G.R. No. L-38510 March 25, 1975

SPOUSES DOLORES MEDINA and MOISES BERNAL, vs. THE HONORABLE NELLY L. ROMERO VALDELLON OF THE COURT OF FIRST INSTANCE OF MALOLOS, BULACAN, SPOUSES CIPRIANO VILLANUEVA and RUFINA PANGANIBAN,

Petition to review by certiorari the order dated October 23, 1973 of the Hon. Nelly L. Romero Valdellon, Judge of the Court of First Instance of Bulacan, Branch I, which dismissed with costs against the plaintiffs its Civil Case No. 4353-M, entitled "Spouses Dolores Medina and Moises Bernal, plaintiffs, vs. Spouses Cipriano Villanueva and Rufina Panganiban, defendants."

The complaint in Civil Case No. 4353-M of the Court of First Instance of Bulacan alleges that plaintiffs (petitioners in this case) are the owners of a parcel of land situated at Bo. San Pascual, Hagonoy, Bulacan, with an assessed value of P800.00 which was purchased sometime in April 1967 from Margarita Punzalan, Rosal Punzalan, Quaquin Gaddi and Paulina Gaddi; "that as defendants are family friends of the plaintiffs, defendants were allowed to remain in the premises and to construct their residential house, subject to the condition that defendants will return unto the plaintiffs the premises upon demand"; "that much to the surprise of the plaintiffs-spouses, on demand, defendants-spouses refused and remain obstinate in their refusal to surrender the property in question"; that because of said defendants' unjustified acts plaintiffs had to institute action and incur damage of P500 as expenses for court litigation; that "the reasonable value of the use of the premises is P100 a month, taking into consideration its commercial value"; and prayed that the defendants be ordered "to vacate the premises and surrender unto plaintiffs" the said property and defendants be ordered to pay plaintiffs "the amount of P500 as incidental expenses and the amount of P100 a month from the filing of this action to the time they surrender its possession to the plaintiffs".

A subsequent motion to amend and admit amended complaint was filed by plaintiffs, the amendment consisting of:

4. That as defendants-spouses are family friends of the plaintiffs, they (defendants) were allowed to build a small house in the premises in April 1967, subject to the condition that they will return to the plaintiffs the premises in 1969;

5. That much to the surprise of the plaintiffs-spouses on demand, defendants-spouses refused and remains obstinate in their refusal to surrender the property in question claiming that they are the owners thereof;

A motion to dismiss the complaint and an opposition to the motion to amend and admit the amended complaint filed by the defendants (respondents in this case) preceded the respondent court's questioned order of October 30, 1973, that dismissed the complaint on the ground of "there being another case pending between the same parties over the same property, namely Land Registration Case No. 2814 of this Court." Petitioners' motion for reconsideration was denied by respondent court in its order dated February 8, 1974.

The only legal issues raised are:

Whether or not the pendency of a land registration case will bar the institution of an action for the recovery of possession; and in the negative, whether or not the respondent judge can be countenanced in her act of dismissing the latter case in view of the pendency of the land registration case.

When this Court (First Division) on May 10, 1974, resolved "without giving due course to the petition, to require the respondents to comment thereon, within 10 days from notice, and both parties to state whether or not there is any valid reason why Civil Case No. 4353-M of the respondent court should not be tried and decided jointly with Land Registration Case No. 2814 of Branch VI of said court, considering that the claim of the plaintiffs in Civil Case No. 4353-M (herein petitioners) for damages due to alleged illegal occupancy of the land involved by the defendants (respondents herein) may not be properly passed upon and adjudicated in the land registration case, where only the question of title to the property sought to be registered will be decided between the applicants and oppositors," counsel for respondents, Rosendo G. Tansinsin Jr., included in his Manifestation and/or Comment, dated May 20, 1974, the following statement: "nevertheless, from the reading of the resolution aforequoted, one will certainly have no doubt that there is no need for the respondents to make any comment on the matter as the same will be an exercise of futility since this Honorable Court has not only given due course to the petition, but has actually decided the same, ... " By reason of the disrespectful tone of the aforesaid statement, said counsel was required by this Court's (First Division) resolution of May 29, 1974, to show cause why he should not be dealt with for contempt of court.

The petitioners by way of compliance with this Court's aforementioned resolution of May 10, 1974, requested that the order of October 30, 1973 of the respondent court be set aside and that the Court of First instance of Bulacan (Branch I and VI) be ordered to consolidate, try and decide Civil Case No. 4353-M of Branch I and L.R.C. Case No. 2814 of Branch VI.

The explanation submitted by respondents' counsel, although it contained an apology, was not considered satisfactory by this Court. Hence in its resolution of July 10, 1974, Atty. Rosendo G. Tansinsin Jr. was declared in contempt of court and suspended from the practice of law for a period of three months. His subsequent motion for reconsideration and personal plea for leniency, sympathy and understanding, coupled with his repeated apology and regret and the fact that his act appeared to be his first offense of that nature, made this Court reconsider the suspension from the practice of law and, instead, ordered him to pay a fine of P300.00 which he has paid.

On the principal issues raised in this case, We have no doubt that the nature of the action embodied in the complaint in Civil Case No. 4353-M is one for recovery of possession brought before the Court of First Instance by the alleged owners of a piece of land against the defendants who were supposed to have unlawfully continued in possession since 1969 when they were supposed to return it to plaintiffs, plus damages. That the action is not for unlawful detainer contemplated in Rule 70 of the Rules of Court, which falls under the exclusive original jurisdiction of the city courts or municipal courts, is very apparent because an action of unlawful detainer is defined as "withholding by a person from another for not more than one year, of the possession of a land or building to which the latter is entitled after the expiration or termination of the former's right to hold possession by virtue of a contract express or implied". (Tenorio vs. Gomba 81 Phil. 54; Dikit vs. Ycasiano 89 Phil. 44) On the basis of the allegations of the complaint in Civil case No. 4363-M, the defendants withheld possession from the plaintiffs since 1969 or very much more than the one year period contemplated in unlawful detainer cases at the time the complaint was filed in July of 1973. Not all cases of dispossession are covered by Rule 70 of the Rules of Court (Forcible Entry and Unlawful Detainer cases) because whenever the owner of property is dispossessed by any other means than those mentioned in the aforementioned rule, he may initiate and maintain a plenary action to recover possession in the Court of First Instance, and it is not necessary for him to wait until the expiration of one year before commencing such action. (Gumiran vs. Gumiran, 21 Phil. 174) It may also be brought after the expiration of said period of one year, if no action had been initiated for forcible entry and detainer during that time in the inferior court. This plenary action to recover possession (accion publiciana) must be instituted in the Court of First Instance as was done in this case.

The respondent court's action in dismissing Civil Case No. 4353-M on the ground that there is another pending case (L.R.C. No. 2814 of Branch VI of the same court) between the same parties over the same property is to Our mind rather precipitate, for We find sufficient merit in petitioners' contention that the rights sought to be enforced and the reliefs prayed for in Civil Case 4353-M (recovery of possession and damages) are entirely separate and distinct from that sought in L.R.C. Case No. 2814 (where petitioners as oppositors are seeking the exclusion of their land from that of private respondents' claim of title over a bigger tract of land). It is likewise true that the Court of First Instance of Bulacan (Branch VI) acting as a land registration court has a limited and special jurisdiction confined to the determination of the legality and propriety of the issue of title over the land subject matter of registration, and it has no power to entertain issues of rightful possession and claim for damages emanating from ownership. It is a fundamental principle in the law governing unlawful detainer cases (including recovery of possession cases) that a mere plea of title or ownership over the disputed land by the defendant cannot be used as a sound legal basis for dismissing an action for recovery of possession because an action for recovery of possession can be maintained even against the very owner of the property. (Prado vs. Calpo et al, G.R. No. L-19379, April 30, 1964) In the case at bar, there is not even a plea of title on the part of private respondents over the disputed property but a mere allegation that there is another action (L.R.C. No. 2814 pending in Branch VI of that court) for registration of title to that land the possession of which is being recovered by petitioners in Civil Case No. 4353-M. An action for recovery of possession is totally distinct and different from an action for recovery of title or ownership. In fact, a judgment rendered in a case of recovery of possession is conclusive only on the question of possession and not that of ownership. It does not in any way bind the title or affect the ownership of the land or building. (Sec. 7, Rule 70, Revised Rules of Court)

The inevitable conclusion from the foregoing is that Civil Case No. 4353-M (for recovery of possession and damages) was arbitrarily and erroneously dismissed on the basis of the alleged pendency of another action (L.R.C. No. 2814 pending in Branch VI of the same court), because while identity of parties may be established in both cases, there is no identity of cause of action or of rights asserted and relief prayed for, so that judgment which may be rendered in one case would not necessarily result in res judicata for the other case.

We cannot see any sufficient reason for any of the parties in this case to object to the consolidation of the trial of both cases (L.R.C. Case No. 2814 and Civil Case No. 4353-M), since the evidence that may be presented by the parties involving

possession and ownership of the disputed parcel of land may facilitate an expeditious termination of both cases. While the issues raised in both cases are not exactly identical, the evidence involving the issues of possession and ownership over the same land must be related and its presentation before one court of justice would redound to a speedy disposition of this litigation.

WHEREFORE, the respondent court's orders of October 30, 1973, and February 8, 1974, are hereby declared null and void and set aside; the complaint and amended complaint in Civil Case No. 4353-M revived; both the respondent Judge and the Presiding Judge, Branch VI, of the Court of First Instance of Bulacan, being directed to consolidate the trial of L.R.C. No. 2814 and Civil Case No. 4353-M in one branch of that court. Costs against private respondents.

SO ORDERED

G.R. No. L-30272 February 28, 1985

RIZAL CEMENT CO., INC., vs. CONSUELO C. VILLAREAL, ISABEL C. VILLAREAL, FLAVIANO C. VILLAREAL, ALFREDO V. GOMEZ, AURORA V. GOMEZ and the COURT OF APPEALS,

Petition for Review on certiorari of the decision of the defunct Court of Appeals in CA- G.R. No. 36700 which REVERSED the decision of the then Court of First Instance of Rizal in Land Registration Case No. 1204, LRC Rec. No. N-10480.

Sometime in December 1955, private respondents filed with the then Court of First Instance of Rizal in Pasig, an Application for Registration, alleging, inter alia:

1. That the said land consists of two agricultural lots bounded and described as shown on plan Psd-147662 as Lots Nos. 1 and 2 and technical description attached hereto and made integral part hereof;

2. That Lots Nos. 1 and 2 of plan Psd-147662 at the last assessment for taxation were assessed at a total amount of ONE THOUSAND FIVE HUNDRED (P1, 500.00) PESOS per Tax Declaration Nos. 11994 and 11995 in the values of ONE THOUSAND ONE HUNDRED NINETY (P1,190.00) PESOS and THREE HUNDRED TEN (P 310.00) PESOS, respectively, in the Land Records of Rizal Province;

3. That to the best of their knowledge and belief, there is no mortgage or encumbrance of any kind whatsoever affecting said parcels of land nor is there any person having any estate or interest thereon, legal or equitable in possession, remainder, reversion or expectancy;

4. That the applicants have acquired said lands by purchase from the spouses VICTORIANO CERVO and IGNACIA GUILLERMO as evidenced by a Deed of Sale executed by the latter in favor of the former, before Notary Public for the City of Manila, Mr. Manuel M. Parades on the 3rd day of November, 1955, per Doc. No. 352, Page No. 42, Book No. II, Series of 1955;

5. That the said parcels of land are not occupied by anybody;

xxx xxx xxx

8. That the said lots included in this application adjoins the National Road and the applicants do not claim any part of the said National Road;

xxx xxx xxx

Petitioner then prayed that the aforesaid parcels be brought under the operation of the Land Registration Act, and to have the title thereto confirmed and registered in their names.

Petitioner filed an OPPOSITION to said application alleging —

That the Rizal Cement Co., Inc. is the owner of unregistered three (3) parcels of land known as Lots Nos. 1, 2 and 4, located in Darangan, Binangonan Rizal, the full technical description and bearing distance of which can be found in Plan Psu-2260 approved by the Director of lands in 1912;

That the land which is the subject of this petition for registration, full technical description of which are found in Psu-147662 approved by the Director of Lands in October, 1955, covers portions of Lots 1 and 4 of Psu-2260;

That Lot No. 1 under Psu-2260 contains an area of 122,982 square meters a portion of which is designated as Lot No. 2 of Psu-147662 Containing an area of 6,133 square meters;

That Lot No. 4 of Psu-2260 contains an area of 27,530 square meters, a portion of which is designated as Lot No. I of Psu-147662 containing an area of 19,916 square meters; and

That the oppositor Rizal Cement Co., Inc. is in possession of said land and has been religiously paying the real estate tax in the Municipality of Binangonan, Rizal from the time it had acquired said property from the previous owner (Old Tax Declaration No. 30662) now 10570.

Petitioner then prayed that the said petition be dismissed.

Private respondents, in REPLY to said OPPOSITION, countered that the whole three (3) parcels of land known as Lots Nos. 1, 2 and 4 of Plan Psu-2260 do not belong to the petitioner; that a portion of Lot No. 1 consisting of 6,133 square meters and portion of Lot No. 4 consisting of 19,916 square meters belong to them; that they and their predecessors-in-interest have been in continuous, adverse and open possession of said portion since time immemorial; and that they have been religiously paying the real estate taxes thereon.

After trial, judgment was rendered by the Court of First Instance on April 28, 1965 which was amended on May 21, 1965, denying the application for registration and ordering the issuance of a decree of registration after finality of said decision in the name of Rizal Cement Company.

Respondents appealed to the then Court of Appeals which reversed and set aside the lower court's decision. Petitioner moved for reconsideration but the appellate court denied the motion in its Resolution of February 11, 1969.

Hence, the present petition alleging that the Court of Appeals, in reversing the decision of the trial court, has arrived at grossly mistaken, absurd and impossible conclusions of law and has decided the appeal in a manner totally at war with and entirely contrary to law and the applicable decisions of this Court. In fine, petitioner submits the following errors allegedly committed by the appellate court for Our review and consideration:

a) Reliance on the Deed of Sale purporting to have been executed by Maria Certeza in 1924 in favor of Apolonia Francisco, the due execution of which have been duly established, and made capital of this deed of sale as having ejected the

transfer of rights over the lots in question, successively from the original vendor down to herein private respondents;

b) Giving much weight to private respondents evidence to the effect that former Justice Mariano de Joya and one Gonzalo Certeza were former owners of the property in question, and that they are the predecessors-in-interest of the applicants-respondents. However, the Court of Appeals failed to consider the fact that these persons who were then available and were the best witnesses to substantiate applicants' claim, were not presented as witnesses thereby giving rise to the legal presumption that their testimonies would have been adverse had they testified in this case;

c) Failure of the Court of Appeals to consider the fact that the two (2) lots sought to be registered by private respondents were not listed in the inventory of Maria Certeza's properties submitted to the court;

d) Failure of the Court of Appeals to rule that private respondents were not able to prove that the properties covered by Exhibit "H" were the same properties covered in Exhibit "I". The Court of Appeals has acted contrary to the doctrine laid down in land registration cases to the effect that an applicant must prove not only the genuineness of his title but also the Identity of the land applied for;

e) Stressing that the evidence of petitioner (then oppositor) was weak to substantiate its claim but failed to apply the doctrine that the burden is upon the applicant for registration of land to prove satisfactorily that he is the owner and it is not enough to prove that the property does not belong to the opponent. The evidence must be absolute and not merely preponderant; and

f) In stating that applicants by themselves and their predecessors-in-interest have an unbroken adverse possession under claim of ownership for over thirty years thus failing to consider that petitioner has also been in possession of the properties since 1911, while several portions thereof were only under lease to several persons.

Based on respondents-applicants' testimonial and documentary evidence, it appears that the property applied for, designated as Lots Nos. 1 and 2 of Plan Psu-147662, have a total area of 26,015 square meters; that these lots originally belonged to one Maria Certeza; that upon her death, the property was involved in a litigation between her grandchildren and Gonzalo Certeza and that the lots were given by the latter to former Justice de Joya as the latter's attorney's fees; that the lots were then sold by de Joya to Filomeno Sta. Ana who, in turn sold the same to spouses Victoriano Cervo and Ignacia Guillermo in 1939; that sometime in November 1955, the said spouses sold the said lots to the herein applicants as shown by a duly notarized deed of sale; 1

that the spouses Cervo declared the property for taxation purposes in the name of the wife, Ignacia Guillermo, and paid for the realty taxes due thereon; that prior to the sale, the spouses Cervo had the two parcels surveyed first in 1950 and then in 1955

Upon the other hand, oppositor, (now petitioner) Rizal Cement Company, claims to be the owner of the subject lots, having bought the same from Maria Certeza, and to have been in continuous and adverse possession of the property since 1911, To substantiate its claim, petitioner submitted documentary evidence, the most important of which are the following —

(a) Plan Psu-2260 which covers the survey of a big tract of land for the company designated as Lots 1, 2 and 4 of the Plan with a total area of 210,644 square meters. The survey was made in 1911 and the plan was approved in 1912;

(b) A sketch plan of the geographical position of the real pro- parties of Madrigal and Company;

(c) Tax Declaration No. 1066 secured in 1949 from the Rizal Provincial Assessor which is a consolidation of all lands of the Rizal Cement Company located in Darangan with a total area of 2,496,712 square meters and which includes the land in litigation;

(d) Tax Declaration No. 10570 which cancels Tax Declaration No. 1066; and

(e) Real estate tax receipts issued for Madrigal and Company, covering among others the land applied for.

As to who had been in actual possession of the land in question, the Court of Appeals gave credence to the testimony of the witnesses for respondents applicants, namely:

(a) Santiago Picadizo — one of the tenants of the land from the time it was owned by Maria Certeza up to the present. He stated that he knew for a fact that the lots in question were given to Justice Mariano de Joya as attorney's fees, who in turn sold the same to Ignacia Guillermo; that from the tune he started working as tenant, he successively gave the share of the harvests to Maria Certeza; and that during all the time that the parcels of land were possessed by the previous owners, no other persons ever claimed ownership of the property.

(b) Isaac Reyes — who started working on one-half of the 2 parcels of land since 1934 up to the present, and declared that there was no other person other than Ignacia Guillermo who claimed ownership of the parcels in litigation; and

(c) Mr. Valentin Marqueza — rebuttal witness who averred that he began to live in Darangan, Binangonan, Rizal since 1910; that he bought a portion of his land from Maria Certeza when he was working with Rizal Cement Company in 1924; that the sale was evidenced by an absolute Deed of Sale; that he occupied the portion sold to him up to 1931; that ever since he possessed the property there were no other adverse claimants thereto; that he saw a small house on a portion of the land of Maria Certeza built by Rizal Cement Company who intended to make a location where it could built a factory; that after 4 to 5 months, the small house was removed, after which, this witness purchased that portion from Maria Certeza; that during his stay in Darangan, the company did not take possession of the land; that Maria Certeza had the possession of the land until her death and that the tenants gave the harvest of the land to Maria Certeza.

On this score the Court of Appeals in its assailed decision held and rightly so —

Being an attribute of ownership, appellants' possession of the land in question goes far to tip the scale in their favor. The right to possess flows from ownership. No person wig suffer adverse possession by another of what belongs to him. Were the oppositor- appellee rightful owner of the land in question, it would not have allowed the tenants to cultivate the land and give the owner's share to appellants and/or their predecessors. It would have opposed the survey for applicants' vendors on May 21 and 28, 1950 and July 31, 1955, but did not as shown in the surveyor's certificate, Exhibit E. If oppositor really bought Lot 2 from Maria Certeza in 1909 as claimed, it has not been explained how she could sell a portion thereof to Apolonia Francisco, married to Valentin Marquez for P100.00 on April 15, 1924 by deed, Exhibit R,-an ancient document -as confirmed by the husband in his deposition who as employee of oppositor would have known of its acquisition. On the other hand, applicants' vendors in mortgaging the two lots to Pedro Picones in 1952, Exhibits 0 and 01, for P11, 000.00, exercised a dominical act; and Aniano Bautista's testimony that the Cervos were not owners of the land challenges belief since Bautista was a witness to Exhibits 0 and 0-1, being uncle of Picones.

Very significantly petitioner did not present any witness in actual possession of the land in question.

As aptly found by the appellate court, respondents possess the property in the concept of an owner.

Possession is acquired by the material occupation of a thing or the exercise of a right or by the fact it is subject to the action of our will, or by the proper acts and legal formalities established for acquiring such right.

Petitioner's evidence, consisting of tax receipts, tax declaration and survey plan are not conclusive and indisputable basis of one's ownership of the property in question. Assessment alone is of little value as proof of title. Mere tax declaration does not vest ownership of the property upon the declarant. 3 Settled is the rule that neither tax receipts nor declaration of ownership for taxation purposes alone constitutes sufficient evidence of ownership or of the right to possess realty. They must be supported by other effective proofs. 4 Neither can the survey plan or technical descriptions prepared at the instance of the party concerned be considered in his favor, the same being self-serving.

Apropos thereto is the appellate court's finding that —

Against the chains of tax declarations presented by the applicants-appellants which originated beyond 1920 from Maria Certeza, undisputably the original owner of Lots 1 and 2, the oppositor-appellee presented no tax declaration which could refer specifically to the two lots in question. Tax Declaration No. 10570 (Exhibit 35-1949) for the oppositor-appellee admittedly does not indicate any of the two lots in question. Indeed, the senior deputy assessor of Rizal, as witness for the oppositor-appellee, categorically declared that his office refused to issue tax declaration for the land covered by its Plan Psu-2260, for the reason that the same had been in possession of various persons in Darangan.

Anent the allegation of petitioner to the effect that tile subject lands, full technical description of which are found in Psu-147662 approved in October 1955, covers portion of Lots 1 and 4 of Psu-2260, the Court of Appeals correctly observed —

The only documentary evidence which the oppositor-appellee may capitalize for its claim of ownership is the notation in applicants' plan Exhibit D that the lots in question are portions of a previous survey made in 1911 for oppositor, Plan Psu-2260. The survey plan however has no original record in the Bureau of Lands. Be that as it may, survey plans merely delimit areas sought to be registered. Besides, the annotation relied upon by the lower court in its judgment in favor of the oppositor is nothing more than what it imports - a previous survey. Neither the plan nor its approval carried with it any adjudication of ownership. The, Director of Lands through approval merely certifies that the survey has been made in accordance with approved methods and regulations in force. (Philippine Executive Commission vs. Antonio, CA-G.R. No. 8456, February 12, 1943)

A painstaking review of the evidence on record failed to disclose any evidence or circumstance of note sufficient enough to overrule said findings and conclusions.

The jurisdiction of this Court in cases brought to Us from the Court of Appeals (now Intermediate Appellate Court) is limited to the review of errors of law, said appellate court's findings of fact being conclusive upon us except 6 (1) when the conclusion is a finding grounded entirely on speculation, surmises or conjectures; (2) when the inference made is manifestly absurd, mistaken or impossible; (3) when there is grave abuse abuse of discretion in the appreciation of facts; (4) when the judgment is premised on a misapprehension of facts; (5) when the findings of fact are conflicting; and (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 appellant and appellee, none of which obtain in the case at bar.

The appellate court did what is required of it under the law and it cannot be faulted after reaching a conclusion adverse to herein petitioner. The decision on the merits of the case hinges on the determination of the pertinent facts, and the findings of the Court of Appeals when supported by substantial evidence are beyond our power of review.

WHEREFORE, the petition is hereby DISMISSED and the decision dated January 6, 1969 of the Court of Appeals (now Intermediate Appellate Court) is hereby AFFIRMED. Costs against petitioner.

SO ORDERED..

G.R. No. L-50264 October 21, 1991

IGNACIO WONG, vs. HON. LUCAS D. CARPIO, as Presiding Judge, Court of First Instance of Davao del Sur, Branch V and MANUEL MERCADO, respondents.

This is a petition for review on certiorari, certified to this Court by the Court of Appeals as it involves purely question of law, seeking the annulment of the September 29, 1978 decision of the then Court of First Instance ** of Davao del Sur, Branch V, in Civil Case No. 1258 which reversed the February 20, 1978 decision of the Municipal Court of Sta. Maria, *** Davao del Sur in an action for Forcible Entry (Civil Case No. 13) ordering the dismissal of the complaint as well as the counterclaim.

The undisputed facts of this case, as found by both the trial court and the then Court of First Instance of Davao del Sur, are as follows:

On the basis of the admission of parties in their respective pleadings, the oral testimonies of all witnesses for both plaintiff and defendants and the documentary evidence offered and admitted this Court finds that plaintiff Manuel Mercado acquired his rights to possess the land in litigation, particularly lot 3 (LRC) Pcs-295, (situated at Colonga, Sta. Maria, Davao del Sur) and which is particularly described and embraced in Transfer Certificate of title No. (T-4244) T-972 from William Giger by virtue of a deed of sale with right to repurchase which was executed in 1972 for a consideration of P3,500.00 (testimony of plaintiff, T.S.N., p. 3, hearing of January 7, 1977). Then, in 1973, William Giger again asked an additional amount of P2,500.00 from plaintiff and so he required William Giger to sign a new deed of Pacto de Retro Sale (Exhibit "A") on November 5,1973 at Davao City before Notary Public Gregorio C. Batiller (T.S.N., p. 5, hearing of January 7, 1977). In 1972, plaintiff began harvesting only the coconut fruits and he paid the taxes on the land (Exhibits B to E) for Mr. Giger. He went periodically to the land to make copra but he never placed any person on the land in litigation to watch it. Neither did he reside on the land as he is a businessman and storekeeper by occupation and resides at Lower Sta. Maria, Davao del Sur while the land in litigation is at Colongan, Sta. Maria. Neither did he put any sign or hut to show that he is in actual possession (p. 8, T.S.N., p. 7, hearing of January 14, 1978). He knew defendants' laborers were in the land in suit as early as August, 1976 and that they have a hut there but he did not do anything to stop them. Instead plaintiff was happy that there were people and a hut on the land in suit (p. 14, T.S.N., hearing of January 14, 1978).

Before July, 1976, defendant Ignacio Wong went to the land in litigation to find out if there were other people residing there or claiming it besides the owner and he found none. So, in July, 1976, defendant Ignacio Wong bought the parcel of land in litigation from William Giger and his wife Cecilia Valenzuela (Exhibit 5). After the execution of Exhibit 5, defendant Ignacio Wong asked for the delivery of the title to him and so he has in his possession TCT No. (T-4244) T-974 (Exhibit 6) in the name of William Giger. Mr. Wong declared the land in suit for taxation purposes in his name (Exhibit 7). He tried to register the pacto de retro sale with the Register of Deeds by paying the registration fee (Exhibit 8) but due to some technicalities, the pacto de retro sale could not be registered. The defendant Wong placed laborers on the land in suit, built a small farm house after making some clearings and fenced the boundaries. He also placed signboards (T.S.N., pp. 14-15, hearing of September 15, 1977). On September 27, 1976, plaintiff Manuel Mercado again went to the land in suit to make copras. That was the time the matter was brought to the attention of the police of Sta. Maria, Davao del Sur and the incident entered in the police blotter (Exhibit 11). Then on November 18, 1976, defendant Wong ordered the hooking of the coconuts from the land in litigation and nobody disturbed him. But on November 29, 1976, defendant received a copy of plaintiff's complaint for forcible entry with

summons to answer which is the case now before the Court. During the pendency of this instant complaint for forcible entry, spouses William Giger and Cecilia Valenzuela filed a case for reformation of instrument with the Court of First Instance of Digos, Davao del Sur against plaintiff Mercado (Exhibit 4). The case pertains to Exhibit "A" of plaintiff. (pp. 1-3, CA Decision, pp. 82-84, Rollo).

On the basis of the aforestated undisputed facts, the Municipal Court of Sta. Maria, Davao del Sur in its February 20, 1978 Decision found that herein petitioner (defendant Ignacio Wong) had prior, actual and continuous physical possession of the disputed property and dismissed both the complaint and the counter-claim.

On appeal, the then Court of First Instance of Davao del Sur, in its September 29, 1978 Decision drew a completely different conclusion from the same set of facts and ruled in favor of herein private respondent (plaintiff Manuel Mercado). The decretal portion of the said decision, reads:

WHEREFORE, the Court finds the plaintiff to have taken possession of the property earlier in point of time and defendant is an intruder and must, as he is hereby ordered to return, the possession of the land in question for the plaintiff, paying a monthly rental of P400.00 from August, 1976, till the property is returned with costs against the defendant. Judgment is reversed.

Petitioner filed the instant petition with the Court of Appeals. But the Court of Appeals, in its March 1, 1979 Resolution **** found that the only issue is a pure question of law — the correctness of the conclusion drawn from the undisputed facts and certified the case to this Court.

In its April 4, 1979 Resolution, the Second Division of this Court docketed the case in this Court and considered it submitted for decision.

Petitioner alleged two (2) errors committed by respondent judge, to wit:

A) THE CONCLUSION DRAWN BY RESPONDENT JUDGE THAT PETITIONER IS AN INTRUDER IS WITHOUT FACTUAL AND LEGAL BASIS FOR PURPOSES OF A FORCIBLE ENTRY.

B) THE CONCLUSION DRAWN BY RESPONDENT JUDGE THAT PETITIONER MUST PAY A MONTHLY RENTAL OF P400.00 FROM AUGUST, 1976 TILL THE PROPERTY IS RETURNED HAS NO LEGAL AND FACTUAL BASIS.

The petition is without merit.

Petitioner, in claiming that the private respondent has not established prior possession, argues that private respondent's periodic visit to the lot to gather coconuts may have been consented to and allowed or tolerated by the owner thereof for the purposes of paying an obligation that may be due to the person gathering said nuts and that a person who enters a property to gather coconut fruits and convert the same to copras may only be a hired laborer who enters the premises every harvest season to comply with the contract of labor with the true owner of the property.

The argument is untenable.

It should be stressed that "possession is acquired by the material occupation of a thing or the exercise of a right, or by the fact that it is subject to the action of our will, or by the proper acts and legal formalities for acquiring such right." (Art. 531, Civil Code; Rizal Cement Co., Inc. vs. Villareal, 135 SCRA 15 [1985]); and that the execution of a sale thru a public instrument shall be equivalent to the delivery of the thing, unless there is stipulation to the contrary . . . . If, however, notwithstanding the execution of the instrument, the purchaser cannot have the enjoyment and material tenancy of the thing and make use of it herself, because such tenancy and enjoyment are opposed by another, then delivery has not been effected. (Paras, Civil Code of the Philippines, Vol. II, 1989 Ed., p. 400).

Applying the above pronouncements on the instant case, it is clear that possession passed from vendor William Giger to private respondent Manuel Mercado by virtue of the first sale a retro (Exhibit A), and accordingly, the later sale a retro (Exhibit 5) in favor of petitioner failed to pass the possession of the property because there is an impediment — the possession exercised by private respondent. Possession as a fact cannot be recognized at the same time in two different personalities except in the cases of co-possession. Should a question arise regarding the fact of possession, the present possessor shall be preferred; if there are two possessions, the one longer in possession, if the dates of possession are the same, the one who presents a title; and if these conditions are equal, the thing shall be placed in judicial deposit pending determination of its possession or ownership through proper proceedings (Art. 538, Civil Code).

As to petitioner's query that "Is the entry of petitioner to the property characterized by force, intimidation, threat, strategy, or stealth in order to show that private respondent has had possession so that the case is within the jurisdiction of the inferior court?" (p. 15, Petition; p. 16, Rollo). The same is answered in the affirmative.

The act of entering the property and excluding the lawful possessor therefrom necessarily implies the exertion of force over the property, and this is all that is necessary. Under the rule, entering upon the premises by strategy or stealth is equally as obnoxious as entering by force. The foundation of the action is really the forcible exclusion of the original possessor by a person who has entered without right. The words "by force, intimidation, threat, strategy, or stealth" include every situation or condition under which one person can wrongfully enter upon real property and exclude another who has had prior possession therefrom. If a trespasser enters upon land in open daylight, under the very eyes of person already clothed with lawful possession, but without the consent of the latter, and there plants himself and excludes such prior possessor from the property, the action of forcible entry and detainer can unquestionably be maintained, even though no force is used by the trespasser other than such as is necessarily implied from the mere acts of planting himself on the ground and excluding the other party. (Tolentino, Civil Code of the Philippines, Vol. II, 1983 Ed., pp. 243-244; Drilon vs. Gaurana, 149 SCRA 342 [1987]).

Anent the award of rentals in favor of private respondent, the same is in order. Petitioner's argument that there is no legal or factual basis for the payment of monthly rentals because bad faith on the part of petitioner was never proved deserves no merit.

It should be noted that possession acquired in good faith does not lose this character except in the case and from the moment facts exist which show that the possessor is not unaware that he possesses the thing improperly or wrongfully. (Art. 528, Civil Code).

Possession in good faith ceases from the moment defects in the title are made known to the possessors, by extraneous evidence or by suit for recovery of the property by the true owner. Whatever may be the cause or the fact from which it can be deduced that the possessor has knowledge of the defects of his title or mode of acquisition, it must be considered sufficient to show bad faith. (Tolentino, Civil Code of the Philippines, Vol. II, p. 226). Such interruption takes place upon service of summons

(Manotok Realty vs. Judge Tecson, 164 SCRA 587 [1988] citing Mindanao Academy, Inc. v. Yap (13 SCRA 190 [1965]). In the latter case, this Court held:

. . . Although the bad faith of one party neutralizes that of the other and hence as between themselves their rights would be as if both of them had acted in good faith at the time of the transaction, this legal fiction of Yap's good faith ceased when the complaint against him was filed, and consequently the court's declaration of liability for the rents thereafter is correct and proper. A possessor in good faith is entitled to the fruits only so long as his possession is not legally interrupted, and such interruption takes place upon service of judicial summons (Arts. 544 and 1123, Civil Code).

A perusal of the records of the case shows that petitioner received private respondent's complaint for forcible entry with summons on November 29, 1976 (Rollo, p. 46). His good faith therefore ceased on November 29,1976. Accordingly, the computation of the payment of monthly rental should start from December, 1976, instead of August, 1976.

WHEREFORE, with the modification that the computation of the monthly rental should start from December, 1976 instead of August, 1976, the September 29, 1978 decision of respondent judge is Affirmed in all other respects, with costs against petitioner.

SO ORDERED.

G.R. No. 82680 August 15, 1994

NICANOR SOMODIO, vs. COURT OF APPEALS, EBENECER PURISIMA, and FELOMINO AYCO,

This is a petition for review on certiorari under Rule 45 of the Revised Rules of Court to reverse and set aside the Decision dated September 29, 1987 and the Resolution dated February 2, 1988 of the Court of Appeals in CA-G.R. SP No. 11602.

I

On October 21, 1974, Jose Ortigas executed an instrument designated as a Transfer of Rights, conveying to Wilfredo Mabugat the possession of a residential lot situated at Rajah Muda, Bula, General Santos City and described in the said instrument as:

Lot No. (Unnumbered), bounded on the North by Temporary Road, on the South by Customs Zone (Sarangani Bay), on the East by Public Land, and on the West by Public Land.

Nicanor Somodio, herein petitioner, contributed one-half of the purchase price. On October 22, 1974, Mabugat executed an Affidavit of Trust expressly recognizing the right of petitioner over one-half undivided portion of the lot. Later, petitioner discovered in the District Land Office that the lot was numbered "6328-X, Csd 2281-D." Thereafter, petitioner and Mabugat partitioned the property into two portions, with petitioner taking the western part. Immediately after the partition, petitioner took possession of his portion and planted thereon ipil-ipil trees, coconut trees and other fruit-bearing trees.

In 1976, petitioner began construction of a structure with a dimension of 22-by-18 feet on his lot. His employment, however, took him to Kidapawan, North Cotabato, and he left the unfinished structure to the case of his uncle. He would visit the property every three months or on weekened when he had time.

Sometime in October 1977, petitioner allowed respondent Felomino Ayco, to transfer his hut to petitioner's lot. About six years later, petitioner demanded that Ayco vacate the premises but such demand proved futile. Hence, on August 23, 1983, petitioner filed an action for unlawful detainer with damages against respondent Ayco before the Municipal Trial Court, Branch I, General Santos, docketed as Civil Case No. 2032-II.

Meanwhile, on June 26, 1983, respondent Ebenecer Purisima entered the land and constructed a house thereon. Four days later, petitioner filed against respondent Purisima a complaint for forcible entry before the same court docketed as Civil Case No. 2013-I. Said case was later consolidated with Civil Case No. 2032-II.

In his answer, respondent Purisima averred that the lot was a portion of the land subject of his application for miscellaneous sales patent with the Bureau of Lands. Purisima described the lot in question as:

Lot No. 6328-Y, CSD-2281-D, Bula, General Santos, Cotabato. Bounded on the North by 6328-X; on the South by Sarangani Bay; on the East by a Municipal Road;

and on the West by Lot No. 6328-W, containing an area of 1,095 square meters and covered by Tax Declaration No. 9647 (Rollo, p. 36; Emphasis supplied).

Respondent Purisima contended that his father, a geodetic engineer, had surveyed the parcel of land comprising of Lots Nos. 6427 and 6328 for the Small Farmers Fishpond Association, Inc. in February 1958, and that his father's survey plan was approved by the Director of Lands in 1960. Respondent Ayco, on the other hand, did not present any evidence but merely anchored his right to possess the property on the evidence of Purisima.

On April 30, 1986, the trial court rendered a decision finding that respondent Purisima built his house "almost on the spot where Somodio's unfinished house" stood "thru stealth and strategy," not knowing that the house was built on Lot No. 6328-X and not on Lot No. 6328-Y, the lot said respondent was claiming (Rollo, p. 43). The court went on to state that:

. . . . He (private respondent Purisima) was a frequent visitor in Rajah Muda and had sometimes stayed with Mrs. Maturan in Judge Purisima's house on the adjoining lots, and could not have remained unaware of the possession of Somodio. He must have depended on the thought that it was his father who made the subdivision survey and had fenced an area which he had claimed. He did not exactly verify that the area fenced by his father had an area of only 1,095 square meters, which did not include the are Lot No. 6328-X could eventually be standing on his property, for Lot No. 6328-X is not claimed by him and has not been applied for even by his father. His father has been abroad and has not taken steps to apply for Lot No. 6328-X. This lot is not declared for taxation purposes in the name of any claimant-applicant. Unless and until there would be an administrative proceedings and the title ultimately issued in favor of an applicant, the possession of the actual claimant and occupant has to be respected and maintained in the interest of public order . . . (Rollo, pp. 43-44).

The Municipal Trial Court further held that petitioner was the actual possessor of Lot No. 6328-X. The court did not believe respondent Ayco's claim that the administratrix of the estate of respondent Purisima's father authorized him to build a hut on Lot No. 6328-X in 1976. At any rate, the court said that respondent Ayco was willing to vacate the premises provided he be given financial assistance to do so (Rollo, pp. 43-44).

Nothing that the ocular inspection of the area showed that the houses of respondents Purisima and Ayco were "inside Lot No. 6328-X" and not on Lot No. 6328-Y, the Municipal Trial Court held that the case became one which entailed mere removal of the houses from the lot in question. Accordingly, the court ordered private

respondents to remove their respective houses, to deliver the land to petitioner, and to pay attorney's fees and litigation expenses.

