G.R. Nos. L-33466-67 April 20, 1983 PEOPLE OF THE PHIL. vs. MAMERTO NARVAEZ 206 Phil.

314 EN BANC [G.R. Nos. L-33466-67. April 20, 1983.] PEOPLE OF THE PHILIPPINES, plaintiff-appellee, vs. MAMERTO NARVAEZ, defendantappellant. The Solicitor General for plaintiff-appellee. Gonzalo B. Callanta (counsel de oficio) for defendant-appellant. SYLLABUS 1. CRIMINAL LAW; JUSTIFYING CIRCUMSTANCE; NOT SATISFIED AS THE CASE AT BAR. Appellant admitted having shot them from the window of his house with the shotgun which he surrendered to the police authorities. He claims, however, that he did so in defense of his person and of his rights, and therefore he should be exempt from criminal liability. Defense of one's person or rights is treated as a justifying circumstance under Art. 11, par. I of the Revised Penal Code, but in order for it to be appreciated, the following requisites must occur: Unlawful aggression; Reasonable necessity of the means employed to prevent or repel it; Lack of sufficient provocation on the part of the person defending himself (Art. II, par. 1, Revised Penal Code, as amended). There is no question that there was aggression on the part of the victims: Fleiseher was ordering, and Rubia was actually participating in the fencing. This was indeed aggression, not on the person of appellant, but on his property rights. The reasonableness of the resistance is also a requirement of the justifying circumstance of self defense or defense of one's rights under paragraph I of Article 11, Revised Penal Code. When the appellant fired his shotgun from his window, killing his two victims, his resistance was disproportionate to the attack. WE find, however, that the third element of defense of property is present, i.e., lack of sufficient provocation on the part of appellant who was defending his property. As a matter of fact, there was no provocation at all on his part, since he was asleep at first and was only awakened by the noise produced by the victims and their laborers. His plea for the deceased and their men to stop and talk things over with him was no provocation at all. 2. ID.; MITIGATING CIRCUMSTANCE; SPECIAL MITIGATING CIRCUMSTANCE OF INCOMPLETE DEFENSE. Appellant's act in killing the deceased was not justifiable, since-not all the elements for justification are present. He should therefore be held responsible for the death of his victims, but he could be credited with the special mitigating circumstance of incomplete defense, pursuant to paragraph 6, Article 13 of the Revised Penal Code. 3. ID.; HOMICIDE; QUALIFYING CIRCUMSTANCE NOT APPRECIATED. The crime committed is homicide on two counts. The qualifying circumstance of treachery cannot be appreciated in this case because of the presence of provocation on the part of the deceased. As WE held earlier in People vs. Manlapaz (55 SCRA 598), the element of a sudden unprovoked attack is therefore lacking. WE likewise find the aggravating (qualifying) circumstance of evident premeditation not sufficiently established. The only evidence, presented to prove this circumstance was the testimony of Crisanto Ibaez, 37 years old, married, resident of Maitum, South Cotabato, and a laborer of Fleischer and Company. This single evidence is not sufficient to warrant appreciation of the aggravating circumstance of evident premeditation. As WE have consistently held, there must be "direct evidence of the planning or preparation to kill the victim, . . . it is not enough that premeditation be suspected or surmised, but the criminal intent must be evidenced by notorious outward acts evincing the determination to commit the crime'' (People vs. Ordioles, 42 SCRA 238). 4. ID.; MITIGATING CIRCUMSTANCE; VOLUNTARY SURRENDER. The trial court has properly appreciated the presence of the mitigating circumstance of voluntary surrender, it appearing that appellant surrendered to the authorities soon after the shooting.

5. ID.; ID.; PASSION AND OBFUSCATION. Passion and obfuscation attended the commission of the crime. The appellant awoke to find his house being damaged and its accessibility to the highway as well as of his rice mill bodega being closed. Not only was his house being unlawfully violated; his business was also in danger of closing down for lack of access to the highway. These circumstances, coming so near to the time when his first house was dismantled, thus forcing him to transfer to his only remaining house, must have so aggravated his obfuscation that he lost momentarily all reason causing him to reach for his shotgun and fire at the victims in defense of hit rights. 6. ID.; PENALTY; REDUCTION IN THE IMPOSITION THEREOF. Article 249 of the Revised Penal Code prescribes the penalty for homicide as reclusion temporal. Pursuant to Article 69, supra, the penalty lower by one or two degrees shall be imposed if the deed is not wholly excusable by reason of the lack of some of the conditions required to justify the same. Considering that the majority of the requirements for defense of property are present, the penalty may be lowered by two degrees, i.e., to prision correccional, And under paragraph 5 of Article 64, the same may further be reduced by one degree, i.e., arresto mayor because of the presence of two mitigating circumstances and no aggravating circumstance. 7. ID.; CIVIL LIABILITY; MODIFICATION. The civil liability of the appellant should be modified. In We case of Zulueta vs. Pan American World Airways (43 SCRA 397), the award for moral damages was reduced because the plaintiff contributed to the gravity of defendant's reaction. In the case at bar, the victims not only contributed but they actually provoked the attack by damaging appellant's properties and business. Considering appellant's standing in the community, being married to a municipal councilor, the victims' actuations were apparently designed to humiliate him and destroy his reputation. Thus, the moral and material suffering of appellant and his family deserves leniency as to his civil liability. 8. ID.; PENAL STATUTE; RETROACTIVE EFFECT APPLIED IN THE CASE AT BAR. Article 39 of the Revised Penal Code requires a person convicted of prision correctional or arrests mayor and fine who has no property with which to meet his civil liabilities to serve a subsidiary imprisonment at the rate of one (1) day for each P2.50. However, the amendment introduced by Republic Act No. 5465 on April 21, 1969 made the provision of Art. 39 applicable to fines only and not to reparation of the damage caused, indemnification of consequential damages and costs of proceedings. Considering that Republic Act 5465 is favorable to the accused who is not a habitual delinquent, it may be given retroactive effect pursuant to Article 22 of the Revised Penal Code. GUTIERREZ, Jr., J., separate opinion: 1. CRIMINAL LAW; JUSTIFYING CIRCUMSTANCES; SELL DEFENSE; DEFENSE OF PROPERTY; INVOKED ONLY WHEN COUPLED WITH SOME FORM OF ATTACK ON PERSON OF ONE ENTRUSTED WITH SAID PROPERTY. Defense of property is not of such importance as the right to life and defense of property can only be invoked when it is coupled with some front of attack on the person of one entrusted with said property. The defense of property, whether complete or incomplete, to be available in prosecutions for murder or homicide must be coupled with an attack by the one getting the property on the person defending it. 2. ID.; ID.; ID.; UNLAWFUL AGGRESSION; ABSENT IN CASE AT BAR. In the case now before Us, there is absolutely no evidence that an attack was attempted, much less made upon the person of appellant. The mere utterance "No, gademit, proceed, go ahead" is not the unlawful aggression which entitles appellant to the plea of self defense. I agree with the majority opinion that the crime is homicide but without any privileged mitigating circumstance. 3. ID.; HOMICIDE; PENALTY; LOWERED BY TWO GENERIC MITIGATING CIRCUMSTANCES. Since the appellant is guilty beyond reasonable doubt of two (2) homicides, mitigated by the two generic mitigating circumstances of voluntary surrender and obfuscation, without any aggravating circumstance, the maximum sentence the appellant should have served was prision mayor plus the indemnification to each group of heirs of Davis Fleischer and of Flamiano Rubia of the sum of Four Thousand (P4,000.00)

Pesos, without subsidiary imprisonment, but without any award for moral damages and attorney's fees. DECISION MAKASIAR, J p: This is an appeal from the decision of the Court of First Instance of South Cotabato, Branch I, in Criminal Cases Nos. 1815 and 1816 for murder which, after a joint trial, resulted in the conviction of the accused in a decision rendered on September 8, 1970, with the following pronouncement: "Thus, we have a crime of MURDER qualified by treachery with the aggravating circumstance of evident premeditation offset by the mitigating circumstance of voluntary surrender. The proper penalty imposable, therefore, is RECLUSION PERPETUA (Arts. 248 and 64, Revised Penal Code). "Accordingly, finding Mamerto Narvaez guilty beyond reasonable doubt of the crime of murder, "(a) In Criminal Case No. 1815, he is hereby sentenced to RECLUSION PERPETUA, to indemnify the heirs of the deceased Davis Q. Fleischer in the sum of P12,000,00 as compensatory damages, P10,000.00 as moral damages, P2,000.00 as attorney's fees, the offended party having been represented by a private prosecutor, and to pay the costs; "(b) In Criminal Case No. 1816, he is hereby sentenced to RECLUSION PERPETUA, to indemnify the heirs of the deceased Flaviano Rubia in the sum of P12,000.00 as compensatory damages, P10,000.00 as moral damages, P2,000.00 as attorney's fees, the offended party having been represented by a private prosecutor, and to pay the costs" (p. 48, rec.). The facts are summarized in the People's brief, as follows: "At about 2:30 in the afternoon of August 22, 1968, Graciano Juan, Jesus Verano and Cesar Ibaez, together with the two deceased Davis Fleischer and Flaviano Rubia, were fencing the land of George Fleischer, father of deceased Davis Fleischer. The place was in the boundary of the highway and the hacienda owned by George Fleischer. This is located in the municipality of Maitum, South Cotabato. At the place of the fencing is the house and rice drier of appellant Mamerto Narvaez (pp. 179-182, t.s.n., Pieza II). At that time, appellant was taking his rest, but when he heard that the walls of his house were being chiselled, he arose and there he saw the fencing going on. If the fencing would go on, appellant would be prevented from getting into his house and the bodega of his ricemill. So he addressed the group, saying -'Pare, if possible you stop destroying my house and if possible we will talk it over - what is good,' addressing the deceased Rubia, who is appellant's compadre. The deceased Fleischer, however, answered: 'No, gademit, proceed, go ahead.' Appellant apparently lost his equilibrium and he got his gun and shot Fleischer, hitting him. As Fleischer fell down, Rubia ran towards the jeep, and knowing there is a gun on the jeep, appellant fired at Rubia, likewise hitting him (pp. 127-133, t.s.n., Defense transcript). Both Fleischer and Rubia died as a result of the shooting' (pp. 9-14, t.s.n., Pieza I; pp. 8-9, Appellant's Brief, p. 161, rec.). It appears, however, that this incident is intertwined with the long drawn out legal battle between the Fleischer and Co., Inc. of which deceased Fleischer was the secretarytreasurer and deceased Rubia the assistant manager, on the one hand, and the land settlers of Cotabato, among whom was appellant. LibLex From the available records of the related cases which had been brought to the Court of Appeals (CA-G.R. Nos. 28858-R and 50583-R) and to this Court on certiorari (G.R. No. L26757 and L-45504), WE take judicial notice of the following antecedent facts: Appellant was among those persons from northern and central Luzon who went to Mindanao in 1937 and settled in Maitum, a former sitio of Kiamba, and now a separate municipality of South Cotabato. He established his residence therein, built his house, cultivated the area, and was among those who petitioned then President Manuel L. Quezon to order the subdivision of the defunct Celebes Plantation and nearby Kalaong Plantation totalling about 2,000 hectares, for distribution among the settlers.
Property || Art. 429 to 444|| 1

Shortly thereafter, Fleischer and Company, headed by George W. Fleischer, an American landowner in Negros Oriental, filed sales application No. 21983 on June 3, 1937 over the same area formerly leased and later abandoned by Celebes Plantation Company, covering 1,017.2234 hectares. Meanwhile, the subdivision was ordered and a public land surveyor did the actual survey in 1941 but the survey report was not submitted until 1946 because of the outbreak of the second world war. According to the survey, only 300 hectares identified as Lots Nos. 22, 26 and 38, Ps. 176 Kiamba, were set aside for Sales Application No. 21983, while the rest were subdivided into sublots of 5 to 6 hectares each to be distributed among the settlers (pp. 32-33, G.R. No. L-45504). The 300 hectares set aside for the sales application of Fleischer and Company was declared open for disposition, appraised and advertised for public auction. At the public auction held in Manila on August 14, 1948, Fleischer and Company was the only bidder for P6,000.00. But because of protests from the settlers the corresponding award in its favor was held in abeyance, while an investigator was sent by the Director of Lands to Kiamba in the person of Atty. Jose T. Gozon. Atty. Gozon came back after ten days with an amicable settlement signed by the representative of the settlers. This amicable settlement was later repudiated by the settlers, but the Director of Lands, acting upon the report of Atty. Gozon, approved the same and ordered the formal award of the land in question to Fleischer and Company. The settlers appealed to the Secretary of Agriculture and Natural Resources, who, however, affirmed the decision in favor of the company. On May 29, 1950, the settlers filed Civil Case No. 240 in the Court of First Instance of Cotabato which then consisted only of one sala, for the purpose of annulling the order of the Secretary of Agriculture and Natural Resources which affirmed the order of the Director of Lands awarding the contested land to the company. The settlers, as plaintiffs, lost that case in view of the amicable settlement which they had repudiated as resulting from threats and intimidation, deceit, misrepresentation and fraudulent machination on the part of the company. They appealed to the Court of Appeals (CA-G.R. No. 28858-R) which likewise affirmed on August 16, 1965 the decision of the Court of First Instance in favor of the company. This resulted in the ouster of the settlers by an order of the Court of First Instance dated September 24, 1966, from the land which they had been occupying for about 30 years. Among those ejected was the appellant who, to avoid trouble, voluntarily dismantled his house, built in 1947 at a cost of around P20,000.00, and transferred to his other house which he built in 1962 or 1963 near the highway. The second house is not far from the site of the dismantled house. Its ground floor has a store operated by Mrs. June Talens who was renting a portion thereof. He also transferred his store from his former residence to the house near the highway. Aside from the store, he also had a rice mill located about 15 meters east of the house, and a concrete pavement between the rice mill and the house, which is used for drying grains and copra. On November 14, 1966, appellant was among the settlers on whose behalf Jose V. Gamboa and other leaders filed Civil Case No. 755 in the Court of First Instance of Cotabato, Branch I, to obtain an injunction or annulment of the order of award with prayer for preliminary injunction. During the pendency of this case, appellant on February 21, 1967 entered into a contract of lease with the company whereby he agreed to lease an area of approximately 100 to 140 square meters of Lot No. 38 from the company (Exh. 9, p. 1, Folder of Exhibits for Defense) for a consideration of P16.00 monthly. According to him, he signed the contract although the ownership of the land was still uncertain, in order to avoid trouble, until the question of ownership could be decided. He never paid the agreed rental, although he alleges that the milling job they did for Rubia was considered payment. On June 25, 1968, deceased Fleischer wrote him a letter with the following tenor: "You have not paid six months rental to Fleischers & Co., Inc. for that portion of land in which your house and ricemill are located as per agreement executed on February 21, 1967. You have not paid even after repeated attempts of collection made by Mr. Flaviano Rubia and myself. "In view of the obvious fact that you do not comply with the agreement, I have no alternative but to terminate our agreement on this date.

