G.R. No.

170757               November 28, 2011

PACIFICO M. VALIAO, for himself and in behalf of his co-heirs LODOVICO, RICARDO,
BIENVENIDO, all Surnamed VALIAO and NEMESIO M. GRANDEA, Petitioners,
vs.
REPUBLIC OF THE PHILIPPINES, MACARIO ZAFRA, and MANUEL YUSAY, Respondents,

DECISION

PERALTA, J.:

Before this Court is a petition for review on certiorari under Rule 45 of the Rules of Court
seeking to set aside the Decision1 and Resolution2 of the Court of Appeals (CA) in CA-G.R. CV No.
54811, which reversed the Decision3 of the Regional Trial Court (RTC) of Kabankalan, Negros
Occidental, Branch 61, in Land Registration Case No. 03, granting petitioners' application for
registration of title over a parcel of land located in Ilog, Negros Occidental.

The factual milieu of this case is as follows:

On August 11, 1987, petitioners4 Pacifico, Lodovico, Ricardo, Bienvenido, all surnamed Valiao,
and Nemesio Grandea filed with the RTC of Kabankalan, Negros Occidental an application for
registration of a parcel of land with an area of 504,535 square meters, more or less, situated in
Barrio Galicia, Municipality of Ilog, Negros Occidental.

On June 20, 1988, private oppositors Macario Zafra and Manuel Yusay filed their Motion to
Dismiss the application on the following grounds: (1) the land applied for has not been declared
alienable and disposable; (2) res judicata has set in to bar the application for registration; and
(3) the application has no factual or legal basis.

On August 24, 1988, the Republic of the Philippines (Republic), through the Office of the
Solicitor General (OSG), opposed the application for registration on the following grounds,
among others: that neither the applicants nor their predecessors-in-interest had been in open,
continuous, exclusive and notorious possession and occupation of the land in question since
June 12, 1945 or prior thereto; that the muniment/s of title and/or the tax declaration/s and
tax payments/receipts of applicants, if any, attached to or alleged in the application, do/es 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 in the concept
of owner, since June 12, 1945 or prior thereto; that the parcel of land applied for is a portion of
public domain belonging to the Republic, which is not subject to private appropriation; and that
the present action is barred by a previous final judgment in a cadastral case prosecuted
between the same parties and involving the same parcel of land.

On July 3, 1989, the RTC denied private oppositors' Motion to Dismiss. Trial thereafter ensued.

In support of their application for registration, petitioners alleged that they acquired the subject
property in 1947, upon the death of their uncle Basilio Millarez (Basilio), who purchased the
land from a certain Fermin Payogao, pursuant to a Deed of Sale5 dated May 19, 1916 entirely
handwritten in Spanish language. Basilio possessed the land in question from May 19, 1916
until his death in 1947. Basilio's possession was open, continuous, peaceful, adverse, notorious,
uninterrupted and in the concept of an owner. Upon Basilio's death, the applicants as co-heirs
possessed the said land until 1966, when oppositor Zafra unlawfully and violently dispossessed
them of their property, which compelled them to file complaints of Grave Coercion and
Qualified Theft against Zafra. In support of their claim of possession over the subject property,
petitioners submitted in evidence Tax Declaration No. 95626 dated September 29, 1976 under
the names of the heirs of Basilio Millarez.

The RTC, in its Decision dated December 15, 1995, granted petitioners' application for
registration of the subject property, the dispositive portion of which states:

WHEREFORE, in view of the foregoing, this Court hereby orders and decrees registration of Lot
No. 2372 subject of the present proceedings and the registration of title thereto, in favor of the
applicants, who are declared the true and lawful owners of said Lot No. 2372, except applicant
Lodovico Valiao, who sold his right to Macario Zafra.

Upon the finality of this decision, let the corresponding decree of registration and Certificate of
Title be issued in the name of the applicants, Heirs of Basilio Millarez, namely: Pacifico Valiao,
Ricardo Valiao, Bienvenido Valiao and Nemesio Grandea, subject to the rights of private
oppositors, Macario Zafra and Manuel Yusay over said lot whose fishpond permits are declared
VALID and will expire on December 31, 2003.

No costs.

SO ORDERED.7

Aggrieved by the Decision, the private oppositors and the Republic, through Assistant
Prosecutor Josue A. Gatin, filed an appeal with the CA, which reversed the trial court's findings
in its Decision dated June 23, 2005. The CA ruled that the classification of lands of the public
domain is an exclusive prerogative of the executive department of the government and in the
absence of such classification, the lands remain as unclassified until it is released therefrom and
rendered open to disposition. Further, there exists a prior cadastral case involving the same
parties herein and the same Lot No. 2372, which ruled that Lot No. 2372 belongs to the
Republic. The CA held that such judgment constitutes res judicata that bars a subsequent action
for land registration. It also ruled that the subject property is part of the inalienable land of the
public domain and petitioners failed to prove that they and their predecessors-in-interest had
been in open, continuous, exclusive and notorious possession of the land in question since June
12, 1945 or earlier. The dispositive portion of the decision reads:

WHEREFORE, premises considered, the instant appeal is GRANTED. Accordingly, We REVERSE

the Decision dated December 15, 1995 of the Regional Trial Court, DENY the application for
registration of title filed by petitioners-appellees, DECLARE as moot and academic any and all
claims of private oppositors-appellants over Lot No. 2372, and DECLARE the subject parcel of
land to be inalienable and indisposable land belonging to the public domain.

SO ORDERED.8

Petitioners filed a motion for reconsideration, which was denied by the CA in a Resolution
dated November 17, 2005. Hence, the present petition with the following issues:

WHETHER OR NOT LOT NO. 2372 OF THE ILOG CADASTRE IS ALIENABLE AND
DISPOSABLE LAND OF THE PUBLIC DOMAIN.

II

WHETHER OR NOT THE CLAIM OF PRESCRIPTION BY THE APPLICANT WILL LIE ON LOT
NO. 2372.
 III

WHETHER OR NOT THE DECISION OF THE COURT OF APPEALS IN CAD. CASE NO. 23,
ENTITLED LODOVICO VALIAO, ET, AL., VS. MACARIO ZAFRA, ET, AL., AC G.R. NO. CV-
68873, CONSTITUTES RES JUDICATA AS FAR AS THIS APPLICATION FOR REGISTRATION IS
CONCERNED.

IV

WHETHER OR NOT THE ALLEGED POSSESSION OF THE APPLICANTS THROUGH THEIR

PREDECESSORS-IN-INTEREST IS SUFFICIENT TO SUSTAIN THEIR CLAIM FOR
PRESCRIPTION.9

Petitioners claim that Lot No. 2372 is an alienable and disposable portion of the public domain.
The possession of applicants' predecessors-in interest since 1916 until 1966 had been open,
continuous and uninterrupted; thus, converting the said land into a private land. The subject lot
had already become private in character in view of the length of time the applicants and their
predecessors-in-interest had possessed the subject lot, which entitles them to the confirmation
of their title. Petitioners further claim that prior dismissal in a cadastral proceeding does not
constitute res judicata in a subsequent application for registration of a parcel of land.

In its Comment, the OSG submits that the issues to be resolved in the present petition, i.e.,
whether Lot No. 2372 is alienable and disposable land of the public domain and whether
petitioners have the right to have the said property registered in their name through
prescription of time are questions of fact, which were already passed upon by the CA and no
longer reviewable by the Court, since findings of fact of the CA, when supported by sufficient
evidence, are conclusive and binding on the parties. The OSG further claims that petitioners
failed to prove that the subject lot is part of the alienable and disposable portion of the public
domain and that petitioners' application for land registration is already barred by a prior
decision in a cadastral case. Lastly, the OSG asserts that petitioners did not present sufficient
evidence to prove that their possession over the subject lot applied for had been open,
peaceful, exclusive, continuous and adverse.

Anent the propriety of filing a petition for review under Rule 45 of the Rules of Court, the
principle is well-established that this Court is not a trier of facts and that only questions of law
may be raised. The resolution of factual issues is the function of the lower courts whose
findings on these matters are received with respect and are, as a rule, binding on this Court.
This rule, however, is subject to certain exceptions. One of these is when the findings of the
appellate court are contrary to those of the trial court.10 Due to the divergence of the findings
of the CA and the RTC, the Court will now re-examine the facts and evidence adduced before
the lower courts.

Section 14 (1) of Presidential Decree No. (PD) 1529, otherwise known as the Property
Registration Decree provides:

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

(1) Those who by themselves or through their predecessors-in-interest have been in open,
continuous, exclusive and notorious possession and occupation of alienable and disposable
lands of the public domain under a bona fide claim of ownership since June 12, 1945, or earlier.
From the foregoing, petitioners need to prove that: (1) the land forms part of the alienable and
disposable land of the public domain; and (2) they, by themselves or through their
predecessors-in-interest, have been in open, continuous, exclusive, and notorious possession
and occupation of the subject land under a bona fide claim of ownership from June 12, 1945 or
earlier.11 These the petitioners must prove by no less than clear, positive and convincing
evidence.12

Under the Regalian doctrine, which is embodied in our Constitution, all lands of the public
domain belong to the State, which is the source of any asserted right to any ownership of land.
All lands not appearing to be clearly within private ownership are presumed to belong to the
State. Accordingly, public lands not shown to have been reclassified or released as alienable
agricultural land or alienated to a private person by the State remain part of the inalienable
public domain.13 Unless public land is shown to have been reclassified as alienable or disposable
to a private person by the State, it remains part of the inalienable public domain. Property of
the public domain is beyond the commerce of man and not susceptible of private appropriation
and acquisitive prescription. Occupation thereof in the concept of owner no matter how long
cannot ripen into ownership and be registered as a title.14 The burden of proof in overcoming
the presumption of State ownership of the lands of the public domain is on the person applying
for registration (or claiming ownership), who must prove that the land subject of the
application is alienable or disposable. To overcome this presumption, incontrovertible evidence
must be established that the land subject of the application (or claim) is alienable or
disposable.15

There must be a positive act declaring land of the public domain as alienable and disposable. To
prove that the land subject of an application for registration is alienable, the applicant must
establish the existence of a positive act of the government, such as a presidential proclamation
or an executive order; an administrative action; investigation reports of Bureau of Lands
investigators; and a legislative act or a statute. The applicant may also secure a certification
from the government that the land claimed to have been possessed for the required number of
years is alienable and disposable.16

No such evidence was offered by the petitioners to show that the land in question has been
classified as alienable and disposable land of the public domain. In the absence of
incontrovertible evidence to prove that the subject property is already classified as alienable
and disposable, we must consider the same as still inalienable public domain.17 Verily, the rules
on the confirmation of imperfect title do not apply unless and until the land subject thereof is
released in an official proclamation to that effect so that it may form part of the disposable
agricultural lands of the public domain.1âwphi1

With respect to the existence of a prior cadastral case, it appears that on July 11, 1966, the
petitioners filed in Cadastral Case No. 23 of the then CFI of Negros Occidental a petition to
reopen the proceedings relative to three lots, one of which is Lot No. 2372. The lower court, in
its Order18 dated October 20, 1980, held that Lot No. 2372 belongs to the Republic. It found that
after the subject lot was declared public land, it was found to be inside the communal forest.
On appeal, the CA, in its Decision19 dated August 7, 1984, found no reversible error and
affirmed the decision of the cadastral court. Thereafter, a petition elevating the case to this
Court was dismissed for lack of merit.20 In the present case, the CA, in its Decision dated June
23, 2005, ruled that such judgment constitutes res judicata that will bar a subsequent action for
land registration on the same land.

In Director of Lands v. Court of Appeals,21 the Court held that a judicial declaration that a parcel
of land is public, does not preclude even the same applicant from subsequently seeking a
judicial confirmation of his title to the same land, provided he thereafter complies with the
provisions of Section 4822 of Commonwealth Act No. 141, as amended, and as long as said
public lands remain alienable and disposable. In the case at bar, not only did the petitioners fail
to prove that the subject land is part of the alienable and disposable portion of the public
domain, they failed to demonstrate that they by themselves or through their predecessors-in-
interest have possessed and occupied the subject land since June 12, 1945 or earlier as
mandated by the law.

It is settled that the applicant must present proof of specific acts of ownership to substantiate
the claim and cannot just offer general statements which are mere conclusions of law than
factual evidence of possession.23 Actual possession consists in the manifestation of acts of
dominion over it of such a nature as a party would actually exercise over his own property.24

The testimonies of Nemesio and Pacifico as to their own and their predecessors-in-interest's
possession and ownership over the subject lot fail to convince Us. Petitioners claim that Basilio
was in possession of the land way back in 1916. Yet no tax declaration covering the subject
property, during the period Basilio allegedly occupied the subject property, i.e., 1916 to 1947,
was presented in evidence. Other than the bare allegations of Nemesio and Pacifico that Basilio
allegedly introduced improvements on the subject property, there is nothing in the records
which would substantiate petitioners' claim that Basilio was in possession of Lot No. 2372 since
June 12, 1945 or earlier, the period of possession required by law. Hence, petitioners' assertion
that Basilio possessed the property in question from 1916 to 1947 is, at best, conjectural and
self-serving.

As regards petitioners' possession of the land in question from 1947 to 1966, petitioners could
only support the same with a tax declaration dated September 29, 1976. At best, petitioners
can only prove possession since said date. What is required is open, exclusive, continuous and
notorious possession by petitioners and their predecessors-in-interest, under a bona fide claim
of ownership, since June 12, 1945 or earlier.25 Petitioners failed to explain why, despite their
claim that their predecessors-in-interest have possessed the subject properties in the concept
of an owner even before June 12, 1945, it was only in 1976 that they started to declare the
same for purposes of taxation. Moreover, 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 disputed property may have been declared for taxation purposes in the names of
the applicants for registration, or of their predecessors-in-interest, but it does not necessarily
prove ownership. They are merely indicia of a claim of ownership.26

Evidently, since the petitioners failed to prove that (1) the subject property was classified as
part of the disposable and alienable land of the public domain; and (2) they and their
predecessors-in-interest had been in open, continuous, exclusive, and notorious possession and
occupation thereof under a bona fide claim of ownership since June 12, 1945 or earlier, their
application for confirmation and registration of the subject property under PD 1529 should be
denied.

WHEREFORE, the Decision and Resolution of the Court of Appeals in CA-G.R. CV No. 54811,
which reversed the Decision of the Regional Trial Court of Kabankalan, Negros Occidental,
Branch 61, in Land Registration Case No. 03, is AFFIRMED. The application for registration of
title filed by the petitioners Pacifico Valiao, Lodovico Valiao, Ricardo Valiao, Bienvenido Valiao,
and Nemesio Grandea, over Lot No. 2372, with a total area of 504,535 square meters, more or
less, situated in Barrio Galicia, Municipality of Ilog, Negros Occidental, is DENIED.

SO ORDERED.
G. R. No. 177790               January 17, 2011

REPUBLIC OF THE PHILIPPINES, Petitioner,

vs.
CARLOS R. VEGA, MARCOS R. VEGA, ROGELIO R. VEGA, LUBIN R. VEGA, HEIRS OF GLORIA R.
VEGA, NAMELY: FRACISCO L. YAP, MA. WINONA Y. RODRIGUEZ, MA. WENDELYN V. YAP and
FRANCISCO V. YAP, JR., Respondents,

ROMEA G. BUHAY-OCAMPO, FRANCISCO G. BUHAY, ARCELI G. BUHAY-RODRIGUEZ, ORLANDO

G. BUHAY, SOLEDAD G. BUHAY-VASQUEZ, LOIDA G. BUHAY-SENADOSA, FLORENDO G.
BUHAY, OSCAR G. BUHAY, ERLYN BUHAY-GINORGA, EVELYN BUHAY-GRANETA, and EMILIE
BUHAY-DALLAS, Respondents-Intervenors.

DECISION

SERENO, J.:

This is a Rule 45 Petition filed by the Republic of the Philippines (petitioner Republic), through
the Office of the Solicitor General (OSG), questioning the Decision of the Court of
Appeals,1 which affirmed a lower court’s grant of an application for original registration of title
covering a parcel of land located in Los Baños, Laguna.

The facts of the case as culled from the records of the trial court and the appellate court are
straightforward and without much contention from the parties.

On 26 May 1995, respondents Carlos R. Vega, Marcos R. Vega, Rogelio R. Vega, Lubin R. Vega
and Heirs of Gloria R. Vega – namely, Francisco L. Yap, Ma. Winona Y. Rodriguez, Ma. Wendelyn
V. Yap and Francisco V. Yap, Jr. (respondents Vegas) – filed an application for registration of
title. The application covered a parcel of land, identified as Lot No. 6191, Cadastre 450 of Los
Baños, Laguna, with a total area of six thousand nine hundred two (6,902) square meters (the
subject land). The case was docketed as Land Registration Case No. 103-95-C and raffled to the
Regional Trial Court of Calamba, Laguna, Branch 92.

Respondents Vegas alleged that they inherited the subject land from their mother, Maria
Revilleza Vda. de Vega, who in turn inherited it from her father, Lorenzo Revilleza. Their
mother’s siblings (two brothers and a sister) died intestate, all without leaving any offspring.

On 21 June 1995, petitioner Republic filed an opposition to respondents Vegas’ application for
registration on the ground, inter alia, that the subject land or portions thereof were lands of the
public domain and, as such, not subject to private appropriation.

During the trial court hearing on the application for registration, respondents Vegas presented
several exhibits in compliance with the jurisdictional requirements, as well as witnesses to
prove respondents Vegas’ ownership, occupation and possession of the land subject of the
registration. Significant was the testimony of Mr. Rodolfo Gonzales, a Special Investigator of the
Community Environment and Natural Resources Office (CENRO) of Los Baños, Laguna, under
the Department of Environment and Natural Resources (DENR). He attested to having
conducted an inspection of the subject land2 and identified the corresponding Report dated 13
January 1997, which he had submitted to the Regional Executive Director, Region IV. The report
stated that the area subject of the investigation was entirely within the alienable and
disposable zone, and that there was no public land application filed for the same land by the
applicant or by any other person.3
During the trial, respondents-intervenors Romea G. Buhay-Ocampo, Francisco G. Buhay, Arceli
G. Buhay-Rodriguez, Orlando G. Buhay, Soledad G. Buhay-Vasquez, Loida G. Buhay-Senadosa,
Florendo G. Buhay, Oscar G. Buhay, Erlyn Buhay-Ginorga, Evelyn Buhay-Grantea and Emilie
Buhay-Dallas (respondents-intervenors Buhays) entered their appearance and moved to
intervene in respondents Vegas’ application for registration.4 Respondents-intervenors Buhays
claimed a portion of the subject land consisting of eight hundred twenty-six (826) square
meters, purportedly sold by respondents Vegas’ mother (Maria Revilleza Vda. de Vega) to the
former’s predecessors-in-interest - the sisters Gabriela Gilvero and Isabel Gilverio - by virtue of
a "Bilihan ng Isang Bahagi ng Lupang Katihan" dated 14 January 1951.5 They likewise formally
offered in evidence Subdivision Plan Csd-04-024336-D, which indicated the portion of the
subject land, which they claimed was sold to their predecessors-in-interest.6

In a Decision dated 18 November 2003, the trial court granted respondents Vegas’ application
and directed the Land Registration Authority (LRA) to issue the corresponding decree of
registration in the name of respondents Vegas and respondents-intervenors Buhays’
predecessors, in proportion to their claims over the subject land.

Petitioner Republic appealed the Decision of the trial court, arguing that respondents Vegas
failed to prove that the subject land was alienable and disposable, since the testimony of Mr.
Gonzales did not contain the date when the land was declared as such. Unpersuaded by
petitioner Republic’s arguments, the Court of Appeals affirmed in toto the earlier Decision of
the trial court. Aggrieved by the ruling, petitioner filed the instant Rule 45 Petition with this
Court.

Respondents Vegas, who are joined by respondents-intervenors Buhays (collectively,

respondents), raise procedural issues concerning the filing of the instant Petition, which the
Court shall resolve first. Briefly, respondents found, in the instant Petition, procedural
deficiencies that ought to warrant its outright dismissal. These deficiencies are as follows: (a)
petitioner Republic failed to include the pertinent portions of the record that would support its
arguments under Rule 45, Section 4 (d) of the Rules of Court, specifically the Appellee’s Brief of
respondents Vegas in the appellate proceedings; and (b) it raised questions of fact, which are
beyond the purview of a Rule 45 Petition.7

The Court is not persuaded by respondents’ arguments concerning the purported defects of the
Petition.

First, petitioner Republic’s failure to attach a copy of respondents Vegas’ Appellee’s Brief to the
instant Petition is not a fatal mistake, which merits the immediate dismissal of a Rule 45
Petition. The requirement that a petition for review on certiorari should be accompanied by
"such material portions of the record as would support the petition" is left to the discretion of
the party filing the petition.8 Except for the duplicate original or certified true copy of the
judgment sought to be appealed from,9 there are no other records from the court a quo that
must perforce be attached before the Court can take cognizance of a Rule 45 petition.

Respondents cannot fault petitioner Republic for excluding pleadings, documents or records in
the lower court, which to their mind would assist this Court in deciding whether the Decision
appealed from is sound. Petitioner Republic is left to its own estimation of the case in deciding
which records would support its Petition and should thus be attached thereto. In any event,
respondents are not prevented from attaching to their pleadings pertinent portions of the
records that they deem necessary for the Court’s evaluation of the case, as was done by
respondents Vegas in this case when they attached their Appellee’s Brief to their Comment. In
the end, it is the Court, in finally resolving the merits of the suit that will ultimately decide
whether the material portions of the records attached are sufficient to support the Petition.
Second, the Petition raises a question of law, and not a question of fact. Petitioner Republic
simply takes issue against the conclusions made by the trial and the appellate courts regarding
the nature and character of the subject parcel of land, based on the evidence presented. When
petitioner asks for a review of the decisions made by a lower court based on the evidence
presented, without delving into their probative value but simply on their sufficiency to support
the legal conclusions made, then a question of law is raised.

In New Rural Bank of Guimba (N.E.) Inc. v. Fermina S. Abad and Rafael Susan,10 the Court
reiterated the distinction between a question of law and a question of fact in this wise:

We reiterate the distinction between a question of law and a question of fact. 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 the facts being admitted. A question
of fact exists when a 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. (Emphasis
supplied)

Petitioner Republic is not calling for an examination of the probative value or truthfulness of
the evidence presented, specifically the testimony of Mr. Gonzales. It, however, questions
whether the evidence on record is sufficient to support the lower court’s conclusion that the
subject land is alienable and disposable. Otherwise stated, considering the evidence presented
by respondents Vegas in the proceedings below, were the trial and the appellate courts justified
under the law and jurisprudence in their findings on the nature and character of the subject
land? Undoubtedly, this is a pure question of law, which calls for a resolution of what is the
correct and applicable law to a given set of facts.

Going now to the substantial merits, petitioner Republic places before the Court the question of
whether, based on the evidence on record, respondents Vegas have sufficiently established
that the subject land is alienable and disposable. Was it erroneous for the Court of Appeals to
have affirmed the trial court’s grant of registration applied for by respondents Vegas over the
subject land? We find no reversible error on the part of either the trial court or the Court of
Appeals.

Presidential Decree No. 1529, otherwise known as the Property Registration Decree, provides
for the instances when a person may file for an application for registration of title over a parcel
of land:

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:

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.
x x x.

Thus, pursuant to the afore-quoted provision of law, applicants for registration of title must
prove the following: (1) that the subject land forms part of the disposable and alienable lands of
the public domain; and (2) that they have been in open, continuous, exclusive and notorious
possession and occupation of the land under a bona fide claim of ownership since 12 June 1945
or earlier.11 Section 14 (1) of the law requires that the property sought to be registered is
already alienable and disposable at the time the application for registration is filed.12

Raising no issue with respect to respondents Vegas’ open, continuous, exclusive and notorious
possession of the subject land in the present Petition, the Court will limit its focus on the first
requisite: specifically, whether it has sufficiently been demonstrated that the subject land is
alienable and disposable.

Unless a land is reclassified and declared alienable and disposable, occupation of the same in
the concept of an owner - no matter how long -cannot ripen into ownership and result in a title;
public lands not shown to have been classified as alienable and disposable lands remain part of
the inalienable domain and cannot confer ownership or possessory rights.13

Matters of land classification or reclassification cannot be assumed; they call for proof.14 To
prove that the land subject of an application for registration is alienable, an applicant must
conclusively establish the existence of a positive act of the government, such as any of the
following: a presidential proclamation or an executive order; other administrative actions;
investigation reports of the Bureau of Lands investigator; or a legislative act or statute.15 The
applicant may also secure a certification from the government that the lands applied for are
alienable and disposable.16

Previously, a certification from the DENR that a lot was alienable and disposable was sufficient
to establish the true nature and character of the property and enjoyed the presumption of
regularity in the absence of contradictory evidence.17

However, in Republic v. T.A.N. Properties, Inc.,18 the Supreme Court overturned the grant by the
lower courts of an original application for registration over a parcel of land in Batangas and
ruled that a CENRO certification is not enough to certify that a land is alienable and disposable:

Further, it is not enough for the PENRO or CENRO to certify that a land is alienable and
disposable. The applicant for land registration must prove that the DENR Secretary had
approved the land classification and released the land of the public domain as alienable and
disposable, and that the land subject of the application for registration falls within the
approved area per verification through survey by the PENRO or CENRO. In addition, the
applicant for land registration must present a copy of the original classification approved by the
DENR Secretary and certified as a true copy by the legal custodian of the official records. These
facts must be established to prove that the land is alienable and disposable. Respondent failed
to do so because the certifications presented by respondent do not, by themselves, prove that
the land is alienable and disposable. (Emphasis supplied)

Thus, as it now stands, aside from a CENRO certification, an application for original registration
of title over a parcel of land must be accompanied by a copy of the original classification
approved by the DENR Secretary and certified as a true copy by the legal custodian of the
official records in order to establish that the land indeed is alienable and disposable.19

To comply with the first requisite for an application for original registration of title under the
Property Registration Decree, respondents Vegas should have submitted a CENRO certification
and a certified true copy of the original classification by the DENR Secretary that the land is
alienable and disposable, together with their application. However, as pointed out by the Court
of Appeals, respondents Vegas failed to submit a CENRO certification -- much less an original
classification by the DENR Secretary -- to prove that the land is classified as alienable and
disposable land of the public domain.20 If the stringent rule imposed in Republic v. T.A.N.
Properties, Inc., is to be followed, the absence of these twin certifications justifies a denial of an
application for registration. Significantly, however, the Court’s pronouncement in Republic v.
T.A.N. Properties, Inc., was issued after the decisions of the trial court21 and the appellate
court22 in this case.

Recently, however, in Republic v. Serrano,23 the Court affirmed the findings of the trial and the
appellate courts that the parcel of land subject of registration was alienable and disposable.
The Court held that a DENR Regional Technical Director’s certification, which is annotated on
the subdivision plan submitted in evidence, constitutes substantial compliance with the legal
requirement:

While Cayetano failed to submit any certification which would formally attest to the alienable
and disposable character of the land applied for, the Certification by DENR Regional Technical
Director Celso V. Loriega, Jr., as annotated on the subdivision plan submitted in evidence by
Paulita, constitutes substantial compliance with the legal requirement. It clearly indicates that
Lot 249 had been verified as belonging to the alienable and disposable area as early as July 18,
1925.

The DENR certification enjoys the presumption of regularity absent any evidence to the
contrary. It bears noting that no opposition was filed or registered by the Land Registration
Authority or the DENR to contest respondents' applications on the ground that their respective
shares of the lot are inalienable. There being no substantive rights which stand to be
prejudiced, the benefit of the Certification may thus be equitably extended in favor of
respondents. (Emphasis supplied)

Indeed, the best proofs in registration proceedings that a land is alienable and disposable are a
certification from the CENRO or Provincial Environment and Natural Resources Office (PENRO)
and a certified true copy of the DENR’s original classification of the land. The Court, however,
has nonetheless recognized and affirmed applications for land registration on other substantial
and convincing evidence duly presented without any opposition from the LRA or the DENR on
the ground of substantial compliance.

Applying these precedents, the Court finds that despite the absence of a certification by the
CENRO and a certified true copy of the original classification by the DENR Secretary, there has
been substantial compliance with the requirement to show that the subject land is indeed
alienable and disposable based on the evidence on record.

First, respondents Vegas were able to present Mr. Gonzales of the CENRO who testified that the
subject land is alienable and disposable, and who identified his written report on his inspection
of the subject land.

In the Report,24 Mr. Gonzales attested under oath that (1) the "area is entirely within the
alienable and disposable zone" as classified under Project No. 15, L.C. Map No. 582, certified on
31 December 1925;25 (2) the land has never been forfeited in favor of the government for non-
payment of taxes; (3) the land is not within a previously patented/decreed/titled property;26 (4)
there are no public land application/s filed by the applicant for the same land;27 and (5) the land
is residential/commercial.28 That Mr. Gonzales appeared and testified before an open court only
added to the reliability of the Report, which classified the subject land as alienable and
disposable public land. The Court affirms the Court of Appeals’ conclusion that Mr. Gonzales’
testimony and written report under oath constituted substantial evidence to support their
claim as to the nature of the subject land.

Second, Subdivision Plan Csd-04-02433-6, formally offered as evidence by respondents-

intervenors Buhays,29 expressly indicates that the land is alienable and disposable. Similar to
Republic v. Serrano, Mr. Samson G. de Leon, the officer-in-charge of the Office of the Assistant
Regional Executive Director for Operations of the DENR, approved the said subdivision plan,
which was annotated with the following proviso: "[T]his survey is inside alienable and
disposable area as per Project No. 15, L.C. Map No. 582, certified on Dec. 31, 1925." Notably,
Mr. De Leon’s annotation pertaining to the identification of the land as alienable and disposable
coincides with the investigation report of Mr. Gonzales.

Finally, upon being informed of respondents Vegas’ application for original registration, the LRA
never raised the issue that the land subject of registration was not alienable and disposable. In
the Supplementary Report submitted during the trial court proceedings,30 the LRA did not
interpose any objection to the application on the basis of the nature of the land. It simply noted
that the subject subdivision plan (Psu-51460) had also been applied for in Case No. 1469, GLRO
Record No. 32505, but that there was no decree of registration issued therefor. Thus, the LRA
recommended that "should the instant case be given due course, the application in Case No.
1469, GLRO Record No. 32505 with respect to plan Psu-51460 be dismissed." In addition, not
only did the government fail to cross-examine Mr. Gonzales, it likewise chose not to present
any countervailing evidence to support its opposition. In contrast to the other cases brought
before this Court,31 no opposition was raised by any interested government body, aside from
the pro forma opposition filed by the OSG.

The onus in proving that the land is alienable and disposable still remains with the applicant in
an original registration proceeding; and the government, in opposing the purported nature of
the land, need not adduce evidence to prove otherwise.32 In this case though, there was no
effective opposition, except the pro forma opposition of the OSG, to contradict the applicant’s
claim as to the character of the public land as alienable and disposable. The absence of any
effective opposition from the government, when coupled with respondents’ other pieces of
evidence on record persuades this Court to rule in favor of respondents.

In the instant Petition, petitioner Republic also assails the failure of Mr. Gonzales to testify as to
when the land was declared as alienable and disposable. Indeed, his testimony in open court is
bereft of any detail as to when the land was classified as alienable and disposable public land,
as well as the date when he conducted the investigation. However, these matters could have
been dealt with extensively during cross-examination, which petitioner Republic waived
because of its repeated absences and failure to present counter evidence.33 In any event, the
Report, as well as the Subdivision Plan, readily reveals that the subject land was certified as
alienable and disposable as early as 31 December 1925 and was even classified as residential
and commercial in nature.

Thus, the Court finds that the evidence presented by respondents Vegas, coupled with the
absence of any countervailing evidence by petitioner Republic, substantially establishes that the
land applied for is alienable and disposable and is the subject of original registration
proceedings under the Property Registration Decree. There was no reversible error on the part
of either the trial court or the appellate court in granting the registration.

Respondents-intervenors Buhays’ title to that portion of the subject land is likewise affirmed,
considering that the joint claim of respondents-intervenors Buhays over the land draws its life
from the same title of respondents Vegas, who in turn failed to effectively oppose the claimed
sale of that portion of the land to the former’s predecessors-in-interest.

It must be emphasized that the present ruling on substantial compliance applies pro hac
vice.1âwphi1 It does not in any way detract from our rulings in Republic v. T.A.N. Properties,
Inc., and similar cases which impose a strict requirement to prove that the public land is
alienable and disposable, especially in this case when the Decisions of the lower court and the
Court of Appeals were rendered prior to these rulings.34 To establish that the land subject of the
application is alienable and disposable public land, the general rule remains: all applications for
original registration under the Property Registration Decree must include both (1) a CENRO or
PENRO certification and (2) a certified true copy of the original classification made by the DENR
Secretary.

As an exception, however, the courts - in their sound discretion and based solely on the
evidence presented on record - may approve the application, pro hac vice, on the ground
of substantial compliance showing that there has been a positive act of government to show
the nature and character of the land and an absence of effective opposition from the
government. This exception shall only apply to applications for registration currently pending
before the trial court prior to this Decision and shall be inapplicable to all future applications.

WHEREFORE, premises considered, the instant Petition is DENIED. The Court of Appeals’
Decision dated 30 April 2007 and the trial court’s Decision dated 18 November 2003 are hereby
AFFIRMED.

SO ORDERED.
 [G.R. No. 178635, April 11 : 2011]

SERVILLANO E. ABAD, PETITIONER, VS. OSCAR C. FARRALES AND DAISY C. FARRALES-

VILLAMAYOR, RESPONDENTS.

DECISION

ABAD, J.:

This case is about a) the need, when establishing the jurisdiction of the court over an action for
forcible entry, for plaintiff to allege in his complaint prior physical possession of the property
and b) the need for plaintiff to prove as well the fact of such prior physical possession.

The Facts and the Case

Petitioner Servillano Abad claims that on August 6, 2002 he and his wife, Dr. Estrella E. Gavilan-
Abad, bought a 428-square meter registered property on 7 Administration St., GSIS Village,
Project 8, Quezon City,[1] from Teresita, Rommel, and Dennis Farrales. The latter were the wife
and sons, respectively, of the late brother of respondents Oscar Farrales (Oscar) and Daisy
Farrales-Villamayor (Daisy).[2] Teresita operated a boarding house on the property.[3]

Because the Abads did not consider running the boarding house themselves, they agreed to
lease the property back to Teresita for P30,000.00 a month so she could continue with her
business.[4] But, although the lease had a good start, Teresita suddenly abandoned the boarding
house,[5] forcing the Abads to take over by engaging the services of Bencio Duran, Teresita's
helper, to oversee the boarding house business.[6]

On December 7, 2002, Dr. Abad went to the boarding house to have certain damage to some
toilets repaired. While she was attending to the matter, she also hired house painters to give
the boarding house fresh coat of paint.[7]  On December 8, 2002 Oscar and Daisy came,
accompanied by two men, and forcibly took possession of the boarding house. Frightened, the
painters called the Abads who immediately sought police help. The Abads were later appeased,
however, when they learned that the intruders left the place.

Two days later or on December 10, 2002, the day the Abads left for abroad, Oscar and Daisy
forcibly entered and took possession of the property once again. Because of this, on March 10,
2003 petitioner Servillano Abad (Abad) filed a complaint[8] for forcible entry against the two
before the Metropolitan Trial Court (MeTC) of Quezon City.[9]

Oscar and Daisy vehemently denied that they forcibly seized the place. They claimed ownership
of it by inheritance. They also claimed that they had been in possession of the same from the
time of their birth.[10] That Oscar had been residing on the property since 1967 as attested to by
a March 31, 2003 certification issued by Barangay Bahay Toro.[11]

While the defendants admitted that Daisy herself ceased to reside on the property as early as
1986, they pointed out that she did not effectively give up her possession.  Oscar and Daisy
further claimed that when their parents were still alive, the latter mortgaged the property to a
bank to secure a loan.  After their mother passed away, they decided to lease portions of the
property to help pay the loan. Daisy managed the operation of the boarding house.[12] To
bolster their claim, Oscar and Daisy presented copies of rental receipts[13] going back from 2001
to 2003. They would not have been able to lease the rooms unless they were in possession.[14]

Further, Oscar and Daisy asked the MeTC to dismiss the action on the ground of failure of Abad
to show that he and his wife enjoyed prior physical possession of the property, an essential
requisite in forcible entry cases. Abad's allegation that he and his wife immediately leased the
property after they bought it was proof that they were never in possession of it for any length
of time.[15]

On March 30, 2005 the MeTC rendered a decision[16] in favor of Abad, stating that Oscar and
Daisy could not acquire ownership of the property since it was registered. And, as owner, Abad
was entitled to possession.

Disagreeing with the MeTC, Oscar and Daisy went up to the Regional Trial Court (RTC) of
Quezon City. In a decision17 dated October 26, 2005, the RTC affirmed the decision of the
MeTC in its totality.  It held that Oscar and Daisy could no longer impugn the jurisdiction of the
MeTC over the action since they raised the ground of Abad's failure to allege prior physical
possession in his complaint for the first time on appeal.  Besides, said the RTC, since the
complaint alleged that Servillano owned the property, it may be presumed that he also had
prior possession of it. No evidence to the contrary having been presented, the presumption
stood.

Abad moved for immediate execution[18] and partial reconsideration[19] of the decision with
respect to his claim for attorney's fees, exemplary damages, and reasonable rents. For their
part, Oscar and Daisy sought reconsideration[20] of the RTC decision and moved to strike out
Abad's motions.[21]  On December 1, 2005 the RTC issued an Order,[22] granting Abad's motion
for immediate execution that would place him in possession and ordering the immediate
release to him of the P390,000.00 supersedeas bond that Oscar and Daisy posted in the case. 
Further, the RTC partially reconsidered its decision by awarding attorney's fees of P20,000.00 to
Abad. Oscar and Daisy moved for the reconsideration of this order.[23]  In an Order dated
December 9, 2005, the RTC denied the motion for reconsideration filed by Oscar and Daisy of
its October 26, 2005 Decision on the ground of non-compliance with Section 4, Rule 15 of the
Rules of Court.

Undaunted, Oscar and Daisy filed a petition for review[24] with the Court of Appeals (CA).  On
March 8, 2007 the CA rendered a decision,[25] annulling the decisions and orders of both the
MeTC and the RTC on the ground of lack of jurisdiction. The CA pointed out that Abad merely
alleged in his complaint that he leased the property to Teresita after he and his wife bought the
same and that, thereafter, Oscar and Daisy forcibly entered the same.  Since Abad did not make
the jurisdictional averment of prior physical possession, the MeTC did not acquire jurisdiction
over his action.  Further, Oscar and Daisy ably proved actual possession from 1967 through the
barangay certification. Since the MeTC had no jurisdiction over the case, all the proceedings in
the case were void.[26]

Abad moved for reconsideration but the CA denied the same,[27] hence, in the present petition
for review.[28]

Questions Presented

The case presents the following questions:

1.  Whether or not Abad sufficiently alleged in his complaint the jurisdictional fact of prior
physical possession of the disputed property to vest the MeTC with jurisdiction over his action;
and

2.  In the affirmative, whether or not Abad sufficiently proved that he enjoyed prior physical
possession of the property in question.

The Court's Rulings

Two allegations are indispensable in actions for forcible entry to enable first level courts to
acquire jurisdiction over them: first, that the plaintiff had prior physical possession of the
property; and, second, that the defendant deprived him of such possession by means of force,
intimidation, threats, strategy, or stealth.[29]

There is no question that Abad made an allegation in his complaint that Oscar and Daisy forcibly
entered the subject property. The only issue is with respect to his allegation, citing such
property as one "of which they have complete physical and material possession of the same
until deprived thereof." Abad argues that this substantially alleges plaintiffs prior physical
possession of the property before the dispossession, sufficient to confer on the MeTC
jurisdiction over the action. The Court agrees. The plaintiff in a forcible entry suit is not required
to use in his allegations the exact terminology employed by the rules. It is enough that the facts
set up in the complaint show that dispossession took place under the required conditions.[30]

It is of course not enough that the allegations of the complaint make out a case for forcible
entry. The plaintiff must also be able to prove his allegations. He has to prove that he had prior
physical possession[31] for this gives him the security that entitles him to remain in the property
until a person with a better right lawfully ejects him.[32]

Here, evidently, the Abads did not take physical possession of the property after buying the
same since they immediately rented it to Teresita who had already been using the property as a
boarding house. Abad claims that their renting it to Teresita was an act of ownership that
amounted to their acquiring full physical possession of the same.[33]

But the Abad's lease agreement with Teresita began only in September 2002.[34] Oscar and
Daisy, on the other hand, have proved that they had been renting spaces in the property as
early as 2001 as evidenced by receipts that they issued to their lessees. This was long before
they supposedly entered the property, using force, in 2002.

Of course, Abad pointed out that the cited receipts covered rents in a place called "D's
Condominium" in Sampaloc, Manila, and were only made to appear through handwritten
notations that they were issued for rooms in the property subject of the suit.[35]  But a close
examination of the receipts shows that "D's Condominium" was just the name that Daisy
employed in her business of renting rooms. The receipts did not necessarily describe another
place. Indeed, they provided blank spaces for describing as the subject of rent the property
subject of this case. And, except for Abad's bare claim that Teresita and his sons had long been
in possession before they sold it to him and his wife, he offered no evidence to show that this
was in fact the case.

Abad assails as irregularly issued the barangay certification that Oscar had been residing on the
subject property since 1967. He claims that it could have been issued as a mere favor to a
friend, the barangay chairman having been Oscar's childhood playmate[36] But Abad has no
proof of these allegations. He has not overcome the presumption that the barangay chairman
performed his official duty and acted regularly in issuing such certification.[37]

Finally, Abad argued that with the title to the property in his name, he has in his favor the right
to the actual, physical, exclusive, continuous, and peaceful possession of the same. He pointed
out that his possession de facto began from the time of the signing and notarization of the deed
of absolute sale, becoming de jure once the title was issued in his name.[38]

It is of course true that a property owner has the right to exercise the attributes of ownership,
one of which is the right to possess the property. But Abad is missing the point. He is referring
to possession flowing from ownership which is not in issue in this case. Possession in forcible
entry cases means nothing more than physical possession or possession de facto, not legal
possession in the sense contemplated in civil law. Only prior physical possession, not title, is the
issue.[9]

For these reasons, the Court finds that Servillano utterly failed to prove prior physical
possession in his favor. The absence of prior physical possession by the plaintiff in a forcible
entry warrants the dismissal of the complaint.[40]

WHEREFORE, the Court DENIES the petition for review of petitioner Servillano E. Abad

and AFFIRMS in their entirety the decision dated March 8, 2007 and resolution dated June 19,
2007 of the Court of Appeals in CA-G.R. SP 92617.

SO ORDERED.
G.R. No. 170575               June 8, 2011

Spouses MANUEL and FLORENTINA DEL ROSARIO, Petitioners,

vs.
GERRY ROXAS FOUNDATION, Inc., Respondent.

DECISION

DEL CASTILLO, J.:

The allegations in the complaint and the reliefs prayed for are the determinants of the nature
of the action1 and of which court has jurisdiction over the action.2

This Petition for Review on Certiorari assails the April 26, 2005 Decision3 of the Court of Appeals
(CA) in CA-G.R. SP No. 87784 which dismissed the Petition for Review before it. Also assailed is
the CA Resolution4 dated November 15, 2005 denying the Motion for Reconsideration thereto.

Factual Antecedents

The controversy between petitioners Manuel and Florentina Del Rosario

and respondent Gerry Roxas Foundation Inc. emanated from a Complaint for Unlawful Detainer
filed by the former against the latter, the surrounding circumstances relative thereto as
summarized by the CA in its assailed Decision are as follows:

The petitioner Manuel del Rosario appears to be the registered owner of Lot 3-A of Psd-301974
located in Roxas City which is described in and covered by Transfer Certificate of Title No. T-
18397 of the Registry of Deeds for the City of Roxas.

Sometime in 1991, the respondent, as a legitimate foundation, took possession and occupancy
of said land by virtue of a memorandum of agreement entered into by and between it and the
City of Roxas. Its possession and occupancy of said land is in the character of being lessee
thereof.

In February and March 2003, the petitioners served notices upon the respondent to vacate the
premises of said land. The respondent did not heed such notices because it still has the legal
right to continue its possession and occupancy of said land.5

On July 7, 2003, petitioners filed a Complaint6 for Unlawful Detainer against the respondent
before the Municipal Trial Court in Cities (MTCC) of Roxas City, docketed as Civil Case No. V-
2391. Said complaint contains, among others, the following significant allegations:

3. Plaintiffs are the true, absolute and registered owner[s] of a parcel of land, situated at
Dayao, Roxas City and covered by and described in Transfer Certificate of Title No.
18397 issued to the plaintiffs by the Register of Deeds for Roxas City as evidenced by a
xerox copy thereof which is hereto attached as Annex "A".

4. Sometime in 1991, without the consent and authority of the plaintiffs, defendant took
full control and possession of the subject property, developed the same and use[d] it for
commercial purposes.

xxxx
7. Plaintiffs have allowed the defendant for several years, to make use of the land
without any contractual or legal basis. Hence, defendant’s possession of the subject
property is only by tolerance.