On appeal, the Regional Trial Court, Branch 22, General Santos City, affirmed in toto the decision of the Municipal Trial Court. Respondent then elevated the cases on a petition for review to the Court of Appeals, which, in its decision dated September 27, 1987, set aside the decisions of the two trial courts and ordered the dismissal of the two complaints filed by petitioner.

The Court of Appeals held that herein petitioner had not "clearly and conclusively established physical, prior possession over Lot No. 6328-X."

Petitioner's motion for the reconsideration of the decision of the Court of Appeals having been denied, he filed the instant petition for review on certiorari.

We grant the petition.

II

The procedural issue raised by private respondents should first be resolved. The issue is whether the instant petition is proper considering that petitioner "merely touch(es) upon questions of fact which had been carefully considered" by the Court of Appeals (Rollo, p. 92). As a general rule, the findings of fact of the Court of Appeals are binding on this Court. This rule, however, is not without exceptions, one of which is when the factual findings of the Court of Appeals and the trial court are contrary to each other. In such a case, this Court may scrutinize the evidence on record in order to arrive at the correct findings based on the record (Valenzuela v. Court of Appeals, 191 SCRA 1 [1990]; Roman Catholic Bishop of Malolos, Inc. v. Intermediate Appellate Court, 191 SCRA 411 [1990]).

Upon a review of the records, we are convinced that petitioner indeed enjoyed priority of possession over Lot No. 6328-X, notwithstanding respondent Purisima's claim to the contrary.

In ejectment cases, the only issue for resolution is who is entitled to the physical or material possession of the property involved, independent of any claim of ownership set forth by any of the party-litigants. Anyone of them who can prove prior possession de facto may recover such possession even from the owner himself. This rule holds true regardless of the character of a party's possession, provided, that he has in his favor priority of time which entitles him to stay on the property until he is

lawfully ejected by a person having a better right by either accion publiciana or accion reivindicatoria (De Luna v. Court of Appeals, 212 SCRA 276 [1992]).

Petitioner took possession of the property sometime in 1974 when he planted the property to coconut trees, ipil- ipil trees and fruit trees. In 1976, he started the construction of a building on the property. It is immaterial that the building was unfinished and that he left for Kidapawan for employment reasons and visited the property only intermittently. Possession in the eyes of the law does not mean that a man has to have his feet on every square meter of ground before it can be said that he is in possession (Ramos v. Director of Lands, 39 Phil. 175 [1918]). It is sufficient that petitioner was able to subject the property to the action of his will.

Article 531 of the Civil Code of the Philippines provides:

Possession is acquired by the material occupation of a thing or the exercise of a right, or by the fact that it is subject to the action of our will, or by the proper acts and legal formalities established for acquiring such right.

Even if the Court of Appeals is correct in its finding that petitioner started introducing improvements on the land only in 1981, he still enjoyed priority of possession because respondent Purisima entered the premises only in 1983.

It should be emphasized that the Court of Appeals noted that none of the parties had produced tax declarations or applications as public land claimants. As such, what should have been scrutinized is who between the claimants had priority of possession.

Moreover, neither is the fact that respondent Purisima's father surveyed the property of help to his cause. As the Court of Appeals found, respondent Purisima's father surveyed the land for the Small Farmers Fishpond Association, Inc., not for himself. Although respondent Purisima now claims that Lot No. 6328-X was in payment of his fee for the services of his father and that he caused the construction of a perimeter wall in the area, these facts do not mean that respondent Purisima himself had prior possession. He did not present any proof that his father had authorized him to enter the land as his successor-in-interest. Neither did he present proof that between 1958, when his father allegedly took possession of the land, and 1983, when said respondent himself entered the land, his father ever exercised whatever right of

possession he should have over the property. Under these circumstances, priority in time should be the pivotal cog in resolving the issue of possession.

The Court of Appeals opined that petitioner had not properly identified the lot he had occupied. The matter of identification of the land, however, had been resolved by respondent Purisima's admission in his pleadings, as well as by two ocular inspections.

In his answer to the complaint, respondent Purisima claimed possession over Lot No. 6328-Y, while petitioner identified the lot adjacent to it, Lot

NO. 6328-X, as the area where private respondents built their houses. That these two lots are distinct from one another was resolved by the ocular inspection conducted by a Senior Geodetic Engineer of the Office of the City Engineer, who found that "south of lot 6328-H across a 10 meter wide road is lot 6328-Y and from thence to the south is lot 6328-X." On June 13, 1985, the Municipal Trial Court judge himself went to the premises in question and discovered that aside from the houses of respondents Purisima and Ayco, five other houses had been built on Lot No. 6328-X.

Petitioner's prior possession over the property, however, is not synonymous with his right of ownership over the same. As earlier stated, resolution of the issue of possession is far from the resolution of the issue of ownership. Forcible entry is merely a quieting process and never determines the actual title to an estate (German Management & Services, Inc. v. Court of Appeals, 177 SCRA 495 [1989]; Manuel v. Court of Appeals, 199 SCRA 603 [1991].

WHEREFORE, the decision of the Court of Appeals is REVERSED and SET ASIDE and that of the trial courts REINSTATED. Costs against private respondents.

SO ORDERED.

[G.R. No. 132518. March 28, 2000]

GAVINA MAGLUCOT-AW, CATALINA ORCULLO, RICHARD ESTANO, NIDA MAGLUCOT, MELANIA MAGLUCOT-CATUBIG, EMILIANO CATUBIG, LADISLAO SALMA, , vs. LEOPOLDO MAGLUCOT, SEVERO MAGLUCOT, WILFREDA MAGLUCOT-ALEJO and CONSTANCIO ALEJO,.

This petition for review on certiorari assails the Decision, dated 11 November 1997, of the Court of Appeals in CA-G.R. CV No. 48816 which reversed and set aside the Decision, dated 13 December 1994, of the Regional Trial Court, Branch 30 of Dumaguete City, Negros Oriental in an action for recovery of possession and damages.

The core issue in this case is whether a partition of Lot No. 1639 had been effected in 1952. Petitioners contend that there was already a partition of said lot; hence, they are entitled to exclusive possession and ownership of Lot No. 1639-D, which originally formed part of Lot No. 1639 until its partition. Private respondents, upon the other hand, claim that there was no partition; hence, they are co-owners of Lot No. 1639-D. Notably, this case presents a unique situation where there is an order for partition but there is no showing that the sketch/subdivision plan was submitted to the then Court of First Instance for its approval or that a decree or order was registered in the Register of Deeds.

The antecedent facts of the case are as follows:

Petitioners filed with the RTC a complaint for recovery of possession and damages alleging, inter alia, that they are the owners of Lot No. 1639-D. Said lot was originally part of Lot No. 1639 which was covered by Original Certificate Title No. 6775 issued in the names of Hermogenes Olis, Bartolome Maglucot, Pascual Olis, Roberto Maglucot, Anselmo Lara and Tomas Maglucot on 16 August 1927.[1] On 19 April 1952, Tomas Maglucot, one of the registered owners and respondents predecessor-in-interest, filed a petition to subdivide Lot No. 1639.[2] Consequently, on 13 May 1952, then CFI of Negros Oriental issued an order[3] directing the parties to subdivide said lot into six portions as follows:

a) Hermogenes Olis - lot 1639-A

b) Pascual Olis - lot 1639-B

c) Bartolome Maglucot - lot 1639-C

d) Roberto (Alberto) - lot 1639-D

Maglucot

e) Anselmo Lara - lot 1639-E

f) Tomas Maglucot - lot 1639-F.[4]

Sometime in 1963, Guillermo Maglucot rented a portion of Lot No. 1639-D (subject lot). Subsequently, Leopoldo and Severo, both surnamed Maglucot, rented portions of subject lot in 1964 and 1969, respectively, and each paying rentals therefor. Said respondents built houses on their corresponding leased lots. They paid the rental amount of P100.00 per annum to Mrs. Ruperta Salma, who represented the heirs of Roberto Maglucot, petitioners predecessor-in-interest. In December 1992, however, said respondents stopped paying rentals claiming ownership over the subject lot. Petitioners thus filed the complaint a quo. Sdaadsc

After trial, the lower court rendered judgment in favor of petitioners. The RTC found the existence of tax declarations in the names of Hermogenes Olis and Pascual Olis (purported owners of Lot Nos. 1639-A and 1639-B, respectively)[5] as indubitable proof that there was a subdivision of Lot No. 1639. It likewise found that Tomas Maglucot, respondents predecessor-in-interest, took active part in the partition as it was he, in fact, who commenced the action for partition.[6] The court a quo cited Article 1431 of the Civil Code which states that "[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." Applying said provision of law, it held that while there was no court order showing that Lot No. 1639 was partitioned, its absence could not be used by Tomas Maglucot, or respondents as his successors-in-interest, to deny the existence of an approved partition against the other co-owners who claim that there was one.[7] Said court, likewise, ruled that the tax declarations[8] over the houses of respondents, expressly stating that the same are constructed on the lots of Roberto Maglucot, constitute a conclusive admission by them of the ownership of the subject lot by the latter.[9]

The dispositive portion of the lower courts decision reads as follows:

WHEREFORE, on the basis of the foregoing discussion, judgment is hereby rendered in favor of the plaintiffs against the defendants ordering the latter:

1. To demolish their houses inside lot 1639-D, vacate the premises thereof and deliver the possession of the same to Plaintiffs;

2. To jointly and solidarily pay plaintiffs the sum of P15,000.00 for attorneys fees;

3. To each pay plaintiffs the sum of P100.00 every year from 1993 for actual damages representing the amount of unpaid rentals up to the time they actually vacate the premises in question; Sclaw

4. To pay the costs.[10]

On appeal, the CA reversed the decision of the RTC. The appellate court ruled that the sketch plan and tax declarations relied upon by petitioners are not conclusive evidence of partition.[11] The CA likewise found that the prescribed procedure under Rule 69 of the Rules of Court was not followed. It thus declared that there was no partition of Lot No. 1639.

Petitioners filed this petition for review on certiorari alleging that the CA committed the following reversible errors:

I

IN VIOLATING THE LAW ON ACQUISITIVE PRESCRIPTION PLAINTIFFS HAVING POSSESSED LOT 1639-D SINCE 1946;

II

IN VIOLATING THE LAW ON ESTOPPEL; THE FACT OF PAYMENT OF RENTALS AND OFFER TO BUY BY THE DEFENDANTS IS ADMISSION THAT THE AREA IN LOT 1639-D, HAD LONG BEEN ADJUDICATED TO PLAINTIFFS;

III

IN DECLARING THAT THERE WAS NO PRIOR PARTITION, CONTRARY TO THE FINDINGS OF THE TRIAL COURT, AND AGAINST THE EVIDENCE ON RECORD, OF WHICH IF PROPERLY CONSIDERED WOULD CHANGE THE OUTCOME OF THE CASE;

IV

IN DECLARING THAT THERE IS NO LAW OR JURISPRUDENCE APPLICABLE UNDER THE PREMISES; THIS WOULD ONLY SHOW THAT THE RECORD OF THE CASE WAS NOT PROPERLY SCRUTINIZED, AND THE LAW WAS NOT PROPERLY STUDIED; ESPECIALLY IN THE CASE AT BENCH THAT THE ORAL AND MUTUAL PARTITION HAPPENED DURING THE REGIME OF THE OLD RULES OF PROCEDURE;[12]

Petitioners maintain that Lot No. 1639 was mutually partitioned and physically subdivided among the co-owners and that majority of them participated in the actual execution of the subdivision. Further, the co-owners accepted their designated shares in 1946 as averred by Tomas Maglucot in his petition for partition.[13] Petitioners opine that in 1952, Tomas Maglucot himself initiated a court proceeding for a formal subdivision of Lot No. 1639. In said petition, he averred that only Hermogenes Olis and the heirs of Pascual Olis were not agreeable to the partition.[14] Petitioners further contend that respondents admitted in their tax declarations covering their respective houses that they are "constructed on the land of Roberto Maglucot."[15] Simply put, petitioners vigorously assert that respondents are estopped from claiming to be co-owners of the subject lot in view of the mutual agreement in 1946, judicial confirmation in 1952, and respondents acquiescence because they themselves exclusively exercised ownership over Lot No. 1639-A beginning 1952 up to the present.[16]

For their part, respondents posit three points in support of their position. First, they emphasize that petitioners failed to show that the interested parties were apprised or notified of the tentative subdivision contained in the sketch and that the CFI subsequently confirmed the same.[17] Second, they point to the fact that petitioners were unable to show any court approval of any partition.[18] Third, they maintain that Lot No. 1639 remain undivided since to date, OCT No. 6275 is still an existing and perfectly valid title, containing no annotation of any encumbrance or partition whatsoever.[19]

After a careful consideration of the pleadings filed by the parties and the evidence on record, we find that the petition is meritorious. As stated earlier, the core issue in this case is whether there was a valid partition in 1952.

Preliminarily, this Court recognizes that "the jurisdiction of this Court in cases brought before it from the Court of Appeals via Rule 45 of the Rules of Court is limited to reviewing errors of law. Findings of fact of the latter are conclusive,

except in the following instances: (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 petitioners 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."[20] This case falls under exceptions (7), (8) and (10) in that the findings of facts of the CA are in conflict with that of the RTC, are mere conclusions without citation of specific evidence on which they are based and are premised on absence of evidence but are contradicted by the evidence on record. For these reasons, we shall consider the evidence on record to determine whether indeed there was partition.

In this jurisdiction, an action for partition is comprised of two phases: first, an order for partition which determines whether a co-ownership in fact exists, and whether partition is proper; and, second, a decision confirming the sketch or subdivision submitted by the parties or the commissioners appointed by the court, as the case may be.[21] 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, (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, upon 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. In the latter case, the parties may, if they are able to agree, make partition among themselves by proper instruments of conveyance, and the court shall confirm the partition so agreed upon. In either case i.e., either the action is dismissed or partition and/or accounting is decreed the order is a final one, and may be appealed by any party aggrieved thereby. 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 court 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 court 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. Such an order is, to be sure, final and appealable.[22]

The present rule on the question of finality and appealability of a decision or order decreeing partition is that it is final and appealable.[23] The order of partition is a final determination of the co-ownership over Lot No. 1639 by the parties and the propriety of the partition thereof. Hence, if the present rule were applied, the order not having been appealed or questioned by any of the parties to the case, it has become final and executory and cannot now be disturbed.

The true test to ascertain whether or not an order or a judgment is interlocutory or final is: Does it leave something to be done in the trial court with respect to the merits of the case? If it does, it is interlocutory; if it does not, it is final. The key test to what is interlocutory is when there is something more to be done on the merits of the case.[24] An order for partition is final and not interlocutory and, hence, appealable because it decides the rights of the parties upon the issue submitted.[25]

However, this Court notes that the order of partition was issued when the ruling in Fuentebella vs. Carrascoso,[26] which held that the order of partition is interlocutory, was controlling. In addition, the reports of the commissioners not having been confirmed by the trial court are not binding.[27] In this case, both the order of partition and the unconfirmed sketch plan are, thus, interlocutory. Nevertheless, where parties do not object to the interlocutory decree, but show by their conduct that they have assented thereto, they cannot thereafter question the decree,[28] especially, where, by reason of their conduct, considerable expense has been incurred in the execution of the commission.[29] Respondents in this case have occupied their respective lots in accordance with the sketch/subdivision plan. They cannot after acquiescing to the order for more than forty (40) years be allowed to question the binding effect thereof.

This case is to be distinguished from the order in the action for partition in Arcenas vs. Cinco.[30] In that case, the order was clearly interlocutory since it required the parties " to submit the corresponding deed of partition to the Court for its approval." Here, the order appointed two commissioners and directed them merely to approve the sketch plan already existing and tentatively followed by the parties.

Under the present rule, the proceedings of the commissioners without being confirmed by the court are not binding upon the parties.[31] However, this rule does not apply in case where the parties themselves actualized the supposedly unconfirmed sketch/subdivision plan. The purpose of court approval is to give effect

to the sketch/subdivision plan. In this case, the parties themselves or through their predecessors-in-interest implemented the sketch plan made pursuant to a court order for partition by actually occupying specific portions of Lot No. 1639 in 1952 and continue to do so until the present until this case was filed, clearly, the purpose of the court approval has been met. This statement is not to be taken to mean that confirmation of the commissioners may be dispensed with but only that the parties herein are estopped from raising this question by their own acts of ratification of the supposedly non-binding sketch/subdivision plan.

The records of the case show that sometime in 1946 there was a prior oral agreement to tentatively partition Lot No. 1639.[32] By virtue of this agreement, the original co-owners occupied specific portions of Lot No. 1639.[33] It was only in 1952 when the petition to subdivide Lot No. 1639 was filed because two of the co-owners, namely Hermogenes Olis and heirs of Pascual Olis, refused to have said lot subdivided and have separate certificates of title. Significantly, after the 1952 proceedings, the parties in this case by themselves and/or through their predecessors-in-interest occupied specific portions of Lot No. 1639 in accordance with the sketch plan. Such possession remained so until this case arose, or about forty (40) years later.

From its order in 1952, it can be gleaned that the CFI took notice of the tentative subdivision plan by oral partition of the parties therein. Further, it appears that said court was aware that the parties therein actually took possession of the portions in accordance with the sketch/subdivision plan. With this factual backdrop, said court ordered the partition and appointed two (2) commissioners to approve the tentative sketch/subdivision plan. It would not be unreasonable to presume that the parties therein, having occupied specific portions of Lot No. 1639 in accordance with the sketch/subdivision plan, were aware that it was that same sketch/subdivision plan which would be considered by the commissioners for approval. There is no showing that respondents by themselves or through their predecessors-in-interest raised any objections. On the contrary, the records show that the parties continued their possession of the specific portions of Lot No. 1639 pursuant to the sketch/subdivision plan.

It has been previously held that a co-owner, who, though not a party to a partition accepts the partition allotted to him, and holds and conveys the same in severalty, will not be subsequently permitted to avoid partition.[34] It follows that a party to a partition is also barred from avoiding partition when he has received and held a portion of the subdivided land especially in this case where respondents have enjoyed ownership rights over their share for a long time.

Parties to a partition proceeding, who elected to take under partition, and who took possession of the portion allotted to them, are estopped to question title to portion allotted to another party.[35] A person cannot claim both under and against the same instrument.[36] In other words, they accepted the lands awarded them by its provisions, and they cannot accept the decree in part, and repudiate it in part. They must accept all or none.[37] Parties who had received the property assigned to them are precluded from subsequently attacking its validity of any part of it.[38] Here, respondents, by themselves and/or through their predecessors-in-interest, already occupied of the lots in accordance with the sketch plan. This occupation continued until this action was filed. They cannot now be heard to question the possession and ownership of the other co-owners who took exclusive possession of Lot 1639-D also in accordance with the sketch plan. Exsm

In technical estoppel, the party to be estopped must knowingly have acted so as to mislead his adversary, and the adversary must have placed reliance on the action and acted as he would otherwise not have done. Some authorities, however, hold that what is tantamount to estoppel may arise without this reliance on the part of the adversary, and this is called, ratification or election by acceptance of benefits, which arises when a party, knowing that he is not bound by a defective proceeding, and is free to repudiate it if he will, upon knowledge, and while under no disability, chooses to adopt such defective proceeding as his own.[39] Ratification means that one under no disability voluntarily adopts and gives sanction to some unauthorized act or defective proceeding, which without his sanction would not be binding on him. It is this voluntary choice, knowingly made, which amounts to a ratification of what was theretofore unauthorized, and becomes the authorized act of the party so making the ratification.[40]

The records show that respondents were paying rent for the use of a portion of Lot No. 1639-D. Had they been of the belief that they were co-owners of the entire Lot No. 1639 they would not have paid rent. Respondents attempted to counter this point by presenting an uncorroborated testimony of their sole witness to the effect that the amount so paid to Roberto Maglucot and, subsequently, to Ruperta Salma were for the payment of real property taxes. We are not persuaded. It is quite improbable that the parties would be unaware of the difference in their treatment of their transactions for so long a time. Moreover, no evidence was ever presented to show that a tax declaration for the entire Lot No. 1639 has ever been made. Replete in the records are tax declarations for specific portions of Lot 1639. It is inconceivable that respondents would not be aware of this. With due diligence on their part, they could

have easily verified this fact. This they did not do for a period spanning more than four decades.

The payment of rentals by respondents reveal that they are mere lessees. As such, the possession of respondents over Lot No. 1639-D is that of a holder and not in the concept of an owner. One who possesses as a mere holder acknowledges in another a superior right which he believes to be ownership, whether his belief be right or wrong.[41] Since the possession of respondents were found to be that of lessors of petitioners, it goes without saying that the latter were in possession of Lot No. 1639-D in the concept of an owner from 1952 up to the time the present action was commenced.

Partition may be inferred from circumstances sufficiently strong to support the presumption.[42] Thus, after a long possession in severalty, a deed of partition may be presumed.[43] It has been held that recitals in deeds, possession and occupation of land, improvements made thereon for a long series of years, and acquiescence for 60 years, furnish sufficient evidence that there was an actual partition of land either by deed or by proceedings in the probate court, which had been lost and were not recorded.[44] And where a tract of land held in common has been subdivided into lots, and one of the lots has long been known and called by the name of one of the tenants in common, and there is no evidence of any subsequent claim of a tenancy in common, it may fairly be inferred that there has been a partition and that such lot was set off to him whose name it bears.[45]

Respondents insist that the absence of any annotation in the certificate of title showing any partition of Lot No. 1639 and that OCT No. 6725 has not been cancelled clearly indicate that no partition took place. The logic of this argument is that unless partition is shown in the title of the subject property, there can be no valid partition or that the annotation in the title is the sole evidence of partition.

Again, we are not persuaded. The purpose of registration is to notify and protect the interests of strangers to a given transaction, who may be ignorant thereof, but the non-registration of the deed evidencing such transaction does not relieve the parties thereto of their obligations thereunder.[46] As originally conceived, registration is merely a species of notice. The act of registering a document is never necessary in order to give it legal effect as between the parties.[47] Requirements for the recording of the instruments are designed to prevent frauds and to permit and require the public to act with the presumption that recorded instruments exist and are genuine.[48]

It must be noted that there was a prior oral partition in 1946. Although the oral agreement was merely tentative, the facts subsequent thereto all point to the

confirmation of said oral partition. By virtue of that agreement, the parties took possession of specific portions of the subject lot. The action for partition was instituted because some of the co-owners refused to have separate titles issued in lieu of the original title. In 1952, an order for partition was issued by the cadastral court. There is no evidence that there has been any change in the possession of the parties. The only significant fact subsequent to the issuance of the order of partition in 1952 is that respondents rented portions of Lot No. 1639-D. It would be safe to conclude, therefore, that the oral partition as well as the order of partition in 1952 were the bases for the finding of actual partition among the parties. The legal consequences of the order of partition in 1952 having been discussed separately, we now deal with oral partition in 1946. Given that the oral partition was initially tentative, the actual possession of specific portions of Lot No. 1639 in accordance with the oral partition and the continuation of such possession for a very long period indicate the permanency and ratification of such oral partition. The validity of an oral partition is already well-settled. In Espina vs. Abaya,[49] we declared that an oral partition is valid. In Hernandez vs. Andal,[50] reiterated in Tan vs. Lim,[51] this Court has ruled, thus:

On general principle, independent and in spite of the statute of frauds, courts of equity have enforce oral partition when it has been completely or partly performed.

Regardless of whether a parol partition or agreement to partition is valid and enforceable at law, equity will proper cases where the parol partition has actually been consummated by the taking of possession in severalty and the exercise of ownership by the parties of the respective portions set off to each, recognize and enforce such parol partition and the rights of the parties thereunder. Thus, it has been held or stated in a number of cases involving an oral partition under which the parties went into possession, exercised acts of ownership, or otherwise partly performed the partition agreement, that equity will confirm such partition and in a proper case decree title in accordance with the possession in severalty.

In numerous cases it has been held or stated that parol partition may be sustained on the ground of estoppel of the parties to assert the rights of a tenant in common as to parts of land divided by parol partition as to which possession in severalty was taken and acts of individual ownership were exercised. And a court of equity will recognize the agreement and decree it to be valid and effectual for the purpose of concluding the right of the parties as between each other to hold their respective parts in severalty.

A parol partition may also be sustained on the ground that the parties thereto have acquiesced in and ratified the partition by taking possession in severalty, exercising acts of ownership with respect thereto, or otherwise recognizing the existence of the partition.

A number of cases have specifically applied the doctrine of part performance, or have stated that a part performance is necessary, to take a parol partition out of the operation of the statute of frauds. It has been held that where there was a partition in fact between tenants in common, and a part performance, a court of equity would have regard to enforce such partition agreed to by the parties.

Two more points have constrained this Court to rule against respondents. First, respondents Wilfreda Maglucot-Alejo and Constancio Alejo offered to buy the share of Roberto Maglucot. Second, the tax declarations contain statements that the houses of respondents were built on the land owned by Roberto Maglucot.

On the first point, petitioners presented Aida Maglucot who testified that after respondents were informed that petitioners were going to use Lot No. 1639-D belonging to Roberto Maglucot, respondents Wilfreda Maglucot-Alejo and Constancio Alejo went to the house of said witness and offered to buy the share of Roberto Maglucot.[52] Aida Maglucot further testified that they refused the offer because they also intend to use the lot for a residential purpose.[53] This testimony of Aida Maglucot is unrebutted by respondents, and the CA did not touch upon this finding of fact. Hence, the offer to buy has been established by the unrebutted evidence of the petitioners. Why would they give such offer if they claim to be at least a co-owner of the said lot? In effect, respondents impliedly admit the title of the petitioners and that they are not co-owners, much less the sole owners, of Lot No. 1639-D.

On the second point, the existence of Tax Declaration No. 04-557 in the names of Constancio Alejo and Godofreda Maglucot,[54] Tax Declaration No. 04-87-13 in the names of Leopoldo Maglucot and Regina Barot,[55] Tax Declaration No. 04-593 in the names of Severo Maglucot and Samni Posida[56] showing that the houses of the above-mentioned persons are constructed on the land of Roberto Maglucot[57] constitute incontrovertible evidence of admission by the same persons of the ownership of the land by Roberto Maglucot. Tax Declarations are public documents. Unless their veracity is directly attacked, the contents therein are presumed to be true and accurate.[58] The lone testimony of Severo Maglucot that Roberto Maglucot was only made to appear as owner of the land in their respective declarations because he was the administrator of Lot No. 1639 is uncorroborated and not supported by any other evidence.

No injustice is dealt upon respondents because they are entitled to occupy a portion of Lot No. 1639, particularly Lot No. 1639-A, in their capacity as heirs of Tomas Maglucot, one of the original co-owners of Lot No. 1639 in accordance with the sketch plan of said lot showing the partition into six portions.[59]

Finally, this Court takes notice of the language utilized by counsel for petitioners in their petition for review on certiorari. Thrice in the petition, counsel for petitioners made reference to the researcher of the CA. First, he alluded to the lack of scrutiny of the records and lack of study of the law "by the researcher."[60] Second, he cited the researcher of the CA as having "sweepingly stated without reference to the record"[61] that "[w]e have scanned the records on hand and found no evidence of any partition." Finally, counsel for petitioners assailed the CA decision, stating that "this will only show that there was no proper study of the case by the researcher."[62]

Any court when it renders a decision does so as an arm of the justice system and as an institution apart from the persons that comprise it. Decisions are rendered by the courts and not the persons or personnel that may participate therein by virtue of their office. It is highly improper and unethical for counsel for petitioners to berate the researcher in his appeal. Counsel for petitioner should be reminded of the elementary rules of the legal profession regarding respect for the courts by the use of proper language in its pleadings and admonished for his improper references to the researcher of the CA in his petition. A lawyer shall abstain from scandalous, offensive, or menacing language or behavior before the courts.[63]

WHEREFORE, the petition is GRANTED The decision of the Court of Appeals is SET ASIDE and the decision of the Regional Trial Court is hereby REINSTATED.

SO ORDERED.

[G.R. No. 137944. April 6, 2000]

FERNANDA MENDOZA CEQUENA and RUPERTA MENDOZA LIRIO, petitioners, vs. HONORATA MENDOZA BOLANTE, respondent. J lexj

D E C I S I O N

PANGANIBAN, J.:

Tax receipts and declarations are prima facie proofs of ownership or possession of the property for which such taxes have been paid. Coupled with proof of actual possession of the property, they may become the basis of a claim for ownership. By acquisitive prescription, possession in the concept of owner -- public, adverse, peaceful and uninterrupted -- may be converted to ownership. On the other hand, mere possession and occupation of land cannot ripen into ownership.

The Case

Before us is a Petition for Review on Certiorari of the March 19, 1999 Decision[1] of the Court of Appeals[2] (CA) in CA-GR CV No. 43423. The assailed Decision disposed as follows:[3]

"WHEREFORE, for all the foregoing, the decision of the trial court appealed from is REVERSED and SET ASIDE. In lieu thereof, judgment is hereby rendered declaring x x x Honorata Mendoza Bolante the rightful owner and possessor of the parcel of land which is the subject of this appeal." Lexj uris

The Facts

The Petition herein refers to a parcel of land situated in Barangay Bangad, Binangonan, Province of Rizal, having an area of 1,728 square meters and covered by Tax Declaration No. 26-0027.

The undisputed antecedents of this case are narrated by the Court of Appeals as follows:[4]

"The facts not disputed revealed that prior to 1954, the land was originally declared for taxation purposes in the name of Sinforoso Mendoza, father of [respondent] and married to Eduarda Apiado. Sinforoso died in 1930. [Petitioners] were the daughters of Margarito Mendoza. On the basis of an affidavit, the tax declaration in the name of Sinforoso Mendoza of the contested lot was cancelled and subsequently declared in the name of Margarito Mendoza. Margarito and Sinforoso are brothers. [Respondent] is the present occupant of the land. Earlier, on October 15, 1975, [respondent] and Miguel Mendoza, another brother of [petitioners], during the cadastral survey had a dispute on [the] ownership of the land. Juri smis

"During the pre-trial conference, parties stipulated the following facts:

1) The land subject of the case was formerly declared for taxation purposes in the name of Sinforoso Mendoza prior to 1954 but is now declared in the name of Margarito Mendoza.

2) The parties agree[d] as to the identity of the land subject of instant case.

3) [Petitioners] are the daughters of Margarito Mendoza while the [respondent] is the only daughter of Sinforoso Mendoza.

'4) Margarito Mendoza and Sinforoso Mendoza [were] brothers, now deceased.

5) During the cadastral survey of the property on October 15, 1979 there was already a dispute between Honorata M. Bolante and Miguel Mendoza, brother of [petitioners].

6) [Respondent was] occupying the property in question.

The only issue involved [was] who [was] the lawful owner and possessor of the land subject of the case.

"After trial, the court a quo rendered its judgment in favor of [petitioners], the dispositive portion of which reads as follows:

Wherefore, in view of the foregoing considerations, judgment is hereby rendered for the [petitioners] and against the [respondent]:

1. Declaring that the parcel of land situated in Bangad, Binangonan, Rizal covered by tax declaration no. 26-0027 in the name of Margarito Mendoza belong to his heirs, the [petitioners] herein;

2. Ordering [respondent] to vacate the property subject of the case and deliver possession thereof to the heirs of Margarito Mendoza. Jjj uris

3. Ordering the [respondent] to indemnify the [petitioners] in the sum of P10,000.00, as actual damages.

4. Ordering the [respondent] to pay the costs."

Ruling of the Court of Appeals

The Court of Appeals reversed the trial court because the genuineness and the due execution of the affidavit allegedly signed by the respondent and her mother had not been sufficiently established. The notary public or anyone else who had witnessed the execution of the affidavit was not presented. No expert testimony or competent witness ever attested to the genuineness of the questioned signatures.

The CA further ruled that the affidavit was insufficient to overcome the denial of respondent and her mother. The former testified that the latter, never having attended school, could neither read nor write. Respondent also said that she had never been called "Leonor," which was how she was referred to in the affidavit.

Moreover, the appellate court held that the probative value of petitioners tax receipts and declarations paled in comparison with respondents proof of ownership of the disputed parcel. Actual, physical, exclusive and continuous possession by respondent since 1985 indeed gave her a better title under Article 538 of the Civil Code. lex

Hence, this Petition.[5]

Issues

Insisting that they are the rightful owners of the disputed land, the petitioners allege that the CA committed these reversible errors:[6]

"1. xxx [I]n not considering the affidavit as an exception to the general rule that an affidavit is classified as hearsay evidence, unless the affiant is placed on the witness stand; and

"2. xxx [I]n holding that respondent has been in actual and physical possession, coupled with xxx exclusive and continuous possession of the land since 1985, which are evidence of the best kind of circumstance proving the claim of the title of ownership and enjoys the presumption of preferred possessor."

The Court's Ruling: The Petition has no merit.

First Issue: Admissibility of the Affidavit

Petitioners dispute the CA's ruling that the affidavit was not the best evidence of their father's ownership of the disputed land, because the "affiant was not placed on the witness stand." They contend that it was unnecessary to present a witness to establish the authenticity of the affidavit because it was a declaration against respondent's interest and was an ancient document. As a declaration against interest, it was an exception to the hearsay rule. As a necessary and trustworthy document, it was admissible in evidence. And because it was executed on March 24, 1953, it was a self-authenticating ancient document. Chief

We quote below the pertinent portion of the appellate court's ruling:[7]

"While it is true that the affidavit was signed and subscribed before a notary public, the general rule is that affidavits are classified as hearsay evidence, unless affiants are placed on the witness stand (People's Bank and Trust Company vs. Leonidas, 207 SCRA 164). Affidavits are not considered the best evidence, if affiants are available as witnesses (Vallarta vs. Court of Appeals, 163 SCRA 587). The due execution of the affidavit was not sufficiently established. The notary public or others who saw that the document was signed or at least [could] confirm its recitals [were] not presented. There was no expert testimony or competent witness who attested to the genuineness of the questioned signatures. Worse, [respondent] denied the genuineness of her signature and that of her mother xxx. [Respondent] testified that her mother was an illiterate and as far as she knew her mother could not write because she had not attended school (p. 7, ibid). Her testimony was corroborated by Ma. Sales Bolante Basa, who said the [respondent's] mother was illiterate."

The petitioners allegations are untenable. Before a private document offered as authentic can be received in evidence, its due execution and authenticity must be proved first.[8] And before a document is admitted as an exception to the hearsay

rule under the Dead Man's Statute, the offeror must show (a) that the declarant is dead, insane or unable to testify; (b) that the declaration concerns a fact cognizable by the declarant; (c) that at the time the declaration was made, he was aware that the same was contrary to his interest; and (d) that circumstances render improbable the existence of any motive to falsify.[9]

In this case, one of the affiants happens to be the respondent, who is still alive and who testified that the signature in the affidavit was not hers. A declaration against interest is not admissible if the declarant is available to testify as a witness.[10] Such declarant should be confronted with the statement against interest as a prior inconsistent statement.

The affidavit cannot be considered an ancient document either. An ancient document is one that is (1) more than 30 years old, (2) found in the proper custody, and (3) unblemished by any alteration or by any circumstance of suspicion.[11] It must on its face appear to be genuine. The petitioners herein failed, however, to explain how the purported signature of Eduarda Apiado could have been affixed to the subject affidavit if, according to the witness, she was an illiterate woman who never had any formal schooling. This circumstance casts suspicion on its authenticity.

Not all notarized documents are exempted from the rule on authentication. Thus, an affidavit does not automatically become a public document just because it contains a notarial jurat. Furthermore, the affidavit in question does not state how the ownership of the subject land was transferred from Sinforoso Mendoza to Margarito Mendoza. By itself, an affidavit is not a mode of acquiring ownership.

Second Issue: Preference of Possession

The CA ruled that the respondent was the preferred possessor under Article 538 of the Civil Code because she was in notorious, actual, exclusive and continuous possession of the land since 1985. Petitioners dispute this ruling. They contend that she came into possession through force and violence, contrary to Article 536 of the Civil Code.

We concede that despite their dispossession in 1985, the petitioners did not lose legal possession because possession cannot be acquired through force or violence.[12] To all intents and purposes, a possessor, even if physically ousted, is still deemed the legal possessor.[13] Indeed, anyone who can prove prior possession, regardless of its character, may recover such possession.[14]

However, possession by the petitioners does not prevail over that of the respondent. Possession by the former before 1985 was not exclusive, as the latter also acquired it before 1985. The records show that the petitioners father and brother, as well as the respondent and her mother were simultaneously in adverse possession of the land.

Before 1985, the subject land was occupied and cultivated by the respondent's father (Sinforoso), who was the brother of petitioners' father (Margarito), as evidenced by Tax Declaration No. 26425.[15] When Sinforoso died in 1930, Margarito took possession of the land and cultivated it with his son Miguel. At the same time, respondent and her mother continued residing on the lot.

When respondent came of age in 1948, she paid realty taxes for the years 1932-1948.[16] Margarito declared the lot for taxation in his name in 1953[17] and paid its realty taxes beginning 1952.[18] When he died, Miguel continued cultivating the land. As found by the CA, the respondent and her mother were living on the land, which was being tilled by Miguel until 1985 when he was physically ousted by the respondent.[19]

Based on Article 538 of the Civil Code, the respondent is the preferred possessor because, benefiting from her father's tax declaration of the subject lot since 1926, she has been in possession thereof for a longer period. On the other hand, petitioners' father acquired joint possession only in 1952. Ms-esm

Third Issue: Possession of Better Right

Finally, the petitioners challenge the CA ruling that "actual and physical coupled with the exclusive and continuous possession [by respondent] of the land since 1985" proved her ownership of the disputed land. The respondent argues that she was legally presumed to possess the subject land with a just title since she possessed it in the concept of owner. Under Article 541 of the Code, she could not be obliged to show or prove such title.

The respondent's contention is untenable. The presumption in Article 541 of the Civil Code is merely disputable; it prevails until the contrary is proven.[20] That is, one who is disturbed in one's possession shall, under this provision, be restored thereto by the means established by law.[21] Article 538 settles only the question of possession, and possession is different from ownership. Ownership in this case should be established in one of the ways provided by law.

To settle the issue of ownership, we need to determine who between the claimants has proven acquisitive prescription.[22]

Ownership of immovable property is acquired by ordinary prescription through possession for ten years.[23] Being the sole heir of her father, respondent showed through his tax receipt that she had been in possession of the land for more than ten years since 1932. When her father died in 1930, she continued to reside there with her mother. When she got married, she and her husband engaged in kaingin inside the disputed lot for their livelihood.[24]

Respondent's possession was not disturbed until 1953 when the petitioners' father claimed the land. But by then, her possession, which was in the concept of owner -- public, peaceful, and uninterrupted[25] -- had already ripened into ownership. Furthermore she herself, after her father's demise, declared and paid realty taxes for the disputed land. Tax receipts and declarations of ownership for taxation, when coupled with proof of actual possession of the property, can be the basis of a claim for ownership through prescription.[26]

In contrast, the petitioners, despite thirty-two years of farming the subject land, did not acquire ownership. It is settled that ownership cannot be acquired by mere occupation.[27] Unless coupled with the element of hostility toward the true owner,[28] occupation and use, however long, will not confer title by prescription or adverse possession. Moreover, the petitioners cannot claim that their possession was public, peaceful and uninterrupted. Although their father and brother arguably acquired ownership through extraordinary prescription because of their adverse possession for thirty-two years (1953-1985),[29] this supposed ownership cannot extend to the entire disputed lot, but must be limited to the portion that they actually farmed.