"I am giving you six months to remove your house, ricemill, bodega, and water pitcher pumps from the land of Fleischers & Co., Inc. This six-month period shall expire on December 31, 1966. "In the event the above constructions have not been removed within the six-month period, the company shall cause their immediate demolition" (Exhibit 10, p. 2, supra). On August 21, 1968, both deceased, together with their laborers, commenced fencing Lot 38 by putting bamboo posts along the property line parallel to the highway. Some posts were planted right on the concrete drier of appellant, thereby cutting diagonally across its center (pp. 227-228, t.s.n., Vol. 2), with the last post just adjacent to appellant's house (p. 231, t.s.n., supra). The fence, when finished, would have the effect of shutting off the accessibility to appellant's house and rice mill from the highway, since the door of the same opens to the Fleischers' side. The fencing continued on that fateful day of August 22, 1968, with the installation of four strands of barbed wire to the posts. prcd At about 2:30 p.m. on the said day, appellant who was taking a nap after working on his farm all morning, was awakened by some noise as if the wall of his house was being chiselled. Getting up and looking out of the window, he found that one of the laborers of Fleischer was indeed chiselling the wall of his house with a crowbar (p. 129, t.s.n., Vol. 6), while deceased Rubia was nailing the barbed wire and deceased Fleischer was commanding his laborers. The jeep used by the deceased was parked on the highway. The rest of the incident is narrated in the People's Brief as above-quoted. Appellant surrendered to the police thereafter, bringing with him shotgun No. 1119576 and claiming he shot two persons (Exh. P, p. 31, Defense Exhibits). Appellant now questions the propriety of his conviction, assigning the following errors: "First Assignment of Error: That the lower court erred in convicting defendantappellant despite the fact that he acted in defense of his person; and "Second Assignment of Error: That the court a quo also erred in convicting defendant-appellant although he acted in defense of his rights" (p. 20 of Appellant's Brief, p. 145, rec.). The act of killing of the two deceased by appellant is not disputed. Appellant admitted having shot them from the window of his house with the shotgun which he surrendered to the police authorities. He claims, however, that he did so in defense of his person and of his rights, and therefore he should be exempt from criminal liability. Defense of one's person or rights is treated as a justifying circumstance under Art. 11, par. 1 of the Revised Penal Code, but in order for it to be appreciated, the following requisites must occur: "First. Unlawful aggression; "Second. Reasonable necessity of the means employed to prevent or repel it; "Third. Lack of sufficient provocation on the part of the person defending himself" (Art 11, par. 1, Revised Penal Code, as amended). The aggression referred to by appellant is the angry utterance by deceased Fleischer of the following words: "Hindi, sigue, gademit, avante", in answer to his request addressed to his compadre, the deceased Rubia, when he said, "Pare, hinto mona ninyo at pag-usapan natin kung ano ang mabuti" (pp. 227-229, t.s.n., Vol. 6). This was in reaction to his having been awakened to see the wall of his house being chiselled. The verbal exchange took place while the two deceased were on the ground doing the fencing and the appellant was up in his house looking out of his window (pp. 225-227, supra). According to appellant, Fleischer's remarks caused this reaction in him: "As if, I lost my senses and unknowingly I took the gun on the bed and unknowingly also I shot Mr. Fleischer, without realizing it, I shot Mr. Fleischer" (p. 132, supra). As for the shooting of Rubia, appellant testified: "When I shot Davis Fleischer, Flaviano Rubia was nailing and upon hearing the shot, Mr. Rubia looked at Mr. Fleischer and when Mr. Fleischer fell down, Mr. Rubia ran toward s the jeep and knowing that there was a firearm in the jeep and thinking that if he will take that firearm he will kill me, I shot at him" (p. 132, supra, emphasis supplied). The foregoing statements of appellant were never controverted by the prosecution. They claim, however, that the deceased were in lawful exercise of their rights of ownership over the land in question, when they did the fencing that sealed off appellant's access to the highway. LLphil

A review of the circumstances prior to the shooting as borne by the evidence reveals that five persons, consisting of the deceased and their three laborers, were doing the fencing and chiselling of the walls of appellant's house, The fence they were putting up was made of bamboo posts to which were being nailed strands of barbed wire in several layers. Obviously, they were using tools which could be lethal weapons, such as nail and hammer, bolo or bamboo cutter, pliers, crowbar, and other necessary gadgets. Besides, it was not disputed that the jeep which they used in going to the place was parked just a few steps away, and in it there was a gun leaning near the steering wheel. When the appellant woke up to the sound of the chiselling on his walls, his first reaction was to look out of the window. Then he saw the damage being done to his house, compounded by the fact that his house and rice mill will be shut off from the highway by the fence once it is finished. He therefore appealed to his compadre, the deceased Rubia, to stop what they were doing and to talk things over with him. But deceased Fleischer answered angrily with "gademit" and directed his men to proceed with what they were doing. The actuation of deceased Fleischer in angrily ordering the continuance of the fencing would have resulted in the further chiselling of the walls of appellant's house as well as the closure of the access to and from his house and rice mill which were not only imminent but were actually in progress. There is no question, therefore, that there was aggression on the part of the victims: Fleischer was ordering, and Rubia was actually participating in the fencing. This was indeed aggression, not on the person of appellant, but on his property rights. The question is, was the aggression unlawful or lawful? Did the victims have a right to fence off the contested property, to destroy appellant's house and to shut off his ingress and egress to his residence and the highway? Article 30 of the Civil Code recognizes the right of every owner to enclose or fence his land or tenements. However, at the time of the incident on August 22, 1968, Civil Case no. 755 for annulment of the order of award to Fleischer and Company was still pending in the Court of First Instance of Cotabato. The parties could not have known that the case would be dismissed over a year after the incident on August 22, 1968, as it was dismissed on January 23, 1970 on ground of res judicata, in view of the dismissal in 1965 (by the Court of Appeals) of Civil Case No. 240 filed in 1950 for the annulment of the award to the company, between the same parties, which the company won by virtue of the compromise agreement in spite of the subsequent repudiation by the settlers of said compromise agreement; and that such 1970 dismissal also carried the dismissal of the supplemental petition filed by the Republic of the Philippines on November 28, 1968 to annul the sales patent and to cancel the corresponding certificate of title issued to the company, on the ground that the Director of Lands had no authority to conduct the sale due to his failure to comply with the mandatory requirements for publication. The dismissal of the government's supplemental petition was premised on the ground that after its filing on November 28, 1968, nothing more was done by the petitioner Republic of the Philippines except to adopt all the evidence and arguments of plaintiffs with whom it joined as parties-plaintiffs. Hence, it is reasonable to believe that appellant was indeed hoping for a favorable judgment in Civil Case No. 755 filed on November 14, 1966 and his execution of the contract of lease on February 21, 1967 was just to avoid trouble. This was explained by him during cross-examination on January 21, 1970, thus: "It happened this way: we talked it over with my Mrs. that we better rent the place because even though we do not know who really owns this portion to avoid trouble. To avoid trouble we better pay while waiting for the case because at that time, it was not known who is the right owner of the place. So we decided until things will clear up and determine who is really the owner, we decided to pay rentals" (p. 169, t.s.n., Vol. 6). In any case, Fleischer had given him up to December 31, 1968 (Exh. 10, p. 2, Defense Exhibits) within which to vacate the land. He should have allowed appellant the peaceful enjoyment of his properties up to that time, instead of chiselling the walls of his house and closing appellant's entrance and exit to the highway. The following provisions of the Civil Code of the Philippines are in point: LLjur
Property || Art. 429 to 444|| 2

"Art. 536. In no case may possession be acquired through force or intimidation as long as there is a possessor who objects thereto. He who believes that he has an action or a right to deprive another of the holding of a thing must invoke the aid of the competent court, if the holder should refuse to deliver the thing." "Art. 539. Every possessor has a right to be respected in his possession; and should he be disturbed therein he shall be protected in or restored to said possession by the means established by the laws and the Rules of Court" (Articles 536 and 539, Civil Code of the Philippines). Conformably to the foregoing provisions, the deceased had no right to destroy or cause damage to appellant's house, nor to close his accessibility to the highway while he was pleading with them to stop and talk things over with him. The assault on appellant's property, therefore, amounts to unlawful aggression as contemplated by law. "Illegal aggression is equivalent to assault or at least threatened assault of immediate and imminent kind" (People vs. Encomiendas, 46 SCRA 522). In the case at bar, there was an actual physical invasion of appellant's property which he had the right to resist, pursuant to Art. 429 of the Civil Code of the Philippines which provides: "Art. 429. The owner or lawful possessor of a thing has the right to exclude any person from the enjoyment and disposal thereof. For this purpose, he may use such force as may be reasonably necessary to repel or prevent an actual or threatened unlawful physical invasion or usurpation of his property" (emphasis supplied). The reasonableness of the resistance is also a requirement of the justifying circumstance of self-defense or defense of one's rights under paragraph 1 of Article 11, Revised Penal Code. When the appellant fired his shotgun from his window, killing his two victims, his resistance was disproportionate to the attack. WE find, however, that the third element of defense of property is present, i.e., lack of sufficient provocation on the part of appellant who was defending his property. As a matter of fact, there was no provocation at all on his part, since he was asleep at first and was only awakened by the noise produced by the victims and their laborers. His plea for the deceased and their men to stop and talk things over with him was no provocation at all. Be that as it may, appellant's act in killing the deceased was not justifiable, since not all the elements for justification are present. He should therefore be held responsible for the death of his victims, but he could be credited with the special mitigating circumstance of incomplete defense, pursuant to paragraph 6, Article 13 of the Revised Penal Code. The crime committed is homicide on two counts. The qualifying circumstance of treachery cannot be appreciated in this case because of the presence of provocation on the part of the deceased. As WE held earlier in People vs. Manlapaz (55 SCRA 598), the element of a sudden unprovoked attack is therefore lacking. cdrep Moreover, in order to appreciate alevosia, "it must clearly appear that the method of assault adopted by the aggressor was deliberately chosen with a special view to the accomplishment of the act without risk to the assailant from any defense that the party assailed might have made. This cannot be said of a situation where the slayer acted instantaneously . . ." (People vs. Caete, 44 Phil. 481). WE likewise find the aggravating (qualifying) circumstance of evident premeditation not sufficiently established. The only evidence presented to prove this circumstance was the testimony of Crisanto Ibaez, 37 years old, married, resident of Maitum, South Cotabato, and a laborer of Fleischer and Company, which may be summarized as follows: "On August 20, 1968 (two days before the incident) at about 7:00 A.M., he was drying corn near the house of Mr. and Mrs. Mamerto Narvaez at the crossing. Maitum, South Cotabato, when the accused and his wife talked to him. Mrs. Narvaez asked him to help them, as he was working in the hacienda. She further told him that if they fenced their house, there is a head that will be broken. Mamerto Narvaez added 'Noy, it is better that you will tell Mr. Fleischer because there will be nobody who will break his head but I will be the one.' He relayed this to Mr. Flaviano Rubia, but the latter told him not to believe as they were only idle threats designed to get him out of the hacienda" (pp. 297-303, t.s.n., Vol. 2). This single evidence is not sufficient to warrant appreciation of the aggravating circumstance of evident premeditation. As WE have consistently held, there must be "direct

evidence of the planning or preparation to kill the victim, . . . it is not enough that premeditation be suspected or surmised, but the criminal intent must be evidenced by notorious outward acts evincing the determination to commit the crime" (People vs. Ordioles, 42 SCRA 238). Besides, there must be a "showing" that the accused premeditated the killing; that the culprit clung to their (his) premeditated act; and that there was sufficient interval between the premeditation and the execution of the crime to allow them (him) to reflect upon the consequences of the act" (People vs. Gida, 102 SCRA 70). Moreover, the obvious bias of witness Crisanto Ibaez, as a laborer of the deceased Davis Fleischer, neutralizes his credibility. Since in the case at bar, there was no direct evidence of the planning or preparation to kill the victims nor that the accused premeditated the killing, and clung to his premeditated act, the trial court's conclusion as to the presence of such circumstance may not be endorsed. Evident premeditation is further negated by appellant pleading with the victims to stop the fencing and destroying his house and to talk things over just before the shooting. But the trial court has properly appreciated the presence of the mitigating circumstance of voluntary surrender, it appearing that appellant surrendered to the authorities soon after the shooting. cdll Likewise, We find that passion and obfuscation attended the commission of the crime. The appellant awoke to find his house being damaged and its accessibility to the highway as well as of his rice mill bodega being closed. Not only was his house being unlawfully violated; his business was also in danger of closing down for lack of access to the highway. These circumstances, coming so near to the time when his first house was dismantled, thus forcing him to transfer to his only remaining house, must have so aggravated his obfuscation that he lost momentarily all reason causing him to reach for his shotgun and fire at the victims in defense of his rights. Considering the antecedent facts of this case, where appellant had thirty years earlier migrated to this so-called "land of promise" with dreams and hopes of relative prosperity and tranquility, only to find his castle crumbling at the hands of the deceased, his dispassionate plea going unheeded - all these could be too much for any man he should be credited with this mitigating circumstance. Consequently, appellant is guilty of two crimes of homicide only, the killing not being attended by any qualifying nor aggravating circumstance, but extenuated by the privileged mitigating circumstance of incomplete defense - in view of the presence of unlawful aggression on the part of the victims and lack of sufficient provocation on the part of the appellant - and by two generic mitigating circumstance of voluntary surrender and passion and obfuscation. Article 249 of the Revised Penal Code prescribes the penalty for homicide as reclusion temporal. Pursuant to Article 69, supra, the penalty lower by one or two degrees shall be imposed if the deed is not wholly excusable by reason of the lack of some of the conditions required to justify the same. Considering that the majority of the requirements for defense of property are present, the penalty may be lowered by two degrees, i.e., to prision correccional. And under paragraph 5 of Article 64, the same may further be reduced by one degree, i.e., arresto mayor, because of the presence of two mitigating circumstances and no aggravating circumstance. cdll The civil liability of the appellant should be modified. In the case of Zulueta vs. Pan American World Airways (43 SCRA 397), the award for moral damages was reduced because the plaintiff contributed to the gravity of defendant's reaction. In the case at bar, the victims not only contributed but they actually provoked the attack by damaging appellant's properties and business. Considering appellant's standing in the community, being married to a municipal councilor, the victims' actuations were apparently designed to humiliate him and destroy his reputation. The records disclose that his wife, councilor Feliza Narvaez, was also charged in these two cases and detained without bail despite the absence of evidence linking her to the killings. She was dropped as a defendant only upon motion of the prosecution dated October 31, 1968. (p. 14, CFI rec. of Crim. Case No. 1816), but acted upon on November 4, 1968 (p. 58, CFI rec. of Criminal Case No. 1815). Moreover, these cases arose out of an inordinate desire on the part of Fleischer and Company, despite its extensive landholdings in a Central Visayan province, to extend its accumulation of public lands to the resettlement areas of Cotabato. Since it had the

capability financial and otherwise to carry out its land accumulation scheme, the lowly settlers, who uprooted their families from their native soil in Luzon to take advantage of the government's resettlement program, but had no sufficient means to fight the big landowners, were the ones prejudiced. Thus, the moral and material suffering of appellant and his family deserves leniency as to his civil liability. Furthermore, Article 39 of the Revised Penal Code requires a person convicted of prision correccional or arresto mayor and fine who has no property with which to meet his civil liabilities to serve a subsidiary imprisonment at the rate of one (1) day for each P2.50. However, the amendment introduced by Republic Act No. 5465 on April 21, 1969 made the provisions of Art. 39 applicable to fines only and not to reparation of the damage caused, indemnification of consequential damages and costs of proceedings. Considering that Republic Act 5465 is favorable to the accused who is not a habitual delinquent, it may be given retroactive effect pursuant to Article 22 of the Revised Penal Code. LibLex WHEREFORE, FINDING APPELLANT GUILTY BEYOND REASONABLE DOUBT OF ONLY TWO (2) HOMICIDES, MITIGATED BY THE PRIVILEGED EXTENUATING CIRCUMSTANCE OF INCOMPLETE SELF-DEFENSE AS WELL AS BY TWO (2) GENERIC MITIGATING CIRCUMSTANCES OF VOLUNTARY SURRENDER AND OBFUSCATION, WITHOUT ANY AGGRAVATING CIRCUMSTANCE, APPELLANT IS HEREBY SENTENCED TO SUFFER AN IMPRISONMENT OF FOUR (4) MONTHS OF ARRESTO MAYOR, TO INDEMNIFY EACH GROUP OF HEIRS OF DAVIS FLEISCHER AND OF FLAVIANO RUBIA IN THE SUM OF FOUR THOUSAND (P4,000.00) PESOS, WITHOUT SUBSIDIARY IMPRISONMENT AND WITHOUT ANY AWARD FOR MORAL DAMAGES AND ATTORNEY'S FEES. CONSIDERING THAT APPELLANT HAS BEEN UNDER DETENTION FOR ALMOST FOURTEEN (14) YEARS NOW SINCE HIS VOLUNTARY SURRENDER ON AUGUST 22, 1968, HIS IMMEDIATE RELEASE IS HEREBY ORDERED. NO COSTS. SO ORDERED.