8. But [plaintiffs’] patience has come to its limits. Hence, sometime in the last quarter of
2002, plaintiffs made several demands upon said defendant to settle and/or pay rentals
for the use of the property.

xxxx

10. Notwithstanding receipt of the demand letters, defendant failed and refused, as it
continues to fail and refuse to pay reasonable monthly rentals for the use and
occupancy of the land, and to vacate the subject premises despite the lapse of the
fifteen-day period specified in the said demand letters. Consequently, defendant is
unlawfully withholding possession of the subject property from the plaintiffs, who are
the owners thereof.7

Upon service of summons, respondent filed its Answer8 dated July 31, 2003 where it
averred that:

3. The defendant ADMITS the allegations set forth in paragraph 4 of the Complaint to
the effect that the defendant "took full control and possession of the subject property,
developed the same" and has been using the premises in accordance with its
agreements with the City of Roxas and the purposes of the defendant corporation
without any objection or opposition of any kind on the part of the plaintiffs for over
twenty-two long years; the defendant specifically DENIES the allegations contained in
the last part of this paragraph 4 of the Complaint that the defendant has used the
property leased for commercial purposes, the truth of the matter being that the
defendant has used and [is] still using the property only for civic non-profit endeavors
hewing closely to purposes of the defendant Gerry Roxas Foundation Inc., inter alia,
devoted to general welfare, protection, and upliftment of the people of Roxas City,
Capiz, and in Panay Island, and elsewhere in the Philippines; that the Foundation has
spent out of its own funds for the compliance of its avowed aims and purposes, up to
the present, more than P25M, and that all the improvements, including a beautiful
auditorium built in the leased premises of the Foundation "shall accrue to the CITY (of
Roxas), free from any compensation whatsoever, upon the expiration of this Lease"
(Memorandum of Agreement, Annex "2" hereof), eighteen (18) years hence;

xxxx

5. The defendant specifically DENIES the allegations set forth in paragraph 7 of the
Complaint, the truth being that the defendant took possession of the subject property
by virtue of Memorandums of Agreement, photo-copies of which are hereto attached as
Annexes "1" and "2" and made integral parts hereof, entered into by defendant and the
City of Roxas, which is the true and lawful owner thereof; thus, the possession of the
subject property by the defendant foundation is lawful, being a lessee thereof;

xxxx

8. The defendant ADMITS the allegations set forth in paragraph 10 of the Complaint that
defendant refused to pay monthly rental to the plaintiffs and to vacate the premises,
but specifically DENIES the rest of the allegations thereof, the truth being that
defendant has no obligation whatsoever, to the plaintiffs, as they are neither the
owners or lessors of the land occupied by defendant;
 xxxx

As and by way of –

AFFIRMATIVE DEFENSE

The defendant repleads the foregoing allegations, and avers further that:

12. The plaintiffs have no cause of action against defendant.

The leased property does not belong to the plaintiffs. The property covered by Transfer
Certificate of Title No. T-18397, [is] occupied by the [defendant] as [lessee] of the City of Roxas
since 1991, the latter having acquired it by purchase from the plaintiffs way back on February
19, 1981, as evidenced by the Deed of Absolute Sale which is hereto attached as Annex "3" and
made an integral part hereof. While, admittedly, the said certificate of title is still in the name of
the plaintiffs, nevertheless, the ownership of the property covered therein has already
transferred to the City of Roxas upon its delivery to it. Article 1496 of the Civil Code provides
that, ownership of the thing sold is acquired by the vendee from the moment it is delivered to
him in any of the ways specified in articles 1497 to 1501, or in any other manner signifying an
agreement that the possession is transferred from the vendor to the vendee. It is also provided
under Article 1498 of the Civil Code that, when the sale is made through a public instrument,
the execution thereof shall be equivalent to the delivery of the thing, which is the object of the
contract, if from the deed the contrary does not appear or cannot clearly be inferred. Upon
execution of the Deed of Absolute Sale (Annex "3"), the plaintiffs have relinquished ownership
of the property subject thereof in favor of the vendee, City of Roxas. Necessarily, the
possession of the property subject of the said Deed of Absolute Sale now pertains to the City of
Roxas and the plaintiffs have no more right, whatsoever, to the possession of the same. It is
defendant foundation by virtue of the Memorandums of Agreement (Annexes "1" and "2"
hereof), which has the legal right to have possession of the subject property;9

After the MTCC issued an Order setting the case for preliminary conference, respondent filed
on October 20, 2003 a Motion to Resolve its Defenses on Forum Shopping and Lack of Cause of
Action. Records show that before the instant case was filed, the City of Roxas had already filed
a case against petitioners for "Surrender of Withheld Duplicate Certificate Under Section 107,
[Presidential Decree No.] 1529" docketed as Special Case No. SPL-020-03 with the Regional Trial
Court (RTC) of Roxas City. Subsequently, on October 27, 2003, petitioners filed their Opposition
to the said Motion.

Ruling of the Municipal Trial Court in Cities

On November 24, 2003, the MTCC issued an Order10 resolving the respondent’s Motion. In the
said Order, the MTCC held that:

The plaintiffs [have] no cause of action against herein defendant. The defendant is the lessee of
the City of Roxas of the parcel of land in question. There has been no previous contractual
relationship between the plaintiffs Del Rosarios and the defendant Gerry Roxas Foundation, Inc.
affecting the title of the land leased by the [Gerry] Roxas Foundation. The Gerry Roxas
Foundation, Inc. has not unlawfully withheld the possession of the land it is leasing from its
lessor. Its right to the physical possession of the land leased by it from the City of Roxas subsists
and continues to subsist until the termination of the contract of lease according to its terms and
pursuant to law.
The defendant had presented as its main defense that the property was already sold by the
plaintiffs to the present lessor of the property, the City of Roxas thru a Deed of Absolute Sale
dated February 19, 1981 executed by herein [plaintiff] spouses as vendors.

Plaintiffs had not directly and specifically shown that the purported Deed of Absolute Sale does
not exist; rather, they contend that said document is merely defective. They had not even
denied the signatories to the said Contract of Sale; specifically the authenticity of the spouses-
plaintiffs signatures; all that plaintiffs did merely referred to it as null and void and highly
questionable without any specifications.

When the parties’ pleadings fail to tender any issue of fact, either because all the factual
allegations have been admitted expressly or impliedly; as when a denial is a general denial;
there is no need of conducting a trial, since there is no need of presenting evidence anymore.
The case is then ripe for judicial determination, either through a judgment on the pleadings
(Rules of Court, Rule 34) or by summary judgment under Rule 35, Rules of Court.

In the instant case, plaintiffs alleged that sometime in 1991, without the consent and authority
of the plaintiffs, defendant took full control and possession of the subject property, developed
the same and use[d] it for commercial purposes. x x x for so many years, plaintiffs patiently
waited for someone to make representation to them regarding the use of the subject property,
but the same never happened. Plaintiff[s] have allowed the defendant for several years, to
make use of the land without any contractual or legal basis. Hence, defendant’s possession of
the subject property is only by tolerance.

xxxx

Defendant admits the allegations of the plaintiffs that the defendant "took full control and
possession of the subject property, developed the same" and has been using the premises in
accordance with its agreements with the City of Roxas and the purposes of the defendant
corporation without any objection or opposition of any kind on the part of the plaintiffs for over
twenty-two long years.

That the defendant’s possession of the subject property is by virtue of a contract of lease
entered into by the defendant foundation with the City of Roxas which is the true and lawful
owner, the latter having acquired said property by virtue of a Deed of Absolute Sale as early as
February 19, 1981, long before the defendant foundation’s occupation of the property. In Alcos
v. IAC 162 SCRA 823 (1988), Buyer’s immediate possession and occupation of the property was
deemed corroborative of the truthfulness and authenticity of the deed of sale.

WHEREFORE, although this Court finds the defense on forum shopping interposed by the
defendant to be untenable and unmeritorious, and hence, denied; this Court still finds the
pleadings filed by the plaintiffs-spouses to be without a cause of action and hence, dismisses
this instant complaint. With cost against the plaintiffs.

SO ORDERED.11

Ruling of the Regional Trial Court

On appeal, the RTC of Roxas City, Branch 17 rendered a Decision12 dated July 9, 2004 affirming
the MTCC Order.

Ruling of the Court of Appeals

Aggrieved, petitioners filed with the CA a Petition for Review. However, the CA, in a
Decision13 dated April 26, 2005, dismissed the petition and affirmed the assailed Decision of the
RTC.

Petitioners timely filed a Motion for Reconsideration14 which was, however, denied in a

Resolution15 dated November 15, 2005.

Issues

Still undaunted, petitioners now come to this Court on a Petition for Review on Certiorari
raising the following issues:

I. Whether x x x in determining if there is a case for unlawful detainer, a court should

limit itself in interpreting a single phrase/allegation in the complaint; and,

II. Whether x x x there exists an unlawful detainer in this case.16

Our Ruling

The petition is bereft of merit.

The allegations in petitioner’s Complaint constitute judicial admissions.

Petitioners alleged in their Complaint before the MTCC, among others, that: (1) sometime in
1991, without their consent and authority, respondent took full control and possession of the
subject property, developed the same and used it for commercial purposes; and (2) they
allowed the respondent for several years, to make use of the land without any contractual or
legal basis. Petitioners thus conclude that respondent’s possession of subject property is only
by tolerance.

Section 4, Rule 129 of the Rules of Court provides that:

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. x x x

"A judicial admission is one so made in pleadings filed or in the progress of a trial as to dispense
with the introduction of evidence otherwise necessary to dispense with some rules of practice
necessary to be observed and complied with."17 Correspondingly, "facts alleged in the
complaint are deemed admissions of the plaintiff and binding upon him."18 "The allegations,
statements or admissions contained in a pleading are conclusive as against the pleader."19

In this case, petitioners judicially admitted that respondents took control and possession of
subject property without their consent and authority and that respondent’s use of the land was
without any contractual or legal basis.

Nature of the action is determined by the judicial admissions in the Complaint.

In Spouses Huguete v. Spouses Embudo,20 citing Cañiza v. Court of Appeals,21 this Court held

that "what determines the nature of an action as well as which court has jurisdiction over it are
the allegations of the complaint and the character of the relief sought."

This Court, in Sumulong v. Court of Appeals,22 differentiated the distinct causes of action in

forcible entry vis-à-vis unlawful detainer, to wit:
Forcible entry and unlawful detainer are two distinct causes of action defined in Section 1, Rule
70 of the Rules of Court. In forcible entry, one is deprived of physical possession of any land or
building by means of force, intimidation, threat, strategy, or stealth. In unlawful detainer, one
unlawfully withholds possession thereof after the expiration or termination of his right to hold
possession under any contract, express or implied. In forcible entry, the possession is illegal
from the beginning and the only issue is who has the prior possession de facto. In unlawful
detainer, possession was originally lawful but became unlawful by the expiration or termination
of the right to possess and the issue of rightful possession is the one decisive, for in such action,
the defendant is the party in actual possession and the plaintiff's cause of action is the
termination of the defendant's right to continue in possession.23

"The words ‘by force, intimidation, threat, strategy or stealth’ shall include every situation or
condition under which one person can wrongfully enter upon real property and exclude
another, who has had prior possession, therefrom."24 "The foundation of the action is really the
forcible exclusion of the original possessor by a person who has entered without right."25

"The act of going on the property and excluding the lawful possessor therefrom necessarily
implies the exertion of force over the property, and this is all that is necessary."26 The
employment of force, in this case, can be deduced from petitioners’ allegation that respondent
took full control and possession of the subject property without their consent and
authority.1avvphi1

"‘Stealth,’ on the other hand, is defined as any secret, sly, or clandestine act to avoid discovery
and to gain entrance into or remain within residence of another without permission,"27 while
strategy connotes the employment of machinations or artifices to gain possession of the
subject property.28 The CA found that based on the petitioners’ allegations in their complaint,
"respondent’s entry on the land of the petitioners was by stealth x x x."29 However, stealth as
defined requires a clandestine character which is not availing in the instant case as the entry of
the respondent into the property appears to be with the knowledge of the petitioners as shown
by petitioners’ allegation in their complaint that "[c]onsidering the personalities behind the
defendant foundation and considering further that it is plaintiff’s nephew, then the vice-mayor,
and now the Mayor of the City of Roxas Antonio A. del Rosario, although without any legal or
contractual right, who transacted with the foundation, plaintiffs did not interfere with the
activities of the foundation using their property."30 To this Court’s mind, this allegation if true,
also illustrates strategy.

Taken in its entirety, the allegations in the Complaint establish a cause of action for forcible
entry, and not for unlawful detainer.

"In forcible entry, one is deprived of physical possession of any land or building by means of
force, intimidation, threat, strategy, or stealth."31 "[W]here the defendant’s possession of the
property is illegal ab initio," the summary action for forcible entry (detentacion) is the remedy
to recover possession.32

In their Complaint, petitioners maintained that the respondent took possession and control of
the subject property without any contractual or legal basis.33 Assuming that these allegations
are true, it hence follows that respondent’s possession was illegal from the very beginning.
Therefore, the foundation of petitioners’ complaint is one for forcible entry – that is "the
forcible exclusion of the original possessor by a person who has entered without right."34 Thus,
and as correctly found by the CA, there can be no tolerance as petitioners alleged that
respondent’s possession was illegal at the inception.35

Corollarily, since the deprivation of physical possession, as alleged in

petitioners’ Complaint and as earlier discussed, was attended by strategy and force, this Court
finds that the proper remedy for the petitioners was to file a Complaint for Forcible Entry and
not the instant suit for unlawful detainer.

Petitioners should have filed a Complaint for Forcible Entry within the reglementary one-year
period from the time of dispossession.

Petitioners likewise alleged in their Complaint that respondent took possession and occupancy
of subject property in 1991. Considering that the action for forcible entry must be filed within
one year from the time of dispossession,36 the action for forcible entry has already prescribed
when petitioners filed their Complaint in 2003. As a consequence, the Complaint failed to state
a valid cause of action against the respondent.

In fine, the MTCC properly dismissed the Complaint, and the RTC and the CA correctly affirmed
said order of dismissal.

WHEREFORE, the petition is DENIED. The Decision dated April 26, 2005 and the Resolution
dated November 15, 2005 of the Court of Appeals in CA-G.R. SP No. 87784 are AFFIRMED.

SO ORDERED.
 SECOND DIVISION

[G.R. No. 151369, March 23 : 2011]

ANITA MONASTERIO-PE AND THE SPOUSES ROMULO TAN AND EDITHA PE-TAN, PETITIONERS,
VS. JOSE JUAN TONG, HEREIN REPRESENTED BY HIS ATTORNEY-IN-FACT, JOSE Y. ONG,
RESPONDENT.

DECISION

PERALTA, J.:

Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court
seeking the reversal and nullification of the Decision[1] and Order,[2] respectively dated October
24, 2001 and January 18, 2002, of the Regional Trial Court (RTC) of Iloilo City, Branch 24.

The instant petition stemmed from an action for ejectment filed by herein respondent Jose
Juan Tong (Tong) through his representative Jose Y. Ong (Ong) against herein petitioners Anita
Monasterio-Pe (Anita) and the spouses Romulo Tan and Editha Pe-Tan (Spouses Tan). The suit
was filed with the Municipal Trial Court in Cities (MTCC), Branch 3, Iloilo City and docketed as
Civil Case No. 2000(92).

In the Complaint, it was alleged that Tong is the registered owner of two parcels of land known
as Lot Nos. 40 and 41 and covered by Transfer Certificate of Title (TCT) Nos. T-9699 and T-9161,
together with the improvements thereon, located at Barangay Kauswagan, City Proper, Iloilo
City; herein petitioners are occupying the house standing on the said parcels of land without
any contract of lease nor are they paying any kind of rental and that their occupation thereof is
simply by mere tolerance of Tong; that in a letter dated December 1, 1999, Tong demanded
that respondents vacate the house they are occupying, but despite their receipt of the said
letter they failed and refused to vacate the same; Tong referred his complaint to the Lupon of
Barangay Kauswagan, to no avail.[3]

In their Answer with Defenses and Counterclaim, herein petitioners alleged that Tong is not the
real owner of the disputed property, but is only a dummy of a certain alien named Ong Se Fu,
who is not qualified to own the said lot and, as such, Tong's ownership is null and void;
petitioners are the true and lawful owners of the property in question and by reason thereof
they need not lease nor pay rentals to anybody; a case docketed as CA-G.R. CV No. 52676 (RTC
Civil Case No. 20181) involving herein petitioner Pe and respondent is pending before the Court
of Appeals (CA) where the ownership of the subject property is being litigated; respondent
should wait for the resolution of the said action instead of filing the ejectment case; petitioners
also claimed that there was, in fact, no proper barangay conciliation as Tong was bent on filing
the ejectment case before conciliation proceedings could be validly made.[4]

On March 19, 2001, the MTCC rendered judgment in favor of herein respondent, the dispositive
portion of which reads as follows:

WHEREFORE, judgment is rendered, finding the defendants Anita Monasterio-Pe, and Spouses
Romulo Tan and Editha Pe-Tan to be unlawfully withholding the property in litigation, i.e., Lot.
Nos. 40 and 41 covered by TCT Nos. T-9699 and 9161, respectively, together with the buildings
thereon, located at Brgy. Kauswagan, Iloilo City Proper, and they are hereby ordered together
with their families and privies, to vacate the premises and deliver possession to the plaintiff
and/or his representative.

The defendants are likewise ordered to pay plaintiff reasonable compensation for the use and
occupancy of the premises in the amount of P15,000.00 per month starting January, 2000 until
they actually vacate and deliver possession to the plaintiff and attorney's fees in the amount of
P20,000.00.

Costs against the defendants.

SO DECIDED.[5]

Aggrieved by the above-quoted judgment, petitioners appealed the decision of the MTCC with
the RTC of Iloilo City.

In its presently assailed Decision, the RTC of Iloilo City, Branch 24 affirmed in its entirety the
appealed decision of the MTCC.

Hence, the instant petition for review on certiorari.

At the outset, it bears emphasis that in a petition for review on certiorari under Rule 45 of the
Rules of Court, only questions of law may be raised by the parties and passed upon by this
Court.[6] It is a settled rule that in the exercise of this Court's power of review, it does not
inquire into the sufficiency of the evidence presented, consistent with the rule that this Court is
not a trier of facts.[7] In the instant case, a perusal of the errors assigned by petitioners would
readily show that they are raising factual issues the resolution of which requires the
examination of evidence. Certainly, issues which are being raised in the present petition, such
as the questions of whether the issue of physical possession is already included as one of the
issues in a case earlier filed by petitioner Anita and her husband, as well as whether respondent
complied with the law and rules on barangay conciliation, are factual in nature.

Moreover, the appeal under Rule 45 of the said Rules contemplates that the RTC rendered the
judgment, final order or resolution acting in its original jurisdiction.[8] In the present case, the
assailed Decision and Order of the RTC were issued in the exercise of its appellate jurisdiction.

Thus, petitioners pursued the wrong mode of appeal when they filed the present petition for
review on certiorari with this Court. Instead, they should have filed a petition for review with
the CA pursuant to the provisions of Section 1,[9] Rule 42 of the Rules of Court.

On the foregoing bases alone, the instant petition should be denied.

In any case, the instant petition would still be denied for lack of merit, as discussed below.

In their first assigned error, petitioners contend that the RTC erred in holding that the law
authorizes an attorney-in-fact to execute the required certificate against forum shopping in
behalf of his or her principal. Petitioners argue that Tong himself, as the principal, and not Ong,
should have executed the certificate against forum shopping.

The Court is not persuaded.

It is true that the first paragraph of Section 5,[10] Rule 7 of the Rules of Court, requires that the
certification should be signed by the "petitioner or principal party" himself. The rationale
behind this is because only the petitioner himself has actual knowledge of whether or not he
has initiated similar actions or proceedings in different courts or agencies.[11] However, the
rationale does not apply where, as in this case, it is the attorney-in-fact who instituted the
action.[12] Such circumstance constitutes reasonable cause to allow the attorney-in-fact to
personally sign the Certificate of Non-Forum Shopping. Indeed, the settled rule is that the
execution of the certification against forum shopping by the attorney-in-fact is not a violation of
the requirement that the parties must personally sign the same.[13] The attorney-in-fact, who
has authority to file, and who actually filed the complaint as the representative of the plaintiff,
is a party to the ejectment suit.[14] In fact, Section 1,[15] Rule 70 of the Rules of Court includes the
representative of the owner in an ejectment suit as one of the parties authorized to institute
the proceedings. In the present case, there is no dispute that Ong is respondent's attorney-in-
fact. Hence, the Court finds that there has been substantial compliance with the rules
proscribing forum shopping.

Petitioners also aver that the certificate against forum shopping attached to the complaint in
Civil Case No. 2000(92) falsely stated that there is no other case pending before any other
tribunal involving the same issues as those raised therein, because at the time the said
complaint was filed, Civil Case No. 20181 was, in fact, still pending with the CA (CA-G.R. CV No.
52676), where the very same issues of ejectment and physical possession were already
included.

Corollarily, petitioners claim that the MTCC has no jurisdiction over Civil Case No. 2000(92) on
the ground that the issue of physical possession raised therein was already included by
agreement of the parties in Civil Case No. 20181. As such, petitioners assert that respondent is
barred from filing the ejectment case, because in doing so he splits his cause of action and
indirectly engages in forum shopping.

The Court does not agree.

The Court takes judicial notice of the fact that the disputed properties, along with three other
parcels of land, had been the subject of two earlier cases filed by herein petitioner Anita and
her husband Francisco against herein respondent and some other persons. The first case is for
specific performance and/or rescission of contract and reconveyance of property with
damages. It was filed with the then Court of First Instance (CFI) of Iloilo City and docketed as
Civil Case No. 10853. The case was dismissed by the CFI. On appeal, the Intermediate Appellate
Court (IAC) upheld the decision of the trial court. When the case was brought to this Court,
[16]
 the decision of the IAC was affirmed. Subsequently, the Court's judgment in this case
became final and executory per Entry of Judgment issued on May 27, 1991.

Subsequently, in 1992, the Spouses Pe filed a case for nullification of contract, cancellation of
titles, reconveyance and damages with the RTC of Iloilo City. This is the case presently cited by
petitioners. Eventually, the case, docketed as Civil Case No. 20181, was dismissed by the lower
court on the ground of res judicata. The RTC held that Civil Case No. 10853 serves as a bar to
the filing of Civil Case No. 20181, because both cases involve the same parties, the same subject
matter and the same cause of action. On appeal, the CA affirmed the dismissal of Civil Case No.
20181. Herein petitioner Anita assailed the judgment of the CA before this Court, but her
petition for review on certiorari was denied via a Resolution[17] dated January 22, 2003. On June
25, 2003, the said Resolution became final and executory. The Court notes that the case was
disposed with finality without any showing that the issue of ejectment was ever raised. Hence,
respondent is not barred from filing the instant action for ejectment.

In any case, it can be inferred from the judgments of this Court in the two aforementioned
cases that respondent, as owner of the subject lots, is entitled to the possession thereof.
Settled is the rule that the right of possession is a necessary incident of ownership.
[18]
 Petitioners, on the other hand, are consequently barred from claiming that they have the
right to possess the disputed parcels of land, because their alleged right is predicated solely on
their claim of ownership, which is already effectively debunked by the decisions of this Court
affirming the validity of the deeds of sale transferring ownership of the subject properties to
respondent.
Petitioners also contend that respondent should have filed an accion publiciana and not an
unlawful detainer case, because the one-year period to file a case for unlawful detainer has
already lapsed.

The Court does not agree.

Sections 1 and 2, Rule 70 of the Rules of Court provide:

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.

Section 2. Lessor to proceed against lessee only after demand. - Unless otherwise stipulated,
such action by the lessor shall be commenced only after demand to pay or comply with the
conditions of the lease and to vacate is made upon the lessee, or by serving written notice of
such demand upon the person found on the premises, or by posting such notice on the
premises if no person be found thereon, and the lessee fails to comply therewith after fifteen
(15) days in the case of land or five (5) days in the case of buildings.

Respondent alleged in his complaint that petitioners occupied the subject property by his mere
tolerance. While tolerance is lawful, such possession becomes illegal upon demand to vacate by
the owner and the possessor by tolerance refuses to comply with such demand.[19] Respondent
sent petitioners a demand letter dated December 1, 1999 to vacate the subject property, but
petitioners did not comply with the demand. 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 him.[20] Under Section 1, Rule 70 of the Rules of Court, the one-
year period within which a complaint for unlawful detainer can be filed should be counted from
the date of demand, because only upon the lapse of that period does the possession become
unlawful.[21] Respondent filed the ejectment case against petitioners on March 29, 2000, which
was less than a year from December 1, 1999, the date of formal demand. Hence, it is clear that
the action was filed within the one-year period prescribed for filing an ejectment or unlawful
detainer case.

Neither is the Court persuaded by petitioners' argument that respondent has no cause of action
to recover physical possession of the subject properties on the basis of a contract of sale
because the thing sold was never delivered to the latter.

It has been established that petitioners validly executed a deed of sale covering the subject
parcels of land in favor of respondent after the latter paid the outstanding account of the
former with the Philippine Veterans Bank.

Article 1498 of the Civil Code provides that when the sale is made through a public instrument,
the execution thereof shall be equivalent to the delivery of the thing which is the object of the
contract, if from the deed the contrary does not appear or cannot clearly be inferred. In the
instant case, petitioners failed to present any evidence to show that they had no intention of
delivering the subject lots to respondent when they executed the said deed of sale. Hence,
petitioners' execution of the deed of sale is tantamount to a delivery of the subject lots to
respondent. The fact that petitioners remained in possession of the disputed properties does
not prove that there was no delivery, because as found by the lower courts, such possession is
only by respondent's mere tolerance.

Lastly, the Court does not agree with petitioners' assertion that the filing of the unlawful
detainer case was premature, because respondent failed to comply with the provisions of the
law on barangay conciliation. As held by the RTC, Barangay Kauswagan City Proper, through
its Pangkat Secretary and Chairman, issued not one but two certificates to file action after
herein petitioners and respondent failed to arrive at an amicable settlement. The Court finds no
error in the pronouncement of both the MTCC and the RTC that any error in the previous
conciliation proceedings leading to the issuance of the first certificate to file action, which was
alleged to be defective, has already been cured by the MTCC's act of referring back the case to
the Pangkat Tagapagkasundo of Barangay Kauswagan for proper conciliation and mediation
proceedings. These subsequent proceedings led to the issuance anew of a certificate to file
action.

WHEREFORE, the instant petition is DENIED. The assailed Decision and Order of the Regional
Trial Court of Iloilo City, Branch 24, are AFFIRMED.

SO ORDERED.
G.R. No. 157150               September 21, 2011

PEDRO ANGELES , Represented by ADELINA T. ANGELES, Attorney-in Fact, Petitioner,

vs.
ESTELITA B. PASCUAL, MARIA THERESA PASCUAL, NERISSA PASCUAL, IMELDA PASCUAL, MA.
LAARNI PASCUAL and EDWIN PASCUAL, Respondents.

RESOLUTION

BERSAMIN, J.:

Under appeal is the decision promulgated on January 31, 2002 in CA- G.R. CV No. 61600,1 which
involved a dispute about the true location of the respective lots of the parties, with the
respondents claiming that the petitioner had encroached on their lot but the latter denying the
encroachment.

Antecedents

Neighbors Regidor Pascual (Pascual) and Pedro Angeles (Angeles) were registered owners of
adjacent parcels of land located in Cabanatuan City. Pascual owned Lot 4, Block 2 (Lot 4) of the
consolidation-subdivision plan (LRC) Psd-951, a portion of the consolidation of Lots 1419-B-2B-
3, 1419-B-2-B-4 and 1419-B-2-B-5, Psd- 9016, LGC (GLRO) Cadastral Record No. 94 covered by
Transfer Certificate Title No. T-43707 of the Registry of Deeds of Nueva Ecija;2 Angeles owned
Lot 5, Block 2 (Lot 5) of the same consolidation-subdivision plan covered by TCT No. T-9459 of
the Registry of Deeds of Nueva Ecija.3 Each of them built a house on his respective lot, believing
all the while that his respective lot was properly delineated. It was not until Metropolitan Bank
and Trust Company (Metrobank), as the highest bidder in the foreclosure sale of the adjacent
Lot 3, Block 2 (Lot 3), caused the relocation survey of Lot 3 that the geodetic engineer
discovered that Pascual’s house had encroached on Lot 3. As a consequence, Metrobank
successfully ejected Pascual.

In turn, Pascual caused the relocation survey of his own Lot 4 and discovered that Angeles’
house also encroached on his lot. Of the 318 square meters comprising Lot 4, Angeles occupied
252 square meters, leaving Pascual with only about 66 square meters. Pascual demanded
rentals for the use of the encroached area of Lot 4 from Angeles, or the removal of Angeles’
house. Angeles refused the demand. Accordingly, Pascual sued Angeles for recovery of
possession and damages in the Regional Trial Court (RTC) in Cabanatuan City.

In the course of the trial, Pascual presented Clarito Fajardo, the geodetic engineer who had
conducted the relocation survey and had made the relocation plan of Lot 4.4 Fajardo testified
that Angeles’ house was erected on Lot 4. On the other hand, Angeles presented Juan
Fernandez, the geodetic engineer who had prepared the sketch plan relied upon by Angeles to
support his claim that there had been no encroachment.5 However, Fernandez explained that
he had performed only a "table work," that is, he did not actually go to the site but based the
sketch plan on the descriptions and bearings appearing on the TCTs of Lot 4, Lot 5 and Lot 6;
and recommended the conduct of a relocation survey.6

In its decision of November 3, 1998,7 the RTC held that there was no dispute that Pascual and
Angeles were the respective registered owners of Lot 4 and Lot 5; that what was disputed
between them was the location of their respective lots; that Pascual proved Angeles’
encroachment on Lot 4 by preponderant evidence; and that Pascual was entitled to relief. The
RTC thus disposed:
WHEREFORE, premises considered, judgment is rendered in favor of the plaintiff and against
the defendant as follows:

1) ordering the defendant or persons claiming right through him to cause the removal of
his house insofar as the same occupies the portion of Lot 4, Block 2 (TCT No. T-43707),
of an area of 252 square meters, as particularly indicated in the Sketch Plan (Exhibit C-
1); and

2) and without pronouncement to damages in both the complainant and counterclaim.

With Costs.

SO ORDERED.8

Angeles appealed to the CA.

On January 31, 2002, the CA affirmed the RTC,9 and held that as between the findings of the
geodetic engineer (Fajardo) who had actually gone to the site and those of the other
(Fernandez) who had based his findings on the TCTs of the owners of the three lots, those of
the former should prevail. However, the CA, modifying the RTC’s ruling, applied Article 448 of
the Civil Code (which defined the rights of a builder, sower and planter in good faith). The
decision decreed thus:10

WHEREFORE, the decision appealed from is MODIFIED. Plaintiffs-appellees are ordered to

exercise within thirty (30) days from the finality of this decision their option to either buy the
portion of defendant-appellant’s house on their Lot. No. 4, or to sell to defendant-appellant the
portion of their land on which his house stands. If plaintiffs-appellees elect to sell the land or
buy the improvement, the purchase price must be at the prevailing market price at the time of
payment. If buying the improvement will render the defendant-appellant’s house useless, then
plaintiffs-appellees should sell the encroached portion of their land to defendant-appellant. If
plaintiffs-appellees choose to sell the land but defendant-appellant is unwilling or unable to
buy, then the latter must vacate the subject portion and pay reasonable rent from the time
plaintiffs-appellees made their choice up to the time they actually vacate the premises. But if
the value of the land is considerably more than the value of the improvement, then defendant-
appellant may elect to lease the land, in which case the parties shall agree upon the terms of
the lease. Should they fail to agree on said terms, the court of origin is directed to fix the terms
of the lease. From the moment plaintiffs-appellees shall have exercised their option, defendant-
appellant shall pay reasonable monthly rent up to the time the parties agree on the terms of
the lease or until the court fixes such terms. This is without prejudice to any future compromise
which may be agreed upon by the parties.

SO ORDERED.

Angeles expectedly sought reconsideration, but the CA denied his motion on February 13, 2003.

Issues

Hence, Angeles appeals, assailing: (a) the credence the CA accorded to the testimony and
relocation plan of Fajardo as opposed to the survey plan prepared by Fernandez; and (b) the
options laid down by the CA, i.e., for Pascual either to buy the portion of Angeles’ house or to
sell to Angeles the portion of his land occupied by Angeles were contrary to its finding of good
faith.

Ruling
The petition lacks merit.

The Court, not being a trier of facts, cannot review factual issues

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 appeal by certiorari,
therefore, only questions of law may be raised, because the Supreme 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. The resolution of factual issues is the function of lower
courts, whose findings thereon are received with respect and are binding on the Supreme Court
subject to certain exceptions.11 A question, to be one of law, must not involve an examination
of the probative value of the evidence presented by the litigants or any of them. There is a
question of law in a given case when the doubt or difference arises as to what the law is on
certain state of facts; there is a question of fact when the doubt or difference arises as to the
truth or falsehood of alleged facts.12

Whether certain items of evidence should be accorded probative value or weight, or should be
rejected as feeble or spurious; or whether or not the proofs on one side or the other are clear
and convincing and adequate to establish a proposition in issue; whether or not the body of
proofs presented by a party, weighed and analyzed in relation to contrary evidence submitted
by adverse party, may be said to be strong, clear and convincing; whether or not certain
documents presented by one side should be accorded full faith and credit in the face of
protests as to their spurious character by the other side; whether or not inconsistencies in the
body of proofs of a party are of such gravity as to justify refusing to give said proofs weight – all
these are issues of fact. Questions like these are not reviewable by the Supreme Court whose
review of cases decided by the CA is confined only to questions of law raised in the petition and
therein distinctly set forth.13

Nonetheless, the Court has recognized several exceptions to the rule, including: (a) when the
findings are grounded entirely on speculation, surmises or conjectures; (b) when the inference
made is manifestly mistaken, absurd or impossible; (c) when there is grave abuse of discretion;
(d) when the judgment is based on a misapprehension of facts; (e) when the findings of facts
are conflicting; (f) when in making its findings the Court of Appeals went beyond the issues of
the case, or its findings are contrary to the admissions of both the appellant and the appellee;
(g) when the findings are contrary to those of the trial court; (h) when the findings are
conclusions without citation of specific evidence on which they are based; (i) 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; (j) when the findings of fact are premised on the supposed absence of evidence
and contradicted by the evidence on record; and (k) when the Court of Appeals manifestly
overlooked certain relevant facts not disputed by the parties, which, if properly considered,
would justify a different conclusion.14 The circumstances of this case indicate that none of such
exceptions is attendant herein.

The credence given by the RTC to the testimony and relocation plan of Fajardo was conclusive
upon this Court especially by virtue of the affirmance by the CA of the RTC. Resultantly, the fact
of Angeles’ encroachment on Pascual’s Lot 4 was proved by preponderant evidence.

It is noteworthy to point out, too, that the argument of Angeles based on the indefeasibility and
incontrovertibility of Torrens titles pursuant to Presidential Decree No. 1529 (The Property
Registration Decree) is inapplicable considering that the ownership of Lot 4 and Lot 5 was not
the issue. Nor were the metes and bounds of the lots as indicated in the respective TCTs being
assailed, for the only issue concerned the exact and actual location of Lot 4 and Lot 5.
 II

Angeles was a builder in good faith

To be next determined is whether the CA’s application of Article 448 of the Civil Code was
correct and proper.

Article 448 of the Civil Code provides thusly:

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.1âwphi1 The parties
shall agree upon the terms of the lease and in case of disagreement, the court shall fix the
terms thereof.

The provision contemplates a person building, or sowing, or planting in good faith on land
owned by another. The law presupposes that the land and the building or plants are owned by
different persons, like here. The RTC and CA found and declared Angeles to be a builder in good
faith. We cannot veer away from their unanimous conclusion, which can easily be drawn from
the fact that Angeles insists until now that he built his house entirely on his own lot. Good faith
consists in the belief of the builder that the land he is building on is his and in his ignorance of a
defect or flaw in his title.15

With the unassailable finding that Angeles’ house straddled the lot of Pascual, and that Angeles
had built his house in good faith, Article 448 of the Civil Code, which spells out the rights and
obligations of the owner of the land as well as of the builder, is unquestionably applicable.
Consequently, the land being the principal and the building the accessory, preference is given
to Pascual as the owner of the land to make the choice as between appropriating the building
or obliging Angeles as the builder to pay the value of the land. Contrary to the insistence of
Angeles, therefore, no inconsistency exists between the finding of good faith in his favor and
the grant of the reliefs set forth in Article 448 of the Civil Code.1âwphi1

WHEREFORE, the Court DENIES the petition for review on certiorari; and AFFIRMS the decision
promulgated on January 31, 2002 by the Court of Appeals in C.A.-G.R. CV No. 61600. No
pronouncement on costs of suit.

SO ORDERED.
G.R. No. 140528               December 7, 2011

MARIA TORBELA, represented by her heirs, namely: EULOGIO TOSINO, husband and children:
CLARO, MAXIMINO, CORNELIO, OLIVIA and CALIXTA, all surnamed TOSINO, APOLONIA
TOSINO VDA. DE RAMIREZ and JULITA TOSINO DEAN; PEDRO TORBELA, represented by his
heirs, namely: JOSE and DIONISIO, both surnamed TORBELA; EUFROSINA TORBELA ROSARIO,
represented by her heirs, namely: ESTEBAN T. ROSARIO, MANUEL T. ROSARIO, ROMULO T.
ROSARIO and ANDREA ROSARIO-HADUCA; LEONILA TORBELA TAMIN; FERNANDO TORBELA,
represented by his heirs, namely: SERGIO T. TORBELA, EUTROPIA T. VELASCO, PILAR T.
ZULUETA, CANDIDO T. TORBELA, FLORENTINA T. TORBELA and PANTALEON T. TORBELA;
DOLORES TORBELA TABLADA; LEONORA TORBELA AGUSTIN, represented by her heirs,
namely: PATRICIO, SEGUNDO, CONSUELO and FELIX, all surnamed AGUSTIN; and SEVERINA
TORBELA ILDEFONSO, Petitioners,
vs.
SPOUSES ANDRES T. ROSARIO and LENA DUQUE-ROSARIO and BANCO FILIPINO SAVINGS AND
MORTGAGE BANK, Respondents.

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

G.R. No. 140553

LENA DUQUE-ROSARIO, Petitioner,
vs.
BANCO FILIPINO SAVINGS AND MORTGAGE BANK, Respondent.

DECISION

LEONARDO-DE CASTRO, J.:

Presently before the Court are two consolidated Petitions for Review on Certiorari under Rule
45 of the Rules of Court, both assailing the Decision1 dated June 29, 1999 and Resolution2 dated
October 22, 1999 of the Court of Appeals in CA-G.R. CV No. 39770.

The petitioners in G.R. No. 140528 are siblings Maria Torbela,3 Pedro Torbela,4 Eufrosina
Torbela Rosario,5 Leonila Torbela Tamin, Fernando Torbela,6 Dolores Torbela Tablada, Leonora
Torbela Agustin,7 and Severina Torbela Ildefonso (Torbela siblings).

The petitioner in G.R. No. 140553 is Lena Duque-Rosario (Duque-Rosario), who was married to,
but now legally separated from, Dr. Andres T. Rosario (Dr. Rosario). Dr. Rosario is the son of
Eufrosina Torbela Rosario and the nephew of the other Torbela siblings.

The controversy began with a parcel of land, with an area of 374 square meters, located in
Urdaneta City, Pangasinan (Lot No. 356-A). It was originally part of a larger parcel of land,
known as Lot No. 356 of the Cadastral Survey of Urdaneta, measuring 749 square meters, and
covered by Original Certificate of Title (OCT) No. 16676,8 in the name of Valeriano Semilla
(Valeriano), married to Potenciana Acosta. Under unexplained circumstances, Valeriano gave
Lot No. 356-A to his sister Marta Semilla, married to Eugenio Torbela (spouses Torbela). Upon
the deaths of the spouses Torbela, Lot No. 356-A was adjudicated in equal shares among their
children, the Torbela siblings, by virtue of a Deed of Extrajudicial Partition9 dated December 3,
1962.

On December 12, 1964, the Torbela siblings executed a Deed of Absolute Quitclaim10 over Lot
No. 356-A in favor of Dr. Rosario. According to the said Deed, the Torbela siblings "for and in
consideration of the sum of NINE PESOS (₱9.00) x x x transfer[red] and convey[ed] x x x unto
the said Andres T. Rosario, that undivided portion of THREE HUNDRED SEVENTY-FOUR square
meters of that parcel of land embraced in Original Certificate of Title No. 16676 of the land
records of Pangasinan x x x."11 Four days later, on December 16, 1964, OCT No. 16676 in
Valeriano’s name was partially cancelled as to Lot No. 356-A and TCT No. 5275112 was issued in
Dr. Rosario’s name covering the said property.

Another Deed of Absolute Quitclaim13 was subsequently executed on December 28, 1964, this
time by Dr. Rosario, acknowledging that he only borrowed Lot No. 356-A from the Torbela
siblings and was already returning the same to the latter for ₱1.00. The Deed stated:

That for and in consideration of the sum of one peso (₱1.00), Philippine Currency and the fact
that I only borrowed the above described parcel of land from MARIA TORBELA, married to
Eulogio Tosino, EUFROSINA TORBELA, married to Pedro Rosario, PEDRO TORBELA, married to
Petra Pagador, LEONILA TORBELA, married to Fortunato Tamen, FERNANDO TORBELA, married
to Victoriana Tablada, DOLORES TORBELA, widow, LEONORA TORBELA, married to Matias
Agustin and SEVERINA TORBELA, married to Jorge Ildefonso, x x x by these presents do hereby
cede, transfer and convey by way of this ABSOLUTE QUITCLAIM unto the said Maria, Eufrosina,
Pedro, Leonila, Fernando, Dolores, Leonora and Severina, all surnamed Torbela the parcel of
land described above.14 (Emphasis ours.)

The aforequoted Deed was notarized, but was not immediately annotated on TCT No. 52751.

Following the issuance of TCT No. 52751, Dr. Rosario obtained a loan from the Development
Bank of the Philippines (DBP) on February 21, 1965 in the sum of ₱70,200.00, secured by a
mortgage constituted on Lot No. 356-A. The mortgage was annotated on TCT No. 52751 on
September 21, 1965 as Entry No. 243537.15 Dr. Rosario used the proceeds of the loan for the
construction of improvements on Lot No. 356-A.

On May 16, 1967, Cornelio T. Tosino (Cornelio) executed an Affidavit of Adverse Claim,16 on
behalf of the Torbela siblings. Cornelio deposed in said Affidavit:

3. That ANDRES T. ROSARIO later quitclaimed his rights in favor of the former owners by
virtue of a Deed of Absolute Quitclaim which he executed before Notary Public Banaga,
and entered in his Notarial Registry as Dec. No. 43; Page No. 9; Book No. I; Series of
1964;

4. That it is the desire of the parties, my aforestated kins, to register ownership over the
above-described property or to perfect their title over the same but their Deed could
not be registered because the registered owner now, ANDRES T. ROSARIO mortgaged
the property with the DEVELOPMENT BANK OF THE PHILIPPINES, on September 21,
1965, and for which reason, the Title is still impounded and held by the said bank;

5. That pending payment of the obligation with the DEVELOPMENT BANK OF THE
PHILIPPINES or redemption of the Title from said bank, I, CORNELIO T. TOSINO, in behalf
of my mother MARIA TORBELA-TOSINO, and my Aunts EUFROSINA TORBELA, LEONILA
TORBELA-TAMEN, DOLORES TORBELA, LEONORA TORBELA-AGUSTIN, SEVERINA
TORBELA-ILDEFONSO, and my Uncles PEDRO TORBELA and FERNANDO, also surnamed
TORBELA, I request the Register of Deeds of Pangasinan to annotate their adverse claim
at the back of Transfer Certificate of Title No. 52751, based on the annexed document,
Deed of Absolute Quitclaim by ANDRES T. ROSARIO, dated December 28, 1964, marked
as Annex "A" and made a part of this Affidavit, and it is also requested that the
DEVELOPMENT BANK OF THE PHILIPPINES be informed accordingly.17
The very next day, on May 17, 1967, the Torbela siblings had Cornelio’s Affidavit of Adverse
Claim dated May 16, 1967 and Dr. Rosario’s Deed of Absolute Quitclaim dated December 28,
1964 annotated on TCT No. 52751 as Entry Nos. 27447118 and 274472,19 respectively.

The construction of a four-storey building on Lot No. 356-A was eventually completed. The
building was initially used as a hospital, but was later converted to a commercial building. Part
of the building was leased to PT&T; and the rest to Mrs. Andrea Rosario-Haduca, Dr. Rosario’s
sister, who operated the Rose Inn Hotel and Restaurant.

Dr. Rosario was able to fully pay his loan from DBP. Under Entry No. 520197 on TCT No.
5275120 dated March 6, 1981, the mortgage appearing under Entry No. 243537 was cancelled
per the Cancellation and Discharge of Mortgage executed by DBP in favor of Dr. Rosario and
ratified before a notary public on July 11, 1980.

In the meantime, Dr. Rosario acquired another loan from the Philippine National Bank (PNB)
sometime in 1979-1981. Records do not reveal though the original amount of the loan from
PNB, but the loan agreement was amended on March 5, 1981 and the loan amount was
increased to ₱450,000.00. The loan was secured by mortgages constituted on the following
properties: (1) Lot No. 356-A, covered by TCT No. 52751 in Dr. Rosario’s name; (2) Lot No. 4489,
with an area of 1,862 square meters, located in Dagupan City, Pangasinan, covered by TCT No.
24832; and (3) Lot No. 5-F-8-C-2-B-2-A, with an area of 1,001 square meters, located in
Nancayasan, Urdaneta, Pangasinan, covered by TCT No. 104189.21 The amended loan
agreement and mortgage on Lot No. 356-A was annotated on TCT No. 52751 on March 6, 1981
as Entry No. 520099.22

Five days later, on March 11, 1981, another annotation, Entry No. 520469,23 was made on TCT
No. 52751, canceling the adverse claim on Lot No. 356-A under Entry Nos. 274471-274472, on
the basis of the Cancellation and Discharge of Mortgage executed by Dr. Rosario on March 5,
1981. Entry No. 520469 consisted of both stamped and handwritten portions, and exactly
reads:

Entry No. 520469. Cancellation of Adverse Claim executed by Andres Rosario in favor of same.
The incumbrance/mortgage appearing under Entry No. 274471-72 is now cancelled as per
Cancellation and Discharge of Mortgage Ratified before Notary Public Mauro G. Meris on March
5, 1981: Doc. No. 215; Page No. 44; Book No. 1; Series Of 1981.

Lingayen, Pangasinan, 3-11, 19981

[Signed: Pedro dela Cruz]

Register of Deeds 24

On December 8, 1981, Dr. Rosario and his wife, Duque-Rosario (spouses Rosario), acquired a
third loan in the amount of ₱1,200,000.00 from Banco Filipino Savings and Mortgage Bank
(Banco Filipino). To secure said loan, the spouses Rosario again constituted mortgages on Lot
No. 356-A, Lot No. 4489, and Lot No. 5-F-8-C-2-B-2-A. The mortgage on Lot No. 356-A was
annotated on TCT No. 52751 as Entry No. 53328325 on December 18, 1981. Since the
construction of a two-storey commercial building on Lot No. 5-F-8-C-2-B-2-A was still
incomplete, the loan value thereof as collateral was deducted from the approved loan amount.
Thus, the spouses Rosario could only avail of the maximum loan amount of ₱830,064.00 from
Banco Filipino.

Because Banco Filipino paid the balance of Dr. Rosario’s loan from PNB, the mortgage on Lot
No. 356-A in favor of PNB was cancelled per Entry No. 53347826 on TCT No. 52751 dated
December 23, 1981.
On February 13, 1986, the Torbela siblings filed before the Regional Trial Court (RTC) of
Urdaneta, Pangasinan, a Complaint for recovery of ownership and possession of Lot No. 356-A,
plus damages, against the spouses Rosario, which was docketed as Civil Case No. U-4359. On
the same day, Entry Nos. 593493 and 593494 were made on TCT No. 52751 that read as
follows:

Entry No. 593494 – Complaint – Civil Case No. U-4359 (For: Recovery of Ownership and
Possession and Damages. (Sup. Paper).

Entry No. 593493 – Notice of Lis Pendens – The parcel of land described in this title is subject to
Lis Pendens executed by Liliosa B. Rosario, CLAO, Trial Attorney dated February 13, 1986. Filed
to TCT No. 52751

February 13, 1986-1986 February 13 – 3:30 p.m.