We cannot sustain the petitioners' contention that their ownership of the disputed land was established before the trial court through the series of tax declarations and receipts issued in the name of Margarito Mendoza. Such documents prove that the holder has a claim of title over the property. Aside from manifesting a sincere desire to obtain title thereto, they announce the holder's adverse claim against the state and other interested parties.[30]

However, tax declarations and receipts are not conclusive evidence of ownership.[31] At most, they constitute mere prima facie proof of ownership or possession of the property for which taxes have been paid.[32] In the absence of actual public and adverse possession, the declaration of the land for tax purposes does not prove

ownership.[33] In sum, the petitioners' claim of ownership of the whole parcel has no legal basis.

WHEREFORE, the Petition is DENIED and the assailed Decision and Resolution AFFIRMED. Costs against petitioners.

SO ORDERED.

G.R. No. L-6019 March 25, 1911

JUAN N. ARAGON, petitioner-appellee, vs. THE INSULAR GOVERNMENT, oppositor-appellant.

This is an appeal from a decree of the Court of Land Registration adjudicating title to a small lot or parcel of land in the city of Manila in favor of the appellees and ordering its registry in accordance with the provisions of "The Land Registration Act."

The Government of the Philippine Islands , through its proper representatives, objected to the application for registry on the ground that, as it alleges, the land in question is a part of the public domain, as defined in subsection 1, article 339, of the Civil Code, which is as follows:

ART. 339. Property of public ownership is -

1. That destined to the public use, such as roads, canals, rivers, torrents, ports, and bridges constructed by the State, and banks, shores, roadsteads, and that of a similar character.

and also as defined in article 1 of "The Law of Waters" (Ley de Aguas) of the 3rd of August, 1886, which is as follows:

The following belong to the national domain and are for the public use:

xxx xxx xxx

3. The shores. - "Shore" is understood to be that space which is alternatively covered and uncovered by water with the movement of the tides. Its interior or terrestial limit is marked by the lone reached by the highest tides and equinoctials. Where the tides are not perceptible the shore begins at the line reached by the water during tempests and ordinary storms.

The evidence of record leaves no room for doubt that, as alleged by the opponent, the land in question, at the time when the trial was had in the court below, was so located that at high tide it was completely covered by the waters of the Bay of Manila, though the receding waters left it completely bare at low tide. It can not be denied, therefore, that if there were no other evidence of record, touching the physical status of this land or title thereto, the contention of the Government would necessarily be sustained.

It appears, however, that in the year 1892 a possessory title to the land in question was duly registered in favor of Inocencio Aragon, one of the predecessors in interest of these applicants; that for a long period of years, and perhaps from a time beyond which the memory of man runneth not to the contrary, the applicant and their predecessors in interest have been in possession of the parcel of land in question, under and undisputed claim of ownership; that it is located toward the center of one of the most valuable residential sections of the city of Manila, and that for many years a house stood upon this land, and was occupied by some of the predecessors in interest of the applicants in these proceedings; that with some relatively small expenditure by way of a "fill" or a "retaining wall" it would still be a valuable building lot for residential purposes; that the adjoining lots extend toward the bay to a line formed by the extension of the outer boundary line of the lot in question, and that these adjoining lots would be in substantially the same physical condition, by relation to the ebb and flow of the tide, as lot in question, but for low retaining walls which protect them against the incoming sea; that the water which spreads over the lot in question at high tide is of but little depth, and would be wholly excluded by a very limited amount of "filling" materials or a low retaining wall; that there are strong reasons to believe that the land in question was originally well above the ebb and flow of the tide; and that only in later years have the waters risen to such a height along the shores of the Bay of Manila at this point as to cover the land in question completely at high tide; though it does not definitely appear whether this is due to changes in the current and flow of the waters in the bay, or to the gradual sinking of the land along the coast.

We think that these facts conclusively establish the right of possession and ownership of the applicants.

Article 446 of the Civil Code is as follows:

Every possessor has a right to be respected in his possession; and should he be disturbed therein, he must be protected or possession must be restored to him by the means established in the laws of procedure.

Article 460 of that code is as follows:

The possessor may lose his possession -

1. By the abandonment of the thing.

2. By transfer to another for a good or valuable consideration.

3. By the destruction or total loss of the thing or by the thing becoming unmarketable.

4. By the possession of another, even against the will of the former possessor, if the new possession has lasted more than one year.

Under these provisions of the code it seems quite clear that if the Government is justified in disturbing the possession of the applicants, it can only be on the ground that they have abandoned their property, or that it has been totally destroyed and has now become a part of the public domain by the erosive action of the sea. It is quite clear that applicants have never abandoned their possession under a claim of ownership of this land. And we think the facts above stated fully sustain a finding that there has been no such destructive or total loss of the property as would justify a holding that the owners have lost possession. Doubtless the property has been injured by the erosive action of the sea. Doubtless the owners in order to profitably enjoy the

possession of this property will be compelled to make some relatively small expenditures by way of a "fill" or a retaining wall. But the actual condition of the property as it appears from the record makes a claim that it has been totally lost or destroyed preposterous and wholly untenable. We need hardly add that if the applicants have not lost their right of possession, the Government's claim of ownership, on the ground that this is a part of the playa (shore) of Manila Bay, necessarily falls to the ground.

We should not be understood, by this decision, to hold that in a case of gradual encroachment or erosion by the ebb and flow of the tide, private property may not become "property of public ownership," as defined in article 339 of the code, where it appears that the owner has to all intents and purposes abandoned it and permitted it to be totally destroyed, so as to become a part of the "playa" (shore of the sea), "rada" (roadstead), or the like. Our ruling in this case is merely that it affirmatively appears that the owners of the land in question have never in fact nor in intent abandoned it, and that keeping in mind its location and actual condition it can not be said to have been totally destroyed for the purposes for which it was held by them, so as to have become a part of the playa (shore) of the Bay of Manila.

The decree entered by the lower court should be affirmed, with the costs of this instance against the appellant. It is so ordered.

G.R. No. 80294-95 September 21, 1988

CATHOLIC VICAR APOSTOLIC OF THE MOUNTAIN PROVINCE, vs. COURT OF APPEALS, HEIRS OF EGMIDIO OCTAVIANO AND JUAN VALDEZ,

The principal issue in this case is whether or not a decision of the Court of Appeals promulgated a long time ago can properly be considered res judicata by respondent Court of Appeals in the present two cases between petitioner and two private respondents.

Petitioner questions as allegedly erroneous the Decision dated August 31, 1987 of the Ninth Division of Respondent Court of Appeals 1 in CA-G.R. No. 05148 [Civil Case No. 3607 (419)] and CA-G.R. No. 05149 [Civil Case No. 3655 (429)], both for Recovery of Possession, which affirmed the Decision of the Honorable Nicodemo T.

Ferrer, Judge of the Regional Trial Court of Baguio and Benguet in Civil Case No. 3607 (419) and Civil Case No. 3655 (429), with the dispositive portion as follows:

WHEREFORE, Judgment is hereby rendered ordering the defendant, Catholic Vicar Apostolic of the Mountain Province to return and surrender Lot 2 of Plan Psu-194357 to the plaintiffs. Heirs of Juan Valdez, and Lot 3 of the same Plan to the other set of plaintiffs, the Heirs of Egmidio Octaviano (Leonardo Valdez, et al.). For lack or insufficiency of evidence, the plaintiffs' claim or damages is hereby denied. Said defendant is ordered to pay costs. (p. 36, Rollo)

Respondent Court of Appeals, in affirming the trial court's decision, sustained the trial court's conclusions that the Decision of the Court of Appeals, dated May 4,1977 in CA-G.R. No. 38830-R, in the two cases affirmed by the Supreme Court, touched on the ownership of lots 2 and 3 in question; that the two lots were possessed by the predecessors-in-interest of private respondents under claim of ownership in good faith from 1906 to 1951; that petitioner had been in possession of the same lots as bailee in commodatum up to 1951, when petitioner repudiated the trust and when it applied for registration in 1962; that petitioner had just been in possession as owner for eleven years, hence there is no possibility of acquisitive prescription which requires 10 years possession with just title and 30 years of possession without; that the principle of res judicata on these findings by the Court of Appeals will bar a reopening of these questions of facts; and that those facts may no longer be altered.

Petitioner's motion for reconsideration of the respondent appellate court's Decision in the two aforementioned cases (CA G.R. No. CV-05418 and 05419) was denied.

The facts and background of these cases as narrated by the trail court are as follows —

... The documents and records presented reveal that the whole controversy started when the defendant Catholic Vicar Apostolic of the Mountain Province (VICAR for brevity) filed with the Court of First Instance of Baguio Benguet on September 5, 1962 an application for registration of title over Lots 1, 2, 3, and 4 in Psu-194357, situated at Poblacion Central, La Trinidad, Benguet, docketed as LRC N-91, said Lots being the sites of the Catholic Church building, convents, high school building, school gymnasium, school dormitories, social hall, stonewalls, etc. On March 22, 1963 the Heirs of Juan Valdez and the Heirs of Egmidio Octaviano filed their Answer/Opposition on Lots Nos. 2 and 3, respectively, asserting ownership and title thereto. After trial on the merits, the land registration court promulgated its Decision, dated November 17, 1965, confirming the registrable title of VICAR to Lots 1, 2, 3, and 4.

The Heirs of Juan Valdez (plaintiffs in the herein Civil Case No. 3655) and the Heirs of Egmidio Octaviano (plaintiffs in the herein Civil Case No. 3607) appealed the decision of the land registration court to the then Court of Appeals, docketed as CA-G.R. No. 38830-R. The Court of Appeals rendered its decision, dated May 9, 1977, reversing the decision of the land registration court and dismissing the VICAR's application as to Lots 2 and 3, the lots claimed by the two sets of oppositors in the land registration case (and two sets of plaintiffs in the two cases now at bar), the first lot being presently occupied by the convent and the second by the women's dormitory and the sister's convent.

On May 9, 1977, the Heirs of Octaviano filed a motion for reconsideration praying the Court of Appeals to order the registration of Lot 3 in the names of the Heirs of Egmidio Octaviano, and on May 17, 1977, the Heirs of Juan Valdez and Pacita Valdez filed their motion for reconsideration praying that both Lots 2 and 3 be ordered registered in the names of the Heirs of Juan Valdez and Pacita Valdez. On August 12,1977, the Court of Appeals denied the motion for reconsideration filed by the Heirs of Juan Valdez on the ground that there was "no sufficient merit to justify reconsideration one way or the other ...," and likewise denied that of the Heirs of Egmidio Octaviano.

Thereupon, the VICAR filed with the Supreme Court a petition for review on certiorari of the decision of the Court of Appeals dismissing his (its) application for registration of Lots 2 and 3, docketed as G.R. No. L-46832, entitled 'Catholic Vicar Apostolic of the Mountain Province vs. Court of Appeals and Heirs of Egmidio Octaviano.'

From the denial by the Court of Appeals of their motion for reconsideration the Heirs of Juan Valdez and Pacita Valdez, on September 8, 1977, filed with the Supreme Court a petition for review, docketed as G.R. No. L-46872, entitled, Heirs of Juan Valdez and Pacita Valdez vs. Court of Appeals, Vicar, Heirs of Egmidio Octaviano and Annable O. Valdez.

On January 13, 1978, the Supreme Court denied in a minute resolution both petitions (of VICAR on the one hand and the Heirs of Juan Valdez and Pacita Valdez on the other) for lack of merit. Upon the finality of both Supreme Court resolutions in G.R. No. L-46832 and G.R. No. L- 46872, the Heirs of Octaviano filed with the then Court of First Instance of Baguio, Branch II, a Motion For Execution of Judgment praying that the Heirs of Octaviano be placed in possession of Lot 3. The Court, presided over by Hon. Salvador J. Valdez, on December 7, 1978, denied the motion on the ground that the Court of Appeals decision in CA-G.R. No. 38870 did not grant the Heirs of Octaviano any affirmative relief.

On February 7, 1979, the Heirs of Octaviano filed with the Court of Appeals a petitioner for certiorari and mandamus, docketed as CA-G.R. No. 08890-R, entitled Heirs of Egmidio Octaviano vs. Hon. Salvador J. Valdez, Jr. and Vicar. In its decision dated May 16, 1979, the Court of Appeals dismissed the petition.

It was at that stage that the instant cases were filed. The Heirs of Egmidio Octaviano filed Civil Case No. 3607 (419) on July 24, 1979, for recovery of possession of Lot 3; and the Heirs of Juan Valdez filed Civil Case No. 3655 (429) on September 24, 1979, likewise for recovery of possession of Lot 2 (Decision, pp. 199-201, Orig. Rec.).

In Civil Case No. 3607 (419) trial was held. The plaintiffs Heirs of Egmidio Octaviano presented one (1) witness, Fructuoso Valdez, who testified on the alleged ownership of the land in question (Lot 3) by their predecessor-in-interest, Egmidio Octaviano (Exh. C ); his written demand (Exh. B—B-4 ) to defendant Vicar for the return of the land to them; and the reasonable rentals for the use of the land at P10,000.00 per month. On the other hand, defendant Vicar presented the Register of Deeds for the Province of Benguet, Atty. Nicanor Sison, who testified that the land in question is not covered by any title in the name of Egmidio Octaviano or any of the plaintiffs (Exh. 8). The defendant dispensed with the testimony of Mons.William Brasseur when the plaintiffs admitted that the witness if called to the witness stand, would testify that defendant Vicar has been in possession of Lot 3, for seventy-five (75) years continuously and peacefully and has constructed permanent structures thereon.

In Civil Case No. 3655, the parties admitting that the material facts are not in dispute, submitted the case on the sole issue of whether or not the decisions of the Court of Appeals and the Supreme Court touching on the ownership of Lot 2, which in effect declared the plaintiffs the owners of the land constitute res judicata.

In these two cases , the plaintiffs arque that the defendant Vicar is barred from setting up the defense of ownership and/or long and continuous possession of the two lots in question since this is barred by prior judgment of the Court of Appeals in CA-G.R. No. 038830-R under the principle of res judicata. Plaintiffs contend that the question of possession and ownership have already been determined by the Court of Appeals (Exh. C, Decision, CA-G.R. No. 038830-R) and affirmed by the Supreme Court (Exh. 1, Minute Resolution of the Supreme Court). On his part, defendant Vicar maintains that the principle of res judicata would not prevent them from litigating the issues of long possession and ownership because the dispositive portion of the prior judgment in CA-G.R. No. 038830-R merely dismissed their application for registration and titling of lots 2 and 3. Defendant Vicar contends that only the

dispositive portion of the decision, and not its body, is the controlling pronouncement of the Court of Appeals. 2

The alleged errors committed by respondent Court of Appeals according to petitioner are as follows:

1. ERROR IN APPLYING LAW OF THE CASE AND RES JUDICATA;

2. ERROR IN FINDING THAT THE TRIAL COURT RULED THAT LOTS 2 AND 3 WERE ACQUIRED BY PURCHASE BUT WITHOUT DOCUMENTARY EVIDENCE PRESENTED;

3. ERROR IN FINDING THAT PETITIONERS' CLAIM IT PURCHASED LOTS 2 AND 3 FROM VALDEZ AND OCTAVIANO WAS AN IMPLIED ADMISSION THAT THE FORMER OWNERS WERE VALDEZ AND OCTAVIANO;

4. ERROR IN FINDING THAT IT WAS PREDECESSORS OF PRIVATE RESPONDENTS WHO WERE IN POSSESSION OF LOTS 2 AND 3 AT LEAST FROM 1906, AND NOT PETITIONER;

5. ERROR IN FINDING THAT VALDEZ AND OCTAVIANO HAD FREE PATENT APPLICATIONS AND THE PREDECESSORS OF PRIVATE RESPONDENTS ALREADY HAD FREE PATENT APPLICATIONS SINCE 1906;

6. ERROR IN FINDING THAT PETITIONER DECLARED LOTS 2 AND 3 ONLY IN 1951 AND JUST TITLE IS A PRIME NECESSITY UNDER ARTICLE 1134 IN RELATION TO ART. 1129 OF THE CIVIL CODE FOR ORDINARY ACQUISITIVE PRESCRIPTION OF 10 YEARS;

7. ERROR IN FINDING THAT THE DECISION OF THE COURT OF APPEALS IN CA G.R. NO. 038830 WAS AFFIRMED BY THE SUPREME COURT;

8. ERROR IN FINDING THAT THE DECISION IN CA G.R. NO. 038830 TOUCHED ON OWNERSHIP OF LOTS 2 AND 3 AND THAT PRIVATE RESPONDENTS AND THEIR PREDECESSORS WERE IN POSSESSION OF LOTS 2 AND 3 UNDER A CLAIM OF OWNERSHIP IN GOOD FAITH FROM 1906 TO 1951;

9. ERROR IN FINDING THAT PETITIONER HAD BEEN IN POSSESSION OF LOTS 2 AND 3 MERELY AS BAILEE BOR ROWER) IN COMMODATUM, A GRATUITOUS LOAN FOR USE;

10. ERROR IN FINDING THAT PETITIONER IS A POSSESSOR AND BUILDER IN GOOD FAITH WITHOUT RIGHTS OF RETENTION AND REIMBURSEMENT AND IS BARRED BY THE FINALITY AND CONCLUSIVENESS OF THE DECISION IN CA G.R. NO. 038830. 3

The petition is bereft of merit.

Petitioner questions the ruling of respondent Court of Appeals in CA-G.R. Nos. 05148 and 05149, when it clearly held that it was in agreement with the findings of the trial court that the Decision of the Court of Appeals dated May 4,1977 in CA-G.R. No. 38830-R, on the question of ownership of Lots 2 and 3, declared that the said Court of Appeals Decision CA-G.R. No. 38830-R) did not positively declare private respondents as owners of the land, neither was it declared that they were not owners of the land, but it held that the predecessors of private respondents were possessors of Lots 2 and 3, with claim of ownership in good faith from 1906 to 1951. Petitioner was in possession as borrower in commodatum up to 1951, when it repudiated the trust by declaring the properties in its name for taxation purposes. When petitioner applied for registration of Lots 2 and 3 in 1962, it had been in possession in concept of owner only for eleven years. Ordinary acquisitive prescription requires possession for ten years, but always with just title. Extraordinary acquisitive prescription requires 30 years. 4

On the above findings of facts supported by evidence and evaluated by the Court of Appeals in CA-G.R. No. 38830-R, affirmed by this Court, We see no error in respondent appellate court's ruling that said findings are res judicata between the parties. They can no longer be altered by presentation of evidence because those issues were resolved with finality a long time ago. To ignore the principle of res judicata would be to open the door to endless litigations by continuous determination of issues without end.

An examination of the Court of Appeals Decision dated May 4, 1977, First Division 5 in CA-G.R. No. 38830-R, shows that it reversed the trial court's Decision 6 finding petitioner to be entitled to register the lands in question under its ownership, on its evaluation of evidence and conclusion of facts.

The Court of Appeals found that petitioner did not meet the requirement of 30 years possession for acquisitive prescription over Lots 2 and 3. Neither did it satisfy the requirement of 10 years possession for ordinary acquisitive prescription because of the absence of just title. The appellate court did not believe the findings of the trial court that Lot 2 was acquired from Juan Valdez by purchase and Lot 3 was acquired also by purchase from Egmidio Octaviano by petitioner Vicar because there was absolutely no documentary evidence to support the same and the alleged purchases were never mentioned in the application for registration.

By the very admission of petitioner Vicar, Lots 2 and 3 were owned by Valdez and Octaviano. Both Valdez and Octaviano had Free Patent Application for those lots since 1906. The predecessors of private respondents, not petitioner Vicar, were in possession of the questioned lots since 1906.

There is evidence that petitioner Vicar occupied Lots 1 and 4, which are not in question, but not Lots 2 and 3, because the buildings standing thereon were only constructed after liberation in 1945. Petitioner Vicar only declared Lots 2 and 3 for taxation purposes in 1951. The improvements oil Lots 1, 2, 3, 4 were paid for by the Bishop but said Bishop was appointed only in 1947, the church was constructed only in 1951 and the new convent only 2 years before the trial in 1963.

When petitioner Vicar was notified of the oppositor's claims, the parish priest offered to buy the lot from Fructuoso Valdez. Lots 2 and 3 were surveyed by request of petitioner Vicar only in 1962.

Private respondents were able to prove that their predecessors' house was borrowed by petitioner Vicar after the church and the convent were destroyed. They never asked for the return of the house, but when they allowed its free use, they became bailors in commodatum and the petitioner the bailee. The bailees' failure to return the subject matter of commodatum to the bailor did not mean adverse possession on the part of the borrower. The bailee held in trust the property subject matter of commodatum. The adverse claim of petitioner came only in 1951 when it declared the lots for taxation purposes. The action of petitioner Vicar by such adverse claim could not ripen into title by way of ordinary acquisitive prescription because of the absence of just title.

The Court of Appeals found that the predecessors-in-interest and private respondents were possessors under claim of ownership in good faith from 1906; that petitioner Vicar was only a bailee in commodatum; and that the adverse claim and repudiation of trust came only in 1951.

We find no reason to disregard or reverse the ruling of the Court of Appeals in CA-G.R. No. 38830-R. Its findings of fact have become incontestible. This Court declined to review said decision, thereby in effect, affirming it. It has become final and executory a long time ago.

Respondent appellate court did not commit any reversible error, much less grave abuse of discretion, when it held that the Decision of the Court of Appeals in CA-G.R. No. 38830-R is governing, under the principle of res judicata, hence the rule, in the present cases CA-G.R. No. 05148 and CA-G.R. No. 05149. The facts as supported by evidence established in that decision may no longer be altered.

WHEREFORE AND BY REASON OF THE FOREGOING, this petition is DENIED for lack of merit, the Decision dated Aug. 31, 1987 in CA-G.R. Nos. 05148 and 05149, by respondent Court of Appeals is AFFIRMED, with costs against petitioner.

SO ORDERED.

G.R. No. 80298 April 26, 1990

EDCA PUBLISHING & DISTRIBUTING CORP., vs. THE SPOUSES LEONOR and GERARDO SANTOS, doing business under the name and style of "SANTOS BOOKSTORE," and THE COURT OF APPEALS,

The case before us calls for the interpretation of Article 559 of the Civil Code and raises the particular question of when a person may be deemed to have been "unlawfully deprived" of movable property in the hands of another. The article runs in full as follows:

Art. 559. The possession of movable property acquired in good faith is equivalent to a title. Nevertheless, one who has lost any movable or has been unlawfully deprived thereof, may recover it from the person in possession of the same.

If the possessor of a movable lost or of which the owner has been unlawfully deprived has acquired it in good faith at a public sale, the owner cannot obtain its return without reimbursing the price paid therefor.

The movable property in this case consists of books, which were bought from the petitioner by an impostor who sold it to the private respondents. Ownership of the books was recognized in the private respondents by the Municipal Trial Court, 1 which was sustained by the Regional Trial Court, 2 which was in turn sustained by the Court of Appeals. 3 The petitioner asks us to declare that all these courts have erred and should be reversed.

This case arose when on October 5, 1981, a person identifying himself as Professor Jose Cruz placed an order by telephone with the petitioner company for 406 books, payable on delivery. 4 EDCA prepared the corresponding invoice and delivered the books as ordered, for which Cruz issued a personal check covering the purchase price of P8,995.65. 5 On October 7, 1981, Cruz sold 120 of the books to private respondent Leonor Santos who, after verifying the seller's ownership from the invoice he showed her, paid him P1,700.00. 6

Meanwhile, EDCA having become suspicious over a second order placed by Cruz even before clearing of his first check, made inquiries with the De la Salle College where he had claimed to be a dean and was informed that there was no such person in its employ. Further verification revealed that Cruz had no more account or deposit with the Philippine Amanah Bank, against which he had drawn the payment check. 7 EDCA then went to the police, which set a trap and arrested Cruz on October 7, 1981. Investigation disclosed his real name as Tomas de la Peña and his sale of 120 of the books he had ordered from EDCA to the private respondents. 8

On the night of the same date, EDCA sought the assistance of the police in Precinct 5 at the UN Avenue, which forced their way into the store of the private respondents and threatened Leonor Santos with prosecution for buying stolen property. They seized the 120 books without warrant, loading them in a van belonging to EDCA, and thereafter turned them over to the petitioner. 9

Protesting this high-handed action, the private respondents sued for recovery of the books after demand for their return was rejected by EDCA. A writ of preliminary attachment was issued and the petitioner, after initial refusal, finally surrendered the books to the private respondents. 10 As previously stated, the petitioner was successively rebuffed in the three courts below and now hopes to secure relief from us.

To begin with, the Court expresses its disapproval of the arbitrary action of the petitioner in taking the law into its own hands and forcibly recovering the disputed books from the private respondents. The circumstance that it did so with the assistance of the police, which should have been the first to uphold legal and peaceful processes, has compounded the wrong even more deplorably. Questions like the one at bar are decided not by policemen but by judges and with the use not of brute force but of lawful writs.

Now to the merits

It is the contention of the petitioner that the private respondents have not established their ownership of the disputed books because they have not even produced a receipt to prove they had bought the stock. This is unacceptable. Precisely, the first sentence of Article 559 provides that "the possession of movable property acquired in good faith is equivalent to a title," thus dispensing with further proof.

The argument that the private respondents did not acquire the books in good faith has been dismissed by the lower courts, and we agree. Leonor Santos first ascertained the ownership of the books from the EDCA invoice showing that they had been sold to Cruz, who said he was selling them for a discount because he was in financial need. Private respondents are in the business of buying and selling books and often deal with hard-up sellers who urgently have to part with their books at reduced prices. To Leonor Santos, Cruz must have been only one of the many such sellers she was accustomed to dealing with. It is hardly bad faith for anyone in the business of buying and selling books to buy them at a discount and resell them for a profit.

But the real issue here is whether the petitioner has been unlawfully deprived of the books because the check issued by the impostor in payment therefor was dishonored.

In its extended memorandum, EDCA cites numerous cases holding that the owner who has been unlawfully deprived of personal property is entitled to its recovery except only where the property was purchased at a public sale, in which event its return is subject to reimbursement of the purchase price. The petitioner is begging the question. It is putting the cart before the horse. Unlike in the cases invoked, it has yet to be established in the case at bar that EDCA has been unlawfully deprived of the books.

The petitioner argues that it was, because the impostor acquired no title to the books that he could have validly transferred to the private respondents. Its reason is that as

the payment check bounced for lack of funds, there was a failure of consideration that nullified the contract of sale between it and Cruz.

The contract of sale is consensual and is perfected once agreement is reached between the parties on the subject matter and the consideration. According to the Civil Code:

Art. 1475. The contract of sale is perfected at the moment there is a meeting of minds upon the thing which is the object of the contract and upon the price.

From that moment, the parties may reciprocally demand performance, subject to the provisions of the law governing the form of contracts.

x x x x x x x x x

Art. 1477. The ownership of the thing sold shall be transferred to the vendee upon the actual or constructive delivery thereof.

Art. 1478. The parties may stipulate that ownership in the thing shall not pass to the purchaser until he has fully paid the price.

It is clear from the above provisions, particularly the last one quoted, that ownership in the thing sold shall not pass to the buyer until full payment of the purchase only if there is a stipulation to that effect. Otherwise, the rule is that such ownership shall pass from the vendor to the vendee upon the actual or constructive delivery of the thing sold even if the purchase price has not yet been paid.

Non-payment only creates a right to demand payment or to rescind the contract, or to criminal prosecution in the case of bouncing checks. But absent the stipulation above noted, delivery of the thing sold will effectively transfer ownership to the buyer who can in turn transfer it to another.

In Asiatic Commercial Corporation v. Ang,11 the plaintiff sold some cosmetics to Francisco Ang, who in turn sold them to Tan Sit Bin. Asiatic not having been paid by Ang, it sued for the recovery of the articles from Tan, who claimed he had validly bought them from Ang, paying for the same in cash. Finding that there was no conspiracy between Tan and Ang to deceive Asiatic the Court of Appeals declared:

Yet the defendant invoked Article 464 12 of the Civil Code providing, among other things that "one who has been unlawfully deprived of personal property may recover it from any person possessing it." We do not believe that the plaintiff has been unlawfully deprived of the cartons of Gloco Tonic within the scope of this legal provision. It has voluntarily parted with them pursuant to a contract of purchase and sale. The circumstance that the price was not subsequently paid did not render illegal a transaction which was valid and legal at the beginning.

In Tagatac v. Jimenez,13 the plaintiff sold her car to Feist, who sold it to Sanchez, who sold it to Jimenez. When the payment check issued to Tagatac by Feist was dishonored, the plaintiff sued to recover the vehicle from Jimenez on the ground that she had been unlawfully deprived of it by reason of Feist's deception. In ruling for Jimenez, the Court of Appeals held:

The point of inquiry is whether plaintiff-appellant Trinidad C. Tagatac has been unlawfully deprived of her car. At first blush, it would seem that she was unlawfully deprived thereof, considering that she was induced to part with it by reason of the chicanery practiced on her by Warner L. Feist. Certainly, swindling, like robbery, is an illegal method of deprivation of property. In a manner of speaking, plaintiff-appellant was "illegally deprived" of her car, for the way by which Warner L. Feist induced her to part with it is illegal and is punished by law. But does this "unlawful deprivation" come within the scope of Article 559 of the New Civil Code?

x x x x x x x x x

. . . The fraud and deceit practiced by Warner L. Feist earmarks this sale as a voidable contract (Article 1390 N.C.C.). Being a voidable contract, it is susceptible of either ratification or annulment. If the contract is ratified, the action to annul it is extinguished (Article 1392, N.C.C.) and the contract is cleansed from all its defects (Article 1396, N.C.C.); if the contract is annulled, the contracting parties are restored to their respective situations before the contract and mutual restitution follows as a consequence (Article 1398, N.C.C.).

However, as long as no action is taken by the party entitled, either that of annulment or of ratification, the contract of sale remains valid and binding. When plaintiff-appellant Trinidad C. Tagatac delivered the car to Feist by virtue of said voidable

contract of sale, the title to the car passed to Feist. Of course, the title that Feist acquired was defective and voidable. Nevertheless, at the time he sold the car to Felix Sanchez, his title thereto had not been avoided and he therefore conferred a good title on the latter, provided he bought the car in good faith, for value and without notice of the defect in Feist's title (Article 1506, N.C.C.). There being no proof on record that Felix Sanchez acted in bad faith, it is safe to assume that he acted in good faith.

The above rulings are sound doctrine and reflect our own interpretation of Article 559 as applied to the case before us.

Actual delivery of the books having been made, Cruz acquired ownership over the books which he could then validly transfer to the private respondents. The fact that he had not yet paid for them to EDCA was a matter between him and EDCA and did not impair the title acquired by the private respondents to the books.

One may well imagine the adverse consequences if the phrase "unlawfully deprived" were to be interpreted in the manner suggested by the petitioner. A person relying on the seller's title who buys a movable property from him would have to surrender it to another person claiming to be the original owner who had not yet been paid the purchase price therefor. The buyer in the second sale would be left holding the bag, so to speak, and would be compelled to return the thing bought by him in good faith without even the right to reimbursement of the amount he had paid for it.

It bears repeating that in the case before us, Leonor Santos took care to ascertain first that the books belonged to Cruz before she agreed to purchase them. The EDCA invoice Cruz showed her assured her that the books had been paid for on delivery. By contrast, EDCA was less than cautious — in fact, too trusting in dealing with the impostor. Although it had never transacted with him before, it readily delivered the books he had ordered (by telephone) and as readily accepted his personal check in payment. It did not verify his identity although it was easy enough to do this. It did not wait to clear the check of this unknown drawer. Worse, it indicated in the sales invoice issued to him, by the printed terms thereon, that the books had been paid for on delivery, thereby vesting ownership in the buyer.

Surely, the private respondent did not have to go beyond that invoice to satisfy herself that the books being offered for sale by Cruz belonged to him; yet she did. Although the title of Cruz was presumed under Article 559 by his mere possession of

the books, these being movable property, Leonor Santos nevertheless demanded more proof before deciding to buy them.

It would certainly be unfair now to make the private respondents bear the prejudice sustained by EDCA as a result of its own negligence.1âwphi1 We cannot see the justice in transferring EDCA's loss to the Santoses who had acted in good faith, and with proper care, when they bought the books from Cruz.

While we sympathize with the petitioner for its plight, it is clear that its remedy is not against the private respondents but against Tomas de la Peña, who has apparently caused all this trouble. The private respondents have themselves been unduly inconvenienced, and for merely transacting a customary deal not really unusual in their kind of business. It is they and not EDCA who have a right to complain.

WHEREFORE, the challenged decision is AFFIRMED and the petition is DENIED, with costs against the petitioner.

G.R. No. L-20264 January 30, 1971

CONSUELO S. DE GARCIA and ANASTACIO GARCIA, petitioners,

vs.

HON. COURT OF APPEALS, ANGELINA D. GUEVARA and JUAN B. GUEVARA, respondents.

Deogracias T. Reyes and Jose M. Luison for petitioners.

Tolentino and Garcia and D.R. Cruz for private respondents.

FERNANDO, J.:

This petition for certiorari to review a decision of respondent Court of Appeals was given due course because it was therein vigorously asserted that legal questions of gravity and of moment, there being allegations of an unwarranted departure from and a patent misreading of applicable and controlling decisions, called for determination by this Tribunal. The brief for petitioners-spouses, however, failed to substantiate such imputed failings of respondent Court. The performance did not live up to the promise. On the basis of the facts as duly found by respondent Court, which we are not at liberty to disregard, and the governing legal provisions, there is no basis for reversal. We affirm.

The nature of the case presented before the lower court by private respondent Angelina D. Guevara, assisted by her spouse, Juan B. Guevara, as plaintiffs, was noted in the decision of respondent Court of Appeals thus: "Plaintiff seeks recovery of `one (1) lady's diamond ring 18 cts. white gold mounting, with one (1) 2.05 cts. diamond-solitaire, and four (4) brills 0.10 cts. total weight' which she bought on October 27, 1947 from R. Rebullida, Inc."1 Then came a summary of now respondent Guevara of her evidence: "Plaintiff's evidence tends to show that around October 11, 1953 plaintiff while talking to Consuelo S. de Garcia, owner of La Bulakeña restaurant recognized her ring in the finger of Mrs. Garcia and inquired where she bought it, which the defendant answered from her comadre. Plaintiff explained that that ring was stolen from her house in February, 1952. Defendant handed the ring to plaintiff and it fitted her finger. Two or three days later, at the request of plaintiff, plaintiff, her husband Lt. Col. Juan Guevara, Lt. Cementina of Pasay PD, defendant and her attorney proceeded to the store of Mr. Rebullida to whom they showed the ring in question. Mr. Rebullida a examined the ring with the aid of high power lens and after consulting the stock card thereon, concluded that it was the very ring that plaintiff bought from him in 1947. The ring was returned to defendant who despite a written request therefor failed to deliver the ring to plaintiff. Hence, this case. Later on when the sheriff tried to serve the writ of seizure (replevin), defendant refused to deliver the ring which had been examined by Mr. Rebullida, claiming it was lost."2

How the defendant, Consuelo S. de Garcia, the present petitioner before us, along with her husband Anastacio Garcia, sought to meet plaintiff's claim was narrated thus: "On the other hand, defendant denied having made any admission before plaintiff or Mr. Rebullida or the sheriff. Her evidence tends to show that the ring

(Exhibit 1) was purchased by her from Mrs. Miranda who got it from Miss Angelita Hinahon who in turn got it from the owner, Aling Petring, who was boarding in her house; that the ring she bought could be similar to, but not the same ring plaintiff purchased from Mr. Rebullida which was stolen; that according to a pawn-shop owner the big diamond on Exhibit 1 was before the trial never dismantled. When dismantled, defendant's diamond was found to weigh 2.57 cts."3

Plaintiff lost in the lower court. She elevated the matter to respondent Court of Appeals with the judgment of the lower court being reversed. It is this decision now under review.

These are the facts as found by respondent Court of Appeals: "That the ring brought by the parties for examination by Rafael Rebullida on December 14, 1953 was the same ring purchased by plaintiff from R. Rebullida, Inc. on October 27, 1947 and stolen in February, 1952 has been abundantly established by plaintiff's evidence. Before plaintiff lost the ring, she had been wearing it for six years and became familiar with it. Thus, when she saw the missing ring in the finger of defendant, she readily and definitely identified it. Her identification was confirmed by Mr. Rafael Rebullida, whose candid testimony is entitled to great weight, with his 30 years experience behind him in the jewelry business and being a disinterested witness since both parties are his customers. Indeed, defendant made no comment when in her presence Rebullida after examining the ring and stock card told plaintiff that that was her ring, nor did she answer plaintiff's letter of demand, ... asserting ownership. Further confirmation may be found in the extra-judicial admissions, contained in defendant's original and first amended answers ..."4

These further facts likewise appeal therein: "The foregoing proof is not counter-balanced by the denial on the part of defendant or the presentation of the ring, Exhibit I, which has a diamond-solitaire 2.57 cts., or much heavier than the lost diamond weighing 2.05 cts. only. It is noteworthy that defendant gave a rather dubious source of her ring. Aling Petring from whom the ring supposedly came turned out to be a mysterious and ephemeral figure. Miss Hinahon did not even know her true and full name, nor her forwarding address. She appeared from nowhere, boarded three months in the house of Miss Hinahon long enough to sell her diamond ring, disappearing from the scene a week thereafter. Indeed, the case was terminated without any hearing on the third-party and fourth-party complaints, which would

have shown up the falsity of defendant's theory. Moreover, Mrs. Baldomera Miranda, third-party defendant, who tried to corroborate defendant on the latter's alleged attempt to exchange the ring defendant bought through her, is [belied] by her judicial admission in her Answer that appellee `suggested that she would make alterations to the mounting and structural design of the ring to hide the true identity and appearance of the original one' (Cunanan vs. Amparo, 45 O.G. 3796). Finally, defendant is refuted by her own extra-judicial admissions ... although made by defendant's counsel. For an attorney who acts as counsel of record and is permitted to act such, has the authority to manage the cause, and this includes the authority to make admission for the purpose of the litigation... Her proffered explanation that her counsel misunderstood her is puerile because the liability to error as to the identity of the vendor and the exchange of the ring with another ring of the same value, was rather remote."5

It is in the light of the above facts as well as the finding that the discrepancy as to the weight between the diamond-solitaire in Exhibit I and the lost diamond was due to defendant having "substituted a diamond-solitaire of plaintiff with a heavier stone" that the decision was rendered, respondent Court reversing the lower court and ordering defendant, now petitioner Consuelo S. de Garcia, to return plaintiff's ring or fact value of P1,000.00 and costs, as well as to pay plaintiff P1,000.00 as attorney's fee and P1,000.00 as exemplary damages. Hence this appeal.

To repeat, there is no occasion to reverse respondent Court. It correctly applied the law to the facts as found.

1. The controlling provision is Article 559 of the Civil Code. It reads thus: "The possession of movable property acquired in good faith is equivalent to a title. Nevertheless, one who has lost any movable or has been unlawfully deprived thereof may recover it from the person in possession of the same. If the possessor of a movable lost of which the owner has been unlawfully deprived, has acquired it in good faith at a public sale, the owner cannot obtain its return without reimbursing the price paid therefor." Respondent Angelina D. Guevara, having been unlawfully deprived of the diamond ring in question, was entitled to recover it from petitioner Consuelo S. de Garcia who was found in possession of the same. The only exception the law allows is when there is acquisition in good faith of the possessor at a public sale, in which case the owner cannot obtain its return without reimbursing the price.