Property || Art. 429 to 444|| 3

PROVINCE OF CAMARINES NORTE, Represented by Hon. Roy A. Padilla, Jr., as Provincial Governor, petitioner, vs. PROVINCE OF QUEZON, Represented by Hon. Eduardo T. Rodriguez, as Provincial Governor, respondent. RE: URGENT PETITION TO CITE GOVERNOR EDUARDO T. RODRIGUEZ OF QUEZON PROVINCE, AND MAYOR JULIO U. LIM OF CALAUAG, QUEZON, IN CONTEMPT OF COURT. [G.R. No. 132885. October 11, 2001]

"WHEREFORE, the Petition for Mandamus and Prohibition is hereby GRANTED. Respondent Quezon Province is hereby ORDERED immediately to cease and desist, and perpetually to refrain, from exercising or performing any and all acts of jurisdiction or political authority over all or any part of the area here held to be part of the territory of the Province of Camarines Norte and forthwith to relinquish the same to petitioner Province of Camarines Norte. "Let a copy of this decision be furnished to the Secretary of the Local Governments and the Office of the President with the request that surveyors from the Bureau of Lands or other appropriate government agency be forthwith designated to survey and locate, by latitude and longitude and by metes and bounds, and to monument the Basiad Bay -Mt. Cadig line described in the 16 June 1922 decision of the Chief of the Executive Bureau. Costs against respondent. "SO ORDERED."[3] (Emphasis ours) The 1989 SC Decision became final and executory on March 19, 1990.[4] Pursuant to the directive in the dispositive portion of the 1989 SC Decision, the Province of Camarines Norte, through its Governor, Roy A. Padilla, Jr., asked the Secretary of the Department of Environment and Natural Resources (DENR) to undertake the survey of the boundary line between the two provinces based on the description[5] in the 1922 EB decision. Acting favorably on the request, then Secretary Fulgencio Factoran, Jr. issued Special Order No. 1179[6] creating a technical working group specifically tasked to make the delineation of the boundary separating the two provinces. On January 31 1991, the DENR technical team informed Quezon Gov. Rodriguez about the survey it would undertake.[7] However, Provincial Secretary Jorge Vargas (acting in behalf of Gov. Rodriguez) objected, claiming that the 1922 EB decision should not be made the basis of the survey. He asserted that the survey should be done in conformity with the conditions set forth in Section 42, Article II of Act 2711 (The Revised Administrative Code of 1917).[8] But the DENR technical team proceeded with the survey using as guide the 1922 EB decision. On May 28, 1991, the DENR technical team went to barangay Tabugon, Calauag, Quezon and installed a monument marker along the boundary line determined in the survey. The marker indicates that the area consisting of 8,032 hectares then held as part of Calauag, Quezon actually falls within the territorial jurisdiction of Camarines Norte. This area comprises the nine (9) barangays of Kagtalaba, Plaridel, Kabuluan, Don Tomas, Guitol, Tabugon, Maualawin, Patag Ibaba and Patag Iraya.[9] On October 14, 1991, Quezon Gov. Eduardo Rodriguez and Calauag Mayor Julio U. Lim caused the bulldozing and removal of the boundary marker. The next day, the Manila Bulletin published an article entitled "2 provinces in border row,"[10] with a photograph containing the following caption: "Boundary dispute "Quezon Gov. Eduardo T. Rodriguez (2nd from right) orders the removal of a boundary marker at barangay Tabugon in Calauag town placed by the Camarines Norte provincial government last May 29. Witnessing the bulldozing of the marker are Calauag Mayor Julio U. Lim (right) and other town officials. (JLJ)" Aggrieved, Camarines Norte Gov. Roy Padilla, Jr. filed the present petition for contempt (docketed as G.R. No. 80796) against Gov. Rodriguez and Mayor Lim, alleging therein that by removing the monument marker, respondents-officials disobeyed the lawful judgment of this Court, which act is punishable as indirect contempt of court under Section 3, Rule 71, of the Revised Rules of Court (now 1997 Rules of Civil Procedure, as amended).

In their comment[11] on the petition, respondents Gov. Rodriguez and Mayor Lim did not deny having ordered the removal of the monument marker installed by the DENR. They claimed, however, that the placing of the marker is illegal because (a) it was installed within the territory of Calauag, Quezon and (b) the survey conducted by the DENR technical team was without prior authority from the Office of the President, as required by the 1989 SC Decision. Thus, respondents Governor Rodriguez and Mayor Lim asserted that their action was a reasonable use of force justified under Article 429[12] of the Civil Code to protect the territorial integrity of Quezon from a threatened physical invasion. In a Resolution dated February 4, 1992, this Court directed Justice Alicia V. SempioDiy of the Court of Appeals to conduct hearing, receive evidence and submit a report and recommendation on the contempt proceedings. During the proceedings, Gov. Roy Padilla, Jr. and Engr. Mamerto Infante, head of the DENR technical team, testified for petitioner Camarines Norte. After petitioner has rested its case, respondent Gov. Rodriguez filed a Demurrer to Evidence[13] contending that the 1989 SC Decision cannot be implemented and that, therefore, no valid survey can be made, in the light of Section 42 (of Act 2711) and Republic Act No. 5480 (An Act Creating the Municipality of Sta. Elena in the Province of Camarines Norte) which define the boundary between Camarines Norte and Quezon provinces.[14] However, the Investigating Justice found no sufficient basis to sustain the demurrer to evidence and ordered further hearing to ascertain respondents justification for removing the monument marker. Eventually, the parties submitted their respective memoranda. Upon the retirement of Justice Alice V. Sempio Diy, the contempt case was assigned to Court of Appeals Justice Teodoro P. Regino. Thereafter, Justice Regino submitted to this Court his 29-page Report and Recommendation dated May 3, 2000. His recommendation reads: Under the facts and for the reasons stated above, the undersigned RECOMMENDS that the respondents (Eduardo T. Rodriguez and Julio U. Lim) be both held guilty of contempt (of court) to be sentenced the maximum penalty of six (6) months imprisonment and to pay jointly and severally a fine of one thousand pesos (PhP1,000.00), and to shoulder the costs of installing a new monument marker on the sight where the previous marker was removed.[15] Meanwhile, during the pendency of the contempt proceedings in the Court of Appeals, the Department of Budget and Management (DBM), obviously recognizing Camarines Nortes territorial jurisdiction over the subject nine (9) barangays as determined by the DENR survey, transferred the Internal Revenue Allotment (IRA) share of the 9 barangays from the Municipality of Calauag, Quezon to the Municipality of Sta. Elena, Camarines Norte starting the Fiscal Year 1994.[16] Likewise, other agencies of the government recognized the Province of Camarines Nortes jurisdiction over the 9 barangays. Thus, during the May 6, 1996 Sangguniang Kabataan Elections, the COMELEC sent the election paraphernalia of the 9 barangays to Sta. Elena, Camarines Norte. In its Resolution No. 96-1175 dated April 18, 1996, the COMELEC directed inter alia the Office of the Election Officer of Calauag, Quezon to refrain from exercising supervision relative to any political exercise in the 9 barangays. Moreover, the Deputy Administrator of the Office of the Civil Registrar General, National Statistics Office, issued a Memorandum dated July 27, 1996 informing the Civil Registrar of Calauag, Quezon that the registration of vital events occurring in the subject 9 barangays should now be exercised by the Local Civil Registry of Sta. Elena, Camarines Norte. Also, on March 18 1997, the Department of Finance directed the Provincial Assessor and Provincial Treasurer of Quezon Province to transfer to Sta. Elena, Camarines Norte all the documents and records pertaining to the assessment and collection of realty taxes on the real property located in the 9 barangays. On July 10, 1997, the COMELEC issued Resolution No. 97-2406,[17] this time authorizing the Election Officer of Sta. Elena, Camarines Norte to: 1) change the address in
Property || Art. 429 to 444|| 4

THE PROVINCIAL GOVERNMENT OF QUEZON, Represented by Governor Eduardo T. Rodriguez; MUNICIPALITY OF CALAUAG IN THE PROVINCE OF QUEZON, WIGBERTO E. TAADA, PEDRO C. INOFRE and OSCAR F. FOLLOSO, petitioners, vs. THE COMMISSION ON ELECTIONS, respondent. DECISION SANDOVAL-GUTIERREZ, J.: On November 8, 1989, this Court, in an En Banc Decision in G.R. No. 80796,[1] PROVINCE OF CAMARINES NORTE, Represented by HONORABLE ROY PADILLA, as Acting Provincial Governor, petitioner, vs. PROVINCE OF QUEZON, Represented by HONORABLE HJALMAR QUINTANA, as Acting Provincial Governor, respondent, resolved with finality the decade-long land boundary discord between the Provinces of Camarines Norte and Quezon, The contending parties are back in this Court instituting two separate petitions. The present petition filed by the Province of Camarines Norte (docketed as G.R. No. 80796) prays that respondents Quezon Governor Eduardo T. Rodriguez and Mayor Julio U. Lim of Calauag, Quezon be cited in contempt of court for causing the removal of the monument marker erected on the disputed boundary line by the Department of Environment and Natural Resources in implementation of the November 8, 1989 Decision. On the other hand, G.R. No. 132885 is a petition for certiorari with prayer for a temporary restraining order wherein petitioners Quezon Province, et al. assail the validity of the Commission On Elections Resolution No. 97-2406 (dated July 10, 1997) and Resolution No. 97-3721 (dated November 27, 1997). Both Resolutions recognize nine (9) barangays as belonging to the territorial jurisdiction of Camarines Norte, no longer part of Calauag, Quezon, in view of the November 8, 1989 Decision of this Court in G.R. No. 80796. The facts are not disputed: As earlier mentioned, on November 8, 1989, this Court rendered a Decision in G.R. No. 80796 ("1989 SC Decision," for brevity) which resolved the long-drawn boundary dispute between the Provinces of Camarines Norte and Quezon. The Decision upheld as binding upon the parties the decision of the then Chief of the Executive Bureau dated June 16, 1922 ("1922 EB decision," for brevity) delineating and describing that portion of the boundary comprising a land area of approximately 8,762 hectares[2] as belonging to Camarines Norte, not to Quezon Province. The pertinent portion of the 1989 SC Decision declares: "In sum, we hold that the decision of the Chief of the Executive Bureau dated 16 June 1922 was lawfully issued and is binding upon the parties. We hold further that prohibition and mandamus will lie for the enforcement of that decision, an enforcement unjustifiably resisted and delayed for sixty-seven (67) years.

the Voter Registration Records (VRR) of the subject 9 barangays from Calauag, Quezon to Sta. Elena, Camarines Norte and 2) notify the registered voters concerned of such change of address. This action by the COMELEC was opposed by the Sangguniang Bayan of Calauag, Quezon through Resolution No. 121[18] dated September 12, 1997. On November 27, 1997, the COMELEC issued Resolution No. 97-3721[19] noting and denying the Calauag Sangguniang Bayan Resolution with finality. Hence, the present second petition for certiorari, docketed as G.R. No. 132885, challenging the COMELEC twin Resolutions. This case was consolidated with G.R. No. 80796.[20] Now to our resolution of the two petitions. As regards the contempt proceedings (G.R. No. 80796), respondents Gov. Eduardo T. Rodriguez and Mayor Julio U. Lim aver that their act of removing the monument marker is in accordance with Article 429 of the Civil Code authorizing the owner or lawful possessor of a property to exclude any person from the enjoyment and disposal thereof. They claim that the survey conducted by the DENR technical team, as well as the subsequent setting up of the monument marker separating the two provinces, constitute usurpation of their territory because (1) the survey was made by the DENR without prior directive from the Office of the President and (2) the 1922 Executive Bureau decision, which was the basis of the survey, is technically inconsistent with and violative of: [a] Section 42, Article II of Act 2711 [Revised Administrative Code of 1917], [b] Republic Act No. 5480, [c] Section 10, Article X of the 1987 Constitution,[21] and [d] Section 10 of Republic Act No. 7160.[22] In his Report and Recommendation, Justice Teodoro Regino found that respondents act of removing the monument marker amounts to contumacious conduct defined under Section 3 (b), Rule 71 of the Revised Rules of Court (now 1997 Rules of Civil Procedure, as amended) which declares contemptuous any disobedience of or resistance to a lawful writ, process, order, or judgment or command of a court. " He found valid and regular the DENR survey, stressing that the installation of the monument marker was in compliance with this Courts 1989 Decision. Further, he viewed respondents persistent invocation of Section 42 of Act No. 2711 (Revised Administrative Code of 1917); Republic Act 5480; Section 10, Article X of the 1987 Constitution; and Section 10 of Republic Act 7160 as a continuing effort on their part to reopen settled issues in order to thwart the implementation of the 1989 SC Decision. Justice Regino's findings are reproduced hereunder: The import of the (Nov. 8, 1989 SC Decision) need not be essayed. The terms employed therein are clear. In removing the monument marker, the objective of the respondents (Eduardo T. Rodriguez and Julio U. Lim) was to remove the proof that they no longer have any territorial jurisdiction over the area determined by the DENR survey group as belonging to the petitioner (Province of Camarines Norte). x x x. They perceived the installation of the monument marker as an attack on the territorial integrity of Quezon Province despite the DENR technical working groups findings that the d isputed area belongs to petitioner. Respondents were thus doing what the Supreme Court decision expressly prohibited or enjoined, that is, the exercise of jurisdiction or political authority over an area held to be part of the territory of the petitioner based on the 1922 Decision of the Chief of the Executive Bureau. xxx xxx xxx

x x x. Respondents contumacious refusal to adhere to the decision was made with full understanding that their acts would fall under contempt of court as evidenced by the following declaration of the respondent Governor in his Demurrer to Evidence With Leave of Court, dated October 12, 1992, as follows: The whole case would have been different if factually the territory defined in the (1922) Decision of the Executive Bureau conformed with the prescription of Section 42 (of Article II, Revised Administrative Code of 1917), x x x. xxx xxx x x x[23] (Emphasis ours)

their own interpretation of what should be the correct description of the boundary line. Such willful disregard of our Decision was eloquently demonstrated when respondents caused the removal of the monument marker delineating the actual territorial boundary between the Provinces of Quezon and Camarines Norte. Parenthetically, exactly the same point was emphasized by this Court in the disbarment case[25] filed by Camarines Norte Governor Roy Padilla, Jr. against the counsel for the Province of Quezon, Attys. Jorge B Vargas and Jovito E. Talabong, docketed as A.C. No. 3774.[26] This Court reprimanded both lawyers for having told the DENR technical team that the province of Quezon shall (only) agree to the definition of the boundary line if it would comply with Section 42, Article II of Act No. 2711 (the Revised Administrative Code of 1917). There we said: Thus, it is clear to us that respondents insistence that the DENR Technical Working Group comply with Section 42, Article II of Act 2711, despite the Courts ruling that said provision of law had failed to identify this portion of the boundary between the two (2) provinces with sufficient specificity, which specificity was precisely supplied by the 16 June 1922 Decision of the Chief of the Executive Bureau, was but a disingenuous device to delay and perhaps frustrate the implementation of the Courts Decision in G.R. No. 80796, which Decision respondents vehemently disagree. This Court does not, as it cannot, always expect counsel of losing litigants graciously to accept the correctness of the decisions of this Court. But when such decisions reach finality, it is the duty of such counsel as officers of the Court and members of the Bar to obey those decisions, whatever their personal opinion may be in respect of the merits of the decisions. It is, of course, open to the respondents herein to seek to change those decisions they disagree with by going to the Congress of the Philippines to try to secure the enactment of a statute changing the boundary line already declared legally binding by this Court. Until such a statute is enacted, however, respondents owe a special duty faithfully and honestly to comply with final decisions of this Court. The Court cannot countenance any further disregard of this duty. It is of essence of an ordered and civilized community that the function of final resolution of disputes be located in a particular institution. In our system, that institution is this Court. ACCORDINGLY, the Court Resolved to REPRIMAND respondents Attys. Jorge B. Vargas, Jr. and Jovito E. Talabong for obstructing implementation of the Decision of this Court dated 8 November 1989 in G.R. No. 80796 . Respondents are hereby solemnly WARNED that any further attempts to delay or frustrate the implementation of the Decision in G.R. No. 80796 of the commission of similar act(s) tending towards the same end, will be dealt with more severely. Let copies of this Resolution be spread on respondents respective personal records in the Office of the Bar Confidant.[27] (Emphasis ours) Next, respondents vainly sought to justify their contemptuous conduct by invoking Republic Act No. 5480 (An Act Creating The Municipality Of Santa Elena In The Province Of Camarines Norte), which was approved on June 21, 1969. They claim that Section 1 of the law, which reads: SECTION 1. Barrios Salvacion, Bulala, Rizal, San Lorenzo, Pulong Guit-guit, Santa Elena, San Vicente, Basiad and San Pedro up to the boundary of the Province of Quezon and the Province of Camarines Norte as defined in Chapter three, Article II, Section forty-two of the Administrative Code, in the Municipality of Capalonga, Province of Camarines Norte, are hereby separated from said municipality, and constituted into a distinct and independent political entity, to be known as the Municipality of Santa Elena. x x x." (Emphasis ours) provides the latest definition of the boundary between Quezon and Camarines Norte.
Property || Art. 429 to 444|| 5