(SGD.) PACIFICO M. BRAGANZA

Register of Deeds27

The spouses Rosario afterwards failed to pay their loan from Banco Filipino. As of April 2, 1987,
the spouses Rosario’s outstanding principal obligation and penalty charges amounted to
₱743,296.82 and ₱151,524.00, respectively.28

Banco Filipino extrajudicially foreclosed the mortgages on Lot No. 356-A, Lot No. 4489, and Lot
No. 5-F-8-C-2-B-2-A. During the public auction on April 2, 1987, Banco Filipino was the lone
bidder for the three foreclosed properties for the price of ₱1,372,387.04. The Certificate of
Sale29 dated April 2, 1987, in favor of Banco Filipino, was annotated on TCT No. 52751 on April
14, 1987 as Entry No. 610623.30

On December 9, 1987, the Torbela siblings filed before the RTC their Amended
Complaint,31 impleading Banco Filipino as additional defendant in Civil Case No. U-4359 and
praying that the spouses Rosario be ordered to redeem Lot No. 356-A from Banco Filipino.

The spouses Rosario instituted before the RTC on March 4, 1988 a case for annulment of
extrajudicial foreclosure and damages, with prayer for a writ of preliminary injunction and
temporary restraining order, against Banco Filipino, the Provincial Ex Officio Sheriff and his
Deputy, and the Register of Deeds of Pangasinan. The case was docketed as Civil Case No. U-
4667. Another notice of lis pendens was annotated on TCT No. 52751 on March 10, 1988 as
Entry No. 627059, viz:

Entry No. 627059 – Lis Pendens – Dr. Andres T. Rosario and Lena Duque Rosario, Plaintiff versus
Banco Filipino, et. al. Civil Case No. U-4667 or Annulment of ExtraJudicial Foreclosure of Real
Estate Mortgage – The parcel of land described in this title is subject to Notice of Lis Pendens
subscribed and sworn to before Notary Public Mauro G. Meris, as Doc. No. 21; Page No. 5; Book
111; S-1988. March 7, 1988-1988 March 10, 1:00 p.m.

(SGD.) RUFINO M. MORENO, SR.

Register of Deeds32

The Torbela siblings intervened in Civil Case No. U-4667. Eventually, on October 17, 1990, the
RTC issued an Order33 dismissing without prejudice Civil Case No. U-4667 due to the spouses
Rosario’s failure to prosecute.

Meanwhile, the Torbela siblings tried to redeem Lot No. 356-A from Banco Filipino, but their
efforts were unsuccessful. Upon the expiration of the one-year redemption period in April
1988, the Certificate of Final Sale34 and Affidavit of Consolidation35 covering all three foreclosed
properties were executed on May 24, 1988 and May 25, 1988, respectively.

On June 7, 1988, new certificates of title were issued in the name of Banco Filipino, particularly,
TCT No. 165812 for Lot No. 5-F-8-C-2-B-2-A and TCT No. 165813 for Lot No. 356-A .36

The Torbela siblings thereafter filed before the RTC on August 29, 1988 a Complaint37 for
annulment of the Certificate of Final Sale dated May 24, 1988, judicial cancelation of TCT No.
165813, and damages, against Banco Filipino, the Ex Officio Provincial Sheriff, and the Register
of Deeds of Pangasinan, which was docketed as Civil Case No. U-4733.

On June 19, 1991, Banco Filipino filed before the RTC of Urdaneta City a Petition for the
issuance of a writ of possession. In said Petition, docketed as Pet. Case No. U-822, Banco
Filipino prayed that a writ of possession be issued in its favor over Lot No. 5-F-8-C-2-B-2-A and
Lot No. 356-A, plus the improvements thereon, and the spouses Rosario and other persons
presently in possession of said properties be directed to abide by said writ.

The RTC jointly heard Civil Case Nos. U-4359 and U-4733 and Pet. Case No. U-822. The
Decision38 on these three cases was promulgated on January 15, 1992, the dispositive portion of
which reads:

WHEREFORE, judgment is rendered:

1. Declaring the real estate mortgage over Lot 356-A covered by TCT 52751 executed by
Spouses Andres Rosario in favor of Banco Filipino, legal and valid;

2. Declaring the sheriff’s sale dated April 2, 1987 over Lot 356-A covered by TCT 52751
and subsequent final Deed of Sale dated May 14, 1988 over Lot 356-A covered by TCT
No. 52751 legal and valid;

3. Declaring Banco Filipino the owner of Lot 356-A covered by TCT No. 52751 (now TCT
165813);

4. Banco Filipino is entitled to a Writ of Possession over Lot 356-A together with the
improvements thereon (Rose Inn Building). The Branch Clerk of Court is hereby ordered
to issue a writ of possession in favor of Banco Filipino;

5. [The Torbela siblings] are hereby ordered to render accounting to Banco Filipino the
rental they received from tenants of Rose Inn Building from May 14, 1988;

6. [The Torbela siblings] are hereby ordered to pay Banco Filipino the sum of ₱20,000.00
as attorney’s fees;

7. Banco Filipino is hereby ordered to give [the Torbela siblings] the right of first refusal
over Lot 356-A. The Register of Deeds is hereby ordered to annotate the right of [the
Torbela siblings] at the back of TCT No. 165813 after payment of the required fees;

8. Dr. Rosario and Lena Rosario are hereby ordered to reimburse [the Torbela siblings]
the market value of Lot 356-A as of December, 1964 minus payments made by the
former;

9. Dismissing the complaint of [the Torbela siblings] against Banco Filipino, Pedro Habon
and Rufino Moreno in Civil Case No. U-4733; and against Banco Filipino in Civil Case No.
U-4359.39
The RTC released an Amended Decision40 dated January 29, 1992, adding the following
paragraph to the dispositive:

Banco Filipino is entitled to a Writ of Possession over Lot-5-F-8-C-2-[B]-2-A of the subdivision

plan (LRC) Psd-122471, covered by Transfer Certificate of Title 104189 of the Registry of Deeds
of Pangasinan[.]41

The Torbela siblings and Dr. Rosario appealed the foregoing RTC judgment before the Court of
Appeals. Their appeal was docketed as CA-G.R. CV No. 39770.

In its Decision42 dated June 29, 1999, the Court of Appeals decreed:

WHEREFORE, foregoing considered, the appealed decision is hereby AFFIRMED with

modification. Items No. 6 and 7 of the appealed decision are DELETED. Item No. 8 is modified
requiring [Dr. Rosario] to pay [the Torbela siblings] actual damages, in the amount of
₱1,200,000.00 with 6% per annum interest from finality of this decision until fully paid. [Dr.
Rosario] is further ORDERED to pay [the Torbela siblings] the amount of ₱300,000.00 as moral
damages; ₱200,000.00 as exemplary damages and ₱100,000.00 as attorney’s fees.

Costs against [Dr. Rosario].43

The Court of Appeals, in a Resolution44 dated October 22, 1999, denied the separate Motions
for Reconsideration of the Torbela siblings and Dr. Rosario.

The Torbela siblings come before this Court via the Petition for Review in G.R. No. 140528, with
the following assignment of errors:

First Issue and Assignment of Error:

THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN NOT FINDING THAT THE
REGISTRATION OF THE DEED OF ABSOLUTE QUITCLAIM EXECUTED BY [DR. ANDRES T.
ROSARIO] IN FAVOR OF THE [TORBELA SIBLINGS] DATED DECEMBER 28, 1964 AND THE
REGISTRATION OF THE NOTICE OF ADVERSE CLAIM EXECUTED BY THE [TORBELA
SIBLINGS], SERVE AS THE OPERATIVE ACT TO CONVEY OR AFFECT THE LAND AND
IMPROVEMENTS THEREOF IN SO FAR AS THIRD PERSONS ARE CONCERNED.

Second Issue and Assignment of Error:

THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN FINDING THAT THE SUBJECT
PROPERTY COVERED BY T.C.T. NO. 52751 IS CLEAN AND FREE, DESPITE OF THE
ANNOTATION OF ENCUMBRANCES OF THE NOTICE OF ADVERSE CLAIM AND THE DEED
OF ABSOLUTE QUITCLAIM APPEARING AT THE BACK THEREOF AS ENTRY NOS. 274471
AND 274472, RESPECTIVELY.

Third Issue and Assignment of Error:

THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN FINDING THAT THE NOTICE OF
ADVERSE CLAIM OF THE [TORBELA SIBLINGS] UNDER ENTRY NO. 274471 WAS VALIDLY
CANCELLED BY THE REGISTER OF DEEDS, IN THE ABSENCE OF A PETITION DULY FILED IN
COURT FOR ITS CANCELLATION.

Fourth Issue and Assignment of Error:

 THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN FINDING THAT RESPONDENT
BANCO FILIPINO SAVINGS AND MORTGAGE BANK IS A MORTGAGEE IN GOOD FAITH.

Fifth Issue and Assignment of Error:

THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN NOT FINDING THAT THE
FILING OF A CIVIL CASE NO. U-4359 ON DECEMBER 9, 1987, IMPLEADING RESPONDENT
BANCO FILIPINO AS ADDITIONAL PARTY DEFENDANT, TOLL OR SUSPEND THE RUNNING
OF THE ONE YEAR PERIOD OF REDEMPTION.

Sixth Issue and Assignment of Error:

THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN NOT FINDING THAT THE
OWNERSHIP OVER THE SUBJECT PROPERTY WAS PREMATURELY CONSOLIDATED IN
FAVOR OF RESPONDENT BANCO FILIPINO SAVINGS AND MORTGAGE BANK.

Seventh Issue and Assignment of Error:

THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN FINDING THAT THE SUBJECT
PROPERTY IS AT LEAST WORTH ₱1,200,000.00.45

The Torbela siblings ask of this Court:

WHEREFORE, in the light of the foregoing considerations, the [Torbela siblings] most
respectfully pray that the questioned DECISION promulgated on June 29, 1999 (Annex "A",
Petition) and the RESOLUTION dated October 22, 1999 (Annex "B", Petition) be REVERSED and
SET ASIDE, and/or further MODIFIED in favor of the [Torbela siblings], and another DECISION
issue ordering, among other reliefs, the respondent Banco Filipino to reconvey back Lot No.
356-A, covered by T.C.T. No. 52751, in favor of the [Torbela siblings] who are the actual owners
of the same.

The [Torbela siblings] likewise pray for such other reliefs and further remedies as may be
deemed just and equitable under the premises.46

Duque-Rosario, now legally separated from Dr. Rosario, avers in her Petition for Review in G.R.
No. 140553 that Lot No. 4489 and Lot No. 5-F-8-C-2-B-2-A were registered in her name, and she
was unlawfully deprived of ownership of said properties because of the following errors of the
Court of Appeals:

THE HON. COURT OF APPEALS PATENTLY ERRED IN NOT FINDING THAT THE PERIOD TO
REDEEM THE PROPERTY HAS NOT COMMENCED, HENCE, THE CERTIFICATE OF SALE, THE
CONSOLIDATION OF OWNERSHIP BY [BANCO FILIPINO], ARE NULL AND VOID.

THE COURT OF APPEALS PATENTLY ERRED IN REFUSING TO RULE THAT THE FILING OF
THE COMPLAINT BEFORE THE COURT A QUO BY THE [TORBELA SIBLINGS] HAD ALREADY
BEEN PRESCRIBED.47

Duque-Rosario prays that the appealed decision of the Court of Appeals be reversed and set
aside, and that Lot No. 4489 and Lot No. 5-F-8-C-2-B-2-A be freed from all obligations and
encumbrances and returned to her.
Review of findings of fact by the RTC and the Court of Appeals warranted.

A disquisition of the issues raised and/or errors assigned in the Petitions at bar unavoidably
requires a re-evaluation of the facts and evidence presented by the parties in the court a quo.

In Republic v. Heirs of Julia Ramos,48 the Court summed up the rules governing the power of
review of the Court:

Ordinarily, this Court will not review, much less reverse, the factual findings of the Court of
Appeals, especially where such findings coincide with those of the trial
court.http://sc.judiciary.gov.ph/jurisprudence/2010/february2010/169481.htm - _ftn The
findings of facts of the Court of Appeals are, as a general rule, conclusive and binding upon this
Court, since this Court is not a trier of facts and does not routinely undertake the re-
examination of the evidence presented by the contending parties during the trial of the case.

The above rule, however, is subject to a number of exceptions, such as (1) when the inference
made is manifestly mistaken, absurd or impossible; (2) when there is grave abuse of discretion;
(3) when the finding is grounded entirely on speculations, surmises, or conjectures; (4) when
the judgment of the Court of Appeals is based on misapprehension of facts; (5) when the
findings of fact are conflicting; (6) when the Court of Appeals, in making its findings, went
beyond the issues of the case and the same is contrary to the admissions of both parties; (7)
when the findings of the Court of Appeals are contrary to those of the trial court; (8) when the
findings of fact are conclusions without citation of specific evidence on which they are based;
(9) when the Court of Appeals manifestly overlooked certain relevant facts not disputed by the
parties and which, if properly considered, would justify a different conclusion; and (10) when
the findings of fact of the Court of Appeals are premised on the absence of evidence and are
contradicted by the evidence on record.49

As the succeeding discussion will bear out, the first, fourth, and ninth exceptions are extant in
these case.

Barangay conciliation was not a pre-requisite to the institution of Civil Case No. U-4359.

Dr. Rosario contends that Civil Case No. U-4359, the Complaint of the Torbela siblings for
recovery of ownership and possession of Lot No. 356-A, plus damages, should have been
dismissed by the RTC because of the failure of the Torbela siblings to comply with the prior
requirement of submitting the dispute to barangay conciliation.

The Torbela siblings instituted Civil Case No. U-4359 on February 13, 1986, when Presidential
Decree No. 1508, Establishing a System of Amicably Settling Disputes at the Barangay Level, was
still in effect.50 Pertinent provisions of said issuance read:

Section 2. Subject matters for amicable settlement. The Lupon of each barangay shall have
authority to bring together the parties actually residing in the same city or municipality for
amicable settlement of all disputes except:

1. Where one party is the government, or any subdivision or instrumentality thereof;

2. Where one party is a public officer or employee, and the dispute relates to the
performance of his official functions;

3. Offenses punishable by imprisonment exceeding 30 days, or a fine exceeding

₱200.00;
 4. Offenses where there is no private offended party;

5. Such other classes of disputes which the Prime Minister may in the interest of justice
determine upon recommendation of the Minister of Justice and the Minister of Local
Government.

Section 3. Venue. Disputes between or among persons actually residing in the same barangay
shall be brought for amicable settlement before the Lupon of said barangay. Those involving
actual residents of different barangays within the same city or municipality shall be brought in
the barangay where the respondent or any of the respondents actually resides, at the election
of the complainant. However, all disputes which involved real property or any interest therein
shall be brought in the barangay where the real property or any part thereof is situated.

The Lupon shall have no authority over disputes:

1. involving parties who actually reside in barangays of different cities or municipalities,

except where such barangays adjoin each other; and

2. involving real property located in different municipalities.

xxxx

Section 6. Conciliation, pre-condition to filing of complaint. – No complaint, petition, action or

proceeding involving any matter within the authority of the Lupon as provided in Section 2
hereof shall be filed or instituted in court or any other government office for adjudication
unless there has been a confrontation of the parties before the Lupon Chairman or the Pangkat
and no conciliation or settlement has been reached as certified by the Lupon Secretary or the
Pangkat Secretary, attested by the Lupon or Pangkat Chairman, or unless the settlement has
been repudiated. x x x. (Emphases supplied.)

The Court gave the following elucidation on the jurisdiction of the Lupong Tagapayapa in Tavora
v. Hon. Veloso51 :

The foregoing provisions are quite clear. Section 2 specifies the conditions under which the
Lupon of a barangay "shall have authority" to bring together the disputants for amicable
settlement of their dispute: The parties must be "actually residing in the same city or
municipality." At the same time, Section 3 — while reiterating that the disputants must be
"actually residing in the same barangay" or in "different barangays" within the same city or
municipality — unequivocably declares that the Lupon shall have "no authority" over disputes
"involving parties who actually reside in barangays of different cities or municipalities," except
where such barangays adjoin each other.

Thus, by express statutory inclusion and exclusion, the Lupon shall have no jurisdiction over
disputes where the parties are not actual residents of the same city or municipality, except
where the barangays in which they actually reside adjoin each other.

It is true that immediately after specifying the barangay whose Lupon shall take cognizance of a
given dispute, Sec. 3 of PD 1508 adds:

"However, all disputes which involve real property or any interest therein shall be brought in
the barangay where the real property or any part thereof is situated."

Actually, however, this added sentence is just an ordinary proviso and should operate as such.
The operation of a proviso, as a rule, should be limited to its normal function, which is to
restrict or vary the operation of the principal clause, rather than expand its scope, in the
absence of a clear indication to the contrary.

"The natural and appropriate office of a proviso is . . . to except something from the enacting
clause; to limit, restrict, or qualify the statute in whole or in part; or to exclude from the scope
of the statute that which otherwise would be within its terms." (73 Am Jur 2d 467.)

Therefore, the quoted proviso should simply be deemed to restrict or vary the rule on venue
prescribed in the principal clauses of the first paragraph of Section 3, thus: Although venue is
generally determined by the residence of the parties, disputes involving real property shall be
brought in the barangay where the real property or any part thereof is situated,
notwithstanding that the parties reside elsewhere within the same
city/municipality.52 (Emphases supplied.)

The original parties in Civil Case No. U-4359 (the Torbela siblings and the spouses Rosario) do
not reside in the same barangay, or in different barangays within the same city or municipality,
or in different barangays of different cities or municipalities but are adjoining each other. Some
of them reside outside Pangasinan and even outside of the country altogether. The Torbela
siblings reside separately in Barangay Macalong, Urdaneta, Pangasinan; Barangay Consolacion,
Urdaneta, Pangasinan; Pangil, Laguna; Chicago, United States of America; and Canada. The
spouses Rosario are residents of Calle Garcia, Poblacion, Urdaneta, Pangasinan. Resultantly, the
Lupon had no jurisdiction over the dispute and barangay conciliation was not a pre-condition
for the filing of Civil Case No. U-4359.

The Court now looks into the merits of Civil Case No. U-4359.

There was an express trust between the Torbela siblings and Dr. Rosario.

There is no dispute that the Torbela sibling inherited the title to Lot No. 356-A from their
parents, the Torbela spouses, who, in turn, acquired the same from the first registered owner
of Lot No. 356-A, Valeriano.

Indeed, the Torbela siblings executed a Deed of Absolute Quitclaim on December 12, 1964 in
which they transferred and conveyed Lot No. 356-A to Dr. Rosario for the consideration of
₱9.00. However, the Torbela siblings explained that they only executed the Deed as an
accommodation so that Dr. Rosario could have Lot No. 356-A registered in his name and use
said property to secure a loan from DBP, the proceeds of which would be used for building a
hospital on Lot No. 356-A – a claim supported by testimonial and documentary evidence, and
borne out by the sequence of events immediately following the execution by the Torbela
siblings of said Deed. On December 16, 1964, TCT No. 52751, covering Lot No. 356-A, was
already issued in Dr. Rosario’s name. On December 28, 1964, Dr. Rosario executed his own
Deed of Absolute Quitclaim, in which he expressly acknowledged that he "only borrowed" Lot
No. 356-A and was transferring and conveying the same back to the Torbela siblings for the
consideration of ₱1.00. On February 21, 1965, Dr. Rosario’s loan in the amount of ₱70,200.00,
secured by a mortgage on Lot No. 356-A, was approved by DBP. Soon thereafter, construction
of a hospital building started on Lot No. 356-A.

Among the notable evidence presented by the Torbela siblings is the testimony of Atty. Lorenza
Alcantara (Atty. Alcantara), who had no apparent personal interest in the present case. Atty.
Alcantara, when she was still a boarder at the house of Eufrosina Torbela Rosario (Dr. Rosario’s
mother), was consulted by the Torbela siblings as regards the extrajudicial partition of Lot No.
356-A. She also witnessed the execution of the two Deeds of Absolute Quitclaim by the Torbela
siblings and Dr. Rosario.
In contrast, Dr. Rosario presented TCT No. 52751, issued in his name, to prove his purported
title to Lot No. 356-A. In Lee Tek Sheng v. Court of Appeals,53 the Court made a clear distinction
between title and the certificate of title:

The certificate referred to is that document issued by the Register of Deeds known as the
Transfer Certificate of Title (TCT). By title, the law refers to ownership which is represented by
that document. Petitioner apparently confuses certificate with title. Placing a parcel of land
under the mantle of the Torrens system does not mean that ownership thereof can no longer
be disputed. Ownership is different from a certificate of title. The TCT is only the best proof of
ownership of a piece of land. Besides, the certificate cannot always be considered as conclusive
evidence of ownership. Mere issuance of the certificate of title in the name of any person does
not foreclose the possibility that the real property may be under co-ownership with persons not
named in the certificate or that the registrant may only be a trustee or that other parties may
have acquired interest subsequent to the issuance of the certificate of title. To repeat,
registration is not the equivalent of title, but is only the best evidence thereof. Title as a
concept of ownership should not be confused with the certificate of title as evidence of such
ownership although both are interchangeably used. x x x.54 (Emphases supplied.)

Registration does not vest title; it is merely the evidence of such title. Land registration laws do
not give the holder any better title than what he actually has.55 Consequently, Dr. Rosario must
still prove herein his acquisition of title to Lot No. 356-A, apart from his submission of TCT No.
52751 in his name.

Dr. Rosario testified that he obtained Lot No. 356-A after paying the Torbela siblings
₱25,000.00, pursuant to a verbal agreement with the latter. The Court though observes that Dr.
Rosario’s testimony on the execution and existence of the verbal agreement with the Torbela
siblings lacks significant details (such as the names of the parties present, dates, places, etc.)
and is not corroborated by independent evidence.

In addition, Dr. Rosario acknowledged the execution of the two Deeds of Absolute Quitclaim
dated December 12, 1964 and December 28, 1964, even affirming his own signature on the
latter Deed. The Parol Evidence Rule provides that when the terms of the agreement have been
reduced into writing, it is considered as containing all the terms agreed upon and there can be,
between the parties and their successors in interest, no evidence of such terms other than the
contents of the written agreement.56 Dr. Rosario may not modify, explain, or add to the terms in
the two written Deeds of Absolute Quitclaim since he did not put in issue in his pleadings (1) an
intrinsic ambiguity, mistake, or imperfection in the Deeds; (2) failure of the Deeds to express
the true intent and the agreement of the parties thereto; (3) the validity of the Deeds; or (4) the
existence of other terms agreed to by the Torbela siblings and Dr. Rosario after the execution of
the Deeds.57

Even if the Court considers Dr. Rosario’s testimony on his alleged verbal agreement with the
Torbela siblings, the Court finds the same unsatisfactory. Dr. Rosario averred that the two
Deeds were executed only because he was "planning to secure loan from the Development
Bank of the Philippines and Philippine National Bank and the bank needed absolute
quitclaim[.]"58 While Dr. Rosario’s explanation makes sense for the first Deed of Absolute
Quitclaim dated December 12, 1964 executed by the Torbela siblings (which transferred Lot No.
356-A to Dr. Rosario for ₱9.00.00), the same could not be said for the second Deed of Absolute
Quitclaim dated December 28, 1964 executed by Dr. Rosario. In fact, Dr. Rosario’s Deed of
Absolute Quitclaim (in which he admitted that he only borrowed Lot No. 356-A and was
transferring the same to the Torbela siblings for ₱1.00.00) would actually work against the
approval of Dr. Rosario’s loan by the banks. Since Dr. Rosario’s Deed of Absolute Quitclaim
dated December 28, 1964 is a declaration against his self-interest, it must be taken as favoring
the truthfulness of the contents of said Deed.59
It can also be said that Dr. Rosario is estopped from claiming or asserting ownership over Lot
No. 356-A based on his Deed of Absolute Quitclaim dated December 28, 1964. Dr. Rosario's
admission in the said Deed that he merely borrowed Lot No. 356-A is deemed conclusive upon
him. 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."60 That admission cannot now be denied by Dr. Rosario as against
the Torbela siblings, the latter having relied upon his representation.

Considering the foregoing, the Court agrees with the RTC and the Court of Appeals that Dr.
Rosario only holds Lot No. 356-A in trust for the Torbela siblings.

Trust is the right to the beneficial enjoyment of property, the legal title to which is vested in
another. It is a fiduciary relationship that obliges the trustee to deal with the property for the
benefit of the beneficiary. Trust relations between parties may either be express or implied. An
express trust is created by the intention of the trustor or of the parties, while an implied trust
comes into being by operation of law.61

Express trusts are created by direct and positive acts of the parties, by some writing or deed, or
will, or by words either expressly or impliedly evincing an intention to create a trust. Under
Article 1444 of the Civil Code, "[n]o particular words are required for the creation of an express
trust, it being sufficient that a trust is clearly intended."62 It is possible to create a trust without
using the word "trust" or "trustee." Conversely, the mere fact that these words are used does
not necessarily indicate an intention to create a trust. The question in each case is whether the
trustor manifested an intention to create the kind of relationship which to lawyers is known as
trust. It is immaterial whether or not he knows that the relationship which he intends to create
is called a trust, and whether or not he knows the precise characteristics of the relationship
which is called a trust.63

In Tamayo v. Callejo,64 the Court recognized that a trust may have a constructive or implied
nature in the beginning, but the registered owner’s subsequent express acknowledgement in a
public document of a previous sale of the property to another party, had the effect of imparting
to the aforementioned trust the nature of an express trust. The same situation exists in this
case. When Dr. Rosario was able to register Lot No. 356-A in his name under TCT No. 52751 on
December 16, 1964, an implied trust was initially established between him and the Torbela
siblings under Article 1451 of the Civil Code, which provides:

ART. 1451. 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.

Dr. Rosario’s execution of the Deed of Absolute Quitclaim on December 28, 1964, containing his
express admission that he only borrowed Lot No. 356-A from the Torbela siblings, eventually
transformed the nature of the trust to an express one. The express trust continued despite Dr.
Rosario stating in his Deed of Absolute Quitclaim that he was already returning Lot No. 356-A to
the Torbela siblings as Lot No. 356-A remained registered in Dr. Rosario’s name under TCT No.
52751 and Dr. Rosario kept possession of said property, together with the improvements
thereon.

The right of the Torbela siblings to recover Lot No. 356-A has not yet prescribed.

The Court extensively discussed the prescriptive period for express trusts in the Heirs of
Maximo Labanon v. Heirs of Constancio Labanon,65 to wit:
On the issue of prescription, we had the opportunity to rule in Bueno v. Reyes that
unrepudiated written express trusts are imprescriptible:

"While there are some decisions which hold that an action upon a trust is imprescriptible,
without distinguishing between express and implied trusts, the better rule, as laid down by this
Court in other decisions, is that prescription does supervene where the trust is merely an
implied one. The reason has been expressed by Justice J.B.L. Reyes in J.M. Tuason and Co., Inc.
vs. Magdangal, 4 SCRA 84, 88, as follows:

Under Section 40 of the old Code of Civil Procedure, all actions for recovery of real property
prescribed in 10 years, excepting only actions based on continuing or subsisting trusts that were
considered by section 38 as imprescriptible. As held in the case of Diaz v. Gorricho, L-11229,
March 29, 1958, however, the continuing or subsisting trusts contemplated in section 38 of the
Code of Civil Procedure referred only to express unrepudiated trusts, and did not include
constructive trusts (that are imposed by law) where no fiduciary relation exists and the trustee
does not recognize the trust at all."

This principle was amplified in Escay v. Court of Appeals this way: "Express trusts prescribe 10
years from the repudiation of the trust (Manuel Diaz, et al. vs. Carmen Gorricho et al., 54 O.G.
p. 8429, Sec. 40, Code of Civil Procedure)."

In the more recent case of Secuya v. De Selma, we again ruled that the prescriptive period for
the enforcement of an express trust of ten (10) years starts upon the repudiation of the trust by
the trustee.66

To apply the 10-year prescriptive period, which would bar a beneficiary’s action to recover in an
express trust, the repudiation of the trust must be proven by clear and convincing evidence and
made known to the beneficiary.67 The express trust disables the trustee from acquiring for his
own benefit the property committed to his management or custody, at least while he does not
openly repudiate the trust, and makes such repudiation known to the beneficiary or cestui que
trust. For this reason, the old Code of Civil Procedure (Act 190) declared that the rules on
adverse possession do not apply to "continuing and subsisting" (i.e., unrepudiated) trusts. In an
express trust, the delay of the beneficiary is directly attributable to the trustee who undertakes
to hold the property for the former, or who is linked to the beneficiary by confidential or
fiduciary relations. The trustee's possession is, therefore, not adverse to the beneficiary, until
and unless the latter is made aware that the trust has been repudiated.68

Dr. Rosario argues that he is deemed to have repudiated the trust on December 16, 1964, when
he registered Lot No. 356-A in his name under TCT No. 52751, so when on February 13, 1986,
the Torbela siblings instituted before the RTC Civil Case No. U-4359, for the recovery of
ownership and possession of Lot No. 356-A from the spouses Rosario, over 21 years had
passed. Civil Case No. U-4359 was already barred by prescription, as well as laches.

The Court already rejected a similar argument in Ringor v. Ringor69 for the following reasons:

A trustee who obtains a Torrens title over a property held in trust for him by another cannot
repudiate the trust by relying on the registration. A Torrens Certificate of Title in Jose’s name
did not vest ownership of the land upon him. The Torrens system does not create or vest title. It
only confirms and records title already existing and vested. It does not protect a usurper from
the true owner. The Torrens system was not intended to foment betrayal in the performance of
a trust. It does not permit one to enrich himself at the expense of another. Where one does not
have a rightful claim to the property, the Torrens system of registration can confirm or record
nothing. Petitioners cannot rely on the registration of the lands in Jose’s name nor in the name
of the Heirs of Jose M. Ringor, Inc., for the wrong result they seek. For Jose could not repudiate
a trust by relying on a Torrens title he held in trust for his co-heirs. The beneficiaries are entitled
to enforce the trust, notwithstanding the irrevocability of the Torrens title. The intended trust
must be sustained.70 (Emphasis supplied.)

In the more recent case of Heirs of Tranquilino Labiste v. Heirs of Jose Labiste,71 the Court
refused to apply prescription and laches and reiterated that:

[P]rescription and laches will run only from the time the express trust is repudiated. The Court
has held that for acquisitive prescription to bar the action of the beneficiary against the trustee
in an express trust for the recovery of the property held in trust it must be shown that: (a) the
trustee has performed unequivocal acts of repudiation amounting to an ouster of the cestui
que trust; (b) such positive acts of repudiation have been made known to the cestui que trust,
and (c) the evidence thereon is clear and conclusive. Respondents cannot rely on the fact that
the Torrens title was issued in the name of Epifanio and the other heirs of Jose. It has been held
that a trustee who obtains a Torrens title over property held in trust by him for another cannot
repudiate the trust by relying on the registration. The rule requires a clear repudiation of the
trust duly communicated to the beneficiary. The only act that can be construed as repudiation
was when respondents filed the petition for reconstitution in October 1993. And since
petitioners filed their complaint in January 1995, their cause of action has not yet prescribed,
laches cannot be attributed to them.72 (Emphasis supplied.)

It is clear that under the foregoing jurisprudence, the registration of Lot No. 356-A by Dr.
Rosario in his name under TCT No. 52751 on December 16, 1964 is not the repudiation that
would have caused the 10-year prescriptive period for the enforcement of an express trust to
run.

The Court of Appeals held that Dr. Rosario repudiated the express trust when he acquired
another loan from PNB and constituted a second mortgage on Lot No. 356-A sometime in 1979,
which, unlike the first mortgage to DBP in 1965, was without the knowledge and/or consent of
the Torbela siblings.

The Court only concurs in part with the Court of Appeals on this matter.

For repudiation of an express trust to be effective, the unequivocal act of repudiation had to be
made known to the Torbela siblings as the cestuis que trust and must be proven by clear and
conclusive evidence. A scrutiny of TCT No. 52751 reveals the following inscription:

Entry No. 520099

Amendment of the mortgage in favor of PNB inscribed under Entry No. 490658 in the sense
that the consideration thereof has been increased to PHILIPPINE PESOS Four Hundred Fifty
Thousand Pesos only (₱450,000.00) and to secure any and all negotiations with PNB, whether
contracted before, during or after the date of this instrument, acknowledged before Notary
Public of Pangasinan Alejo M. Dato as Doc. No. 198, Page No. 41, Book No. 11, Series of 1985.

Date of Instrument March 5, 1981

Date of Inscription March 6, 198173

Although according to Entry No. 520099, the original loan and mortgage agreement of Lot No.
356-A between Dr. Rosario and PNB was previously inscribed as Entry No. 490658, Entry No.
490658 does not actually appear on TCT No. 52751 and, thus, it cannot be used as the
reckoning date for the start of the prescriptive period.
The Torbela siblings can only be charged with knowledge of the mortgage of Lot No. 356-A to
PNB on March 6, 1981 when the amended loan and mortgage agreement was registered on TCT
No. 52751 as Entry No. 520099. Entry No. 520099 is constructive notice to the whole
world74 that Lot No. 356-A was mortgaged by Dr. Rosario to PNB as security for a loan, the
amount of which was increased to ₱450,000.00. Hence, Dr. Rosario is deemed to have
effectively repudiated the express trust between him and the Torbela siblings on March 6,
1981, on which day, the prescriptive period for the enforcement of the express trust by the
Torbela siblings began to run.

From March 6, 1981, when the amended loan and mortgage agreement was registered on TCT
No. 52751, to February 13, 1986, when the Torbela siblings instituted before the RTC Civil Case
No. U-4359 against the spouses Rosario, only about five years had passed. The Torbela siblings
were able to institute Civil Case No. U-4359 well before the lapse of the 10-year prescriptive
period for the enforcement of their express trust with Dr. Rosario.

Civil Case No. U-4359 is likewise not barred by laches. Laches means 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 a presumption that the party entitled to assert it either has
abandoned it or declined to assert it. As the Court explained in the preceding paragraphs, the
Torbela siblings instituted Civil Case No. U-4359 five years after Dr. Rosario’s repudiation of the
express trust, still within the 10-year prescriptive period for enforcement of such trusts. This
does not constitute an unreasonable delay in asserting one's right. A delay within the
prescriptive period is sanctioned by law and is not considered to be a delay that would bar
relief. Laches apply only in the absence of a statutory prescriptive period.75

Banco Filipino is not a mortgagee and buyer in good faith.

Having determined that the Torbela siblings are the true owners and Dr. Rosario merely the
trustee of Lot No. 356-A, the Court is next faced with the issue of whether or not the Torbela
siblings may still recover Lot No. 356-A considering that Dr. Rosario had already mortgaged Lot
No. 356-A to Banco Filipino, and upon Dr. Rosario’s default on his loan obligations, Banco
Filipino foreclosed the mortgage, acquired Lot No. 356-A as the highest bidder at the
foreclosure sale, and consolidated title in its name under TCT No. 165813. The resolution of this
issue depends on the answer to the question of whether or not Banco Filipino was a mortgagee
in good faith.

Under Article 2085 of the Civil Code, one of the essential requisites of the contract of mortgage
is that the mortgagor should be the absolute owner of the property to be mortgaged;
otherwise, the mortgage is considered null and void. However, an exception to this rule is the
doctrine of "mortgagee in good faith." Under this doctrine, even if the mortgagor is not the
owner of the mortgaged property, the mortgage contract and any foreclosure sale arising
therefrom are given effect by reason of public policy. This principle is based on the rule that all
persons dealing with property covered by a Torrens Certificate of Title, as buyers or
mortgagees, are not required to go beyond what appears on the face of the title. This is the
same rule that underlies the principle of "innocent purchasers for value." The prevailing
jurisprudence is that a mortgagee has a right to rely in good faith on the certificate of title of
the mortgagor to the property given as security and in the absence of any sign that might
arouse suspicion, has no obligation to undertake further investigation. Hence, even if the
mortgagor is not the rightful owner of, or does not have a valid title to, the mortgaged
property, the mortgagee in good faith is, nonetheless, entitled to protection.76

On one hand, the Torbela siblings aver that Banco Filipino is not a mortgagee in good faith
because as early as May 17, 1967, they had already annotated Cornelio’s Adverse Claim dated
May 16, 1967 and Dr. Rosario’s Deed of Absolute Quitclaim dated December 28, 1964 on TCT
No. 52751 as Entry Nos. 274471-274472, respectively.

On the other hand, Banco Filipino asseverates that it is a mortgagee in good faith because per
Section 70 of Presidential Decree No. 1529, otherwise known as the Property Registration
Decree, the notice of adverse claim, registered on May 17, 1967 by the Torbela siblings under
Entry Nos. 274471-274472 on TCT No. 52751, already lapsed after 30 days or on June 16, 1967.
Additionally, there was an express cancellation of Entry Nos. 274471-274472 by Entry No.
520469 dated March 11, 1981. So when Banco Filipino approved Dr. Rosario’s loan for
₱1,200,000.00 and constituted a mortgage on Lot No. 356-A (together with two other
properties) on December 8, 1981, the only other encumbrance on TCT No. 52751 was Entry No.
520099 dated March 6, 1981, i.e., the amended loan and mortgage agreement between Dr.
Rosario and PNB (which was eventually cancelled after it was paid off with part of the proceeds
from Dr. Rosario’s loan from Banco Filipino). Hence, Banco Filipino was not aware that the
Torbela siblings’ adverse claim on Lot No. 356-A still subsisted.

The Court finds that Banco Filipino is not a mortgagee in good faith. Entry Nos. 274471-274472
were not validly cancelled, and the improper cancellation should have been apparent to Banco
Filipino and aroused suspicion in said bank of some defect in Dr. Rosario’s title.

The purpose of annotating the adverse claim on the title of the disputed land is to apprise third
persons that there is a controversy over the ownership of the land and to preserve and protect
the right of the adverse claimant during the pendency of the controversy. It is a notice to third
persons that any transaction regarding the disputed land is subject to the outcome of the
dispute.77

Adverse claims were previously governed by Section 110 of Act No. 496, otherwise known as
the Land Registration Act, quoted in full below:

ADVERSE CLAIM

SEC. 110. Whoever claims any part or interest in registered land adverse to the registered
owner, arising subsequent to the date of the original registration, may, if no other provision is
made in this Act for registering the same, make a statement in writing setting forth fully his
alleged right or interest, and how or under whom acquired, and a reference to the volume and
page of the certificate of title of the registered owner, and a description of the land in which
the right or interest is claimed.

The statement shall be signed and sworn to, and shall state the adverse claimant’s residence,
and designate a place at which all notices may be served upon him. This statement shall be
entitled to registration as an adverse claim, and the court, upon a petition of any party in
interest, shall grant a speedy hearing upon the question of the validity of such adverse claim
and shall enter such decree therein as justice and equity may require. If the claim is adjudged to
be invalid, the registration shall be cancelled. If in any case the court after notice and hearing
shall find that a claim thus registered was frivolous or vexatious, it may tax the adverse claimant
double or treble costs in its discretion.

Construing the aforequoted provision, the Court stressed in Ty Sin Tei v. Lee Dy Piao78 that
"[t]he validity or efficaciousness of the [adverse] claim x x x may only be determined by the
Court upon petition by an interested party, in which event, the Court shall order the immediate
hearing thereof and make the proper adjudication as justice and equity may warrant. And it is
ONLY when such claim is found unmeritorious that the registration thereof may be cancelled."
The Court likewise pointed out in the same case that while a notice of lis pendens may be
cancelled in a number of ways, "the same is not true in a registered adverse claim, for it may be
cancelled only in one instance, i.e., after the claim is adjudged invalid or unmeritorious by the
Court x x x;" and "if any of the registrations should be considered unnecessary or superfluous, it
would be the notice of lis pendens and not the annotation of the adverse claim which is more
permanent and cannot be cancelled without adequate hearing and proper disposition of the
claim."

With the enactment of the Property Registration Decree on June 11, 1978, Section 70 thereof
now applies to adverse claims:

SEC. 70. Adverse claim. – Whoever claims any part or interest in registered land adverse to the
registered owner, arising subsequent to the date of the original registrations, may, if no other
provision is made in this Decree for registering the same, make a statement in writing setting
forth fully his alleged right, or interest, and how or under whom acquired, a reference to the
number of the certificate of title of the registered owner, the name of the registered owner,
and a description of the land in which the right or interest is claimed.

The statement shall be signed and sworn to, and shall state the adverse claimant’s residence,
and a place at which all notices may be served upon him. This statement shall be entitled to
registration as an adverse claim on the certificate of title. The adverse claim shall be effective
for a period of thirty days from the date of registration. After the lapse of said period, the
annotation of adverse claim may be cancelled upon filing of a verified petition therefor by the
party in interest: Provided, however, that after cancellation, no second adverse claim based on
the same ground shall be registered by the same claimant.

Before the lapse of thirty days aforesaid, any party in interest may file a petition in the Court of
First Instance where the land is situated for the cancellation of the adverse claim, and the court
shall grant a speedy hearing upon the question of the validity of such adverse claim, and shall
render judgment as may be just and equitable. If the adverse claim is adjudged to be invalid,
the registration thereof shall be ordered cancelled. If, in any case, the court, after notice and
hearing, shall find that the adverse claim thus registered was frivolous, it may fine the claimant
in an amount not less than one thousand pesos nor more than five thousand pesos, in its
discretion. Before the lapse of thirty days, the claimant may withdraw his adverse claim by filing
with the Register of Deeds a sworn petition to that effect. (Emphases supplied.)

In Sajonas v. Court of Appeals,79 the Court squarely interpreted Section 70 of the Property

Registration Decree, particularly, the new 30-day period not previously found in Section 110 of
the Land Registration Act, thus:

In construing the law aforesaid, care should be taken that every part thereof be given effect
and a construction that could render a provision inoperative should be avoided, and
inconsistent provisions should be reconciled whenever possible as parts of a harmonious
whole. For taken in solitude, a word or phrase might easily convey a meaning quite different
from the one actually intended and evident when a word or phrase is considered with those
with which it is associated. In ascertaining the period of effectivity of an inscription of adverse
claim, we must read the law in its entirety. Sentence three, paragraph two of Section 70 of P.D.
1529 provides:

"The adverse claim shall be effective for a period of thirty days from the date of registration."

At first blush, the provision in question would seem to restrict the effectivity of the adverse
claim to thirty days. But the above provision cannot and should not be treated separately, but
should be read in relation to the sentence following, which reads:
"After the lapse of said period, the annotation of adverse claim may be cancelled upon filing of
a verified petition therefor by the party in interest."

If the rationale of the law was for the adverse claim to ipso facto lose force and effect after the
lapse of thirty days, then it would not have been necessary to include the foregoing caveat to
clarify and complete the rule. For then, no adverse claim need be cancelled. If it has been
automatically terminated by mere lapse of time, the law would not have required the party in
interest to do a useless act.

A statute's clauses and phrases must not be taken separately, but in its relation to the statute's
totality. Each statute must, in fact, be construed as to harmonize it with the pre-existing body
of laws. Unless clearly repugnant, provisions of statutes must be reconciled. The printed pages
of the published Act, its history, origin, and its purposes may be examined by the courts in their
construction. x x x.

xxxx

Construing the provision as a whole would reconcile the apparent inconsistency between the
portions of the law such that the provision on cancellation of adverse claim by verified petition
would serve to qualify the provision on the effectivity period. The law, taken together, simply
means that the cancellation of the adverse claim is still necessary to render it ineffective,
otherwise, the inscription will remain annotated and shall continue as a lien upon the property.
For if the adverse claim has already ceased to be effective upon the lapse of said period, its
cancellation is no longer necessary and the process of cancellation would be a useless
ceremony.

It should be noted that the law employs the phrase "may be cancelled," which obviously
indicates, as inherent in its decision making power, that the court may or may not order the
cancellation of an adverse claim, notwithstanding such provision limiting the effectivity of an
adverse claim for thirty days from the date of registration. The court cannot be bound by such
period as it would be inconsistent with the very authority vested in it. A fortiori, the limitation
on the period of effectivity is immaterial in determining the validity or invalidity of an adverse
claim which is the principal issue to be decided in the court hearing. It will therefore depend
upon the evidence at a proper hearing for the court to determine whether it will order the
cancellation of the adverse claim or not.

To interpret the effectivity period of the adverse claim as absolute and without qualification
limited to thirty days defeats the very purpose for which the statute provides for the remedy of
an inscription of adverse claim, as the annotation of an adverse claim is a measure designed to
protect the interest of a person over a piece of real property where the registration of such
interest or right is not otherwise provided for by the Land Registration Act or Act 496 (now P.D.
1529 or the Property Registration Decree), and serves as a warning to third parties dealing with
said property that someone is claiming an interest or the same or a better right than the
registered owner thereof.

The reason why the law provides for a hearing where the validity of the adverse claim is to be
threshed out is to afford the adverse claimant an opportunity to be heard, providing a venue
where the propriety of his claimed interest can be established or revoked, all for the purpose of
determining at last the existence of any encumbrance on the title arising from such adverse
claim. This is in line with the provision immediately following:

"Provided, however, that after cancellation, no second adverse claim shall be registered by the
same claimant."
Should the adverse claimant fail to sustain his interest in the property, the adverse claimant will
be precluded from registering a second adverse claim based on the same ground.

It was held that "validity or efficaciousness of the claim may only be determined by the Court
upon petition by an interested party, in which event, the Court shall order the immediate
hearing thereof and make the proper adjudication as justice and equity may warrant. And it is
only when such claim is found unmeritorious that the registration of the adverse claim may be
cancelled, thereby protecting the interest of the adverse claimant and giving notice and
warning to third parties."80 (Emphases supplied.)

Whether under Section 110 of the Land Registration Act or Section 70 of the Property
Registration Decree, notice of adverse claim can only be cancelled after a party in interest files a
petition for cancellation before the RTC wherein the property is located, and the RTC conducts
a hearing and determines the said claim to be invalid or unmeritorious.

No petition for cancellation has been filed and no hearing has been conducted herein to
determine the validity or merit of the adverse claim of the Torbela siblings. Entry No. 520469
cancelled the adverse claim of the Torbela siblings, annotated as Entry Nos. 274471-774472,
upon the presentation by Dr. Rosario of a mere Cancellation and Discharge of Mortgage.

Regardless of whether or not the Register of Deeds should have inscribed Entry No. 520469 on
TCT No. 52751, Banco Filipino could not invoke said inscription in support of its claim of good
faith. There were several things amiss in Entry No. 520469 which should have already aroused
suspicions in Banco Filipino, and compelled the bank to look beyond TCT No. 52751 and inquire
into Dr. Rosario’s title. First, Entry No. 520469 does not mention any court order as basis for the
cancellation of the adverse claim. Second, the adverse claim was not a mortgage which could
be cancelled with Dr. Rosario’s Cancellation and Discharge of Mortgage. And third, the adverse
claim was against Dr. Rosario, yet it was cancelled based on a document also executed by Dr.
Rosario.