As authoritative interpreted in Cruz v. Pahati, 6 the right of the owner cannot be defeated even by proof that there was good faith by the acquisition by the possessor. There is a reiteration of this principle in Aznar v. Yapdiangco.7 Thus: "Suffice it to say in this regard that the right of the owner to recover personal property acquired in good faith by another, is based on his being dispossessed without his consent. The common law principle that where one of two innocent persons must suffer by a fraud perpetrated by the another, the law imposes the loss upon the party who, by his misplaced confidence, has enabled the fraud to be committed, cannot be applied in a case which is covered by an express provision of the new Civil Code, specifically Article 559. Between a common law principle and statutory provision, the latter must prevail in this jurisdiction."8

2. It is thus immediately apparent that there is no merit to the contention raised in the first assigned error that her possession in good faith, equivalent to title, sufficed to defeat respondent Guevara's claim. As the above cases demonstrate, even on that assumption the owner can recover the same once she can show illegal deprivation. Respondent Court of Appeals was so convinced from the evidence submitted that the owner of the ring in litigation is such respondent. That is a factual determination to which we must pay heed. Instead of proving any alleged departure from legal norms by respondent Court, petitioner would stress Article 541 of the Civil Code, which provides: 'A possessor in the concept of owner has in his favor the legal presumption that he possesses with a just title and he cannot be obliged to show or prove it." She would accord to it a greater legal significance than that to which under the controlling doctrines it is entitled.lâwphî1.ñèt The brief for respondents did clearly point out why petitioner's assertion is lacking in support not only from the cases but even from commentators. Thus: "Actually, even under the first clause, possession in good faith does not really amount to title, for the reason that Art. 1132 of the Code provides for a period of acquisitive prescription for movables through `uninterrupted possession for four years in good faith' (Art. 1955 of the old Spanish Code, which provided a period of three years), so that many Spanish writers, including Manresa, Sanchez Roman, Scaevola, De Buen, and Ramos, assert that under Art. 464 of the Spanish Code (Art. 559 of the New Civil Code), the title of the possessor is not that of ownership, but is merely a presumptive title sufficient to serve as a basis of acquisitive prescription (II Tolentino, Civil Code of the Phil. p. 258: IV Manresa, Derecho Civil Español, 6th Ed., p. 380). And it is for the very reason that the title established by the first clause of Art. 559 is only a presumptive title sufficient to serve as a basis for acquisitive prescription, that the clause immediately following provides that `one who has lost any movable or has been unlawfully deprived thereof, may recover it from the person in possession of the

same.' As stated by the Honorable Justice Jose B. L. Reyes of this Court in Sotto vs. Enage (C.A.), 43 Off. Gaz. 5075, Dec. 1947: `Article 559 in fact assumes that possessor is as yet not the owner; for it is obvious that where the possessor has come to acquire indefeasible title by, let us say, adverse possession for the necessary period, no proof of loss or illegal deprivation could avail the former owner of the chattel. He would no longer be entitled to recover it under any condition.' "9

The second assigned error is centered on the alleged failure to prove the identity of the diamond ring. Clearly the question raised is one of the fact. What the Court of Appeals found is conclusive. Again, petitioner could not demonstrate that in reaching such a conclusion the Court of Appeals acted in an arbitrary manner. As made mention of in the brief for respondents two disinterested witnesses, Mr. Rafael Rebullida as well as Lt. Col. Reynaldo Cementina of the Pasay City Police Department, both of whom could not be accused of being biased in favor of respondent Angelina D. Guevara, did testify as to the identity of the ring.

The third assigned error of petitioners would find fault with respondent Court relying "on the weakness of the title or evidence" of petitioner Consuelo S. de Garcia. It is true, in the decision under review, mention was made of petitioner Consuelo S. de Garcia making no comment when in her presence Rebullida, after examining the ring the stock card, told respondent Angelina L. Guevara that that was her ring, nor did petitioner answer a letter of the latter asserting ownership. It was likewise stated in such decision that there were extra-judicial admissions in the original and first amended answers of petitioner. In the appraisal of her testimony, respondent Court likewise spoke of her giving a rather dubious source of her ring, the person from whom she allegedly bought it turning out "to be a mysterious and ephemeral figure." As a matter of fact, as set forth a few pages back, respondent Court did enumerate the flaws in the version given by petitioner. From the weakness of the testimony offered which, as thus made clear, petitioner, did not even seek to refute, she would raise the legal question that respondent Court relied on the "weakness of [her] title or evidence" rather than on the proof justifying respondent Angelina D. Guevara's claim of ownership. Petitioner here would ignore the finding of fact of respondent Court that such ownership on her part "has been abundantly established" by her evidence. Again here, in essence, the question raised is one of fact, and there is no justification for us to reverse respondent Court.

The legal question raised in the fourth assignment of error is that the matter of the substitution of the diamond on the ring was a question raised for the first time on appeal as it was never put in issue by the pleadings nor the subject of reception of evidence by both parties and not touched upon in the decision of the lower court. Why no such question could be raised in the pleadings of respondent Angelina D. Guevara was clarified by the fact that the substitution came after it was brought for examination to Mr. Rebullida. After the knowledge of such substitution was gained, however, the issue was raised at the trial according to the said respondent resulting in that portion of the decision where the lower court reached a negative conclusion. As a result, in the motion for reconsideration, one of the points raised as to such decision being contrary to the evidence is the finding that there was no substitution. It is not necessary to state that respondent Court, exercising its appellate power reversed the lower court. What was held by it is controlling. What is clear is that there is no factual basis for the legal arguments on which the fourth assigned error is predicated.

What is said takes care of the fifth assigned error that respondent Court was mistaken in its finding that there was such a substitution. Again petitioner would have us pass on a question of credibility which is left to respondent Court of Appeals. The sixth assigned error would complain against the reversal of the lower court judgment as well as petitioner Consuelo S. de Garcia being made to pay respondent Angelina D. Guevara exemplary damages, attorney's fees and costs. The reversal is called for in the light of the appraisal of the evidence of record as meticulously weighed by respondent Court. As to the attorney's fees and exemplary damages, this is what respondent Court said in the decision under review: "Likewise, plaintiff is entitled to recover reasonable attorney's fees in the sum of P1,000, it being just and equitable under the circumstances, and another P1,000 as exemplary damages for the public good to discourage litigants from resorting to fraudulent devices to frustrate the ends of justice, as defendant herein tried to substitute the ring, Exhibit 1, for plaintiff's ring." 10 Considering the circumstances, the cursory discussion of the sixth assigned error on the matter by petitioner fails to demonstrate that respondent Court's actuation is blemished by legal defects.

WHEREFORE, the decision of respondent Court of Appeals of August 6, 1962 is hereby affirmed. With costs.

G.R. No. L-30817 September 29, 1972

DOMINADOR DIZON, doing business under the firm name "Pawnshop of Dominador Dizon", petitioner,

vs.

LOURDES G. SUNTAY, respondent.

Andres T. Velarde for petitioner.

Rafael G. Suntay for respondent.

FERNANDO, J.:p

In essence there is nothing novel in this petition for review of a decision of the Court of Appeals affirming a lower court judgment sustaining the right of an owner of a diamond ring, respondent Lourdes G. Suntay, as against the claim of petitioner Dominador Dizon, who owns and operates a pawnshop. The diamond ring was turned over to a certain Clarita R. Sison, for sale on commission, along with other pieces of jewelry of respondent Suntay. It was then pledged to petitioner. Since what was done was violative of the terms of the agency, there was an attempt on her part to recover possession thereof from petitioner, who refused. She had to file an action then for its recovery. She was successful, as noted above, both in the lower court and thereafter in the Court of Appeals. She prevailed as she had in her favor the protection accorded by Article 559 of the Civil

Code. 1 The matter was then elevated to us by petitioner. Ordinarily, our discretion would have been exercised against giving due course to such petition for review. The vigorous plea however, grounded on estoppel, by his counsel, Atty. Andres T. Velarde, persuaded us to act otherwise. After a careful perusal of the respective contentions of the parties, we fail to perceive any sufficient justification for a

departure from the literal language of the applicable codal provision as uniformly interpreted by this Court in a number of decisions. The invocation of estoppel is therefore unavailing. We affirm.

The statement of the case as well as the controlling facts may be found in the Court of Appeals decision penned by Justice Perez. Thus: "Plaintiff is the owner of a three-carat diamond ring valued at P5,500.00. On June 13, 1962, the plaintiff and Clarita R. Sison entered into a transaction wherein the plaintiff's ring was delivered to Clarita R. Sison for sale on commission. Upon receiving the ring, Clarita R. Sison executed and delivered to the plaintiff the receipt ... . The plaintiff had already previously known Clarita R. Sison as the latter is a close friend of the plaintiff's cousin and they had frequently met each other at the place of the plaintiff's said cousin. In fact, about one year before their transaction of June 13, 1962 took place, Clarita R. Sison received a piece of jewelry from the plaintiff to be sold for P500.00, and when it was sold, Clarita R. Sison gave the price to the plaintiff. After the lapse of a considerable time without Clarita R. Sison having returned to the plaintiff the latter's ring, the plaintiff made demands on Clarita R. Sison for the return of her ring but the latter could not comply with the demands because, without the knowledge of the plaintiff, on June 15, 1962 or three days after the ring above-mentioned was received by Clarita R. Sison from the plaintiff, said ring was pledged by Melia Sison, niece of the husband of Clarita R. Sison, evidently in connivance with the latter, with the defendant's pawnshop for P2,600.00 ... ." 2 Then came this portion of the decision under review: "Since the plaintiff insistently demanded from Clarita R. Sison the return of her ring, the latter finally delivered to the former the pawnshop ticket ... which is the receipt of the pledge with the defendant's pawnshop of the plaintiff's ring. When the plaintiff found out that Clarita R. Sison pledged, she took steps to file a case of estafa against the latter with the fiscal's office. Subsequently thereafter, the plaintiff, through her lawyer, wrote a letter ... dated September 22, 1962, to the defendant asking for the delivery to the plaintiff of her ring pledged with defendant's pawnshop under pawnshop receipt serial-B No. 65606, dated June 15, 1962 ... . Since the defendant refused to return the ring, the plaintiff filed the present action with the Court of First Instance of Manila for the recovery of said ring, with P500.00 as attorney's fees and costs. The plaintiff asked for the provisional remedy of replevin by the delivery of the ring to her, upon her filing the requisite bond, pending the final determination of the action. The lower court issued the writ of replevin prayed for by plaintiff and the latter was able to take possession of the ring during the pendency of the action upon her filing the requisite bond." 3 It was then noted that the lower court rendered judgment declaring that plaintiff, now respondent Suntay, had the right to the possession of the ring in question. Petitioner Dizon, as

defendant, sought to have the judgment reversed by the Court of Appeals. It did him no good. The decision of May 19, 1969, now on review, affirmed the decision of the lower court.

In the light of the facts as thus found by the Court of Appeals, well-nigh conclusive on use, with the applicable law being what it is, this petition for review cannot prosper. To repeat, the decision of the Court of Appeals stands.

1. There is a fairly recent restatement of the force and effect of the governing codal norm in De Gracia v. Court of Appeals. 4 Thus: "The controlling provision is Article 559 of the Civil Code. It reads thus: 'The possession of movable property acquired in good faith is equivalent to a title. Nevertheless, one who has lost any movable or has been unlawfully deprived thereof may recover it from the person in possession of the same. If the possessor of a movable lost of which the owner has been unlawfully deprived, has acquired it in good faith at a public sale, the owner cannot obtain its return without reimbursing the price paid therefor.' Respondent Angelina D. Guevara, having been unlawfully deprived of the diamond ring in question, was entitled to recover it from petitioner Consuelo S. de Garcia who was found in possession of the same. The only exception the law allows is when there is acquisition in good faith of the possessor at a public sale, in which case the owner cannot obtain its return without reimbursing the price. As authoritatively interpreted in Cruz v. Pahati, the right of the owner cannot be defeated even by proof that there was good faith in the acquisition by the possessor. There is a reiteration of this principle in Aznar v. Yapdiangco. Thus: 'Suffice it to say in this regard that the right of the owner to recover personal property acquired in good faith by another, is based on his being dispossessed without his consent. The common law principle that were one of two innocent persons must suffer by a fraud perpetrated by another, the law imposes the loss upon the party who, by his misplaced confidence, has enabled the fraud to be committed, cannot be applied in a case which is covered by an express provision of the new Civil Code, specifically Article 559. Between a common law principle and a statutory provision, the latter must prevail in this jurisdiction." " 5

2. It must have been a recognition of the compulsion exerted by the above authoritative precedents that must have caused petitioner to invoke the principle of estoppel. There is clearly a misapprehension. Such a contention is devoid of any persuasive force.

Estoppel as known to the Rules of Court 6 and prior to that to the Court of Civil Procedure, 7 has its roots in equity. Good faith is its basis. 8 It is a response to the demands of moral right and natural justice. 9 For estoppel to exist though, it is indispensable that there be a declaration, act or omission by the party who is sought to be bound. Nor is this all. It is equally a requisite that he, who would claim the benefits of such a principle, must have altered his position, having been so intentionally and deliberately led to comport himself thus, by what was declared or what was done or failed to be done. If thereafter a litigation arises, the former would not be allowed to disown such act, declaration or omission. The principle comes into full play. It may successfully be relied upon. A court is to see to it then that there is no turning back on one's word or a repudiation of one's act. So it has been from our earliest decisions. As Justice Mapa pointed out in the first case, a 1905 decision, Rodriguez v. Martinez, 10 a party should not be permitted "to go against his own acts to the prejudice of [another]. Such a holding would be contrary to the most rudimentary principles of justice and law." 11 He is not, in the language of Justice Torres, in Irlanda v. Pitargue, 12 promulgated in 1912, "allowed to gainsay [his] own acts or deny rights which [he had] previously recognized." 13 Some of the later cases are to the effect that an unqualified and unconditional acceptance of an agreement forecloses a claim for interest not therein provided. 14 Equally so the circumstance that about a month after the date of the conveyance, one of the parties informed the other of his being a minor, according to Chief Justice Paras, "is of no moment, because [the former's] previous misrepresentation had already estopped him from disavowing the contract. 15 It is easily understandable why, under the circumstances disclosed, estoppel is a frail reed to hang on to. There was clearly the absence of an act or omission, as a result of which a position had been assumed by petitioner, who if such elements were not lacking, could not thereafter in law be prejudiced by his belief in what had been misrepresented to him. 16 As was put by Justice Labrador, "a person claimed to be estopped must have knowledge of the fact that his voluntary acts would deprive him of some rights because said voluntary acts are inconsistent with said rights." 17 To recapitulate, there is this pronouncement not so long ago, from the pen of Justice Makalintal, who reaffirmed that estoppel "has its origin in equity and, being based on moral right and natural justice, finds applicability wherever and whenever the special circumstances of a case so demand." 18

How then can petitioner in all seriousness assert that his appeal finds support in the doctrine of estoppel? Neither the promptings of equity nor the mandates of moral right and natural justice come to his rescue. He is engaged in a business where

presumably ordinary prudence would manifest itself to ascertain whether or not an individual who is offering a jewelry by way of a pledge is entitled to do so. If no such care be taken, perhaps because of the difficulty of resisting opportunity for profit, he should be the last to complain if thereafter the right of the true owner of such jewelry should be recognized. The law for this sound reason accords the latter protection. So it has always been since Varela v.

Finnick, 19 a 1907 decision. According to Justice Torres: "In the present case not only has the ownership and the origin of the jewels misappropriated been unquestionably proven but also that the accused, acting fraudulently and in bad faith, disposed of them and pledged them contrary to agreement, with no right of ownership, and to the prejudice of the injured party, who was thereby illegally deprived of said jewels; therefore, in accordance with the provisions of article 464, the owner has an absolute right to recover the jewels from the possession of whosoever holds them, ... ." 20 There have been many other decisions to the same effect since then. At least nine may be cited. 21 Nor could any other outcome be expected, considering the civil code provisions both in the former Spanish legislation 22 and in the present Code. 23 Petitioner ought to have been on his guard before accepting the pledge in question. Evidently there was no such precaution availed of. He therefore, has only himself to blame for the fix he is now in. It would be to stretch the concept of estoppel to the breaking point if his contention were to prevail. Moreover, there should have been a realization on his part that courts are not likely to be impressed with a cry of distress emanating from one who is in a business authorized to impose a higher rate of interest precisely due to the greater risk assumed by him. A predicament of this nature then does not suffice to call for less than undeviating adherence to the literal terms of a codal provision. Moreover, while the activity he is engaged in is no doubt legal, it is not to be lost sight of that it thrives on taking advantage of the necessities precisely of that element of our population whose lives are blighted by extreme poverty. From whatever angle the question is viewed then, estoppel certainly cannot be justly invoked.

WHEREFORE, the decision of the Court of Appeals of May 19, 1969 is affirmed, with costs against petitioner.

[G.R. No. 86051. September 1, 1992.]

JAIME LEDESMA, v. THE HONORABLE COURT OF APPEALS and CITIWIDE MOTORS, INC.,.

SYLLABUS

1. CIVIL LAW; POSSESSION; REQUISITES TO MAKE POSSESSION OF MOVABLE PROPERTY EQUIVALENT TO TITLE. — It is quite clear that a party who (a) has lost any movable or (b) has been unlawfully deprived thereof can recover the same from the present possessor even if the latter acquired it in good faith and has, therefore, title thereto for under the first sentence of Article 559, such manner of acquisition is equivalent to a title. There are three (3) requisites to make possession of movable property equivalent to title, namely: (a) the possession should be in good faith; (b) the owner voluntarily parted with the possession of the thing; and (c) the possession is in the concept of owner. (TOLENTINO, A.M., Civil Code of the Philippines, Vol. II, 1983 ed., 275-276, citing 2-II Colin and Capitant 942; De Buen: Ibid., 1009, 2 Salvat 165; 4 Manresa 339). Undoubtedly, one who has lost a movable or who has been unlawfully deprived of it cannot be said to have voluntarily parted with the possession thereof. This is the justification for the exceptions found under the second sentence of Article 559 of the Civil Code.

2. CIVIL LAW; SPECIAL CONTRACTS; CONTRACT OF SALE; ABSENCE OF CONSIDERATION; EFFECT THEREOF. — There was a perfected unconditional contract of sale between private respondent and the original vendee. The former voluntarily caused the transfer of the certificate of registration of the vehicle in the name of the first vendee — even if the said vendee was represented by someone who used a fictitious name — and likewise voluntarily delivered the cars and the certificate of registration to the vendee’s alleged representative Title thereto was forthwith transferred to the vendee. The subsequent dishonor of the check because of the alteration merely amounted to a failure of consideration which does not render the contract of sale void, but merely allows the prejudiced party to sue for specific performance or rescission of the contract, and to prosecute the impostor for estafa under Article 315 of the Revised Penal Code.

Petitioner impugns the Decision of 22 September 1988 of respondent Court of Appeals 1 in C.A.-G.R. CV No. 05955 2 reversing the decision of then Branch XVIII-B (Quezon City) of the then Court of First Instance (now Regional Trial Court) of Rizal in a replevin case, Civil Case No. Q-24200, the dispositive portion of which reads:

"Accordingly, the Court orders the plaintiff to return the repossessed Isuzu Gemini, 1977 Model vehicle, subject of this case to the defendant Ledesma. The incidental claim (sic) for damages professed by the plaintiff are dismissed for lack of merit. On defendant’s counterclaim, Court (sic) makes no pronouncement as to any form of damages, particularly, moral, exemplary and nominal in view of the fact that Citiwide has a perfect right to litigate its claim, albeit by this pronouncement, it did not succeed."

which was supplemented by a Final Order dated 26 June 1980, the dispositive portion of which reads:

"IN VIEW OF THE FOREGOING, the Court grants defendant Ledesma the sum of P35,000.00 by way of actual damages recoverable upon plaintiff’s replevin bond. Plaintiff and its surety, the Rizal Surety and Insurance Co., are hereby ordered jointly and severally to pay defendant Jaime Ledesma the sum of P10,000.00 as damages for the wrongful issue of the writ of seizure, in line with Rule 57, Sec. 20, incorporated in Rule 60, Sec. 10.

In conformity with the rules adverted to, this final order shall form part of the judgment of this Court on September 5, 1979.

The motion for reconsideration of the judgment filed by the plaintiff is hereby DENIED for lack of merit. No costs at this instance." 4

The decision of the trial court is anchored on its findings that (a) the proof on record is not persuasive enough to show that defendant, petitioner herein, knew that the vehicle in question was the object of a fraud and a swindle 5 and (b) that plaintiff,

private respondent herein, did not rebut or contradict Ledesma’s evidence that valuable consideration was paid for it.

The antecedent facts as summarized by the respondent Court of Appeals are as follows:

"On September 27, 1977, a person representing himself to be Jojo Consunji, purchased purportedly for his father, a certain Rustico T. Consunji, two (2) brand new motor vehicles from plaintiff-appellant Citiwide Motors, Inc., more particularly described as follows:chanrobles lawlibrary : rednad

a) One (1) 1977 Isuzu Gemini, 2-door Model PF 50ZIK, with Engine No. 751214 valued at P42,200.00; and

b) One (1) 1977 Holden Premier Model 8V41X with Engine No. 198-1251493, valued at P58,800.00.

Said purchases are evidenced by Invoices Nos. 3054 and 3055, respectively. (See Annexes A and B).

On September 28, 1977, plaintiff-appellant delivered the two-above described motor vehicles to the person who represented himself as Jojo Consunji, allegedly the son of the purported buyers Rustico T. Consunji, and said person in turn issued to plaintiff-appellant Manager’s Check No. 066-110-0638 of the Philippine Commercial and Industrial Bank dated September 28, 1977 for the amount of P101,000.00 as full payment of the value of the two (2) motor vehicles.

However, when plaintiff-appellant deposited the said check, it was dishonored by the bank on the ground that it was tampered with, the correct amount of P101.00 having been raised to P101,000.00 per the bank’s notice of dishonor (Annexes F and G).

On September 30, 1977, plaintiff-appellant reported to the Philippine Constabulary the criminal act perpetrated by the person who misrepresented himself as Jojo Consunji and in the course of the investigation, plaintiff-appellant learned that the real identity of the wrongdoer/impostor is Armando Suarez who has a long line of criminal cases against him for estafa using this similar modus operandi.

On October 17, 1977, plaintiff-appellant was able to recover the Holden Premier vehicle which was found abandoned somewhere in Quezon City.

On the other hand, plaintiff-appellant learned that the 1977 Isuzu Gemini was transferred by Armando Suarez to third persona and was in the possession of one Jaime Ledesma at the time plaintiff-appellant instituted this action for replevin on November 16, 1977.

In his defense, Jaime Ledesma claims that he purchases (sic) and paid for the subject vehicle in good faith from its registered owner, one Pedro Neyra, as evidenced by the Land Transportation Commission Registration Certificate No. RCO1427249.chanrobles.com.ph : virtual law library

After posting the necessary bond in the amount double the value of the subject motor vehicle, plaintiff-appellant was able to recover possession of the 1977 Isuzu Gemini as evidenced by the Sheriff’s Return dated January 23, 1978." 6

After trial on the merits, the lower court rendered the decision and subsequently issued the Final Order both earlier adverted to, which plaintiff (private respondent herein) appealed to the respondent Court of Appeals; it submitted the following assignment of errors:jgc:chanrobles.com.ph

"The trial court erred.

I

IN HOLDING THAT THE DEFENDANT IS ENTITLED TO THE POSSESSION OF THE CAR;

II

IN HOLDING THAT THE DEFENDANT IS AN INNOCENT PURCHASER IN GOOD FAITH AND FOR VALUE;

III

IN RULING THAT THE PLAINTIFF SHOULD RETURN THE CAR TO DEFENDANT, DISMISSING ITS CLAIM FOR DAMAGES, AND GRANTING DEFENDANT P35,000.00 DAMAGES RECOVERABLE AGAINST THE REPLEVIN BOND AND P101,000.00 DAMAGES FOR ALLEGED WRONGFUL SEIZURE;

IV

IN RENDERING THE DECISION DATED SEPTEMBER 3, 1979 AND THE FINAL ORDER DATED JUNE 26, 1980." 7

In support of its first and second assigned errors, private respondent cites Article 559 of the Civil Code which provides:jgc:chanrobles.com.ph

"ARTICLE 559. The possession of movable property acquired in good faith is equivalent to a title. Nevertheless, one who has lost any movable or has been unlawfully deprived thereof, may recover it from the person in possession of the same.

If the possessor of a movable lost or of which the owner has been unlawfully deprived, has acquired it in good faith at a public sale, the owner cannot obtain its return without reimbursing the price paid therefor."cralaw virtua1aw library

Without in any way reversing the findings of the trial court that herein petitioner was a buyer in good faith and for valuable consideration, the respondent Court ruled that:chanroblesvirtualawlibrary

"‘Under Article 559, Civil Code, the rule is to the effect that if the owner has lost a thing, or if he has been unlawfully deprived of it, he has a right to recover it not only from the finder, thief or robber, but also from third persons who may have acquired it in good faith from such finder, thief or robber. The said article establishes two (2) exceptions to the general rule of irrevendicability (sic), to wit: when the owner (1) has lost the thing, or (2) has been unlawfully deprived thereof. In these cases, the possessor cannot retain the thing as against the owner who may recover it without paying any indemnity, except when the possessor acquired it in a public sale.’ (Aznar v. Yapdiangco, 13 SCRA 486).

Put differently, where the owner has lost the thing or has been unlawfully deprived thereof, the good faith of the possessor is not a bar to recovery of the movable unless the possessor acquired it in a public sale of which there is no pretense in this case. Contrary to the court a assumption, the issue is not primarily the good faith of Ledesma for even if this were true, this may not be invoked as a valid defense, if it be shown that Citiwide was unlawfully deprived of the vehicle.

In the case of Dizon v. Suntay, 47 SCRA 160, the Supreme Court had occasion to define the phrase unlawfully deprived, to wit:chanrob1es virtual 1aw library

‘. . . it extends to all cases where there has been no valid transmission of ownership including depositary or lessee who has sold the same. It is believed that the owner in such a case is undoubtedly unlawfully deprived of his property and may recover the same from a possessor in good faith.’

x x x

In the case at bar, the person who misrepresented himself to be the son of the purported buyer, Rustico T. Consunji, paid for the two (2) vehicles using a check whose amount has been altered from P101.00 to P101,000.00. There is here a case of estafa. Plaintiff was unlawfully deprived of the vehicle by false pretenses executed simultaneously with the commission of fraud (Art. 315 2(a) R.P.C.). Clearly, Citiwide would not have parted with the two (2) vehicles were it not for the false representation that the check issued in payment thereupon (sic) is in the amount of P101,000.00, the actual value of the two (2) vehicles."

In short, said buyer never acquired title to the property; hence, the Court rejected the claim of herein petitioner that at least, Armando Suarez had a voidable title to the property.

His motion for reconsideration having been denied in the resolution of the respondent Court of 12 December 1988, 9 petitioner filed this petition alleging therein that:

"A

THE HONORABLE COURT OF APPEALS ERRED IN APPLYING ARTICLE 559 OF THE NEW CIVIL CODE TO THE INSTANT CASE DESPITE THE FACT THAT PRIVATE RESPONDENT CITIWIDE MOTORS, INC. WAS NOT UNLAWFULLY DEPRIVED OF THE SUBJECT CAR, AS IN FACT CITIWIDE VOLUNTARILY PARTED WITH THE TITLE AND POSSESSION OR (sic) THE SAME IN FAVOR OF ITS IMMEDIATE TRANSFEREE.

B

THE FACTUAL MILIEU OF THE INSTANT CASE FALLS WITHIN THE OPERATIVE EFFECTS OF ARTICLES 1505 AND 1506 OF THE NEW CIVIL CODE CONSIDERING THAT THE IMMEDIATE TRANSFEREE OF THE PRIVATE RESPONDENT CITIWIDE MOTORS, INC., ACQUIRED A VOIDABLE TITLE OVER THE CAR IN QUESTION WHICH TITLE WAS NOT DECLARED VOID BY A COMPETENT COURT PRIOR TO THE ACQUISITION BY THE PETITIONER OF THE SUBJECT CAR AND ALSO

BECAUSE PRIVATE RESPONDENT, BY ITS OWN CONDUCT, IS NOW PRECLUDED FROM ASSAILING THE TITLE AND POSSESSION BY THE PETITIONER OF THE SAID CAR."

There is merit in the petition. The assailed decision must be reversed.

The petitioner successfully proved that he acquired the car in question from his vendor in good faith and for valuable consideration. According to the trial court, the private respondent’s evidence was not persuasive enough to establish that petitioner had knowledge that the car was the object of a fraud and a swindle and that it did not rebut or contradict petitioner’s evidence of acquisition for valuable consideration. The respondent Court concedes to such findings but postulates that the issue here is not whether petitioner acquired the vehicle in that concept but rather, whether private respondent was unlawfully deprived of it so as to make Article 559 of the Civil Code apply.

It is quite clear that a party who (a) has lost any movable or (b) has been unlawfully deprived thereof can recover the same from the present possessor even if the latter acquired it in good faith and has, therefore, title thereto for under the first sentence of Article 559, such manner of acquisition is equivalent to a title. There are three (3) requisites to make possession of movable property equivalent to title, namely: (a) the possession should be in good faith; (b) the owner voluntarily parted with the possession of the thing; and (c) the possession is in the concept of owner. 11

Undoubtedly, one who has lost a movable or who has been unlawfully deprived of it cannot be said to have voluntarily parted with the possession thereof. This is the justification for the exceptions found under the second sentence of Article 559 of the Civil Code.

The basic issue then in this case is whether private respondent was unlawfully deprived of the cars when it sold the same to Rustico Consunji, through a person who claimed to be Jojo Consunji, allegedly the latter’s son, but who nevertheless turned out to be Armando Suarez, on the faith of a Manager’s Check with a face value of P101,000.00, dishonored for being altered, the correct amount being only P101.00.chanrobles virtual lawlibrary

Under this factual milieu, the respondent Court was of the opinion, and thus held, that private respondent was unlawfully deprived of the car by false pretenses.

We disagree. There was a perfected unconditional contract of sale between private respondent and the original vendee. The former voluntarily caused the transfer of the certificate of registration of the vehicle in the name of the first vendee — even if the said vendee was represented by someone who used a fictitious name — and likewise voluntarily delivered the cars and the certificate of registration to the vendee’s alleged representative Title thereto was forthwith transferred to the vendee. The subsequent dishonor of the check because of the alteration merely amounted to a failure of consideration which does not render the contract of sale void, but merely allows the prejudiced party to sue for specific performance or rescission of the contract, and to prosecute the impostor for estafa under Article 315 of the Revised Penal Code. This is the rule enunciated in EDCA Publishing and Distributing Corp. v. Santos, 12 the facts of which do not materially and substantially differ from those obtaining in the instant case. In said case, a person identifying himself as Professor Jose Cruz, dean of the De la Salle College, placed an order by telephone with petitioner for 406 books, payable upon delivery. Petitioner agreed, prepared the corresponding invoice and delivered the books as ordered, for which Cruz issued a personal check covering the purchase price. Two (2) days later, Cruz sold 120 books to private respondent Leonor Santos who, after verifying the seller’s ownership from the invoice the former had shown her, paid the purchase price of P1,700.00. Petitioner became suspicious over a second order placed by Cruz even before his first check had cleared, hence, it made inquiries with the De la Salle College. The latter informed the petitioner that Cruz was not in its employ. Further verification revealed that Cruz had no more account or deposit with the bank against which he drew the check. Petitioner sought the assistance of the police which then set a trap and arrested Cruz. Investigation disclosed his real name, Tomas de la Peña, and his sale of 120 of the books to Leonor Santos. On the night of the arrest; the policemen whose assistance the petitioner sought, forced their way into the store of Leonor’ and her husband, threatened her with prosecution for the buying of stolen property, seized the 120 books without a warrant and thereafter turned said books over to the petitioner. The Santoses then sued for recovery of the books in the Municipal Trial Court which decided in their favor; this decision was subsequently affirmed by the Regional Trial Court and sustained by the Court of Appeals. Hence, the petitioner came to this Court by way of a petition for review wherein it insists that it was unlawfully deprived of the books because as the check bounced for lack of funds, there was failure of consideration that nullified the contract of sale between it and the

impostor who then acquired no title over the books. We rejected said claim in this wise:

"The contract of sale is consensual and is perfected once agreement is reached between the parties on the subject matter and the consideration. According to the Civil Code:

ART. 1475. The contract of sale is perfected at the moment there is a meeting of minds upon the thing which is the object of the contract and upon the price.

From that moment, the parties may reciprocally demand performance, subject to the provisions of the law governing the form of contracts.

x x x

ART. 1477. The ownership of the thing sold shall be transferred to the vendee upon the actual or constructive delivery thereof.

ART. 1478. The parties may stipulate that ownership in the thing shall not pass to the purchaser until he has fully paid the price.

It is clear from the above provisions, particularly the last one quoted, that ownership in the thing sold shall not pass to the buyer until full payment of the purchase price only if there is a stipulation to that effect. Otherwise, the rule is that such ownership shall pass from the vendor to the vendee upon the actual or constructive delivery of the thing sold even if the purchase price has not yet been paid.

Non-payment only creates a right to demand payment or to rescind the contract, or to criminal prosecution in the case of bouncing checks. But absent the stipulation above noted, delivery of the thing sold will effectively transfer ownership to the buyer who can in turn transfer it to another."

In the early case of Chua Hai v. Hon. Kapunan, 14 one Roberto Soto purchased from the Youngstown Hardware, owned by private respondent, corrugated galvanized iron

sheets and round iron bars for P6,137.70, in payment thereof, he issued a check drawn against the Security Bank and Trust Co. without informing Ong Shu that he (Soto) had no sufficient funds in said bank to answer for the same. In the meantime, however, Soto sold the sheets to, among others, petitioner Chua Hai. In the criminal case filed against Soto, upon motion of the offended party, the respondent Judge ordered petitioner to return the sheets which were purchased from Soto. Petitioner’s motion for reconsideration having been denied, he came to this Court alleging grave abuse of discretion and excess of jurisdiction. In answer to the petition, it is claimed that inter alia, even if the property was acquired in good faith, the owner who has been unlawfully deprived thereof may recover it from the person in possession of the same unless the property was acquired in good faith at a public sale. 15 Resolving this specific issue, this Court ruled that Ong Shu was not illegally deprived of the possession of the property:

". . . It is not denied that Ong Shu delivered the sheets to Soto upon a perfected contract of sale, and such delivery transferred title or ownership to the purchaser. Says Art. 1496:chanrob1es virtual 1aw library

‘Art. 1496. The 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.’

The failure of the buyer to make good the price does not, in law, cause the ownership to revest in the seller until and unless the bilateral contract of sale is first rescinded or resolved pursuant to Article 1191 of the new Civil Code.

And, assuming that the consent of Ong Shu to the sale in favor of Soto was obtained by the latter through fraud or deceit, the contract was not thereby rendered void ab initio, but only voidable by reason of the fraud, and Article 1390 expressly provides that:

‘ART. 1390. The following contracts are voidable or annullable, even though there may have been no damage to the contracting parties:chanrob1es virtual 1aw library

(1) Those where one of the parties is incapable of giving consent to a contract;

(2) Those where the consent is vitiated by mistake, violence, intimidation, undue influence or fraud.

These contracts are binding, unless they are annulled by a proper action in court. They are susceptible of ratification.’

Agreeably to this provision, Article 1506 prescribes:

‘ARTICLE 1506. Where the seller of goods has a voidable title thereto, but his title has not been avoided at the time of the sale, the buyer acquires a good title to the goods, provided he buys them in good faith, for value, and without notice of the seller’s defect of title.’

Hence, until the contract of Ong Shu with Soto is set aside by a competent court (assuming that the fraud is established to its satisfaction), the validity of appellant’s claim to the property in question can not be disputed, and his right to the possession thereof should be respected."

It was therefore erroneous for the respondent Court to declare that the private respondent was illegally deprived of the car simply because the check in payment therefor was subsequently dishonored; said Court also erred when it divested the petitioner, a buyer in good faith who paid valuable consideration therefor, of his possession thereof.

WHEREFORE, the challenged decision of the respondent Court of Appeals of 22 September 1988 and its Resolution of 12 December 1988 in C.A.-G.R. CV No. 05955 are hereby SET ASIDE and the Decision of the trial court of 3 September 1979 and its Final Order of 26 June 1980 in Civil Case No. Q-24200 are hereby REINSTATED, with costs against private respondent Citiwide Motors, Inc.

SO ORDERED.

[G.R. No. L-11977. April 29, 1959.]

LEONARDO AZARCON, MANUEL AZARCON and ESTEBAN ABOBO, , v. VICTOR EUSEBIO,

SYLLABUS

1. POSSESSION; POSSESSOR’S RIGHT OVER PRODUCTS PENDING HARVEST; WHEN ORDERED TO VACATE PREMISES. — Under the law a person who is in possession and who is being ordered to leave a parcel of land while products thereon are pending harvest, has the right to a part of the net harvest as expressly provided by Article 545 of the Civil Code.

2. CONTEMPT; WHEN THE ORDER DOES NOT INHIBIT THE ACT COMPLAINED OF. — Where the order of execution does not expressly prohibit the defendants-appellants from gathering fruits, which were the result of their possession and cultivation of the land, it cannot be said that the defendants-appellants committed an act which is a clear violation of the court’s order, especially if they had presented a motion to set aside the said order of execution which was granted and a bond in compliance with said order and had it approved by the Court in view of which appellants may have felt justified in entering the land and harvesting the fruits existing thereon.

3. ID.; ID; — Appellants’ act in harvesting the pending fruits was not only justified by law but was not expressly prohibited by the Court’s order and was even ratified when the court ordered the suspension of the execution. There was therefore no open, clear and contumacious refusal to obey a definite order of the court such as would constitute contempt.

4. POSSESSION; POSSESSOR’S RIGHT TO TAKE WITH HIM HIS OWN EFFECTS IF ORDERED TO VACATE. — A person who has been ordered to leave certain premises is ordinarily not prohibited from taking with him his own effects and possession.

Appeal from an order of the Court of Appeals, Fourth Division, in CA-G. R. No. 15444-R, promulgated September 5, 1956, finding Leonardo Azarcon, Manuel Azarcon and Esteban Abobo guilty of contempt of court, ordering each of them to pay a fine of P100, to remove certain improvements that they have constructed on the land etc.

The record discloses that respondent Victor Eusebio and petitioners herein had a dispute over the possesion of a certain parcel of public land in the year 1954. Victor Eusebio had filed a lease application, No. V-79, for a parcel of land known as lot No. 3807, containing an area of about 349 hectares. A portion thereof was occupied by petitioners herein, Leonardo L. Azarcon and his companions, under a homestead application. The conflict between the lessee and the homesteaders was ordered to be investigated on May 25, 1955 by the Director of Lands and again on August 3, 1955 by the Secretary of Agriculture and Natural Resources.