We agree with Justice Reginos findings. Indeed, it is highly improper for respondent Gov. Rodriguez to state in his Demurrer to Evidence that the whole case would have been different (meaning, this contempt incident would not have happened) had the territory defined in the (1922) Decision of the Executive Bureau conformed with the prescription of Section 42 (of Article II, Revised Administrative Code of 1917). Respondent Rodriguez knew very well that this issue on the subject territorial boundary had long been settled in our 1989 Decision where we ruled: "1. Turning to the first issue, we note that Section 42 (Article II, Revised Administrative Code of 1917) does set out a definition or description of the boundary line between Ambos Camarines and Quezon Province. We note, however, that Section 42 does not describe or define the entirety of that line in such a manner as to permit the whole boundary line to be located on the ground by a surveyor. Close examination of Section 42 will show that it is not the whole boundary line that is disputed but only a segment thereof. The boundary line from the peak of Mt. Cadig eastward to the peak of Mt. Labo and from there to a stone monument at the head-waters of the Pasay River and thence along the course of that river to the Gulf of Ragay, is described in terms which are sufficiently precise to permit a surveyor to locate that boundary line on the surface of the earth. It is the western portion of the boundary line - from the peak of Mt. Cadig westward to a point on the eastern shore of Basiad Bay - which is the subject of the boundary dispute. "It is pointed out by petitioner Camarines Norte, firstly, that the particular point on Basiad Bay that is the terminus of the boundary line is not specifically identified in Section 42, considering that the eastern shore of Basiad Bay is 25 kilometers in length, more or less, such that that terminal point could in theory be located anywhere along the 25kilometer shore line. Secondly, the specific direction or directions and the varying lengths (the 'metes and bounds') of the various segments of the boundary line to be projected from the terminus point on Basiad Bay onto Mt. Cadig's peak, are similarly not specified in Section 42. Thus, again, a surveyor on the ground would be unable to locate and monument the boundary line from Basiad Bay to Mt. Cadig if all he had was the language found in Section 42 of the Revised Administrative Code. We agree with petitioner Camarines Nortes argument. We consider that to that limited extent, the Ambos Camarines Quezon boundary line was undefined and that there was thus necessity for the 16 June 22 decision of the Chief of the Executive Bureau to provide more specific guidance that would permit the actual identification or location of the Basiad Bay Mt. Cadig portion of the boundary line between Ambos Camarines and Quezon Province: '[from the peak of Mt. Cadig] thence a straight line is drawn to the point of intersection of the interprovincial road between Camarines Norte and Tayabas (now Quezon) with the Tabugon River, thence following the course of the river to each mouth at the Basiad Bay.'"[24] (Emphasis ours) Very clearly, our 1989 Decision categorically declared valid and binding the 1922 EB decision upon the contending parties. Despite this, respondents stubbornly insisted on

Based on the records of the case, the respondents have a long record of resisting the claim of petitioner to the disputed area. x x x. The undersigned is, therefore, convinced that respondents completely understood the Supreme Court decision but chose instead to deliberately disobey it

They argue that nowhere in Section 1 can be found the subject nine (9) barangays to be within the territorial jurisdiction of Santa Elena, Camarines Norte. Hence, to include these 9 barangays to Santa Elena would violate not only R.A. No. 5480 but also Section 10, Article X of the 1987 Constitution and Section 10 of Republic Act 7160 (The Local Government Code of 1991), which laws require a plebiscite in cases of substantial alteration of territorial boundaries. Again, these arguments do not present any novel issue. Firstly, we have settled this matter when we disposed of the Province of Quezons motion for clarification of the 1989 SC Decision. We said: Considering that the motion for clarification of judgment dated March 26, 1990 filed by the counsel for respondent province of Quezon merely repeats an argument previously made in their motion for reconsideration, and considering that said motion for clarification is in effect a second motion for reconsideration, the first motion for reconsideration having been denied with finality, the Court resolved to note without action the said motion for clarification. The Court would simply add that Republic Act No. 5480 does not purport to have amended Section 42 of the Revised Administrative Code nor Section 2 of Act No. 2809, both as implemented in the decision dated 16 June 1922 of the Executive Bureau of the Department of Interior. xxx."[28] (Emphasis ours) Moreover, while Section 1 quoted above enumerates the component barangays of Santa Elena, the same section categorically extends Santa Elenas territorial jurisdiction up to the boundary of the Province of Quezon and the Province of Camarines Norte as defined in Chapter three, Article II, Section forty-two of the Administrative Code. That boundary has been defined in the 1922 EB Decision, which, in turn, was ordered enforced in our November 8, 1989 Decision. Verily, the enumeration of the barangays in Section 1 of R.A. No. 5480 is not intended to delimit the territorial jurisdiction of Santa Elena, Camarines Norte. And, secondly, the 1989 SC Decision emphatically stresses that the (1922 decision of the) Chief of the Executive Bureau did not x x x alter or re-define or amend an existing provincial boundary, the boundary line between Ambos Camarines and Tayabas (now Quezon Province). All that the Chief of the Executive Bureau did was to implement, upon the authority of the Secretary of Interior, Section 42 of Act No. 2711.[29] Necessarily, respondents argument on the non-compliance with the plebiscite requirement under Section 10, Article X of the 1987 Constitution, as well as Section 10 of Republic Act No. 7160, is misplaced. We also find baseless respondents claim that the DENR technical team conducted the survey without prior authority from the Office of the President. It cannot be gainsaid that the authority of the DENR technical team emanated from the Special Order No. 1179 duly issued by the DENR Secretary, the alter ego of the President. Being an alter ego, the acts of the DENR Secretary are presumed to be the acts of the President, unless expressly repudiated by the latter. The DENR technical team was precisely created in compliance with the 1989 SC Decision to conduct the survey. Thus, the DENR technical teams authority is beyond question. From the above disquisition, we hold that respondents Gov. Eduardo T. Rodriguez and Mayor Julio U. Lim openly disobeyed our November 8, 1989 Decision when they caused the removal of the monument marker installed by the DENR. The significance of the monument marker cannot simply be disregarded. As aptly explained by Engr. Mamerto Infante, it has a technical purpose of preserving the survey conducted by his team. [30] In fact, our 1989 Decision itself mandates to monument the Basiad Bay-Mt. Cadig line described in the 16 June 1922 decision of the Chief of the Executive Bureau. That respondents understood our 1989 Decision is fully borne by the records in these cases and well attested by their valiant effort in re-litigating issues already settled by this Court. That same effort, however, highlighted by their contumacious destruction of the monument,

worked adversely to their cause. It renders them liable for indirect contempt. We are well aware of the legal precept that the power of the court to punish contemptuous acts should be exercised on the preservative and not on the vindictive principle.[31] However, where, as here, there is clear and contumacious defiance of, or refusal to obey this Court's Decision, we will not hesitate to exercise our inherent power if only to maintain respect to this Court, for without which the administration of justice may falter or fail. We note that respondents Gov. Rodriguez and Mayor Lim committed the contemptuous act on October 14, 1991 and were charged for contempt under Section 3, Rule 71 of the Revised Rules of Court. Section 6 thereof imposes a penalty of fine not exceeding P1,000.00 or imprisonment of not more than six (6) months, or both. We believe the penalty of FINE in the amount of P1,000.00, with warning, is reasonable for this purpose. We now come to the petition for certiorari (G.R. No. 132885) instituted by the Province of Quezon, et al. against the COMELEC. Petitioners assail the COMELEC Resolutions No. 97-2406 (dated July 10, 1997) and No. 97-3721 (dated November 27, 1997) which, for election purposes, recognize the Province of Camarines Nortes territorial jurisdiction over the subject nine (9) barangays formerly considered part of Calauag, Quezon. They maintain that respondent COMELEC, in issuing the Resolutions, has committed grave abuse of discretion and/or acted without or in excess of jurisdiction, contending that such recognition violated Republic Act No. 5480; Section 10, Article X of the Constitution; and Section 10 of the Local Government Code. In its comment, the COMELEC asserts that it issued the assailed Resolutions in deference to the final (November 8, 1989) Decision of this Honorable Court in the case of Province of Camarines Norte vs. Province of Quezon (in G.R. No. 80796), and only after the issue of the land boundary dispute between the two provinces had been settled therein.[32] It further claims that the issuance of the challenged Resolutions was to enforce the 1989 SC Decision as directed by this Court in a subsequent En Banc Resolution dated August 4, 1994 in the same G.R. No. 80796, thus: The Court takes this occasion to stress that the Province of Quezon and Governor Eduardo Rodriguez are bound by the said final decision of this Court and that the boundary dispute there resolved is no longer a dispute and that all the attendant legal issues have been resolved with finality. That decision of this Court constitutes res adjudicata in respect of all offices and agencies of the Executive Department. Accordingly, the province of Camarines Norte is entitled, not to a status quo prior to the controversy, but rather to the prompt enforcement of the decision of this Court.[33] (Emphasis ours) We fully agree with respondent COMELEC. For showing high regard to this Courts Decision and Orders, we commend not only the COMELEC but also the Department of Budget and Management, the Department of Finance, the Department of Environment and Natural Resources, the Department of Interior and Local Government and the National Statistics Office. These government offices and agencies have collectively recognized the subject 9 barangays as part of Camarines Nortes jurisdiction. Sadly, it is only Quezon Province and its officials who ignore the finality of the Decision and Resolutions of this Court. Their present petition attempts to re-litigate the same issues judiciously passed upon by this Court with finality. It is but imperative for this Court to write finis to these cases. Indeed, every litigation must come to an end; otherwise, it would become even more intolerable than the wrong and injustice it is designed to correct.

WHEREFORE, the petition for contempt in G.R. No. 80796 is GRANTED. Respondents Eduardo T. Rodriguez and Julio U. Lim are adjudged GUILTY of INDIRECT CONTEMPT of this Court and, pursuant to Section 6, Rule 71 of the Revised Rules of Court, are FINED in the amount of P1,000.00 each, and WARNED that a repetition of similar misconduct will be dealt with more severely. The Province of Quezon, its representatives and any person acting on its behalf are ORDERED to REFRAIN from committing the same or similar act tending to obstruct the full implementation of this Courts Decision dated November 9, 1989 in G.R. No. 80796. Within Ten (10) days from notice of this Decision, respondents Eduardo T. Rodriguez and Julio U. Lim are ORDERED to RE-INSTALL, at their expense, the monument marker on the site where it was originally placed, under the direct supervision of the Department of Environment and Natural Resources. The petition for certiorari in G.R. No. 132885 is DISMISSED for lack of merit. Let a copy of this Decision be furnished the Office of the President and the Secretary of the Department of Interior and Local Government, with the request that the results of the survey conducted by the DENR Technical Working Group be FULLY and IMMEDIATELY implemented. Costs against respondents Eduardo T. Rodriguez and Julio U. Lim. This Decision is FINAL. SO ORDERED.

Property || Art. 429 to 444|| 6

SECOND DIVISION [G.R. No. 147076. June 17, 2004] 2. 3. METROPOLITAN WATERWORKS AND SEWERAGE SYSTEM, petitioner, vs. ACT THEATER, INC., respondent. DECISION CALLEJO, SR., J.: Before the Court is a petition for review on certiorari filed by the Metropolitan Waterworks and Sewerage System (MWSS), seeking to reverse and set aside the Decision[1] dated January 31, 2001 of the Court of Appeals in CA-G.R. CV No. 58581, which affirmed the civil aspect of the Decision[2] dated May 5, 1997 of the Regional Trial Court of Quezon City, Branch 77, directing the petitioner MWSS to pay the respondent Act Theater, Inc. damages and attorneys fees. The present case stemmed from the consolidated cases of Criminal Case No. Q-892412 entitled People of the Philippines v. Rodolfo Tabian, et al., for violation of Presidential Decree (P.D.) No. 401, as amended by Batas Pambansa Blg. 876, and Civil Case No. Q88-768 entitled Act Theater, Inc. v. Metropolitan Waterworks and Sewerage System. The two cases were jointly tried in the court a quo as they arose from the same factual circumstances, to wit: On September 22, 1988, four employees of the respondent Act Theater, Inc., namely, Rodolfo Tabian, Armando Aguilar, Arnel Concha and Modesto Ruales, were apprehended by members of the Quezon City police force for allegedly tampering a water meter in violation of P.D. No. 401, as amended by B.P. Blg. 876. The respondents employees were subsequently criminally charged (Criminal Case No. Q-89-2412) before the court a quo. On account of the incident, the respondents water service connection was cut off. Consequently, the respondent filed a complaint for injunction with damages (Civil Case No. Q-88-768) against the petitioner MWSS. In the civil case, the respondent alleged in its complaint filed with the court a quo that the petitioner acted arbitrarily, whimsically and capriciously, in cutting off the respondents water service connection without prior notice. Due to lack of water, the health and sanitation, not only of the respondents patrons but in the surrounding premises as well, were adversely affected. The respondent prayed that the petitioner be directed to pay damages. After due trial, the court a quo rendered its decision, the dispositive portion of which reads: In Criminal Case No. Q-89-2412 WHEREFORE, for failure of the prosecution to prove the guilt of the accused beyond reasonable doubt, the four (4) above-named Accused are hereby ACQUITTED of the crime charged.[3] In Civil Case No. Q-88-768 ... 1. Ordering defendant MWSS to pay plaintiff actual or compensatory damages in the amount of P25,000.00; and to return the sum of P200,000.00 deposited by the plaintiff for SO 4. 5.

the restoration of its water services after its disconnection on September 23, 1988; Defendants counterclaim for undercollection of P530,759.96 is dismissed for lack of merit; Ordering defendant MWSS to pay costs of suit; Ordering defendant MWSS to pay plaintiff the amount of P5,000.00 as attorneys fees; Making the mandatory injunction earlier issued to plaintiff Act Theater, Inc. permanent. ORDERED.[4]

A right is a power, privilege, or immunity guaranteed under a constitution, statute or decisional law, or recognized as a result of long usage,[6] constitutive of a legally enforceable claim of one person against the other.[7] Concededly, the petitioner, as the owner of the utility providing water supply to certain consumers including the respondent, had the right to exclude any person from the enjoyment and disposal thereof. However, the exercise of rights is not without limitations. Having the right should not be confused with the manner by which such right is to be exercised.[8] Article 19 of the Civil Code precisely sets the norms for the exercise of ones rights: Art. 19. Every person must, in the exercise of his rights and in the performance of his duties, act with justice, give everyone his due, and observe honesty and good faith. When a right is exercised in a manner which discards these norms resulting in damage to another, a legal wrong is committed for which actor can be held accountable.[9] In this case, the petitioner failed to act with justice and give the respondent what is due to it when the petitioner unceremoniously cut off the respondents water service connection. As correctly found by the appellate court: While it is true that MWSS had sent a notice of investigation to plaintiff-appellee prior to the disconnection of the latters water services, this was done only a few hours before the actual disconnection. Upon receipt of the notice and in order to ascertain the matter, Act sent its assistant manager Teodulo Gumalid, Jr. to the MWSS office but he was treated badly on the flimsy excuse that he had no authority to represent Act. Acts water services were cut at midnight of the day following the apprehension of the employees. Clearly, the plaintiff-appellee was denied due process when it was deprived of the water services. As a consequence thereof, Act had to contract another source to provide water for a number of days. Plaintiffappellee was also compelled to deposit with MWSS the sum of P200,000.00 for the restoration of their water services.[10] There is, thus, no reason to deviate from the uniform findings and conclusion of the court a quo and the appellate court that the petitioners act was arbitrary, injurious and prejudicial to the respondent, justifying the award of damages under Article 19 of the Civil Code. Finally, the amount of P500,000 as attorneys fees in that portion of the assailed decision which quoted the fallo of the court a quos decision was obviously a typographical error. As attorneys fees, the court a quo awarded the amount of P5,000 only. It was this amount, as well as actual and compensatory damages of P25,000 and the reimbursement of P200,000 deposited by the respondent for the restoration of its water supply, that the CA affirmed, as it expressly stated in its dispositive portion that finding no cogent reason to reverse the appealed Decision which is in conformity with the law and evidence, the same is hereby AFFIRMED.[11] The award of P5,000 as attorneys fees is reasonable and warranted. Attorneys fees may be awarded when a party is compelled to litigate or incur expenses to protect his interest by reason of an unjustified act of the other party.[12] WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals dated January 31, 2001 in CA-G.R. CV No. 58581 is AFFIRMED in toto. SO ORDERED.