It is a well-settled rule that a purchaser or mortgagee 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 or mortgagor. 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 the vendor's or mortgagor's title, will not make him an innocent purchaser or
mortgagee for value, if it afterwards develops that the title was in fact defective, and it appears
that he had such notice of the defects as would have led to its discovery had he acted with the
measure of precaution which may be required of a prudent man in a like situation.81

While the defective cancellation of Entry Nos. 274471-274472 by Entry No. 520469 might not
be evident to a private individual, the same should have been apparent to Banco Filipino. Banco
Filipino is not an ordinary mortgagee, but is a mortgagee-bank, whose business is impressed
with public interest. In fact, in one case, 82 the Court explicitly declared that the rule that
persons dealing with registered lands can rely solely on the certificate of title does not apply to
banks. In another case,83 the Court adjudged that unlike private individuals, a bank is expected
to exercise greater care and prudence in its dealings, including those involving registered lands.
A banking institution is expected to exercise due diligence before entering into a mortgage
contract. The ascertainment of the status or condition of a property offered to it as security for
a loan must be a standard and indispensable part of its operations.

Banco Filipino cannot be deemed a mortgagee in good faith, much less a purchaser in good
faith at the foreclosure sale of Lot No. 356-A. Hence, the right of the Torbela siblings over Lot
No. 356-A is superior over that of Banco Filipino; and as the true owners of Lot No. 356-A, the
Torbela siblings are entitled to a reconveyance of said property even from Banco Filipino.
Nonetheless, the failure of Banco Filipino to comply with the due diligence requirement was not
the result of a dishonest purpose, some moral obliquity, or breach of a known duty for some
interest or ill will that partakes of fraud that would justify damages.84

Given the reconveyance of Lot No. 356-A to the Torbela siblings, there is no more need to
address issues concerning redemption, annulment of the foreclosure sale and certificate of sale
(subject matter of Civil Case No. U-4733), or issuance of a writ of possession in favor of Banco
Filipino (subject matter of Pet. Case No. U-822) insofar as Lot No. 356-A is concerned. Such
would only be superfluous. Banco Filipino, however, is not left without any recourse should the
foreclosure and sale of the two other mortgaged properties be insufficient to cover Dr.
Rosario’s loan, for the bank may still bring a proper suit against Dr. Rosario to collect the unpaid
balance.

The rules on accession shall govern the improvements on Lot No. 356-A and the rents thereof.

The accessory follows the principal. The right of accession is recognized under Article 440 of the
Civil Code which states that "[t]he 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."

There is no question that Dr. Rosario is the builder of the improvements on Lot No. 356-A. The
Torbela siblings themselves alleged that they allowed Dr. Rosario to register Lot No. 356-A in his
name so he could obtain a loan from DBP, using said parcel of land as security; and with the
proceeds of the loan, Dr. Rosario had a building constructed on Lot No. 356-A, initially used as a
hospital, and then later for other commercial purposes. Dr. Rosario supervised the construction
of the building, which began in 1965; fully liquidated the loan from DBP; and maintained and
administered the building, as well as collected the rental income therefrom, until the Torbela
siblings instituted Civil Case No. U-4359 before the RTC on February 13, 1986.

When it comes to the improvements on Lot No. 356-A, both the Torbela siblings (as
landowners) and Dr. Rosario (as builder) are deemed in bad faith. The Torbela siblings were
aware of the construction of a building by Dr. Rosario on Lot No. 356-A, while Dr. Rosario
proceeded with the said construction despite his knowledge that Lot No. 356-A belonged to the
Torbela siblings. This is the case contemplated under Article 453 of the Civil Code, which reads:

ART. 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.)

When both the landowner and the builder are in good faith, the following rules govern:

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.
ART. 546. Necessary expenses shall be refunded to every possessor; but only the possessor in
good faith may retain the thing until he has been reimbursed therefor.

Useful expenses shall be refunded only to the possessor in good faith with the same right of
retention, the person who has defeated him in the possession having the option of refunding
the amount of the expenses or of paying the increase in value which the thing may have
acquired by reason thereof.

ART. 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.

Whatever is built, planted, or sown on the land of another, and the improvements or repairs
made thereon, belong to the owner of the land. Where, however, the planter, builder, 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 what Manresa calls a state of "forced co-ownership," the
law has provided a just and equitable 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 allowed 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.85

The landowner has to make a choice between appropriating the building by paying the proper
indemnity or obliging the builder to pay the price of the land. But even as the option lies with
the landowner, the grant to him, nevertheless, is preclusive. He must choose one. He cannot,
for instance, compel the owner of the building to remove the building from the land without
first exercising either option. It is only if the owner chooses to sell his land, and the builder or
planter fails to purchase it where its value is not more than the value of the improvements, that
the owner may remove the improvements from the land. The owner is entitled to such
remotion only when, after having chosen to sell his land, the other party fails to pay for the
same.86

This case then must be remanded to the RTC for the determination of matters necessary for the
proper application of Article 448, in relation to Article 546, of the Civil Code. Such matters
include the option that the Torbela siblings will choose; the amount of indemnity that they will
pay if they decide to appropriate the improvements on Lot No. 356-A; the value of Lot No. 356-
A if they prefer to sell it to Dr. Rosario; or the reasonable rent if they opt to sell Lot No. 356-A to
Dr. Rosario but the value of the land is considerably more than the improvements. The
determination made by the Court of Appeals in its Decision dated June 29, 1999 that the
current value of Lot No. 356-A is ₱1,200,000.00 is not supported by any evidence on record.

Should the Torbela siblings choose to appropriate the improvements on Lot No. 356-A, the
following ruling of the Court in Pecson v. Court of Appeals87 is relevant in the determination of
the amount of indemnity under Article 546 of the Civil Code:

Article 546 does not specifically state how the value of the useful improvements should be
determined. The respondent court and the private respondents espouse the belief that the cost
of construction of the apartment building in 1965, and not its current market value, is sufficient
reimbursement for necessary and useful improvements made by the petitioner. This position is,
however, not in consonance with previous rulings of this Court in similar cases. In Javier vs.
Concepcion, Jr., this Court pegged the value of the useful improvements consisting of various
fruits, bamboos, a house and camarin made of strong material based on the market value of
the said improvements. In Sarmiento vs. Agana, despite the finding that the useful
improvement, a residential house, was built in 1967 at a cost of between eight thousand pesos
(₱8,000.00) to ten thousand pesos (₱10,000.00), the landowner was ordered to reimburse the
builder in the amount of forty thousand pesos (₱40,000.00), the value of the house at the time
of the trial. In the same way, the landowner was required to pay the "present value" of the
house, a useful improvement, in the case of De Guzman vs. De la Fuente, cited by the
petitioner.

The objective of Article 546 of the Civil Code is to administer justice between the parties
involved. In this regard, this Court had long ago stated in Rivera vs. Roman Catholic Archbishop
of Manila that the said provision was formulated in trying to adjust the rights of the owner and
possessor in good faith of a piece of land, to administer complete justice to both of them in
such a way as neither one nor the other may enrich himself of that which does not belong to
him. Guided by this precept, it is therefore the current market value of the improvements
which should be made the basis of reimbursement. A contrary ruling would unjustly enrich the
private respondents who would otherwise be allowed to acquire a highly valued income-
yielding four-unit apartment building for a measly amount. Consequently, the parties should
therefore be allowed to adduce evidence on the present market value of the apartment
building upon which the trial court should base its finding as to the amount of reimbursement
to be paid by the landowner.88 (Emphases supplied.)

Still following the rules of accession, civil fruits, such as rents, belong to the owner of the
building.89 Thus, Dr. Rosario has a right to the rents of the improvements on Lot No. 356-A and
is under no obligation to render an accounting of the same to anyone. In fact, it is the Torbela
siblings who are required to account for the rents they had collected from the lessees of the
commercial building and turn over any balance to Dr. Rosario. Dr. Rosario’s right to the rents of
the improvements on Lot No. 356-A shall continue until the Torbela siblings have chosen their
option under Article 448 of the Civil Code. And in case the Torbela siblings decide to
appropriate the improvements, Dr. Rosario shall have the right to retain said improvements, as
well as the rents thereof, until the indemnity for the same has been paid.90

Dr. Rosario is liable for damages to the Torbela siblings.

The Court of Appeals ordered Dr. Rosario to pay the Torbela siblings ₱300,000.00 as moral
damages; ₱200,000.00 as exemplary damages; and ₱100,000.00 as attorney’s fees.

Indeed, Dr. Rosario’s deceit and bad faith is evident when, being fully aware that he only held
Lot No. 356-A in trust for the Torbela siblings, he mortgaged said property to PNB and Banco
Filipino absent the consent of the Torbela siblings, and caused the irregular cancellation of the
Torbela siblings’ adverse claim on TCT No. 52751. Irrefragably, Dr. Rosario’s betrayal had
caused the Torbela siblings (which included Dr. Rosario’s own mother, Eufrosina Torbela
Rosario) mental anguish, serious anxiety, and wounded feelings. Resultantly, the award of
moral damages is justified, but the amount thereof is reduced to ₱200,000.00.

In addition to the moral damages, exemplary damages may also be imposed given that Dr.
Rosario’s wrongful acts were accompanied by bad faith. However, judicial discretion granted to
the courts in the assessment of damages must always be exercised with balanced restraint and
measured objectivity. The circumstances of the case call for a reduction of the award of
exemplary damages to ₱100,000.00.

As regards attorney's fees, they may be awarded when the defendant's act or omission has
compelled the plaintiff to litigate with third persons or to incur expenses to protect his interest.
Because of Dr. Rosario’s acts, the Torbela siblings were constrained to institute several cases
against Dr. Rosario and his spouse, Duque-Rosario, as well as Banco Filipino, which had lasted
for more than 25 years. Consequently, the Torbela siblings are entitled to an award of
attorney's fees and the amount of ₱100,000.00 may be considered rational, fair, and
reasonable.

Banco Filipino is entitled to a writ of possession for Lot No. 5-F-8-C-2-B-2-A.

The Court emphasizes that Pet. Case No. U-822, instituted by Banco Filipino for the issuance of
a writ of possession before the RTC of Urdaneta, included only Lot No. 5-F-8-C-2-B-2-A and Lot
No. 356-A (Lot No. 4489, the third property mortgaged to secure Dr. Rosario’s loan from Banco
Filipino, is located in Dagupan City, Pangasinan, and the petition for issuance of a writ of
possession for the same should be separately filed with the RTC of Dagupan City). Since the
Court has already granted herein the reconveyance of Lot No. 356-A from Banco Filipino to the
Torbela siblings, the writ of possession now pertains only to Lot No. 5-F-8-C-2-B-2-A.

To recall, the Court of Appeals affirmed the issuance by the RTC of a writ of possession in favor
of Banco Filipino. Dr. Rosario no longer appealed from said judgment of the appellate court.
Already legally separated from Dr. Rosario, Duque-Rosario alone challenges the writ of
possession before this Court through her Petition in G.R. No. 140553.

Duque-Rosario alleges in her Petition that Lot No. 5-F-8-C-2-B-2-A had been registered in her
name under TCT No. 104189. Yet, without a copy of TCT No. 104189 on record, the Court
cannot give much credence to Duque-Rosario’s claim of sole ownership of Lot No. 5-F-8-C-2-B-
2-A. Also, the question of whether Lot No. 5-F-8-C-2-B-2-A was the paraphernal property of
Duque-Rosario or the conjugal property of the spouses Rosario would not alter the outcome of
Duque-Rosario’s Petition.

The following facts are undisputed: Banco Filipino extrajudicially foreclosed the mortgage
constituted on Lot No. 5-F-8-C-2-B-2-A and the two other properties after Dr. Rosario defaulted
on the payment of his loan; Banco Filipino was the highest bidder for all three properties at the
foreclosure sale on April 2, 1987; the Certificate of Sale dated April 2, 1987 was registered in
April 1987; and based on the Certificate of Final Sale dated May 24, 1988 and Affidavit of
Consolidation dated May 25, 1988, the Register of Deeds cancelled TCT No. 104189 and issued
TCT No. 165812 in the name of Banco Filipino for Lot No. 5-F-8-C-2-B-2-A on June 7, 1988.

The Court has consistently ruled that the one-year redemption period should be counted not
from the date of foreclosure sale, but from the time the certificate of sale is registered with the
Registry of Deeds.91 No copy of TCT No. 104189 can be found in the records of this case, but the
fact of annotation of the Certificate of Sale thereon was admitted by the parties, only differing
on the date it was made: April 14, 1987 according to Banco Filipino and April 15, 1987 as
maintained by Duque-Rosario. Even if the Court concedes that the Certificate of Sale was
annotated on TCT No. 104189 on the later date, April 15, 1987, the one-year redemption period
already expired on April 14, 1988.92 The Certificate of Final Sale and Affidavit of Consolidation
were executed more than a month thereafter, on May 24, 1988 and May 25, 1988, respectively,
and were clearly not premature.

It is true that the rule on redemption is liberally construed in favor of the original owner of the
property. The policy of the law is to aid rather than to defeat him in the exercise of his right of
redemption.93 However, the liberal interpretation of the rule on redemption is inapplicable
herein as neither Duque-Rosario nor Dr. Rosario had made any attempt to redeem Lot No. 5-F-
8-C-2-B-2-A. Duque-Rosario could only rely on the efforts of the Torbela siblings at redemption,
which were unsuccessful. While the Torbela siblings made several offers to redeem Lot No. 356-
A, as well as the two other properties mortgaged by Dr. Rosario, they did not make any valid
tender of the redemption price to effect a valid redemption. The general rule in redemption is
that it is not sufficient that a person offering to redeem manifests his desire to do so. The
statement of intention must be accompanied by an actual and simultaneous tender of
payment. The redemption price should either be fully offered in legal tender or else validly
consigned in court. Only by such means can the auction winner be assured that the offer to
redeem is being made in good faith.94 In case of disagreement over the redemption price, the
redemptioner may preserve his right of redemption through judicial action, which in every case,
must be filed within the one-year period of redemption. The filing of the court action to enforce
redemption, being equivalent to a formal offer to redeem, would have the effect of preserving
his redemptive rights and "freezing" the expiration of the one-year period.95 But no such action
was instituted by the Torbela siblings or either of the spouses Rosario.

Duque-Rosario also cannot bar the issuance of the writ of possession over Lot No. 5-F-8-C-2-B-
2-A in favor of Banco Filipino by invoking the pendency of Civil Case No. U-4359, the Torbela
siblings’ action for recovery of ownership and possession and damages, which supposedly
tolled the period for redemption of the foreclosed properties. Without belaboring the issue of
Civil Case No. U-4359 suspending the redemption period, the Court simply points out to Duque-
Rosario that Civil Case No. U-4359 involved Lot No. 356-A only, and the legal consequences of
the institution, pendency, and resolution of Civil Case No. U-4359 apply to Lot No. 356-A alone.

Equally unpersuasive is Duque-Rosario’s argument that the writ of possession over Lot No. 5-F-
8-C-2-B-2-A should not be issued given the defects in the conduct of the foreclosure sale (i.e.,
lack of personal notice to Duque-Rosario) and consolidation of title (i.e., failure to provide
Duque-Rosario with copies of the Certificate of Final Sale).

The right of the purchaser to the possession of the foreclosed property becomes absolute upon
the expiration of the redemption period. The basis of this right to possession is the purchaser's
ownership of the property. After the consolidation of title in the buyer's name for failure of the
mortgagor to redeem, the writ of possession becomes a matter of right and its issuance to a
purchaser in an extrajudicial foreclosure is merely a ministerial function.961avvphi1

The judge with whom an application for a writ of possession is filed need not look into the
validity of the mortgage or the manner of its foreclosure. Any question regarding the validity of
the mortgage or its foreclosure cannot be a legal ground for the refusal to issue a writ of
possession. Regardless of whether or not there is a pending suit for the annulment of the
mortgage or the foreclosure itself, the purchaser is entitled to a writ of possession, without
prejudice, of course, to the eventual outcome of the pending annulment case. The issuance of a
writ of possession in favor of the purchaser in a foreclosure sale is a ministerial act and does not
entail the exercise of discretion.97

WHEREFORE, in view of the foregoing, the Petition of the Torbela siblings in G.R. No. 140528 is
GRANTED, while the Petition of Lena Duque-Rosario in G.R. No. 140553 is DENIED for lack of
merit. The Decision dated June 29, 1999 of the Court of Appeals in CA-G.R. CV No. 39770, which
affirmed with modification the Amended Decision dated January 29, 1992 of the RTC in Civil
Case Nos. U-4359 and U-4733 and Pet. Case No. U-822, is AFFIRMED WITH MODIFICATIONS, to
now read as follows:

(1) Banco Filipino is ORDERED to reconvey Lot No. 356-A to the Torbela siblings;

(2) The Register of Deeds of Pangasinan is ORDERED to cancel TCT No. 165813 in the
name of Banco Filipino and to issue a new certificate of title in the name of the Torbela
siblings for Lot No. 356-A;

(3) The case is REMANDED to the RTC for further proceedings to determine the facts
essential to the proper application of Articles 448 and 546 of the Civil Code, particularly:
(a) the present fair market value of Lot No. 356-A; (b) the present fair market value of
 the improvements thereon; (c) the option of the Torbela siblings to appropriate the
improvements on Lot No. 356-A or require Dr. Rosario to purchase Lot No. 356-A; and
(d) in the event that the Torbela siblings choose to require Dr. Rosario to purchase Lot
No. 356-A but the value thereof is considerably more than the improvements, then the
reasonable rent of Lot No. 356-A to be paid by Dr. Rosario to the Torbela siblings;

(4) The Torbela siblings are DIRECTED to submit an accounting of the rents of the
improvements on Lot No. 356-A which they had received and to turn over any balance
thereof to Dr. Rosario;

(5) Dr. Rosario is ORDERED to pay the Torbela siblings ₱200,000.00 as moral damages,
₱100,000.00 as exemplary damages, and ₱100,000.00 as attorney’s fees; and

(6) Banco Filipino is entitled to a writ of possession over Lot-5-F-8-C-2-B-2-A, covered by

TCT No. 165812. The RTC Branch Clerk of Court is ORDERED to issue a writ of possession
for the said property in favor of Banco Filipino.

SO ORDERED.
G.R. No. 108894 February 10, 1997

TECNOGAS PHILIPPINES MANUFACTURING CORPORATION, petitioner,

vs.
COURT OF APPEALS (FORMER SPECIAL SEVENTEENTH DIVISION) and EDUARDO
UY, respondents.

PANGANIBAN, J.:

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 Court2 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 plaintiffs 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 Court6 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 Ru1ing

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

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
electroplating 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. Ibanez [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:

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.
G.R. No. L-57348 May 16, 1985

FRANCISCO DEPRA, plaintiff-appellee,
vs.
AGUSTIN DUMLAO, defendant-appellant.

Roberto D. Dineros for plaintiff-appellee.

Veil D. Hechanova for defendant-appellant.

MELENCIO-HERRERA, J.:

This is an appeal from the Order of the former Court of First Instance of Iloilo to the then Court
of Appeals, which the latter certified to this instance as involving pure questions of law

Plaintiff-appellee, Francisco Depra, is the owner of a parcel of land registered under Transfer
Certificate of Title No. T3087, known as Lot No. 685, situated in the municipality of Dumangas,
Iloilo, with an area of approximately 8,870 square meters. Agustin Dumlao, defendant-
appellant, owns an adjoining lot, designated as Lot No. 683, with an approximate area of 231
sq. ms.

Sometime in 1972, when DUMLAO constructed his house on his lot, the kitchen thereof had
encroached on an area of thirty four (34) square meters of DEPRA's property, After the
encroachment was discovered in a relocation survey of DEPRA's lot made on November 2,1972,
his mother, Beatriz Depra after writing a demand letter asking DUMLAO to move back from his
encroachment, filed an action for Unlawful Detainer on February 6,1973 against DUMLAO in
the Municipal Court of of Dumangas, docketed as Civil Case No 1, Said complaint was later
amended to include DEPRA as a party plain. plaintiff.

After trial, the Municipal Court found that DUMLAO was a builder in good faith, and applying
Article 448 of the Civil Code, rendered judgment on September 29, 1973, the dispositive portion
of which reads:

Ordering that a forced lease is created between the parties with the plaintiffs, as
lessors, and the defendants as lessees, over the disputed portion with an area of
thirty four (34) square meters, the rent to be paid is five (P5.00) pesos a month,
payable by the lessee to the lessors within the first five (5) days of the month the
rent is due; and the lease shall commence on the day that this decision shall
have become final.

From the foregoing judgment, neither party appeal so that, ff it were a valid judgment, it would
have ordinarily lapsed into finality, but even then, DEPRA did not accept payment of rentals so
that DUMLAO deposited such rentals with the Municipal Court.

On July 15,1974, DEPRA filed a Complaint for Quieting of Title against DUMLAO before the then
Court of First Instance of Iloilo, Branch IV (Trial Court), involving the very same 34 square
meters, which was the bone of contention in the Municipal Court. DUMLAO, in his Answer,
admitted the encroachment but alleged, in the main, that the present suit is barred by res
judicata by virtue of the Decision of the Municipal Court, which had become final and
executory.
After the case had been set for pre-trial, the parties submitted a Joint Motion for Judgment
based on the Stipulation of Facts attached thereto. Premised thereon, the Trial Court on
October 31, 1974, issued the assailed Order, decreeing:

WHEREFORE, the Court finds and so holds that the thirty four (34) square meters
subject of this litigation is part and parcel of Lot 685 of the Cadastral Survey of
Dumangas of which the plaintiff is owner as evidenced by Transfer Certificate of
Title No. 3087 and such plaintiff is entitled to possess the same.

Without pronouncement as to costs.

SO ORDERED.

Rebutting the argument of res judicata relied upon by DUMLAO, DEPRA claims that the Decision
of the Municipal Court was null and void ab initio because its jurisdiction is limited to the sole
issue of possession, whereas decisions affecting lease, which is an encumbrance on real
property, may only be rendered by Courts of First Instance.

Addressing out selves to the issue of validity of the Decision of the Municipal Court, we hold the
same to be null and void. The judgment in a detainer case is effective in respect of possession
only (Sec. 7, Rule 70, Rules of Court). 1 The Municipal Court over-stepped its bounds when it
imposed upon the parties a situation of "forced lease", which like "forced co-ownership" is not
favored in law. Furthermore, a lease is an interest in real property, jurisdiction over which
belongs to Courts of First Instance (now Regional Trial Courts) (Sec. 44(b), Judiciary Act of
1948; 2 Sec. 19 (2) Batas Pambansa Blg. 129). 3 Since the Municipal Court, acted without
jurisdiction, its Decision was null and void and cannot operate as res judicata to the subject
complaint for Queting of Title. Besides, even if the Decision were valid, the rule on res
judicata would not apply due to difference in cause of action. In the Municipal Court, the cause
of action was the deprivation of possession, while in the action to quiet title, the cause of action
was based on ownership. Furthermore, Sec. 7, Rule 70 of the Rules of Court explicitly provides
that judgment in a detainer case "shall not bar an action between the same parties respecting
title to the land. " 4

Conceded in the Stipulation of Facts between the parties is that DUMLAO was a builder in good
faith. Thus,

8. That the subject matter in the unlawful detainer case, Civil Case No. 1, before
the Municipal Court of Dumangas, Iloilo involves the same subject matter in the
present case, the Thirty-four (34) square meters portion of land and built
thereon in good faith is a portion of defendant's kitchen and has been in the
possession of the defendant since 1952 continuously up to the present; ...
(Emphasis ours)

Consistent with the principle that our Court system, like any other, must be a dispute resolving
mechanism, we accord legal effect to the agreement of the parties, within the context of their
mutual concession and stipulation. They have, thereby, chosen a legal formula to resolve their
dispute to appeal ply to DUMLAO the rights of a "builder in good faith" and to DEPRA those of a
"landowner in good faith" as prescribed in Article 448. Hence, we shall refrain from further
examining whether the factual situations of DUMLAO and DEPRA conform to the juridical
positions respectively defined by law, for a "builder in good faith" under Article 448, a
"possessor in good faith" under Article 526 and a "landowner in good faith' under Article 448.

In regards to builders in good faith, Article 448 of the Civil Code provides:
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
(Paragraphing supplied)

Pursuant to the foregoing provision, DEPRA has the option either to pay for the encroaching
part of DUMLAO's kitchen, or to sell the encroached 34 square meters of his lot to DUMLAO. He
cannot refuse to pay for the encroaching part of the building, and to sell the encroached part of
his land, 5 as he had manifested before the Municipal Court. But that manifestation is not
binding because it was made in a void proceeding.

However, the good faith of DUMLAO is part of the Stipulation of Facts in the Court of First
Instance. It was thus error for the Trial Court to have ruled that DEPRA is "entitled to
possession," without more, of the disputed portion implying thereby that he is entitled to have
the kitchen removed. He is entitled to such removal only when, after having chosen to sell his
encroached land, DUMLAO fails to pay for the same. 6 In this case, DUMLAO had expressed his
willingness to pay for the land, but DEPRA refused to sell.

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 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 (italics ours).

We hold, therefore, that the order of Judge Natividad compelling defendants-

petitioners to remove their buildings from the land belonging to plaintiffs-
respondents only because the latter chose neither to pay for such buildings nor
to sell the land, is null and void, for it amends substantially the judgment sought
to be executed and is. furthermore, offensive to articles 361 (now Article 448)
and 453 (now Article 546) of the Civil Code. (Ignacio vs. Hilario, 76 Phil. 605,
608[1946]).

A word anent the philosophy behind Article 448 of the Civil rode.

The original provision was found in Article 361 of the Spanish Civil Code; which provided:
 ART. 361. The owner of land on which anything has been built, sown or planted
in good faith, shall have the right to appropriate as his own the work, sowing or
planting, after the payment of the indemnity stated in Articles 453 and 454, or to
oblige the one who built or planted to pay the price of the land, and the one who
sowed, the proper rent.

As will be seen, the Article favors the owner of the land, by giving him one of the two options
mentioned in the Article. Some commentators have questioned the preference in favor of the
owner of the land, but Manresa's opinion is that the Article is just and fair.

. . . es justa la facultad que el codigo da al dueno del suelo en el articulo 361, en

el caso de edificacion o plantacion? Algunos comentaristas la conceptuan injusta,
y como un extraordinario privilegio en favor de la propiedad territorial.
Entienden que impone el Codigo una pena al poseedor de buena fe y como
advierte uno de los comentaristas aludidos 'no se ve claro el por que de tal
pena . . . al obligar al que obro de buena fe a quedarse con el edificio o
plantacion, previo el pago del terreno que ocupa, porque si bien es verdad que
cuando edifico o planto demostro con este hecho, que queria para si el edificio o
plantio tambien lo es que el que edifico o planto de buena fe lo hizo en la
erronea inteligencia de creerse dueno del terreno Posible es que, de saber lo
contrario, y de tener noticia de que habia que comprar y pagar el terreno, no se
hubiera decidido a plantar ni a edificar. La ley obligandole a hacerlo fuerza su
voluntad, y la fuerza por un hecho inocente de que no debe ser responsable'. Asi
podra suceder pero la realidad es que con ese hecho voluntario, aunque sea
inocente, se ha enriquecido torticeramente con perjuicio de otro a quien es justo
indemnizarle,

En nuestra opinion, el Codigo ha resuelto el conflicto de la manera mas justa y

equitativa y respetando en lo possible el principio que para la accesion se
establece en el art. 358. 7

Our own Code Commission must have taken account of the objections to Article 361 of the
Spanish Civil Code. Hence, the Commission provided a modification thereof, and Article 448 of
our Code has been made to provide:

ART. 448. The owner of the land on which anything has been built, sown or
planted in good faith, shall have the right to appropriate as his own the works,
sowing or planting, after payment of the indemnity provided for in articles 546
and 548, or to oblige the one who built or planted to pay the price of the land,
and the one who sowed, the proper rent. However, the builder or planter cannot
be obliged to buy the land if its value is considerably more than that of the
building or trees. In such case, he shall pay reasonable rent, if the owner of the
land does not choose to appropriate the building or trees after proper
indemnity. The parties shall agree upon the terms of the lease and in case of
disagreement, the court shall fix the terms thereof.

Additional benefits were extended to the builder but the landowner retained his options.

The fairness of the rules in Article 448 has also been explained as follows:

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 to pay for 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. Ibanez [S.C.] 52 Off. Gaz. 217; Marfori vs. Velasco, [C.A.] 52 Off. Gaz.
2050). 8

WHEREFORE, the judgment of the trial Court is hereby set aside, and this case is hereby
ordered remanded to the Regional Trial Court of Iloilo for further proceedings consistent with
Articles 448 and 546 of the Civil Code, as follows:

1. The trial Court shall determine

a) the present fair price of DEPRA's 34 square meter area of land;

b) the amount of the expenses spent by DUMLAO for the building of the kitchen;

c) the increase in value ("plus value") which the said area of 34 square meters
may have acquired by reason thereof, and

d) whether the value of said area of land is considerably more than that of the
kitchen built thereon.

2. After said amounts shall have been determined by competent evidence, the Regional, Trial
Court shall render judgment, as follows:

a) The trial Court shall grant DEPRA a period of fifteen (15) days within which to
exercise his option under the law (Article 448, Civil Code), whether to
appropriate the kitchen as his own by paying to DUMLAO either the amount of
tile expenses spent by DUMLAO f or the building of the kitchen, or the increase
in value ("plus value") which the said area of 34 square meters may have
acquired by reason thereof, or to oblige DUMLAO to pay the price of said area.
The amounts to be respectively paid by DUMLAO and DEPRA, 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 Court in favor of the party entitled to
receive it;

b) The trial Court shall further order that if DEPRA exercises the option to oblige
DUMLAO 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 kitchen, DUMLAO shall give written notice of such rejection to
DEPRA and to the Court within fifteen (15) days from notice of DEPRA'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 Court formal written notice of such 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 Ten Pesos (P10.00) 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 1952 that DUMLAO has occupied the
subject area. The rental thus fixed shall be increased by ten percent (10%) for
the second year of the forced lease. DUMLAO shall not make any further
constructions or improvements on the kitchen. Upon expiration of the two-year
period, or upon default by DUMLAO in the payment of rentals for two (2)
consecutive months, DEPRA shall be entitled to terminate the forced lease, to
recover his land, and to have the kitchen removed by DUMLAO or at the latter's
expense. The rentals herein provided shall be tendered by DUMLAO to the Court
for payment to DEPRA, and such tender shall constitute evidence of whether or
not compliance was made within the period fixed by the Court.

c) In any event, DUMLAO shall pay DEPRA an amount computed at Ten Pesos
(P10.00) per month as reasonable compensation for the occupancy of DEPRA's
land for the period counted from 1952, the year DUMLAO occupied the subject
area, 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 Precision shall be inextendible,
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.
G.R. No. 157537               September 7, 2011

THE HEIRS OF PROTACIO GO, SR. and MARTA BAROLA, namely: LEONOR, SIMPLICIO,
PROTACIO, JR., ANTONIO, BEVERLY ANN LORRAINNE, TITA, CONSOLACION, LEONORA and
ASUNCION, all surnamed GO, represented by LEONORA B. GO, Petitioners,
vs.
ESTER L. SERVACIO and RITO B. GO, Respondents.

DECISION

BERSAMIN, J.:

The disposition by sale of a portion of the conjugal property by the surviving spouse without the
prior liquidation mandated by Article 130 of the Family Code is not necessarily void if said
portion has not yet been allocated by judicial or extrajudicial partition to another heir of the
deceased spouse. At any rate, the requirement of prior liquidation does not prejudice vested
rights.

Antecedents

On February 22, 1976, Jesus B. Gaviola sold two parcels of land with a total area of 17,140
square meters situated in Southern Leyte to Protacio B. Go, Jr. (Protacio, Jr.). Twenty three
years later, or on March 29, 1999, Protacio, Jr. executed an Affidavit of Renunciation and
Waiver,1 whereby he affirmed under oath that it was his father, Protacio Go, Sr. (Protacio, Sr.),
not he, who had purchased the two parcels of land (the property).

On November 25, 1987, Marta Barola Go died. She was the wife of Protacio, Sr. and mother of
the petitioners.2 On December 28, 1999, Protacio, Sr. and his son Rito B. Go (joined by Rito’s
wife Dina B. Go) sold a portion of the property with an area of 5,560 square meters to Ester L.
Servacio (Servacio) for ₱5,686,768.00.3 On March 2, 2001, the petitioners demanded the return
of the property,4 but Servacio refused to heed their demand. After barangay proceedings failed
to resolve the dispute,5 they sued Servacio and Rito in the Regional Trial Court in Maasin City,
Southern Leyte (RTC) for the annulment of the sale of the property.

The petitioners averred that following Protacio, Jr.’s renunciation, the property became
conjugal property; and that the sale of the property to Servacio without the prior liquidation of
the community property between Protacio, Sr. and Marta was null and void.6

Servacio and Rito countered that Protacio, Sr. had exclusively owned the property because he
had purchased it with his own money.7

On October 3, 2002,8 the RTC declared that the property was the conjugal property of Protacio,
Sr. and Marta, not the exclusive property of Protacio, Sr., because there were three vendors in
the sale to Servacio (namely: Protacio, Sr., Rito, and Dina); that the participation of Rito and
Dina as vendors had been by virtue of their being heirs of the late Marta; that under Article 160
of the Civil Code, the law in effect when the property was acquired, all property acquired by
either spouse during the marriage was conjugal unless there was proof that the property thus
acquired pertained exclusively to the husband or to the wife; and that Protacio, Jr.’s
renunciation was grossly insufficient to rebut the legal presumption.9

Nonetheless, the RTC affirmed the validity of the sale of the property, holding that: "xxx As long
as the portion sold, alienated or encumbered will not be allotted to the other heirs in the final
partition of the property, or to state it plainly, as long as the portion sold does not encroach
upon the legitimate (sic) of other heirs, it is valid."10 Quoting Tolentino’s commentary on the
matter as authority,11 the RTC opined:

In his comment on Article 175 of the New Civil Code regarding the dissolution of the conjugal
partnership, Senator Arturo Tolentino, says" [sic]

"Alienation by the survivor. — After the death of one of the spouses, in case it is necessary to
sell any portion of the community property in order to pay outstanding obligation of the
partnership, such sale must be made in the manner and with the formalities established by the
Rules of Court for the sale of the property of the deceased persons. Any sale, transfer,
alienation or disposition of said property affected without said formalities shall be null and void,
except as regards the portion that belongs to the vendor as determined in the liquidation and
partition. Pending the liquidation, the disposition must be considered as limited only to the
contingent share or interest of the vendor in the particular property involved, but not to the
corpus of the property.

This rule applies not only to sale but also to mortgages. The alienation, mortgage or disposal of
the conjugal property without the required formality, is not however, null ab initio, for the law
recognizes their validity so long as they do not exceed the portion which, after liquidation and
partition, should pertain to the surviving spouse who made the contract." [underlining
supplied]

It seems clear from these comments of Senator Arturo Tolentino on the provisions of the New
Civil Code and the Family Code on the alienation by the surviving spouse of the community
property that jurisprudence remains the same - that the alienation made by the surviving
spouse of a portion of the community property is not wholly void ab initio despite Article 103 of
the Family Code, and shall be valid to the extent of what will be allotted, in the final partition, to
the vendor. And rightly so, because why invalidate the sale by the surviving spouse of a portion
of the community property that will eventually be his/her share in the final partition? Practically
there is no reason for that view and it would be absurd.

Now here, in the instant case, the 5,560 square meter portion of the 17,140 square-meter
conjugal lot is certainly mush (sic) less than what vendors Protacio Go and his son Rito B. Go will
eventually get as their share in the final partition of the property. So the sale is still valid.

WHEREFORE, premises considered, complaint is hereby DISMISSED without pronouncement as

to cost and damages.

SO ORDERED.12

The RTC’s denial of their motion for reconsideration13 prompted the petitioners to appeal
directly to the Court on a pure question of law.

Issue

The petitioners claim that Article 130 of the Family Code is the applicable law; and that the sale
by Protacio, Sr., et al. to Servacio was void for being made without prior liquidation.

In contrast, although they have filed separate comments, Servacio and Rito both argue that
Article 130 of the Family Code was inapplicable; that the want of the liquidation prior to the
sale did not render the sale invalid, because the sale was valid to the extent of the portion that
was finally allotted to the vendors as his share; and that the sale did not also prejudice any
rights of the petitioners as heirs, considering that what the sale disposed of was within the
aliquot portion of the property that the vendors were entitled to as heirs.14
 Ruling

The appeal lacks merit.

Article 130 of the Family Code reads:

Article 130. Upon the termination of the marriage by death, the conjugal partnership property
shall be liquidated in the same proceeding for the settlement of the estate of the deceased.

If no judicial settlement proceeding is instituted, the surviving spouse shall liquidate the
conjugal partnership property either judicially or extra-judicially within one year from the death
of the deceased spouse. If upon the lapse of the six month period no liquidation is made, any
disposition or encumbrance involving the conjugal partnership property of the terminated
marriage shall be void.

Should the surviving spouse contract a subsequent marriage without compliance with the
foregoing requirements, a mandatory regime of complete separation of property shall govern
the property relations of the subsequent marriage.

Article 130 is to be read in consonance with Article 105 of the Family Code, viz:

Article 105. In case the future spouses agree in the marriage settlements that the regime of
conjugal partnership of gains shall govern their property relations during marriage, the
provisions in this Chapter shall be of supplementary application.

The provisions of this Chapter shall also apply to conjugal partnerships of gains already
established between spouses before the effectivity of this Code, without prejudice to vested
rights already acquired in accordance with the Civil Code or other laws, as provided in Article
256. (n) [emphasis supplied]

It is clear that conjugal partnership of gains established before and after the effectivity of the
Family Code are governed by the rules found in Chapter 4 (Conjugal Partnership of Gains) of
Title IV (Property Relations Between Husband And Wife) of the Family Code. Hence, any
disposition of the conjugal property after the dissolution of the conjugal partnership must be
made only after the liquidation; otherwise, the disposition is void.

Before applying such rules, however, the conjugal partnership of gains must be subsisting at the
time of the effectivity of the Family Code. There being no dispute that Protacio, Sr. and Marta
were married prior to the effectivity of the Family Code on August 3, 1988, their property
relation was properly characterized as one of conjugal partnership governed by the Civil Code.
Upon Marta’s death in 1987, the conjugal partnership was dissolved, pursuant to Article 175 (1)
of the Civil Code,15 and an implied ordinary co-ownership ensued among Protacio, Sr. and the
other heirs of Marta with respect to her share in the assets of the conjugal partnership pending
a liquidation following its liquidation.16 The ensuing implied ordinary co-ownership was
governed by Article 493 of the Civil Code,17 to wit:

Article 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.
(399)
Protacio, Sr., although becoming a co-owner with his children in respect of Marta’s share in the
conjugal partnership, could not yet assert or claim title to any specific portion of Marta’s share
without an actual partition of the property being first done either by agreement or by judicial
decree. Until then, all that he had was an ideal or abstract quota in Marta’s
share.18 Nonetheless, a co-owner could sell his undivided share; hence, Protacio, Sr. had the
right to freely sell and dispose of his undivided interest, but not the interest of his co-
owners.19 Consequently, the sale by Protacio, Sr. and Rito as co-owners without the consent of
the other co-owners was not necessarily void, for the rights of the selling co-owners were
thereby effectively transferred, making the buyer (Servacio) a co-owner of Marta’s share.20 This
result conforms to the 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).21

Article 105 of the Family Code, supra, expressly provides that the applicability of the rules on
dissolution of the conjugal partnership is "without prejudice to vested rights already acquired in
accordance with the Civil Code or other laws." This provision gives another reason not to
declare the sale as entirely void. Indeed, such a declaration prejudices the rights of Servacio
who had already acquired the shares of Protacio, Sr. and Rito in the property subject of the
sale.

In their separate comments,22 the respondents aver that each of the heirs had already received
"a certain allotted portion" at the time of the sale, and that Protacio, Sr. and Rito sold only the
portions adjudicated to and owned by them. However, they did not present any public
document on the allocation among her heirs, including themselves, of specific shares in Marta’s
estate. Neither did they aver that the conjugal properties had already been liquidated and
partitioned. Accordingly, pending a partition among the heirs of Marta, the efficacy of the sale,
and whether the extent of the property sold adversely affected the interests of the petitioners
might not yet be properly decided with finality. The appropriate recourse to bring that about is
to commence an action for judicial partition, as instructed in Bailon-Casilao v. Court of
Appeals,23 to wit:

From the foregoing, it may be deduced that since a co-owner is entitled to sell his undivided
share, a sale of the entire property by one

co-owner without the consent of the other co-owners is not null and void. However, only the
rights of the co-owner-seller are transferred, thereby making the buyer a co-owner of the
property.

The proper action in cases like this is not for the nullification of the sale or for the recovery of
possession of the thing owned in common from the third person who substituted the co-owner
or co-owners who alienated their shares, but the DIVISION of the common property as if it
continued to remain in the possession of the co-owners who possessed and administered it
[Mainit v. Bandoy, supra].1avvphi1

Thus, it is now settled that the appropriate recourse of co-owners in cases where their consent
were not secured in a sale of the entire property as well as in a sale merely of the undivided
shares of some of the co-owners is an action for PARTITION under Rule 69 of the Revised Rules
of Court. xxx24

In the meanwhile, Servacio would be a trustee for the benefit of the co-heirs of her vendors in
respect of any portion that might not be validly sold to her. The following observations of
Justice Paras are explanatory of this result, viz:
xxx [I]f it turns out that the property alienated or mortgaged really would pertain to the share
of the surviving spouse, then said transaction is valid. If it turns out that there really would be,
after liquidation, no more conjugal assets then the whole transaction is null and
void.1âwphi1 But if it turns out that half of the property thus alienated or mortgaged belongs
to the husband as his share in the conjugal partnership, and half should go to the estate of the
wife, then that corresponding to the husband is valid, and that corresponding to the other is
not. Since all these can be determined only at the time the liquidation is over, it follows logically
that a disposal made by the surviving spouse is not void ab initio. Thus, it has been held that the
sale of conjugal properties cannot be made by the surviving spouse without the legal
requirements. The sale is void as to the share of the deceased spouse (except of course as to
that portion of the husband’s share inherited by her as the surviving spouse). The buyers of the
property that could not be validly sold become trustees of said portion for the benefit of the
husband’s other heirs, the cestui que trust ent. Said heirs shall not be barred by prescription or
by laches (See Cuison, et al. v. Fernandez, et al.,L-11764, Jan.31, 1959.)25

WHEREFORE, we DENY the petition for review on certiorari; and AFFIRM the decision of the
Regional Trial Court.

The petitioners shall pay the costs of suit.

SO ORDERED.
G.R. No. 165427               March 21, 2011

BETTY B. LACBAYAN, Petitioner,
vs.
BAYANI S. SAMOY, JR., Respondent.

DECISION

VILLARAMA, JR., J.:

This settles the petition for review on certiorari filed by petitioner Betty B. Lacbayan against
respondent Bayani S. Samoy, Jr. assailing the September 14, 2004 Decision1 of the Court of
Appeals (CA) in CA-G.R. CV No. 67596. The CA had affirmed the February 10, 2000 Decision2 of
the Regional Trial Court (RTC), Branch 224, of Quezon City declaring respondent as the sole
owner of the properties involved in this suit and awarding to him ₱100,000.00 as attorney’s
fees.

This suit stemmed from the following facts.

Petitioner and respondent met each other through a common friend sometime in 1978. Despite
respondent being already married, their relationship developed until petitioner gave birth to
respondent’s son on October 12, 1979.3

During their illicit relationship, petitioner and respondent, together with three more
incorporators, were able to establish a manpower services company.4 Five parcels of land were
also acquired during the said period and were registered in petitioner and respondent’s names,
ostensibly as husband and wife. The lands are briefly described as follows:

1. A 255-square meter real estate property located at Malvar St., Quezon City covered
by TCT No. 303224 and registered in the name of Bayani S. Samoy, Jr. "married to Betty
Lacbayan."5

2. A 296-square meter real estate property located at Main Ave., Quezon City covered
by TCT No. 23301 and registered in the name of "Spouses Bayani S. Samoy and Betty
Lacbayan."6

3. A 300-square meter real estate property located at Matatag St., Quezon City covered
by TCT No. RT-38264 and registered in the name of Bayani S. Samoy, Jr. "married to
Betty Lacbayan Samoy."7

4. A 183.20-square meter real estate property located at Zobel St., Quezon City covered
by TCT No. 335193 and registered in the name of Bayani S. Samoy, Jr. "married to Betty
L. Samoy."8

5. A 400-square meter real estate property located at Don Enrique Heights, Quezon City
covered by TCT No. 90232 and registered in the name of Bayani S. Samoy, Jr. "married
to Betty L. Samoy."9

Initially, petitioner lived with her parents in Mapagbigay St., V. Luna, Quezon City. In 1983,
petitioner left her parents and decided to reside in the property located in Malvar St. in Project
4, Quezon City. Later, she and their son transferred to Zobel St., also in Project 4, and finally to
the 400-square meter property in Don Enrique Heights.10
Eventually, however, their relationship turned sour and they decided to part ways sometime in
1991. In 1998, both parties agreed to divide the said properties and terminate their business
partnership by executing a Partition Agreement.11 Initially, respondent agreed to petitioner’s
proposal that the properties in Malvar St. and Don Enrique Heights be assigned to the latter,
while the ownership over the three other properties will go to respondent.12 However, when
petitioner wanted additional demands to be included in the partition agreement, respondent
refused.13 Feeling aggrieved, petitioner filed a complaint for judicial partition14 of the said
properties before the RTC in Quezon City on May 31, 1999.