Before the dispute could be settled and on April 28, 1954, Victor Eusebio filed a complaint in the Court of First Instance of Nueva Ecija, alleging that he had acquired a big parcel of land, 349 hectares in area, by lease from the Bureau of Lands (lease application No. V-79); that while he was in possession thereof defendants occupied a portion, known as lot No. 2807, containing an area of six hectares more or less. He, therefore, prayed that defendants be ordered to vacate the six hectares occupied by them and pay damages. Defendant Leonardo Azarcon answered the complaint alleging that he is in actual possession of a portion of 24 hectares since 1941 by virtue of a homestead application, No. V-42995; that the lease application of plaintiff is subsequent to said homestead application of Leonardo Azarcon; that Azarcon had occupied the land since 1941 with interruptions during the war and again in 1950 up to the time of the filing of the action. He, therefore, prayed that the action be dismissed. The answer was filed on June 2, 1954 and on motion of plaintiffs dated March 15, 1955, the defendants were declared in default. A motion to set aside the default was denied, and a judgment by default was entered by the court on April 26, 1955. It ordered defendants to restore possession of the land to plaintiff. Having failed to obtain a reconsideration of the above decision, defendants appealed to the Court of Appeals.

While the case was pending in the Court of Appeals, a writ for the execution of the judgment of the lower court was issued on October 3, 1955. On October 8, 1955,

defendants moved and the court on October 21 ordered that the said writ of execution be stayed upon defendants’ depositing of a supersedeas bond of P1,000. The writ of execution was actually served on the defendants on October 7, 1955. Various petitions were submitted by the parties, and among them was that of defendants-appellants asking for the lifting of the writ of execution. This petition, dated October 14, 1955, was granted on November 1, 1955, and the court again fixed the supersedeas bond to stay execution in the amount of P1,000 to be filed with and approved by the Court of First Instance of Nueva Ecija as to its sufficiency. In the same order of November 7, the Court of Appeals denied a petition of the plaintiff-appellee to file a counter-supersedeas bond as well as plaintiff appellee’s motion for injunction. In the meanwhile the defendants-appellants had presented on November 21, 1955 the supersedeas bond required for the approval of the Court of First Instance of Nueva Ecija and the said bond was filed and approved on November 21, 1955. This fact was certified to by the clerk of the Court of First Instance of Nueva Ecija on November 14, 1955.

On December 2, 1955 the Court of Appeals on motion of plaintiff, reconsidered its order or resolution of November 7, 1955 authorizing the stay of execution upon the filing of the bond by the defendants-appellants, on the ground that the defendants-appellants have not filed any supersedeas bond as required. On January 19, 1956, the Court of Appeals denied a petition of defendants-appellants to reconsider said order of December 2, 1955 on the ground that the writ of execution issued on October 3, 1955 had already been executed.

The following appear to be clear: (a) the writ of execution dated October 3, 1955 was furnished the defendants on October 7, 1955; (b) said order of execution was set aside in an order of October 21, 1955, which order authorized the defendants-appellants to file a supersedeas bond in the amount of P1,000, the same to be approved by the Court of First Instance of Nueva Ecija; (c) said supersedeas bond was filed with the Court of First Instance on November 21, 1955, but the certificate showing such filing of the bond was issued by the clerk of the Court of First Instance of Nueva Ecija only on December 14, 1955; and the Court of Appeals, not having been notified of the fact that the defendants have already secured the approval of their supersedeas bond, set aside the order to stay execution on December 2, 1955.

The evidence shows that in spite of the receipt by the defendants of the notice of the writ of execution of October 3, 1955, which writ of execution commanded defendants "to forthwith remove from said premises and that plaintiff have restitution of the same," defendants-appellants nevertheless entered the land to gather palay which was then pending harvest. We gather further from the record that the rice found on the disputed land at the time of the service of the order of execution had been planted by defendants-appellants, who appear to have been in possession of the land from 1951. While the court order of October 3, 1955 ordered the defendant-appellant to move out from the premises, it did not prohibit them from gathering the crop then existing thereon. Under the law a person who is in possession and who is being ordered to leave a parcel of land while products thereon are pending harvest, has the right to a part of the net harvest, as expressly provided by Article 545 of the Civil Code.

"ART. 545. If at the time the good faith ceases, there should be any natural or industrial fruits, the possessor shall have a right to a part of the expenses of cultivation, and to a part of the net harvest, both in proportion to the time of the possession."cralaw virtua1aw library

x x x

As the order of execution did not expressly prohibit the defendants-appellants from gathering the pending fruits, which fruits were the result of their possession and cultivation of the land, it cannot be said that the defendants-appellants committed an act which is a clear violation of the courts’ order. Besides, the defendants-appellants had presented, after receipt of the order of execution, a motion to set aside the said order of execution, and this motion to stay execution was granted. Defendants furthermore presented a bond in accordance with the order of the court and had it approved by the Court of First Instance. It was perhaps in expectation of this resolution of the court setting aside the order of execution that defendants-appellants may have felt justified in entering the land and harvesting the fruits existing thereon.

Again the order of the court setting aside its order to stay execution was issued in the belief that the defendants-appellants had not presented their bond to stay execution (which they had actually presented before the Court of First Instance of Nueva Ecija and which said court actually approved). Under the circumstances above stated, we

are not ready to conclude that the defendants-appellants can be held to have committed a clear defiance of the order of the court. Their act in harvesting the pending fruits was not only justified by law but was not expressly prohibited by the court’s order, and was even ratified when the court ordered the suspension of the execution. There was, therefore, no open, clear and contumacious refusal to obey a definite order of the court such as would constitute contempt. Furthermore, a person who has been ordered to leave certain premises is ordinarily not prohibited from taking with him his own effects and possession, unless there is an express prohibition to this effect. No such prohibition was contained in the order for the defendants to leave the land. There may have been a technical violation of an order not to enter the premises, but not of one prohibiting them from removing anything therefrom. Such technical violation of the order cannot be considered as one amounting to a defiance of the court’s authority, punishable as contempt.

For the foregoing considerations, the order appealed from should be, as it is hereby, set aside, and the defendants-appellants acquitted of the charge against them. Without costs.

[G.R. No. L-36789. July 25, 1983.]

FELIPA CORDERO (Deceased) MAURO OCAMPO, CASIMIRO OCAMPO and ELISEA OCAMPO, Petitioners, v. VICTORIA P. CABRAL, ALEJANDRO BERBOSO, DALMACIO MONTAOS and HONORABLE COURT OF APPEALS, Respondents.

San Juan, Africa & Associates for Petitioner.

Bengzon & Associates for Private Respondent.

SYLLABUS

1. REMEDIAL LAW; APPEAL; SCOPE; ONLY QUESTIONS RAISED WITHIN THE ISSUES MADE BY THE PARTIES IN THE PLEADINGS IN THE COURT BELOW; ENTERTAINED ON APPEAL. — It is a well-settled rule that, except questions on jurisdiction, no question will be entertained on appeal unless it has been raised in the court below and it is within the issues made by the parties in their pleadings.

2. ID.; ID.; JUDGMENT OF APPELLATE COURT BASED ON A GROUND NOT LITIGATED IN THE TRIAL COURT; CASE AT BAR. — In this, case, the Court of Appeals erred when it rendered a decision based on a ground which was not litigated in the trial court and which could not have been raised on appeal. The ground to be sure, is the supposed oral contract of sale made to the predecessors of the defendants covering the disputed piece of land. The supposed oral contract of sale was never an issue.

3. CIVIL LAW; PROPERTY; POSSESSION; GOOD FAITH CEASES AND BAD FAITH BEGINS UPON SERVICES OF SUMMONS. — The defendants, by their own admission, are in possession of the disputed land. There is no evidence that they were possessors in bad faith. However, their good faith ceased when they were served with summons to answer the complainant. (Art. 528, Civil Code; Tacas v. Tobon, 53 Phil. 356 [1929]). As possessors in bad faith from the service of the summons they "shall reimburse the fruits received and those which the legitimate possessor could have received . . ." (Art. 549, Civil Code)

D E C I S I O N

ABAD SANTOS, J.:

Petition to review a decision of the defunct Court of Appeals.

In Civil Case No. 2323 of the defunct Court of First Instance of Bulacan, Felipa Cordero and her children Mauro, Casimiro and Elisea all surnamed Ocampo sued Victoria Cabral, Alejandro Berboso and Dalmacio Montaos in a Complaint which reads as follows:chanrobles.com:cralaw:red

"1. That the plaintiffs are all of legal age, all residing and with postal address at Meycauayan, Bulacan; Felipa Cordero is a widow while Elisea Ocampo is single; and the defendants are all of legal age, Victoria P. Cabral is married but she is living apart and separate from her husband so the latter is not included herein as party defendant, and all of them are residing and with postal address at Meycauayan, Bulacan, where they may be served with summons;

2. That Mr. Gregorio Z. Ocampo of Meycauayan, Bulacan, husband of the plaintiff Felipa Cordero and father of the other plaintiffs surnamed Ocampo, died on May 17, 1958, and that said deceased left several properties, which were inherited by the plaintiffs, one of which is a parcel of land described as follows:chanrob1es virtual 1aw library

A parcel of land (Lot No. 5, plan Psu. 43302), with the improvements thereon, situated in the barrio of Saluysoy, Municipality of Meycauayan. Bounded on the N. by Sapa and properties of Pedro Dazo and Catalino Exaltacion; on the NE. by property of Trinidad Rodriguez & Mateo Mistica; on the SE. by properties of Vicente Mistica, Antonio Rodriguez, Hermogenes Blanco, Lucio Sulbera and Pablo Francia; on the SW. by properties of Concepcion Rodriguez and Alejandro de la Cruz; and on NW. by a Sapa . . .; containing an area of Seventy-eight thousand one hundred and eighty-one square meters (78,181), more or less. With TRANSFER CERTIFICATE OF TITLE NO. 14513 in the name of Gregorio Z. Ocampo and has Tax Declaration No. 2819 and is assessed at P4,290.00.

which parcel of land was originally registered in accordance with the Land Registration Act on December 14, 1933, and was registered and/or transferred in the name of Mr. Gregorio Z. Ocampo on July 31, 1934;

3. That after the death of the said Mr. Gregorio Z. Ocampo the plaintiffs herein took possession of the properties left by him, among others is the afore-described parcel of land which is a riceland, but they found out that the southern portion of the same with an area 4,303 square meters, more or less, upon verification, was possessed by the defendants herein, Victoria P. Cabral, Alejandro Berboso and Dalmacio Montaos; and that the defendant Victoria P. Cabral claimed to be the owner of said portion while her co-defendants co-possessed the same as her tenants;

4. That the plaintiffs demanded of the defendants to surrender to the former possession of the afore-mentioned portion of land and/or vacate it but they refused and failed to do so, and the defendant Victoria P. Cabral continued claiming to be the owner of the same while her co-defendants continued recognizing her as the owner thereof instead of the plaintiffs; that the plaintiffs had the afore-described parcel of land (with T.C.T. No. 14513) relocated in the presence of the defendants’ representatives and it was found and/or determined that the afore-said portion of land with the area of 4,303 square meters, more or less, was a part of the plaintiffs’ land with T.C.T. No. 14513; that even after the said relocation the defendant Victoria P. Cabral persisted and still persist in her claim of ownership over the said portion and her co-defendants persisted and still persist in recognizing her as the owner thereof instead of the plaintiffs; that the defendants continue in possession of the same; and that the defendants still refuse and fail to surrender and/or vacate said portion of land inspite of demands made on them by the plaintiffs;

5. That because of the defendants’ occupancy of the afore-mentioned plaintiffs’ portion of land with the area of 4,303 square meters, more or less, to the exclusion of the latter, the said plaintiffs failed to realize a yearly harvest of at least ten (10) cavanes of palay at the rate of P10.00 per cavan, from the harvest-time of 1958 up to the present;

6. That because of the defendants’ refusal to recognize plaintiffs’ ownership over the afore-mentioned portion of land and also because of their refusal and failure to surrender and/or vacate the same the plaintiffs were forced to employ the services of the undersigned counsel to institute this action at an agreed fees of P500.00.

WHEREFORE, premises considered, the plaintiffs herein respectfully pray of this Hon. Court to render judgment in favor of the plaintiffs and against the defendants thus ordering them:chanrob1es virtual 1aw library

a) To recognize the ownership of the plaintiffs over the afore-mentioned portion of land with an area of 4,303 square meters, more or less, and to surrender it to the plaintiffs or vacate the same;

b) To deliver, jointly and severally, to the plaintiffs palay in the amount of ten (10) cavanes or pay their market price at the rate of P10.00 per cavan per harvest-time beginning the year 1958 up to the time of their delivery or payment.

c) To pay, jointly and severally, the plaintiffs’ lawyer’s fees in the amount of P500.00; and

d) To pay the costs of this suit.

And to grant any remedy and relief just and equitable in the premises." (Record on Appeal, pp. 2-6.).

The Answer of the defendants contains the following allegations:jgc:chanrobles.com.ph

"I. That defendants have no knowledge or information sufficient to form a belief as to the truth of the allegations in paragraph 2 of the complaint;

II. That defendants admit being in possession of the portion of land alleged in paragraph 3 of the complaint, as said portion of land belongs to defendant Victoria P. Cabral;

III. That defendants deny the allegation in paragraph 4 of the complaint to the effect that the said portion of 4,303 square meters, more or less, is a part of the plaintiffs’ land;

IV. That defendants have no knowledge or information sufficient to form a belief as to the truth of the allegations in paragraph 5 of the complaint;

V. That defendants likewise have no knowledge or information sufficient to form a belief as to the truth of the allegations in paragraph 5 of the complaint;

And by way of SPECIAL DEFENSE, defendants allege:chanrobles.com : virtual law library

VI. That defendant Victoria P. Cabral and her predecessors in interest before her are the real owners, and have been in actual, adverse, peaceful and continuous possession, of that portion of land claimed by the plaintiffs in their complaint, which portion is more particularly described as Lot 5-B of plan Psd-11496, duly approved by the Director of Lands on December 21, 1935;

VII. That the deceased Gregorio Z. Ocampo and/or his heirs, the herein plaintiffs, have admitted, acknowledged and recognized the defendant Cabral and her predecessors in said portion of land, as the real owners thereof;

VIII. That the deceased Gregorio Z. Ocampo and his predecessors in interest, as well as the defendant Cabral and her predecessors in interest, have always recognized as the boundary between their respective properties, a barrio road which has existed since the Spanish regime and has continued to exist up to the present time; and all the residents of the rural areas using said barrio road know for a fact that, with respect to the respective properties of the parties hereto, said road is the boundary between said properties;

IX. That the inclusion of that portion claimed by the plaintiffs in their complaint in the original registration of their property was obtained thru error or fraud by the original applicant, but was never possessed by him nor by his successors in interest, as they have always openly recognized the ownership of said portion as belonging to defendant Cabral and her predecessors in interest before her;

And by way of COUNTER CLAIM, defendants allege:chanrob1es virtual 1aw library

X. That all the foregoing paragraphs are pleaded herein and made parts hereof;

XI. That the defendant Victoria P. Cabral is the real owner of Lot No. 5-B, plan Psd-11496, with an area of 4,303 square meters, more or less, erroneously or fraudulently included in the property described in Transfer Certificate of Title No. 14513 of the Register of Deeds of the Province of Bulacan, registered in the name of the deceased Gregorio Z. Ocampo and now claimed by the herein plaintiffs;

XII. That defendant Cabral and her predecessors in interest have been in possession of said portion of land for more than fifty years, their possession being actual, adverse, peaceful and continuous, as owners thereof;

XIII. That said deceased Gregorio Z. Ocampo and/or his heirs, and their predecessors in interest have openly admitted, acknowledged and recognized the defendant Victoria P. Cabral and her predecessors in interest as the real owners of said portion of land, Lot 5-B plan Psd-11496, and said Gregorio Z. Ocampo and/or his heirs and their predecessors in interest have never been in possession of said portion of land;

XIV. That the plaintiffs, claiming to be the heirs of the deceased Gregorio Z. Ocampo, are therefore under obligation to execute a deed of transfer of said portion of land in favor of the true owner thereof, the herein defendant Victoria P. Cabral, in accordance with law;

XV. That because of the present action filed by the plaintiffs, the defendants have suffered damages in the amount of P1,000.00;

WHEREFORE:, defendants pray that judgment be rendered:chanrob1es virtual 1aw library

(a) dismissing the complaint, with costs against the plaintiffs;

(b) declaring the defendant Victoria P. Cabral as the owner of Lot-5-B, plan Psd-11496, which has been erroneously included in the property of the deceased Gregorio Z. Ocampo covered by Transfer Certificate of Title No. 14513, Bulacan, and ordering the herein plaintiffs to execute a deed of transfer of said Lot No. 5-B, plan Psd-11496 in favor of the defendant Victoria P. Cabral; and

(c) ordering the plaintiffs to pay to the defendants the sum of P1,000.00.

Defendants further pray for such other reliefs and remedies which may be proper and just under the premises." (R.A., pp. 8-13.)

The plaintiffs filed a Reply and Answer to Counterclaim as follows:jgc:chanrobles.com.ph

"1. That the plaintiffs deny the allegation in paragraph II of the Answer that the portion of land now under litigation belongs to the defendant Victoria P. Cabral, and likewise deny the allegations in paragraphs VI and XI of the same that the defendant Victoria P. Cabral and her predecessors in interest are the real owners of this portion (under litigation) with an area of 4,303 square meters, Lot 5-B of plan Psd-11496 with Transfer Certificate of Title No. 14513 in the name of Mr. Gregorio Z. Ocampo, because the truth is that the said Mr. Ocampo and his successors in interest, the plaintiffs herein, are the real owners thereof; and that said portion is a part and is included in the plaintiffs’ big parcel of land known as Lot 5, Psu-43302, and covered by the afore-mentioned Certificate;

That the defendant Victoria P. Cabral and her predecessors in interest were never the owners of the said portion of land and in fact none of them, much less Victoria P. Cabral, has been in possession or in possession of any title or any document either public or private, showing his or her ownership, and not even a Tax Declaration for taxation purposes; the truth is that when the late Mr. Antonio Rodriguez, original owner of the land with plan Psu-100536, adjacent to that of the plaintiffs, sold said land to his successor Segunda Prodon he did not include in the said sale this portion, under litigation, Lot 5-B, of plan Psd-11496 with an area of 4,303 square meters, more or less, knowing that it did not belong to him; and because of Segunda Prodon has not acquired this portion of land with an area of 4,303 square meters, more or less, it is clear, therefore, that she could not have transmitted it to her successors including the herein defendant, Victoria P. Cabral;

2. That the plaintiffs deny the defendants’ allegations in paragraphs VI and XII of their Answer that the defendant Victoria P. Cabral and her predecessors in interest have been in actual, adverse, peaceful and continuous possession of this portion of land for a period of more than 50 years because the truth is that, if they were ever in possession of the same, their possession was ‘not adverse’ and ‘not continuous’. When Mr. Gregorio Z. Ocampo bought the parcel of land known as Lot 5, Psu-43302 with an area of 78,181 square meters, more or less, in 1934, (wherein

this portion under litigation is included) the said Mr. Ocampo took possession of this whole land. In the year 1935 the adjoining owner of the said property, the late Mr. Antonio Rodriguez and predecessor of the defendant Victoria P. Cabral, requested Mr. Ocampo to sell to him a portion of said land with an area of 4,303 square meters, more or less, to which Mr. Ocampo agreed. As there was already a meeting of the mind Mr. Rodriguez requested Mr. Ocampo that he be allowed to possess the said portion as they were going to make the formal deed of sale, to which proposition Mr. Ocampo likewise agreed. This proposed sale never materialized so if Mr. Rodriguez ever possessed the said portion of land, now under litigation, he did not possess it as owner but only as a ‘prospective owner’. His possession cannot, therefore, be termed ‘adverse’. Such possession cannot also be termed ‘continuous’ for 50 years because Mr. Ocampo was in possession of the same in 1934 before Mr. Rodriguez came in possession of the same, first, with the consent and later by toleration of Mr. Ocampo.

Granting but without admitting, that the defendant Cabral and her predecessors in interest have been in possession of this portion of land with an area of 4,303 square meters, more or less for more than 50 years, does she mean to imply now that she acquires ownership over the same by virtue of ‘prescription’? She must remember that this property is titled under Act 496 and, therefore, ‘imprescriptible’,

3. That the plaintiffs deny the defendants’ allegations in paragraphs VI and IX of their Answer that the plaintiffs have admitted, acknowledged and recognized the defendant Cabral and her predecessors in said land as the real owners thereof, because the truth is that the plaintiffs are the real owners of the same, and that they have never admitted, acknowledged nor recognized the defendant Cabral nor any of her predecessors in interest as the owners of said portion of land;

4. That the plaintiffs admit the allegation in paragraph VIII of the Answer that the defendant Victoria P. Cabral owns an adjoining property which is described in her plan Psu-100536 but they deny there is a ‘barrio road’ between her land and that of the plaintiffs which serves as the boundary and that there has never been any road much less a barrio road between their properties.

That, if the defendants are referring to Lot 5-B, plan Psd-11496, and the rest of the land of the plaintiffs Lot No. 5, Psu-43302, which said Lot 5-B is a part, the plaintiffs deny the existence of such road much less a barrio road, and that there has never been a road therein. With the permission of the Hon. Court the existence or non-existence of a road can be verified by an ocular inspection and if need be with the aid of a licensed surveyor;

5. That the plaintiffs deny the allegations in paragraphs IX and XIII of the Answer that Mr. Gregorio Z. Ocampo and his successors in interest have never been in possession of this portion of land now under litigation. Mr. Gregorio Z. Ocampo took possession of said property after he bought it in 1934 and if the predecessors in interest of the defendant Cabral happened to be in its possession it was, first, with the consent of Mr. Ocampo and later by his toleration as we have already explained in paragraph 2 of this Reply;

6. That the plaintiffs deny the allegation in paragraph IX of the Answer that the inclusion of this portion of property under litigation was ‘obtained thru error or fraud’ by the original applicant, and they likewise deny the allegation in paragraph XI of the Answer that this portion with an area of 4,303 square meters, more or less, was erroneously and fraudulently included in the property described in Transfer Certificate of Title No. 14513 of the Register of Deeds of the Province of Bulacan, because in truth and in fact there was no such error or fraud. The title of this property was granted and obtained in a regular proceeding. If there was any error or fraud the predecessor in interest of the defendant Victoria P. Cabral would have filed a petition for review or would have sued for damages. Or the said defendant or any of her predecessors in interest would have resorted to some legal remedy.

The fact is that the defendant Victoria P. Cabral or any of her predecessors in interest did not sincerely and honestly believe that they were the owners of this portion of property. In fact they did not have and do not have any kind of title or any kind of document, either public or private, over this property and they did not even have this property declared in their names for taxation purposes.

Granting, but without admitting, that the title to this property was obtained either by error or fraud yet the defendant Victoria P. Cabral can have no valid claim against the plaintiffs because she has never been the owner of said property and also because the plaintiffs’ predecessor, Mr. Gregorio Z. Ocampo, acquired this property as ‘an innocent purchaser, in good faith and for value.’

7. That the plaintiffs deny the allegation in paragraph XIV of the Answer that the plaintiffs are under obligation to execute a deed of transfer of the portion of land in favor of the defendant Victoria P. Cabral because, first, the title to this land was obtained in a regular proceeding where there was neither error nor fraud; second, said defendant or her predecessors in interest are not the owners of said land much less said defendant Cabral who has nothing at all in her possession to show any kind of right over said portion of land, and third, Mr. Gregorio Z. Ocampo, the predecessor in interest of the plaintiffs, acquire this property as an ‘innocent purchaser, in good faith and for value’, and

8. That the plaintiffs have no knowledge or information sufficient to form a belief as to the truth of the allegation in paragraph XV of the defendants’ Answer (Counterclaim).

WHEREFORE, it is respectfully prayed of this Hon. Court to grant the plaintiffs’ Petition in their Complaint." (R.A., pp. 14-21.)

It can be seen that the thrust of the Complaint is that a piece of land covered by T.C.T. No. 14513 in the name of Gregorio Z. Ocampo was illegally possessed by the defendants. Upon the other hand, the thrust of the Answer is that "the defendant Victoria P. Cabral is the real owner of Lot No. 5-B, plan Psd-11496, with an area of 4,303 square meters, more or less, erroneously or fraudulently included in the property described in Transfer Certificate of Title No. 14513 of the Register of Deeds of the Province of Bulacan, registered in the name of the deceased Gregorio Z. Ocampo and now claimed by the herein plaintiffs." (Answer, par. XI.)

The decision of the trial court is not clear as to whether or not the disputed lot is included in T.C.T. No. 14513. However, the decision contains the following statement: "if it is included in their title, such title is void insofar as the portion of the Pandayan road is concerned." (R.A., p. 30.).

The trial court gave the following judgment:

"WHEREFORE, plaintiffs’ complaint is hereby DISMISSED, without costs. For lack of proof that plaintiffs were in bad faith in the filing of the present action, defendants’ counter-claim is likewise dismissed." (R.A., p. 30.)

The plaintiffs appealed to the Court of Appeals and made the following assignment of errors:jgc:chanrobles.com.ph

"I. THE LOWER COURT ERRED IN HOLDING THAT THE PANDAYAN ROAD IS LOCATED INSIDE THE PROPERTY DESCRIBED IN T.C.T. NO. 14513 AND INCONSEQUENTLY HOLDING THAT THE SAME CONSTITUTES THE BOUNDARY LINE BETWEEN THE PROPERTIES OF PLAINTIFFS-APPELLANTS AND DEFENDANT-APPELLEE VICTORIA CABRAL.

II. THE LOWER COURT ERRED IN HOLDING THAT T.C.T. NO. 14513 IS ‘VOID INSOFAR AS THE PORTION FROM THE PANDAYAN ROAD IS CONCERNED’, AND IN NOT HOLDING THAT SAID T.C.T. IS INCONTROVERTIBLE.

III. THE LOWER COURT ERRED IN GIVING IMPORTANCE TO DEFENDANTS-APPELLEES’ ALLEGED ‘OPEN, CONTINUOUS AND ADVERSE POSSESSION’ AND IN DISMISSING PLAINTIFFS-APPELLANTS’ COMPLAINT." (Brief, pp. a-b.)

The Court of Appeals found as a fact: "That disputed portion Lot 5-a is admittedly part of the land originally registered in the name of plaintiff’s predecessor in interest,

there should be no question that that title had become imprescriptible and original registrant as well as his successors had the right to vindicate their ownership against any body else." (Rollo, p. 54.)

But the Court of Appeals went further. Seizing a statement in the Reply and Answer to Counterclaim filed by the plaintiffs, it held that Gregorio Z. Ocampo had by an oral contract sold the disputed land to Antonio Rodriguez the defendant’s predecessor in interest. The Court of Appeals further said "that agreement oral albeit, became binding upon Ocampo, it was even executed in part by the actual delivery of possession, it amounted to a supervening fact, posterior to the title, and the fact that Ocampo’s title was not afterwards cancelled can not at all mean that the title could be used as a weapon to annul that posterior agreement by Ocampo voluntarily entered into and by reason of which he had delivered possession unto defendant’s predecessor; of course, no deed of sale was formalized for a reason not clear in the evidence, but whether or not formalized, it was a binding personal agreement upon Ocampo." (Rollo, pp. 56-57.)

The statement upon which the Court of Appeals built its decision is as follows:jgc:chanrobles.com.ph

"When Mr. Gregorio Z. Ocampo bought the parcel of land known as Lot 5, Psu-43302 with an area of 78,181 square meters, more or less, in 1934, (wherein this portion under litigation is included), the said Mr. Ocampo took possession of this whole land. In the year 1935 the adjoining owner of the said property, the late Mr. Antonio Rodriguez and predecessor of the defendant Victoria P. Cabral, requested Mr. Ocampo to sell to him a portion of said land with an area of 4,303 square meters, more or less, to which Mr. Ocampo agreed. As there was already a meeting of the mind Mr. Rodriguez requested Mr. Ocampo that he be allowed to possess the said portion as they were going to make the formal deed of sale, to which proposition Mr. Ocampo likewise agreed. This proposed sale never materialized so if Mr. Rodriguez ever possessed the said portion of land, now under litigation, he did not possess it as owner but only as a ‘prospective owner’. His possession cannot, therefore, be termed ‘adverse’. Such possession cannot also be termed ‘continuous’ for 50 years because Mr. Ocampo was in possession of the same in 1934 before Mr. Rodriguez came to possession of the same, first, with the consent and later by toleration of Mr. Ocampo." (R.A. pp. 15-16.)

It passes understanding why the plaintiffs mentioned a non-consummated transaction between Gregorio Z. Ocampo and Antonio Rodriguez when the defendants made no claim of such transaction nor was the name of Antonio Rodriguez even mentioned in their Answer.chanrobles virtual lawlibrary

Even as the Court of Appeals found that the disputed piece of land is registered in the name of the plaintiffs but because of the supposed oral sale of the same to the predecessors of the defendants, it affirmed the judgment of the trial court dismissing the complaint for the recovery of the land.

The instant petition assails the Court of Appeals for rendering a decision based on a ground which was never raised nor discussed whether in the trial court or before it by any of the parties. The ground to be sure, is the supposed oral contract of sale made to the predecessors of the defendants covering the disputed piece of land.

The petition is highly impressed with merit.

It is a well-settled rule that, except questions on jurisdiction, no question will be entertained on appeal unless it has been raised in the court below and it is within the issues made by the parties in their pleadings. (See cases cited in II Moran, Rules of Court, pp. 504-505 [1970].)

In this case, the Court of Appeals erred when it rendered a decision based on a ground which was not litigated in the trial court and which could not have been raised on appeal. That the supposed oral contract of sale was never an issue is demonstrated by the following:chanrob1es virtual 1aw library

1. The pleadings of the parties have been purposely reproduced in full above. It can be seen therefrom that no issue in respect of the supposed oral sale actually emerged.

2. The decision of the trial court is absolutely silent on the supposed oral contract of sale.

3. The plaintiffs who appealed the decision of the trial court to the Court of Appeals did not make an assignment of error in respect of the supposed oral sale.

The Court of Appeals found as a fact that the disputed piece of land is registered in the name of the plaintiffs’ predecessor.

The defendants claimed in their answer that they and their predecessors are the owners of the land in dispute but that the plaintiffs’ predecessor was able to register the same in his name through error or fraud.

However, the trial court made no categorical finding on this claim of the defendants otherwise it would have granted the affirmative relief which they asked, namely:" (b) declaring the defendant Victoria P. Cabral as the owner of Lot 5-B, plan Psd-11496, which has been erroneously included in the property of the deceased Gregorio Z. Ocampo covered by Transfer Certificate of Title No. 14513, Bulacan, and ordering the herein plaintiffs to execute a deed of transfer of said Lot No. 5-B, plan Psd-11496 in favor of the defendant Victoria P. Cabral." The Court of Appeals did not deal with this issue because there was no appeal made by the defendants.chanroblesvirtualawlibrary

The following conclusions have to be made.

1. The disputed land is included in T.C.T. No. 14513 issued to Gregorio Z. Ocampo, the predecessor of the plaintiffs.

2. The original registration which includes the disputed land was not vitiated by error or fraud.

3. The Court of Appeals erred when it held that Gregorio Z. Ocampo had orally sold the disputed land to the predecessors of the defendants.

4. The defendants, by their own admission, are in possession of the disputed land. There is no evidence that they were possessors in bad faith. However, their good faith ceased when they were served with summons to answer the complaint. (Art. 528, Civil Code; Tacas v. Tobon, 53 Phil. 356 [1929].) As possessors in bad faith from the service of the summons they "shall reimburse the fruits received and those which the legitimate possessor could have received, . . ." (Art. 549, Civil Code.)

WHEREFORE, the judgment of the Court of Appeals is hereby reversed and another one rendered in that the defendants shall vacate and surrender the land in question to the plaintiffs; and the defendants shall also account for the fruits thereof pursuant to Article 549 of the Civil Code from the service of the summons. Costs against the defendants.

SO ORDERED.

DELFIN LAMSIS, MAYNARD MONDIGUING, JOSE VALDEZ, JR. and Heirs of AGUSTIN KITMA, represented by EUGENE KITMA, Petitioners, v. MARGARITA SEMON DONG-E, Respondent.cralaw

D E C I S I O N

DEL CASTILLO, J.:

There is laches when a party is aware, even in the early stages of the proceedings, of a possible jurisdictional objection, and has every opportunity to raise said objection, but fails to do so, even on appeal.

This is a Petition for Review1cra1aw assailing the March 30, 2006 Decision2cra1aw of the Court of Appeals (CA) in CA-G.R. CV No. 78987 as well as its May 26, 2006 Resolution3cra1aw which denied petitioners motion for reconsideration. The dispositive portion of the assailed Decision reads:chanroblesvirtualawlibrary

WHEREFORE, in view of the foregoing, the appeal is hereby DISMISSED for lack of merit and the judgment dated January 8, 2003 of the Regional Trial Court of Baguio City in Civil Case No. 4140-R is AFFIRMED in toto.

SO ORDERED.4chanroblesvirtuallawlibrary

Factual antecedents

This case involves a conflict of ownership and possession over an untitled parcel of land, denominated as Lot No. 1, with an area of 80,736 square meters. The property is located along Km. 5 Asin Road, Baguio City and is part of a larger parcel of land with an area of 186,090 square meters. While petitioners are the actual occupants of Lot No. 1, respondent is claiming ownership thereof and is seeking to recover its possession from petitioners.

According to respondent Margarita Semon Dong-E (Margarita), her familys ownership and occupation of Lot No. 1 can be traced as far back as 1922 to her late grandfather, Ap-ap.5cra1aw Upon Ap-aps death, the property was inherited by his children, who obtained a survey plan in 1964 of the 186,090-square meter property, which included Lot No. 1.6cra1aw On the same year, they declared the property for taxation purposes in the name of "The Heirs of Ap-ap."7cra1aw The 1964 tax declaration bears a notation that reads: "Reconstructed from an old Tax Declaration No. 363 dated May 10, 1922 per true of same presented."8chanroblesvirtuallawlibrary

The heirs of Ap-ap then executed, for a P500.00 consideration, a Deed of Quitclaim9cra1aw on February 26, 1964 in favor of their brother Gilbert Semon (Margaritas father).

Sometime between 1976 and 1978,10cra1aw Gilbert Semon together with his wife Mary Lamsis, allowed his in-laws Manolo Lamsis and Nancy Lamsis-Kitma, to stay

on a portion of Lot No. 1 together with their respective families.11cra1aw They were allowed to erect their houses, introduce improvements, and plant trees thereon. When Manolo Lamsis and Nancy Lamsis-Kitma died sometime in the 1980s, their children, petitioners Delfin Lamsis (Delfin) and Agustin Kitma (Agustin), took possession of certain portions of Lot No. 1. Delfin possessed 4,000 square meters of Lot No. 1, while Agustin occupied 5,000 square meters thereof.12cra1aw Nevertheless, the heirs of Gilbert Semon tolerated the acts of their first cousins.

When Gilbert Semon died in 1983,13cra1aw his children extrajudicially partitioned the property among themselves and allotted Lot No. 1 thereof in favor of Margarita.14cra1aw Since then, Margarita allegedly paid the realty tax over Lot No. 115cra1aw and occupied and improved the property together with her husband; while at the same time, tolerating her first cousins occupation of portions of the same lot.

This state of affairs changed when petitioners Delfin and Agustin allegedly began expanding their occupation on the subject property and selling portions thereof.16cra1aw Delfin allegedly sold a 400-square meter portion of Lot No. 1 to petitioner Maynard17cra1aw Mondiguing (Maynard) while Agustin sold another portion to petitioner Jose Valdez (Jose).18chanroblesvirtuallawlibrary

With such developments, Margarita filed a complaint19cra1aw for recovery of ownership, possession, reconveyance and damages against all four occupants of Lot No. 1 before the Regional Trial Court (RTC) of Baguio City. The case was docketed as Civil Case No. 4140-R and raffled to Branch 59. The complaint prayed for the annulment of the sales to Maynard and Jose and for petitioners to vacate the portions of the property which exceed the areas allowed to them by Margarita.20cra1aw Margarita claimed that, as they are her first cousins, she is willing to donate to Delfin and Agustin a portion of Lot No. 1, provided that she retains the power to choose such portion.21chanroblesvirtuallawlibrary

Petitioners denied Margaritas claims of ownership and possession over Lot No. 1. According to Delfin and Agustin, Lot No. 1 is a public land claimed by the heirs of Joaquin Smith (not parties to the case).22cra1aw The Smiths gave their permission

for Delfin and Agustins parents to occupy the land sometime in 1969 or 1970. They also presented their neighbors who testified that it was Delfin and Agustin as well as their respective parents who occupied Lot No. 1, not Margarita and her parents.

Delfin and Agustin also assailed the muniments of ownership presented by Margarita as fabricated, unauthenticated, and invalid. It was pointed out that the Deed of Quitclaim, allegedly executed by all of Ap-aps children, failed to include two Rita Bocahan and Stewart Sito.23cra1aw Margarita admitted during trial that Rita Bocahan and Stewart Sito were her uncle and aunt, but did not explain why they were excluded from the quitclaim.

According to Maynard and Jose, Delfin and Agustin were the ones publicly and openly in possession of the land and who introduced improvements thereon. They also corroborated Delfin and Agustins allegation that the real owners of the property are the heirs of Joaquin Smith.24chanroblesvirtuallawlibrary

In order to debunk petitioners claim that the Smiths owned the subject property, Margarita presented a certified copy of a Resolution from the Land Management Office denying the Smiths application for recognition of the subject property as part of their ancestral land.25cra1aw The resolution explains that the application had to be denied because the Smiths did not "possess, occupy or utilize all or a portion of the property x x x. The actual occupants (who were not named in the resolution) whose improvements are visible are not in any way related to the applicant or his co-heirs."26chanroblesvirtuallawlibrary

To bolster her claim of ownership and possession, Margarita introduced as evidence an unnumbered resolution of the Community Special Task Force on Ancestral Lands (CSTFAL) of the Department of Environment and Natural Resources (DENR), acting favorably on her and her siblings ancestral land claim over a portion of the 186,090-square meter property.27cra1aw The said resolution states:chanroblesvirtualawlibrary

The land subject of the instant application is the ancestral land of the herein applicants. Well-established is the fact that the land treated herein was first declared for taxation purposes in 1922 under Tax Declaration No. 363 by the applicants grandfather Ap-Ap (one name). Said application was reconstructed in 1965 after the original got lost during the war. These tax declarations were issued and recorded in the Municipality of Tuba, Benguet, considering that the land was then within the territorial jurisdiction of the said municipality. That upon the death of declarant Ap-Ap his heirs x x x transferred the tax declaration in their name, [which tax declaration is] now with the City assessors office of Baguio.

The land consisting of four (4) lots with a total area of ONE HUNDRED EIGHTY SIX THOUSAND NINETY (186,090) SQUARE METERS, is covered by Psu-198317 duly approved by the Director of Lands on October 4, 1963 in the name of Ap-Ap (one name). In 1964, the same land was the subject of a petition filed by Gilbert Semon, as petitioner, before the Court of First Instance of the City of Baguio in the reopening of Judicial Proceedings under Civil Case No. 1, GLRO Record No. 211 for the registration and the issuance of Certificate of Title of said land. The land registration case was however overtaken by the decision of the Supreme Court declaring such judicial proceedings null and void because the courts of law have no jurisdiction.