Aggrieved, the petitioner appealed the civil aspect of the aforesaid decision to the CA. The appellate court, however, dismissed the appeal. According to the CA, the court a quo correctly found that the petitioners act of cutting off the respondents water service connection without prior notice was arbitrary, injurious and prejudicial to the latter justifying the award of damages under Article 19 of the Civil Code. Undaunted, the petitioner now comes to this Court alleging as follows: I WHETHER OR NOT THE HONORABLE COURT OF APPEAL[S] VALIDLY AFFIRMED THE DECISION OF THE REGIONAL TRIAL COURT IN RESOLVING THE PETITIONERS APPEAL; II WHETHER OR NOT THE HONORABLE COURT OF APPEALS VALIDLY UPHELD THE AWARD OF ATTORNEYS FEES; III WHETHER OR NOT THE HONORABLE COURT OF APPEAL[S] CORRECTLY APPLIED THE PROVISION OF ARTICLE 19 OF THE NEW CIVIL CODE WITHOUT CONSIDERING THE APPLICABLE PROVISION OF ARTICLE 429 OF THE SAME CODE.[5] Preliminarily, the petitioner harps on the fact that, in quoting the decretal portion of the court a quos decision, the CA erroneously typed P500,000 as the attorneys fees awarded in favor of the respondent when the same should only be P5,000. In any case, according to the petitioner, whether the amount is P500,000 or P5,000, the award of attorneys fees is improper considering that there was no discussion or statement in the body of the assailed decision justifying such award. The petitioner insists that in cutting off the respondents water service connection, the petitioner merely exercised its proprietary right under Article 429 of the Civil Code. The petition is devoid of merit. Article 429 of the Civil Code, relied upon by the petitioner in justifying its act of disconnecting the water supply of the respondent without prior notice, reads: Art. 429. The owner or lawful possessor of a thing has the right to exclude any person from the enjoyment and disposal thereof. For this purpose, he may use such force as may be reasonable to repel or prevent an actual or threatened unlawful physical invasion or usurpation of his property.

Property || Art. 429 to 444|| 7

SECOND DIVISION [G.R. No. 142668. August 31, 2004]

UNITED COCONUT PLANTERS BANK and LUIS MA. ONGSIAPCO, petitioners, vs. RUBEN E. BASCO, respondent. DECISION CALLEJO, SR., J.: This is a petition for review on certiorari assailing the Decision[1] of the Court of Appeals dated March 30, 2000, affirming, with modifications, the Decision[2] of the Regional Trial Court (RTC), Makati City, Branch 146, which found the petitioner bank liable for payment of damages and attorneys fees. The Case for the Respondent

In the meantime, we are more concerned with your denying Mr. Basco access to all bank premises. As you may know, he is currently connected with Cocolife as insurance agent. Given his 17-year tenure with your bank, he has established good relationships with many UCPB employees, who comprise the main source of his solicitations. In the course of his work as insurance agent, he needs free access to your bank premises, within reason, to add the unnecessary. Your memorandum has effectively curtailed his livelihood and he is once again becoming a victim of another illegal termination, so to speak. And Shakespeare said: You take his life when you do take the means whereby he lives. Mr. Bascos work as an insurance agent directly benefits UCPB, Cocolifes mother company. He performs his work in your premises peacefully without causing any disruption of bank operations. To deny him access to your premises for no reason except the pendency of the labor case, the outcome of which is still in doubt his liability, if any, certainly has not been proven is a clear abuse of right in violation of our clients rights. Denying him access to the bank, which is of a quasi-public nature, is an undue restriction on his freedom of movement and right to make a livelihood, comprising gross violations of his basic human rights. (This is Human Rights Week, ironically). We understand that Mr. Basco has been a stockholder of record of 804 common shares of the capital stock of UCPB since July 1983. As such, he certainly deserves better treatment than the one he has been receiving from your office regarding property he partly owns. He is a particle of corporate sovereignty. We doubt that you can impose the functional equivalent of the penalty of destierro on our client who really wishes only to keep his small place in the sun, to survive and breathe. No activity can be more legitimate than to toil for a living. Let us live and let live.[12] In his reply dated December 12, 1995, Ongsiapco informed the respondent that his request could not be granted: As you understand, we are a banking institution; and as such, we deal with matters involving confidences of clients. This is among the many reasons why we, as a matter of policy, do not allow non-employees to have free access to areas where our employees work. Of course, there are places where visitors may meet our officers and employees to discuss business matters; unfortunately, we have limited areas where our officers and employees can entertain non-official matters. Furthermore, in keeping with good business practices, the Bank prohibits solicitation, peddling and selling of goods, service and other commodities within its premises as it disrupts the efficient performance and function of the employees. Please be assured that it is farthest from our intention to discriminate against your client. In the same vein, it is highly improper for us to carve exceptions to our policies simply to accommodate your clients business ventures.[13] The respondent was undaunted. At 5:30 p.m. of December 21, 1995, he went to the office of Junne Cacay, the Assistant Manager of the Makati Branch. Cacay was then having a conference with Bong Braganza, an officer of the UCPB Sucat Branch. Cacay entertained the respondent although the latter did have an appointment. Cacay even informed him that he had a friend who wanted to procure an insurance policy.[14] Momentarily, a security guard of the bank approached the respondent and told him that it was already past office hours. He was also reminded not to stay longer than he should in

the bank premises.[15] Cacay told the guard that the respondent would be leaving shortly.[16] The respondent was embarrassed and told Cacay that he was already leaving.[17] At 1:30 p.m. of January 31, 1996, the respondent went to the UCPB Makati Branch to receive a check from Rene Jolo, a bank employee, and to deposit money with the bank for a friend.[18] He seated himself on a sofa fronting the tellers booth[19] where other people were also seated.[20] Meanwhile, two security guards approached the respondent. The guards showed him the Ongsiapcos Memorandum and told him to leave the bank premises. The respondent pleaded that he be allowed to finish his transaction before leaving. One of the security guards contacted the management and was told to allow the respondent to finish his transaction with the bank. Momentarily, Jose Regino Casil, an employee of the bank who was in the 7th floor of the building, was asked by Rene Jolo to bring a check to the respondent, who was waiting in the lobby in front of the tellers booth.[21] Casil agreed and went down to the ground floor of the building, through the elevator. He was standing in the working area near the Automated Teller Machine (ATM) Section[22] in the ground floor when he saw the respondent standing near the sofa[23] near the two security guards.[24] He motioned the respondent to come and get the check, but the security guard tapped the respondent on the shoulder and prevented the latter from approaching Casil. The latter then walked towards the respondent and handed him the check from Jolo. Before leaving, the respondent requested the security guard to log his presence in the logbook. The guard did as requested and the respondents presen ce was recorded in the logbook.[25] On March 11, 1996, the respondent filed a complaint for damages against the petitioners UCPB and Ongsiapco in the RTC of Manila, alleging inter alia, that 12. It is readily apparent from this exchange of correspondence that defendant bank' acknowledged reason for barring plaintiff from its premises - the pending labor case is a mere pretense for its real vindictive and invidious intent: to prevent plaintiff, and plaintiff alone, from carrying out his trade as an insurance agent among defendant banks employees, a practice openly and commonly allowed and tolerated (encouraged even, for some favored proverbial sacred cows) in the bank premises, now being unjustly denied to plaintiff on spurious grounds. 13. Defendants, to this day, have refused to act on plaintiffs claim to be allowed even in only the limited areas where [the banks] officers and employees can entertain non-official matters and have maintained the policy banning plaintiff from all bank premises. As he had dared exercised his legal right to question his dismissal, he is being penalized with a variation of destierro, available in criminal cases where the standard however, after proper hearing, is much more stringent and based on more noble grounds than mere pique or vindictiveness. 14. This appallingly discriminatory policy resulted in an incident on January 31, 1996 at 1:30 p.m. at defendant banks branch located at its head office, which caused plaintiff tremendous undeserved humiliation, embarrassment, and loss of face.[26] 15. Defendants memorandum and the consequent acts of defendants security guards, together with defendant Ongsiapcos disingenuous letter of December 12, 1995, are suggestive of malice and bad faith in derogation of plaintiffs right and dignity as a human being and citizen of this country, which acts have caused him considerable undeserved
Property || Art. 429 to 444|| 8

Respondent Ruben E. Basco had been employed with the petitioner United Coconut Planters Bank (UCPB) for seventeen (17) years.[3] He was also a stockholder thereof and owned 804 common shares of stock at the par value of P1.00.[4] He likewise maintained a checking account with the bank at its Las Pias Branch under Account No. 117-001520-6.[5] Aside from his employment with the bank, the respondent also worked as an underwriter at the United Coconut Planters Life Association (Coco Life), a subsidiary of UCPB since December, 1992.[6] The respondent also solicited insurance policies from UCPB employees. On June 19, 1995, the respondent received a letter from the UCPB informing him of the termination of his employment with the bank for grave abuse of discretion and authority, and breach of trust in the conduct of his job as Bank Operations Manager of its Olongapo Branch. The respondent thereafter filed a complaint for illegal dismissal, non-payment of salaries, and damages against the bank in the National Labor Relations Commission (NLRC), docketed as NLRC Cases Nos. 00-09-05354-92 and 00-09-05354-93. However, the respondent still frequented the UCPB main office in Makati City to solicit insurance policies from the employees thereat. He also discussed the complaint he filed against the bank with the said employees.[7] The respondent was also employed by All-Asia Life Insurance Company as an underwriter. At one time, the lawyers of the UCPB had an informal conference with him at the head office of the bank, during which the respondent was offered money so that the case could be amicably settled. The respondent revealed the incident to some of the bank employees.[8] On November 15, 1995, Luis Ma. Ongsiapco, UCPB First Vice-President, Human Resource Division, issued a Memorandum to Jesus Belanio, the Vice-President of the Security Department, informing him that the respondents employment had been terminated as of June 19, 1995, that the latter filed charges against the bank and that the case was still on-going. Ongsiapco instructed Belanio not to allow the respondent access to all bank premises.[9] Attached to the Memorandum was a passport-size picture of the respondent. The next day, the security guards on duty were directed to strictly impose the security procedure in conformity with Ongsiapcos Memorandum.[10] On December 7, 1995, the respondent, through counsel, wrote Ongsiapco, requesting that such Memorandum be reconsidered, and that he be allowed entry into the bank premises.[11] His counsel emphasized that

embarrassment. Even if defendants, for the sake of argument, may be acting within their rights, they cannot exercise same abusively, as they must, always, act with justice and in good faith, and give plaintiff his due.[27] The respondent prayed that, after trial, judgment be rendered in his favor, as follows: WHEREFORE, it is respectfully prayed that judgment issue ordering defendants: 1. To rescind the directive to its agents barring plaintiff from all bank premises as embodied in the memorandum of November 15, 1995, and allow plaintiff access to the premises of defendant bank, including all its branches, which are open to members of the general public, during reasonable hours, to be able to conduct lawful business without being subject to invidious discrimination; and 2. To pay plaintiff P100,000.00 as moral damages, P100,000.00 as exemplary damages, and P50,000.00 by way of attorneys fees. Plaintiff likewise prays for costs, interest, the disbursements of this action, and such other further relief as may be deemed just and equitable in the premises.[28] In their Answer to the complaint, the petitioners interposed the following affirmative defenses: 9. Plaintiff had been employed as Branch Operations Officer, Olongapo Branch, of defendant United Coconut Planters Bank. In or about the period May to June 1992, he was, together with other fellow officers and employees, investigated by the bank in connection with various anomalies. As a result of the investigation, plaintiff was recommended terminated on findings of fraud and abuse of discretion in the performance of his work. He was found by the banks Committee on Employee Discipline to have been guilty of committing or taking part in the commission of the following: a. Abuse of discretion in connection with actions taken beyond or outside the limits of his authority. b. Borrowing money from a bank client. c. Gross negligence or dereliction of duty in the implementation of bank policies or valid orders from management. d. Direct refusal or willful failure to perform, or delay in performing, an assigned task. e. Fraud or willful breach of trust in the conduct of his work. f. Falsification or forgery of bank records/documents. 10. Plaintiff thereafter decided to contest his termination by filing an action for illegal dismissal against the bank. Despite the pendency of this litigation, plaintiff was reported visiting employees of the bank in their place of work during work hours, and circulating false information concerning the status of his case against the bank, including alleged offers by management of a monetary settlement for his illegal dismissal. 11. Defendants acted to protect the banks interest by preventing plaintiffs access to the banks offices, and at the same time informing him of that decision.

Plaintiff purported to insist on seeing and talking to the banks employees despite this decision, claiming he needed to do this in connection with his insurance solicitation activities, but the bank has not reconsidered. 12. The complaint states, and plaintiff has, no cause of action against defendants.[29] The petitioners likewise interposed compulsory counterclaims for damages. The Case for the Petitioners

SO ORDERED.[37] The trial court held that the petitioners abused their right; hence, were liable to the respondent for damages under Article 19 of the New Civil Code. The petitioners appealed the decision to the Court of Appeals and raised the following issues: 4.1 Did the appellants abuse their right when they issued the Memorandum? 4.2 Did the appellants abuse their right when Basco was asked to leave the bank premises, in implementation of the Memorandum, on 21 December 1995? 4.3. Did the appellants abuse their right when Basco was asked to leave the bank premises, in implementation of the Memorandum, on 31 January 1995? 4.4. Is Basco entitled to moral and exemplary damages and attorneys fees? 4.5. Are the appellants entitled to their counterclaim?[38] The CA rendered a Decision on March 30, 2000, affirming the decision of the RTC with modifications. The CA deleted the awards for moral and exemplary damages, but ordered the petitioner bank to pay nominal damages on its finding that latter abused its right when its security guards stopped the respondent from proceeding to the working area near the ATM section to get the check from Casil. The decretal portion of the decision reads: WHEREFORE, the Decision of the Regional Trial Court dated May 29, 1998 is hereby MODIFIED as follows: 1. The awards for moral and exemplary damages are deleted; 2. The award for attorneys fees is deleted; 3. The order rescinding Memorandum dated November 15, 1995 is set aside; and 4. UCPB is ordered to pay nominal damages in the amount of P25,000.00 to plaintiff-appellee. Costs de oficio.[39] The Present Petition

The petitioners adduced evidence that a day or so before November 15, 1995, petitioner Ongsiapco was at the 10th floor of the main office of the bank where the training room of the Management Development Training Office was located. Some of the banks management employees were then undergoing training. The bank also kept important records in the said floor. When Ongsiapco passed by, he saw the respondent talking to some of the trainees. Ongsiapco was surprised because non-participants in the training were not supposed to be in the premises.[30] Besides, the respondent had been dismissed and had filed complaints against the bank with the NLRC. Ongsiapco was worried that bank records could be purloined and employees could be hurt. The next day, Ongsiapco contacted the training supervisor and inquired why the respondent was in the training room the day before. The supervisor replied that he did not know why.[31] Thus, on November 15, 1995, Ongsiapco issued a Memorandum to Belanio, the Vice-President for Security Services, directing the latter not to allow the respondent access to the bank premises near the working area.[32] The said Memorandum was circulated by the Chief of Security to the security guards and bank employees. At about 12:30 p.m. on January 31, 1996, Security Guard Raul Caspe, a substitute for the regular guard who was on leave, noticed the respondent seated on the sofa in front of the tellers booth.[33] Caspe notified his superior of the respondents presence, and was instructed not to confront the respondent if the latter was going to make a deposit or withdrawal.[34] Caspe was also instructed not to allow the respondent to go to the upper floors of the building.[35] The respondent went to the tellers booth and, after a while, seated himself anew on the sofa. Momentarily, Caspe noticed Casil, another employee of the bank who was at the working section of the Deposit Service Department (DSD), motioning to the respondent to get the check. The latter stood up and proceeded in the direction of Casils workstation. After the respondent had taken about six to seven paces from the sofa, Caspe and the company guard approached him. The guards politely showed Ongsiapcos Memorandum to the respondent and told the latter that he was not allowed to enter the DSD working area; it was lunch break and no outsider was allowed in that area. [36] The respondent looked at the Memorandum and complied. On May 29, 1998, the trial court rendered judgment in favor of the respondent. The fallo of the decision reads: WHEREFORE, premises considered, defendants are hereby adjudged liable to plaintiff and orders them to rescind and set-aside the Memorandum of November 15, 1995 and orders them to pay plaintiff the following: 1) the amount of P100,000.00 as moral damages; 2) the amount of P50,000.00 as exemplary damages; 3) P50,000.00 for and as attorneys fees; 4) Cost of suit. Defendants counterclaim is dismissed for lack of merit.

