm its bad faith, and should entitle respondent to an award.
With the foregoing view of the case, a discussion of the other issues
raised is deemed irrelevant and unnecessary.
WHEREFORE, the Petition is DENIED. The assailed April 27, 2010
Decision and August 24, 2010 Resolution of the Court of Appeals in CA-G.R. CV
No. 91758 are AFFIRMED.
SO ORDERED.
Carpio, * Acting C.J., Brion, Mendoza and Leonen, JJ., concur.

Footnotes
* Per Special Order No. 1803 dated September 24, 2014.

1. Rollo , pp. 17-45.
2. Id. at 46-55; penned by Associate Justice Apolinario D. Bruselas, Jr. and

concurred in by Associate Justices Mario L. Guariña III and Rodil V. Zalameda.
3. Id. at 56.
4. Id. at 138-140; penned by Judge Ramon S. Caguioa.
5. Respondent herein.
6. Petitioner herein.
7. Rollo , pp. 46-48.
8. Id. at 57-60.
9. Id. at 61-75.
10. Id. at 83.
11. Id. at 140.
12. Id.
13. Article 559. The possession of movable property acquired in good faith is
equivalent to a title. Nevertheless, one who has lost any movable or has been
unlawfully deprived thereof, may recover it from the person in possession of
the same.
If the possessor of a movable lost or of which the owner has been unlawfully
deprived, has acquired it in good faith at a public sale, the owner cannot
obtain its return without reimbursing the price paid therefor.
14. Rollo , p. 54.
15. Citing Manila Prince Hotel v. Government Service Insurance System, 335 Phil.
82 (1997).
16. Rollo , pp. 31-32.
17. Id. at 215-224.
18. Id. at 79-80.
19. Id. at 81.
20. Id. at 210-213.
21. FNCB Finance v. Estavillo, G.R. No. 93394, December 20, 1990, 192 SCRA 514,
517.
22. Borromeo v. Sun, 375 Phil. 595, 602 (1999).
23. Mindanao Terminal and Brokerage Service, Inc. v. Nagkahiusang Mamumuo sa

Minterbro-Southern Philippines Federation of Labor , G.R. No. 174300,
December 5, 2012, 687 SCRA 28, 41.
24. Under Section 48 of Republic Act No. 7653, or the New Central Bank Act, "the
unit of monetary value in the Philippines is the peso." And under Section 50
of the same law, "the Bangko Sentral shall have the sole power and authority
to issue currency within the territory of the Philippines. No other person or
entity, public or private, may put into circulation notes, coins or any other
object or document which, in the opinion of the Monetary Board, might
circulate as currency, nor reproduce or imitate the facsimiles of Bangko
Sentral notes without prior authority from the Bangko Sentral."
Under Section 52, only those "notes and coins issued by the Bangko Sentral shall
be fully guaranteed by the Government of the Republic of the Philippines and
shall be legal tender in the Philippines for all debts, both public and private."
25. Art. 2208. In the absence of stipulation, attorney's fees and expenses of
litigation, other than judicial costs, cannot be recovered, except:
(1) When exemplary damages are awarded;
(2) When the defendant's act or omission has compelled the plaintiff to litigate
with third persons or to incur expenses to protect his interest;
(3) In criminal cases of malicious prosecution against the plaintiff;
(4) In case of a clearly unfounded civil action or proceeding against the

plaintiff;
(5) Where the defendant acted in gross and evident bad faith in refusing to
satisfy the plaintiff's plainly valid, just and demandable claim;
(6) In actions for legal support;
(7) In actions for the recovery of wages of household helpers, laborers and
skilled workers;
(8) In actions for indemnity under workmen's compensation and employer's

liability laws;
(9) In a separate civil action to recover civil liability arising from a crime;
(10) When at least double judicial costs are awarded;
(11) In any other case where the court deems it just and equitable that
attorney's fees and expenses of litigation should be recovered.
In all cases, the attorney's fees and expenses of litigation must be reasonable.

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FIRST DIVISION

[G.R. No. L-11658. February 15, 1918.]

LEUNG YEE, plaintiff-appellant, vs. FRANK L. STRONG

Booram & Mahoney for appellant.

1.CHATTEL MORTGAGE; REGISTRY OF MORTGAGE COVERING REAL

The "Compañia Agricola Filipina" bought a considerable quantity of

1.16 Off., 911

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[G.R. No. 109946. February 9, 1996.]

DEVELOPMENT BANK OF THE PHILIPPINES, petitioner, vs.

Office of the Legal Counsel for DBP.

2. ID.; OBLIGATIONS AND CONTRACTS; MORTGAGE; MORTGAGOR

DEVELOPMENT BANK OF THE PHILIPPINES ﬁled this petition for review on

On 20 April 1979 an additional loan of P62,000.00 was extended by

Petitioner then appealed to the Court of Appeals which likewise ruled in

Petitioner now seeks to overturn the decision of respondent Court of

Finally, anent the contention of petitioner that respondents fraudulently

WHEREFORE, the petition is DENIED and the questioned decision of the

Padilla, Vitug, Kapunan, and Hermosisima, Jr., JJ., concur.

1. Penned by Justice Consuelo Yñares-Santiago, concurred in by Justices Luis

2. Rollo , pp. 18-19.

7. Id., pp. 47-56.

12. Director of Lands v. De Luna, 110 Phil. 28 (1960).

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[G.R. No. 137887. February 28, 2000.]

REPUBLIC OF THE PHILIPPINES, petitioner, vs. DAMIAN

The Solicitor General for petitioner.

1. LAND TITLES AND DEEDS; PUBLIC LAND ACT; CONFIRMATION OF

Before us is a Petition for Review on Certiorari of a decision of the Court of

Conflicting applications for confirmation of imperfect title were filed by

As earlier mentioned, on appeal to the Court of Appeals, said judgment

Hence, the instant Petition, anchored upon the following assignments of

THE TRIAL COURT ERRED IN NOT FINDING THAT THE DE GUZMANS

We find merit in the instant Petition.

It is not disputed that the subject parcels of land were released as

In ﬁnding that private respondents' possession of the subject property

The Court of Appeals' consideration of the period of possession prior to

'Unless and until the land classiﬁed as forest is released in

While we acknowledge the Court of Appeals' ﬁnding that private

Davide, Jr., C.J., Puno, Kapunan and Pardo, JJ., concur.

3. Id., at p. 14; Rollo, p. 454.

5. See Exhibit "S-4"; Records, p. 98.

6. See Petition; Records, LRC Case No. TG-396, pp. 1-18.

7. See Note 1, at p. 10; Rollo, p. 33.

9. G.R. No. 94525, 205 SCRA 486 [1992].

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[G.R. No. 193618. November 28, 2016.]

HEIRS OF LEOPOLDO DELFIN and SOLEDAD DELFIN, namely

Under Commonwealth Act No. 141, a claimant may acquire alienable

1) P400,000.00 representing the reasonable market value of

2) P13,360.00 representing the value of the permanent

3) P10,000.00, representing attorney's fees;

On the National Housing Authority's appeal, the Court of Appeals

(1) Those who by themselves or through their predecessors-

(2) Those who have acquired ownership of private lands by

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Accordingly, there must be an express declaration by the State

(b) Those who by themselves or through their predecessors-

1. Rollo , pp. 50-67.

10. Id. at 11 and 144.

12. Id. at 10.

16. Id. at 116-119.

25. Id. at 159.

27. Id. at 157.