It has been sufficiently substantiated by the applicants that prior to and at the time of the pendency of the land registration case and henceforth up to and including the present, the herein applicants by themselves and through their predecessor-in-interest have been in exclusive, continuous, and material possession and occupation of the said parcel of land mentioned above under claim of ownership, devoting the same for residential and agricultural purposes. Found are the residential houses of the applicants as well as those of their close relatives, while the other areas planted to fruit trees, coffee and banana, and seasonal crops. Also noticeable therein are permanent stone and earthen fences, terraces, clearings, including irrigation gadgets.

On the matter of the applicant[s] indiguinity [sic] and qualifications, there is no doubt that they are members of the National Cultural Communities, particularly the Ibaloi tribe. They are the legitimate grandchildren of Ap-Ap (one name) who lived along the Asin Road area. His legal heirs are: Orani Ap-Ap, married to Calado Salda; Rita Ap-Ap, married to Jose Bacacan; Sucdad Ap-Ap, married to Oragon Wakit; and

Gilbert Semon, a former vice-mayor of Tuba, Benguet, [who] adopted the common name of their father Semon, as it is the customary practice among the early Ibalois. x x x

On the matter regarding the inheritance of the heirs of Ap-Ap, it is important to state [that] Gilbert Semon consolidated ownership thereof and became the sole heir in 1964, by way of a "Deed of Quitclaim" executed by the heirs in his favor. As to the respective share of the applicants[] co-heirs, the same was properly adjudicated in 1989 with the execution of an "Extrajudicial Settlement/ Partition of Estate with Waiver of Rights."

With regard to the overlapping issue, it is pertinent to state that application No. Bg-L-066 of Thomas Smith has already been denied by us in our Resolution dated November 1997. As to the other adverse claims therein by reason of previous conveyances in favor of third parties, the same were likewise excluded resulting in the reduction of the area originally applied from ONE HUNDRED EIGHTY SIX THOUSAND NINETY (186,090) SQUARE METERS, more or less to ONE HUNDRED TEN THOUSAND THREE HUNDRED FORTY TWO (110,342) SQUARE METERS, more or less. Considering the foregoing developments, we find no legal and procedural obstacle in giving due course to the instant application.

Now therefore, we hereby [resolve] that the application for Recognition of Ancestral Land Claim filed by the Heirs of Gilbert Semon, represented by Juanito Semon, be granted [and] a Certificate of Ancestral Land Claim (CALC) be issued to the herein applicants by the Secretary, Department of Environment and Natural Resources, Visayas Avenue, Diliman, Quezon City, through the Regional Executive Director, DENR-CAR, Diego Silang Street, Baguio City. The area of the claim stated herein above is however subject to the outcome of the final survey to be forthwith executed.

Carried this 23rd day of June 1998.28chanroblesvirtuallawlibrary

The resolution was not signed by two members of the CSTFAL on the ground that the signing of the unnumbered resolution was overtaken by the enactment of the

Republic Act (RA) No. 8371 or the Indigenous Peoples Rights Act of 1997 (IPRA). The IPRA removed the authority of the DENR to issue ancestral land claim certificates and transferred the same to the National Commission on Indigenous Peoples (NCIP).29cra1aw The Ancestral Land Application No. Bg-L-064 of the Heirs of Gilbert Semon was transferred to the NCIP, Cordillera Administrative Region, La Trinidad, Benguet and re-docketed as Case No. 05-RHO-CAR-03.30cra1aw The petitioners filed their protest in the said case before the NCIP. The same has been submitted for resolution.

Ruling of the Regional Trial Court31chanroblesvirtuallawlibrary

After summarizing the evidence presented by both parties, the trial court found that it preponderates in favor of respondents long-time possession of and claim of ownership over the subject property.32cra1aw The survey plan of the subject property in the name of the Heirs of Ap-ap executed way back in 1962 and the tax declarations thereafter issued to the respondent and her siblings all support her claim that her family and their predecessors-in-interest have all been in possession of the property to the exclusion of others. The court likewise gave credence to the documentary evidence of the transfer of the land from the Heirs of Ap-ap to respondents father and, eventually to respondent herself. The series of transfers of the property were indications of the respondents and her predecessors interest over the property. The court opined that while these pieces of documentary evidence were not conclusive proof of actual possession, they lend credence to respondents claim because, "in the ordinary course of things, persons will not execute legal documents dealing with real property, unless they believe, and have the basis to believe, that they have an interest in the property subject of the legal documents x x x."33chanroblesvirtuallawlibrary

In contrast, the trial court found nothing on record to substantiate the allegations of the petititioners that they and their parents were the long-time possessors of the subject property. Their own statements belied their assertions. Petitioner Maynard and Jose both admitted that they could not secure title for the property from the Bureau of Lands because there were pending ancestral land claims over the property.34cra1aw Petitioner Agustins Townsite Sales Application over the property was held in abeyance because of respondents own claim, which was eventually favorably considered by the CSTFAL.35chanroblesvirtuallawlibrary

The dispositive portion of the trial courts Decision reads:chanroblesvirtualawlibrary

WHEREFORE, premises considered, judgment is hereby rendered in favor of the [respondent] and against the [petitioners]

(1) Declaring the transfer of a portion of Lot 1 of PSU 198317 made by the [petitioner] Delfin Lamsis to Menard Mondiguing and Jose Valdez, Jr. null and void;

(2) Ordering the [petitioners] Delfin Lamsis, Agustin Kitma, Menard Mondiguing and Jose Valdez, Jr., to vacate the area they are presently occupying that is within Lot 1 of PSU 198317 belonging to the [respondent] and to surrender possession thereof to the [respondent];

(3) To pay [respondent] attorneys fees in the amount of P10,000.00; and

(4) To pay the costs of suit.

SO ORDERED.36chanroblesvirtuallawlibrary

It appears that no motion for reconsideration was filed before the trial court. Nevetheless, the trial court issued an Order37cra1aw allowing the petitioners Notice of Appeal.38chanroblesvirtuallawlibrary

Ruling of the Court of Appeals39chanroblesvirtuallawlibrary

The sole issue resolved by the appellate court was whether the trial court erred in ruling in favor of respondent in light of the adduced evidence. Citing the rule on preponderance of evidence, the CA held that the respondent was able to discharge her burden in proving her title and interest to the subject property. Her documentary evidence were amply supported by the testimonial evidence of her witnesses.

In contrast, petitioners only made bare allegations in their testimonies that are insufficient to overcome respondents documentary evidence.

Petitioners moved for a reconsideration40cra1aw of the adverse decision but the same was denied.

Hence this petition, which was initially denied for failure to show that the CA committed any reversible error.41cra1aw Upon petitioners motion for reconsideration,42cra1aw the petition was reinstated in the Courts January 15, 2007 Resolution.43chanroblesvirtuallawlibrary

Petitioners arguments

Petitioners assign as error the CAs appreciation of the evidence already affirmed and considered by the trial court. They maintain that the change in the presiding judges who heard and decided their case resulted in the appreciation of what would otherwise be inadmissible evidence.44cra1aw Petitioners ask that the Court exempt their petition from the general rule that a trial judges assessment of the credibility of witnesses is accorded great respect on appeal.

To support their claim that the trial and appellate courts erred in ruling in favor of respondent, they assailed the various pieces of evidence offered by respondent. They maintain that the Deed of Quitclaim executed by the Heirs of Ap-ap is spurious and lacks the parties and witnesses signatures. Moreover, it is a mere photocopy, which was never authenticated by the notary public in court and no reasons were proferred

regarding the existence, loss, and contents of the original copy.45cra1aw Under the best evidence rule, the Deed of Quitclaim is inadmissible in evidence and should have been disregarded by the court.

Respondent did not prove that she and her husband possessed the subject property since time immemorial. Petitioners argue that respondent admitted possessing and cultivating only the land that lies outside the subject property.46chanroblesvirtuallawlibrary

Petitioners next assail the weight to be given to respondents muniments of ownership, such as the tax declarations and the survey plan. They insist that these are not indubitable proofs of respondents ownership over the subject property given that there are other claimants to the land (who are not parties to this case) who also possess a survey plan over the subject property.47chanroblesvirtuallawlibrary

Petitioners then assert their superior right to the property as the present possessors thereof. They cite pertinent provisions of the New Civil Code which presume good faith possession on the part of the possessor and puts the burden on the plaintiff in an action to recover to prove her superior title.48chanroblesvirtuallawlibrary

Petitioners next assert that they have a right to the subject property by the operation of acquisitive prescription. They posit that they have been in possession of a public land publicly, peacefully, exclusively and in the concept of owners for more than 30 years. Respondents assertion that petitioners are merely possessors by tolerance is unsubstantiated.49chanroblesvirtuallawlibrary

Petitioners also maintain that the reivindicatory action should be dismissed for lack of jurisdiction in light of the enactment of the IPRA, which gives original and exclusive jurisdiction over disputes involving ancestral lands and domains to the NCIP.50cra1aw They assert that the customary laws of the Ibaloi tribe of the Benguet Province should be applied to their dispute as mandated by Section 65, Chapter IX of RA 8371, which states: "When disputes involve ICCs/IPs,51cra1aw customary laws and practices shall be used to resolve the dispute."

In the alternative that jurisdiction over an accion reivindicatoria is held to be vested in the trial court, the petitioners insist that the courts should dismiss the reivindicatory action on the ground of litis pendentia.52cra1aw They likewise argue that NCIP has primary jurisdiction over ancestral lands, hence, the courts should not interfere "when the dispute demands the exercise of sound administrative discretion requiring special knowledge, experience and services of the administrative tribunal x x x In cases where the doctrine of primary jurisdiction is clearly applicable, the court cannot arrogate unto itself the authority to resolve a controversy, the jurisdiction over which is initially lodged with an administrative body of special competence."53cra1aw The courts should stand aside in order to prevent the possibility of creating conflicting decisions.54chanroblesvirtuallawlibrary

Respondents arguments

Respondent opines that the appellate court did not commit any reversible error in affirming the trial courts decision. The present petition is a mere dilatory tactic to frustrate the speedy administration of justice.55chanroblesvirtuallawlibrary

Respondent also asserts that questions of fact are prohibited in a Rule 45 petition.56cra1aw Thus, the appreciation and consideration of the factual issues are no longer reviewable.57chanroblesvirtuallawlibrary

The issue of lack of jurisdiction is raised for the first time in the petition before this Court. It was never raised before the trial court or the CA. Thus, respondent insists that petitioners are now barred by laches from attacking the trial courts jurisdiction over the case. Citing Aragon v. Court of Appeals,58cra1aw respondent argues that the jurisdictional issue should have been raised at the appellate level at the very least so as to avail of the doctrine that the ground lack of jurisdiction over the subject matter of the case may be raised at any stage of the proceedings even on appeal.59chanroblesvirtuallawlibrary

Respondent maintains that there is no room for the application of litis pendentia because the issues in the application for ancestral land claim are different from the issue in a reivindicatory action. The issue before the NCIP is whether the Government, as grantor, will recognize the ancestral land claim of respondent over a public alienable land; while the issue in the reivindicatory case before the trial court is ownership, possession, and right to recover the real property.60chanroblesvirtuallawlibrary

Given that the elements of lis pendens are absent in case at bar, the allegation of forum-shopping is also bereft of merit. Any judgment to be rendered by the NCIP will not amount to res judicata in the instant case.61chanroblesvirtuallawlibrary

Issues

The petitioners present the following issues for our consideration:chanroblesvirtualawlibrary

1. Whether the appellate court disregarded material facts and circumstances in affirming the trial courts decision;

2. Whether petitioners have acquired the subject property by prescription;

3. Whether the trial court has jurisdiction to decide the case in light of the effectivity of RA 8371 or the Indigenous Peoples Rights Act of 1997 at the time that the complaint was instituted;

4. If the trial court retains jurisdiction, whether the ancestral land claim pending before the NCIP should take precedence over the reivindicatory action.62chanroblesvirtuallawlibrary

Our Ruling

Whether the appellate court disregarded material facts and circumstances in affirming the trial courts decision

Both the trial and the appellate courts ruled that respondent has proven her claims of ownership and possession with a preponderance of evidence. Petitioners now argue that the two courts erred in their appreciation of the evidence. They ask the Court to review the evidence of both parties, despite the CAs finding that the trial court committed no error in appreciating the evidence presented during trial. Hence, petitioners seek a review of questions of fact, which is beyond the province of a Rule 45 petition. A question of fact exists if the uncertainty centers on the truth or falsity of the alleged facts.63cra1aw "Such questions as whether certain items of evidence should be accorded probative value or weight, or rejected as feeble or spurious, or whether the proofs on one side or the other are clear and convincing and adequate to establish a proposition in issue, are without doubt questions of fact."64chanroblesvirtuallawlibrary

Since it raises essentially questions of fact, this assignment of error must be dismissed for it is settled that only questions of law may be reviewed in an appeal by certiorari.65cra1aw There is a question of law when there is doubt as to what the law is on a certain state of facts. Questions of law can be resolved without having to re-examine the probative value of evidence presented, the truth or falsehood of facts being admitted.66cra1aw The instant case does not present a compelling reason to deviate from the foregoing rule, especially since both trial and appellate courts agree that respondent had proven her claim of ownership as against petitioners claims. Their factual findings, supported as they are by the evidence, should be accorded great respect.

In any case, even if petitioners arguments attacking the authenticity and admissibility of the Deed of Quitclaim executed in favor of respondents father are well-taken, it will not suffice to defeat respondents claim over the subject property. Even without the Deed of Quitclaim, respondents claims of prior possession and ownership were

adequately supported and corroborated by her other documentary and testimonial evidence. We agree with the trial courts observation that, in the ordinary course of things, people will not go to great lengths to execute legal documents and pay realty taxes over a real property, unless they have reason to believe that they have an interest over the same.67chanroblesvirtuallawlibrary

The fact that respondents documents traverse several decades, from the 1960s to the 1990s, is an indication that she and her family never abandoned their right to the property and have continuously exercised rights of ownership over the same.

Moreover, respondents version of how the petitioners came to occupy the property coincides with the same timeline given by the petitioners themselves. The only difference is that petitioners maintain they came into possession by tolerance of the Smith family, while respondent maintains that it was her parents who gave permission to petitioners. Given the context under which the parties respective statements were made, the Court is inclined to believe the respondents version, as both the trial and appellate courts have concluded, since her version is corroborated by the documentary evidence.

Whether petitioners have acquired the subject property by prescription

Assuming that the subject land may be acquired by prescription, we cannot accept petitioners claim of acquisition by prescription. Petitioners admitted that they had occupied the property by tolerance of the owner thereof. Having made this admission, they cannot claim that they have acquired the property by prescription unless they can prove acts of repudiation. It is settled that possession, in order to ripen into ownership, must be in the concept of an owner, public, peaceful and uninterrupted. Possession not in the concept of owner, such as the one claimed by petitioners, cannot ripen into ownership by acquisitive prescription, unless the juridical relation is first expressly repudiated and such repudiation has been communicated to the other party. Acts of possessory character executed due to license or by mere tolerance of the owner are inadequate for purposes of acquisitive prescription. Possession by tolerance is not adverse and such possessory acts, no

matter how long performed, do not start the running of the period of prescription.68chanroblesvirtuallawlibrary

In the instant case, petitioners made no effort to allege much less prove any act of repudiation sufficient for the reckoning of the acquisitive prescription. At most, we can find on record the sale by petitioners Delfin and Agustin of parts of the property to petitioners Maynard and Jose; but the same was done only in 1998, shortly before respondent filed a case against them. Hence, the 30-year period necessary for the operation of acquisitve prescription had yet to be attained.

Whether the ancestral land claim pending before the National Commission on Indigenous Peoples (NCIP) should take precedence over the reivindicatory action

The application for issuance of a Certificate of Ancestral Land Title pending before the NCIP is akin to a registration proceeding. It also seeks an official recognition of ones claim to a particular land and is also in rem. The titling of ancestral lands is for the purpose of "officially establishing" ones land as an ancestral land.69cra1aw Just like a registration proceeding, the titling of ancestral lands does not vest ownership70cra1aw upon the applicant but only recognizes ownership71cra1aw that has already vested in the applicant by virtue of his and his predecessor-in-interests possession of the property since time immemorial. As aptly explained in another case:chanroblesvirtualawlibrary

It bears stressing at this point that ownership should not be confused with a certificate of title. Registering land under the Torrens system does not create or vest title because registration is not a mode of acquiring ownership. A certificate of title is merely an evidence of ownership or title over the particular property described therein. Corollarily, any question involving the issue of ownership must be threshed out in a separate suit x x x The trial court will then conduct a full-blown trial wherein the parties will present their respective evidence on the issue of ownership of the subject properties to enable the court to resolve the said issue. x x x72cra1aw (Emphasis supplied)

Likewise apropos is the following explanation:chanroblesvirtualawlibrary

The fact that the [respondents] were able to secure [TCTs over the property] did not operate to vest upon them ownership of the property. The Torrens system does not create or vest title. It has never been recognized as a mode of acquiring ownership x x x If the [respondents] wished to assert their ownership, they should have filed a judicial action for recovery of possession and not merely to have the land registered under their respective names. x x x Certificates of title do not establish ownership.73cra1aw (Emphasis supplied)

A registration proceeding is not a conclusive adjudication of ownership. In fact, if it is later on found in another case (where the issue of ownership is squarely adjudicated) that the registrant is not the owner of the property, the real owner can file a reconveyance case and have the title transferred to his name.74chanroblesvirtuallawlibrary

Given that a registration proceeding (such as the certification of ancestral lands) is not a conclusive adjudication of ownership, it will not constitute litis pendentia on a reivindicatory case where the issue is ownership.75cra1aw "For litis pendentia to be a ground for the dismissal of an action, the following requisites must concur: (a) identity of parties, or at least such parties who represent the same interests in both actions; (b) identity of rights asserted and relief prayed for, the relief being founded on the same facts; and (c) the identity with respect to the two preceding particulars in the two cases is such that any judgment that may be rendered in the pending case, regardless of which party is successful, would amount to res judicata in the other case."76cra1aw The third element is missing, for any judgment in the certification case would not constitute res judicata or be conclusive on the ownership issue involved in the reivindicatory case. Since there is no litis pendentia, there is no reason for the reivindicatory case to be suspended or dismissed in favor of the certification case.

Moreover, since there is no litis pendentia, we cannot agree with petitioners contention that respondent committed forum-shopping. Settled is the rule that "forum shopping exists where the elements of litis pendentia are present or where a final

judgment in one case will amount to res judicata in the other."77chanroblesvirtuallawlibrary

Whether the trial court has jurisdiction to decide the case in light of the effectivity of RA 8371 or the Indigenous Peoples Rights Act of 1997 at the time that the complaint was instituted

For the first time in the entire proceedings of this case, petitioners raise the trial courts alleged lack of jurisdiction over the subject-matter in light of the effectivity78cra1aw of the IPRA at the time that the complaint was filed in 1998. They maintain that, under the IPRA, it is the NCIP which has jurisdiction over land disputes involving indigenous cultural communities and indigenous peoples.

As a rule, an objection over subject-matter jurisdiction may be raised at any time of the proceedings. This is because jurisdiction cannot be waived by the parties or vested by the agreement of the parties. Jurisdiction is vested by law, which prevails at the time of the filing of the complaint.

An exception to this rule has been carved by jurisprudence. In the seminal case of Tijam v. Sibonghanoy,79cra1aw the Court ruled that the existence of laches will prevent a party from raising the courts lack of jurisdiction. Laches is defined as the "failure or neglect, for an unreasonable and unexplained length of time, to do that which, by exercising due diligence, could or should have been done earlier; it is negligence or omission to assert a right within a reasonable time, warranting the presumption that the party entitled to assert it either has abandoned or declined to assert it."80cra1aw Wisely, some cases81cra1aw have cautioned against applying Tijam, except for the most exceptional cases where the factual milieu is similar to Tijam.

In Tijam, the surety could have raised the issue of lack of jurisdiction in the trial court but failed to do so. Instead, the surety participated in the proceedings and filed pleadings, other than a motion to dismiss for lack of jurisdiction. When the case reached the appellate court, the surety again participated in the case and filed their

pleadings therein. It was only after receiving the appellate courts adverse decision that the surety awoke from its slumber and filed a motion to dismiss, in lieu of a motion for reconsideration. The CA certified the matter to this Court, which then ruled that the surety was already barred by laches from raising the jurisdiction issue.

In case at bar, the application of the Tijam doctrine is called for because the presence of laches cannot be ignored. If the surety in Tijam was barred by laches for raising the issue of jurisdiction for the first time in the CA, what more for petitioners in the instant case who raised the issue for the first time in their petition before this Court.

At the time that the complaint was first filed in 1998, the IPRA was already in effect but the petitioners never raised the same as a ground for dismissal; instead they filed a motion to dismiss on the ground that the value of the property did not meet the jurisdictional value for the RTC. They obviously neglected to take the IPRA into consideration.

When the amended complaint was filed in 1998, the petitioners no longer raised the issue of the trial courts lack of jurisdiction. Instead, they proceeded to trial, all the time aware of the existence of the IPRA as evidenced by the cross-examination82cra1aw conducted by petitioners lawyer on the CSTFAL Chairman Guillermo Fianza. In the cross-examination, it was revealed that the petitioners were aware that the DENR, through the CSTFAL, had lost its jurisdiction over ancestral land claims by virtue of the enactment of the IPRA. They assailed the validity of the CSTFAL resolution favoring respondent on the ground that the CSTFAL had been rendered functus officio under the IPRA. Inexplicably, petitioners still did not question the trial courts jurisdiction.

When petitioners recoursed to the appellate court, they only raised as errors the trial courts appreciation of the evidence and the conclusions that it derived therefrom. In their brief, they once again assailed the CSTFALs resolution as having been rendered functus officio by the enactment of IPRA.83cra1aw But nowhere did petitioners assail the trial courts ruling for having been rendered without jurisdiction.

It is only before this Court, eight years after the filing of the complaint, after the trial court had already conducted a full-blown trial and rendered a decision on the merits, after the appellate court had made a thorough review of the records, and after petitioners have twice encountered adverse decisions from the trial and the appellate courts that petitioners now want to expunge all the efforts that have gone into the litigation and resolution of their case and start all over again. This practice cannot be allowed.

Thus, even assuming arguendo that petitioners theory about the effect of IPRA is correct (a matter which need not be decided here), they are already barred by laches from raising their jurisdictional objection under the circumstances.

WHEREFORE, premises considered, the petition is denied for lack of merit. The March 30, 2006 Decision of the Court of Appeals in CA-G.R. CV No. 78987 and its May 26, 2006 Resolution denying the motion for reconsideration are AFFIRMED.

G.R. No. 158929 : August 3, 2010

ROSARIO P. TAN, Petitioner, v. ARTEMIO G. RAMIREZ, MOISES G. RAMIREZ, RODRIGO G. RAMIREZ, DOMINGO G. RAMIREZ, and MODESTA RAMIREZ ANDRADE, Respondents.

We resolve in this Decision the petition for review on certiorari1cra1aw filed by petitioner Rosario P. Tan (petitioner) who seeks to reverse and set aside the decision2cra1aw dated January 28, 2003 and the resolution3cra1aw dated June 19, 2003 of the former Seventh Division of the Court of Appeals (CA) in CA-G.R. SP No. 66120. The assailed CA decision declared Roberto Ramirez, father and predecessor-in-interest of respondents Artemio G. Ramirez, Moises G. Ramirez, Rodrigo G. Ramirez, Domingo G. Ramirez, and Modesta Ramirez Andrade (respondents), as the lawful owner of a 86,433-square meter parcel of land in Mahaba, Apid, Inopacan, Leyte, known as Cadastral Lot No. 3483, Case 12, CAD 637-D, Inopacan Cadastre (subject property). The assailed CA resolution denied the petitioner's motion for reconsideration.

FACTUAL BACKGROUND

The facts of the case, gathered from the records, are briefly summarized below.

On August 11, 1998, the petitioner, representing her parents (spouses Crispo and Nicomedesa P. Alumbro), filed with the Municipal Circuit Trial Court (MCTC) of Hindang-Inopacan, Leyte a complaint for the recovery of ownership and possession and/or quieting of title of a one-half portion of the subject property against the respondents.4cra1aw

The petitioner alleged that her great-grandfather Catalino Jaca Valenzona was the owner of the subject property under a 1915 Tax Declaration (TD) No. 2724. Catalino had four children: Gliceria,5cra1aw Valentina, Tomasa, and Julian; Gliceria inherited the subject property when Catalino died; Gliceria married Gavino Oyao, but their union bore no children; when Gliceria died on April 25, 1952, Gavino inherited a one-half portion of the subject property, while Nicomedesa acquired the other half through inheritance, in representation of her mother, Valentina, who had predeceased Gliceria, and through her purchase of the shares of her brothers and sisters. In 1961, Nicomedesa constituted Roberto as tenant of her half of the subject property; on June 30, 1965, Nicomedesa bought Gavino's one-half portion of the subject property from the latter's heirs, Ronito and Wilfredo Oyao,6cra1aw evidenced by a Deed of Absolute Sale of Agricultural Land;7cra1aw on August 3, 1965, Nicomedesa sold to Roberto this one-half portion in a Deed of Absolute Sale of Agricultural Land;8cra1aw and in 1997, Nicomedesa discovered that since 1974, Roberto had been reflecting the subject property solely in his name under TD No. 4193.

The respondents, on the other hand, traced ownership of the subject property to Gavino who cultivated it since 1956; Roberto bought half of the subject property from Nicomedesa on August 3, 1965,9cra1aw and the remaining half from Gavino's heirs, Ronito and Wilfredo Oyao, on October 16, 1972.10cra1aw On January 9, 1975, a certain Santa Belacho, claiming to be Gavino's natural child, filed a complaint with the Court of First Instance of Baybay, Leyte against Roberto,

Nicomedesa, Ronito and Wilfredo Oyao, docketed as Civil Case No. B-565, for recovery of possession and ownership of two (2) parcels of land, including the subject property;11cra1aw on September 16, 1977, Roberto bought the subject property from Belacho through a Deed of Absolute Sale of Land; and on October 5, 1977, Roberto and Nicomedesa entered into a Compromise Agreement with Belacho to settle Civil Case No. B-565. Belacho agreed in this settlement to dismiss the case and to waive her interest over the subject property in favor of Roberto, and the other parcel of land in favor of Nicomedesa in consideration of P1,800.00.12cra1aw

THE MCTC RULING

In a Decision dated April 2, 2001, the MCTC found that Catalino's 1915 TD No. 2724 was not the source of Gavino's 1945 TD No. 3257 because it involved the other parcel of land subject of Civil Case No. B-565. It noted that the subject property was the conjugal property of Gavino and Gliceria; Gliceria's death in 1952 dissolved the conjugal partnership and entitled Gavino to a one-half portion as his conjugal share, while Gliceria's one-half share should be equally divided among Gavino and Gliceria's brothers and sisters or their children. It held that Roberto was entitled to only three-fourths, as this was Gavino's entire share, while the petitioner was entitled to one-fourth of the subject property, and gave the parties sixty days to effect the partition.13cra1aw

The MCTC brushed aside the respondents' argument that they acquired the subject property by ordinary acquisitive prescription, noting that bad faith attended their possession because they were well aware of Nicomedesa's claim of ownership over a one-half portion of the subject property, long before the property was tax declared solely in Roberto's name in 1974. It observed that the required thirty-year period for extraordinary acquisitive prescription was not met because the respondents had only twenty-four years of adverse possession, counted from 1974 until the filing of the complaint in 1998.14cra1aw

THE RTC RULING

On appeal, Judge Abraham B. Apostol15cra1aw of the Regional Trial Court (RTC), Branch 18, Hilongos, Leyte, rendered a two-page Decision dated June 29, 2001, which we quote in full:chan robles virtual law library

I. The Case

THIS IS A COMPLAINT FOR Recovery of Ownership And Possession And/Or Quieting of Title With Damages filed by Plaintiffs against defendants on a parcel of land located at Mahaba, Apid, Inopacan, Leyte presently described as follows:chan robles virtual law library

A parcel of land situated at Mahaba, Inopacan, Leyte, bounded on the NORTH by Camotes Sea; EAST by Camotes Sea; SOUTH by Lot 3478, 3476, 3473, WEST by Lot 3480 covered by Tax Declaration No. 4193 in the name of Roberto Ramirez.

After a full blown hearing, a DECISION was rendered, the decretal portion being:chan robles virtual law library

WHEREFORE, all the foregoing considered the court hereby decrees:

1. That plaintiff and defendants are lawful co-owners of Lot 3483 as afore-described;

2. That the shares of the parties shall be divided and apportioned in the following manner: plaintiff shall own one-fourth (1/4) of Lot 3483 and defendants shall collectively own three-fourth (3/4) of Lot 3483;

3. That the parties are hereby given sixty days from receipt hereof within which to effect the actual partition among themselves observing the foregoing proportion,

proportionately sharing the expenses therefor and to submit to the court for final approval the project of partition including the proposed subdivision plan prepared by a geodetic engineer;

4. That should the parties be unable to voluntarily agree to make the partition, they shall so inform the court within thirty days from receipt hereof.

5. That the parties equally share the costs of this suit.

SO ORDERED.

II. Facts of the Case:

a. Version of the Plaintiffs is extant on the rollo of the case summarized on Appeal by a MEMORANDUM but negligently forgetting to enumerate their PRAYERS.

b. Version of the Defendants is also extant on the records of the case and clearly expanded via a MEMORANDUM.

III. Court Findings/Ruling:chan robles virtual law library

THIS COURT adopts in toto the DECISION of the Court a quo, slightly correcting no. 2 of the same to conform to the fallo of the DECISION which stated a "proportion of 1:3[.]"

No. 2 shall therefore read as follows:chan robles virtual law library

2. That the shares of the parties shall be divided and apportioned in the following manner: plaintiff shall own ONE-THIRD (1/3) of Lot 3483 and defendants shall collectively own TWO-THIRDS (2/3) of Lot 3483.

SO ORDERED.16cra1aw

The respondents elevated the case to the CA via a petition for review under Rule 42 of the Rules of Court, insisting that the lower courts erred in finding that the petitioner is a co-owner since they have already acquired the entire area of the subject property by ordinary acquisitive prescription.

THE CA RULING

The CA decided the appeal on January 28, 2003. It set aside the Decisions dated April 2, 2001 and June 29, 2001 of the MCTC and the RTC, respectively, and declared Roberto as the lawful owner of the entire area of the subject property. The appellate court found that the October 5, 1977 Compromise Agreement executed by Belacho gave Roberto's possession of the subject property the characters of possession in good faith and with just title; the respondents' twenty-one years of possession, from execution of the compromise agreement in 1977 until the filing of the case in 1998, is more than the required ten-year possession for ordinary acquisitive prescription. The CA also noted that Roberto also enjoyed just title because Belacho executed a contract of sale in his favor on September 16, 1977.17cra1aw

After the CA's denial18cra1aw of her motion for reconsideration,19cra1aw the petitioner filed the present petition for review on certiorari under Rule 45 of the Rules of Court.

THE PETITION

The petitioner contends that the CA misappreciated the legal significance of the compromise agreement and the contract of sale, both executed by Belacho, and thus concluded that the respondents were possessors in good faith and with just title and could acquire the subject property through ordinary acquisitive prescription. She argues that the parties merely entered into the compromise agreement to settle the case. She further argues that Roberto entered the contract of sale in bad faith because the sale took place during the pendency of Civil Case No. B-565.

The respondents submit that they are possessors in good faith and with just title because Roberto bought the subject property from Belacho in a contract of sale dated September 16, 1977, and the compromise agreement, executed on October 5, 1977, recognized Roberto's ownership of the subject property.

THE ISSUE

The core issue is whether the CA erred in relying upon the compromise agreement and the contract of sale to conclude that the respondents had been possessors in good faith and with just title and could acquire the subject property through ordinary acquisitive prescription.

OUR RULING

We find the petition meritorious.

This Court is not a trier of facts. However, if the inference drawn by the appellate court from the facts is manifestly mistaken, as in the present case, we can review the evidence to allow us to arrive at the correct factual conclusions based on the record.20cra1aw

Prescription as a mode of acquiring ownership

Prescription, as a mode of acquiring ownership and other real rights over immovable property,21cra1aw is concerned with lapse of time in the manner and under conditions laid down by law, namely, that the possession should be in the concept of an owner, public, peaceful, uninterrupted, and adverse.22cra1aw The party who asserts ownership by adverse possession must prove the presence of the essential elements of acquisitive prescription.23cra1aw

Acquisitive prescription of real rights may be ordinary or extraordinary.24cra1aw Ordinary acquisitive prescription requires possession in good faith and with just title for ten years.25cra1aw In extraordinary prescription, ownership and other real rights over immovable property are acquired through uninterrupted adverse possession for thirty years without need of title or of good faith.26cra1aw

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.27cra1aw 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.28cra1aw

Compromise agreement not a valid basis

of possession in good faith and just title

We find that the CA mistakenly relied upon the compromise agreement, executed by Belacho to conclude that the respondents were possessors in good faith and with just title who acquired the property through ordinary acquisitive prescription.

In Ramnani v. Court of Appeals,29cra1aw we held that the main purpose of a compromise agreement is to put an end to litigation because of the uncertainty that

may arise from it. Reciprocal concessions are the very heart and life of every compromise agreement.30cra1aw By the nature of a compromise agreement, it brings the parties to agree to something that neither of them may actually want, but for the peace it will bring them without a protracted litigation.31cra1aw

In the present case, to avoid any conflict with Belacho, Roberto and Nicomedesa paid P1,800.00 in consideration of Belacho's desistance from further pursuing her claim over two (2) parcels of land, including the subject property. Thus, no right can arise from the compromise agreement because the parties executed the same only to buy peace and to write finis to the controversy; it did not create or transmit ownership rights over the subject property. In executing the compromise agreement, the parties, in effect, merely reverted to their situation before Civil Case No. B-565 was filed.

Contract of sale cannot support

claim of good faith and just title

Neither can the respondents benefit from the contract of sale of the subject property, executed by Belacho in favor of Roberto, to support their claim of possession in good faith and with just title. In the vintage case of Leung Yee v. F.L. Strong Machinery Co. and Williamson,32cra1aw we explained good faith in this manner:chan robles virtual law library

One who purchases real estate with knowledge of a defect or lack of title in his vendor cannot claim that he has acquired title thereto in good faith as against the true owner of the land or of an interest therein; and the same rule must be applied to one who has knowledge of facts which should have put him upon such inquiry and investigation as might be necessary to acquaint him with the defects in the title of his vendor.33cra1aw

Good faith, or the want of it, can be ascertained only from the acts of the one claiming it, as it is a condition of mind that can only be judged by actual or fancied token or signs.34cra1aw

In the present case, no dispute exists that Roberto, without Nicomedesa's knowledge or participation, bought the subject property on September 16, 1977 or during the pendency of Civil Case No. B-565. Roberto, therefore, had actual knowledge that Belacho's claim to ownership of the subject property, as Gavino's purported heir, was disputed because he (Roberto) and Nicomedesa were the defendants in Civil Case No. B-565. Roberto even admitted that he bought the subject property from Belacho to "avoid any trouble."35cra1aw He, thus, cannot claim that he acted in good faith under the belief that there was no defect or dispute in the title of the vendor, Belacho.

Not being a possessor in good faith and with just title, the ten-year period required for ordinary acquisitive prescription cannot apply in Roberto's favor. Even the thirty-year period under extraordinary acquisitive prescription has not been met because of the respondents' claim to have been in possession, in the concept of owner, of the subject property for only twenty-four years, from the time the subject property was tax declared in 1974 to the time of the filing of the complaint in 1998.

Based on the foregoing, the CA erred in finding that the respondents acquired the petitioner's one-fourth portion of the subject property through acquisitive prescription. As aptly found by the MCTC, the respondents are only entitled to three-fourths of the subject property because this was Gavino's rightful share of the conjugal estate that Roberto bought from Ronito and Wilfredo Oyao.

RTC Decision did not conform to the

requirements of the Constitution and

of the Rules of Court

Before closing, we cannot close our eyes to the failure of the RTC decision to measure up to the standard set by Section 14 of Article VIII of the Constitution, as well as Section 1 of Rule 36 and Section 1, Rule 120 of the Rules on Civil Procedure, that a decision, judgment or final order determining the merits of the case shall state, clearly and distinctly, the facts and the law on which it is based. Our Administrative Circular No. 1 of January 28, 1988 reiterates this requirement and stresses that judges should make complete findings of facts in their decisions, scrutinize closely the legal aspects of the case in the light of the evidence presented, and avoid the tendency to generalize and to form conclusions without detailing the facts from which such conclusions are deduced.

In Yao v. Court of Appeals,

Faithful adherence to the requirements of Section 14, Article VIII of the Constitution is indisputably a paramount component of due process and fair play. It is likewise demanded by the due process clause of the Constitution. The parties to a litigation should be informed of how it was decided, with an explanation of the factual and legal reasons that led to the conclusions of the court. The court cannot simply say that judgment is rendered in favor of X and against Y and just leave it at that without any justification whatsoever for its action. The losing party is entitled to know why he lost, so he may appeal to the higher court, if permitted, should he believe that the decision should be reversed. A decision that does not clearly and distinctly state the facts and the law on which it is based leaves the parties in the dark as to how it was reached and is precisely prejudicial to the losing party, who is unable to pinpoint the possible errors of the court for review by a higher tribunal. More than that, the requirement is an assurance to the parties that, in reaching judgment, the judge did so through the processes of legal reasoning. It is, thus, a safeguard against the impetuosity of the judge, preventing him from deciding ipse dixit. Vouchsafed neither the sword nor the purse by the Constitution but nonetheless vested with the sovereign prerogative of passing judgment on the life, liberty or property of his fellowmen, the judge must ultimately depend on the power of reason for sustained public confidence in the justness of his decision.37cra1aw

The RTC decision did not distinctly and clearly set forth, nor substantiate, the factual and legal bases for its affirmance of the MCTC decision. It contained no analysis of the evidence of the parties nor reference to any legal basis in reaching its

conclusions. Judges must inform the parties to a case of the legal basis for their decision so that if a party appeals, it can point out to the appellate court the points of law to which it disagrees. Judge Apostol should have known the exacting standard imposed on courts by the Constitution and should not have sacrificed the constitutional standard for brevity's sake. Had he thoroughly read the body of the MCTC decision, he would have clearly noted that the "proportion of 1:3," stated in the penultimate paragraph of the decision, meant that the petitioner was entitled to one-fourth, while the respondents were entitled to three-fourths, of the subject property.

WHEREFORE, in light of all the foregoing, we hereby REVERSE and SET ASIDE the decision dated January 28, 2003 and the resolution dated June 19, 2003 of the former Seventh Division of the Court of Appeals in CA-G.R. SP No. 66120. The decision dated April 2, 2001 of the Municipal Circuit Trial Court of Hindang-Inopacan, Leyte in Civil Case No. 196 is REINSTATED. No pronouncement as to costs.

SO ORDERED.

[G.R. NO. 150066 : April 13, 2007]

SPS. EMMANUEL (deceased) and EDNA CHUA and SPS. MANUEL and MARIA CHUA, Petitioners, v. MSGR. VIRGILIO SORIANO. Substituted by Sister Mary Virgilia Celestino Soriano, Respondent.

D E C I S I O N

AUSTRIA-MARTINEZ, J.:

Before the Court is a Petition for Review on Certiorari under Rule 45 of the Rules of Court assailing the Decision1 dated September 21, 2001 of the Court of Appeals (CA) in CA-G.R. CV No. 56568 which affirmed with modification the Decision2 dated July 10, 1997 of the Regional Trial Court, Branch 81, Quezon City (RTC) in Civil Case No. Q-90-6439.