The petitioners now raise the following issues before this Court: I. Whether or not the appellate court erred when it found that UCPB excessively exercised its right to self-help to the detriment of Basco as a depositor, when on January 31, 1996, its security personnel stopped respondent from proceeding to the area restricted to UCPBs employees. Whether or not the appellate court erred when it ruled that respondent is entitled to nominal damages. Whether or not the appellate court erred when it did not award the petitioners valid and lawful counterclaim.[40]
Property || Art. 429 to 444|| 9

II. III.

The core issues are the following: (a) whether or not the petitioner bank abused its right when it issued, through petitioner Ongsiapco, the Memorandum barring the respondent access to all bank premises; (b) whether or not petitioner bank is liable for nominal damages in view of the incident involving its security guard Caspe, who stopped the respondent from proceeding to the working area of the ATM section to get the check from Casil; and (c) whether or not the petitioner bank is entitled to damages on its counterclaim. The Ruling of the Court

such limitations are not contrary to the law.[43] It bears stressing that property rights must be considered, for many purposes, not as absolute, unrestricted dominions but as an aggregation of qualified privileges, the limits of which are prescribed by the equality of rights, and the correlation of rights and obligations necessary for the highest enjoyment of property by the entire community of proprietors.[44] Indeed, in Rellosa vs. Pellosis,[45] we held that: Petitioner might verily be the owner of the land, with the right to enjoy and to exclude any person from the enjoyment and disposal thereof, but the exercise of these rights is not without limitations. The abuse of rights rule established in Article 19 of the Civil Code requires every person to act with justice, to give everyone his due; and to observe honesty and good faith. When right is exercised in a manner which discards these norms resulting in damage to another, a legal wrong is committed for which the actor can be held accountable. Rights of property, like all other social and conventional rights, are subject to such reasonable limitations in their enjoyment and to such reasonable restraints established by law.[46] In this case, the Memorandum of the petitioner Ongsiapco dated November 15, 1995, reads as follows: MEMO TO : MR. JESUS M. BELANIO Vice President Security Department

circumstances. The said Memorandum is all-embracing and admits of no exceptions whatsoever. Moreover, the security guards were enjoined to strictly implement the same. We agree that the petitioner may prohibit non-employees from entering the working area of the ATM section. However, under the said Memorandum, even if the respondent wished to go to the bank to encash a check drawn and issued to him by a depositor of the petitioner bank in payment of an obligation, or to withdraw from his account therein, or to transact business with the said bank and exercise his right as a depositor, he could not do so as he was barred from entry into the bank. Even if the respondent wanted to go to the petitioner bank to confer with the corporate secretary in connection with his shares of stock therein, he could not do so, since as stated in the Memorandum of petitioner Ongsiapco, he would not be allowed access to all the bank premises. The said Memorandum, as worded, violates the right of the respondent as a stockholder or a depositor of the petitioner bank, for being capricious and arbitrary. The Memorandum even contravenes Article XII, paragraph 4 (4.1 and 4.2) of the Code of Ethics issued by the petitioner bank itself, which provides that one whose employment had been terminated by the petitioner bank may, nevertheless, be allowed access to bank premises, thus: 4.1 As a client of the Bank in the transaction of a regular bank-client activity. 4.2 When the offending party is on official business concerning his employment with the Bank with the prior approval and supervision of the Head of HRD or of the Division Head, or of the Branch Head in case of branches.[48] For another, the Memorandum, as worded, is contrary to the intention of the petitioners. Evidently, the petitioners did not intend to bar the respondent from access to all bank premises under all circumstances. When he testified, petitioner Ongsiapco admitted that a bank employee whose services had been terminated may be allowed to see an employee of the bank and may be allowed access to the bank premises under certain conditions, viz: ATTY. R. ALIKPALA Q So the permission you are referring to is merely a permission to be granted by the security guard? No, sir, not the security guard. The security will call the office where they are going. Because this is the same procedure they do for visitors. Anybody who wants to see anybody in the bank before they are allowed access or entry, they call up the department or the division. So I want to clarify, Mr. Witness. Former bank employees are not allowed within the bank premises until after the security guard call, which ever department they are headed for, and that they give the permission and they tell the security guard to allow the person? Yes, Sir, that is the usual procedure. If an employee resigned from the bank, same treatment? Yes, Sir. If an employee was terminated by the bank for cause, same treatment?
Property || Art. 429 to 444|| 10

On the first issue, the petitioners aver that the petitioner bank has the right to prohibit the respondent from access to all bank premises under Article 429 of the New Civil Code, which provides that: Art. 429. The owner or lawful possessor of a thing has the right to exclude any person from the enjoyment and disposal thereof. For this purpose, he may use such force as may be reasonably necessary to repel or prevent an actual or threatened unlawful physical invasion or usurpation of his property. The petitioners contend that the provision which enunciates the principle of self-help applies when there is a legitimate necessity to personally or through another, prevent not only an unlawful, actual, but also a threatened unlawful aggression or usurpation of its properties and records, and its personnel and customers/clients who are in its premises. The petitioners assert that petitioner Ongsiapco issued his Memorandum dated November 15, 1995 because the respondent had been dismissed from his employment for varied grave offenses; hence, his presence in the premises of the bank posed a threat to the integrity of its records and to the persons of its personnel. Besides, the petitioners contend, the respondent, while in the bank premises, conversed with bank employees about his complaint for illegal dismissal against the petitioner bank then pending before the Labor Arbiter, including negotiations with the petitioner banks counsels for an amicable settlement of the said case. The respondent, for his part, avers that Article 429 of the New Civil Code does not give to the petitioner bank the absolute right to exclude him, a stockholder and a depositor, from having access to the bank premises, absent any clear and convincing evidence that his presence therein posed an imminent threat or peril to its property and records, and the persons of its customers/clients. We agree with the respondent bank that it has the right to exclude certain individuals from its premises or to limit their access thereto as to time, to protect, not only its premises and records, but also the persons of its personnel and its customers/clients while in the premises. After all, by its very nature, the business of the petitioner bank is so impressed with public trust; banks are mandated to exercise a higher degree of diligence in the handling of its affairs than that expected of an ordinary business enterprise. [41] Banks handle transactions involving millions of pesos and properties worth considerable sums of money. The banking business will thrive only as long as it maintains the trust and confidence of its customers/clients. Indeed, the very nature of their work, the degree of responsibility, care and trustworthiness expected of officials and employees of the bank is far greater than those of ordinary officers and employees in the other business firms. [42] Hence, no effort must be spared by banks and their officers and employees to ensure and preserve the trust and confidence of the general public and its customers/clients, as well as the integrity of its records and the safety and well being of its customers/clients while in its premises. For the said purpose, banks may impose reasonable conditions or limitations to access by non-employees to its premises and records, such as the exclusion of nonemployees from the working areas for employees, even absent any imminent or actual unlawful aggression on or an invasion of its properties or usurpation thereof, provided that

DATE : RE

15 November 1995 : MR. RUBEN E. BASCO

Please be advised that Mr. Ruben E. Basco was terminated for a cause by the Bank on 19 June 1992. He filed charges against the bank and the case is still on-going. In view of this, he should not be allowed access to all bank premises. (Sgd.) LUIS MA. ONGSIAPCO First Vice President Human Resource Division 16 November 1995 TO: ALL GUARDS ON DUTY

Strictly adhere/impose Security Procedure RE: Admission to Bank premises. For your compliance. (Signature) 11/16/95 JOSE G. TORIAGA[47] On its face, the Memorandum barred the respondent, a stockholder of the petitioner bank and one of its depositors, from gaining access to all bank premises under all

A Q A Q

A Q A Q A Q A Q

Yes, Sir. Outsiders who are not employees or who were never employees of the bank also must ask permission? Yes, Sir. Because there is a security control at the lobby. You mentioned that this is a general rule? Yes, Sir. Is this rule written down in black and white anywhere? I think this is more of a security procedure. But being a huge financial institution, we expect Cocobank has its procedure written down in black and white?

becomes you know because you do not all these people, you do not know every client of the bank so you just allow them inside the bank? A Yes, the premises.[49]

Petitioner Ongsiapco also testified that a former employee who is a customer/client of the petitioner bank also has access to the bank premises, except those areas reserved for its officers and employees, such as the working areas: ATTY. R. ALIKPALA Q So Mr. Witness, just for the sake of clarity. The ground floor area is where the regular consumer banking services are held? What do you call this portion? That is the Deposit Servicing Department. Where the . Where the people transact business.

floors, which were limited to bank personnel only (TSN, pp. 6-9, June 4, 1997), the said act exposed plaintiff-appellee to humiliation considering that it was done in full view of other bank customers. UCPB security personnel should have waited until they were sure that plaintiff-appellee had entered the restricted areas and then implemented the memorandum order by asking him to leave the premises. Technically, plaintiff-appellee was still in the depositing area when UCPB security personnel approached him. In this case, UCPBs exercise of its right to self-help was in excess and abusive to the detriment of the right of plaintiff-appellee as depositor of said Bank, hence, warranting the award of nominal damages in favor of plaintiffappellee. Nominal damages are adjudicated in order that a right of a plaintiff, which has been violated or invaded by the defendant, may be vindicated or recognized and not for the purpose of indemnifying any loss suffered by him (Japan Airlines vs. Court of Appeals, 294 SCRA 19).[51] The petitioners contend that the respondent is not entitled to nominal damages and that the appellate court erred in so ruling for the following reasons: (a) the respondent failed to prove that the petitioner bank violated any of his rights; (b) the respondent did not suffer any humiliation because of the overt acts of the security guards; (c) even if the respondent did suffer humiliation, there was no breach of duty committed by the petitioner bank since its security guards politely asked the respondent not to proceed to the working area of the ATM section because they merely acted pursuant to the Memorandum of petitioner Ongsiapco, and accordingly, under Article 429 of the New Civil Code, this is a case of damnum absque injuria;[52] and (d) the respondent staged the whole incident so that he could create evidence to file suit against the petitioners. We rule in favor of the petitioners. The evidence on record shows that Casil was in the working area of the ATM section on the ground floor when he motioned the respondent to approach him and receive the check. The respondent then stood up and walked towards the direction of Casil. Indubitably, the respondent was set to enter the working area, where non-employees were prohibited entry; from there, the respondent could go up to the upper floors of the banks premises through the elevator or the stairway. Caspe and the company guard had no other recourse but prevent the respondent from going to and entering such working area. The security guards need not have waited for the respondent to actually commence entering the working area before stopping the latter. Indeed, it would have been more embarrassing for the respondent to have started walking to the working area only to be halted by two uniformed security guards and disallowed entry, in full view of bank customers. It bears stressing that the security guards were polite to the respondent and even apologized for any inconvenience caused him. The respondent could have just motioned to Casil to give him the check at the lobby near the tellers booth, instead of proceeding to and entering the working area himself, which the respondent knew to be an area off-limits to non-employees. He did not. The respondent failed to adduce evidence other than his testimony that people in the ground floor of the petitioner bank saw him being stopped from proceeding to the working area of the bank. Evidently, the respondent did not suffer embarrassment, inconvenience or discomfort which, however, partakes of the nature of damnum absque injuria, i.e. damage without injury or damage inflicted without injustice, or loss or damage without violation of legal rights, or a wrong due to a pain for which the law provides no remedy.[53] Hence, the award of nominal damages by the Court of Appeals should be deleted. On the third issue, we now hold that the petitioner bank is not entitled to damages and attorneys fees as its counterclaim. There is no evidence on record that the respondent acted in bad faith or with malice in filing his complaint against the petitioners. Well-settled is the rule that the commencement of an action does not per se make the action wrongful and subject the action to damages, for the law could not have meant to impose a penalty on
Property || Art. 429 to 444|| 11

A Q A

ATTY. A. BATUHAN Your Honor, objection. Argumentative, Your Honor. There is no question posed at all, Your Honor. COURT Answer. Is there any guideline? A Q A There must be a guideline of the security. But you are not very familiar about the security procedures? Yes, Sir.

ATTY. R. ALIKAPALA Q A Q They are freely allowed in this area? Yes, Sir. This is the area where there are counters, Teller, where a person would normally go to let us say open a bank account or to request for managers check, is that correct? Yes, Sir. So, in this portion, no, I mean beyond this portion, meaning the working areas and second floor up, outsiders will have to ask express permission from the security guard? Yes, Sir. And you say that the security guards are instructed to verify the purpose of every person who goes into this area? As far as I know, sir.[50]

ATTY. R. ALIKPALA Q A Q A Q A Q Mr. Ongsiapco, the agency that you hired follows certain procedures? Yes, Sir. Which of course are under the direct control and supervision of the bank? Yes, Sir. And did the security agency have any of this procedure written down? It will be given to them by the Security Department, because they are under the Security Department. But if an employee is only entering the ground floor bank area, where customers of the bank are normally allowed, whether depositors or not, they dont need to ask for express permission, is that correct? Yes, if they are client. Even if they are not client, but let us say they have to encash a check paid to them by someone? He is a client then. But he is not yet a client when he enters the bank premises. He only

A Q

A Q A

It behooved the petitioners to revise such Memorandum to conform to its Code of Ethics and their intentions when it was issued, absent facts and circumstances that occurred pendente lite which warrant the retention of the Memorandum as presently worded. On the second issue, the Court of Appeals ruled that the petitioner bank is liable for nominal damages to the respondent despite its finding that the petitioners had the right to issue the Memorandum. The CA ratiocinated that the petitioner bank should have allowed the respondent to walk towards the restricted area of the ATM section until they were sure that he had entered such area, and only then could the guards enforce the Memorandum of petitioner Ongsiapco. The Court of Appeals ruled that for such failure of the security guards, the petitioner bank thereby abused its right of self-help and violated the respondent's right as one of its depositors: With respect, however, to the second incident on January 31, 1996, it appears that although according to UCPB security personnel they tried to stop plaintiff-appellee from proceeding to the stairs leading to the upper

A Q A Q

the right to litigate. We reiterate case law that if damages result from a partys exercise of a right, it is damnum absque injuria.[54] IN LIGHT OF ALL THE FOREGOING, the petition is GRANTED. The assailed Decision of the Court of Appeals is REVERSED and SET ASIDE. The complaint of the respondent in the trial court and the counterclaims of the petitioners are DISMISSED. No costs. SO ORDERED.

REYNALDO VILLAFUERTE and PERLITA T. VILLAFUERTE, P e t i t i o n e r s,

and continued operating the gas station (Exhibits 3-B, 3-C and 3-F, Daleon). On May 9, 1989, in the Office of the Barangay Captain of Barangay Tres, Lucena City, a complaint for ejectment was filed by Gonzalo Daleon against the Villafuertes (Exhibit 6, Daleon). Evidently, no settlement was reached thereat, as shown by a certification to file action issued by the lupon. With their problem with the Daleon brothers far from over, the Villafuertes were apt for another one; their lease contract with Edilberto de Mesa was not renewed when it expired on December 31, 1989. Nonetheless, and duplicating what they had done in the case of the property of the Daleon brothers, the spouses continued to operate their gasoline station and other businesses on the lot of de Mesa despite the latters demand to vacate. controversy. What transpired next lays at the core of the instant

- versus

HON. COURT OF APPEALS, EDILBERTO DE MESA and GONZALO DALEON, R e s p o n d e n t s. DECISION

CHICO-NAZARIO, J.: This is a petition for review on certiorari of the Decision[1] of the Court of Appeals in CA-G.R. CV No. 41871 which affirmed, with modification, the decision[2] of the Regional Trial Court, Branch 55, Lucena City, in Civil Case No. 90-11 entitled, Reynaldo C. Villafuerte and Perlita Tan Villafuerte v. Edilberto De Mesa and Gonzalo Daleon . The facts, as established by the Court of Appeals, follow: Appelees the spouses Reynaldo C. Villafuerte and Perlita Tan-Villafuerte operated a gasoline station known as Peewees Petron Powerhouse Service Station and General Merchandise on the premises of three (3) adjoining lots at the corner of Gomez Street and Quezon Avenue in Lucena City. One of these lots, Lot No. 2948-A with an area of 575 square meters, is owned by several persons, one of whom is appellant Edilberto de Mesa, while the other lot, Lot 2948-B with an area of 290 square meters, is owned by appellant Gonzalo Daleon and his brother Federico A. Daleon. The remaining lot belongs to Mrs. Anicia YapTan, mother of appellee Perlita Tan-Villafuerte. Appellants Edilberto de Mesa and Gonzalo Daleon acquired their respective lots subject to the lease by Petrophil Corporation which had built thereon the gasoline station being managed by the Villafuerte couple. When the lease of Petrophil Corporation expired on December 31, 1988, the Villafuertes obtained a new lease on Lot No. 2948-A from appellant Edilberto de Mesa for a period expiring on December 31, 1989, thus:. 1 This lease will be for a period of one (1) year only, from January 1, 1989 and will terminate on the 31st of December 1989 at a monthly rental of FOUR THOUSAND PESOS (P4,000.00). (Exhibit 1-A-1 De Mesa). As regards Lot 2948-B of the Daleon brothers, the Villafuertes were not as lucky. For, instead of obtaining a lease renewal, what they received were demand letters from the brothers counsel ordering them to vacate the premises. Instead of complying therewith, the Villafuertes simply ignored the demand