In her complaint, petitioner averred that she and respondent started to live together as
husband and wife in 1979 without the benefit of marriage and worked together as business
partners, acquiring real properties amounting to ₱15,500,000.00.15 Respondent, in his
Answer,16 however, denied petitioner’s claim of cohabitation and said that the properties were
acquired out of his own personal funds without any contribution from petitioner.17

During the trial, petitioner admitted that although they were together for almost 24 hours a day
in 1983 until 1991, respondent would still go home to his wife usually in the wee hours of the
morning.18 Petitioner likewise claimed that they acquired the said real estate properties from
the income of the company which she and respondent established.19

Respondent, meanwhile, testified that the properties were purchased from his personal funds,
salaries, dividends, allowances and commissions.20 He countered that the said properties were
registered in his name together with petitioner to exclude the same from the property regime
of respondent and his legal wife, and to prevent the possible dissipation of the said properties
since his legal wife was then a heavy gambler.21 Respondent added that he also purchased the
said properties as investment, with the intention to sell them later on for the purchase or
construction of a new building.22

On February 10, 2000, the trial court rendered a decision dismissing the complaint for lack of
merit.23 In resolving the issue on ownership, the RTC decided to give considerable weight to
petitioner’s own admission that the properties were acquired not from her own personal funds
but from the income of the manpower services company over which she owns a measly 3.33%
share.24

Aggrieved, petitioner elevated the matter to the CA asserting that she is the pro indiviso owner
of one-half of the properties in dispute. Petitioner argued that the trial court’s decision
subjected the certificates of title over the said properties to collateral attack contrary to law
and jurisprudence. Petitioner also contended that it is improper to thresh out the issue on
ownership in an action for partition.25

Unimpressed with petitioner’s arguments, the appellate court denied the appeal, explaining in
the following manner:

Appellant’s harping on the indefeasibility of the certificates of title covering the subject realties
is, to say the least, misplaced. Rather than the validity of said certificates which was nowhere
dealt with in the appealed decision, the record shows that what the trial court determined
therein was the ownership of the subject realties – itself an issue correlative to and a necessary
adjunct of the claim of co-ownership upon which appellant anchored her cause of action for
partition. It bears emphasizing, moreover, that the rule on the indefeasibility of a Torrens title
applies only to original and not to subsequent registration as that availed of by the parties in
respect to the properties in litigation. To our mind, the inapplicability of said principle to the
case at bench is even more underscored by the admitted falsity of the registration of the
selfsame realties in the parties’ name as husband and wife.
The same dearth of merit permeates appellant’s imputation of reversible error against the trial
court for supposedly failing to make the proper delineation between an action for partition and
an action involving ownership. Typically brought by a person claiming to be co-owner of a
specified property against a defendant or defendants whom the plaintiff recognizes to be co-
owners, an action for partition may be seen to present simultaneously two principal issues, i.e.,
first, the issue of whether the plaintiff is indeed a co-owner of the property sought to be
partitioned and, second – assuming that the plaintiff successfully hurdles the first – the issue of
how the property is to be divided between plaintiff and defendant(s). Otherwise stated, the
court must initially settle the issue of ownership for the simple reason that it cannot properly
issue an order to divide the property without first making a determination as to the existence of
co-ownership. Until and unless the issue of ownership is definitely resolved, it would be
premature to effect a partition of the properties. This is precisely what the trial court did when
it discounted the merit in appellant’s claim of co-ownership.26

Hence, this petition premised on the following arguments:

I. Ownership cannot be passed upon in a partition case.

II. The partition agreement duly signed by respondent contains an admission against
respondent’s interest as to the existence of co-ownership between the parties.

III. An action for partition cannot be defeated by the mere expedience of repudiating co-
ownership based on self-serving claims of exclusive ownership of the properties in
dispute.

IV. A Torrens title is the best evidence of ownership which cannot be outweighed by
respondent’s self-serving assertion to the contrary.

V. The properties involved were acquired by both parties through their actual joint
contribution of money, property, or industry.27

Noticeably, the last argument is essentially a question of fact, which we feel has been squarely
threshed out in the decisions of both the trial and appellate courts. We deem it wise not to
disturb the findings of the lower courts on the said matter absent any showing that the instant
case falls under the exceptions to the general rule that questions of fact are beyond the ambit
of the Court’s jurisdiction in petitions under Rule 45 of the 1997 Rules of Civil Procedure, as
amended. The issues may be summarized into only three:

I. Whether an action for partition precludes a settlement on the issue of ownership;

II. Whether the Torrens title over the disputed properties was collaterally attacked in
the action for partition; and

III. Whether respondent is estopped from repudiating co-ownership over the subject
realties.

We find the petition bereft of merit.

Our disquisition in Municipality of Biñan v. Garcia28 is definitive. There, we explained that the
determination as to the existence of co-ownership is necessary in the resolution of an action for
partition. Thus:

The first phase of a partition and/or accounting suit is taken up with the determination of
whether or not a co-ownership in fact exists, and a partition is proper (i.e., not otherwise legally
proscribed) and may be made by voluntary agreement of all the parties interested in the
property. This phase may end with a declaration that plaintiff is not entitled to have a partition
either because a co-ownership does not exist, or partition is legally prohibited. It may end, on
the other hand, with an adjudgment that a co-ownership does in truth exist, partition is proper
in the premises and an accounting of rents and profits received by the defendant from the real
estate in question is in order. x x x

The second phase commences when it appears that "the parties are unable to agree upon the
partition" directed by the court. In that event[,] partition shall be done for the parties by the
[c]ourt with the assistance of not more than three (3) commissioners. This second stage may
well also deal with the rendition of the accounting itself and its approval by the [c]ourt after the
parties have been accorded opportunity to be heard thereon, and an award for the recovery by
the party or parties thereto entitled of their just share in the rents and profits of the real estate
in question. x x x29 (Emphasis supplied.)

While it is true that the complaint involved here is one for partition, the same is premised on
the existence or non-existence of co-ownership between the parties. Petitioner insists she is a
co-owner pro indiviso of the five real estate properties based on the transfer certificates of title
(TCTs) covering the subject properties. Respondent maintains otherwise. Indubitably, therefore,
until and unless this issue of co-ownership is definitely and finally resolved, it would be
premature to effect a partition of the disputed properties.30 More importantly, the complaint
will not even lie if the claimant, or petitioner in this case, does not even have any rightful
interest over the subject properties.31

Would a resolution on the issue of ownership subject the Torrens title issued over the disputed
realties to a collateral attack? Most definitely, it would not.

There is no dispute that a Torrens certificate of title cannot be collaterally attacked,32 but that
rule is not material to the case at bar. What cannot be collaterally attacked is the certificate of
title and not the title itself.33 The certificate referred to is that document issued by the Register
of Deeds known as the TCT. In contrast, the title referred to by law means ownership which is,
more often than not, represented by that document.34 Petitioner apparently confuses title with
the certificate of title. Title as a concept of ownership should not be confused with the
certificate of title as evidence of such ownership although both are interchangeably used.35

Moreover, placing a parcel of land under the mantle of the Torrens system does not mean that
ownership thereof can no longer be disputed. Ownership is different from a certificate of title,
the latter only serving as the best proof of ownership over a piece of land. The certificate
cannot always be considered as conclusive evidence of ownership.36 In fact, mere issuance of
the certificate of title in the name of any person does not foreclose the possibility that the real
property may be under co-ownership with persons not named in the certificate, or that the
registrant may only be a trustee, or that other parties may have acquired interest over the
property subsequent to the issuance of the certificate of title.37 Needless to say, registration
does not vest ownership over a property, but may be the best evidence thereof.1avvphi1

Finally, as to whether respondent’s assent to the initial partition agreement serves as an

admission against interest, in that the respondent is deemed to have admitted the existence of
co-ownership between him and petitioner, we rule in the negative.

An admission is any statement of fact made by a party against his interest or unfavorable to the
conclusion for which he contends or is inconsistent with the facts alleged by him.38 Admission
against interest is governed by Section 26 of Rule 130 of the Rules of Court, which provides:
Sec. 26. Admissions of a party. – The act, declaration or omission of a party as to a relevant fact
may be given in evidence against him.

To be admissible, an admission must (a) involve matters of fact, and not of law; (b) be
categorical and definite; (c) be knowingly and voluntarily made; and (d) be adverse to the
admitter’s interests, otherwise it would be self-serving and inadmissible.39

A careful perusal of the contents of the so-called Partition Agreement indicates that the
document involves matters which necessitate prior settlement of questions of law, basic of
which is a determination as to whether the parties have the right to freely divide among
themselves the subject properties. Moreover, to follow petitioner’s argument would be to
allow respondent not only to admit against his own interest but that of his legal spouse as well,
who may also be lawfully entitled co-ownership over the said properties. Respondent is not
allowed by law to waive whatever share his lawful spouse may have on the disputed properties.
Basic is the rule that rights may be waived, unless the waiver is contrary to law, public order,
public policy, morals, good customs or prejudicial to a third person with a right recognized by
law.40

Curiously, petitioner herself admitted that she did not assent to the Partition Agreement after
seeing the need to amend the same to include other matters. Petitioner does not have any right
to insist on the contents of an agreement she intentionally refused to sign.

As to the award of damages to respondent, we do not subscribe to the trial court’s view that
respondent is entitled to attorney’s fees. Unlike the trial court, we do not commiserate with
respondent’s predicament. The trial court ruled that respondent was forced to litigate and
engaged the services of his counsel to defend his interest as to entitle him an award of
₱100,000.00 as attorney’s fees. But we note that in the first place, it was respondent himself
who impressed upon petitioner that she has a right over the involved properties. Secondly,
respondent’s act of representing himself and petitioner as husband and wife was a deliberate
attempt to skirt the law and escape his legal obligation to his lawful wife. Respondent,
therefore, has no one but himself to blame the consequences of his deceitful act which resulted
in the filing of the complaint against him.

WHEREFORE, the petition is DENIED. The September 14, 2004 Decision of the Court of Appeals
in CA-G.R. CV No. 67596 is AFFIRMED with MODIFICATION. Respondent Bayani S. Samoy, Jr. is
hereby declared the sole owner of the disputed properties, without prejudice to any claim his
legal wife may have filed or may file against him. The award of ₱100,000.00 as attorney’s fees in
respondent’s favor is DELETED.

No costs.

SO ORDERED.
G.R. No. 180282               April 11, 2011

CRISPIN DICHOSO, JR., EVELYN DICHOSO VALDEZ, and ROSEMARIE DICHOSO PE

BENITO, Petitioners,
vs.
PATROCINIO L. MARCOS, Respondent.

DECISION

NACHURA, J.:

This is a petition for review on certiorari under Rule 45 of the Rules of Court, seeking to reverse
and set aside the Court of Appeals (CA) Decision1 dated January 31, 2007 and Resolution2 dated
October 23, 2007 in CA-G.R. CV No. 85471. The assailed Decision reversed and set aside the July
15, 2005 decision3 of the Regional Trial Court (RTC) of Laoag City, Branch 14, in Civil Case No.
12581-14; while the assailed Resolution denied the Motion for Reconsideration filed by
petitioners Crispin Dichoso, Jr., Evelyn Dichoso Valdez, and Rosemarie Dichoso Pe Benito.

The facts of the case, as culled from the records, are as follows:

On August 2, 2002, petitioners filed a Complaint for Easement of Right of Way4 against

respondent Patrocinio L. Marcos. In their complaint, petitioners alleged that they are the
owners of Lot No. 21553 of the Cadastral Survey of Laoag City, covered by Transfer Certificate
of Title No. T-31219; while respondent is the owner of Lot No. 1. As petitioners had no access to
a public road to and from their property, they claimed to have used a portion of Lot No. 1 in
accessing the road since 1970. Respondent, however, blocked the passageway with piles of
sand. Though petitioners have been granted another passageway by the spouses Benjamin and
Sylvia Arce (Spouses Arce), the owners of another adjacent lot, designated as Lot No. 21559-B,
the former instituted the complaint before the RTC and prayed that:

WHEREFORE, it is respectfully prayed of this Honorable Court that judgment be rendered:

1. Granting the plaintiffs’ right of way over an area of 54 square meters more or less of
Lot 01 by paying the defendant the amount of ₱54,000.00, and that the right be
annotated on defendant’s title;

2. Ordering the defendant to pay the plaintiffs the sum of ₱30,000.00 as damages for
attorney’s fees and costs of suit;

Other reliefs, just and equitable under the premises, are likewise sought.5

Instead of filing an Answer, respondent moved6 for the dismissal of the complaint on the
ground of lack of cause of action and noncompliance with the requisite certificate of non-forum
shopping.

During the hearing on respondent’s motion to dismiss, the parties agreed that an ocular
inspection of the subject properties be conducted. After the inspection, the RTC directed the
parties to submit their respective position papers.

In a resolution7 dated May 12, 2004, the RTC denied respondent’s motion to dismiss and
required the latter to answer petitioners’ complaint.

In his Answer,8 respondent denied that he allowed anybody to use Lot No. 1 as passageway. He
stated that petitioners’ claim of right of way is only due to expediency and not necessity. He
also maintained that there is an existing easement of right of way available to petitioners
granted by the Spouses Arce. Thus, there is no need to establish another easement over
respondent’s property.

In an Order9 dated July 6, 2005, the RTC declared that respondent’s answer failed to tender an
issue, and opted to render judgment on the pleadings and thus deemed the case submitted for
decision.

On July 15, 2005, the RTC rendered a decision10 in favor of petitioners, the dispositive portion of
which reads, as follows:

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

1. granting plaintiffs a right of way over an area of 54 square meters more or less over
Lot 01 owned by defendant Patrocinio L. [Marcos] appearing in the Laoag City Assessor’s
sketch (Annex A) found on page 28 of the record of the case;

2. ordering plaintiffs to pay defendant the amount of ₱54,000.00 as proper indemnity;

and

3. ordering the Register of Deeds of Laoag City to duly annotate this right of way on
defendant’s title to the property.

SO ORDERED.11

The RTC found that petitioners adequately established the requisites to justify an easement of
right of way in accordance with Articles 649 and 650 of the Civil Code. The trial court likewise
declared petitioners in good faith as they expressed their willingness to pay proper indemnity.12

On appeal, the CA reversed and set aside the RTC decision and consequently dismissed
petitioners’ complaint. Considering that a right of way had already been granted by the (other)
servient estate, designated as Lot No. 21559-B and owned by the Spouses Arce, the appellate
court concluded that there is no need to establish an easement over respondent’s property.
The CA explained that, while the alternative route through the property of the Spouses Arce is
longer and circuitous, said access road is adequate. It emphasized that the convenience of the
dominant estate is never the gauge for the grant of compulsory right of way. Thus, the opening
of another passageway is unjustified.13

Aggrieved, petitioners come before this Court, raising the following issues:

I.

CAN PETITIONERS BE ENTITLED TO A GRANT OF LEGAL EASEMENT OF RIGHT OF WAY

FROM THEIR LANDLOCKED PROPERTY THROUGH THE PROPERTY OF PRIVATE
RESPONDENT WHICH IS THE SHORTEST ROUTE IN GOING TO AND FROM THEIR
PROPERTY TO THE PUBLIC STREET AND WHERE THEY USED TO PASS?

II.

CAN RESPONDENT REFUSE TO GRANT A RIGHT OF WAY ON THE DESIRED PASSAGEWAY

WHICH HE CLOSED SINCE THERE IS ANOTHER PASSAGEWAY WHICH IS MORE
CIRCUITOUS AND BURDENSOME AND IS BELATEDLY OFFERED UNTO PETITIONERS?

III.
 CAN PETITIONERS BE COMPELLED TO AVAIL OF A LEGAL EASEMENT OF RIGHT OF WAY
THROUGH THE PROPERTY OF ARCE WHICH WAS BELATEDLY OFFERED BUT HAS BEEN
FORECLOSED BY THE BANK AND WHEREIN THE LATTER IS NOT A PARTY TO THE CASE?14

The petition is without merit.

It is already a well-settled rule that the jurisdiction of this Court in cases brought before it from
the CA by virtue of Rule 45 of the Rules of Court is limited to reviewing errors of law. Findings of
fact of the CA are conclusive upon this Court. There are, however, recognized exceptions to the
foregoing rule, namely:

(1) when the findings are grounded entirely on speculation, surmises, or conjectures;

(2) when the inference made is manifestly mistaken, absurd, or impossible;

(3) when there is grave abuse of discretion;

(4) when the judgment is based on a misapprehension of facts;

(5) when the findings of fact are conflicting;

(6) when, in making its findings, the Court of Appeals went beyond the issues of the
case, or its findings are contrary to the admissions of both the appellant and the
appellee;

(7) when the findings are contrary to those of the trial court;

(8) when the findings are conclusions without citation of specific evidence on which they
are based;

(9) when the facts set forth in the petition, as well as in the petitioner's main and reply
briefs, are not disputed by the respondent; and

(10) when the findings of fact are premised on the supposed absence of evidence and
contradicted by the evidence on record.15

The present case falls under the 7th exception, as the RTC and the CA arrived at conflicting
findings of fact and conclusions of law.

The conferment of a legal easement of right of way is governed by Articles 649 and 650 of the
Civil Code, quoted below for easy reference:16

Article 649. The owner, or any person who by virtue of a real right may cultivate or use any
immovable, which is surrounded by other immovables pertaining to other persons and without
adequate outlet to a public highway, is entitled to demand a right of way through the
neighboring estates, after payment of the proper indemnity.

Should this easement be established in such a manner that its use may be continuous for all the
needs of the dominant estate, establishing a permanent passage, the indemnity shall consist of
the value of the land occupied and the amount of the damage caused to the servient estate.

In case the right of way is limited to the necessary passage for the cultivation of the estate
surrounded by others and for the gathering of its crops through the servient estate without a
permanent way, the indemnity shall consist in the payment of the damages caused by such
encumbrance.

This easement is not compulsory if the isolation of the immovable is due to the proprietor’s
own acts.

Article 650. The easement of right of way shall be established at the point least prejudicial to
the servient estate, and, insofar as consistent with this rule, where the distance from the
dominant estate to a public highway may be the shortest.

To be entitled to an easement of right of way, the following requisites should be met:

1. The dominant estate is surrounded by other immovables and has no adequate outlet
to a public highway;

2. There is payment of proper indemnity;

3. The isolation is not due to the acts of the proprietor of the dominant estate; and

4. The right of way claimed is at the point least prejudicial to the servient estate; and
insofar as consistent with this rule, where the distance from the dominant estate to a
public highway may be the shortest.17

Petitioners may be correct in the theoretical reading of Articles 649 and 650 of the Civil Code,
but they nevertheless failed to show sufficient factual evidence to satisfy the above-
enumerated requirements.18

It must be stressed that, by its very nature, and when considered with reference to the
obligations imposed on the servient estate, an easement involves an abnormal restriction on
the property rights of the servient owner and is regarded as a charge or encumbrance on the
servient estate. It is incumbent upon the owner of the dominant estate to establish by clear and
convincing evidence the presence of all the preconditions before his claim for easement of right
of way may be granted.19 Petitioners failed in this regard.

Admittedly, petitioners had been granted a right of way through the other adjacent lot owned
by the Spouses Arce. In fact, other lot owners use the said outlet in going to and coming from
the public highway. Clearly, there is an existing outlet to and from the public road.

However, petitioners claim that the outlet is longer and circuitous, and they have to pass
through other lots owned by different owners before they could get to the highway. We find
petitioners’ concept of what is "adequate outlet" a complete disregard of the well-entrenched
doctrine that in order to justify the imposition of an easement of right of way, there must be
real, not fictitious or artificial, necessity for it. Mere convenience for the dominant estate is not
what is required by law as the basis of setting up a compulsory easement. Even in the face of
necessity, if it can be satisfied without imposing the easement, the same should not be
imposed.20

We quote with approval the CA’s observations in this wise:

As it shows, [petitioners] had been granted a right of way through the adjacent estate of
Spouses Arce before the complaint below was even filed. [Respondent] alleged that this right of
way is being used by the other estates which are similarly situated as [petitioners]. [Petitioners]
do not dispute this fact. There is also a reason to believe that this right of way is Spouses Arce’s
outlet to a public road since their property, as it appears from the Sketch Map, is also
surrounded by other estates. The fact that Spouses Arce are not insisting on a right of way
through respondent’s property, although an opening on the latter’s property is undoubtedly
the most direct and shortest distance to P. Gomez St. from the former’s property, bolsters our
conviction that they have adequate outlet to the highway which they are now likewise making
available to [petitioners].

The convenience of the dominant estate has never been the gauge for the grant of compulsory
right of way.1âwphi1 To be sure, the true standard for the grant of the legal right is "adequacy."
Hence, when there is already an existing adequate outlet from the dominant estate to a public
highway, as in this case, even when the said outlet, for one reason or another, be inconvenient,
the need to open up another servitude is entirely unjustified.21

Thus, in Cristobal v. CA,22 the Court disallowed the easement prayed for because an outlet
already exists which is a path walk located at the left side of petitioners’ property and which is
connected to a private road about five hundred (500) meters long. The private road, in turn,
leads to Ma. Elena Street, which is about 2.5 meters wide, and finally, to Visayas Avenue. This
outlet was determined by the Court to be sufficient for the needs of the dominant estate.

Also in Floro v. Llenado,23 we refused to impose a right of way over petitioner’s property
although private respondent’s alternative route was admittedly inconvenient because he had to
traverse several ricelands and rice paddies belonging to different persons, not to mention that
said passage is impassable during the rainy season.

And in Ramos v. Gatchalian Realty, Inc.,24 this Court refused to grant the easement prayed for
even if petitioner had to pass through lots belonging to other owners, as temporary ingress and
egress, which lots were grassy, cogonal, and greatly inconvenient due to flood and mud
because such grant would run counter to the prevailing jurisprudence that mere convenience
for the dominant estate does not suffice to serve as basis for the easement.25

WHEREFORE, premises considered, the petition is DENIED. The Court of Appeals Decision dated
January 31, 2007 and Resolution dated October 23, 2007 in CA-G.R. CV No. 85471 are
AFFIRMED.

SO ORDERED.
G.R. No. 183719               February 2, 2011

MARGARITA F. CASTRO, Petitioner,
vs.
NAPOLEON A. MONSOD, Respondent.

DECISION

NACHURA, J.:

Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court,
assailing the Decision1 dated May 25, 2007 and the Resolution2 dated July 14, 2008 of the Court
of Appeals (CA) in CA-G.R. CV No. 83973.

The antecedents of the case are as follows:

Petitioner is the registered owner of a parcel of land located on Garnet Street, Manuela Homes,
Pamplona, Las Piñas City, and covered by Transfer Certificate of Title (TCT) No. T-36071, with an
area of one hundred thirty (130) square meters (sq.m.). Respondent, on the other hand, is the
owner of the property adjoining the lot of petitioner, located on Lyra Street, Moonwalk Village,
Phase 2, Las Piñas City. There is a concrete fence, more or less two (2) meters high, dividing
Manuela Homes from Moonwalk Village.3

On February 29, 2000, respondent caused the annotation of an adverse claim against sixty-five
(65) sq.m. of the property of petitioner covered by TCT No. T-36071. The adverse claim was
filed without any claim of ownership over the property. Respondent was merely asserting the
existing legal easement of lateral and subjacent support at the rear portion of his estate to
prevent the property from collapsing, since his property is located at an elevated plateau of
fifteen (15) feet, more or less, above the level of petitioner’s property.4 Respondent also filed a
complaint for malicious mischief and malicious destruction before the office of the barangay
chairman.5

In defiance, petitioner filed a complaint for damages with temporary restraining order/writ of
preliminary injunction before the Regional Trial Court (RTC) of Las Piñas City. Petitioner also
prayed that the Register of Deeds of Las Piñas City be ordered to cancel the annotation of the
adverse claim on TCT No. T-36071.6

Prior to the filing of the case before the RTC, there were deposits of soil and rocks about two (2)
meters away from the front door of the house of

petitioner. As such, petitioner was not able to park her vehicle at the dead-end portion of
Garnet Street. When petitioner noticed a leak that caused the front portion of her house to be
slippery, she hired construction workers to see where the leak was coming from. The workers
had already started digging when police officers sent by respondent came and stopped the
workers from finishing their job.7

Petitioner averred that when she bought the property from Manuela Homes in 1994, there was
no annotation or existence of any easement over the property. Respondent neither asked
permission nor talked to her with regard to the use of 65 sq.m. of her property as easement.
Upon learning of the adverse claim, she felt disturbed and experienced sleepless nights for fear
that she would not be able to sell her property. Petitioner admitted that TCT No. 36071 does
not cover the open space at the dead-end portion of Garnet Street.8
For his part, respondent claimed that he and his family had been residing in Moonwalk Village
since June 1984. Adjacent to his property is the land of petitioner in Manuela Homes. When he
bought the property in 1983, the land elevation of Moonwalk Village was almost on the same
level as Manuela Homes. However, sometime in 1985 and 1986, Pilar Development
Corporation, the developer of Manuela Homes, bulldozed, excavated, and transferred portions
of the elevated land to the lower portions of Manuela Homes. Thus, Manuela Homes became
lower than Moonwalk Village.9

Before the said excavation, respondent personally complained to Pilar

Development Corporation and was assured that, as provided by the National Building Code, an
embankment will be retained at the boundary of Manuela Homes and Moonwalk Village, which
is more or less fifteen (15) feet higher than Manuela Homes.10

Manuela Homes retained the embankment consisting of soil and rocks. Respondent had the
open space riprapped with stones as reinforcement against any potential soil erosion,
earthquake, and possible digging by any person.

Respondent asserted that the affidavit of adverse claim was for the annotation of the lateral
and subjacent easement of his property over the property of petitioner, in view of the latter’s
manifest determination to remove the embankment left by the developer of Manuela Homes.

On October 11, 2004, the RTC rendered a decision,11 the dispositive portion of which reads:

WHEREFORE, premises considered, this court hereby renders judgment: (1) ordering the
cancellation of [respondent’s] adverse claim at the back of Transfer Certificate of Title No. T-
36071 at the expense of [respondent] Napoleon Monsod; (2) ordering the said [respondent] to
pay the herein [petitioner] the amount of Php50,000.00 as moral damages; and (3) dismissing
[petitioner’s] claim for actual damages, attorney’s fees, litigation costs and costs of suit and
[respondent’s] compulsory counterclaim for lack of merit.

SO ORDERED.12

The trial court ratiocinated that the adverse claim of respondent was non-registrable
considering that the basis of his claim was an easement and not an interest adverse to the
registered owner, and neither did he contest the title of petitioner. Furthermore, the adverse
claim of respondent failed to comply with the requisites provided under Section 70 of
Presidential Decree No. 1529.13

On appeal, the CA reversed the decision of the trial court in a Decision14 dated May 25, 2007,
the fallo of which reads:

WHEREFORE, premises considered, the instant appeal is GRANTED. The Decision of the Regional
Trial Court, Branch 198, Las Piñas City dated October 11, 2004 is REVERSED and SET ASIDE. The
Court hereby orders the retention of the annotation at the back of Transfer Certificate of Title
No. T-36071, not as an adverse claim, but a recognition of the existence of a legal easement of
subjacent and lateral support constituted on the lengthwise or horizontal land
support/embankment area of sixty-five (65) square meters, more or less, of the property of
[petitioner] Margarita Castro. The writ of preliminary injunction issued by this Court on April 18,
2006 is hereby made permanent. [Petitioner’s] claim for damages is likewise DISMISSED.

SO ORDERED.15
The CA ruled that while respondent’s adverse claim could not be sanctioned because it did not
fall under the requisites for registering an adverse claim, the same might be duly annotated in
the title as recognition of the existence of a legal easement of subjacent and lateral support.
The purpose of the annotation was to prevent petitioner from making injurious excavations on
the subject embankment as to deprive the residential house and lot of respondent of its natural
support and cause it to collapse. Respondent only asked that petitioner respect the legal
easement already existing thereon.16

On June 15, 2007, petitioner filed a motion for reconsideration. However, the CA denied the
same in a Resolution17 dated July 14, 2008.

Hence, this petition.

The issue in this case is whether the easement of lateral and subjacent support exists on the
subject adjacent properties and, if it does, whether the same may be annotated at the back of
the title of the servient estate.

Article 437 of the Civil Code provides that the owner of a parcel of land is the owner of its
surface and of everything under it, and he can construct thereon any works, or make any
plantations and excavations which he may deem proper. However, such right of the owner is
not absolute and is subject to the following limitations: (1) servitudes or easements,18 (2)
special laws,19 (3) ordinances,20 (4) reasonable requirements of aerial navigation,21 and (5) rights
of third persons.22

Respondent filed before the RTC an affidavit of adverse claim, the pertinent portions of which
read:

5. That our adverse claim consists of rights of legal or compulsory easement of lateral
and subjacent support (under the Civil Code) over a portion of the above-described
property of owner Margarita F. Castro, that is, covering the lengthwise or horizontal
land support/embankment area of sixty-five (65) square meters, more or less.

6. That said registered owner has attempted to destroy and/or remove portions of the
existing lateral/subjacent land and cement supports adjoining the said two properties.
In fact, a portion of the easement was already destroyed/removed, to the continuing
prejudice of herein adverse claimant, and that a formal complaint against said
registered owner was filed by the herein adverse claimant before the Office of the
Barangay Chairman of Talon V, Las Piñas City and the same proved futile.23

Respondent’s assertion that he has an adverse claim over the 65 sq.m. property of petitioner is
misplaced since he does not have a claim over the ownership of the land. The annotation of an
adverse claim over registered land under Section 70 of Presidential Decree 152924 requires a
claim on the title of the disputed land. Annotation is done to apprise third persons that there is
a controversy over the ownership of the land and to preserve and protect the right of the
adverse claimant during the pendency of the controversy. It is a notice to third persons that any
transaction regarding the disputed land is subject to the outcome of the dispute.25

In reality, what respondent is claiming is a judicial recognition of the existence of the easement
of subjacent and lateral support over the 65 sq. m. portion of petitioner’s property covering the
land support/embankment area. His reason for the annotation is only to prevent petitioner
from removing the embankment or from digging on the property for fear of soil erosion that
might weaken the foundation of the rear portion of his property which is adjacent to the
property of petitioner.
An easement or servitude is an encumbrance imposed upon an immovable for the benefit of
another immovable belonging to a different owner.26 There are two kinds of easements
according to source. An easement is established either by law or by will of the owners.27 The
courts cannot impose or constitute any servitude where none existed. They can only declare its
existence if in reality it exists by law or by the will of the owners. There are therefore no judicial
easements.28

Article 684 of the Civil Code provides that no proprietor shall make such excavations upon his
land as to deprive any adjacent land or building of sufficient lateral or subjacent support. An
owner, by virtue of his surface right, may make excavations on his land, but his right is subject
to the limitation that he shall not deprive any adjacent land or building of sufficient lateral or
subjacent support. Between two adjacent landowners, each has an absolute property right to
have his land laterally supported by the soil of his neighbor, and if either, in excavating on his
own premises, he so disturbs the lateral support of his neighbor’s land as to cause it, or, in its
natural state, by the pressure of its own weight, to fall away or slide from its position, the one
so excavating is liable.29

In the instant case, an easement of subjacent and lateral support exists in favor of
respondent.1avvphi1 It was established that the properties of petitioner and respondent adjoin
each other. The residential house and lot of respondent is located on an elevated plateau of
fifteen (15) feet above the level of petitioner’s property. The embankment and the riprapped
stones have been in existence even before petitioner became the owner of the property. It was
proven that petitioner has been making excavations and diggings on the subject embankment
and, unless restrained, the continued excavation of the embankment could cause the
foundation of the rear portion of the house of respondent to collapse, resulting in the
destruction of a huge part of the family dwelling.30

We sustain the CA in declaring that a permanent injunction on the part of petitioner from
making injurious excavations is necessary in order to protect the interest of respondent.
However, an annotation of the existence of the subjacent and lateral support is no longer
necessary. It exists whether or not it is annotated or registered in the registry of property. A
judicial recognition of the same already binds the property and the owner of the same,
including her successors-in-interest. Otherwise, every adjoining landowner would come to
court or have the easement of subjacent and lateral support registered in order for it to be
recognized and respected.

WHEREFORE, in view of the foregoing, the Decision dated May 25, 2007 and the Resolution
dated July 14, 2008 of the Court of Appeals in CA-G.R. CV No. 83973 are hereby AFFIRMED
WITH MODIFICATION that the annotation at the back of Transfer Certificate of Title No. T-
36071, recognizing the existence of the legal easement of subjacent and lateral support
constituted on the lengthwise or horizontal land support/embankment area of sixty-five (65)
square meters, more or less, of the property of petitioner Margarita F. Castro, is hereby
ordered removed.

SO ORDERED.
G.R. No. 172804               January 24, 2011

GONZALO VILLANUEVA, represented by his heirs, Petitioner,

vs.
SPOUSES FROILAN and LEONILA BRANOCO, Respondents.

DECISION

CARPIO, J.:

The Case

This resolves the petition for review1 of the ruling2 of the Court of Appeals dismissing a suit to
recover a realty.

The Facts

Petitioner Gonzalo Villanueva (petitioner), here represented by his heirs,3 sued respondents,

spouses Froilan and Leonila Branoco (respondents), in the Regional Trial Court of Naval, Biliran
(trial court) to recover a 3,492 square-meter parcel of land in Amambajag, Culaba, Leyte
(Property) and collect damages. Petitioner claimed ownership over the Property through
purchase in July 1971 from Casimiro Vere (Vere), who, in turn, bought the Property from
Alvegia Rodrigo (Rodrigo) in August 1970. Petitioner declared the Property in his name for tax
purposes soon after acquiring it.

In their Answer, respondents similarly claimed ownership over the Property through purchase
in July 1983 from Eufracia Rodriguez (Rodriguez) to whom Rodrigo donated the Property in May
1965. The two-page deed of donation (Deed), signed at the bottom by the parties and two
witnesses, reads in full:

KNOW ALL MEN BY THESE PRESENTS:

That I, ALVEGIA RODRIGO, Filipino, of legal age, widow of the late Juan Arcillas, a resident of
Barrio Bool, municipality of Culaba, subprovince of Biliran, Leyte del Norte, Philippines, hereby
depose and say:

That as we live[d] together as husband and wife with Juan Arcillas, we begot children, namely:
LUCIO, VICENTA, SEGUNDINA, and ADELAIDA, all surnamed ARCILLAS, and by reason of poverty
which I suffered while our children were still young; and because my husband Juan Arcillas
aware as he was with our destitution separated us [sic] and left for Cebu; and from then on
never cared what happened to his family; and because of that one EUFRACIA RODRIGUEZ, one
of my nieces who also suffered with our poverty, obedient as she was to all the works in our
house, and because of the love and affection which I feel [for] her, I have one parcel of land
located at Sitio Amambajag, Culaba, Leyte bearing Tax Decl. No. 1878 declared in the name of
Alvegia Rodrigo, I give (devise) said land in favor of EUFRACIA RODRIGUEZ, her heirs,
successors, and assigns together with all the improvements existing thereon, which parcel of
land is more or less described and bounded as follows:

1. Bounded North by Amambajag River; East, Benito Picao; South, Teofilo Uyvico; and West, by
Public land; 2. It has an area of 3,492 square meters more or less; 3. It is planted to coconuts
now bearing fruits; 4. Having an assessed value of ₱240.00; 5. It is now in the possession of
EUFRACIA RODRIGUEZ since May 21, 1962 in the concept of an owner, but the Deed of
Donation or that ownership be vested on her upon my demise.
That I FURTHER DECLARE, and I reiterate that the land above described, I already devise in favor
of EUFRACIA RODRIGUEZ since May 21, 1962, her heirs, assigns, and that if the herein Donee
predeceases me, the same land will not be reverted to the Donor, but will be inherited by the
heirs of EUFRACIA RODRIGUEZ;

That I EUFRACIA RODRIGUEZ, hereby accept the land above described from Inay Alvegia
Rodrigo and I am much grateful to her and praying further for a longer life; however, I will give
one half (1/2) of the produce of the land to Apoy Alve during her lifetime.4

Respondents entered the Property in 1983 and paid taxes afterwards.

The Ruling of the Trial Court

The trial court ruled for petitioner, declared him owner of the Property, and ordered
respondents to surrender possession to petitioner, and to pay damages, the value of the
Property’s produce since 1982 until petitioner’s repossession and the costs.5 The trial court
rejected respondents’ claim of ownership after treating the Deed as a donation mortis
causa which Rodrigo effectively cancelled by selling the Property to Vere in 1970.6 Thus, by the
time Rodriguez sold the Property to respondents in 1983, she had no title to transfer.

Respondents appealed to the Court of Appeals (CA), imputing error in the trial court’s
interpretation of the Deed as a testamentary disposition instead of an inter vivos donation,
passing title to Rodriguez upon its execution.

Ruling of the Court of Appeals

The CA granted respondents’ appeal and set aside the trial court’s ruling. While conceding that
the "language of the [Deed is] x x x confusing and which could admit of possible different
interpretations,"7 the CA found the following factors pivotal to its reading of the Deed as
donation inter vivos: (1) Rodriguez had been in possession of the Property as owner since 21
May 1962, subject to the delivery of part of the produce to Apoy Alve; (2) the Deed’s
consideration was not Rodrigo’s death but her "love and affection" for Rodriguez, considering
the services the latter rendered; (3) Rodrigo waived dominion over the Property in case
Rodriguez predeceases her, implying its inclusion in Rodriguez’s estate; and (4) Rodriguez
accepted the donation in the Deed itself, an act necessary to effectuate donations inter vivos,
not devises.8 Accordingly, the CA upheld the sale between Rodriguez and respondents, and,
conversely found the sale between Rodrigo and petitioner’s predecessor-in-interest, Vere, void
for Rodrigo’s lack of title.

In this petition, petitioner seeks the reinstatement of the trial court’s ruling. Alternatively,
petitioner claims ownership over the Property through acquisitive prescription, having allegedly
occupied it for more than 10 years.9

Respondents see no reversible error in the CA’s ruling and pray for its affirmance.

The Issue

The threshold question is whether petitioner’s title over the Property is superior to
respondents’. The resolution of this issue rests, in turn, on whether the contract between the
parties’ predecessors-in-interest, Rodrigo and Rodriguez, was a donation or a devise. If the
former, respondents hold superior title, having bought the Property from Rodriguez. If the
latter, petitioner prevails, having obtained title from Rodrigo under a deed of sale the execution
of which impliedly revoked the earlier devise to Rodriguez.
 The Ruling of the Court

We find respondents’ title superior, and thus, affirm the CA.

Naked Title Passed from Rodrigo to Rodriguez Under a Perfected Donation

We examine the juridical nature of the Deed – whether it passed title to Rodriguez upon its
execution or is effective only upon Rodrigo’s death – using principles distilled from relevant
jurisprudence. Post-mortem dispositions typically –

(1) Convey no title or ownership to the transferee before the death of the transferor; or,
what amounts to the same thing, that the transferor should retain the ownership (full or
naked) and control of the property while alive;

(2) That before the [donor’s] death, the transfer should be revocable by the transferor
at will, ad nutum; but revocability may be provided for indirectly by means of a reserved
power in the donor to dispose of the properties conveyed;

(3) That the transfer should be void if the transferor should survive the transferee.10

Further –

[4] [T]he specification in a deed of the causes whereby the act may be revoked by the
donor indicates that the donation is inter vivos, rather than a disposition mortis causa[;]

[5] That the designation of the donation as mortis causa, or a provision in the deed to
the effect that the donation is "to take effect at the death of the donor" are not
controlling criteria; such statements are to be construed together with the rest of the
instrument, in order to give effect to the real intent of the transferor[;] [and]

(6) That in case of doubt, the conveyance should be deemed donation inter vivos rather
than mortis causa, in order to avoid uncertainty as to the ownership of the property
subject of the deed.11

It is immediately apparent that Rodrigo passed naked title to Rodriguez under a perfected
donation inter vivos. First. Rodrigo stipulated that "if the herein Donee predeceases me, the
[Property] will not be reverted to the Donor, but will be inherited by the heirs of x x x
Rodriguez," signaling the irrevocability of the passage of title to Rodriguez’s estate, waiving
Rodrigo’s right to reclaim title. This transfer of title was perfected the moment Rodrigo learned
of Rodriguez’s acceptance of the disposition12 which, being reflected in the Deed, took place on
the day of its execution on 3 May 1965. Rodrigo’s acceptance of the transfer underscores its
essence as a gift in presenti, not in futuro, as only donations inter vivos need acceptance by the
recipient.13 Indeed, had Rodrigo wished to retain full title over the Property, she could have
easily stipulated, as the testator did in another case, that "the donor, may transfer, sell, or
encumber to any person or entity the properties here donated x x x"14 or used words to that
effect. Instead, Rodrigo expressly waived title over the Property in case Rodriguez predeceases
her.

In a bid to diffuse the non-reversion stipulation’s damning effect on his case, petitioner tries to
profit from it, contending it is a fideicommissary substitution clause.15 Petitioner assumes the
fact he is laboring to prove. The question of the Deed’s juridical nature, whether it is a will or a
donation, is the crux of the present controversy. By treating the clause in question as
mandating fideicommissary substitution, a mode of testamentary disposition by which the first
heir instituted is entrusted with the obligation to preserve and to transmit to a second heir the
whole or part of the inheritance,16 petitioner assumes that the Deed is a will. Neither the Deed’s
text nor the import of the contested clause supports petitioner’s theory.

Second. What Rodrigo reserved for herself was only the beneficial title to the Property, evident
from Rodriguez’s undertaking to "give one [half] x x x of the produce of the land to Apoy Alve
during her lifetime."17 Thus, the Deed’s stipulation that "the ownership shall be vested on
[Rodriguez] upon my demise," taking into account the non-reversion clause, could only refer to
Rodrigo’s beneficial title. We arrived at the same conclusion in Balaqui v. Dongso18 where, as
here, the donor, while "b[inding] herself to answer to the [donor] and her heirs x x x that none
shall question or disturb [the donee’s] right," also stipulated that the donation "does not pass
title to [the donee] during my lifetime; but when I die, [the donee] shall be the true owner" of
the donated parcels of land. In finding the disposition as a gift inter vivos, the Court reasoned:

Taking the deed x x x as a whole, x x x x it is noted that in the same deed [the donor]
guaranteed to [the donee] and her heirs and successors, the right to said property thus
conferred. From the moment [the donor] guaranteed the right granted by her to [the donee] to
the two parcels of land by virtue of the deed of gift, she surrendered such right; otherwise
there would be no need to guarantee said right. Therefore, when [the donor] used the words
upon which the appellants base their contention that the gift in question is a donation mortis
causa [that the gift "does not pass title during my lifetime; but when I die, she shall be the true
owner of the two aforementioned parcels"] the donor meant nothing else than that she
reserved of herself the possession and usufruct of said two parcels of land until her death, at
which time the donee would be able to dispose of them freely.19 (Emphasis supplied)

Indeed, if Rodrigo still retained full ownership over the Property, it was unnecessary for her to
reserve partial usufructuary right over it.20

Third. The existence of consideration other than the donor’s death, such as the donor’s love
and affection to the donee and the services the latter rendered, while also true of devises,
nevertheless "corroborates the express irrevocability of x x x [inter vivos] transfers."21 Thus, the
CA committed no error in giving weight to Rodrigo’s statement of "love and affection" for
Rodriguez, her niece, as consideration for the gift, to underscore its finding.

It will not do, therefore, for petitioner to cherry-pick stipulations from the Deed tending to
serve his cause (e.g. "the ownership shall be vested on [Rodriguez] upon my demise" and
"devise"). Dispositions bearing contradictory stipulations are interpreted wholistically, to give
effect to the donor’s intent. In no less than seven cases featuring deeds of donations styled as
"mortis causa" dispositions, the Court, after going over the deeds, eventually considered the
transfers inter vivos,22 consistent with the principle that "the designation of the donation
as mortis causa, or a provision in the deed to the effect that the donation is ‘to take effect at
the death of the donor’ are not controlling criteria [but] x x x are to be construed together with
the rest of the instrument, in order to give effect to the real intent of the transferor."23 Indeed,
doubts on the nature of dispositions are resolved to favor inter vivos transfers "to avoid
uncertainty as to the ownership of the property subject of the deed."24

Nor can petitioner capitalize on Rodrigo’s post-donation transfer of the Property to Vere as
proof of her retention of ownership. If such were the barometer in interpreting deeds of
donation, not only will great legal uncertainty be visited on gratuitous dispositions, this will give
license to rogue property owners to set at naught perfected transfers of titles, which, while
founded on liberality, is a valid mode of passing ownership. The interest of settled property
dispositions counsels against licensing such practice.25

Accordingly, having irrevocably transferred naked title over the Property to Rodriguez in 1965,
Rodrigo "cannot afterwards revoke the donation nor dispose of the said property in favor of
another."26 Thus, Rodrigo’s post-donation sale of the Property vested no title to Vere. As Vere’s
successor-in-interest, petitioner acquired no better right than him. On the other hand,
respondents bought the Property from Rodriguez, thus acquiring the latter’s title which they
may invoke against all adverse claimants, including petitioner.

Petitioner Acquired No Title Over the Property

Alternatively, petitioner grounds his claim of ownership over the Property through his and
Vere’s combined possession of the Property for more than ten years, counted from Vere’s
purchase of the Property from Rodrigo in 1970 until petitioner initiated his suit in the trial court
in February 1986.27 Petitioner anchors his contention on an unfounded legal assumption. The
ten year ordinary prescriptive period to acquire title through possession of real property in the
concept of an owner requires uninterrupted possession coupled with just title and good
faith.28 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.29 Good faith, on the
other hand, consists in the reasonable belief that the person from whom the possessor
received the thing was the owner thereof, and could transmit his ownership.30

Although Vere and petitioner arguably had just title having successively acquired the Property
through sale, neither was a good faith possessor. As Rodrigo herself disclosed in the Deed,
Rodriguez already occupied and possessed the Property "in the concept of an owner" ("como
tag-iya"31) since 21 May 1962, nearly three years before Rodrigo’s donation in 3 May 1965 and
seven years before Vere bought the Property from Rodrigo. This admission against interest
binds Rodrigo and all those tracing title to the Property through her, including Vere and
petitioner. Indeed, petitioner’s insistent claim that Rodriguez occupied the Property only in
1982, when she started paying taxes, finds no basis in the records. In short, when Vere bought
the Property from Rodrigo in 1970, Rodriguez was in possession of the Property, a fact that
prevented Vere from being a buyer in good faith.

Lacking good faith possession, petitioner’s only other recourse to maintain his claim of
ownership by prescription is to show open, continuous and adverse possession of the Property
for 30 years.32 Undeniably, petitioner is unable to meet this requirement.1avvphil

Ancillary Matters Petitioner Raises Irrelevant

Petitioner brings to the Court’s attention facts which, according to him, support his theory that
Rodrigo never passed ownership over the Property to Rodriguez, namely, that Rodriguez
registered the Deed and paid taxes on the Property only in 1982 and Rodriguez obtained from
Vere in 1981 a waiver of the latter’s "right of ownership" over the Property. None of these facts
detract from our conclusion that under the text of the Deed and based on the
contemporaneous acts of Rodrigo and Rodriguez, the latter, already in possession of the
Property since 1962 as Rodrigo admitted, obtained naked title over it upon the Deed’s
execution in 1965. Neither registration nor tax payment is required to perfect donations. On
the relevance of the waiver agreement, suffice it to say that Vere had nothing to waive to
Rodriguez, having obtained no title from Rodrigo. Irrespective of Rodriguez’s motivation in
obtaining the waiver, that document, legally a scrap of paper, added nothing to the title
Rodriguez obtained from Rodrigo under the Deed.

WHEREFORE, we DENY the petition. We AFFIRM the Decision dated 6 June 2005 and the
Resolution dated 5 May 2006 of the Court of Appeals.

SO ORDERED.
G.R. No. 175444               December 14, 2011

JAIME ABALOS and SPOUSES FELIX SALAZAR and CONSUELO SALAZAR, GLICERIO ABALOS,
HEIRS OF AQUILINO ABALOS, namely: SEGUNDA BAUTISTA, ROGELIO ABALOS, DOLORES A.
ROSARIO, FELICIDAD ABALOS, ROBERTO ABALOS, JUANITO ABALOS, TITA ABALOS, LITA A.
DELA CRUZ AND HEIRS OF AQUILINA ABALOS, namely: ARTURO BRAVO, PURITA B.
MENDOZA, LOURDES B. AGANON, CONSUELO B. SALAZAR, PRIMA B. DELOS SANTOS, THELMA
APOSTOL and GLECERIO ABALOS, Petitioners,
vs.
HEIRS OF VICENTE TORIO, namely: PUBLIO TORIO, LIBORIO TORIO, VICTORINA TORIO, ANGEL
TORIO, LADISLAO TORIO, PRIMO TORIO and NORBERTO TORIO, Respondents.