The factual background of the case is as follows:

Msgr. Virgilio C. Soriano (Soriano) owned a 1,600 square meter parcel of land located in Barangay Banlat, Quezon City, covered by Transfer Certificate of Title (TCT) No. 363471 of the Registry of Deeds of Quezon City.

Sometime in the early months of 1988, Soriano's first cousin and godson, Emmanuel C. Celestino, Sr. (Celestino) asked Soriano to lend him TCT No. 363471 as a security for a loan to be used in the business operation of Celestino's company, Digital Philippines, Inc.3 Acceding to Celestino's request, Soriano executed on March 29, 1988 a Special Power of Attorney (SPA) authorizing Celestino to mortgage said property.4

Then came the June 11, 1988 fire that gutted a portion of the Quezon City Hall and destroyed in the process the original copy of TCT No. 363471 on file with the Registry of Deeds of Quezon City.

On August 22, 1988, Soriano executed a SPA authorizing Celestino and one Carlito Castro to initiate administrative reconstitution proceedings of TCT No. 363471.5 On April 17, 1990, the reconstituted title, TCT No. RT-3611 (363471) PR 1686, was issued.6

During the pendency of the administrative reconstitution proceedings, Soriano asked Celestino whether there was any truth to the spreading rumor that he had already sold the subject property.7 Celestino denied the rumor but informed Soriano that the

subject property was mortgaged with a foreign bank.8 Dissatisfied with Celestino's explanation, Soriano made inquiries with the Registry of Deeds of Quezon City9 and discovered, to his dismay, that TCT No. 363471 had been canceled by TCT No. 1451410 in the name of spouses Emmanuel and Edna Chua and spouses Manuel and Maria Chua (Chuas). By virtue of a SPA11 dated March 9, 1989 with Soriano's purported signature, Celestino sold to the Chuas the property in an Absolute Deed of Sale12 dated July 4, 1989 for P500,000.00.

Claiming that his signature in the SPA is a forgery, Soriano filed on August 20, 1990 a complaint against Celestino and the Chuas for annulment of deed of sale and special power of attorney, cancellation of title and reconveyance with damages.13

The defense of Celestino is that he was duly authorized to sell the property14 while the Chuas contend that they are purchasers in good faith since they bought the property from Celestino by virtue of a SPA which was duly inscribed and annotated on the owner's duplicate of the TCT and the tax declaration and that they have duly inspected the property before purchasing it.15

Soriano died during the pendency of the trial.16 He was substituted by his sister, Florencia Celestino Soriano, also known as Sister Mary Virgilia Celestino Soriano (Sis. Soriano).17

On July 10, 1997, the RTC rendered its Decision18 in favor of Soriano, the dispositive portion of which reads:

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

1. Declaring the special power of attorney dated March 19, 1985 and the Deed of Sale dated July 4, 1989 as without legal force and effect;

2. Declaring Transfer Certificate of Title No. 14514 in the name of the defendants Chuas as null and void;

3. Directing defendants Chuas to reconvey the subject property to plaintiff Soriano.

4. Ordering defendant Celestino to pay to the plaintiff the amounts of P100,000.00 as moral damages, P20,000.00 as attorney's fees and P10,000.00 as litigation expenses;

5. Ordering defendant Celestino to pay to the defendants Chuas the amount of P500,000.00 plus interest at the legal rate from July 4, 1989 until fully paid;

6. Ordering defendant Celestino to pay the defendants Chuas the amounts of P20,000.00 as attorney's fees and P10,000.00 as litigation expenses.

With costs against defendant Celestino.

SO ORDERED.19

The RTC held that Soriano's purported signature in the SPA dated March 9, 1989 is a forgery based on the opinion of expert witness Arcadio A. Ramos, Chief of the Questioned Documents Division of the National Bureau of Investigation (NBI), that a comparison of Soriano's sample signature and the one appearing on the SPA dated March 9, 1989 revealed that they were "not written by one and the same person;"20 that the Chuas are not purchasers in good faith since they did not personally verify the title of the subject property but relied only upon its tax declaration; that the Chuas were placed on guard to ascertain the authenticity of the authority of Celestino since they were not dealing with Soriano, the registered owner.

Dissatisfied, Celestino and the Chuas filed separate appeals with the CA, docketed singly as CA-G.R. No. 56568.21 On September 21, 2001, the CA rendered its Decision,22 the dispositive portion of which reads:

WHEREFORE, for the lack of merit, this Court DISMISSES the appeal and AFFIRMS the appealed Decision except paragraph number 3 of the dispositive part which is hereby completely DELETED and replaced with the following: 3. The Register of Deeds of Quezon City is ordered to reinstate and reactivate Transfer Certificate of Title No. RT-3611 (363471) PR-1686 in the name of appellee Soriano.

SO ORDERED.23

The CA held that that there was no cogent reason to set aside the RTC's reliance on the testimony of the expert witness since there is no contrary evidence to rebut the same. The CA also agreed with the RTC's findings that the Chuas are not purchasers in good faith since they failed to determine the veracity of Celestino's alleged authority to sell the property.

No appeal was filed by Celestino. The Chuas filed the present petition anchored on the following grounds:

THE HONORABLE COURT OF APPEALS HAS DECIDED A QUESTION IN A WAY NOT PROBABLY IN ACCORD WITH THE LAW AND WITH THE DECISIONS OF THE HONORABLE SUPREME COURT; AND

THE HONORABLE COURT OF APPEALS HAS SO FAR DEPARTED FROM THE ACCEPTED AND USUAL COURSE OF JUDICIAL PROCEEDINGS.24

The Chuas argue that they are purchasers in good faith since they dealt with Celestino who had in his possession the owner's duplicate title and the SPA dated

March 9, 1989 with Soriano's purported signature; that the SPA was inscribed and annotated in the owner's duplicate title; that since verification with the original title in the Registry of Deeds of Quezon City was not possible, they checked the tax declaration of the property; that the SPA dated March 9, 1989 was duly annotated in the tax declaration; that they inspected the property and found three squatter occupants; that they paid off the two squatters and appointed the third squatter occupant as caretaker of the property; that Soriano was responsible for his predicament since he entrusted the owner's duplicate title to Celestino; that the fact that Soriano's purported signature in the SPA dated March 9, 1989 was later declared by the NBI handwriting expert as a forgery is of no moment since they are not handwriting experts and they had the right to assume that the SPA was perfectly legal for otherwise, it could not have been annotated at the back of the title.

Sis. Soriano, on the other hand, avers that the Chuas are not purchasers in good faith since they failed to check the veracity of Celestino's alleged authority to sell the property; that had the Chuas conferred with Soriano about the sale transaction proposed by Celestino, they would have readily discovered the fraud being then hatched by Celestino.

Emmanuel Chua died during the pendency of the present petition.25 He was substituted by his surviving spouse and co-petitioner, Edna L. Chua, and his children, Erlyn, Ericson, Emmanuel and Elise, all surnamed Chua.26

The sole issue to be resolved in the present petition is this: whether or not the Chuas are purchasers in good faith.

The question of whether or not a person is a purchaser in good faith is a factual matter that will generally be not delved into by this Court, since only questions of law may be raised in petitions for review.27

The established rule is that in the exercise of the Supreme Court's power of review, the Court, not being a trier of facts, does not normally embark on a re-examination of the evidence presented by the contending parties during the trial of the case

considering that the findings of facts of the CA are conclusive and binding on the Court.28 This rule, however, has several well-recognized exceptions: (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 the trial court; (8) when the findings are conclusions without citation of specific evidence on which they are based; (9) when the facts set forth in the petition as well as in the petitioner's main and reply briefs are not disputed by the respondent; (10) when the findings of fact are premised on the supposed absence of evidence and contradicted by the evidence on record; and (11) when the Court of Appeals manifestly overlooked certain relevant facts not disputed by the parties, which, if properly considered, would justify a different conclusion.29 Exception (4) is present in the instant case.

A purchaser in good faith is one who buys property without notice that some other person has a right to or interest in such property and pays its fair price before he has notice of the adverse claims and interest of another person in the same property. The honesty of intention which constitutes good faith implies a freedom from knowledge of circumstances which ought to put a person on inquiry.30 As the Court enunciated in Lim v. Chuatoco:31

x x x good faith consists in the possessor's belief that the person from whom he received the thing was the owner of the same and could convey his title. Good faith, while it is always to be presumed in the absence of proof to the contrary, requires a well founded belief that the person from whom title was received was himself the owner of the land, with the right to convey it. There is good faith where there is an honest intention to abstain from taking any unconscientious advantage from another. Otherwise stated, good faith is the opposite of fraud and it refers to the state of mind which is manifested by the acts of the individual concerned.32

Consistently, this Court has ruled that every person dealing with registered land may safely rely on the correctness of the certificate of title issued therefor and the law will in no way oblige him to go beyond the certificate to determine the condition of the

property. Where there is nothing in the certificate of title to indicate any cloud or vice in the ownership of the property, or any encumbrance thereon, the purchaser is not required to explore further than what the Torrens Title upon its face indicates in quest for any hidden defects or inchoate right that may subsequently defeat his right thereto.33

However, when a person who deals with registered land through someone who is not the registered owner, he is expected to look behind the certificate of title and examine all the factual circumstances, in order to determine if the vendor has the capacity to transfer any interest in the land.34 He has the duty to ascertain the identity of the person with whom he is dealing and the latter's legal authority to convey.35

The law "requires a higher degree of prudence from one who buys from a person who is not the registered owner, although the land object of the transaction is registered. While one who buys from the registered owner does not need to look behind the certificate of title, one who buys from one who is not the registered owner is expected to examine not only the certificate of title but all factual circumstances necessary for him to determine if there are any flaws in the title of the transferor, or in his capacity to transfer the land."36

The strength of buyer's inquiry on the seller's capacity or legal authority to sell depends on the proof of capacity of the seller. If the proof of capacity consists of a special power of attorney duly notarized, mere inspection of the face of such public document already constitutes sufficient inquiry. If no such special power of attorney is provided or there is one but there appear flaws in its notarial acknowledgment, mere inspection of the document will not do; the buyer must show that his investigation went beyond the document and into the circumstances of its execution.37

In the present case, the Chuas were dealing with Celestino, Soriano's attorney-in-fact, who presented Soriano's duplicate title, a SPA dated March 9, 1989 with Soriano's purported signature, and tax declaration.

An examination of the assailed SPA shows that it is valid and regular on its face. It contains a notarial seal.38 A notarial seal is a mark, image or impression on a document which would indicate that the notary public has officially signed it.39 The long-standing rule is that documents acknowledged before a notary public have the evidentiary weight with respect to their due execution and regularity.40 The assailed SPA is a notarized document and therefore, presumed to be valid and duly executed.

Thus, the reliance by the Chuas on the notarial acknowledgment found in the duly notarized SPA presented by Celestino is sufficient evidence of good faith. The Chuas need not prove anything more for it is already the function of the notarial acknowledgment to establish the appearance of the parties to the document, its due execution and authenticity.41

Moreover, the SPA was accepted by the Register of Deeds. It was registered with the Registry of Deeds of Quezon City42 and inscribed and annotated in the owner's duplicate title,43 further bolstering the appearance of due execution and regularity.

The fact that Soriano's purported signature in the SPA dated March 9, 1989 was declared to be a forgery does not alter the Chuas' status as purchasers in good faith. The Court's recent pronouncements in Bautista v. Silva44 are enlightening to quote:

When the document under scrutiny is a special power of attorney that is duly notarized, we know it to be a public document where the notarial acknowledgment is prima facie evidence of the fact of its due execution. A purchaser presented with such a document would have no choice between knowing and finding out whether a forger lurks beneath the signature on it. The notarial acknowledgment has removed the choice from him and replaced it with a presumption sanctioned by law that the affiant appeared before the notary public and acknowledged that he executed the document, understood its import and signed it. In reality, he is deprived of such choice not because he is incapable of knowing and finding out but because, under our notarial system, he has been given the luxury of merely relying on the presumption of regularity of a duly notarized SPA. And he cannot be faulted for that because it is precisely that fiction of regularity which holds together commercial transactions across borders and time.45

Thus, the fact that Soriano's signature in the SPA dated March 9, 1989 was subsequently declared by the trial court to have been falsified would not revoke the title subsequently issued title in favor of the Chuas. With the property in question having already passed to the hands of purchasers in good faith, it is now of no moment that some irregularity attended the issuance of the SPA, consistent with our pronouncement in Heirs of Spouses Benito Gavino and Juana Euste v. Court of Appeals,46 to wit:

x x x, the general rule that the direct result of a previous void contract cannot be valid, is inapplicable in this case as it will directly contravene the Torrens system of registration. Where innocent third persons, relying on the correctness of the certificate of title thus issued, acquire rights over the property, the court cannot disregard such rights and order the cancellation of the certificate. The effect of such outright cancellation will be to impair public confidence in the certificate of title. The sanctity of the Torrens system must be preserved; otherwise, everyone dealing with the property registered under the system will have to inquire in every instance as to whether the title had been regularly or irregularly issued, contrary to the evident purpose of the law.47

Being purchasers in good faith, the Chuas already acquired valid title to the property. A purchaser in good faith holds an indefeasible title to the property and he is entitled to the protection of the law. Accordingly, TCT No. 14514 issued in the name of the Chuas is valid. The amount of P500,000.00, representing the purchase price in the Absolute Deed of Sale48 dated July 4, 1989, which the RTC directed Celestino to pay to the Chuas should instead be paid to Soriano as part of the actual damages awarded to him. Such amount shall earn interest rate of 6% from August 20, 1990, the time of the filing of the complaint until its full payment before finality of judgment. After the judgment becomes final and executory until the obligation is satisfied, the amount due shall earn interest at 12% per year, the interim period being deemed equivalent to a forbearance of credit.49

For the Court to uphold the effects of a SPA that is rooted in falsity may be disconcerting. Yet whatever sympathies may be judicially appreciated for the deceived party must be balanced in deference to the protection afforded by law to the

purchaser in good faith. If such innocence or good faith is established by the evidence, or insufficiently rebutted by the disputant, then the corresponding duty of the Court is simply to affirm the rights of the purchaser in good faith. It is mischief at worse, and error at least, for a court to misread or inflate the facts to justify a ruling for the defrauded party, no matter how wronged he or she may be.50

WHEREFORE, the petition is GRANTED. Petitioners are hereby declared purchasers in good faith. Accordingly, the Decision of the Court of Appeals dated September 21, 2001 in CA-G.R. CV No. 56568 is PARTLY REVERSED and SET ASIDE insofar as it affirms the Decision of the Regional Trial Court, Branch 81, Quezon City dated July 10, 1997 in Civil Case No. Q-90-6439 finding the Chuas as purchasers in bad faith.

The Decision dated July 10, 1997 of the Regional Trial Court, Branch 81, Quezon City (RTC) in Civil Case No. Q-90-6439 is MODIFIED to read as follows:

1. Declaring the special power of attorney dated March 9, 1985 and the Deed of Sale dated July 4, 1989 and the Transfer Certificate of Title No. 14514 in the name of the defendants Chuas as valid;

2. Ordering Celestino to pay plaintiff the amount of P500,000.00 as actual damages, with interest rate of 6% p.a. computed from the time of the filing of the complaint until its full payment before finality of judgment; thereafter, if the amount adjudged remains unpaid, the interest rate shall be 12% p.a. computed from the time the judgment becomes final and executory until fully satisfied;

3. Ordering defendant Celestino to pay to the plaintiff the amounts of P100,000.00 as moral damages, P20,000.00 as attorney's fees and P10,000.00 as litigation expenses;

With costs against defendant Celestino.

SO ORDERED.

G.R. No. L-28721 October 5, 1928

MARTIN MENDOZA and NATALIO ENRIQUEZ, Plaintiffs-Appellees, v. MANUEL DE GUZMAN, Defendant-Appellant.

MAX B. SOLIS, intervenor-appellant.

Juan S. Rustia for appellants.

Godofredo Reyes for appellees.

MALCOLM, J.:

This case calls for the application of articles 361, 435, and 454 of the Civil Code to the proven facts.chanroblesvirtualawlibrary chanrobles virtual law library

On November 6, 1916, Leandra Solis and her husband Bernardo Solis brought an action in the Court of First Instance of Tayabas against Martin Mendoza for the recovery of a certain piece of land. Judgment was rendered in that case absolving Mendoza from the complaint, and this judgment was subsequently affirmed by the Supreme Court. 1 When the case was remanded to the court of origin, the trial judge issued an order requiring the provincial sheriff immediately to dissolve the preliminary writ of injunction and to put Mendoza in the possession of the land. By virtue of this order, Mendoza was in fact put in possession of the property.chanroblesvirtualawlibrary chanrobles virtual law library

In the cadastral proceedings of the municipality of Sariaya, Tayabas, the piece of land above-mentioned was identified as lot No. 687. In the decision rendered in the

cadastral case, this lot was adjudicated in favor of Martin Mendoza and Natalio Enriquez in equal parts pro indiviso subject to the right of retention on the part of Manuel de Guzman until he shall have been indemnified for the improvements existing on the land. By virtue of this judgment, De Guzman presented a motion requesting the issuance of a writ of possession for lot No. 687 in his favor which was granted on June 25, 1924. From the time Leandra Solis and Bernardo Solis, as well as Manuel de Guzman who was working on the land, were ejected therefrom, Martin Mendoza possessed it until June 25, 1924, when de Guzman obtained the writ of possession above- mentioned. Since then De Guzman has had dominion over the land.chanroblesvirtualawlibrary chanrobles virtual law library

Being unable to come to an agreement as to the amount which should be allowed for the improvements made on the land, Martin Mendoza and Natalio Enriquez began an action requesting the court to (a) fix the value of the necessary and useful expenses incurred by Manuel de Guzman in introducing the improvements; (b) require the defendant to render an accounting of the fruits received by him and order that the value of the fruits be applied to the payment of the necessary and useful expenses; and (c) decree the restitution of the possession to the plaintiffs. To the complaint, the defendant filed an answer in the form of a general denial with special defenses and appended a counter-claim and crosscomplaint, in which a total of P6,000 was asked. During the pendency of the case, Bernardo Solis, or Max. B. Solis, one of the persons who was ejected from the land, asked leave to intervene, alleging, among other things, that De Guzman, in consideration of the sum of P5,000, had transferred all his rights in the improvements and in the lot to him with the exception of two hundred coconut trees. This petition was granted by the trial court.chanroblesvirtualawlibrary chanrobles virtual law library

When the case was called for trial, the parties entered into the follwing stipulation:

1. That the plaintiffs are the owners and proprietors of the land described in the second paragraph of the complaint.chanroblesvirtualawlibrary chanrobles virtual law library

2. That a decree of registration has been issued on said land in the terms set forth in paragraph 3 of the complaint.chanroblesvirtualawlibrary chanrobles virtual law library

3. That the defendant Manuel de Guzman is the one who has been in possession and enjoyment of the land from June 25, 1924, up to the present time by virtue of a writ of possession obtained by him from the Court of Land Registration.chanroblesvirtualawlibrary chanrobles virtual law library

4. That the defendant has made improvements on said land be planting coconut trees thereon.chanroblesvirtualawlibrary chanrobles virtual law library

5. That the plaintiff Martin Mendoza is the one who has been in possession and enjoyment of said property and its improvements since December 16, 1916, by virtue of a writ of possession in civil case No. 356 until said pssession was transferred to the defendant Manuel de Guzman.chanroblesvirtualawlibrary chanrobles virtual law library

6. That from March 20, 1920, the plaintiff Natalio Enriquez has been in possession and enjoyment of a portion of the land, the subject matter of the complaint herein, by virtue of a deed of sale executed in his favor by Attorney Agustin Alvarez, who, in turn, acquired it from the other plaintiff Martin Mendoza, until June 25, 1924.chanroblesvirtualawlibrary chanrobles virtual law library

The parties desire to submit, as they do submit, under this stipulation of facts the following questions:

(a) The amount of the indemnity to be paid to the defendant for the improvements made by him on said lot and the basis upon which said amount shall be fixed.chanroblesvirtualawlibrary chanrobles virtual law library

(b) Whether or not the defendant is obliged to render an account of the fruits received by him from June 25, 1924, until the improvements are delivered after same have been paid for.

(c) Whether the value of said fruits and products received by the defendant shall be applied to the indemnity to which he is entitled, or whether said defendant is obliged to deliver to the plaintiffs the remainder in case of excess.

(d) Whether or not the defendant has the right to be paid by the plaintiffs in whole or in part for the value of the fruits received by Martin Mendoza and Natalio Enriquez from the respective dates that they were in possession and enjoyment of the land until June 25, 1924.

The parties at the same time that they submit to the court for decision the questions presented in the above stipulation reserve to themselves, whatever said decision may be, the right to present later their evidence in support of their respective views with respect to the amount of the indemnity.

After the preliminary questions have been decided, the parties request that commissioners be appointed to receive said evidence with respect to the amount of the indemnity in accordance with the views of both parties.

The trial court resolved the questions presented by holding (1) that in accordance with the provisions of articles 435 and 454 in relation with article 361 of the Civil Code, the value of the "indemnization" to be paid to the defendant should be fixed according to the necessary and useful expenses incurred by him in introducing "las plantaciones en cuestion"; (2) that the plaintiffs as the owner of the property have the right to make their own "las plantaciones hechas por el demandado" upon payment in the form indicated in No. 1, the defendant having the right to retain the land until the expenditures have been refunded; (3) that the defendant is obliged to render a detail and just account of the fruits and other profits received by him from the property for their due application; and (4) that the value of the fruits received by the defendant should first be applied to the payment of the "indemnizacion," and in that it exceeds

the value of the "indemnizacion," the excess shall be returned to the plaintiffs. With respect to the last question as to whether or not the plaintiffs are obliged to return to the defendant the value of the fruits received by them before the defendant took possession of the land, the trial court abstained from making any pronouncement for the reason that the circumstances under which the plaintiffs acquired possession and the defendant again acquired it were not before him, the parties needing to submit their evidence with respect to this point.

At the trial which followed and at the instance of the parties, two commissioners were appinted with instructions to inspect the land and to count the number of coconut trees planted thereon, determining the number of fruit-bearing trees and those that are not fruit-bearing as well as the condition of the same. After trial, Judge of First Instance Gloria rendered judgment declaring (a) that the defendant Manuel de Guzman and the intervenor Bernardo Solis have the right to collect from the plaintiffs Martin Mendoza and Natalio Enriquez the sum of P2,046 as compensation for the necessary and useful expenditures in the proportion of 20 per cent for Manuel de Guzman and 80 per cent for Bernardo Solis; and (b) that Manuel de Guzman and Bernardo Solis are obliged to pay to the plaintiffs the sum of P666.93 per annum from June 25, 1924, one-fifth of this amount to be paid by Manuel de Guzman and the other four-fifths by Bernardo Solis. As on the date when this judgment was rendered, that is on September 23, 1927, the amount that the plaintiffs were required to pay to the defendant and intervenor exceeded the amount that the latter were to pay the former, the defendant and intervenor were ordered to deliver the land and its improvement as soon as the plaintiffs have paid the difference, without special pronouncement as to costs.

The appeal of the defendant and intervenor is based on fourteen assigned errors relating to both questions of fact and of law. The question of fact mainly concerns the amount to be paid as "indemnizacion" in the form of necessary and useful expenditures incurred by the defendant. The question of law mainly concerns the interpretation of articles 361, 453, and 454 of the Civil Code. Counsel for the appellants has presented a learned brief divided into three chapters. Counsel for the appellees has countered with an equally helpful brief in which the fourteen assigned errors are reduced for purposes of arguments to four fundamental questions. It would not be profitable and it is not necessary to follow opposing counsel into all of their refinements of fact and law.

As to the facts, the findings of the trial judge should be given effect. An examination of the evidence shows that these findings are fully substantiated. Our only doubt has been as to the just value for each coconut tree now found on the land. However, everything considered, we have at last determined that we would not be justified in changing the value per tree of P2 as fixed in the trial court. With respect to the fruits received by the defendant while the land was in his possession, the finding in the trial court is correct.

With the facts as above indicated, little time need be taken to discuss the points of law. Article 361 of the Civil Code in the original Spanish text uses the word "indemnizacion." However one may speculate as to the true meaning of the term "indemnizacion" whether correctly translated as "compensation" or "indemnity," the amount of the "indemnizacion" is the amount of the expenditures mentioned in articles 453 and 454 of the Civil Code, which in the present case is the amount of the necessary and useful expenditures incurred by the defendant. Necessary expenses have been variously described by the Spanish commentators as those made for the preservation of the thing (4 Manresa's Comentarios al Codigo Civil, p. 258); as those without which the thing would deteriorate or be lost (Scaevola's Comentarios al Codigo Civil, p.408); as those that augment the income of the things upon which they are expanded (4 Manresa's Comentarios al Codigo Civil, p. 261; 8 Scaevola's Comentarios al Codigo Civil, p. 416). Among the necessary expenditures are those incurred for cultivation, production, upkeep, etc. (4 Manresa's Comentarios al Codigo Civil, p. 257). Here the plaintiffs have chosen to take the improvements introduced on the land and are disposed to pay the amount of the necessary and useful expenses incurred by the defendant. Inasmuch as the retentionist, who is not exactly a posessor in good faith with in the meaning of the law, seeks to be reimbursed for the necessary and useful expenditures, it is only just that he should account to the owners of the estate for any rents, fruits, or crops he has gathered from it.

In brief, therefore, and with special reference to the decision appealed from, the errors assigned on appeal, and the argument of counsel as addressed to the decision in the lower court and the assignment of errors, we may say that we are content to make the findings of fact and law of Judge Gloria in the lower court the findings of fact and law in the appellate court.

Based on the foregoing considerations, the judgment appealed from will be affirmed, with the costs of this instance against the appellants.

EN BANC

G.R. No. L-16736 December 22, 1921

EVARISTA ROBLES and her husband ENRIQUE MARTIN, Plaintiffs-Appellees, v. LIZARRAGA HERMANOS Defendants-Appellant.

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G.R. No. L-16661 December 22, 1921

SOCIEDAD LIZARRAGA HERMANOS, Plaintiff-Appellee, vs. EVARISTA ROBLES DE MARTIN and ENRIQUE MARTIN, Defendants-Appellants.

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G.R. No. L-16662 December 22, 1921

EVARISTA ROBLES and her husband ENRIQUE MARTIN, Plaintiff-Appellants, vs. LIZARRAGA HERMANOS and THE REGISTER OF DEEDS OF ILOILO, Defendants-Appellees.

Fisher & DeWitt and Francisco Lavides for appellants. (Case No. 16736.)

A. P. Seva for appellees.

A. P. Seva for appellants. (Case No. 16661.)

Fisher and DeWitt and Francisco Lavides for appellee.

A. P. Seva for appellants. (Case No. 16662.)

Fisher and DeWitt and Francisco Lavides for appellees.

ROMUALDEZ, J.:

Owing to the character of the facts in the three above entitled cases and the intimate connection existing between them, they were, by agreement of the parties, tried together in the court below, and on appeal this court was requested to try them at the same time, which was done, and these three cases are jointly adjudged in the present decision.chanroblesvirtualawlibrary chanrobles virtual law library

The following facts are undisputed:chanrobles virtual law library

Anastasia de la Rama died on the 17th of October, 1916, leaving six children, to wit, Magdalena, Jose, Evarista, Zacarias, Felix, and Purificacion, surnamed Robles, and some properties, among which is house No. 4 on Iznart Street in the city of Iloilo, concerning which a controversy arose which developed into the three cases now under consideration.chanroblesvirtualawlibrary chanrobles virtual law library

The children and heirs of Anastasia de la Rama entered into partnership with Lizarraga Hermanos in liquidation and settlement of their accounts, by virtue of which the competent court awarded to said partnership the properties left by the deceased, including the aforesaid house No. 4 on Iznart Street.chanroblesvirtualawlibrary chanrobles virtual law library

Evarista Robles, one of the aforesaid heirs, since before the death of her mother Anastasia de la Rama, has been with her husband occupying the aforesaid house No. 4 on Iznart Street, at the beginning, by permission of her mother, later on by the consent of her coheirs, and lastly by agreement with the partnership, Lizarraga Hermanos, to whom it had been awarded, having made some improvements on the house, the value of which is fixed at four thousand five hundred pesos (P4,500), and paying to said partnership forty pesos (P40) monthly as rent of the upper story.chanroblesvirtualawlibrary chanrobles virtual law library

On March 18, 1918, Lizarraga Hermanos notified Evarista Robles (Exhibit J) that beginning April next the rent of the upper story of the house would be raised to sixty pesos (P60) a month, and that, if she did not agree to the new rate of rent, she might vacate the house. Evarista Robles refused to pay such a new rate of rent and to vacate the house, and Lizarraga Hermanos brought suit against her for ejectment. Evarista Robles sued Lizarraga Hermanos afterwards to recover the value of the improvements, and demanded, in another action, that said value be noted on the certificate of title as an encumbrance.chanroblesvirtualawlibrary chanrobles virtual law library

Evarista Robles contends that the understanding with Lizarraga Hermanos by virtue of which she continued to occupy the house and made the improvements, was a contract whereby it was agreed to sell her the said building on Iznart Street, the deed of sale to be executed as soon as the title deeds of the property were transferred to the name of said partnership; that by virtue of this contract she remained in the occupation of the building and made the improvements; that, as one of the stipulations in the contract of sale of the estate, Evarista Robles assumed the liability of an encumbrance of fourteen thousand pesos (P14,000)on the estate and another one in favor of the Agricultural Bank and its successor, the National Bank, paying the interest thereon as well as the land tax and the premiums of the five insurance, all of which payments were made through the same firm of Lizarraga Hermanos who, as a result of the liquidation of accounts, held funds in their possession belonging to Exhibit A, B, C, F, H, and I. It should here be noted that Evarista Robles does not seek the execution of the proper instrument of evidence this contract of sale, nor the performance thereof. She only claims the cost of the improvements made at her expense and that this be recorded in the corresponding certificate of title.chanroblesvirtualawlibrary chanrobles virtual law library

While the firm of Lizarraga Hermanos does not question that fact that said improvements have been made and that their value amounts to four thousand five hundred pesos (P4,500), it denies, however, having entered into any agreement with Evarista Robles for the sale of the building in question. In deciding the case No. 16736 of this court, the court a quo found such a verbal contract of sale to have been proven not only by Exhibit A, which leads to such a conclusion, but by the oral evidence, which, in its opinion, had a preponderance in favor thereof, and by the corroborative evidence consisting in the fact of Lizarraga Hermanos having executed the deed of sale of the warehouse mentioned in the said Exhibit A. This firm questions the right of Evarista Robles to the improvements under consideration.chanroblesvirtualawlibrary chanrobles virtual law library

The fundamental questions upon which hinges the controversy in these three cases are: First, whether Evarista Robles is the owner of the aforesaid improvements and has the right to demand payment of their value (case No. 16736); second, whether she has any right to retain the building until the said value is paid to her (case No. 16661); and third, whether a note for the four thousand five hundred pesos (P4,500), the value of the above-mentioned improvements, as an encumbrance on this estate (case No. 16662), should be made on the title deeds thereof.chanroblesvirtualawlibrary chanrobles virtual law library

Regarding the controversy in the case No. 16736, attention is called to article 453 of the Civil Code which reads:

Necessary expenditures shall be refunded to every possessor, but only the possessor in good faith may retain the thing until they are repaid to him.chanroblesvirtualawlibrary chanrobles virtual law library

Useful expenditures shall be paid the possessor in good faith with the same right to retention, the person who has defeated him in his possession having the opinion of refunding the amount of such expenditures or paying him the increase in value which the thing has acquired by reason thereof.

This provision of law is in force and applies to personal as well as real property.chanroblesvirtualawlibrary chanrobles virtual law library

The expenditures incurred in these improvements were not necessary inasmuch as without them the house would have continued to stand just as before, but were useful, inasmuch as with them the house better serves the purpose for which it was intended, being used as a residence, and the improvements consisting of the addition of a dining room, kitchen, closet, and bathroom in the lower and upper stories of the house, and a stable, suitable as a coach house and dwelling, it is beyond doubt that such improvements are useful to the building. One of the chiefs of the firm of Lizarraga Hermanos, on the occasion of a luncheon in the house, on noting the improvements, could not refrain from expressing that such improvements added much to the value of the building (folio 25, stenographic notes).chanroblesvirtualawlibrary chanrobles virtual law library

Now then, was Evarista Robles a possessor in good faith when she made those improvements? Article 434 provides that "good faith is always presumed and the burden of proving bad faith on the part of the possessor rests upon the person alleging it." Lizarraga Hermanos did not allege, nor prove in the first instance the bad faith characterizing Evarista Robles' possession, who, as shown in the records and heretofore stated, began to occupy the house by permission of the former owner, her mother Anastasia de la Rama, and continued later in the occupation by the consent of her coheirs, and afterwards by considering herself the future owner of the building by virtue of the contract with the present owner, Lizarraga Hermanos. The evidence shows that said improvements were begun about the end of December, 1916, after the agreement with Lizarraga Hermanos for the sale thereof to Evarista Robles. (Folios 23, 24, 25, stenographic notes.)chanrobles virtual law library

We find that in the court below the presumption of good faith in favor of Evarista Robles' possession at the time she made the improvements on the property was neither disputed nor discussed, but on the contrary, there is positive evidence sufficient to support the conclusion that when she made the improvements on the aforesaid building she was possessing it in good faith.chanroblesvirtualawlibrary chanrobles virtual law library

If the improvements are useful and Evarista Robles' possession was in good faith, the conclusion set out in article 453 of the Civil Code, supra, is inevitable; Evarista Robles is the owner of such improvements, and entitled to reimbursement therefor, and to retain the building until the same is made.chanroblesvirtualawlibrary chanrobles virtual law library

One of the proofs establishing the fact that Evarista Robles' possession was in good faith is found in Exhibit A, which textually is as follows:

Value of house For }Evarista P16,500.00

Value of Warehouse

Evarista pays them in this way -

Balance in h/f owning from L. Hnos P1,424.35

Legacy to Evarista 500.00

Legacy to J. Robles 500.00

Legacy to Ambrosio 100.00

Credit Agricultural Bank 14,000.00

Paid by Zacarias 16,524.35

Cash balance carried forward 24.35

Liquidation

16,500.00

Severiano Lizarraga acknowledged having drawn this document and admitted it to be in his own hand-writing (folios 6-8, transcript of stenographic notes taken in case No. 16661 at the trial held December 6, 1919). Taking into consideration the explanation he gives of the contents of this exhibit, there is the inevitable conclusion

which is obviously inferred from the phrases "Value of house - of warehouse - For Evarista P16,500 - Evarista pays them in this way," that Evarista Robles was to become the owner of the house (which is the one question) and the warehouse for sixteen thousand five hundred pesos (P16,500), which sum she was to pay by assuming the liability of all the amounts enumerated in the said memorandum all the way through.chanroblesvirtualawlibrary chanrobles virtual law library

But the admissibility of this document as evidence is disputed by reference to section 335, case No. 5, of the Code of Civil Procedure, which in the English text, which is clearer on this point, reads:

SEC. 335. Agreements invalid unless made in writing. - In the following cases an agreement hereafter made shall be unenforceable (Emphasis ours) by action unless the same, or some note or memorandum thereof, be in writing, and subscribed by the party charged, or by his agent; evidence, therefore, of the agreement cannot be received without the writing, or secondary evidence of its contents:chanrobles virtual law library

No. 5. An agreement for . . . the sale of real property, etc.

It should be noted, first of all, that this rule of evidence does not go to the extent of rendering invalid any verbal contract for the sale of real property (Conlu vs. Araneta and Guanko, 15 Phil., 387), but declares inadmissible any evidence of such a contract other than the document itself of the sale or some memorandum signed by the party charged, in so far as the object of the action instituted is to enforce performance of said contract of sale. But we are not dealing with that phase in any of the cases now before us. This document was introduced only to reinforce the proofs relative to the good faith characterizing the possession of Evarista Robles when she made the improvements in question, to the effect that if she made then, it was because she entertained the well-founded, may certain belief that she was making them on a building that was to become her property by virtue of the verbal contract of sale.chanroblesvirtualawlibrary chanrobles virtual law library

In the action wherein Evarista Robles and her husband ask that they be adjudged owners of these improvements and that their value be paid to them, Lizarraga Hermanos filed a general denied and a counterclaim and cross-complaint for nineteen thousand pesos (P19,000) as compensation for damages alleged to have been sustained by them on account of their inability to sell the house and the warehouse, due to the fact that the buyer imposed the condition that the house should be vacated, which the plaintiffs refused to do.chanroblesvirtualawlibrary chanrobles virtual law library

It is a fact that the value of the improvements in question has not as yet been paid by Lizarraga Hermanos. Wherefore, if Evarista Robles and her husband are entitled to retain the building until the value of such improvements is paid them, Lizarraga Hermanos have not yet any right to oust them from the building, nor, therefore, to be indemnified for any damages caused by the refusal of the plaintiffs found on their legitimate rights.chanroblesvirtualawlibrary chanrobles virtual law library

In regard to the ejectment sought in the case No. 16661, the suit was brought by Lizarraga Hermanos in the justice of the peace court of Iloilo on May 6, 1918, based on the failure of Evarista Robles and her husband to pay the rent of the upper story of the house in question for the month of April of that year, amounting to sixty pesos (P60), and on the refusal of said spouses to quit the building. These spouses in their answer alleged as special defense that they had never been the tenants of Lizarraga Hermanos until November, 1917, when they became so "under the special circumstances" under which the plaintiff partnership sold the building, whereon they later made, with the latter's consent, improvements amounting to four thousand five hundred pesos (P4,500), setting out the other stipulations and conditions hereinabove stated, which were incorporated into the contract of sale, and prayed, under their counterclaim, that Lizarraga Hermanos be sentenced to pay the sum of four thousand five hundred pesos (P4,500), the value of the improvements referred to, and under their cross-complaint, that said partnership be ordered to pay then thousand pesos (P10,000) as compensation for damages alleged to have been sustained by the aforesaid spouses due to the aforesaid partnership's act, praying lastly, in view of the questions raised, that the case be regarded not as one of unlawful detainer, but for the recovery of title to real property, and that the court of the justice of the peace abstain from taking cognizance thereof for want of jurisdiction.chanroblesvirtualawlibrary chanrobles virtual law library

The case having been appealed to the Court of First Instance, these allegations were reproduced.chanroblesvirtualawlibrary chanrobles virtual law library

In the Court of First Instance Lizarraga Hermanos demurred to this counterclaim and cross-complaint, and the demurrer was sustained by the court in its decision on the merits of the case, whereby the defendants are sentenced to return to Lizarraga Hermanos the possession of the building, to pay the rents thereof due from April, 1918, until they vacate the house, at the rate of sixty pesos (P60) per month, and the costs.chanroblesvirtualawlibrary chanrobles virtual law library

From this judgment Evarista Robles and her husband have appealed, assigning as errors of the court a quo in finding the Lizarraga Hermanos were entitled to bring action for unlawful detainer, and ordering them to return the possession of the building.chanroblesvirtualawlibrary chanrobles virtual law library

If Evarista Robles and her husband were mere lessees of this building, the plaintiff's action for unlawful detainer is obvious and must prosper. But, were Evarista Robles and her husband mere lessees?chanrobles virtual law library

As above stated, we hold that there existed a contract of sale of this building executed by Lizarraga Hermanos in favor of Evarista Robles about November, 1916, the performance of which is not, however, sought to be enforced, nor would it be enforceable if the evidence offered in the action instituted for the purpose be not the document itself of the sale, or a memorandum thereof, signed by the party bound by the contract and required in the action to fulfill it, and objection be made to said evidence, as was done here.chanroblesvirtualawlibrary chanrobles virtual law library

The possession of these spouses was in no way begun by virtue of any lease whatever, since it is not disputed, and is a proven fact, that they came to occupy the building by permission of the mother of Evarista Robles. Upon said mother's death, the continued to occupy the property by the consent of the coheirs. After the assignment of the property of Lizarraga Hermanos was concluded, but before the title deeds were transferred to the name of this partnership, an agreement was made

for the sale of the building to Evarista Robles and her husband, the latter agreeing in the meantime to pay to Lizarraga Hermanos a certain sum per month - forty pesos (P40) - by way of compensation for the occupation of the building until the execution of the deed of sale in favor of the occupants.