It appears that in the early morning of February 1, 1990, appellants Edilberto de Mesa and Gonzalo Daleon, with the aid of several persons and without the knowledge of the Villafuertes, caused the closure of the latters gasoline station by constructing fences around it. The following day February 2, 1990 the Villafuertes countered with a complaint for damages with preliminary mandatory injunction against both Edilberto de Mesa and Gonzalo Daleon. Docketed in the court below as Civil Case No. 90-11, the complaint seeks vindication for the alleged malicious and unlawful fencing of the plaintiffs business premises (Records, pp. 1-6). Invoking their status as owners of the withheld premises, the defendants admitted in their respective answers having caused the fencing of the plaintiffs gasoline station thereat but reasoned out that they did so on account of the plaintiffs refusal to vacate the same despite demands. After hearing the parties in connection with the plaintiffs application for a writ of preliminary mandatory injunction, the lower court, in its order of May 23, 1990, ruled that with the expiration of the lease on the defendants property, the plaintiffs have no more right to stay thereon and, therefore, cannot pretend to have a clear and unmistakable right to an injunctive writ and accordingly denied their application therefore (Rec., p. 186). In a subsequent order of July 30, 1990, the same court denied the Villafuertes motion for reconsideration (Rec., p. 237). Later, with leave of court, the Villafuertes amended their complaint to allege, among others, that the complained acts of the defendants cost them the following items of actual damages: a) Daily Sales (4000-5000 lts.) at .35lt.
Property || Art. 429 to 444|| 12

mark-up, P1,750 x 270 days P472,500.00 b) Storage Fee of POL (Petroleum, Oil & Lubricants) Recom 4 at 5% for 100,000 lts. = 5000 lts. X 3 quarters x P6.00/lt. 90,000.00 c) Tires, Batteries, Accessories (TBA) Gen. Merchandise Sales, P50,000/mo. 20% markUp = P10,000 x 9 months 90,000.00 d) Hauling of Petroleum products for Peewees Petron Powerhouse, 2 trips weekly, P1,500 X 8 trips/mo. X 9 months 108,000.00 e) Hauling of Petroleum products for military 7 trips/qtr., P1,500/trip x 21 (3 qtrs.) 31,500.00 f) Balloon Business (Sunshine Balloons) P50,000.00 capital, P6,000/mo. Income TOTAL LOSS 200,000.00 g) Uncollected 619,030.61 Debts P2,176,293.44 (Rec., pp. 290, 300)

TOTAL

--

itself to remove the materials and equipment related to the operation of the gasoline station on the subject premises. (Rec., pp. 355-356). After the parties herein had presented their respective evidence, the lower court came out with the decision now under review. Dated November 13, 1990, the decision dispositively reads: WHEREFORE, judgment is hereby rendered in favor of the plaintiffs and ordering the defendants Edliberto de Mesa and Gonzalo Daleon to pay, jointly and severally, plaintiffs the following: 1. Actual damages in the total amount of TWO MILLION ONE HUNDRED SEVENTY SIX THOUSAND AND TWO HUNDRED NINETY THREE PESOS AND FORTY FOUR CENTAVOS (P2,176,293.44); Moral damages in the amount of P200,000.00; Exemplary damages in the amount of P50,000.00; P50,000.00, as and for attorneys fees; and Costs of suit.

The amended complaint thus prayed for the following reliefs: WHEREFORE, it is respectfully prayed of this Hon. Court that judgment be rendered in favor of the plaintiffs: A - Immediately ordering the issuance of a writ of preliminary mandatory injunction against the defendants commanding them and any person acting in their behalf to forthwith remove the fence they have constructed around the premises in question, and after trial making the said injunction permanent. B - Ordering the defendants to pay jointly and severally the plaintiffs the following: 1) Moral damages equivalent to not less than P200,000.00; 2) Exemplary damages in the amount of P50,000.00; 3) Attorneys fee in the amount of P60,000.00 plus twenty-five percent (25%) of the amount of damages to which plaintiffs are entitled; and 4) Litigation expenses in this instance in the amount of P10,000.00 C Requiring the defendants to pay jointly and severally actual damages representing unrealized income and profits as well as losses referred to in paragraphs 10 and 12 hereof in such amount as may be shown in evidence during the hearing. DGranting the plaintiffs such other just and equitable remedies to which they may be entitled under the law and equity. (Orig. Rec., pp. 292-293). As later events disclosed, the defendants resumed possession of the premises in question on January 25, 1991 (Rec., p. 333). Four (4) days later, they obtained a judgment by compromise from the Municipal Trial Court in Cities, Lucena City in connection with the suit for ejectment they earlier filed thereat against Petrophil Corporation. In that judgment, Petrophil bound

2.

3.

h) Uncollected Checks 37,449.05 i) Merchandise Inventory as of July 25, 1990, P141,036.50 value, 50% damaged 70,518.25 j) Damaged Office Equipments 30,000.00 k) Stampitas (Religious Articles) and other Hermana Fausta Memorial Foundation, Inc. printed matters entrusted in my care, totally damaged by rain and termites 5,000.00 l) Products lost in 4 underground tanks 249,805.00

4.

5.

SO ORDERED (Rec., pp. 408-414).[3] The trial court ruled that with the continued occupation by petitioners of the two lots belonging to private respondents, despite the expiration of the lease contracts over the same, petitioners had become undesirable lessees.[4] However, it was improper for private respondents to resort to fencing their properties in order to remove petitioners from the premises in the light of the clear provision of the Civil Code on the matter, to wit: Art. 536. In no case may possession be acquired through force or intimidation as long as there is a possessor who objects thereto. He who believes that he has an action or a right to deprive another of the holding of a thing, must invoke the aid of the competent court, if the holder should refuse to deliver the thing.

m)

Interest payments to RCBC (Rizal Commercial Banking Corporation) for additional loan availed of to pay off products acquired on credit from Petron Corp. but were held inside gas station 172,490.53

Property || Art. 429 to 444|| 13

Having disregarded the plain requirement of the law, private respondents were held accountable to petitioners for the various damages prayed for by petitioners in their amended complaint. In due time, private respondents filed their respective appeals before the Court of Appeals which affirmed, with modification, the decision of the trial court. The dispositive portion of the appellate courts decision reads: WHEREFORE, the decision appealed from is MODIFIED by holding the appellants jointly and severally liable to the appellees for P50,000.00 as exemplary damages and for P27,000.00 as actual damages, itemized as follows: 1. 2. 3. 4. detention of the records: P7,000.00; detention of the merchandise: P10,000.00; value of the damaged merchandise and religious items: P5,000; and detention of offices equipment: P5,000.00,

5. On the issue of actual damages, the appellate court substantially reduced the amount of actual damages awarded by the court a quo upon the ground that petitioners failed to substantiate their claims thereto except for the detention of petitioners records of their receivables, various merchandise, damaged goods, religious items, and office equipment; 6. As for the propriety of awarding moral damages to petitioners, the Court of Appeals held that petitioners are not entitled to this form of damage as this case does not fall within Article 2219 of the Civil Code; 7. Although Article 2219 of the Civil Code encompasses incidents which may fall within the purview of Article 21 of the Civil Code, the latter, being a rule based on equity, necessitates the claimant to come to court with clean hands which cannot be said of petitioners who continued to occupy the lands belonging to private respondents without the authority of a subsisting lease agreement; 8. Private respondents are nevertheless liable for exemplary damages for having taken the law into their own hands by fencing the premises of the Petron gasoline station operated by petitioners instead of seeking redress from the proper court as mandated by Article 536 of the Civil Code; and 9. Petitioners are liable to pay private respondents for the unpaid rentals from the time the lease agreements over the subject properties expired until 01 February 1990 when private respondents constructed the fence. Dissatisfied with the ruling of the Court of Appeals, petitioners are now before us raising, in the main, the issue of whether the appellate court erred in substantially reducing the amount of damages earlier awarded to them by the trial court. Petitioners insist that the appellate court resorted to assumptions, inferences, surmises and conjectures in disallowing certain items of actual damages like lost petroleum products valued at P249,805.00, loss of value of merchandise detained for a quite a long time (sic) in the fenced premises and uncollected debts as against the positive testimony of petitioner Perlita Villafuerte which remained unrebutted and uncontested even on appeal.[9] They also allege that the list of unrealized income, collectibles and damages prepared by petitioner Perlita was based and ably supported by documents. Petitioners also maintain that the Court of Appeals erred in finding that they came to court with unclean hands, thus, depriving them of entitlement to moral damages. According to petitioners, their continued occupation of private respondents properties was based on their belief that their lease contract with private respondent De Mesa was modified and extended whereas private respondent Daleon had verbally agreed to allow them to continue with their possession of his lot for as long as the Petron Corporations equipment remain in the premises. Finally, petitioners argue that the trial court was correct in awarding in their favor attorneys fees in the amount of P50,000.00 as they were compelled to engage the services of counsel in order to seek vindication from the arbitrary action of private respondents. After a considered review of the records of this case, we resolve to affirm, with modification, the decision of the Court of Appeals. Both the trial court and the Court of Appeals concluded that the lease contracts between petitioners and private respondents over the latters respective lots had already expired. There was also a congruence of findings that it was wrong for private respondents

to fence their properties thereby putting to a halt the operation of petitioners gasoline station. To this, we agree. Article 536 of the Civil Code previously quoted explicitly provides for the proper recourse of one who claims to be entitled to the possession of a thing. When private respondents personally took it upon themselves to evict petitioners from their properties, which act was in clear contravention of the law, they became liable for all the necessary and natural consequences of [their] illegal act.[10] As expected, petitioners instituted this action praying that private respondents be held liable for actual damages, moral damages, exemplary damages, attorneys fees, and costs of litigation. We shall resolve their right to these damages in seriatim. Actual or compensatory damages are those awarded in order to compensate a party for an injury or loss he suffered. They arise out of a sense of natural justice and are aimed at repairing the wrong done.[11] Except as provided by law or by stipulation, a party is entitled to an adequate compensation only for such pecuniary loss as he has duly proven.[12] It is hornbook doctrine that to be able to recover actual damages, the claimant bears the onus of presenting before the court actual proof of the damages alleged to have been suffered, thus: A party is entitled to an adequate compensation for such pecuniary loss actually suffered by him as he has duly proved. Such damages, to be recoverable, must not only be capable of proof, but must actually be proved with a reasonable degree of certainty. We have emphasized that these damages cannot be presumed and courts, in making an award must point out specific facts which could afford a basis for measuring whatever compensatory or actual damages are borne.[13]

and by holding the appellees jointly and severally liable for rental to appellants Edilberto de Mesa and Gonzalo Daleon in the amount of P5,500.00 and P39,000.00, respectively. The deficiency in the payment of the docket fees, to be computed by the clerk of court of the lower court, shall constitute a lien on this judgment.[5]

In adjudging private respondents liable for damages, the Court of Appeals substantially ruled that: 1. Private respondents could not invoke the doctrine of self-help contained in Article 429 of the Civil Code[6] reasoning that the doctrine finds no application when occupation was effected through lawful means such as in this case where petitioners possession of the lots owned by private respondents was effected through lease agreements; 2. Petitioners continued unauthorized occupation of private respondents properties may have been illegal, however, it was incumbent upon private respondents to abide by the express provision of Article 536 of the Civil Code requiring recourse to the proper court prior to ousting petitioners from their (private respondents) lots; 3. On the matter of insufficient docket fees paid by petitioners during the institution of this action, the Court of Appeals declared that whatever deficiency there may be in the docket fees can be levied from the amount that may be awarded the appellees (petitioners herein)[7] and that private respondents were already estopped from assailing the jurisdiction of the trial court; 4. Private respondents could not invoke the principle of damnum absque injuria as this doctrine only applies when the loss or damage does not constitute a violation of a legal right or amounts to a legal wrong[8] and not to this case where private respondents clearly violated the law by unilaterally displacing petitioners from the subject premises;

We have exhaustively perused the records of this case and thus conclude that petitioners have miserably failed to proffer evidence capable of sustaining their plea for actual damages. We note that when petitioner Perlita was directly examined with respect to her unrealized income[14] for the following matters, namely: daily sales of various petroleum products;[15] storage fee of RECOM IVs petroleum, oil, and lubricants;[16] sales of tires, batteries, accessories, and general merchandise;[17] hauling of petroleum products for Peewees Petron Powerhouse by the gasoline tankers owned by petitioners;[18] hauling of petroleum products for the military;[19] and petitioner Perlitas balloon business which she conducted within the premises of the fenced gasoline station,[20] she repeatedly testified that she arrived at these claimed amounts based on the average of her sales for the month of January 1990, the number of trips undertaken by their tankers, and average volume of the gasoline deposit for RECOM IV. Her testimony on these matters went as follows: Atty. CAMALIGAN: May I ask that this List of Unrealized Income, Collectibles and Damages from Febrauary 1, 1990 to October 30, 1990 be marked as Exhibit AA. ... Q: Will you explain to the court why this list you made is up to October 30, 1990?

Property || Art. 429 to 444|| 14

A: Q:

I prepared this list until October 10, 1990 in preparation for our first hearing sometime in November, sir. I am calling your attention to No. 1 which is I quote, Daily Sales (4,000 to 5,000 liters) at P0.035 per liter mark up P1,750.00 by 270 days amounting to P472,500.00 will you explain to the court how you incurred this damage? After the closure of our gasoline station that was February 1, 1990 and then until September, 1990 is nine (9) months and that is 270 days. I went thru my sales for January and the average sales (is) 4,000 to 5,000 liters and so for our daily sales of 4,000 to 5,000 liters sale at P0.35 centavos mark-up, I got P1,750.00 daily so that is times 270 days until September 1990, the total is P472,500.00, sir. That is gross?

COURT: A:

Five percent of what? Five percent of the number of liters deposited with us so that if they deposited one hundred thousand (100,000) liters we are paid in terms of gasoline also, five thousand (5,000) liters. What was the average volume of deposit made by the RECOM IV? It is on a quarterly basis, that is one hundred thousand (100,000) liters quarterly, sir. On item 3 referring to tires, batteries, accessories, general merchandise is listed an amount of ninety thousand (P90,000.00) pesos as your losses, will you please explain how you incurred such losses? Aside from petroleum products we also sell accessories for the motoring public and they are in kinds like tires, batteries and some additives, how do you realize income out of this? (sic) We have 20% mark-up on the merchandise and last January 1990 I average fifty thousand (P50,000.00) pesos gross income on the general merchandise so for 20% mark-up that is more or less ten thousand (P10,000.00) pesos and for nine (9) months that is ninety thousand (P90,000.00) pesos, sir. In item No. 4 appearing in your list you listed a total amount of one hundred eight thousand (P108,000.00) pesos, for hauling of petroleum products for Peewees Petron Powerhouse, will you explain to the court this hauling? My husband and I run a fleet of gasoline tankers and they are hauling petroleum products for our gasoline stations and for the military accounts. We average two (2) deliveries every week so this is already a net of one thousand five hundred (P1,500.00) pesos per delivery. It is two thousand eight hundred (P2,800.00) pesos per delivery and deducting the salaries of the drivers, the fuel consumption and the depreciation of the tankers, we incur a net of one thousand five hundred (P1,500.00) pesos per trip. Every month we incur at least eight (8) trips and that is one thousand five hundred (P1,500.00) pesos times eight (8) trips times nine (9) months and I got one hundred eight thousand (P108,000.00) pesos total. Do you own them? Yes, sir. In item No. 6 you listed Balloon Business under Sunshine Balloon, you have given a total amount of two hundred thousand (P200,000.00) pesos as your losses here, ... A:

will you please explain to the Court how you incurred these losses?