DECISION

PERALTA, J.:

Before the Court is a petition for review on certiorari seeking to set aside the Decision1 dated
June 30, 2006 and Resolution2 dated November 13, 2006 by the Court of Appeals (CA) in CA-
G.R. SP No. 91887. The assailed Decision reversed and set aside the Decision3 dated June 14,
2005 of the Regional Trial Court (RTC) of Lingayen, Pangasinan, Branch 69, while the questioned
Resolution denied petitioners' Motion for Reconsideration.

The factual and procedural antecedents of the case are as follows:

On July 24, 1996, herein respondents filed a Complaint for Recovery of Possession and Damages
with the Municipal Trial Court (MTC) of Binmaley, Pangasinan against Jaime Abalos (Jaime) and
the spouses Felix and Consuelo Salazar. Respondents contended that: they are the children and
heirs of one Vicente Torio (Vicente) who died intestate on September 11, 1973; at the time of
the death of Vicente, he left behind a parcel of land measuring 2,950 square meters, more or
less, which is located at San Isidro Norte, Binmaley, Pangasinan; during the lifetime of Vicente
and through his tolerance, Jaime and the Spouses Salazar were allowed to stay and build their
respective houses on the subject parcel of land; even after the death of Vicente, herein
respondents allowed Jaime and the Spouses Salazar to remain on the disputed lot; however, in
1985, respondents asked Jaime and the Spouses Salazar to vacate the subject lot, but they
refused to heed the demand of respondents forcing respondents to file the complaint.4

Jaime and the Spouses Salazar filed their Answer with Counterclaim, denying the material
allegations in the Complaint and asserting in their Special and Affirmative Defenses that:
respondents' cause of action is barred by acquisitive prescription; the court a quo has no
jurisdiction over the nature of the action and the persons of the defendants; the absolute and
exclusive owners and possessors of the disputed lot are the deceased predecessors of
defendants; defendants and their predecessors-in-interest had been in actual, continuous and
peaceful possession of the subject lot as owners since time immemorial; defendants are
faithfully and religiously paying real property taxes on the disputed lot as evidenced by Real
Property Tax Receipts; they have continuously introduced improvements on the said land, such
as houses, trees and other kinds of ornamental plants which are in existence up to the time of
the filing of their Answer.5

On the same date as the filing of defendants' Answer with Counterclaim, herein petitioners filed
their Answer in Intervention with Counterclaim. Like the defendants, herein petitioners claimed
that their predecessors-in-interest were the absolute and exclusive owners of the land in
question; that petitioners and their predecessors had been in possession of the subject lot since
time immemorial up to the present; they have paid real property taxes and introduced
improvements thereon.6
After the issues were joined, trial ensued.

On December 10, 2003, the MTC issued a Decision, the dispositive portion of which reads as
follows:

WHEREFORE, in view of the foregoing consideration[s], the Court adjudged the case in favor of
the plaintiffs and against the defendants and defendants-intervenors are ordered to turn over
the land in question to the plaintiffs (Lot Nos. 869 and 870, Cad. 467-D. Binmaley Cadastre
located in Brgy. San Isidro Norte, Binmaley, Pangasinan with an area of 2,950 sq. m., more or
less, bounded and described in paragraph 3 of the Complaint[)]; ordering the defendants and
defendants-intervenors to remove their respective houses standing on the land in dispute;
further ordering the defendants and defendants-intervenors, either singly or jointly to pay the
plaintiffs land rent in the amount of ₱12,000.00 per year to be reckoned starting the year 1996
until defendants and defendants-intervenors will finally vacate the premises; furthermore,
defendants and defendants-intervenors are also ordered to pay, either singly or jointly, the
amount of ₱10,000.00 as and by way of attorney's fees and costs of suit.

SO ORDERED.7

Jaime and the Spouses Salazar appealed the Decision of the MTC with the RTC of Lingayen,
Pangasinan.8 Herein petitioners, who were intervenors, did not file an appeal.

In its Decision dated June 14, 2005, the RTC ruled in favor of Jaime and the Spouses Salazar,
holding that they have acquired the subject property through prescription. Accordingly, the RTC
dismissed herein respondents' complaint.

Aggrieved, herein respondents filed a petition for review with the CA assailing the Decision of
the RTC.

On June 30, 2006, the CA promulgated its questioned Decision, the dispositive portion of which
reads, thus:

WHEREFORE, the petition is GRANTED. The Decision dated June 14, 2005 of the Regional Trial
Court, Branch 69, Lingayen, Pangasinan is hereby REVERSED and SET ASIDE. In its stead, a new
one is entered reinstating the Decision dated December 10, 2003 of the Municipal Trial Court of
Binmaley, Pangasinan.

SO ORDERED.9

Jaime and the Spouses Salazar filed a Motion for Reconsideration, but the same was denied by
the CA in its Resolution dated November 13, 2006.

Hence, the instant petition based on a sole assignment of error, to wit:

THE COURT OF APPEALS ERRED IN NOT APPRECIATING THAT THE PETITIONERS HEREIN ARE
NOW THE ABSOLUTE AND EXCLUSIVE OWNERS OF THE LAND IN QUESTION BY VIRTUE OF
ACQUISITIVE PRESCRIPTION.10

The main issue raised by petitioners is whether they and their predecessors-in-interest
possessed the disputed lot in the concept of an owner, or whether their possession is by mere
tolerance of respondents and their predecessors-in-interest. Corollarily, petitioners claim that
the due execution and authenticity of the deed of sale upon which respondents' predecessors-
in-interest derived their ownership were not proven during trial.
The petition lacks merit.

Preliminarily, the Court agrees with the observation of respondents that some of the
petitioners in the instant petition were the intervenors11 when the case was filed with the MTC.
Records would show that they did not appeal the Decision of the MTC.12 The settled rule is that
failure to perfect an appeal renders the judgment final and executory.13 Hence, insofar as the
intervenors in the MTC are concerned, the judgment of the MTC had already become final and
executory.

It also bears to point out that the main issue raised in the instant petition, which is the
character or nature of petitioners' possession of the subject parcel of land, is factual in nature.

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.14 Section 1 of Rule 45 states that petitions for
review on certiorari "shall raise only questions of law which must be distinctly set forth."

Doubtless, the issue of whether petitioners possess the subject property as owners, or whether
they occupy the same by mere tolerance of respondents, is a question of fact. Thus, it is not
reviewable.

Nonetheless, the Court has, at times, allowed exceptions from the abovementioned restriction.
Among the recognized exceptions are the following:

(a) When the findings are grounded entirely on speculation, surmises, or conjectures;

(b) When the inference made is manifestly mistaken, absurd, or impossible;

(c) When there is grave abuse of discretion;

(d) When the judgment is based on a misapprehension of facts;

(e) When the findings of facts are conflicting;

(f) When in making its findings the CA went beyond the issues of the case, or its findings
are contrary to the admissions of both the appellant and the appellee;

(g) When the CA’s findings are contrary to those by the trial court;

(h) When the findings are conclusions without citation of specific evidence on which
they are based;

(i) 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;

(j) When the findings of fact are premised on the supposed absence of evidence and
contradicted by the evidence on record; or

(k) When the CA manifestly overlooked certain relevant facts not disputed by the
parties, which, if properly considered, would justify a different conclusion.15

In the present case, the findings of fact of the MTC and the CA are in conflict with those of the
RTC.
After a review of the records, however, the Court finds that the petition must fail as it finds no
error in the findings of fact and conclusions of law of the CA and the MTC.

Petitioners claim that they have acquired ownership over the disputed lot through ordinary
acquisitive prescription.

Acquisitive prescription of dominion and other real rights may be ordinary or

extraordinary.16 Ordinary acquisitive prescription requires possession in good faith and with just
title for ten (10) years.17 Without good faith and just title, acquisitive prescription can only be
extraordinary in character which requires uninterrupted adverse possession for thirty (30)
years.18

Possession "in good faith" consists in the reasonable belief that the person from whom the
thing is received has been the owner thereof, and could transmit his ownership.19 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.20

In the instant case, it is clear that during their possession of the property in question,
petitioners acknowledged ownership thereof by the immediate predecessor-in-interest of
respondents. This is clearly shown by the Tax Declaration in the name of Jaime for the year
1984 wherein it contains a statement admitting that Jaime's house was built on the land of
Vicente, respondents' immediate predecessor-in-interest.21 Petitioners never disputed such an
acknowledgment. Thus, having knowledge that they nor their predecessors-in-interest are not
the owners of the disputed lot, petitioners' possession could not be deemed as possession in
good faith as to enable them to acquire the subject land by ordinary prescription. In this
respect, the Court agrees with the CA that petitioners' possession of the lot in question was by
mere tolerance of respondents and their predecessors-in-interest. Acts of possessory character
executed due to license or by mere tolerance of the owner are inadequate for purposes of
acquisitive prescription.22 Possession, to constitute the foundation of a prescriptive right, must
be en concepto de dueño, or, to use the common law equivalent of the term, that possession
should be adverse, if not, such possessory acts, no matter how long, do not start the running of
the period of prescription.23

Moreover, the CA correctly held that even if the character of petitioners' possession of the
subject property had become adverse, as evidenced by their declaration of the same for tax
purposes under the names of their predecessors-in-interest, their possession still falls short of
the required period of thirty (30) years in cases of extraordinary acquisitive prescription.
Records show that the earliest Tax Declaration in the name of petitioners was in 1974.
Reckoned from such date, the thirty-year period was completed in 2004. However, herein
respondents' complaint was filed in 1996, effectively interrupting petitioners' possession upon
service of summons on them.24 Thus, petitioners’ possession also did not ripen into ownership,
because they failed to meet the required statutory period of extraordinary prescription.

This Court has held that the evidence relative to the possession upon which the alleged
prescription is based, must be clear, complete and conclusive in order to establish the
prescription.25 In the present case, the Court finds no error on the part of the CA in holding that
petitioners failed to present competent evidence to prove their alleged good faith in neither
possessing the subject lot nor their adverse claim thereon. Instead, the records would show
that petitioners' possession was by mere tolerance of respondents and their predecessors-in-
interest.1avvphi1

Finally, as to the issue of whether the due execution and authenticity of the deed of sale upon
which respondents anchor their ownership were not proven, the Court notes that petitioners
did not raise this matter in their Answer as well as in their Pre-Trial Brief. It was only in their
Comment to respondents' Petition for Review filed with the CA that they raised this issue.
Settled is the rule that points of law, theories, issues, and arguments not adequately brought to
the attention of the trial court need not be, and ordinarily will not be, considered by a
reviewing court.26 They cannot be raised for the first time on appeal. To allow this would be
offensive to the basic rules of fair play, justice and due process.27

Even granting that the issue of due execution and authenticity was properly raised, the Court
finds no cogent reason to depart from the findings of the CA, to wit:

xxxx

Based on the foregoing, respondents [Jaime Abalos and the Spouses Felix and Consuelo Salazar]
have not inherited the disputed land because the same was shown to have already been validly
sold to Marcos Torio, who, thereupon, assigned the same to his son Vicente, the father of
petitioners [herein respondents]. A valid sale was amply established and the said validity
subsists because the deed evidencing the same was duly notarized.

There is no doubt that the deed of sale was duly acknowledged before a notary public. As a
notarized document, it has in its favor the presumption of regularity and it carries the
evidentiary weight conferred upon it with respect to its due execution. It is admissible in
evidence without further proof of its authenticity and is entitled to full faith and credit upon its
face.28

Indeed, settled is the rule in our jurisdiction that a notarized document has in its favor the
presumption of regularity, and to overcome the same, there must be evidence that is clear,
convincing and more than merely preponderant; otherwise, the document should be
upheld.29 In the instant case, petitioners' bare denials will not suffice to overcome the
presumption of regularity of the assailed deed of sale.

WHEREFORE, the petition is DENIED. The assailed Decision and Resolution of the Court of
Appeals in CA-G.R. SP No. 91887 are AFFIRMED.

SO ORDERED.
G.R. No. 172331               August 24, 2011

RAMON ARANDA, Petitioner,
vs.
REPUBLIC OF THE PHILIPPINES, Respondent.

DECISION

VILLARAMA, JR., J.:

On appeal is the Decision1 dated July 26, 2005 and Resolution2 dated April 11, 2006 of the Court
of Appeals (CA) in CA-G.R. CV No. 73067 which reversed and set aside the Decision3 dated
January 31, 2001 of the Regional Trial Court (RTC) of Tanauan, Batangas, Branch 6 in Land Reg.
Case No. T-335 (LRA Record No. N-69447).

Subject of a petition for original registration before the RTC is a parcel of land situated in San
Andres, Malvar, Batangas with an area of 9,103 square meters and designated as Lot 3730, Psc
47, Malvar Cadastre. The petition4 was originally filed by ICTSI Warehousing, Inc. (ICTSI-WI)
represented by its Chairman, Enrique K. Razon, Jr. The Republic through the Office of the
Solicitor General (OSG) filed its opposition5 on grounds that the land applied for is part of the
public domain and the applicant has not acquired a registrable title thereto under the
provisions of Commonwealth Act No. 141 as amended by Republic Act No. 6940.

ICTSI-WI sought leave of court to amend the application citing the following reasons: (1) the
petition was not accompanied by a certification of non-forum shopping; (2) the statement of
technical description was based merely on the boundaries set forth in the tax declaration; and
(3) due to a technicality, the sale between the vendor and applicant corporation cannot push
through and consequently the tax declaration is still in the name of vendor Ramon Aranda and
the land cannot be transferred and declared in the name of ICTSI-WI.6

The trial court admitted the Amended Application for Registration of Title,7 this time filed in the
name of Ramon Aranda, herein petitioner. Petitioner prayed that should the Land Registration
Act be not applicable to this case, he invokes the liberal provisions of Section 48 of
Commonwealth Act No. 141, as amended, having been in continuous possession of the subject
land in the concept of owner, publicly, openly and adversely for more than thirty (30) years
prior to the filing of the application.8

In support of the application, petitioner’s sister Merlita A. Enriquez testified that in 1965 her
father Anatalio Aranda donated the subject land to his brother (petitioner), as evidenced by
documents "Pagpapatunay ng Pagkakaloob ng Lupa" which she and her siblings executed on
June 7, 2000.9 She came to know the land for the first time in 1965 when she was eight years
old and his brother Ramon has been tilling the land since then, planting it with rice and corn.
His brother did not introduce any permanent improvement and also did not hire a tenant to
work on the land. As to the donation made by his father to his brother Ramon, she recalled
there was such a document but it was eaten by rats.10

Another witness, Luis Olan, testified that his father Lucio Olan originally owned the land and
that he had known about this property since he was six (6) years old as he used to accompany
his father in going to the land. His father farmed the land and planted it first, with rice, and later
corn. They had open, peaceful, continuous and adverse possession of the land in the concept of
owner until his father sold the land in 1946 to Anatalio Aranda. The children of Anatalio then
took over in tilling the land, planting it with rice and corn and adding a few coconut trees. He
does not have any copy of the document of sale because his mother gave it to Anatalio.11
On January 31, 2001, the trial court rendered its Decision12 granting the application and
ordering the issuance of a decree of registration in favor of petitioner.

The Republic appealed to the CA which reversed the trial court. The CA held that petitioner’s
evidence does not satisfactorily establish the character and duration of possession required by
law, as petitioner failed to prove specific acts showing the nature of the possession by his
predecessors-in-interest. The CA also did not give evidentiary weight to the documents
"Pagpapatunay ng Pagkakaloob ng Lupa" and "Pagpapatunay ng Bilihang Lampasan ng
Lupa",13 both prepared only in the year 2000 when the application for registration was filed, as
factual proof of ownership by the parties to the compromise agreement.

Petitioner’s motion for reconsideration was likewise denied by the CA.

Hence, this appeal by way of a petition for review on certiorari under Rule 45 alleging that the
decision of the CA is based on a misapprehension of facts with regard to compliance with the
required 30 years of open, exclusive, public and adverse possession in the concept of owner.
Petitioner argues that the deeds of confirmation of the 1946 sale in favor of Anatalio Aranda
and the 1965 donation to petitioner are competent proof of transfer of ownership
notwithstanding that these were executed only in the year 2000. He asserts that the
testimonies of witnesses Merlita Aranda-Enriquez and Luis Olan on the fact of loss and
destruction of copies of the aforesaid deeds constitute secondary evidence of the contents
thereof based on recollection of persons who are adversely affected. Such testimonial evidence
coupled with the deeds of confirmation warrants the application of the exception from the best
evidence rule. Petitioner thus contends that the CA had no legal basis to doubt the veracity of
the donation and sale of the subject property, and to conclude that the confirmation deeds can
be treated as compromise agreement considering that the transactions had been previously
completed and perfected by the parties.

We deny the petition.

The Property Registration Decree (P.D. No. 1529) provides for original registration of land in an
ordinary registration proceeding. Under Section 14(1)14 thereof, a petition may be granted upon
compliance with the following requisites: (a) that the property in question is alienable and
disposable land of the public domain; (b) that the applicants by themselves or through their
predecessors-in-interest have been in open, continuous, exclusive and notorious possession
and occupation; and (c) that such possession is under a bona fide claim of ownership since June
12, 1945 or earlier.

Under the Regalian doctrine which is embodied in Section 2, Article XII of the 1987
Constitution, all lands of the public domain belong to the State, which is the source of any
asserted right to ownership of land. All lands not appearing to be clearly within private
ownership are presumed to belong to the State. Unless public land is shown to have been
reclassified or alienated to a private person by the State, it remains part of the inalienable
public domain. To overcome this presumption, incontrovertible evidence must be established
that the land subject of the application is alienable or disposable.15

To prove that the land subject of an application for registration is alienable, an applicant must
establish the existence of a positive act of the government such as a presidential proclamation
or an executive order; an administrative action; investigation reports of Bureau of Lands
investigators; and a legislative act or a statute.16 The applicant may also secure a certification
from the Government that the lands applied for are alienable and disposable.17

In this case, the Assistant Regional Executive Director For Operations-Mainland Provinces of the
Department of Environment and Natural Resources (DENR), in compliance with the directive of
the trial court, issued a certification stating that the subject property "falls within the Alienable
and Disposable Land, Project No. 22-A of Lipa, Batangas per LC Map 718 certified on March 26,
1928."18 However, in the Certification19 dated January 14, 2000 issued by the DENR CENR Officer
of Batangas City, Pancrasio M. Alcantara, which was submitted in evidence by the petitioner, it
states that:

This is to certify that based on projection from the technical reference map of this Office, Lot
No. 3730, Ap-04-009883, situated at Barangay San Andres, Malvar, Batangas containing an area
of NINE THOUSAND ONE HUNDRED THREE AND FORTY SEVEN (9,103.47) SQUARE METERS and
shown at the reverse side hereof has been verified to be within the ALIENABLE AND
DISPOSABLE ZONE under Project No. 39, Land Classification Map No. 3601 certified on 22
December 1997 except for twenty meters strip of land along the creek bounding on the
northeastern portion which is to be maintained as streambank protection.

x x x x (Emphasis supplied.)

Petitioner has not explained the discrepancies in the dates of classification20 mentioned in the
foregoing government certifications. Consequently, the status of the land applied for as
alienable and disposable was not clearly established.

We also agree with the CA that petitioner’s evidence failed to show that he possessed the
property in the manner and for the duration required by law.

Petitioner presented tax declarations and the deeds of confirmation of the 1946 sale from the
original owner (Lucio Olan) to Anatalio Aranda and the 1965 donation made by the latter in
favor of petitioner. But as found by the CA, the history of the land shows that it was declared
for taxation purposes for the first time only in 1981. On the other hand, the Certification issued
by the Municipal Treasurer of Malvar stated that petitioner, who supposedly received the
property from his father in 1965, had been paying the corresponding taxes for said land "for
more than five consecutive years including the current year [1999]," or beginning 1994 only or
just three years before the filing of the application for original registration. While, as a rule, tax
declarations or realty tax payments of property are not conclusive evidence of ownership,
nevertheless they are good indicia of possession in the concept of owner, for no one in his right
mind would be paying taxes for a property that is not in his actual or constructive possession –
they constitute at least proof that the holder has a claim of title over the property.21

Petitioner likewise failed to prove the alleged possession of his predecessors-in-interest. His
witness Luis Olan testified that he had been visiting the land along with his father Lucio since he
was 6 years old (he was 70 years old at the time he testified), or as early as 1936. Yet, there was
no evidence that Lucio Olan declared the property for tax purposes at anytime before he sold it
to Anatalio Aranda. There is also no showing that Anatalio Aranda declared the property in his
name from the time he bought it from Lucio Olan. And even assuming that Lucio actually
planted rice and corn on the land, such statement is not sufficient to establish possession in the
concept of owner as contemplated by law. Mere casual cultivation of the land does not amount
to exclusive and notorious possession that would give rise to ownership.22 Specific acts of
dominion must be clearly shown by the applicant.

We have held that a person who seeks the registration of title to a piece of land on the basis of
possession by himself and his predecessors-in-interest must prove his claim by clear and
convincing evidence, i.e., he must prove his title and should not rely on the absence or
weakness of the evidence of the oppositors.23 Furthermore, the court has the bounden duty,
even in the absence of any opposition, to require the petitioner to show, by a preponderance of
evidence and by positive and absolute proof, so far as possible, that he is the owner in fee
simple of the lands which he is attempting to register.24 Since petitioner failed to meet the
quantum of proof required by law, the CA was correct in reversing the trial court and dismissing
his application for judicial confirmation of title.

WHEREFORE, the present petition for review on certiorari is DENIED. The Decision dated July
26, 2005 and Resolution dated April 11, 2006 of the Court of Appeals in CA-G.R. CV No. 73067
are AFFIRMED and UPHELD.

With costs against the petitioner.

SO ORDERED.
G.R. No. 179978               August 31, 2011

DCD CONSTRUCTION, INC., Petitioner,

vs.
REPUBLIC OF THE PHILIPPINES, Respondent.

DECISION

VILLARAMA, JR., J.:

Before us is a petition for review on certiorari under Rule 45 which seeks to set aside the
Decision1 dated June 25, 2007 and Resolution2 dated September 10, 2007 of the Court of
Appeals (CA) in CA-G.R. CV No. 77868. The CA reversed the Decision3 dated August 22, 2002 of
the Regional Trial Court (RTC) of Danao City, Branch 25 in LRC No. 147 (LRA Rec. No. N-73333).

On January 19, 2001, petitioner DCD Construction, Inc., through its President and CEO Danilo D.
Dira, Jr., filed a verified application for registration4 of a parcel of land situated in Taytay, Danao
City with an area of 4,493 square meters designated as Cadastral Lot No. 5331-part, CAD 681-D.
It was alleged that applicant which acquired the property by purchase, together with its
predecessors-in-interest, have been in continuous, open, adverse, public, uninterrupted,
exclusive and notorious possession and occupation of the property for more than thirty (30)
years. Thus, petitioner prayed to have its title judicially confirmed.

After compliance with the jurisdictional requirements, the trial court through its clerk of court
conducted hearings for the reception of petitioner’s evidence. Based on petitioner’s
documentary and testimonial evidence, it appears that although designated as Cadastral Lot
No. 5331-part, the approved technical description indicated the lot number as Lot 30186, CAD
681-D which is allegedly identical to Lot 21225-A, Csd-07-006621 consisting of 3,781 square
meters. Lot 5331-part (4,493 sq. ms.) was subdivided into two (Lots 21225-A and 21225-B) so
that the 712 square meters (Lot 21225-B) can be segregated as salvage zone pursuant to DENR
Administrative Order No. 97-05.5

Andrea Batucan Enriquez, one of the six (6) children of Vivencio and Paulina Batucan, testified
that her parents originally owned the subject land which was bought by her father after the
Second World War. Vivencio and Paulina died on April 2, 1967 and November 11, 1980,
respectively. Upon the death of their parents, she and her siblings inherited the land which they
possessed and declared for tax purposes. On December 22, 1993, they executed a Deed of
Extrajudicial Settlement With Absolute Sale whereby they sold the property to Danilo C. Dira,
Sr., petitioner’s father.6

Danilo D. Dira, Jr. testified that the subject land declared under Tax Declaration (TD) No.
0400583 in the name of Danilo C. Dira, Sr. was among those properties which they inherited
from his father, as shown in the Extrajudicial Settlement of Estate With Special Power of
Attorney dated May 28, 1996 and Supplemental Extrajudicial Settlement of Estate dated
February 27, 1997. On June 26, 2000, his mother, brothers and sisters executed a Deed of
Absolute Sale whereby the subject land was sold to petitioner. Thereafter, petitioner declared
the property for tax purposes and also paid realty taxes. His father had possessed the land
beginning 1992 or 1994, and presently petitioner is in possession thereof. Petitioner also
assumed the ₱3.8 million mortgage obligation with Land Bank of the Philippines as evidenced
by the Deed of Undertaking/Agreement dated March 30, 2000.7

On August 22, 2002, the trial court rendered its decision, the dispositive portion of which reads:
WHEREFORE, from all of the foregoing undisputed facts, this Court finds and so holds that the
applicant DCD CONSTRUCTION INC., has a registerable title to Lot No. 5331-A with an area of
3,781 square meters as part of Lot 5331, CAD-681-D, under Csd-072223-003891 which is
identical to Lot No. 21225-A as part of Lot No. 21225, CAD-681-D, under Csd-07-006621, and is
covered by Tax Declaration No. 0-0400469 situated in Taytay, Danao City, hereby confirming
the same and ordering its registration under Act 496, as amended by Presidential Decree No.
1529, strictly in line with the Technical Description of Lot 30186, Danao, CAD-681-D, identical to
Lot 21225-A, Csd-07-006621, upon finality of this decision.

SO ORDERED.8

On appeal by respondent Republic of the Philippines, the CA reversed the trial court. The CA
ruled that the evidence failed to show that the land applied for was alienable and disposable
considering that only a notation in the survey plan was presented to show the status of the
property. The CA also found that petitioner’s evidence was insufficient to establish the requisite
possession as the land was bought by Vivencio Batucan only after the Second World War or in
1946, further noting that the earliest tax declaration submitted was issued only in 1988. As to
the testimony of witness Andrea Batucan Enriquez, the CA held that it did not prove open,
continuous, exclusive and notorious possession under a bona fide claim of ownership since June
12, 1945.

Its motion for reconsideration having been denied, petitioner is now before this Court raising
the following arguments:

IN RULING THAT PETITIONER FAILED TO PROVE THAT THE LAND APPLIED FOR IS ALIENABLE AND
DISPOSABLE, THE COURT OF APPEALS COMMITTED A GROSS MISAPPREHENSION OF FACTS,
WHICH WARRANTS A REVIEW BY THE HONORABLE SUPREME COURT, IN ACCORDANCE WITH
THE RULING IN MEGAWORLD AND HOLDINGS, INC. VS. HON. JUDGE BENEDICTO G. COBARDE,
ET AL. AND SUPERLINES TRANSPORTATION COMPANY, INC. VS. PHILIPPINE NATIONAL
CONSTRUCTION COMPANY, ET AL.

(A) THE BUREAU OF LANDS VERIFIED AND CERTIFIED THE SUBJECT LOT AS "ALIENABLE
AND DISPOSABLE".

(B) THE DENR CERTIFIED THAT ITS OWN LAND CLASSIFICATION MAP SHOWS THAT
SUBJECT LOT IS "WITHIN THE ALIENABLE AND DISPOSABLE AREA".

II

THE COURT OF APPEALS DECIDED THE CASE IN A WAY NOT IN ACCORD WITH LAW AND
SETTLED DECISION OF THE HONORABLE SUPREME COURT, WHEN IT RULED THAT PETITIONER
FAILED TO PROVE THAT THE REQUIREMENT OF OPEN, CONTINUOUS, EXCLUSIVE AND
NOTORIOUS POSSESSION AND OCCUPATION OF THE SUBJECT LAND FOR THE PERIOD REQUIRED
BY LAW HAS BEEN COMPLIED WITH, DESPITE THE FACT THAT:

(A) WITNESS ANDREA ENRIQUEZ’S TESTIMONY SHOWS THAT PETITIONER’S

PREDECESSORS-IN-INTEREST ACQUIRED AND POSSESSED SUBJECT LOT IN 1942.

(B) IN REPUBLIC OF THE PHILS. VS. SPOUSES ENRIQUEZ, THE SUPREME COURT
CATEGORICALLY RULED THAT POSSESSION FOR 34 YEARS IS SUFFICIENT COMPLIANCE
WITH THE LEGAL REQUIREMENT FOR REGISTRATION.9
We deny the petition.

In Megaworld Properties and Holdings, Inc. v. Cobarde,10 the Court held that as an exception to
the binding effect of the trial court’s factual findings which were affirmed by the CA, a review of
such factual findings may be made when the judgment of the CA is premised on a
misapprehension of facts or a failure to consider certain relevant facts that would lead to a
completely different conclusion. In the same vein, we declared in Superlines Transportation
Company, Inc. v. Philippine National Construction Company,11 that while it is settled that this
Court is not a trier of facts and does not, as a rule, undertake a re-examination of the evidence
presented by the parties, a number of exceptions have nevertheless been recognized by the
Court, such as when the judgment is based on a misapprehension of facts, and when the CA
manifestly overlooked certain relevant facts not disputed by the parties, which, if properly
considered, would justify a different conclusion. Petitioner invokes the foregoing exceptions
urging this Court to pass upon anew the CA’s findings regarding the status of the subject land
and compliance with the required character and duration of possession by an applicant for
judicial confirmation of title.

After a thorough review, we find no reversible error committed by the CA in ruling that
petitioner failed to establish a registrable title on the subject land.

Applicants for confirmation of imperfect title must prove the following: (a) that the land forms
part of the disposable and alienable agricultural lands of the public domain and (b) that they
have been in open, continuous, exclusive and notorious possession and occupation of the same
under a bona fide claim of ownership either since time immemorial or since June 12, 1945.12

Under Section 2, Article XII of the Constitution, which embodies the Regalian doctrine, all lands
of the public domain belong to the State – the source of any asserted right to ownership of
land.13 All lands not appearing to be clearly of private dominion presumptively belong to the
State.14 Accordingly, public lands not shown to have been reclassified or released as alienable
and disposable agricultural land or alienated to a private person by the State remain part of the
inalienable public domain.15 Incontrovertible evidence must be presented to establish that the
land subject of the application is alienable or disposable.16

In support of its contention that Lot 5331-A, CAD-681-D under Csd-072223-003891 is alienable
and disposable, petitioner presented the following notation appearing in the survey plan which
reads:

CONFORMED PER LC MAP NOTATION

LC Map No. 1321, Project No. 26-A certified on June 07, 1938, verified to be within Alienable &
Disposable Area

(SGD.) CYNTHIA L. IBAÑEZ

Chief, Map Projection Section17

Petitioner assailed the CA in refusing to give weight to the above certification, stressing that the
DENR-Lands Management Services (LMS) approved the survey plan in its entirety, "without any
reservation as to the ‘inaccuracy’ or ‘incorrectness’ of Cynthia L. Ibañez’[s] annotation found
therein."18 Petitioner relies on the statement of Rafaela A. Belleza, Chief, Surveys Assistance
Section, DENR-LMS, who testified (direct examination) as follows:

Atty. Paylado continues:

Q Before this is given to the surveyor, did these two (2) documents pass your office?
A Yes, sir.

Q When you said it passed your office, it passed your office as you have to verify all the entries
in these documents whether they are correct?

A Yes, sir.

Q Were you able to have a personal look and verification on these Exhibits "P" and "Q" and will
you confirm that all the entries here are true and correct?

A Yes, sir.

Q Based on the records in your office?

A As a whole.

x x x x19 (Emphasis supplied)

Petitioner contends that the foregoing declaration of Belleza conclusively proves that the LMS
itself had approved and adopted the notation made by Ibañez on the survey plan as its own.
Such approval amounts to a positive act of the government indicating that the land applied for
is indeed alienable and disposable.

We do not agree.

First, it must be clarified that the survey plan (Exhibit "Q") was not offered by petitioner as
evidence of the land’s classification as alienable and disposable. The formal offer of exhibits
stated that said document and entries therein were offered for the purpose of proving the
identity of the land, its metes and bounds, boundaries and adjacent lots; and that the survey
has passed and was approved by the DENR-LMS. And while it was also stated therein that the
evidence is also being offered as part of the testimony of Belleza, nowhere in her testimony do
we find a confirmation of the notation concerning the land’s classification as correct. In fact,
said witness denied having any participation in the actual approval of the survey plan. This can
be gleaned from her testimony on cross-examination which immediately followed the afore-
quoted portion of her testimony that the survey plan "passed" their office, thus:

CROSS-EXAMINATION: (FISCAL KYAMKO TO THE WITNESS)

Q Madam Witness, you said that Exhibits "P" and "Q" passed before your office, now, the
question is, could you possibly inform the Court whether you have some sort of an initial on the
two (2) documents or the two (2) exhibits?

A Actually, sir, I am not a part of this approval because this will undergo in the isolated survey
and my section is I am the Chief, Surveys Assistant Section, which concerns of the LRA, issuance
of Certified Sketch Plans, issuance of certified Technical Descriptions of Untitled Lots to correct
the titles for judicial purpose.

Q In other words, since Exhibits "P" and "Q" are originals, they did not actually pass your office,
is it not?

A Our office, yes, but not in my section, sir.

Q So it passed your office but it did not pass your section?

A Yes, sir.

Q In other words, you had [no] hand in re-naming or renumbering of the subject lots, is it not?

A It is in the Isolated Survey Section, sir.

Q In other words, you cannot possibly testify with authority as to the manner by which the
numbering of the subject lot was renumbered, is it not?

A Yes, sir.

x x x x20 (Emphasis supplied.)

Clearly, the testimony of the officer from DENR-LMS, Rafaela Belleza, did not at all attest to the
veracity of the notation made by Ibañez on the survey plan regarding the status of the subject
land. Hence, no error was committed by the CA in finding that the certification made by DENR-
LMS pertained only to the technical correctness of the survey plotted in the survey plan and not
to the nature and character of the property surveyed.

In Republic v. Court of Appeals,21 this Court noted that to prove that the land subject of an
application for registration is alienable, an applicant must establish the existence of a positive
act of the government such as a presidential proclamation or an executive order; and
administrative action; investigation reports of Bureau of Lands investigators; and a legislative
act or a statute.22 A certification issued by a Community Environment and Natural Resources
Officer in the Department of Environment and Natural Resources (DENR) stating that the lots
involved were found to be within the alienable and disposable area was deemed sufficient to
show the real character of the land.23

As to notations appearing in the subdivision plan of the lot stating that it is within the alienable
and disposable area, the consistent holding is that these do not constitute proof required by
the law.24 In Menguito v. Republic,25 the Court declared:

x x x petitioners cite a surveyor-geodetic engineer’s notation x x x indicating that the survey was
inside alienable and disposable land. Such notation does not constitute a positive government
act validly changing the classification of the land in question. Verily, a mere surveyor has no
authority to reclassify lands of the public domain. By relying solely on the said surveyor’s
assertion, petitioners have not sufficiently proven that the land in question has been declared
alienable.26

The above ruling equally applies in this case where the notation on the survey plan is
supposedly made by the Chief of Map Projection Unit of the DENR-LMS. Such certification
coming from an officer of the DENR-LMS is still insufficient to establish the classification of the
property surveyed. It is not shown that the notation was the result of an investigation
specifically conducted by the DENR-LMS to verify the status of the subject land. The certifying
officer, Cynthia L. Ibañez, did not testify on her findings regarding the classification of the lot as
reflected in her notation on the survey plan. As to the testimonial evidence presented by the
petitioner, the CA noted that Engr. Norvic Abella who prepared the survey plan had no
authority to reclassify lands of the public domain, while Rafaela A. Belleza who is the Chief of
the Surveys Assistance Section, admitted on cross-examination that she had no part in the
approval of the subdivision plan, and hence incompetent to testify as to the correctness of
Ibañez’s notation. More important, petitioner failed to establish the authority of Cynthia L.
Ibañez to issue certifications on land classification status for purpose of land registration
proceedings.
Our pronouncement in Republic v. T.A.N. Properties, Inc.27 is instructive:

In this case, respondent submitted two certifications issued by the Department of Environment
and Natural Resources (DENR). The 3 June 1997 Certification by the Community Environment
and Natural Resources Offices (CENRO), Batangas City, certified that "lot 10705, Cad-424, Sto.
Tomas Cadastre situated at Barangay San Bartolome, Sto. Tomas, Batangas with an area of
596,116 square meters falls within the ALIENABLE AND DISPOSABLE ZONE under Project No. 30,
Land Classification Map No. 582 certified [on] 31 December 1925." The second certification in
the form of a memorandum to the trial court, which was issued by the Regional Technical
Director, Forest Management Services of the DENR (FMS-DENR), stated "that the subject area
falls within an alienable and disposable land, Project No. 30 of Sto. Tomas, Batangas certified on
Dec. 31, 1925 per LC No. 582."

The certifications are not sufficient. DENR Administrative Order (DAO) No. 20, dated 30 May
1988, delineated the functions and authorities of the offices within the DENR. Under DAO No.
20, series of 1988, the CENRO issues certificates of land classification status for areas below 50
hectares. The Provincial Environment and Natural Resources Offices (PENRO) issues certificate
of land classification status for lands covering over 50 hectares. DAO No. 38, dated 19 April
1990, amended DAO No. 20, series of 1988. DAO No. 38, series of 1990 retained the authority
of the CENRO to issue certificates of land classification status for areas below 50 hectares, as
well as the authority of the PENRO to issue certificates of land classification status for lands
covering over 50 hectares. In this case, respondent applied for registration of Lot 10705-B. The
area covered by Lot 10705-B is over 50 hectares (564,007 square meters). The CENRO
certificate covered the entire Lot 10705 with an area of 596,116 square meters which, as per
DAO No. 38, series of 1990, is beyond the authority of the CENRO to certify as alienable and
disposable.

The Regional Technical Director, FMS-DENR, has no authority under DAO Nos. 20 and 38 to
issue certificates of land classification. x x x

xxxx

Hence, the certification issued by the Regional Technical Director, FMS-DENR, in the form of a
memorandum to the trial court, has no probative value.

Further, it is not enough for the PENRO or CENRO to certify that a land is alienable and
disposable. The applicant for land registration must prove that the DENR Secretary had
approved the land classification and released the land of the public domain as alienable and
disposable, and that the land subject of the application for registration falls within the
approved area per verification through survey by the PENRO or CENRO. In addition, the
applicant for land registration must present a copy of the original classification approved by the
DENR Secretary and certified as a true copy by the legal custodian of the official records. These
facts must be established to prove that the land is alienable and disposable. Respondent failed
to do so because the certifications presented by respondent do not, by themselves, prove that
the land is alienable and disposable.

Only Torres, respondent’s Operations Manager, identified the certifications submitted by

respondent. The government officials who issued the certifications were not presented before
the trial court to testify on their contents. The trial court should not have accepted the contents
of the certifications as proof of the facts stated therein. Even if the certifications are presumed
duly issued and admissible in evidence, they have no probative value in establishing that the
land is alienable and disposable.

xxxx
Applying Section 24 of Rule 132, the record of public documents referred to in Section 19(a),
when admissible for any purpose, may be evidenced by an official publication thereof or by a
copy attested by the officer having legal custody of the record, or by his deputy x x x. The
CENRO is not the official repository or legal custodian of the issuances of the DENR Secretary
declaring public lands as alienable and disposable. The CENRO should have attached an official
publication of the DENR Secretary’s issuance declaring the land alienable and disposable.

xxxx

The CENRO and Regional Technical Director, FMS-DENR, certifications do not fall within the
class of public documents contemplated in the first sentence of Section 23 of Rule 132. The
certifications do not reflect "entries in public records made in the performance of a duty by a
public officer," such as entries made by the Civil Registrar in the books of registries, or by a ship
captain in the ship’s logbook. The certifications are not the certified copies or authenticated
reproductions of original official records in the legal custody of a government office. The
certifications are not even records of public documents. The certifications are conclusions
unsupported by adequate proof, and thus have no probative value. Certainly, the certifications
cannot be considered prima facie evidence of the facts stated therein.

The CENRO and Regional Technical Director, FMS-DENR, certifications do not prove that Lot
10705-B falls within the alienable and disposable land as proclaimed by the DENR Secretary.
Such government certifications do not, by their mere issuance, prove the facts stated therein.
Such government certifications may fall under the class of documents contemplated in the
second sentence of Section 23 of Rule 132. As such, the certifications are prima facie evidence
of their due execution and date of issuance but they do not constitute prima facie evidence of
the facts stated therein.

x x x x28 (Emphasis supplied.)

In the light of the foregoing, it is clear that the notation inserted in the survey plan (Exhibit "Q")
hardly satisfies the incontrovertible proof required by law on the classification of land applied
for registration.

The CA likewise correctly held that there was no compliance with the required possession
under a bona fide claim of ownership since June 12, 1945.

The phrase "adverse, continuous, open, public, peaceful and in concept of owner," are mere
conclusions of law requiring evidentiary support and substantiation. The burden of proof is on
the applicant to prove by clear, positive and convincing evidence that the alleged possession
was of the nature and duration required by law.29 The bare statement of petitioner’s witness,
Andrea Batucan Enriquez, that her family had been in possession of the subject land from the
time her father bought it after the Second World War does not suffice.

Moreover, the tax declaration in the name of petitioner’s father, TD No. 0400583 was issued
only in 1994, while TD No. 0-0400469 in its own name was issued in 2000. Petitioner’s
predecessors-in-interest were able to submit a tax declaration only for the year 1988, which
was long after both spouses Vivencio and Paulina Batucan have died. Although tax declarations
or realty tax payments of property are not conclusive evidence of ownership, nevertheless, they
are good indicia of possession in the concept of owner.30 And while Andrea Batucan Enriquez
claimed knowledge of their family’s possession since she was just ten (10) years old – although
she said she was born in 1932 -- there was no clear and convincing evidence of such open,
continuous, exclusive and notorious possession under a bona fide claim of ownership. She
never mentioned any act of occupation, development, cultivation or maintenance over the
property throughout the alleged length of possession.31 There was no account of the
circumstances regarding their father’s acquisition of the land, whether their father introduced
any improvements or farmed the land, and if they established residence or built any house
thereon.

We have held that the bare claim of the applicant that the land applied for had been in the
possession of her predecessor-in-interest for 30 years does not constitute the "well-nigh
inconvertible" and "conclusive" evidence required in land registration.32 1avvphi1

As the Court declared in Republic v. Alconaba:33

The law speaks of possession and occupation. Since these words are separated by the
conjunction and, the clear intention of the law is not to make one synonymous with the other.
Possession is broader than occupation because it includes constructive possession. When,
therefore, the law adds the word occupation, it seeks to delimit the all-encompassing effect of
constructive possession. Taken together with the words open, continuous, exclusive and
notorious, the word occupation serves to highlight the fact that for an applicant to qualify, his
possession must not be a mere fiction. Actual possession of a land consists in
the manifestation of acts of dominion over it of such a nature as a party would naturally
exercise over his own property.34 (Emphasis supplied.)

WHEREFORE, the petition for review on certiorari is DENIED. The Decision dated June 25, 2007
and Resolution dated September 10, 2007 of the Court of Appeals in CA-G.R. CV No. 77868 are
AFFIRMED.

With costs against the petitioner.

SO ORDERED.
G.R. No. 171726               February 23, 2011

VICENTE YU CHANG AND SOLEDAD YU CHANG, Petitioners,

vs.
REPUBLIC OF THE PHILIPPINES, Respondent.

DECISION

VILLARAMA, JR. J.:

This petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure, as
amended, assails the Decision1 dated August 26, 2005 and the Resolution2 dated February 13,
2006 of the Court of Appeals (CA) in CA-G.R. CV No. 67430. The CA reversed and set aside the
April 28, 2000 Decision3 of the Regional Trial Court of Pili, Camarines Sur, Branch 31, in LRC No.
P-115, LRA Rec. No. N-68012, which granted petitioners’ application for registration of title over
two parcels of land, denominated as Lots 2199 and 2200 of Cad. 291, Pili Cadastre.

The antecedent facts, as culled from the records, are as follows:

On March 22, 1949, petitioners’ father, L. Yu Chang4 and the Municipality of Pili, Camarines Sur,
through its then Mayor, Justo Casuncad, executed an Agreement to Exchange Real
Property5 wherein the former assigned and transferred to the Municipality of Pili his 400-
square-meter residential lot in Barrio San Roque, Pili, Camarines Sur, in exchange for a 400-
square-meter piece of land located in San Juan, Pili. Thereafter, L. Yu Chang and his family took
possession of the property thus obtained and erected a residential house and a gasoline station
thereon. He also declared the property in his name under Tax Declaration No. 017946 and
017957 and paid the real property taxes thereon as evidenced by twenty-eight (28) official
receipts from February 21, 1951 up to March 10, 1976. When L. Yu Chang died on September
30, 1976, his wife, Donata Sta. Ana and his seven children inherited the property and succeeded
in the possession of the property.

On March 1, 1978, a Deed of Transfer and Renunciation8 of their rights over the property was
executed by L. Yu Chang's five children, Rafaela, Catalina, Flaviana, Esperanza, and Antonio, in
favor of herein petitioners. After the transfer, petitioners had the subject property surveyed
and subdivided into two lots, Lot 21999 and Lot 220010 of Plan SWO-05-000888, Pili Cadastre.
Petitioners also declared the lots in their names for taxation purposes as shown in Tax
Declaration No. 0263311 and paid the real property taxes thereon.

On February 21, 1997, petitioner Soledad Yu Chang, for herself and in representation of her
brother and co-petitioner, Vicente Yu Chang, filed a petition12 for registration of title over the
aforementioned lots under the Property Registration Decree. In their petition, they declared
that they are the co-owners of the subject lots; that they and their predecessors-in-interest
"have been in actual, physical, material, exclusive, open, occupation and possession of the
above described parcels of land for more than 100 years"13; and that allegedly, they have
continuously, peacefully, and adversely possessed the property in the concept of owners.
Hence, they are entitled to confirmation of ownership and issuance and registration of title in
their names.

In support of their application, petitioners submitted the following documents, to wit:

1. Agreement to Exchange Real Property;

2. Deed of Transfer and Renunciation;

 3. Approved Plan of Lot 2199 and Lot 2200, Cad. 291, Pili Cadastre;

4. Approved Technical Description of Lot 2199;

5. Approved Technical Description of Lot 2200;

6. Field Appraisal and Assessment Sheet (FAAS) A.R.P. No. 026-044 for Lot 2199 Cad.
291; and

7. Field Appraisal and Assessment Sheet (FAAS) A.R.P. No. 026-043 for Lot 2200 Cad. 291
Pili Cadastre.

The Republic, through the Office of the Solicitor General (OSG), filed an Opposition14 to the
application, alleging, inter alia, that: (1) neither the applicants nor their predecessors-in-interest
have been in open, continuous, exclusive and notorious possession of the land since June 12,
1945 or prior thereto; (2) the muniments of title, tax declarations and tax receipts do not
constitute competent and sufficient evidence of a bona fide acquisition of the land; and (3) that
the parcels of land applied for are portions of the public domain and are not subject to private
appropriation.