Considering abstractly the naked fact that these spouses occupied the house by paying a certain sum for its occupation, it would seem that this is indeed a case of lease. But such was not the contract. It was simply the sense of justice of the parties that led them to make the stipulation that, while the conveyance of the building was being carried into effect in due form, the future owners should pay a certain sum for its possession. This peculiar situation continued for all the time in which the said spouses made and completed the improvements in question until Lizarraga Hermanos changed their resolution to sell the building to Evarista Robles and her husband. But then all the improvements in question had already been made, and when these spouses were requested to vacate the building, they answered and gave it to understand, that they would do so as soon as the value of the improvements was paid to them. Up to that time they were not lessees strictly speaking. Did they become so afterwards? Neither; for since that moment they have been as are at present, in possession of the building by virtue of the right that they had, and do have, to retain it until the value of the improvements is paid to them. And it was after these spouses had manifested their intention not to leave the building until they were reimbursed for the improvements made thereon that this action for unlawful detainer was instituted.

Before these improvements were made, or before these spouses demanded payment of their value, that is, while the possession was partly based on the stipulation with color of lease, an action for unlawful detainer might have, in a sense, been justifiable, though not entirely maintainable, owing to the fact that such possession was based primarily on the well-founded belief of the occupants that they were to become the owners of the house in their possession, that the monthly payment being a provisional arrangement, an incidental and peremptory stipulation, while the solemn formalities of the conveyance were being complied with.

But after the improvements had been made and Lizarraga Hermanos had manifested their resolution to rescind the contract of sale and not to pay for them, then the possession of the aforesaid spouses lost all color of lease, and turns out to be

possession based only upon the latter's right to retain the building. And these were all the attending circumstances of said possession when the action for unlawful detainer was commenced.

We are, therefore, of opinion, and so hold, that Lizarraga Hermanos were not, and are not, entitled to maintain any action for unlawful detainer so long as they do not pay the value of the improvements in question.

We will now take up the case No. 16662 wherein Evarista Robles and her husband ask that these improvements be noted on the proper certificate of title as an encumbrance.

These spouses pray in their complaint for the cancellation of the said certificate of title, which is the transfer certificate No. 526, a substitute of the original No. 32 of the office of the register of deeds of Iloilo.

If the object of these spouses is, as it cannot be otherwise, to have such an encumbrance noted, the cancellation is not necessary, and, of course, not justifiable. At any rate, the fraud alleged in this last action to have been committed precisely to secure such a transfer certificate cannot be held proven.

But it having been decided that these spouses are entitled to demand payment of the value of the improvements and to retain the building until such value is paid them, it only remains for us to determine whether this right of retention has the character of a real right to be regarded as one of the encumbrances referred to in section 70 and the following sections of the Land Registration Act.

It being a burden on the building to the extent of being inseparably attached to the possession thereof, this right of retention must necessarily be a real one. If so, as we regard, and find, it to be, it is but just that such an encumbrance should be noted on

the transfer certificate No. 526 issued by the register of deeds of Iloilo in favor of Lizarraga Hermanos, or on any substitute thereof.

As a consequence of all the foregoing, we affirm the judgments appealed from in the three cases in so far as they are in harmony with the conclusions herein set out, and reverse them in so far as they are in conflict therewith, and it is hereby adjudged and decreed:chanrobles virtual law library

First. That Lizarraga Hermanos pay to the spouses Evarista Robles and Enrique Martin the sum of four thousand five hundred pesos (P4,500), the value of the improvements referred to in these cases, with right on the part of said spouses to retain the building in question until the payment hereby ordered is made.chanroblesvirtualawlibrary chanrobles virtual law library

Second. That said spouses Evarista Robles and Enrique Martin vacate the aforesaid building immediately after the receipt, or the legal tender, of the payment hereby decreed.chanroblesvirtualawlibrary chanrobles virtual law library

Third. That the said spouses Evarista Robles and Enrique Martin pay to Lizarraga Hermanos a compensation for the occupation of the building at the rate of forty pesos (P40) a month, beginning with the month of April, 1918, until they vacate the aforesaid building as it is ordered herein.chanroblesvirtualawlibrary chanrobles virtual law library

Fourth. That upon payment of his lawful fees, the register of deeds note said right of retention on the back of the transfer certificate No. 526 issued in favor of Lizarraga Hermanos, or of any other certificate standing in lieu thereof, concerning the said building, which note will remain in force until the payment of the aforesaid improvements is made as above ordered. Without pronouncement as to the costs in this instance, so ordered.

G.R. No. 126000. October 7, 1998

METROPOLITAN WATERWORKS AND SEWERAGE SYSTEM (MWSS), Petitioner, v. COURT OF APPEALS, HON. PERCIVAL LOPEZ, AYALA CORPORATION and AYALA LAND, INC., Respondents.

G.R. No. 128520. October 7, 1998

METROPOLITAN WATERWORKS AND SEWERAGE SYSTEM, Petitioner, v. HON. PERCIVAL MANDAP LOPEZ, CAPITOL HILLS GOLF AND COUNTRY CLUB INC., SILHOUETTE TRADING CORPORATION, and PABLO ROMAN JR., Respondents.

D E C I S I O N

MARTINEZ, J.:

These are consolidated petitions for review emanating from Civil Case No. Q-93-15266 of the Regional Trial Court of Quezon City, Branch 78, entitled "Metropolitan Waterworks and Sewerage System (hereafter MWSS) vs. Capitol Hills Golf & Country Club Inc. (hereafter, CHGCCI), STC (hereafter, SILHOUETTE), Ayala Corporation, Ayala Land, Inc.(hereafter AYALA) Pablo Roman, Jr., Josefino Cenizal, Jose A. Roxas, Jesus Hipolito, Alfredo Juinio, National Treasurer of the Philippines and the Register of Deeds of Quezon City."

From the voluminous pleadings and other documents submitted by the parties and their divergent styles in the presentation of the facts, the basic antecedents attendant herein are as follows:

Sometime in 1965, petitioner MWSS (then known as NAWASA) leased around one hundred twenty eight (128) hectares of its land (hereafter, subject property) to respondent CHGCCI (formerly the International Sports Development Corporation) for twenty five (25) years and renewable for another fifteen (15) years or until the year 2005, with the stipulation allowing the latter to exercise a right of first refusal should the subject property be made open for sale. The terms and conditions of respondent CHGCCI's purchase thereof shall nonetheless be subject to presidential approval.

Pursuant to Letter of Instruction (LOI) No. 440 issued on July 29, 1976 by then President Ferdinand E. Marcos directing petitioner MWSS to negotiate the cancellation of the MWSS-CHGCCI lease agreement for the disposition of the subject property, Oscar Ilustre, then General Manager of petitioner MWSS, sometime in November of 1980 informed respondent CHGCCI, through its president herein respondent Pablo Roman, Jr., of its preferential right to buy the subject property which was up for sale. Valuadation thereof was to be made by an appraisal company of petitioner MWSS'choice, the Asian Appraisal Co., Inc. which, on January 30, 1981, pegged a fair market value of P40.00 per square meter or a total of P53,800,000.00 for the subject property.

Upon being informed that petitioner MWSS and respondent CHGCCI had already agreed in principle on the purchase of the subject property, President Marcos expressed his approval of the sale as shown in his marginal note on the letter sent by respondents Jose Roxas and Pablo Roman, Jr. dated December 20, 1982.

The Board of Trustees of petitioner MWSS thereafter passed Resolution 36-83, approving the sale of the subject property in favor of respondent SILHOUETTE, as assignee of respondent CHGCCI, at the appraised value given by Asian Appraisal Co., Inc. Said Board Resolution reads:

"NOW, THEREFORE, BE IT RESOLVED, as it is hereby resolved, that in accordance with Section 3, Par. (g) of the MWSS Charter and subject to the approval of the President of the Philippines, the sale of a parcel of land located in Balara, Quezon City, covered by TCT No. 36069 of the Registry of Deeds of Quezon City,

containing an area of ONE HUNDRED TWENTY SEVEN (127.313) hectares more or less, which is the remaining portion of the area under lease after segregating a BUFFER ZONE already surveyed along the undeveloped area near the treatment plant and the developed portion of the CHGCCI golf course, to SILHOUETTE TRADING CORPORATION as Assignee of Capitol Hills Golf & Country Club, Inc., at FORTY (P40.00) PESOS per square meter, be and is hereby approved.

"BE IT RESOLVED FURTHER, that the General Manager be authorized, as he is hereby authorized to sign for and in behalf of the MWSS the contract papers and other pertinent documents relative thereto."

The MWSS-SILHOUETTE sales agreement eventually pushed through. Per the Agreement dated May 11, 1983 covering said purchase, the total price for the subject property is P50,925,200, P25 Million of which was to be paid upon President Marcos' approval of the contract and the balance to be paid within one (1) year from the transfer of the title to respondent SILHOUETTE as vendee with interest at 12% per annum. The balance was also secured by an irrevocable letter of credit. A Supplemental Agreement was forged between petitioner MWSS and respondent SILHOUETTE on August 11, 1983 to accurately identify the subject property.

Subsequently, respondent SILHOUETTE, under a deed of sale dated July 26, 1984, sold to respondent AYALA about sixty-seven (67) hectares of the subject property at P110.00 per square meter. Of the total price of around P74 Million, P25 Million was to be paid by respondent AYALA directly to petitioner MWSS for respondent SILHOUETTE's account and P2 Million directly to respondent SILHOUETTE. P11,600,000 was to be paid upon the issuance of title in favor of respondent AYALA, and the remaining balance to be payable within one (1) year with 12% per annum interest.

Respondent AYALA developed the land it purchased into a prime residential area now known as the Ayala Heights Subdivision.

Almost a decade later, petitioner MWSS on March 26, 1993 filed an action against all herein named respondents before the Regional Trial Court of Quezon City seeking for the declaration of nullity of the MWSS-SILHOUETTE sales agreement and all subsequent conveyances involving the subject property, and for the recovery thereof with damages.

Respondent AYALA filed its answer pleading the affirmative defenses of (1) prescription, (2) laches, (3) waiver/estoppel/ratification, (4) no cause of action, (5) non-joinder of indispensable parties, and (6) non-jurisdiction of the court for non-specification of amount of damages sought.

On June 10, 1993; the trial court issued an Order dismissing the complaint of petitioner MWSS on grounds of prescription, laches, estoppel and non-joinder of indispensable parties.

Petitioner MWSS's motion for reconsideration of such Order was denied, forcing it to seek relief from the respondent Court where its appeal was docketed as CA-G.R. CV No. 50654. It assigned as errors the following:

"I. The court a quo committed manifest serious error and gravely abused its discretion when it ruled that plaintiff's cause of action is for annulment of contract which has already prescribed in the face of the clear and unequivocal recitation of six causes of action in the complaint, none of which is for annulment.

II. The lower court erred and exceeded its jurisdiction when, contrary to the rules of court and jurisprudence, it treated and considered the affirmative defenses of Ayalas - defenses not categorized by the rules as grounds for a motion to dismiss - as grounds of a motion to dismiss which justify the dismissal of the complaint.

III. The lower court abused its discretion and exceeded its jurisdiction when it favorably acted on Ayala's motion for preliminary hearing of affirmative defenses

(motion to dismiss) by dismissing the complaint without conducting a hearing or otherwise requiring the Ayalas to present evidence on the factual moorings of their motion.

IV. The lower court acted without jurisdiction and committed manifest error when it resolved factual issues and made findings and conclusions of facts all in favor of the Ayalas in the absence of any evidence presented by the parties.

V. The court a quo erred when, contrary to the rules and jurisprudence, it prematurely ruled that laches and estoppel bar the complaint as against Ayalas or that otherwise the alleged failure to implead indispensable parties dictates the dismissal of the complaint."

In the meantime, respondents CHGCCI and Roman filed their own motions to hear their affirmative defenses which were identical to those adduced by respondent AYALA. For its part, respondent SILHOUETTE filed a similarly grounded motion to dismiss.

Ruling upon these motions, the trial court issued an order dated December 13, 1993 denying all of them. The motions for reconsideration of the respondents concerned met a similar fate in the May 9, 1994 Order of the trial court. They thus filed special civil actions for certiorari before the respondent Court which were docketed as CA-G.R. SP Nos. 34605, 34718 and 35065 and thereafter consolidated with CA-G.R. CV No. 50694 for disposition.

Respondent court, on August 19, 1996, rendered the assailed decision, the dispositive portion of which reads:

"WHEREFORE, judgment is rendered:

1.) DENYING the petitions for writ of certiorari for lack of merit; and

2.) AFFIRMING the order of the lower court dismissing the complaint against the appellees Ayalas.

"SO ORDERED."

Petitioner MWSS appealed to this Court that portion of the respondent Court's decision affirming the trial court's dismissal of its complaint against respondent AYALA, docketed as G.R. No. 126000. The portion dismissing the petition for certiorari (CA-GR Nos. 34605, 347718 and 35065) of respondents Roman, CHGCCI and SILHOUETTE, however, became final and executory for their failure to appeal therefrom. Nonetheless, these respondents were able to thereafter file before the trial court another motion to dismiss grounded, again, on prescription which the trial court in an Order of October 1996 granted.

This prompted petitioner MWSS to file another petition for review of said trial court Order before this Court and docketed as G.R. No. 128520. On motion of petitioner MWSS, this Court in a Resolution dated December 3, 1997 directed the consolidation of G.R. Nos. 126000 and 128520.

The errors assigned by petitioner MWSS in CA-GR No. 126000 are:

I

In holding, per the questioned Decision dated 19 August 1996, that plaintiffs cause of action is for annulment of contract which has already prescribed in the face of the clear and unequivocal recitation of six causes of action in the complaint, none of which is for annulment and in effect affirming the dismissal by the respondent judge of the complaint against respondent Ayalas. This conclusion of respondent CH is, with due respect, manifestly mistaken and legally absurd.

II

In failing to consider that the complaint recited six alternative causes of action, such that the insufficiency of one cause - assuming there is such insufficiency - does not render insufficient the other causes and the complaint itself. The contrary ruling in this regard by respondent CA is founded entirely on speculation and conjecture and is constitutive of grave abuse of discretion.

In G.R. No. 128520, petitioner MWSS avers that:

I

The court of origin erred in belatedly granting respondent's motions to dismiss which are but a rehash, a disqualification, of their earlier motion for preliminary hearing of affirmative defense / motion to dismiss. These previous motions were denied by the lower court, which denial the respondents raised to the Court of Appeals by way of perfection for certiorari, which petitions in turn were dismissed for lack of merit by the latter court. The correctness and validity of the lower court's previous orders denying movant's motion for preliminary hearing of affirmative defense/motion to dismiss has accordingly been settled already with finality and cannot be disturbed or challenged anew at this instance of defendant's new but similarly anchored motions to dismiss, without committing procedural heresy causative of miscarriage of justice.

II

The lower court erred in not implementing correctly the decision of the Court of Appeal. After all, respondents' own petitions for certiorari questioning the earlier denial of their motion for preliminary hearing of affirmative defense / motion to dismiss were dismissed by the Court of Appeal, in the process of affirming the validity and legality of such denial by the court a quo. The dismissal of the respondents' petitions are embodied in the dispositive portion of the said decision of the Court of Appeals dated 19 August 1996. The lower court cannot choose to disregard such decretal aspect of the decision and instead implement an obiter dictum.

III.

That part of the decision of the decision of the Court of Appeals resolving the issue of prescription attendant to the appeal of plaintiff against the Ayalas, has been appealed by plaintiff to the Supreme Court by way of a petition for review on certiorari. Not yet being final and executory, the lower court erred in making capital out of the same to dismiss the case against the other defendants, who are the respondents herein.

IV.

The lower court erred in holding, per the questioned orders, that plaintiff's cause of action is for annulment of contract which has already prescribed in the face of the clear and unequivocal recitation of six causes of action in the complaint, none of which is for annulment. This conclusion of public respondent is manifestly mistaken and legally absurd.

V.

The court a quo erred in failing to consider the complaint recites six alternative causes of action, such that the insufficiency of one cause - assuming there is such insufficiency - does not render insufficient the other cause and the complaint itself. The contrary ruling in this regard by public respondent is founded entirely on speculation and conjecture and is constitutive of grave abuse of discretion.

In disposing of the instant petition, this Court shall dwell on the more crucial upon which the trial court and respondent based their respective rulings unfavorable to petitioner MWSS; i.e., prescription, laches, estoppel/ratification and non-joinder of indispensable parties.

RE: Prescription

Petitioner MWSS claims as erroneous both the lower courts' uniform finding that the action has prescribed, arguing that its complaint is one to declare the MWSS-

SILHOUETTE sale, and all subsequent conveyances of the subject property, void which is imprescriptible.

We disagree.

The very allegations in petitioner MWSS' complaint show that the subject property was sold through contracts which, at most, can be considered only as voidable, and not void. Paragraph 12 of the complaint reads in part:

"12. xxx.

The plaintiff has been in continuous, peaceful and public possession and ownership of the afore-described properties, the title (TCT No. [36069] 199170) thereto, including its derivative titles TCT Nos. 213872 and 307655, having been duly issued in its name. However, as a result of fraudulent and illegal acts of herein defendants, as described in the paragraphs hereinafter following, the original of said title/s were cancelled and in lieu thereof new titles were issued to corporate defendant/s covering subject 127.9271 hectares. xxx."

Paragraph 34 alleges:

"34. Sometime thereafter, clearly influenced by the premature if not questionable approval by Mr. Marcos of a non-existent agreement, and despite full knowledge that both the assessed and market value of subject property were much much higher, the MWSS Board of Trusties illegally passed an undated resolution ( 'Resolution No. 36-83' ), approving the 'sale' of the property to CHGCCI at P40/sq.m. and illegally authorizing General Manager Ilustre to sign the covering contract.

This 'resolution' was signed by Messrs. Jesus Hipolito as Chairman; Oscar Ilustre, as Vice Chairman; Aflredo Junio, as Member; and Silvestre Payoyo, as Member; xxx"

Paragraph 53 states:

" 53. Defendants Pablo Roman, Jr., Josefino Cenizal, and Jose Roxas as well as defendant corporations (CHGCCI, STC and Ayala) who acted through the former and their other principal officers, knowingly inducedand caused then President Marcos and the former officers of plaintiff MWSS to enter into the aforesaid undated 'Agreement' which are manifestly and grossly disadvantageous to the government and which gave the same defendants unwarranted benefits, i.e., the ownership and dominion of the afore-described property of plaintiff."

Paragraph 54 avers:

"54. Defendants Jesus Hipolito and Alfredo Junio, then public officers, together with the other public officers who are now deceased (Ferdinand Marcos, Oscar liustre, and Sivestre Payoyo) knowingly allowed themselves to be persuaded, induced and influenced to approve and/or enter into the aforementioned 'Agreements' which are grossly and manifestly disadvantageous to the MWSS/government and which bestowed upon the other defendants the unwarranted benefit/ownership of subject property."

The three elements of a contract - consent, the object, and the cause of obligation11 are all present. It cannot be otherwise argued that the contract had for its object the sale of the property and the cause or consideration thereof was the price to be paid (on the part of respondents CHGCCI/SILHOUETTE) and the land to be sold (on the part of petitioner MWSS). Likewise, petitioner MWSS' consent to the May 11, 1983 and August 11, 1983 Agreements is patent on the face of these documents and on its own resolution No. 36-83.

As noted by both lower courts, petitioner MWSS admits that it consented to the sale of the property, with the qualification that such consent was allegedly unduly influenced by the President Marcos. Taking such allegation to be hypothetically true, such would have resulted in only voidable contracts because all three elements of a contract, still obtained nonetheless. The alleged vitiation of MWSS' consent did not make the sale null and void ab initio. Thus, "a contract where consent is given through mistake, violence, intimidation, undue influence or fraud, is voidable."2 Contracts "where consent is vitiated by mistake, violence, intimidation, undue influence or fraud" are voidable or annullable.3 These are not void as -

"Concepts of Voidable Contracts. - Voidable or anullable contracts are existent, valid, and binding, although they can be annulled because of want of capacity or vitiated consent of the one of the parties, but before annulment, they are effective and obligatory between parties. Hence, it is valid until it is set aside and its validity may be assailed only in an action for that purpose. They can be confirmed or ratified."

As the contracts were voidable at the most, the four year prescriptive period under Art. 1391 of the New Civil Code will apply. This article provides that the prescriptive period shall begin in the cases of intimidation, violence or undue influence, from the time the defect of the consent ceases", and "in case of mistake or fraud, from the time of the discovery of the same time".

Hypothetically admitting that President Marcos unduly influenced the sale, the prescriptive period to annul the same would have begun on February 26, 1986 which this Court takes judicial notice of as the date President Marcos was deposed. Prescription would have set in by February 26, 1990 or more than three years before petitioner MWSS' complaint was filed.

However, if petitioner MWSS' consent was vitiated by fraud, then the prescriptive period commenced upon discovery. Discovery commenced from the date of the execution of the sale documents as petitioner was party thereto. At the least, discovery is deemed to have taken place on the date of registration of the deeds with the register of Deeds as registration is constructive notice to the world.5 Given these two principles on discovery, the prescriptive period commenced in 1983 as petitioner MWSS actually knew of the sale, or, in 1984 when the agreements were registered and titles thereafter were issued to respondent SILHOUETTE. At the latest, the action would have prescribed by 1988, or about five years before the complaint was instituted. Thus, in Aznar vs. Bernard6, this Court held that:

"Lastly, even assuming that the petitioners had indeed failed to raise the affirmative defense of prescription in a motion to dismiss or in an appropriate pleading (answer, or amended or supplemental answer) and an amendment would no longer be feasible, still prescription, if apparent on the face of the complaint, may be favorably considered. In the case at bar, the private respondents admit in their complaint that the contract or real estate mortgage which they alleged to be fraudulent and which had been foreclosed, giving rise to this controversy with the petitioners, was executed on July 17, 1978, or more than eight long years before the commencement of the suit in the court a quo, on September 15, 1986. And an action declare a contract null and void on the ground of fraud must be instituted within four years.

Extinctive prescription is thus apparent on the face of the complaint itself as resolved by the Court."

Petitioner MWSS further contends that prescription does not apply as its complaint prayed not for the nullification of voidable contracts but for the declaration of nullity of void ab initio contracts which are imprescriptible. This is incorrect, as the prayers in a complaint are not determinative of what legal principles will operate based on the factual allegations of the complaint. And these factual allegations, assuming their truth, show that MWSS consented to the sale, only that such consent was purportedly vitiated by undue influence or fraud. Therefore, the rules on prescription will operate. Even if petitioner MWSS asked for the declaration of nullity of these contracts, the prayers will not be controlling as only the factual allegations in the complaint determine relief. "(I)t is the material allegations of fact in the complaint, not the legal conclusion made therein or the prayer that determines the relief to which the plaintiff is entitled"7. Respondent court is thus correct in holding that:

"xxx xxx xxx

The totality then of those allegations in the complaint makes up a case of a voidable contract of sale - not a void one. The determinative allegations are those that point out that the consent of MWSS in the Agreement of Sale was vitiated either by fraud or undue for the declaration of nullity of the said contract because the Complaint says no. Basic is the rule however that it is the body and not the caption nor the prayer of the Complaint that determines the nature of the action. True, the caption and prayer of the Complaint state that the action is for a judicial declaration of nullity of a contract, but alas, as already pointed out, its body unmistakably alleges only a voidable contract. One cannot change the real nature of an action adopting a different nomenclature any more than one can change gin into whisky by just replacing the label on the bottle with that of the latter's and calling it whisky. No matter what, the liquid inside remains gin.

xxx xxx xxx."

Petitioner MWSS also theorizes that the May 11, 1983 MWSS-SILHOUETTE Agreement and the August 11, 1983 Supplemental Agreement were void ab initio because the "initial agreement" from which these agreements emanated was executed "without the knowledge, much less the approval" of petitioner MWSS through its Board of Trustees. The "initial agreement" referred to in petitioner MWSS' argument is the December 20, 1982 letter of respondents Roxas and Roman, Jr. to President Marcos where the authors mentioned that they had reached an agreement with petitioner's then general manager, Mr. Oscar Ilustre. Petitioner MWSS maintains that Mr. Ilustre was not authorized to enter into such "initial agreement", contrary to Art.

1874 of the New Civil Code which provides that "when a sale of a parcel of land or any interest therein is through an agent, the authority of the latter shall be in writing otherwise the sale shall be void." It then concludes that since its Res. No. 36-83 and the May 11, 1983 and August 11, 1983 Agreements are "fruits" of the "initial agreement" (for which Mr. Ilustre was allegedly not authorized in writing), all of these would have been also void under Art. 1422 of NCC, which provides that a contract which is the direct result of a pronounced illegal contract, is also void and inexistent."

The argument does not impress. The "initial agreement" reflected in the December 20, 1982 letter of respondent Roman to Pres. Marcos, is not a sale under Art. 1874. Since the nature of the "initial agreement" is crucial, we quote8 the letter in full:

"We respectfully approach Your Excellency in all humility and in the spirit of the Yuletide Season. We have explained to Your Excellency when you allowed us the honor to see you, that the negotiations with MWSS which the late Pablo R. Roman initiated way back in 1975, with your kind approval, will finally be concluded.

We have agreed in principle with Mr. Oscar llustre on the terms of the sale as evidenced by the following:

1 . Our written agreement to hire Asian Appraisal Company to appraise the entire leased area which would then be the basis for the negotiations of the purchase price of the property; and

2. Our exchange of communications wherein MWSS made a counter-offer and our acceptance of the counter-offer.

However, we were informed by Mr. Ilustre that only written instruction from Your Excellency will allow us to finally sign the Agreement.

In sum, our Agreement is for the purchase price of FIFTY-SEVEN MILLION TWO-HUNDRED-FORTY THOUSAND PESOS (P 57,240,000) for the entire leased area

of 135 hectares; TWENTY-SEVEN MILLION PESOS (P27,000,000) payable upon approval of the contract by Your Excellency and the balance of THIRTY MILLION TWO HUNDRED FORTY THOUSAND PESOS (P 30,240,000) after one (1) year inclusive of a 12% interest.

We believe that this arrangement is fair and equitable to both parties considering that the value of the land was appraised by a reputable company and independent appraisal company jointly commissioned by both parties and considering further that Capitol Hills has still a 23-year lien on the property by virtue of its existing lease contract with MWSS.

We humbly seek your instruction, Your Excellency and please accept our families' sincere wish for a Merry Christmas and a Happy New Year to you and the First Family."

The foregoing does not document a sale, but at most, only the conditions proposed by respondent Roman to enter into one. By the terms thereof, it refers only to an "agreement in principle". Reflecting a future consummation, the letter mentions "negotiations with MWSS (which) with your (Marcos') kind approval, will finally be concluded". It must likewise be noted that presidential approval had yet to be obtained. Thus, the "initial agreement" was not a sale as it did not in any way transfer ownership over the property. The proposed terms had yet to be approval by the President and the agreement in principle still had to be formalized in a deed of sale. Written authority as is required under Art. 1834 of the New Civil Code, was not needed at the point of the "initial agreement".

Verily, the principle on prescription of actions is designed to cover situations such as the case at bar, where there have been a series of transfers to innocent purchasers for value. To set aside these transactions only to accommodate a party who has slept on his rights is anathema to good order.9

RE: Laches

Even assuming, for argument's sake, that the allegations in the complaint establish the absolute nullity of the assailed contracts an hence imprescriptible, the complaint

can still be dismissed on the ground of laches which is different from prescription. This Court, as early as 1966, has distinguished these two concepts in this wise:

"x x x (T)he defense of laches applies independently of prescription. Laches is different from the statute of limitations. Prescription is concerned with the fact of delay, whereas laches is concerned with the effect of delay. Prescription is a matter of time; laches is principally a question of inequity of permitting a claim to be enforced, this inequity being founded on some change in the condition of the property or the relation of the parties. Prescription is statutory; laches is not. Laches applies in inequity, whereas prescription applies at law. Prescription is based on fixed-time; laches is not."10

Thus, the prevailing doctrine is that the right to have a contract declared void ab initio may be barred by laches although not barred by prescription.

It has, for all its elements are present, viz:

(1) conduct on the part of the defendant, or one under whom he claims, giving rise to the situation that led to the complaint and for which the complaint seeks a remedy;

(2) delay in asserting the complainant's rights, having had knowledge or notice of the defendant's conduct and having been afforded an opportunity to institute a suit;

(3) lack of knowledge or notice on the part of the defendant that the complainant would assert the right on which he bases his suit; and

(4) injury or prejudice to the defendant in the event relief is accorded to the complainant, or the suit is not held barred.12

There is no question on the presence of the first element. The main thrust of petitioner MWSS's complaint is to bring to the fore what it claims as fraudulent and/or illegal acts of the respondents in the acquisition of the subject property.

The second element of delay is evident from the fact that petitions tarried for almost ten (10) years from the conclusion of the sale sometime in 1983 before formally laying claim to the subject property in 1993.

The third element is present as can be deduced from the allegations in the complaint that petitioner MWSS (a) demanded for downpayment for no less than three times; (b) accepted downpayment for P25 Million; and (c) accepted a letter of credit for the balance. The pertinent paragraphs in the complaint thus read:

"38. In a letter dated September 19, 1983, for failure of CHGCCI to pay on time, Mr. Ilustre demanded payment of the downpayment of P25 Million which was due as of 18 April 1983. A copy of this letter is hereto attached as Annex 'X';

"39. Again, in a letter dated February 7, 1984, then MWSS Acting General Manager Aber Canlas demanded payment from CHGCCI of the purchase price long overdue. A copy of this letter is hereto attached as Annex 'Y';

"40. Likewise, in a letter dated March 14, 1984, Mr. Canlas again demanded from CHGCCI payment of the price. A copy of this demand letter is hereto attached as Annex 'Z';

"41. Thereafter, in a letter dated July 27, 1984, another entity, defendant Ayala Corporation, through SVP Renato de la Fuente, paid with a check the long overdue downpayment of P25,000,000.00 of STC/CHGCCI. Likewise a domestic stand-by letter of credit for the balance was issued in favor of MWSS; Copies of the said letter, check and letter of credit are hereto attached as Annexes 'AA', 'BB', and 'CC', respectively."

Under these facts supplied by petitioner MWSS itself, respondents have every good reason to believe that petitioner was honoring the validity of the conveyances of the subject property, and that the sudden institution of the complaint in 1993 alleging the nullity of such conveyances was surely an unexpected turn of events for respondents. Hence, petitioner MWSS cannot escape the effect of laches.

RE: Ratification

Pertinent to this issue is the claim of petitioner MWSS that Mr. Ilustre was never given the authority by its Board of Trustees to enter into the "initial agreement" of December 20, 1982 and therefore, the sale of the subject property is invalid.

Petitioner MWSS misses the point. The perceived infirmity in the "initial agreement" can be cured by ratification. So settled is the precept that ratification can be made by the corporate board either expressly or impliedly. Implied ratification may take

various forms - like silence or acquiescence; by acts showing approval or adoption of the contract; or by acceptance and retention of benefits flowing therefrom.13 Both modes of ratification have been made in this case.

There was express ratification made by the Board of petitioner MWSS when it passed Resolution No. 36-83 approving the sale of the subject property to respondent SILHOUETTE and authorizing Mr. Ilustre, as General Manager, "to sign for and in behalf of the MWSS the contract papers and other pertinent documents relative thereto." Implied ratification by "silence or acquiescence" is revealed from the acts of petitioner MWSS in (a) sending three (3) demand letters for the payment of the purchase price, (b) accepting P25 Million as downpayment, and (c) accepting a letter of credit for the balance, as hereinbefore mentioned. It may well be pointed out also that nowhere in petitioner MWSS' complaint is it alleged that it returned the amounts, or any part thereof, covering the purchase price to any of the respondents-vendees at any point in time. This is only indicative of petitioner MWSS' acceptance and retention of benefits flowing from the sales transactions which is another form of implied ratification.

RE: Non-joinder of indispensable parties

There is no denying that petitioner MWSS' action against herein respondents for the recovery of the subject property now converted into a prime residential subdivision would ultimately affect the proprietary rights of the many lot owners to whom the land has already been parceled out. They should have been included in the suit as parties-defendants, for. "it is well established that owners of property over which reconveyance is asserted are indispensable parties without whom no relief is available and without whom the court can render no valid judgment."14 Being indispensable parties, the absence of these lot-owners in the suit renders all subsequent actions of the trial court null and void for want of authority to act, not only as to the absent parties but even as to those present.15 Thus, when indispensable parties are not before the court, the action should be dismissed.16

WHEREFORE, in view of the foregoing, the consolidated petitions are hereby DENIED.

SO ORDERED

G.R. No. L-2939 August 29, 1950

PLACIDO NOCEDA, vs. MARCOS ESCOBAR

Plaintiff-appellant was the owner of the motor cutter named "N.S. del Rosario I." which was registered in his name in the office of the Insular Collector of Customs, Manila, on January 19, 1939, and which, according to said plaintiff, had cost him about P 16,000. He used it to transport passengers and cargo between Albay and Catanduanes. On February 11, 1942, that is to say, during the enemy occupation of the Bicol provinces, the Japanese armed forces seized the said vessel and utilized it during the progress of the war in transporting troops, ammunition, and supplies.

After the liberation of the Philippines from the Japanese, the United States armed forces found said vessel in Cebu and, on May 17, 1945, thru the PCAU, sold it as enemy property to one Vicente Asuncion for P100. The bill of sale executed by Lt. Col. Pete W. Scott, "C.O. PCAU 15, Agent, United States Government," described said vessel as a "Japanese fishing type boat approximately 60 feet in length . . . now partially submerged and beached between Cebu City, Cebu, and the town of Mandawe, Cebu." The bill of sale further recited: "It is expressly understood that party of the first part warrants nothing in this transaction except transfer of title to said property." On August 14, 1945, Vicente Asuncion sold said vessel for P8,000 to the defendant Marcos Escobar, who registered the deed of sale in the office of the collector of Customs of Cebu on October 25, 1945. Thereafter Escobar caused extensive repairs to be made on the vessel and named it "Long Distance."

The present action was instituted by the plaintiff in the Court of the First Instance of Cebu to recover from the defendant the possession of said vessel or its value in the sum of P20,000, plus damages in the sum of P5,000.

Upon the trial of the case, in which the principal issue was the identity of the vessel, the trial court, after an ocular inspection of the vessel in question and after hearing the testimony of witnesses, found in effect that the vessel now named "Long Distance" in the possession of the defendant is the same vessel formerly named "N.S. del Rosario I," which the Japanese armed forces had seized in Albay from the plaintiff in February, 1942. The trial court, however, held that the boat in question had been lawfully seized and confiscated by the Japanese armed forces and that "as a necessary consequence of the validity of the seizure by the Japanese of the vessel in dispute, the United States armed forces acquired a valid title over the same when in the course of liberation of the Philippines said authority took possession of the vessel in Philippine waters." Further holding that the defendant had acquired a valid title to said vessel, the trial court dismissed plaintiff's complaint, without costs. From that judgment the plaintiff appealed.

Appellant's contention is predicated on the article 3, Chapter II of the Hague Conventions of 1907 relating to the exercise of the rights of the capture in the naval war, which reads as follows:

Vessel used exclusively for fishing along the coast or small boats employed in the local trade are exempt from capture, as well as their appliances, rigging, tackle, and cargo.

We think this article is not applicable, for the reason that when the Japanese armed forces seized the vessel in question in the Bicol provinces on February 11, 1942, they were already in military occupation of that territory. The vessel was not captured in the course of a naval war, but was seized by the military occupant, who used it in the prosecution of the war. We think the provision of the Hague Conventions of 1907 that is applicable here is the second paragraph of article 53 of the "Regulations Respecting the Laws and Customs of War on Land." which reads as follows:

ART. 53. An army of occupation can only take possession of the cash, funds, and realizable securities belonging strictly to the State, depots of arms, of arms, of transport, stores and supplies, and, generally, all movable property of the State which may be used for military operations.

All appliances, whether on land, at sea, or in the air, adapted for the transmission of news, or for the transport of persons or things, apart from cases governed by maritime law, depots of arms and, generally, all kinds of war material may be seized, even though belonging to private persons, but they must be restored at the conclusion of peace, and indemnities paid for them. (Emphasis supplied.)

The second paragraph of article 53 above quoted was quoted by the trial court in support of its view that the Japanese Army was authorized under international law to seize the vessel in question. And we think that was correct. But we are clearly of the opinion that the trial court erred in holding that the Japanese Army could and did lawfully confiscate said vessel. Although the regulations quoted authorized the seizure of the vessel in question, they did not authorize its confiscation. On the contrary, it is expressly provided therein that the things seized "must be restored at the conclusion of peace and indemnities paid for them." It is clear, therefore, that the title to the vessel in question did not pass to the Japanese but remained in the owner, the plaintiff herein. In other words, said vessel did not become enemy property and was not such when the PCAU sold it to Vicente Asuncion. Hence said sale was not valid as against the plaintiff, and the defendant acquired no valid title to said vessel by virtue of his purchase from Vicente Asuncion.

A question which was not passed upon by the trial court remains to be resolved, namely, the right of the defendant to be reimbursed by the plaintiff for necessary and useful expenditures on said vessel and the corresponding obligation of said defendant to account to the plaintiff for the earnings of the vessel during the pendency of this action. Upon the facts proven, we may a concede that the defendant-appellee was a purchaser in good faith. But we hold that he ceased to be a possessor in good faith from the moment the plaintiff, as owner of the vessel, claimed it from the defendant judicially or extrajudicially Form that moment the defendant was not unaware that his possession was wrongful. (See art. 435, Civil Code; Ortis vs. Fuentebella, 27 Phil., 537.)

Article 451 of the old Civil Code provides that "fruits received by one in possession in the good faith, before possession is legally interrupted, become his own" And article 453 says that "necessary expenditures shall be refunded to every possessor; but only the possessor in good faith may retain the thing until they are repaid to him. Useful expenditures shall be paid the possessor in good faith.."

It follows that the defendant must account to the plaintiff for the net earnings of the vessel from the time the plaintiff claimed said vessel from him judicially or extrajudicially, and whatever necessary expenditures he may have made on said vessel as well as all useful expenditures made before the possession was legally interrupted, may be deducted from or set off against said earnings.

Finding that the plaintiff is entitled to the vessel in question, we reverse the Judgment appealed from and order the case remanded to the court of origin for further proceedings in accordance with this decision, with costs against the appellee.