No other parties filed their opposition. Thus, on December 14, 1998, an Order of General
Default15 was issued by the trial court.

After hearing, the trial court rendered a Decision granting petitioners' application. The fallo of
the trial court’s decision reads:

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

1. Confirming the imperfect title of the herein applicants Vicente Yu Chang and Soledad
Yu Chang over the two (2) parcels of land described in paragraph two (2) page 2 of the
Petition, particularly Lot 2199, Plans S"0-05-000888, Cad. 291, Pili Cadastre and Lot
2200, Plan SWO-05-000888, Cad. 291, Pili Cadastre; both Filipino citizens, residents of
#14 Joaquin St., Corinthian Garden, Quezon City and San Juan, Pili, Camarines Sur
respectively;

2. Ordering the dismissal of the application in the Cadastral proceeding with respect to
Lots 2199 and 2200, Cad. 291, Pili Cadastre under CAD Case No. N-9;

3. After finality of this decision, let the corresponding decree of registration be issued by
the Administrator, Land Registration Authority to the herein applicants above-
mentioned.

SO ORDERED.16

The Republic appealed the decision to the CA on the ground that the court a quo erred in
granting petitioners’ application for registration of Lots 2199 and 2200 despite their failure to
show compliance with the requirements of the law. In addition, the Republic asserted that the
land was classified as public forest land; hence, it could not be subject to appropriation and
alienation.

As aforesaid, the CA reversed the trial court's decision on August 26, 2005, and dismissed
petitioners’ application for land registration. The CA considered the petition to be governed by
Section 48(b) of Commonwealth Act (C.A.) No. 141 or the Public Land Act, as amended, and
held that petitioners were not able to present incontrovertible evidence that the parcels of land
sought to be registered are alienable and disposable.17 The CA relied on the testimony of
Lamberto Orcena, Land Management Officer III of CENRO, Iriga City, who testified that prior to
October 30, 1986, the entire area encompassing the right side of the Naga-Legaspi Highway,
including the subject properties, was classified as forest land. According to the CA, even if the
area within which the subject properties are located is now being used for residential and
commercial purposes, such fact will not convert the subject parcels of land into agricultural
land.18 The CA stressed that there must be a positive act from the government declassifying the
land as forest land before it could be deemed alienable or disposable land for agricultural or
other purposes.19

Additionally, the CA noted that the lands sought to be registered were declared disposable
public land only on October 30, 1986. Thus, it was only from that time that the period of open,
continuous and notorious possession commenced to toll against the State.

Aggrieved, petitioners are now before this Court via the present appeal, raising the sole issue of
whether the appellate court erred in dismissing their application for registration of title on the
ground that they failed to prove compliance with the requirements of Section 48(b) of
the Public Land Act, as amended.

Petitioners insist that the subject properties could no longer be considered and classified as
forest land since there are buildings, residential houses and even government structures
existing and standing on the land.20 In their Memorandum,21 petitioners point out that the
original owner and possessor of the subject land was the Municipal Government of Pili which
was established in 1930. The land was originally part of the municipal ground adjacent to the
Municipal Building located at the right side of the Naga-Legaspi National Highway.22 From 1949,
when L. Yu Chang acquired the property through barter and up to the filing of petitioners’
application in 1997, petitioners and their predecessors-in-interest had been in actual physical
and material possession of the land in the concept of an owner, notorious and known to the
public and adverse to the whole world.

The Republic, through the OSG, for its part, maintains that petitioners failed to prove their
open, continuous, exclusive and notorious possession of the subject lots for the period of time
required by law. The OSG also submits that the subject lands were declared as alienable and
disposable only on October 30, 1986.

We deny the petition for lack of merit.

Section 48(b) of the Public Land Act, as amended by P.D. 1073, under which petitioners’
application was filed, provides:

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 Regional Trial Court of the province or city where the
land is located for confirmation of their claims and the issuance of a certificate of title therefor,
under the Property Registration Decree, to wit:

xxxx

(b) Those who by themselves or through their predecessors[-]in[-]interest have been in the
open, continuous, exclusive, and notorious possession and occupation of alienable and
disposable agricultural lands of the public domain, under a bona fide claim of acquisition or
ownership, since June 12, 1945, 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.
x x x x23

Under this provision, in order that petitioners’ application for registration of title may be
granted, they must first establish the following: (1) that the subject land forms part of the
disposable and alienable lands of the public domain and (2) that they have been in open,
continuous, exclusive and notorious possession and occupation of the same under a bona
fide claim of ownership, since June 12, 1945, or earlier.24 Applicants must overcome the
presumption that the land they are applying for is part of the public domain and that they have
an interest therein sufficient to warrant registration in their names arising from an imperfect
title.25

In the instant case, petitioners did not adduce any evidence to the effect that the lots subject of
their application are alienable and disposable land of the public domain. Instead, petitioners
contend that the subject properties could no longer be considered and classified as forest land
since there are building structures, residential houses and even government buildings existing
and standing on the area. This, however, is hardly the proof required under the law. As clarified
by this Court in Heirs of Jose Amunategui v. Director of Forestry,26 a forested area classified as
forest land of the public domain does not lose such classification simply because loggers or
settlers may have stripped it of its forest cover. Parcels of land classified as forest land may
actually be covered with grass or planted with crops by kaingin cultivators or other farmers.
"Forest lands" do not have to be on mountains or in out-of-the-way places. The classification of
land is descriptive of its legal nature or status and does not have to be descriptive of what the
land actually looks like.27 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, the rules on confirmation of imperfect title do not apply.28 As aptly held
by the appellate court:

[T]he fact that the area within which the subject parcels of land are located is being used for
residential and commercial purposes does not serve to convert the subject parcels of land into
agricultural land. It is fundamental that before any land may be declassified from the forest
group and converted into alienable or disposable land for agricultural or other purposes, there
must be a positive act from the government. A person cannot enter into forest land and by the
simple act of cultivating a portion of that land, earn credits towards an eventual confirmation of
imperfect title. The Government must first declare the forest land to be alienable and
disposable agricultural land before the year of entry, cultivation and exclusive and adverse
possession can be counted for purposes of an imperfect title.291avvphil

Moreover, during the hearing of petitioners' application, the Republic presented a Report30 of
Rene Gomez, Land Investigator/Inspector, CENRO No. V-2-3, which disclosed that the lots
applied for by the petitioners were classified as alienable and disposable under Project No. 9-E,
L.C. Map No. 3393 and released and certified as such only on October 30, 1986. A
Compliance31 dated January 19, 1999 submitted by OIC-CENR Officer Joaquin Ed A. Guerrero to
the trial court also stated that Lots. 2199 and 2200 of Cad. 291 were "verified to be within
Alienable and Disposable area under Project No. 9-E, L.C. Map No. 3393, as certified on October
30, 1986 by the then Bureau of Forestry". Evidently, therefore, the subject lots were declared
alienable and disposable only on October 30, 1986. Prior to that period, the same could not be
the subject of confirmation of imperfect title. Petitioners’ possession of the subject forest land
prior to the date when it was classified as alienable and disposable is inconsequential and
should be excluded from the computation of the period of possession.32 To reiterate, it is well
settled that possession of forest land, prior to its classification as alienable and disposable land,
is ineffective since such possession may not be considered as possession in the concept of
owner.33 The adverse possession which can be the basis of a grant of title in confirmation of
imperfect title cases cannot commence until after forest land has been declared and alienable.34
Much as this Court wants to conform to the State’s policy of encouraging and promoting the
distribution of alienable public lands to spur economic growth and remain true to the ideal of
social justice, our hands are tied by the law’s stringent safeguards against registering imperfect
titles.35 Here, petitioners failed to present "well-nigh incontrovertible" evidence necessary to
prove their compliance of the requirements under Section 48(b) of C.A. No. 141. Hence, the
Court of Appeals did not err in dismissing their application for confirmation and registration of
title.

WHEREFORE, the petition is hereby DENIED. The Decision dated August 26, 2005 and the
Resolution dated February 13, 2006 of the Court of Appeals in CA-G.R. CV No. 67430 are
hereby AFFIRMED.

With costs against the petitioners.

SO ORDERED.
G.R. No. 156318               September 5, 2011

SPOUSES ANSELMO1 and PRISCILLA BULAONG, Petitioners,

vs.
VERONICA GONZALES, Respondent.

DECISION

BRION, J.:

Petitioners Anselmo Bulaong and Priscilla Bulaong – collectively referred to as the Bulaongs –
seek, through their petition for review on certiorari, the reversal of the decision2 of the Court of
Appeals (CA) dated July 31, 2002 in CA-G.R. SP No. 55423 and the subsequent resolution of
November 27, 20023 reiterating this decision. These CA rulings reversed and set aside the
decision4 of the Regional Trial Court (RTC) of Malolos, Bulacan, Branch 12, that ordered the
cancellation of Transfer Certificate of Title (TCT) No. T-62002 and TCT No. T-62003.

FACTUAL ANTECEDENTS

This case traces its roots to the conflicting claims of two sets of parties over two parcels of land.
The first parcel of land, with an area of 237 square meters and covered by TCT No. T-
249639,5 was originally registered in the name of Fortunato E. Limpo, married to Bertha
Limpo.6 The other parcel of land, with an area of 86 square meters and covered by TCT No. T-
249641,7 was originally registered in the names of Pacifica E. Limpo, married to Nicanor C.
Sincionco, and Fortunato E. Limpo, married to Bertha Limpo.8

These parcels of land were mortgaged by the daughter of Fortunato and Bertha Limpo, Regina
Christi Limpo, upon the authority of her father,9 to the Bulaongs, to secure a loan in the amount
of ₱4,300,000.00. The mortgage was evidenced by a Deed of Mortgage dated January 13,
1993.10

The Bulaongs alleged that before they executed the mortgage, Regina gave them the owner’s
duplicates of title of the two properties. In early January 1993 (the exact date is unknown but
prior to the execution of the mortgage), Anselmo Bulaong, together with his counsel, Atty.
Roberto Dionisio, allegedly went to the Office of the Register of Deeds of Bulacan to check the
titles of the properties to be mortgaged. According to the Bulaongs, the Register of Deeds, Atty.
Elenita Corpus, assured them that TCT Nos. T-249639 and T-249641 were completely clear of
any liens or encumbrances from any party. Relying on this assurance, Anselmo Bulaong agreed
to the execution of the mortgage over the two properties.11

After the execution of the mortgage, the Bulaongs once again went to the Office of the Register
of Deeds of Bulacan to register and annotate the mortgage on the titles. They learned then that
the Register of Deed’s copies of the two titles were among the records that were burned in the
fire that destroyed the entire office of the Register of Deeds of Bulacan on March 7, 1987. Atty.
Elenita Corpus convinced them to cause the reconstitution of the originals of the titles, and
further assured them that the mortgage over the properties would be protected since a copy of
the Deed of Mortgage had already been given to her office for annotation.12

On February 4, 1993, the newly reconstituted titles were issued – TCT No. RT-29488 replaced
TCT No. T-249639, and TCT No. RT-22489 replaced TCT No. T-249641, still in the names of
Fortunato Limpo, and of Pacifica Limpo and Fortunato Limpo, respectively.

Thereafter, on February 24, 1993, new titles were again issued upon the extrajudicial
settlement of the estate of Regina’s parents. Thus, TCT No. RT-29488 was cancelled and TCT No.
T-30395 was issued in its place, with Regina replacing her parents as the registered owner;
similarly, TCT No. RT-22489 was cancelled and TCT No. T-30396 was issued in the names of
Pacifica Limpo and Regina Limpo, as her parents’ heir.13

To the Bulaongs’ astonishment, the new titles in Regina’s name now contained the following
entries:

TCT No. T-30395

Entry No. 5306; Kind: Condition: The property herein described is subject to the prov. of sec. 4,
rule 74 of the rules of court. date of instrument: 1-13-93; date of inscription: 2-24-93 at 10:42
a.m.

(SGD.) ELENITA E. CORPUS

Register of Deeds

Entry No. 5484; Kind: Mortgage: Exec. In favor of: Sps. Anselmo Bulaong & Priscilla Bulaong;
Condition: Covering the parcel of land herein described, for the sum of P4,300,000.00 subject to
all the conditions stipulated in the deed of mortgage on file in this office. Doc. No. 428, Page 86,
Book XXX, S. of 1993, N.P. – Roberto Dionisio of Mal. Bul. Date of Instrument: 1-13-93; date of
inscription – 3-1-93 at 9:20 a.m.

(SGD.) ELENITA E. CORPUS

Register of Deeds

/5306

(NOTE: Proceed to Entry no. 5484)

Entry No. 7808: Kind: NOTICE OF LEVY ON EXECUTION: Conditions: Notice is hereby given that
by virtue of the Writ of Execution, issued in Crim. Cases Nos. 9638 to 9646-M, entitled "People
of the Philippines v. Reggie Christi Schaetchen Limpo and Maria Lourdes (Bong) Diaz y Gamir, et
al., Accused" by the Regional Trial Court, Third Jud. Region, Branch 12, Malolos, Bulacan, under
date of Dec. 29, 1992, and at the instance of the private complainant Veronica R. Gonzales, thru
counsel, levy on execution is hereby made upon all the rights, shares, interests and
participations of accused Reggie Christi Schaetchen14 over the real properties described in T-
249641 and T-249639, by virtue of Deeds of Absolute Sale executed by former registered
owners in favor of Reggie Christi Schaetchen dated November 5, 1991, together with all the
improvements existing thereon, was levied on execution preparatory to the sale of the same
without prejudice to third persons having better right thereof and to any valid lien and
encumbrances. Date of instrument – Jan. 4, 1993; Date of inscription – Jan. 4, 1993 at 11:50
a.m.

(SGD.) ELENITA E. CORPUS

Register of Deeds/negm15 (emphasis ours)

TCT No. T-30396

Entry No. 5306; Kind: Condition: One-half (1/2) of the property herein described is subject to
the prov. of sec. 4, rule 74 of the rules of court. date of instrument: 1-13-93; date of inscription:
2-24-93 at 10:42 a.m.

(SGD.) ELENITA E. CORPUS

Register of Deeds
Entry No. 5484; Kind: Mortgage: Exec. In favor of: Sps. Anselmo Bulaong & Priscilla Bulaong;
Condition: Covering the parcel of land herein described, for the sum of P4,300,000.00 subject to
all the conditions stipulated in the deed of mortgage on file in this office. Doc. No. 428, Page 86,
Book XXX, S. of 1993, N.P. – Roberto Dionisio of Mal. Bul. Date of Instrument: 1-13-93; date of
inscription – 3-1-93 at 9:20 a.m.

(SGD.) ELENITA E. CORPUS

Register of Deeds

/5306

(NOTE: Proceed to Entry No. 5484)

Entry No. 7808: Kind: NOTICE OF LEVY ON EXECUTION: Conditions: Notice is hereby given that
by virtue of the Writ of Execution, issued in Crim. Cases Nos. 9638 to 9646-M, entitled "People
of the Philippines v. Reggie Christi Schaetchen Limpo and Maria Lourdes (Bong) Diaz y Gamir, et
al., Accused" by the Regional Trial Court, Third Jud. Region, Branch 12, Malolos, Bulacan, under
date of Dec. 29, 1992, and at the instance of the private complainant Veronica R. Gonzales, thru
counsel, levy on execution is hereby made upon all the rights, shares, interests and
participations of accused Reggie Christi Schaetchen over the real properties described in T-
249641 and T-249639, by virtue of Deeds of Absolute Sale executed by former registered
owners in favor of Reggie Christi Schaetchen dated Nov. 5, 1991, together with all the
improvements existing thereon, was levied on execution preparatory to the sale of the same
without prejudice to third persons having better right thereof and to any valid lien and
encumbrances. Date of instrument – Jan. 4, 1993; Date of inscription – Jan. 4, 1993 at 11:50
a.m.

(SGD.) ELENITA E. CORPUS

Register of Deeds/negm16 (emphasis ours)

It appears that a certain Veronica Gonzales had filed a criminal case for estafa against Regina
with the RTC of Bulacan, Branch 12.17 On October 28, 1991, the RTC rendered a decision
acquitting Regina, but at the same time ordering her to pay Veronica actual damages in the
total amount of ₱275,000.00.18 By virtue of a writ of execution issued on December 29, 1992,
the above-quoted notice of levy was recorded in the Primary Entry Book of the Registry of
Bulacan on January 4, 1993. However, this was not annotated on the titles themselves because
at the time of the levy, the properties had not yet been transferred to Regina, but were still
registered in the name of her parents.19

Based on the annotation referring to the notice of levy, the subject of the levy was Regina’s
interest in the properties which, in turn, was anchored on a Deed of Absolute Sale allegedly
executed by her parents on November 5, 1991 to transfer their interest in both properties to
her. Notably, Regina never registered this sale with the Register of Deeds.

To satisfy Regina’s judgment debt, the two lots were sold at public auction on June 8, 1993 to
Veronica, the only bidder, for ₱640,354.14.20 The Certificate of Sale was annotated on the titles
on June 8, 1993 as Entry No. 2075. Upon the lapse of the one year redemption period on June
20, 1994, Veronica’s titles over the properties were consolidated. A final deed of sale was
issued in Veronica’s name and annotated as Entry No. 40425 on TCT Nos. T-30395 and T-30396
on June 24, 1994.21

On the other hand, the Bulaongs also had the mortgage extrajudicially foreclosed, with the
sheriff conducting the auction sale on August 22, 1994. The Bulaongs were the highest bidders,
buying the properties for the sum of ₱4,300,000.00. They also paid the corresponding capital
gains tax of ₱215,000.00, plus ₱64,500.00 for the documentary stamp tax, which were required
before the titles to the lots could be transferred in their names. The Certificate of Sale in their
favor was inscribed on August 23, 1994 on TCT No. T-30395 and TCT No. T-30396 as Entry No.
46739.22

Veronica thereafter filed a petition for the surrender to the Register of Deeds of the owner’s
copies of TCT Nos. T-30395 and T-30396 with the RTC of Malolos, docketed as LRC Case No. P-
292. On December 16, 1994, the RTC granted the petition and ordered Regina to surrender her
owner’s copies of the titles; should Regina fail to comply, the RTC ordered the Register of Deeds
to cancel these titles and issue new ones in Veronica’s name. Complying with this order, the
Register of Deeds cancelled TCT Nos. T-30395 and T-30396, and issued TCT No. T-62002 in
Veronica’s name, and TCT No. T-62003 in the name of Veronica and Pacifica Limpo. These new
titles were "clean" and did not contain any annotations, liens or encumbrances.

The Bulaongs thus filed a petition for mandamus with the RTC of Bulacan against Ramon
Sampana, the incumbent Register of Deeds of Bulacan, and Veronica, praying that the court
order Sampana to cancel TCT Nos. T-62002 and T-62003, and issue new titles in their names;
and order the respondents therein to pay them moral and exemplary damages, and attorney’s
fees.

On July 30, 1999, the RTC ruled in favor of the Bulaongs. According to the RTC, allowing
Veronica to levy on the properties worth at least ₱5,000,000.00 for a judgment of ₱275,000.00
would result in gross unjust enrichment. The RTC thus ordered the Register of Deeds of Bulacan
to issue new titles in the name of the Bulaongs, but only after the Bulaongs had reimbursed the
amount of ₱275,000.00 to Veronica, with interest. The RTC also ordered Veronica to pay the
Bulaongs ₱50,000.00 as attorney’s fees. The dispositive portion of the RTC decision reads:

WHEREFORE, conformably with all the foregoing, judgment is hereby rendered:

1. – Annulling and cancelling Transfer Certificates of Title Nos. T-62002 in the name of
defendant Veronica Gonzales, and T-62003 in the name of defendant Veronica Gonzales
and Pacifica E. Limpo married to Nicanor C. Sincioco;

2. – Ordering the Ex-Officio Sheriff of Bulacan to execute a final deed of sale in favor of
petitioner spouses Anselmo Bulaong and Pr[i]scilla Bulaong on the basis of the
registered Certificate of Sale executed by said court officer on August 23, 1994, in favor
of said spouses-mortgagee, without the owner-mortgagors exercising the right of
redemption since then;

3. – Ordering the Register of Deeds of Bulacan to issue new titles, in place of Transfer
Certificate of Title Nos. T-62002 and T-62003, this time in the name of petitioner
spouses Anselmo Bulaong and Pr[is]cilla Bulaong, as soon as the aforesaid final deed of
sale in their favor is executed by the Ex-Officio Sheriff of Bulacan and only after said
spouses shall have paid and/or reimbursed Veronica Gonzales’ lien as judgment creditor
in the amount of ₱275,000.00, plus interests at the legal rate computed from November
19, 1995, until fully paid and satisfied;

4. – Order[ing] herein defendants Veronica R. Gonzales and the Register of Deeds of

Bulacan upon notice of this judgment, not to effect any transfer, encumbrance or any
disposition whatsoever of the parcels of land covered by Transfer Certificates of Title
Nos. 62002 and T-62003, or any part thereof, right or interest therein, either by sale or
any form of conveyance, lien or encumbrance; and
 5. – Ordering only defendant Veronica R. Gonzales to pay herein petitioners ₱50,000.00
as just and equitable attorney’s fees, and the costs of suit, defendant Ramon C.
Sampana as the Register of Deeds of Bulacan having merely performed his ministerial
duty of following the court order of issuing titles to defendant Gonzales.

No pronouncement as to moral and exemplary damages alleged in the petition but not even
testified to by petitioners at the trial.23

Both parties appealed to the CA, with the case docketed as CA-G.R. SP No. 55423.

THE COURT OF APPEALS D E C I S I O N

In its July 31, 2002 decision, the CA upheld the validity of the Notice of Levy on Execution,
noting that it created a lien in favor of the judgment creditor over the property. According to
the CA, when the Bulaongs received the owners’ copies of TCT Nos. T-30395 and T-30396, the
Notice of Levy was already annotated on the titles and, thus, should have put them on guard.
As mortgagees of the lots, the Bulaongs had the option to redeem the properties within the
redemption period provided by law. Since they failed to avail of this remedy, the consolidation
of titles in Veronica’s name was proper.

THE PETITION

The Bulaongs filed the present petition, raising the following issues:

a) Whether Entry No. 7808 is valid;

b) Whether Veronica has a superior right over the properties; and

c) Assuming the notice of levy earlier annotated in favor of Veronica to be valid,

whether there was a valid foreclosure sale.

THE COURT’S RULING

We GRANT the petition.

Procedural issues

Time and again, we have stated that petitions for review on certiorari shall only raise questions
of law, as questions of fact are not reviewable by this Court. The main issue of who has a better
right over the disputed properties is not only a question of law but one that requires a thorough
review of the presented evidence, in view particularly of the Bulaongs’ allegation that fraud
attended the annotation of Entry No. 7808 in the titles. Thus, in the usual course, we would
have denied the present petition for violation of Section 1, Rule 45 of the Rules of Court, 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. (emphasis ours)

This rule, however, admits of several exceptions. Questions of fact may be reviewed, among
others, when the lower court makes inferences that are manifestly mistaken, and when the
judgment of the CA is based on a misapprehension of facts.24 As will be apparent in the
discussions below, these exceptional circumstances are present in the present case. A review of
the evidence, therefore, is not only allowed, but is necessary for the proper resolution of the
presented issues.

It has not escaped our attention that the Bulaongs appear to have erroneously filed a petition
for mandamus for what is essentially an action to assail the validity of Veronica’s certificates of
title over the subject properties. This lapse, however, is not legally significant under the well-
settled rule that the cause of action in a complaint is not the title or designation of the
complaint, but the allegations in the body of the complaint. The designation or caption is not
controlling as it is not even an indispensable part of the complaint; the allegations of the
complaint control.25 We thus proceed to resolve the case, bearing in mind that the relief the
Bulaongs sought before the lower court was to nullify Veronica’s certificates of title and to
order the Register of Deeds to issue new titles in their name.

Redemption not the proper remedy

The CA faulted the Bulaongs for not redeeming the properties from Veronica when they had
the option of doing so. For failing to exercise this right, the CA concluded that the consolidation
of the titles to the lots in Veronica’s name thus became a matter of course.

We disagree.

At the outset, we observe that this is not a simple case of determining which lien came first. A
perusal of the Bulaongs’ submissions to the Court shows that they have consistently maintained
that the levy and the corresponding execution sale in Veronica’s favor are null and void. Had
the Bulaongs merely exercised the right of redemption, they would have been barred from
raising these issues in court, pursuant to our ruling in Cometa v. Intermediate Appellate
Court: 26

The respondent appellate court's emphasis on the failure of the petitioner to redeem the
properties within the period required by law is misplaced because redemption, in this case, is
inconsistent with the petitioner's claim of invalidity of levy and sale. Redemption is an implied
admission of the regularity of the sale and would estop the petitioner from later impugning its
validity on that ground.27 (emphasis ours)

The Bulaongs were thus justified in their refusal to redeem the properties.

Annotation is valid

The Bulaongs assail the validity of Entry No. 7808 (relating to the Notice of Levy on Execution in
Veronica’s favor) on the two titles, asserting that it is null and void for being a fraudulent entry.
In support of this contention, they note the following suspicious circumstances: (a) although
Entry No. 7808 has a higher number and appears after Entry No. 5484 (corresponding to the
Bulaongs’ mortgage) on the titles, Entry No. 7808 appeared in an earlier volume of the Book of
Entries; and (b) although the Notice of Levy on Execution was purportedly presented to the
Registry of Bulacan on January 4, 1993, or prior to the date when the Bulaongs’ deed of
mortgage was presented on January 13, 1993, the Notice of Levy on Execution, Entry No. 7808,
was numbered and placed after the mortgage, Entry No. 5484, on the titles.

We agree that these circumstances render the Notice of Levy on Execution, annotated on the
titles, highly suspicious. These circumstances, however, can be sufficiently explained when the
records are examined.
The records show that on January 4, 1993, Veronica went to the Registry of Bulacan with the
Notice of Levy on Execution, requesting that the notice be registered. While the Register of
Deeds placed the Notice of Levy on Execution in the Primary Entry Book, she did not
immediately make a registration when a question arose regarding the registrability of the
notice; the question necessitated the submission of a consulta to the Land Registration
Authority (LRA) on January 25, 1993.28

The LRA Administrator responded to the consulta only on February 10, 1993.29 Thus, the Notice
of Levy on Execution was not immediately annotated on the newly reconstituted titles, which
were issued on February 4, 1993. It was only when new titles were again issued to reflect the
extrajudicial settlement of the estate of Regina’s parents on February 24, 1993 that the Notice
of Levy on Execution appeared on the titles as Entry No. 7808.

The apparent discrepancy in the numbering of the Notice of Levy on Execution and the date of
inscription on the certificates of title is suitably explained by Section 56 of Presidential Decree
No. 1529 whose pertinent portion states:

Section 56. Primary Entry Book; fees; certified copies. – Each Register of Deeds shall keep a
primary entry book in which, upon payment of the entry fee, he shall enter, in the order of their
reception, all instruments including copies of writs and processes filed with him relating to
registered land. He shall, as a preliminary process in registration, note in such book the date,
hour and minute of reception of all instruments, in the order in which they were received. They
shall be regarded as registered from the time so noted, and the memorandum of each
instrument, when made on the certificate of title to which it refers, shall bear the same date:
Provided, that the national government as well as the provincial and city governments shall be
exempt from the payment of such fees in advance in order to be entitled to entry and
registration. [emphases ours]

In other words, the order of entries in the Primary Entry Book determines the priority in
registration. Thus, the Register of Deeds merely complied with the law when she fixed Entry No.
7808’s date of inscription as January 4, 1993, to coincide with the date when the Notice of Levy
on Execution was presented and inscribed in the Primary Entry Book.

The late annotation of the levy on execution on the titles did not at all lessen its effectivity.
Jurisprudence has already established the rule that the entry of the notice of levy on execution
in the Primary Entry Book, even without the corresponding annotation on the certificate of
titles, is sufficient notice to all persons that the land is already subject to the levy.30 As we
explained in Armed Forces and Police Mutual Benefit Association, Inc. v. Santiago:31

The notice of levy on attachment in favor of petitioner may be annotated on TCT No. PT-
94912. Levin v. Bass (91 Phil. 420 [1952]; see also Dr. Caviles, Jr. v. Bautista, 377 Phil. 25; 319
SCRA 24 [1999]; Garcia v. Court of Appeals, 184 Phil. 358; 95 SCRA 380 [19890]) provided the
distinction between voluntary registration and involuntary registration. In voluntary
registration, such as a sale, mortgage, lease and the like, if the owner's duplicate certificate be
not surrendered and presented or if no payment of registration fees be made within fifteen (15)
days, entry in the day book of the deed of sale does not operate to convey and affect the land
sold. In involuntary registration, such as an attachment, levy upon execution, lis pendens and
the like, entry thereof in the day book is a sufficient notice to all persons of such adverse claim.

The entry of the notice of levy on attachment in the primary entry book or day book of the
Registry of Deeds on September 14, 1994 is sufficient notice to all persons, including the
respondent, that the land is already subject to an attachment. The earlier registration of the
notice of levy on attachment already binds the land insofar as third persons are
concerned.32 (emphases ours)
Consequently, when the Register of Deeds placed the Notice of Levy on Execution in the
Primary Entry Book on January 4, 1993, this entry already bound third persons to the notice
entered.

Validity of the Levy

i. Regina’s interest in the properties is not established

The levy on execution for judgment is "the act x x x by which an officer sets apart or
appropriate[s,] for the purpose of satisfying the command of the writ, a part or the whole of
the judgment debtor’s property."33 Every interest which the judgment debtor may have in the
property may be subjected to levy on execution.34 As established by the Court in Reyes v.
Grey:35

The term "property" as here applied to lands comprehends every species of title, inchoate or
complete; legal or equitable. This statute authorizes the sale under execution of every kind of
property, and every interest in property which is, or may be, the subject of private ownership
and transfer. It deals with equitable rights and interests as it deals with legal, without anywhere
expressly recognizing or making any distinction between them. [emphases ours]

In Reyes, the Court set the standard to be applied in determining the kind of property that can
be subject to attachment:

We think the real test, as to whether or not property can be attached and sold upon execution
is — does the judgment debtor hold such a beneficial interest in such property that he can sell
or otherwise dispose of it for value? If he does, then the property is subject to execution and
payment of his debts.36 (emphasis and underscoring ours)

Applying the test in Reyes, the Court, in Gotauco & Co. v. Register of Deeds of
Tayabas,37 recognized as valid the inscription of a notice of levy on execution on the certificates
of title, even though the titles were not in the name of the judgment debtor (Rafael Vilar).
According to the Court, while the certificates of title were still registered in the name of
Florentino Vilar, since Rafael Vilar presented a copy of a petition filed with the lower court,
from which it could be inferred that Florentino Vilar was dead and Rafael Vilar was one of his
heirs, Rafael had an interest in Florentino’s property that could properly be the subject of
attachment, even if his participation in Florentino’s property was indeterminable before the
final liquidation of the estate.

Similarly, in Pacific Commercial Co. v. Geaga,38 the Court held that although the Register of
Deeds may properly reject an attachment where it appears that the titles involved are not
registered in the name of the defendants (debtors), that rule yields to a case where there is
evidence submitted to indicate that the defendants have present or future interests in the
property covered by said titles, regardless of whether they still stand in the names of other
persons. The fact that the present interests of the defendants are still indeterminate, and even
though there was no judicial declaration of heirship yet, is of no consequence for the purpose
of registering the attachment in question. This is the case since what is being attached and what
may be later sold at public auction in pursuance of the attachment cannot be anything more
than whatever rights, titles, interests and participations which the defendants may or might
have in the property so attached. In other words, if they had actually nothing in the property,
then nothing is affected and the property will remain intact.39 This rule is expressed in Section
35, Rule 39 of the old Rules of Civil Procedure, which provides:
Upon the execution and delivery of said deed [of conveyance and possession], the purchaser, or
redemptioner, or his assignee, shall be substituted to and acquire all the right, title, interest and
claim of the judgment debtor to the property as of the time of the levy[.] [emphases ours]

Although we recognize the validity of the annotation of the levy on the execution in the present
case, the question of whether the levy itself is valid remains to be determined. To do this,
Regina’s interest in the subject properties at the time of the levy has to be ascertained. To
recall, Veronica’s notice of levy on execution is based on Regina’s interest in the two properties,
which she acquired via the Deed of Absolute Sale purportedly executed by her parents in her
favor on November 5, 1991. But is this Deed of Absolute Sale a sufficient evidence of Regina’s
interest in the subject properties?

After carefully reviewing the evidence on record, we rule in the negative.

To begin with, not only were the properties subject of the attachment not registered in Regina’s
name, the Deed of Absolute Sale on which Regina based her interest was not even annotated
on these titles. While Regina purportedly purchased her parents’ rights to the subject
properties in 1991, she never asserted her rights over these properties by presenting the Deed
of Absolute Sale to the Register of Deeds for registration and annotation on the titles. As a
matter of fact, it was Veronica, and not Regina, who presented the Deed of Absolute Sale to the
Register of Deeds.

More importantly, from the records, it is clear that the subject properties were finally
registered in Regina’s name, not by virtue of the 1991 Deed of Absolute Sale, but by virtue of
succession, specifically by the "Adjudication" that Regina filed with the Register of Deeds on
February 24, 1993,40 pursuant to Section 1, Rule 74 of the Rules of Court.41 The procedure by
which the properties were registered in Regina’s name suggests that when Regina’s parents
died, the subject lots still formed part of Regina’s parents’ estate, and were not, as Veronica
claims, sold to Regina in 1991, thereby casting doubt to the validity of the Deed of Absolute
Sale. As the Bulaongs reason in their memorandum, if the subject properties had already been
sold to Regina as early as 1991, why would they still be considered a part of her parents’ estate
in 1993?42

Another point to consider is that Regina dealt with the Bulaongs as her father’s representative
when they were negotiating the mortgage over the properties.43 If she had already acquired her
parents’ interest in these properties in 1991, she would not have needed any authority from
her father to execute the mortgage with the Bulaongs; she would have done so in her own
capacity.

These facts, taken together, lead us to doubt that Regina had any interest in the properties at
the time of the levy. Thus, unlike in the previously cited cases where the debtors, although
possessing merely an inchoate interest in the properties at the time of the levy, had interests
that were established with reasonable certainty and could be the subject of attachment; in the
present case, the evidence on record fails to prove that Regina actually had any interest in the
properties which could be the subject of levy.

The spring cannot rise higher than its source.44 Since Regina had no established interest in the
subject properties at the time of the levy, Veronica’s levy had nothing to attach to in the subject
properties.

ii. Unregistered sale of land cannot bind third parties

Even assuming that the Deed of Absolute Sale in Regina’s favor was valid, we still cannot uphold
the validity of the levy and execution sale in Veronica’s favor.
The general rule in dealing with registered land is set forth in Section 51 of P.D. No. 1529:

Section 51. Conveyance and other dealings by registered owner. – An owner of registered land
may convey, mortgage, lease, charge or otherwise deal with the same in accordance with
existing laws. He may use such forms of deeds, mortgages, leases or other voluntary
instruments as are sufficient in law. But no deed, mortgage, lease, or other voluntary
instrument, except a will purporting to convey or affect registered land shall take effect as a
conveyance or bind the land, but shall operate only as a contract between the parties and as
evidence of authority to the Register of Deeds to make registration.

The act of registration shall be the operative act to convey or affect the land insofar as third
persons are concerned, and in all cases under this Decree, the registration shall be made in the
office of the Register of Deeds for the province or city where the land lies. [emphases ours]

From the standpoint of third parties, a property registered under the Torrens system remains,
for all legal purposes, the property of the person in whose name it is registered,
notwithstanding the execution of any deed of conveyance, unless the corresponding deed is
registered.45 Simply put, if a sale is not registered, it is binding only between the seller and the
buyer, but it does not affect innocent third persons.

Undoubtedly, Veronica’s claim on the properties is rooted in the unregistered Deed of Absolute
Sale between Regina and her parents. The Bulaongs do not appear to have had any knowledge
that this sale ever took place. To recall, Regina gave the Bulaongs the owner’s duplicate
certificates of the properties, which showed that the properties were registered in the names of
her parents, Fortunato and Bertha Limpo. It thus appears that the Bulaongs first learned about
the sale between Regina and her parents when they received the newly issued titles in Regina’s
name which contained the annotation of the levy in Veronica’s favor.

One of the principal features of the Torrens system of registration is that all encumbrances on
the land shall be shown, or at least intimated upon the certificate of title and a person dealing
with the owner of the registered land is not bound to go behind the certificate and inquire into
transactions, the existence of which is not there intimated.46 Since the Bulaongs had no
knowledge of the unregistered sale between Regina and her parents, the Bulaongs can neither
be bound by it, nor can they be prejudiced by its consequences. This is but the logical corollary
to the rule set forth in Section 51 of P.D. No. 1529, in keeping with the basic legal maxim that
what cannot be done directly cannot be done indirectly.

Execution sale in Veronica’s favor was highly irregular

We also find that the execution sale in favor of Veronica is invalid because Regina’s interest in
both lots was sold together, in violation of Sections 15 and 21, Rule 39 of the old Rules of Court.
The pertinent portions of these provisions provide:

Section 15. Execution of money judgments. – The officer must enforce an execution of a money
judgment by levying on all the property, real and personal of every name and nature
whatsoever, and which may be disposed of for value, of the judgment debtor not exempt from
execution, or on a sufficient amount of such property, if there be sufficient, and selling the
same, and paying to the judgment creditor, or his attorney, so much of the proceeds as will
satisfy the judgment. Any excess in the proceeds over the judgment and accruing costs must be
delivered to the judgment debtor, unless otherwise directed by the judgment or order of the
court. When there is more property of the judgment debtor than is sufficient to satisfy the
judgment and accruing costs, within the view of the officer, he must levy only on such part of
the property as is amply sufficient to satisfy the judgment and costs.
Section 21. How property sold on execution. Who may direct manner and order of sale. – All
sales of property under execution must be made at public auction, to the highest bidder,
between the hours of nine in the morning and five in the afternoon. After sufficient property
has been sold to satisfy the execution, no more shall be sold. When the sale is of real property,
consisting of several known lots, they must be sold separately; or, when a portion of such real
property is claimed by a third person, he may require it to be sold separately. [emphases ours]

Where the property to be sold consists of distinct lots, tracts or parcels, or is susceptible of
division without injury, it should be offered for sale in parcels and not en masse, for the
reason that a sale in that manner will generally realize the best price, and will not result in
taking from the debtor any more property than is necessary to satisfy the judgment. It will
also enable the defendant to redeem any one or more of the parcels without being
compelled to redeem all the land sold.47 A sale of additional land or personal property after
enough has been sold to satisfy the judgment is unauthorized. 48

While the general policy of the law is to sustain execution sales, the sale may be set aside
where there is a resulting injury based on fraud, mistake and irregularity. 49 Where the
properties were sold together when the sale of less than the whole would have been
sufficient to satisfy the judgment debt, the sale may be set aside. 50 lawphi1

In Caja v. Nanquil, 51 we took judicial notice of the fact that the value of a property was usually
bigger than the amount for which it could be mortgaged. Since the two properties, taken
together, were mortgaged to the petitioners to secure a loan worth ₱4,300,000.00, we can
easily assume that these properties are worth at least this amount. Even Veronica does not
contest this assumption.

From this premise, we can logically assume that the sale of just one of the lots would have
been sufficient to satisfy the judgment debt. Yet no explanation was provided as to why the
sheriff sold both parcels of land at the execution sale for the paltry sum of ₱640,354.14. This
act undoubtedly resulted in great prejudice to the Bulaongs. To our minds, this renders the
execution sale defective, and provides sufficient ground for us to set the sale aside.

For the foregoing reasons, we rule and so hold that the levy and the corresponding execution
sale in Veronica’s favor are invalid, and must be set aside. Veronica, however, is not without
recourse, as she may still seek to enforce the judgment debt against Regina.

WHEREFORE, premises considered, we GRANT the petition and REVERSE the decision of the
Court of Appeals dated July 31, 2002 in CA-G.R. SP No. 55423. We REINSTATE the decision of
the Regional Trial Court, Branch 12, Malolos, Bulacan, dated July 30, 1999 in Civil Case No. 170-
M-95, with the MODIFICATION that petitioners Anselmo Bulaong and Priscilla Bulaong are no
longer required to reimburse Veronica Gonzales for her lien in the amount of ₱275,000.00, plus
interest.

SO ORDERED.
G.R. No. 142676               June 6, 2011

EMERITA MUÑOZ, Petitioner,
vs.
ATTY. VICTORIANO R. YABUT, JR. and SAMUEL GO CHAN, Respondents.

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

G.R. No. 146718

EMERITA MUÑOZ, Petitioner,
vs.
SPOUSES SAMUEL GO CHAN and AIDA C. CHAN, and THE BANK OF THE PHILIPPINE
ISLANDS, Respondents.

DECISION

LEONARDO-DE CASTRO, J.:

Before Us are the following consolidated petitions for review on certiorari under Rule 45 of the
Rules of Court.

In G.R. No. 142676, Emerita Muñoz (Muñoz) is seeking the reversal, annulment, and setting
aside of the Decision1 dated July 21, 1995 and Resolution2 dated March 9, 2000 of the Court of
Appeals in CA-G.R. SP No. 35322, which affirmed the Orders3 dated June 10, 1994 and August 5,
1994 of the Regional Trial Court, Branch 88 (RTC-Branch 88) of Quezon City in Civil Case No. Q-
94-20632. The RTC dismissed Civil Case No. 8286, the forcible entry case instituted by Muñoz
against Atty. Victoriano R. Yabut, Jr. (Atty. Yabut) and Samuel Go Chan before the Metropolitan
Trial Court (MeTC), Branch 33 of Quezon City; and nullified the MeTC Order4 dated May 16,
1994, granting Muñoz’s prayer for the issuance of a writ of preliminary mandatory injunction
which restored possession of the subject property to Muñoz.

In G.R. No. 146718, Muñoz is praying for the reversal, setting aside, and nullification of the
Decision5 dated September 29, 2000 and Resolution6 dated January 5, 2001 of the Court of
Appeals in CA-G.R. SP No. 40019, which affirmed the Orders7 dated August 21, 1995 and
October 3, 1995 of the Quezon City RTC, Branch 95 (RTC-Branch 95) in Civil Case No. Q-28580
denying Muñoz’s Motion for an Alias Writ of Execution and Application for Surrender of the
Owner’s Duplicate Copy of TCT No. 532978 against respondents Bank of the Philippine Islands
(BPI) and the spouses Samuel Go Chan and Aida C. Chan (spouses Chan).

I
FACTS

The subject property is a house and lot at No. 48 Scout Madriñan St., Diliman, Quezon City,
formerly owned by Yee L. Ching. Yee L. Ching is married to Emilia M. Ching (spouses Ching),
Muñoz’s sister. Muñoz lived at the subject property with the spouses Ching. As consideration
for the valuable services rendered by Muñoz to the spouses Ching’s family, Yee L. Ching agreed
to have the subject property transferred to Muñoz. By virtue of a Deed of Absolute Sale,
seemingly executed by Yee L. Ching in favor of Muñoz,9 the latter acquired a Transfer Certificate
of Title (TCT) No. 186306 covering the subject property in her name on December 22,
1972.10 However, in a Deed of Absolute Sale dated December 28, 1972, Muñoz purportedly sold
the subject property to her sister, Emilia M. Ching. As a result, TCT No. 186306 was cancelled
and TCT No. 186366 was issued in Emilia M. Ching’s name. Emilia M. Ching, in a Deed of
Absolute Sale dated July 16, 1979, sold the subject property to spouses Go Song and Tan Sio
Kien (spouses Go), hence, TCT No. 186366 was cancelled and replaced by TCT No. 258977 in the
spouses Go’s names.

On October 15, 1979, Muñoz registered her adverse claim to the subject property on TCT No.
258977 of the spouses Go. The next day, on October 16, 1979, Muñoz filed a complaint for the
annulment of the deeds of absolute sale dated December 28, 1972 and July 16, 1979, the
cancellation of TCT No. 258977 in the spouses Go’s names, and the restoration and revival of
TCT No. 186306 in Muñoz’s name. The complaint was docketed as Civil Case No. Q-28580 and
raffled to RTC-Branch 95. On October 17, 1979, Muñoz caused the annotation of a notice of lis
pendens on TCT No. 258977 of the spouses Go. In an Order dated December 17, 1979, the RTC-
Branch 95 granted the spouses Go’s motion for the issuance of a writ of preliminary mandatory
injunction and ordered the sheriff to put the spouses Go in possession of the subject property.
The writ was implemented by the sheriff on March 26, 1980, driving Muñoz and her
housemates away from the subject property.

Muñoz filed a petition for certiorari and prohibition before the Court of Appeals, assailing the
issuance of the writ of preliminary mandatory injunction, which was docketed as CA-G.R. SP No.
10148. The appellate court dismissed Muñoz’s petition on January 4, 1980. Yee L. Ching and his
son Frederick M. Ching filed an urgent motion for leave to intervene in CA-G.R. SP No. 10148
and for the issuance of a temporary restraining order (TRO). The Court of Appeals issued a TRO.
However, in a Resolution dated March 18, 1980, the appellate court denied the motion to
intervene of Yee L. Ching and Frederick M. Ching, and cancelled the TRO previously issued. Yee
L. Ching and Frederick M. Ching challenged before this Court, in G.R. No. 53463, the Resolution
dated March 18, 1980 of the Court of Appeals. Eventually, in a Resolution dated June 3, 1981,
the Court dismissed the petition in G.R. No. 53463, for lack of merit and failure of Yee L. Ching
and Frederick M. Ching to substantially show that the RTC-Branch 95 and the Court of Appeals
gravely abused their discretion. In a subsequent Resolution dated June 21, 1982, the Court
clarified that its Resolution of June 3, 1981 was without prejudice to the continuation of the
litigation in Civil Case No. Q-28580 still pending before the trial court, "in order that proper and
final adjudication may be made of whether or not the deed of sale by Emerita L. Muñoz in favor
of Emilia M. Ching is a real, genuine and authentic transaction, thereby to settle once and for all
the issue of ownership of the property herein in question."11

Trial in Civil Case No. Q-28580 proceeded before RTC-Branch 95.

In the meantime, Muñoz’s adverse claim and notice of lis pendens on TCT No. 258977 was
cancelled on October 28, 1982 on the basis of an alleged final judgment in favor of the spouses
Go.12 The spouses Go obtained a loan of ₱500,000.00 from BPI Family Savings Bank (BPI Family)
and to secure the same, they constituted a mortgage on the subject property on November 23,
1982.13 When the spouses Go defaulted on the payment of their loan, BPI Family foreclosed the
mortgage. BPI Family was the highest bidder at the auction sale of the subject property. The
spouses Go failed to exercise their right of redemption within the prescribed period, thus, BPI
Family was finally able to register the subject property in its name on October 23, 1987 under
TCT No. 370364.14 Apparently, the original copy of TCT No. 370364 was among those razed in
the fire at the Quezon City Register of Deeds on June 11, 1988. As a result of the administrative
reconstitution of the lost title, TCT No. RT-54376 (370364) was issued to BPI Family. On
December 3, 1990, BPI Family executed in favor of the spouses Samuel Go Chan and Aida C.
Chan (spouses Chan) a Deed of Absolute Sale15 covering the subject property for and in
consideration of ₱3,350,000.00. Consequently, TCT No. RT-54376 (370364) in the name of BPI
Family was cancelled and TCT No. 53297 was issued in the spouses Chan’s names on January
28, 1991.16 The spouses Chan obtained a loan from BPI Family on October 2, 1992 for the
construction of a building on the subject property, and to secure the same, constituted a
mortgage on the subject property in favor of BPI Family.17

On July 19, 1991, RTC-Branch 95 rendered its Decision18 in Civil Case No. Q-28580, against
Emilia M. Ching, Yee L. Ching, and the spouses Go (Emilia M. Ching, et al.). It found that
Muñoz’s signature on the Deed of Absolute Sale dated December 28, 1972 was forged; that
Muñoz never sold the subject property to her sister, Emilia M. Ching; and that the spouses Go
were not innocent purchasers for value of the subject property. The fallo of the said decision
reads:

WHEREFORE, judgment is hereby rendered dismissing for lack of merit [Emilia M. Ching, et al.’s]
respective counterclaims, cross-claims, and counter-cross-claim, declaring as null and void ab
initio the following documents, to wit: (a) Deed of Absolute Sale dated December 28, 1972,
copy of which is marked in evidence as Exh. M; (b) TCT No. 186366 of the Registry of Deeds for
Quezon City, copy of which is marked in evidence as Exh. N; (c) Deed of Absolute Sale dated July
16, 1979, copy of which is marked in evidence as Exh. 3; and, (d) TCT No. 258977 of the Registry
of Deeds for Metro Manila District III, copy of which is marked in evidence as Exh. 4, and
directing defendant Register of Deeds of Quezon City to cancel from the records of the subject
property the registrations of all the said documents and to restore and revive, free from all liens
and encumbrances, TCT No. 186306 of the Registry of Deeds for Quezon City, copy of which is
marked in evidence as Exh. L, as well as ordering defendants Emilia M. Ching, Go Song and Tan
Sio Kien jointly and severally to pay [Muñoz] the sum of ₱50,000.00 as and for attorney’s fees
and to pay the costs of suit. The court also hereby dismisses the rest of the claims in [Muñoz’s]
complaint, there being no satisfactory warrant therefor.19

Emilia M. Ching, et al.’s, appeal of the foregoing judgment of the RTC-Branch 95 was docketed
as CA-G.R. CV No. 33811 before the Court of Appeals. In its Decision20 dated March 4, 1993, the
appellate court not only affirmed the appealed judgment, but also ordered the spouses Go and
their successors-in-interest and assigns and those acting on their behalf to vacate the subject
property, to wit:

WHEREFORE, premises considered, the decision appealed from is AFFIRMED, with costs against
[Emilia M. Ching, et al.]. The writ of preliminary mandatory injunction issued on December 17,
1979 is hereby set aside and declared dissolved. Defendants-appellants Go and Tan, their
successors-in-interest and assigns and those acting on their behalf, are ordered to vacate the
disputed premises and to deliver the same to [Muñoz] immediately upon receipt of this
decision.21

Emilia L. Ching, et al., filed before this Court a motion for extension of time to file their petition
for review, which was assigned the docket number G.R. No. 109260. However, they failed to file
their intended petition within the extended period which expired on April 23, 1993. In a
Resolution22 dated July 12, 1993, the Court declared G.R. No. 109260 terminated. The
Resolution dated July 12, 1993 of the Court in G.R. No. 109260 became final and executory on
July 15, 1993 and was entered in the Book of Entries of Judgments on even date.23

More than two months later, on September 20, 1993, the RTC-Branch 95 issued a writ of
execution to implement the judgment in Civil Case No. Q-28580.

The spouses Chan, who bought the subject property from BPI Family, then came forward and
filed before the RTC-Branch 95 on October 22, 1993 an Urgent Motion to Stop Execution as
Against Spouses Samuel Go Chan and Aida Chan,24 opposing the writ of execution issued in Civil
Case No. Q-28580. The spouses Chan asserted ownership and possession of the subject
property on the basis of a clean title registered in their names under TCT No. 53297. The
spouses Chan further contended that the final judgment in Civil Case No. Q-28580 could not be
executed against them since they were not parties to the said case; they were not successors-
in-interest, assigns, or acting on behalf of the spouses Go; and they purchased the subject
property from BPI Family without any notice of defect in the latter’s title.

It was only at this point that Muñoz, upon her own inquiry, discovered the cancellation on
October 28, 1982 of her adverse claim and notice of lis pendens annotated on the spouses Go’s
TCT No. 258977, and the subsequent events that led to the transfer and registration of the title
to the subject property from the spouses Go, to BPI Family, and finally, to the spouses Chan.

In its Order25 dated December 28, 1993, the RTC-Branch 95 denied the spouses Chan’s urgent
motion to stop the execution. According to the RTC-Branch 95, the photocopy of TCT No.
370364 in the name of BPI Family, submitted by the spouses Chan with their motion, could
hardly be regarded as satisfactory proof that Muñoz’s adverse claim and notice of lis pendens
annotated therein were also missing from the original copy of said certificate of title. Muñoz’s
adverse claim and notice of lis pendens were annotated on TCT No. 258977 in the spouses Go’s
names as P.E.-8078 and P.E.-8178, respectively. So when TCT No. 258977 of the spouses Go was
cancelled and TCT No. 370364 was issued to BPI Family, it could be presumed that the Register
of Deeds regularly performed his official duty by carrying over Muñoz’s adverse claim and
notice of lis pendens to TCT No. 370364. In addition, the RTC-Branch 95 pointed out that in this
jurisdiction, the entry of the notice of lis pendens in the day book of the Register of Deeds was
already sufficient notice to the whole world of the dispute over the subject property, and there
was no more need to annotate the same on the owner’s duplicate of the certificate of title.
Finally, the RTC-Branch 95 held that TCT No. RT-54376 (370364) of BPI Family and TCT No.
53297 of the spouses Chan shall be subject to the reservation under Section 7 of Republic Act
No. 2626 "[t]hat certificates of title reconstituted extrajudicially, in the manner stated in sections
five and six hereof, shall be without prejudice to any party whose right or interest in the
property was duly noted in the original, at the time it was lost or destroyed, but entry or
notation of which has not been made on the reconstituted certificate of title." Thus, the
spouses Chan were deemed to have taken the disputed property subject to the final outcome
of Civil Case No. Q-28580.

On January 3, 1994, the RTC-Branch 95 issued an Alias Writ of Execution.27 On January 10, 1994,
the writ was enforced, and possession of the subject property was taken from the spouses
Chan and returned to Muñoz.28 In its Orders dated April 8, 1994 and June 17, 1994, the RTC-
Branch 95 denied the spouses Chan’s motion for reconsideration and notice of appeal,
respectively.29

G.R. No. 142676

Pending resolution by the RTC-Branch 95 of the spouses Chan’s motion for reconsideration and
notice of appeal in Civil Case No. Q-28580, Muñoz instituted before the MeTC on February 4,
1994 a Complaint for Forcible Entry with Prayer for Preliminary Mandatory Injunction30 against
Samuel Go Chan and Atty. Yabut, docketed as Civil Case No. 8286. Muñoz alleged in her
complaint that she had been in actual and physical possession of the subject property since
January 10, 1994. She hired a caretaker and two security guards for the said property. On
February 2, 1994, Samuel Go Chan and Atty. Yabut, along with 20 other men, some of whom
were armed, ousted Muñoz of possession of the subject property by stealth, threat, force, and
intimidation. Muñoz prayed for the issuance of a writ of preliminary mandatory injunction
directing Samuel Go Chan and Atty. Yabut and all persons claiming right under them to vacate
the subject property. Muñoz additionally prayed for judgment making the mandatory injunction
permanent and directing Samuel Go Chan and Atty. Yabut to pay Muñoz: (1) compensation for
the unlawful occupation of the subject property in the amount of ₱50,000.00 per month,
beginning February 2, 1994 until the said property is fully and completely turned over to
Muñoz; (2) attorney’s fees in the amount of ₱50,000.00, plus ₱1,500.00 per court appearance
of Muñoz’s counsel; and (3) costs of suit.

Samuel Go Chan and Atty. Yabut denied Muñoz’s allegations, insisting that Samuel Go Chan is
the valid, lawful, and true legal owner and possessor of the subject property. Samuel Go Chan
and Atty. Yabut averred that the Turn-Over of Possession and Receipt of Possession dated
January 10, 1994 – attached to Muñoz’s complaint as proof that the subject property had been
placed in her possession – is a falsified document. The Writ of Execution issued on September
20, 1993 in Civil Case No. Q-28580 had already expired and the Sheriff’s Return on the Writ –
another document purporting to show that possession of the subject property was turned-over
to Muñoz on January 10, 1994 – was then being challenged in a complaint before the Office of
Deputy Court Administrator Reynaldo L. Suarez of the Supreme Court. Samuel Go Chan’s
possession of the subject property has never been interrupted. His sister, Cely Chan, resided at
the subject property and was never removed therefrom. On February 2, 1994, Atty. Yabut was
at the subject property only to protect the rights and interest of his client, Samuel Go Chan, and
since the latter’s possession of the subject property had never been interrupted, Atty. Yabut
entered the same peacefully, without intimidation, force, or stealth. The other people at the
subject property on February 2, 1994 were there to attend the services at the Buddhist Temple
which occupied the fourth floor of the building erected by the spouses Chan on the subject
property. Samuel Go Chan and Atty. Yabut, thus, asked the MeTC to dismiss Muñoz’s complaint
for lack of merit and legal basis.31

The MeTC received evidence from the parties on whether a writ of preliminary injunction
should be issued, as prayed for by Muñoz. In its Order dated May 16, 1994, the MeTC adjudged
that the final judgment in Civil Case No. Q-28580 was already executed against the spouses
Chan and there was, indeed, a turn-over of possession of the subject property to Muñoz.
Accordingly, the MeTC granted Muñoz’s prayer for the issuance of a writ of preliminary
mandatory injunction, restoring possession of the subject property to Muñoz.

Samuel Go Chan and Atty. Yabut questioned the foregoing MeTC order through a Petition for
Certiorari with Prayer for Temporary Restraining Order and Writ of Preliminary
Injunction32 before the RTC-Branch 88, which was docketed as Civil Case No. Q-94-20632. They
asserted that they were not bound by the execution of the final judgment of RTC-Branch 95 in
Civil Case No. Q-28580 as they were not parties to the said case. Muñoz, on the other hand,
argued that the MeTC Order of May 16, 1994 was an interlocutory order, and under Section 19
of the Rules of Summary Procedure, a petition for certiorari against an interlocutory order
issued by the court is one of the prohibited pleadings and motions in summary proceedings.

In its Order dated June 10, 1994, the RTC-Branch 88 issued a writ of preliminary injunction to
enjoin the implementation of the MeTC Order dated May 16, 1994.

On August 5, 1994, the RTC-Branch 88 issued another Order resolving Muñoz’s motion to
dismiss the petition for certiorari in Civil Case No. Q-94-20632, motion for reconsideration of
the Order dated June 10, 1994 of RTC-Branch 88 granting the issuance of a writ of preliminary
injunction, and motion to resolve with additional grounds for dismissal. According to the RTC-
Branch 88, the MeTC failed to distinguish the issue of finality of the judgment of the RTC-Branch
95 in Civil Case No. Q-28580 from the assertions of Samuel Go Chan and Atty. Yabut that the
spouses Chan are not covered by said final judgment because they are not successors-in-
interest, assigns, or privies of the spouses Go and they are purchasers of the subject property in
good faith. The issue of whether the final judgment in Civil Case No. Q-28580 extended to the
spouses Chan was then still being litigated in the same case before RTC-Branch 95, where the
spouses Chan’s motion for reconsideration of the denial of their notice of appeal was pending.
The RTC-Branch 88 further found that the MeTC committed grave abuse of discretion in not
dismissing Muñoz’s complaint for forcible entry on the ground of "lis pendens," as the issue as
to who between Muñoz and the spouses Chan had the better right to possession of the subject
property was the subject of the pending proceeding in Civil Case No. Q-28580 before the RTC-
Branch 95. In the end, the RTC-Branch 88 decreed:

WHEREFORE, premises considered, the Court renders judgment –

(a) Denying the motion to dismiss of respondent Muñoz for lack of merit;

(b) Denying the motion for reconsideration of respondent Muñoz for the recall and/or
setting aside of the writ of preliminary injunction granted to petitioners;

(c) Declaring the Order dated May 16, 1994 of Public respondent Hon. Elsa de Guzman
in Civil Case No. 8286 illegal and therefore null and void; and

(d) Dismissing the ejectment suit in Civil Case No. 8286 on ground of lis pendens.

Without pronouncement as to costs.33

Muñoz appealed the Orders dated June 10, 1994 and August 5, 1994 of RTC-Branch 88 before
the Court of Appeals. Her appeal was docketed as CA-G.R. SP No. 35322. Aside from the
nullification of the two orders, Muñoz additionally prayed for the dismissal from the service of
the RTC-Branch 88 presiding judge and the disbarment of Atty. Yabut.

The Court of Appeals, in its Decision dated July 21, 1995, sustained the appealed orders of RTC-
Branch 88. The Court of Appeals held that the MeTC should have dismissed the forcible entry
case on the ground of "lis pendens"; that the spouses Chan were not parties in Civil Case No. Q-
28580, and impleading them only in the execution stage of said case vitiated their right to due
process; that the order of the RTC-Branch 95 involving the spouses Chan in Civil Case No. Q-
28580 was null and void, considering that they are strangers to the case, and they are innocent
purchasers for value of the subject property; that the notice of lis pendens was already
cancelled from the spouses Go’s certificate of title at the time they mortgaged the subject
property to BPI Family; and that the title to the subject property was already free of any and all
liens and encumbrances when the spouses Chan purchased the said property from BPI Family.
The Court of Appeals, in its Resolution dated March 9, 2000, denied Muñoz’s motion for
reconsideration.

G.R. No. 146718

Meanwhile, Muñoz filed before the RTC-Branch 95 in Civil Case No. Q-28580 a Motion to Cite
the Register of Deeds in Contempt of Court for the failure of the Register of Deeds to restore
Muñoz’s TCT No. 186306 despite having been served with a copy of the writ of execution on
October 11, 1993. In its Judgment (on the Contempt Proceedings against the Register of Deeds
of Quezon City Samuel C. Cleofe)34 dated March 18, 1994, the RTC-Branch 95 denied Muñoz’s
motion, convinced that the Register of Deeds had a valid excuse for his inability to implement
the served writ. The Register of Deeds could not cancel the spouses Chan’s TCT No. 53297, the
subsisting certificate of title over the subject property, absent any authority or directive for him
to do so. The directive in the final judgment in Civil Case No. Q-28580 and the writ of execution
for the same only pertained to the cancellation of the spouses Go’s TCT No. 258977.

Thereafter, Muñoz filed a Motion for Contempt against the spouses Chan and a Second Motion
for Contempt against Samuel Go Chan and Atty. Yabut. Muñoz also filed a Motion for an Alias
Writ of Execution and Application for Surrender of the Owner’s Duplicate Copy of TCT No.
53297,35 in which she prayed for the issuance of an alias writ of execution directing the Register
of Deeds not only to cancel TCT No. 258977 and all documents declared null and void ab initio
in the dispositive portion of the Decision36 dated July 19, 1991 of RTC-Branch 95 in Civil Case
No. Q-28580, and to restore and revive, free from all liens and encumbrances Muñoz’s TCT No.
186306, but likewise to cancel the present certificate of title covering the subject property, TCT
No. 53297.

In its Order dated August 21, 1995, the RTC-Branch 95 denied all of Muñoz’s aforementioned
motions. The RTC-Branch 95 was of the view that Samuel Go Chan’s title should be litigated in
another forum, not in Civil Case No. Q-28580 where the judgment had already become final
and executory. The RTC-Branch 95 also stressed that since the judgment in Civil Case No. Q-
28580 had long become final and executory, it could no longer be changed or amended except
for clerical error or mistake. Accordingly, the RTC-Branch 95 resolved as follows:

1. Ordering, as it hereby orders, the denial of [Muñoz’s] first and second motions for
contempt and hereby absolves respondents Samuel Go Chan, Celia Chan, Atty.
Victoriano R. Yabut, Jr., and several John Does of the Contempt Charges against them.

2. Ordering, as it hereby orders, the issuance of an alias writ of execution directing the
Court’s Deputy Sheriff:

(a) Defendants Go Song and Tan Sio Kien, their successors-in-interest and assigns
and those acting on their behalf to vacate the disputed premises and deliver the
same to [Muñoz];

(b) Defendant Register of Deeds of Quezon City to cancel from the records of the
subject property the registration of all the following documents, to wit: (1)
"Deed of Absolute Sale" dated December 28, 1972; (2) Transfer Certificate of
Title (TCT) No. 186366 of the Register of Deeds of Quezon City; (3) "Deed of
Absolute Sale" dated July 16, 1979; and (4) TCT No. 258977 of the Registry of
Deeds for Metro Manila II, and to restore and revive, free from all liens and
encumbrances TCT No. 186306 of the Registry of Deeds for Quezon City; and

(c) Defendants Emilia M. Ching, Go Song and Tan Sio Kien jointly and severally to
pay [Muñoz] the sum of ₱50,000.00 as and for attorney’s fees and to pay the
cost of suit.37

Unrelenting, Muñoz filed a Motion for Clarificatory Order, pointing out that the spouses Chan
are the present occupants of the subject property. The Order dated August 21, 1995 of the RTC-
Branch 95 directed the deputy sheriff to deliver the subject property to Muñoz, and this could
not be done unless the spouses Chan are evicted therefrom. Resultantly, Muñoz prayed that "a
clarificatory order be made categorically stating that the spouses Samuel Go Chan and Aida C.
Chan, and all persons claiming right under them, are likewise evicted from the subject premises
pursuant to the Order of 21 August 1995."38

Once more, the RTC-Branch 95 denied Muñoz’s motion in its Order dated October 3, 1995. The
RTC-Branch 95 reiterated the rule that after the judgment had become final, only clerical errors,
as distinguished from substantial errors, can be amended by the court. Furthermore, when the
decision or judgment sought to be amended is promulgated by an appellate court, it is beyond
the power of the trial court to change, amplify, enlarge, alter, or modify. Ultimately, the RTC-
Branch 95 pronounced that it was "restrained x x x to consider as mere clerical error the
exclusion of spouses Samuel Go Chan and Aida C. Chan in the Decision of the Court dated July
19, 1991, a final judgment, which judgment cannot now be made to speak a different
language."39
Attributing grave abuse of discretion on the part of the RTC-Branch 95 in issuing its Orders
dated August 21, 1995 and October 3, 1995, Muñoz filed before this Court a Petition for
Certiorari and Mandamus, which was remanded to the Court of Appeals in observance of the
hierarchy of courts, where it was docketed as CA-G.R. SP No. 40019. The Court of Appeals
promulgated its Decision on September 29, 2000 dismissing Muñoz’s petition. The Court of
Appeals agreed with the RTC-Branch 95 that the spouses Chan could not be covered by the alias
writ of execution considering that they were not impleaded in Civil Case No. Q-28580. The
cancellation of TCT No. 53297 in the spouses Chan’s names could not be done apart from a
separate action exclusively for that matter. The spouses Chan are deemed buyers in good faith
and for value as the certificate of title delivered to them by BPI Family was free from any liens
or encumbrances or any mark that would have raised the spouses Chan’s suspicions. Every
person dealing with registered lands may safely rely on the correctness of the certificate of title
of the vendor/transferor, and he is not required to go beyond the certificate and inquire into
the circumstances culminating in the vendor’s acquisition of the property. The Court of Appeals
denied Muñoz’s motion for reconsideration in a Resolution dated January 5, 2001.

Muñoz comes before this Court via the present consolidated petitions.

Muñoz posits that the final judgment and writ of execution of RTC-Branch 95 in Civil Case No.
Q-28580 bind not only Emilia M. Ching and the spouses Go, but also their successors-in-
interest, assigns, or persons acting on their behalf, namely, BPI Family and spouses Chan. The
spouses Chan cannot be deemed innocent purchasers for value of the property since the
cancellation of the adverse claim and notice of lis pendens on the spouses Go’s TCT No. 258977
is completely null and void.

Muñoz further argues that the MeTC Order dated May 16, 1994 in Civil Case No. 8286 correctly
ordered the issuance of a writ of preliminary mandatory injunction restoring possession of the
subject property to her, as she had already acquired prior possession of the said property upon
the execution of the final judgment in Civil Case No. Q-28580. Also, the spouses Chan’s petition
for certiorari before the RTC-Branch 88, docketed as Civil Case No. Q-94-20632, challenging the
Order dated May 16, 1994 of the MeTC in Civil Case No. 8286, is a prohibited pleading under
the Rules of Summary Procedure; and the RTC-Branch 88 and the Court of Appeals should be
faulted for giving due course to the said petition even in the absence of jurisdiction.

On the other hand, in their comments to the two petitions at bar, the spouses Chan, Atty.
Yabut, and BPI Family assert that given the peculiar factual circumstances of the case, RTC-
Branch 88 was justified in taking cognizance of Samuel Go Chan and Atty. Yabut’s petition for
certiorari in Civil Case No. Q-94-20632; that Muñoz is estopped from questioning the
jurisdiction of RTC-Branch 88 after participating in the proceedings in Civil Case No. Q-94-
20632; that the spouses Chan’s title to the subject property is not affected by the final
judgment of RTC-Branch 95 in Civil Case No. Q-28580, and the said judgment cannot be
executed against the spouses Chan since they are neither parties to the case, nor are they the
successors-in-interest, assigns, or persons acting on behalf of Emilia M. Ching or the spouses
Go; that BPI Family and consequently, the spouses Chan, obtained title to the subject property
as innocent purchasers for value, there being no notice of any infirmity in said title; and that
Muñoz is guilty of forum shopping for filing her petition in G.R. No. 146718 even while her
petition in G.R. No. 142676 is still pending.

II
RULING

For the sake of expediency, we will be discussing first the merits of the petition in G.R. No.
146718.
G.R. No. 146718

Civil Case No. Q-28580 involved Muñoz’s complaint for the annulment of the deeds of absolute
sale dated December 28, 197240 and July 16, 1979,41 the cancellation of the spouses Go’s TCT
No. 258977, and the restoration and revival of Muñoz’s TCT No. 186306. The final judgment of
RTC-Branch 95 in Civil Case No. Q-28580 was in favor of Muñoz and against Emilia M. Ching and
the spouses Go. The problem arose when during the pendency of the said case, title and
possession of the subject property were transferred from the spouses Go, to BPI Family, and
finally, to the spouses Chan. BPI Family and the spouses Chan were never impleaded as parties
and were not referred to in the dispositive portion of the final judgment in Civil Case No. Q-
28580.

Muñoz questions in G.R. No. 146718: (1) the Order dated August 21, 1995 denying her Motion
for Contempt against the spouses Chan, Second Motion for Contempt against Samuel Go Chan
and Atty. Yabut, and Motion for an Alias Writ of Execution and Application for Surrender of the
Owner’s Duplicate Copy of TCT No. 53297; and (2) the Order dated October 3, 1995 denying her
Motion for Clarificatory Order, both issued by the RTC-Branch 95 in Civil Case No. Q-28580, and
upheld by the Court of Appeals in CA-G.R. SP No. 40019. In sum, Muñoz was seeking in her
aforementioned motions: (1) a categorical order from the RTC-Branch 95 that the final
judgment in Civil Case No. Q-28580 be executed against the spouses Chan; and (2) the
surrender and cancellation of the spouses Chan’s TCT No. 53297 and restoration of Muñoz’s
TCT No. 186306.

There is no merit in Muñoz’s petition in G.R. No. 146718.

Civil Case No. Q-28580 is an action for reconveyance of real property. In Heirs of Eugenio Lopez,
Sr. v. Enriquez,42 we described an action for reconveyance as follows:

An action for reconveyance is an action in personam available to a person whose property has
been wrongfully registered under the Torrens system in another’s name. Although the decree is
recognized as incontrovertible and no longer open to review, the registered owner is not
necessarily held free from liens. As a remedy, an action for reconveyance is filed as an ordinary
action in the ordinary courts of justice and not with the land registration court. Reconveyance is
always available as long as the property has not passed to an innocent third person for value. A
notice of lis pendens may thus be annotated on the certificate of title immediately upon the
institution of the action in court. The notice of lis pendens will avoid transfer to an innocent
third person for value and preserve the claim of the real owner.43 (Emphases ours.)

The rule is that: (1) a judgment in rem is binding upon the whole world, such as a judgment in a
land registration case or probate of a will; and (2) a judgment in personam is binding upon the
parties and their successors-in-interest but not upon strangers. A judgment directing a party to
deliver possession of a property to another is in personam; it is binding only against the parties
and their successors-in-interest by title subsequent to the commencement of the action. An
action for declaration of nullity of title and recovery of ownership of real property, or re-
conveyance, is a real action but it is an action in personam, for it binds a particular individual
only although it concerns the right to a tangible thing. Any judgment therein is binding only
upon the parties properly impleaded.44

Since they were not impleaded as parties and given the opportunity to participate in Civil Case
No. Q-28580, the final judgment in said case cannot bind BPI Family and the spouses Chan. The
effect of the said judgment cannot be extended to BPI Family and the spouses Chan by simply
issuing an alias writ of execution against them. No man shall be affected by any proceeding to
which he is a stranger, and strangers to a case are not bound by any judgment rendered by the
court. In the same manner, a writ of execution can be issued only against a party and not
against one who did not have his day in court. Only real parties in interest in an action are
bound by the judgment therein and by writs of execution issued pursuant thereto.45

A similar situation existed in Dino v. Court of Appeals,46 where we resolved that:

As the registered owner of the subject property, petitioners are not bound by decision in Civil
Case No. R-18073 for they were never summoned in said case and the notice of lis pendens
annotated on TCT No. 73069 was already cancelled at the time petitioners purchased the
subject property. While it is true that petitioners are indispensable parties in Civil Case No. R-
18073, without whom no complete relief could be accorded to the private respondents, the
fact still remains that petitioners were never actually joined as defendants in said case.
Impleading petitioners as additional defendants only in the execution stage of said case violated
petitioners’ right to due process as no notice of lis pendens was annotated on the existing
certificate of title of said property nor were petitioners given notice of the pending case,
therefore petitioners remain strangers in said case and the Order of the trial court involving
them is null and void, considering that petitioners are innocent purchasers of the subject
property for value.47

We further stress that Section 48 of Presidential Decree No. 1529, otherwise known as the
Property Registration Decree, clearly provides that "[a] certificate of title shall not be subject to
collateral attack. It cannot be altered, modified or cancelled except in a direct proceeding in
accordance with law." Herein, several Torrens titles were already issued after the cancellation
of Muñoz’s. Certificates of title had been successively issued to Emilia M. Ching, spouses Go, BPI
Family, and spouses Chan. Civil Case No. Q-28580, in which a final judgment had already been
rendered, specifically challenged the validity of the certificates of title of Emilia M. Ching and
the spouses Go only. To have the present certificate of title of the spouses Chan cancelled,
Muñoz must institute another case directly attacking the validity of the same.

The fact that the titles to the subject property of Emilia M. Ching and the spouses Go were
already declared null and void ab initio by final judgment in Civil Case No. Q-28580 is not
enough, for it does not automatically make the subsequent titles of BPI Family and the spouses
Chan correspondingly null and void ab initio.

It has long been ingrained in our jurisprudence that a void title may become the root of a valid
title if the derivative title was obtained in good faith and for value. Following the principle of
indefeasibility of a Torrens title, every person dealing with registered lands may safely rely on
the correctness of the certificate of title of the vendor/transferor, and he is not required to go
beyond the certificate and inquire into the circumstances culminating in the vendor’s
acquisition of the property. The rights of innocent third persons who relied on the correctness
of the certificate of title and acquired rights over the property covered thereby cannot be
disregarded and the courts cannot order the cancellation of such certificate for that would
impair or erode public confidence in the Torrens system of land registration.48

Hence, we pronounced in Republic v. Agunoy, Sr.49:

Here, it bears stressing that, by petitioner's own judicial admission, the lots in dispute are no
longer part of the public domain, and there are numerous third, fourth, fifth and more parties
holding Torrens titles in their favor and enjoying the presumption of good faith. This brings to
mind what we have reechoed in Pino v. Court of Appeals and the cases therein cited:

[E]ven on the supposition that the sale was void, the general rule that the direct result of a
previous illegal contract cannot be valid (on the theory that the spring cannot rise higher than
its source) cannot apply here for We are confronted with the functionings of the Torrens
System of Registration. The doctrine to follow is simple enough: a fraudulent or forged
document of sale may become the ROOT of a valid title if the certificate of title has already
been transferred from the name of the true owner to the name of the forger or the name
indicated by the forger.50 (Emphases ours.)

Although the RTC-Branch 95 had declared with finality in Civil Case No. Q-28580 that the titles
of Emilia M. Ching and the spouses Go were null and void, there is yet no similar determination
on the titles of BPI Family and the spouses Chan. The question of whether or not the titles to
the subject property of BPI Family and the spouses Chan are null and void, since they are
merely the successors-in-interest, assigns, or privies of Emilia M. Ching and the spouses Go,
ultimately depends on the issue of whether or not BPI Family and the spouses Chan obtained
their titles to the subject property in bad faith, i.e., with notice of Muñoz’s adverse claim and
knowledge of the pendency of Civil Case No. Q-28580. The latter is a factual issue on which we
cannot rule in the present petition, not only because we are not a trier of facts, but more
importantly, because it was not among the issues raised and tried in Civil Case No. Q-28580.

In support of her prayer for an alias writ of execution against BPI Family and the spouses Go,
Muñoz cites our ruling in Calalang v. Register of Deeds of Quezon City,51 in relation to De la Cruz
v. De la Cruz.52

De la Cruz is an action for reconveyance of Lot 671 founded on breach of trust filed by
Augustina de la Cruz, et al., against Lucia dela Cruz (Lucia) and Iglesia Ni Kristo (INK). We upheld
the validity of the sale of Lot 671 by Lucia to INK, and thereby validated the title of INK to the
said property.

Calalang actually involved two petitions: (1) a special civil action for certiorari and prohibition
originally filed by Virginia Calalang (Calalang) before this Court, and (2) a petition for injunction
with damages originally filed by Augusto M. de Leon (De Leon), et al., before the RTC and
docketed as Civil Case No. Q-45767. Calalang and De Leon, et al., assert titles that were adverse
to that of INK. De Leon, et al., in particular, claim that their titles to Lot 671 were derived from
Amando Clemente. Calalang and De Leon, et al., sought from the court orders enjoining INK
from building a fence to enclose Lot 671; requiring the Administrator of the National Land Titles
and Deeds Registration Administration (NLTDRA) to conduct an investigation of the anomaly
regarding Lucia’s reconstituted title to Lot 671; and dismissing the proceedings instituted by the
Register of Deeds for the cancellation of their titles. We dismissed the petitions of Calalang and
De Leon, et al., on the ground of res judicata, the legality or validity of the title of INK over Lot
671 had been settled with finality in De la Cruz. De la Cruz was applied to Calalang and De Leon,
et al., since the facts on which such decision was predicated continued to be the facts on which
the petitions of Calalang and De Leon, et al., were based.

Muñoz’s reliance on Calalang is misplaced. There are substantial differences in the facts and
issues involved in Calalang and the present case.

In Calalang, there is duplication or overlapping of certificates of title issued to different persons

over the same property. We already upheld in De la Cruz the validity of the certificate of title of
INK over Lot 671, which effectively prevents us from recognizing the validity of any other
certificate of title over the same property. In addition, Lucia, the predecessor-in-interest of INK,
had her certificate of title judicially reconstituted. The judicial reconstitution of title is a
proceeding in rem, constituting constructive notice to the whole world. Hence, we rejected the
petitions of Calalang and De Leon, et al., to enjoin INK from building a fence enclosing Lot 671,
and the concerned public authorities from instituting appropriate proceedings to have all other
certificates of title over Lot 671 annulled and cancelled.

In the instant case, there has been no duplication or overlapping of certificates of title. The
subject property has always been covered by only one certificate of title at a time, and at
present, such certificate is in the spouses Chan’s names. As we have previously discussed
herein, Muñoz cannot have the spouses Chan’s TCT No. 53297 cancelled by a mere motion for
the issuance of an alias writ of execution in Civil Case No. Q-28580, when the spouses Chan
were not parties to the case. Civil Case No. Q-28580 was a proceeding in personam, and the
final judgment rendered therein – declaring null and void the titles to the subject property of
Emilia M. Ching and the spouses Go – should bind only the parties thereto. Furthermore,
despite the void titles of Emilia M. Ching and the spouses Go, the derivative titles of BPI Family
and the spouses Chan may still be valid provided that they had acquired the same in good faith
and for value.

More in point with the instant petition is Pineda v. Santiago.53 Pineda still involved Lot 671. INK
sought from the RTC a second alias writ of execution to implement the judgment in Calalang
against Conrado Pineda (Pineda), et. al. In opposing the issuance of such writ, Pineda, et al.,
asserted that they held titles to Lot 671 adverse to those of Lucia and INK and that they were
not parties in De la Cruz or in Calalang. In its assailed order, the RTC granted the second alias
writ of execution on the basis that the issue of ownership of Lot 671 was already determined
with finality in favor of Lucia and INK. The writ ordered the deputy sheriff to eject Pineda, et al.,
from Lot 671. When the matter was brought before us, we annulled the assailed order as the
writ of execution issued was against Pineda, et al., who were not parties to Civil Case No. Q-
45767, the ejectment suit instituted by De Leon, et al. We elaborated in Pineda that:

Being a suit for injunction, Civil Case No. Q-45767 partakes of an action in personam. In
Domagas v. Jensen, we have explained the nature of an action in personam and enumerated
some actions and proceedings which are in personam, viz:

"The settled rule is that the aim and object of an action determine its character. Whether a
proceeding is in rem, or in personam, or quasi in rem for that matter, is determined by its
nature and purpose, and by these only. A proceeding in personam is a proceeding to enforce
personal rights and obligations brought against the person and is based on the jurisdiction of
the person, although it may involve his right to, or the exercise of ownership of, specific
property, or seek to compel him to control or dispose of it in accordance with the mandate of
the court. The purpose of a proceeding in personam is to impose, through the judgment of a
court, some responsibility or liability directly upon the person of the defendant. Of this
character are suits to compel a defendant to specifically perform some act or actions to fasten a
pecuniary liability on him. An action in personam is said to be one which has for its object a
judgment against the person, as distinguished from a judgment against the propriety to
determine its state. It has been held that an action in personam is a proceeding to enforce
personal rights or obligations; such action is brought against the person. As far as suits for
injunctive relief are concerned, it is well-settled that it is an injunctive act in personam. In
Combs v. Combs, the appellate court held that proceedings to enforce personal rights and
obligations and in which personal judgments are rendered adjusting the rights and obligations
between the affected parties is in personam. Actions for recovery of real property are in
personam."

The respondent judge's jurisdiction is, therefore, limited to the parties in the injunction suit. To
stress, the petition for injunction, docketed as Civil Case No. Q-45767, was filed only by therein
petitioners Augusto M. de Leon, Jose de Castro, Jose A. Panlilio, Felicidad Vergara Vda. De
Pineda, Fernando L. Vitug I, Fernando M. Vitug II, Fernando M. Vitug III, and Faustino Tobia, and
later amended to include Elena Ostrea and Feliza C. Cristobal-Generoso as additional
petitioners therein, against Bishop Eraño Manalo, in his capacity as titular and spiritual head of
I.N.K. Herein petitioners Conrado Pineda, et al. never became parties thereto. Any and all
orders and writs of execution, which the respondent judge may issue in that case can,
therefore, be enforced only against those parties and not against the herein petitioners
Conrado Pineda, et al. In issuing the assailed Order dated 22 April 1998, which directed the
issuance of the 2nd Alias Writ of Execution to eject non-parties (herein petitioners), the
respondent judge clearly went out of bounds and committed grave abuse of discretion.

The nature of the injunction suit — Civil Case No. Q-45767 — as an action in personam in the
RTC remains to be the same whether it is elevated to the CA or to this Court for review. An
action in personam does not become an action in rem just because a pronouncement
confirming I.N.K.'s title to Lot 671 was made by this Court in the Calalang decision. Final rulings
may be made by this Court, as the Highest Court of the Land, in actions in personam but such
rulings are binding only as against the parties therein and not against the whole world. Here lies
another grave abuse of discretion on the part of the respondent judge when he relied on the
Calalang decision in his assailed Order dated 07 May 1998 as if it were binding against the
whole world, saying:

"After evaluating the arguments of both parties, decisive on the incident is the decision of the
Supreme Court in favor of the respondent I.N.K., represented by its titular and spiritual head
Bishop Eraño G. Manalo, sustaining its ownership over the subject Lot 671. This Court could do
no less but to follow and give substantial meaning to its ownership which shall include all
dominical rights by way of a Writ of Execution. To delay the issuance of such writ is a denial of
justice due the I.N.K."

As a final word, this decision shall not be misinterpreted as disturbing or modifying our ruling in
Calalang. The final ruling on I.N.K.'s ownership and title is not at all affected. Private respondent
I.N.K., as the true and lawful owner of Lot 671 as ruled by the Court in Calalang, simply has to
file the proper action against the herein petitioners to enforce its property rights within the
bounds of the law and our rules. I.N.K.'s recourse of asking for the issuance of an alias writ of
execution against the petitioners in Civil Case No. Q-45767 and the respondent judge's orders in
said case, granting I.N.K.'s prayer and enforcing the alias writ of execution against the present
petitioners, constitutes blatant disregard of very fundamental rules and must therefore be
stricken down.54 (Emphases ours.)

Consistent with Pineda, and as appositely recommended by the RTC-Branch 95 and the Court of
Appeals in the present case, Muñoz’s legal remedy is to directly assail in a separate action the
validity of the certificates of title of BPI Family and the spouses Chan.

G.R. No. 142676

G.R. No. 142676 is Muñoz’s appeal of the dismissal of Civil Case No. 8286, the forcible entry
case she instituted against Samuel Go Chan and Atty. Yabut before the MeTC.

There is forcible entry or desahucio when one is deprived of physical possession of land or
building by means of force, intimidation, threat, strategy or stealth. In such cases, the
possession is illegal from the beginning and the basic inquiry centers on who has the prior
possession de facto. In filing forcible entry cases, the law tells us that two allegations are
mandatory for the municipal court to acquire jurisdiction: first, the plaintiff must allege prior
physical possession of the property, and second, he must also allege that he was deprived of his
possession by any of the means provided for in Section 1, Rule 70 of the Rules of Court, i.e., by
force, intimidation, threat, strategy, or stealth. It is also settled that in the resolution thereof,
what is important is determining who is entitled to the physical possession of the property.
Indeed, any of the parties who can prove prior possession de facto may recover such
possession even from the owner himself since such cases proceed independently of any claim
of ownership and the plaintiff needs merely to prove prior possession de facto and undue
deprivation thereof.55
Title is never in issue in a forcible entry case, the court should base its decision on who had
prior physical possession. The main thing to be proven in an action for forcible entry is prior
possession and that same was lost through force, intimidation, threat, strategy, and stealth, so
that it behooves the court to restore possession regardless of title or ownership.56

We more extensively discussed in Pajuyo v. Court of Appeals57 that:

Ownership or the right to possess arising from ownership is not at issue in an action for
recovery of possession. The parties cannot present evidence to prove ownership or right to
legal possession except to prove the nature of the possession when necessary to resolve the
issue of physical possession. The same is true when the defendant asserts the absence of title
over the property. The absence of title over the contested lot is not a ground for the courts to
withhold relief from the parties in an ejectment case.

The only question that the courts must resolve in ejectment proceedings is - who is entitled to
the physical possession of the premises, that is, to the possession de facto and not to the
possession de jure. It does not even matter if a party’s title to the property is questionable, or
when both parties intruded into public land and their applications to own the land have yet to
be approved by the proper government agency. Regardless of the actual condition of the title
to the property, the party in peaceable quiet possession shall not be thrown out by a strong
hand, violence or terror. Neither is the unlawful withholding of property allowed. Courts will
always uphold respect for prior possession.

Thus, a party who can prove prior possession can recover such possession even against the
owner himself. Whatever may be the character of his possession, if he has in his favor prior
possession in time, he has the security that entitles him to remain on the property until a
person with a better right lawfully ejects him. To repeat, the only issue that the court has to
settle in an ejectment suit is the right to physical possession.58 (Emphases ours.)

Based on the foregoing, we find that the RTC-Branch 88 erred in ordering the dismissal of Civil
Case No. 8286 even before completion of the proceedings before the MeTC. At the time said
case was ordered dismissed by RTC-Branch 88, the MeTC had only gone so far as holding a
hearing on and eventually granting Muñoz’s prayer for the issuance of a writ of preliminary
mandatory injunction.

Muñoz alleges in her complaint in Civil Case No. 8286 that she had been in prior possession of
the subject property since it was turned-over to her by the sheriff on January 10, 1994,
pursuant to the Alias Writ of Execution issued by the RTC-Branch 95 to implement the final
judgment in Civil Case No. Q-28580. The factual issue of who was in prior possession of the
subject property should be litigated between the parties regardless of whether or not the final
judgment in Civil Case No. Q-28580 extended to the spouses Chan. Hence, the pendency of the
latter issue in Civil Case No. Q-28580 before the RTC-Branch 95 did not warrant the dismissal of
Civil Case No. 8286 before the MeTC on the ground of litis pendentia. The two cases could
proceed independently of one another.

Samuel Go Chan and Atty. Yabut aver that the spouses Chan have never lost possession of the
subject property since acquiring the same from BPI Family in 1990. This is a worthy defense to
Muñoz’s complaint for forcible entry, which Samuel Go Chan and Atty. Yabut should
substantiate with evidence in the continuation of the proceedings in Civil Case No. 8286 before
the MeTC.

In addition, Civil Case No. 8286, a forcible entry case, is governed by the Revised Rule on
Summary Procedure, Section 19 whereof provides:
SEC. 19. Prohibited pleadings and motions. – The following pleadings, motions, or petitions shall
not be allowed in the cases covered by this Rule:

xxxx

(g) Petition for certiorari, mandamus, or prohibition against any interlocutory order issued by
the court.

The purpose of the Rule on Summary Procedure is to achieve an expeditious and inexpensive
determination of cases without regard to technical rules. Pursuant to this objective, the Rule
prohibits petitions for certiorari, like a number of other pleadings, in order to prevent
unnecessary delays and to expedite the disposition of cases.59

Interlocutory orders are those that determine incidental matters that do not touch on the
merits of the case or put an end to the proceedings.60 An order granting a preliminary
injunction, whether mandatory or prohibitory, is interlocutory and unappealable.611avvphil

The writ of preliminary mandatory injunction issued by the MeTC in its Order dated May 16,
1994, directing that Muñoz be placed in possession of the subject property during the course of
Civil Case No. 8286, is an interlocutory order. Samuel Go Chan and Atty. Yabut assailed the said
order before the RTC-Branch 88 via a petition for certiorari, docketed as Civil Case No. Q-94-
20632. The RTC-Branch 88 gave due course to said petition, and not only declared the MeTC
Order dated May 16, 1994 null and void, but went further by dismissing Civil Case No. 8286.

The prohibition in Section 19(g) of the Revised Rule on Summary Procedure is plain enough. Its
further exposition is unnecessary verbiage.62 The petition for certiorari of Samuel Go Chan and
Atty. Yabut in Civil Case No. Q-94-20632 is clearly covered by the said prohibition, thus, it
should have been dismissed outright by the RTC-Branch 88. While the circumstances involved in
Muñoz’s forcible entry case against Samuel Go Chan and Atty. Yabut are admittedly very
peculiar, these are insufficient to except the petition for certiorari of Samuel Go Chan and Atty.
Yabut in Civil Case No. Q-94-20632 from the prohibition. The liberality in the interpretation and
application of the rules applies only in proper cases and under justifiable causes and
circumstances. While it is true that litigation is not a game of technicalities, it is equally true
that every case must be prosecuted in accordance with the prescribed procedure to insure an
orderly and speedy administration of justice.63

Nonetheless, even though the peculiar circumstances extant herein do not justify the dismissal
of Civil Case No. 8286, they do require limiting pro hac vice the reliefs the MeTC may accord to
Muñoz in the event that she is able to successfully prove forcible entry by Samuel Go Chan and
Atty. Yabut into the subject property (i.e., that the sheriff actually turned-over to Muñoz the
possession of the subject property on January 10, 1994, and that she was deprived of such
possession by Samuel Go Chan and Atty. Yabut on February 2, 1994 by means of force,
intimidation, threat, strategy, and stealth). Taking into account our ruling in G.R. No. 146718 –
that the final judgment in Civil Case No. Q-28580 does not extend to the spouses Chan, who
were not impleaded as parties to the said case – the MeTC is precluded from granting to Muñoz
relief, whether preliminary or final, that will give her possession of the subject property.
Otherwise, we will be perpetuating the wrongful execution of the final judgment in Civil Case
No. Q-28580. Based on the same reason, Muñoz can no longer insist on the reinstatement of
the MeTC Order dated May 16, 1994 granting a preliminary mandatory injunction that puts her
in possession of the subject property during the course of the trial. Muñoz though may recover
damages if she is able to prove wrongful deprivation of possession of the subject property from
February 2, 1994 until the finality of this decision in G.R. No. 146718.

WHEREFORE, in view of the foregoing, we:

 (1) GRANT Emerita Muñoz’s petition in G.R. No. 142676. We REVERSE and SET ASIDE the
Decision dated July 21, 1995 and Resolution dated March 9, 2000 of the Court of
Appeals in CA-G.R. SP No. 35322, which affirmed the Orders dated June 10, 1994 and
August 5, 1994 of the Regional Trial Court, Branch 88 of Quezon City in Civil Case No. Q-
94-20632. We DIRECT the Metropolitan Trial Court, Branch 33 of Quezon City to
reinstate Emerita Muñoz’s complaint for forcible entry in Civil Case No. 8286 and to
resume the proceedings only to determine whether or not Emerita Muñoz was forcibly
deprived of possession of the subject property from February 2, 1994 until finality of
this judgment, and if so, whether or not she is entitled to an award for damages for
deprivation of possession during the aforementioned period of time; and

(2) DENY Emerita Munoz’s petition in G.R. No. 146718 for lack of merit, and AFFIRM the
Decision dated September 29, 2000 and Resolution dated January 5, 2001 of the Court
of Appeals in CA-G.R. SP No. 40019, which in turn, affirmed the Orders dated August 21,
1995 and October 3, 1995 of the Regional Trial Court, Branch 95 of Quezon City in Civil
Case No. Q-28580.

No pronouncement as to costs.

SO ORDERED.