Q: A: Q:

(A):

Inside the gasoline station we also operate a balloon business and we have invested fifty thousand capital on this balloon business. This business has been thriving for several years and we usually incur six (6) thousand monthly income from said business, sir. Now that the gasoline station was closed with all the equipments of the balloon business inside also, we have totally lost the market for the balloon business and I feel that two hundred thousand (P200,000.00) pesos would have to be paid for the total loss of the business.[21]

COURT: A:

A:

Yes, your Honor. What about the net income to be realized? A:

COURT: A:

Your Honor, we will deduct from here the salaries and wages of the gasoline boys and electric bill, maybe P0.25 centavos per liter. Proceed. Q:

Noticeably, petitioner Perlitas testimony was replete with claims that her unrealized income, as far as these items were concerned, were based on the average. Except, however, for the record of daily petroleum sales for the month of January 1990,[22] petitioners failed to present any evidence that would sufficiently establish their mean income from these business undertakings. In the absence of any corroborative proof, this Court is not bound to award in petitioners favor the actual damages for items a, b, c, d, e, and f of her alleged unrealized income. Nor can we give premium on the summary of daily petroleum sales for January 1990 prepared by petitioner Perlita as the same is not supported by any competent evidence; at best, said exhibit is self-serving. Anent the actual damages claimed for the deterioration of the items which remained inside petitioners office, petitioner Perlita testified that when they were able to retrieve the merchandise from the gasoline station, they noticed that most of them were already defective and so they valued[23] the damages thereto at seventy (70%) of their total value. As for the items entrusted to her by the Hermana Fausta Memorial Foundation of which she was the executive vice president at that time, petitioner Perlita alleged that the amount of five thousand pesos represents the production cost of these materials which the foundation purportedly paid to Imprenta Lucentina. As regards the amount of P30,000.00 sought as actual damages for the damaged office equipment, petitioner Perlita stated before the trial court that she arrived at this figure after computing the acquisition costs of these equipment which she approximated[24] to be P35,000.00. Evidently, in establishing the amount of actual damages for the merchandise inventory, office equipment, and materials owned by the Hermana Fausta Memorial Foundation, petitioners relied solely on their own assessment of the prices of these items as well as the damage thereto purportedly occasioned by the fencing of the gasoline station. This is clearly demonstrated by the inconsistent stance of petitioner Pertlita with regard to the percentage of damaged merchandise stored in the gasoline station, thus: ATTY. CAMALIGAN: Q: I noticed that the total appearing on page 3 of your merchandize inventory is one hundred forty one thousand thirty six pesos and fifty centavos (P141,036.50) only while in your list, it is ninety eight thousand seven hundred twenty five pesos and fifty five centavos (P98,725.55), will you please explain the same?
Property || Art. 429 to 444|| 15

COURT: Q:

Is the mark-up of P0.35 centavos per liter thru (sic), irrespective of amount of gasoline or value of gasoline per liter? We have different kinds of petroleum products, extra, regular and diesel and the average mark-up is thirtyfive (35) centavos. ...

A:

A:

Q:

Calling your attention to No. 2 in the list which refers to storage fee of petroleum, oil and lubricant from RECOM IV amounting to a total of ninety thousand pesos (P90,000.00) will you kindly explain how you arrived at this amount? The military, PC/INP RECOM IV which is stationed at Camp Nakar has entered into an agreement with us to deposit their petroleum, oil and lubricant for every quarter, sir. Under what condition was that deposit made for? That they will be able to withdraw the said products for a certain storage fee, sir, and the storage fee is 5% which would cover disposing the products and also certain percent of evaporation. Q: A: Q:

A:

Q: A:

WITNESS: A: This list with the total amount of one hundred forty one thousand thirty six pesos and fifty centavos (P141,036.50) represent the total value of all the merchandize but then the reason why we have the ninety eight thousand seven hundred twenty five pesos and fifty five centavos (P98,725.55) figure is, this represents seventy percent (70%) of the total amount because when we retrieved the merchandize, we noticed that most of them are already defective, so we valued the damages only seventy percent (70%) of the total value because some of them could still be sold, sir.

Petitioners likewise seek to be compensated for the value of the petroleum products allegedly lost from the four underground tanks between the period 01 February 1990 until 25 July 1990 when an ocular inspection was conducted within the disputed property. According to petitioners, after they compared the volume of the tanks contents as of the evening of 31 January 1990 with the dipstick reading on 25 July 1990, they discovered that they had lost thousands of liters of petroleum products. On this point, we quote with approval the conclusion of the Court of Appeals, to wit: The appellees[31] failed to adduce convincing evidence that appellants are the ones responsible for the loss of the petroleum products in the four (4) underground tanks (item 1, paragraph 10 of Amended Complaint). Although the premises which were fenced by the appellants[32] adjoin the lot of Perlitas mother and are even secured by appellees guard, the appellees did not present anyone to testify on the fact of loss of said gasoline products. Instead, they chose to rely on Perlitas bare assertion that she lost P249,805.00 in terms of petroleum products that allegedly disappeared. The sheer volume of the missing fuel makes it difficult for the pilferer to commit the deed without attracting attention. An unsubstantiated claim of loss, more so of such a dimension, cannot merit an award therefor.[33] Finally, with respect to the interest payments to the Rizal Commercial Banking Corporation (RCBC), petitioners maintain that because of the fencing of their gasoline station on 01 February 1990, they were forced to obtain a loan from RCBC in order to pay off their obligations to different suppliers. This contention was effectively refuted by petitioner Perlita herself when, during her re-direct examination, she admitted that the loan granted by the RCBC was intended for all the businesses that she and her husband, petitioner Reynaldo, were maintaining.[34] It would, therefore, be iniquitous to charge private respondents for the interest payments for this loan the proceeds of which were utilized to finance petitioners various businesses and not solely the settlement of petitioners obligations to the suppliers of Peewees Petron Powerhouse. In the absence of actual proof as to how much of the RCBC loan was really used to pay the creditors of the closed gasoline station, this Court can not affirm petitioners right to be compensated for the amount of interest payments they have made to the RCBC. We find, however, that an award of temperate damages to petitioners is in order. In lieu of actual damages, temperate damages, which are more than nominal but less than compensatory damages, may be awarded where the court finds that some pecuniary loss had been suffered by the claimant but its amount cannot be proved with certainty. Undoubtedly, pecuniary loss had been inflicted upon petitioners in this case, however, due to the insufficiency of evidence before us, we cannot place its amount with certainty. In this regard, we find the amount of P50,000.00 to be sufficient. Petitioners also assail the removal by the Court of Appeals of the moral damages previously ordered by the trial court. They argue that contrary to the findings of the appellate court, they came to court with clean hands as they believed that the lease contract with private respondent De Mesa was modified and extended. At the same time, they contend that they had a verbal understanding with private respondent Daleon wherein the latter permitted them to remain in his lot for as long as Petron Corporation was not removing its equipment. Further, petitioners contend that under Article 2219 of the Civil Code, this Court had awarded moral damages in instances where the claimants were victims of capricious, wanton, oppressive, malicious, and arbitrary acts such as petitioners in this case. On this issue, we agree in the findings of the Court of Appeals that:

The Court must have to disallow the lower courts award of moral damages. The concept of moral damages, as announced in Article 2217 of the Civil Code, is designed to compensate the complainant for his physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation and similar injury occasioned by the defendants wrongful act or omission. Article 2219 of the same Code specifies the cases where moral damages may be awarded, to wit: Art. 2219. Moral damages may be recovered in the following and analogous cases: (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) A criminal offense resulting in physical injuries; Quasi-delicts causing physical injuries; Seduction, abduction, rape, or other lascivious acts; Adultery or concubinage; Illegal or arbitrary detention or arrest; Illegal search; Libel, slander or any other form of defamation; Malicious prosecution; Acts mentioned in article 309; Acts and actions referred to in articles 21, 26, 27, 28, 29, 30, 32, 34, and 35.

ATTY. CAMALIGAN: Q: I noticed there is a correction in Item No. 9 from ninety percent (90%) to seventy percent (70%). When did you make that correction? Only last December 30, 1990 after we have retrieved all the merchandize. I prepared this list on October 31, 1990 not realizing the extent of the real damages to the merchandize but when we retrieved them last December 29 and upon inspection, most of the motor oil have already leaked because of the plastics that were exposed to sun and rain, so we changed the estimate to seventy percent (70%), sir.[25]

A:

Such arbitrary estimations run afoul with our consistent pronouncement that actual or compensatory damages cannot be presumed but must be proved with reasonable degree of certainty.[26] A court cannot simply rely on speculation, conjecture or guesswork as to the fact and amount of damages, but is required to depend upon competent proof that the claimant had suffered and on evidence of the actual amount thereof.[27] Failing in this regard, we resolve to delete the award of actual damages rendered by the Court of Appeals with respect to these items. Similarly, we rule that petitioners are not entitled to the total amount of the 17 checks issued in their favor by their customers and to the amount of uncollected debts owed to them by their patrons. Petitioners maintain that their customers were used to coming to their gasoline station in order to settle their obligations but were prevented from doing after the 01 February 1990 incident. They therefore would like to hold private respondents accountable for these receivables. This, we can not grant. The records indicate that petitioners filed before the trial court a motion to allow them to enter the gasoline station subject of this dispute in order to make an inventory of their property that were locked inside and to remove those they needed for their personal use.[28] Among the items removed from the gasoline station were the receipts evidencing petitioners receivables from their customers[29] as well as the 17 uncollected checks.[30] Obviously, after the court-approved ocular inspection conducted on 24 July 1990 and 25 July 1990, petitioners were already in possession of the evidences of credit of their customers. There was nothing, not even the closure of their gasoline station, which stood in the way of petitioners exerting earnest efforts in going after their debtors.

The parents of the female seduced, abducted, raped or abused, referred to in No. 3 of this article, may also recover moral damages. The spouse, descendants, ascendants, and brothers and sisters may bring the action mentioned in No. 9 of this article, in the order named. Noticeably, none of the foregoing instances has any relevant bearing to the case at bench. While Article 2219 comprehends the situation in Article 21 of the Code, whereunder [A]ny person who willfully causes loss or injury to another in a manner that is contrary to morals, good customs or public policy shall compensate the latter for the damages, the appellees cannot benefit from it. The right to recover moral damages under Article 21 is based on equity, and those who come to court to demand equity must come with clean hands (Garciano v. Court of Appeals, 212 SCRA 436 citing Padilla, CIVIL CODE ANNOTATED, Vol. 1, 1975 Ed., p. 87). The appellees knew that their lease had expired. Yet, despite such awareness, they persisted in their unauthorized occupancy of appellants property. Being partly responsible for their present predicament which is very much within their power to avoid, appellees cannot receive
Property || Art. 429 to 444|| 16

compensation for whatever mental anguish or suffering they went thru.[35]

Petitioners are asking Us to reverse, in this Petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure, the Decision[1] of the Court of Appeals dated 25 March 2004 and its Resolution[2] dated 23 September 2004 denying petitioners Motion for Reconsideration. The facts of the case are as follows: In order to facilitate the payment of her salaries and other monetary benefits from her employer, petitioner Philippine Bank of Communications (PBCOM[3]), respondent Elenita B. Trazo opened a payroll account with China Banking Corporation (CBC) under Current Account No. 101-003921-9. On or about 29 December 1997, petitioner Romeo G. dela Rosa, PBCOM assistant vice-president, instructed CBC to credit all accounts under its payroll with the medical and clothing subsidy for the year 1998. Accordingly, respondent Trazos current account was credited on that date with the amount of P7,000.00 for such annual subsidy. On 31 December 1997, respondent Trazo, then project manager of the information technology and management group, resigned from PBCOM. Since respondent Trazo severed her employment with PBCOM effective 1 January 1998 and was, therefore, no longer entitled to the medical and clothing subsidy for the year 1998, petitioner dela Rosa wrote William Lim, CBC senior assistant vice-president, on 5 January 1997 authorizing/directing CBC/Lim to debit the sum of P7,000.00 from respondent Trazos current account. Acting upon such authority/directive, CBC/Lim debited said amount from respondent Trazos account on the same date. Meanwhile, respondent Trazo drew checks against her current account in favor of Bliss Development Corporation (BDC) and the House of Sara Lee Phils., Inc. However, the checks were dishonored by CBC due to insufficiency of funds, which was occasioned by the P7,000.00 debit from her current account. Averring that PBCOM, through dela Rosa, had no authority to unilaterally order the debiting of her current account and that CBC, through Lim, made such debit without her knowledge and consent resulting in the dishonor of her checks, respondent Trazo instituted an action for damages against PBCOM, dela Rosa, CBC, and Lim before the Regional Trial Court (RTC) of Quezon City (Branch 79). Summons was served on CBC and Lim on 19 May 1998 and on petitioners herein, PBCOM and dela Rosa, on 27 May 1998. On 27 May 1998 and 11 June 1998, or before the expiration of the reglementary period for filing their answers, CBC and Lim, and PBCOM and dela Rosa, respectively, filed motions for 15-day extension of time. On 8 June 1998, respondent Trazo filed a Motion to Declare Defendants China Banking Corporation and William Lim in Default and Opposition to Motion for Extension of Time to File Answer and/or Responsive Pleading. On 15 June 1998, respondent Trazo filed a Motion to Declare Defendants Philippine Bank of Communication and Romeo G. dela Rosa in Default. On 16 June 1998, CBC and Lim filed a Motion to Dismiss the case on the ground of improper venue. On 24 June 1998, PBCOM and dela Rosa filed their own Motion to Dismiss on the ground that the complaint failed to state a cause of action. On 7 October 1998, the lower court issued an Omnibus Order granting the motions to dismiss and declaring the motions to declare defendants in default moot and academic. The dispositive portion of the Omnibus Order is as follows:

Similarly, we uphold the award of P50,000.00 as exemplary damages in order to deter similarly minded individuals from pursuing the course of action taken by private respondents. The law on this matter is clear: (h)e who believes himself entitled to deprive another of the possession of a thing, so long as the possessor refuses delivery, must request the assistance of the proper authority.[36] Petitioners arbitrary conduct of fencing their properties under the claim that they own the same brazenly violates the law and circumvents the proper procedure which should be obtained before the court. This Court likewise adopts the conclusion reached by the Court of Appeals that petitioners do not deserve the award of attorneys fees for it was precisely their unfounded insistence to stay on private respondents properties that precipitated this suit. WHEREFORE, the Decision of the Court of Appeals dated 31 March 1998, which modified the Decision dated 13 November 1992 of the Regional Trial Court, Branch 55, Lucena City, and its Resolution of 17 June 1993 denying reconsideration are hereby MODIFIED as follows: 1. The award of Twenty-Seven Thousand Pesos (P27,000.00) as actual damages in favor of petitioners Reynaldo and Perlita Villafuerte is deleted; and 2. Private respondents Edilberto De Mesa and Gonzalo Daleon are held jointly and severally liable to pay petitioners the amount of Fifty Thousand Pesos (P50,000.00) as temperate damages.

PREMISES CONSIDERED, the case against defendants China Bank and William Lim is DISMISSED on the ground of improper venue. The case against defendants Philippine Bank of Communications and Romeo G. dela Rosa is DISMISSED for lack of cause of action.[4] Respondent Trazo filed with the trial court a Notice of Appeal. In the assailed Decision, the Court of Appeals ruled in favor of respondent Trazo, disposing of the case in the following manner: WHEREFORE, the omnibus order dated October 7, 1998 of the Regional Trial Court of Quezon City (Branch 79) is REVERSED and SET ASIDE and the complaint REINSTATED. Appellant is given ten (10) days from notice of finality of this decision within which to amend the complaint.[5] Petitioners filed their Motion for Reconsideration on 14 April 2004, while CBC and Lim filed their Motion for Reconsideration on 19 April 2004. On 23 September 2004, the Court of Appeals issued the assailed Resolution wherein both motions for reconsideration were denied for lack of merit. Hence, the instant Petition, where petitioners PBCOM and Trazo bring before us the following issues: A. WHETHER OR NOT THE COURT OF APPEALS ERRED IN RULING THAT THE COMPLAINT STATED A CAUSE OF ACTION FOR DAMAGES AGAINST PETITIONERS ARISING OUT OF THE ALLEGED UNLAWFUL DEBITING OF RESPONDENTS CHINABANK ACCOUNT, NOTWITHSTANDING THAT IT WAS CHINABANK WHICH DEBITED THE ACCOUNT, NOT PETITIONERS.

The remainder of the same Decision and Resolution of the Court of Appeals are hereby AFFIRMED. No costs. SO ORDERED. PHILIPPINE BANK OF COMMUNICATIONS and ROMEO G. DELA ROSA, Petitioners,

B. WHETHER OR NOT THE COURT OF APPEALS ERRED IN HOLDING THAT THE COMPLAINT PLEADED A CAUSE OF ACTION FOR ABUSE OF RIGHTS AGAINST PETITIONERS. C. WHETHER OR NOT THE COURT OF APPEALS ERRED IN ORDERING THE AMENDMENT OF THE COMPLAINT DESPITE THE COMPLAINTS ABSOLUTE FAILURE TO STATE A CAUSE OF ACTION AGAINST PETTIONERS. D.

- versus -

ELENITA B. TRAZO,

Respondent.

DECISION

CHICO-NAZARIO, J.:

Property || Art. 429 to 444|| 17

WHETHER OR NOT THE COURT OF APPEALS ERRED IN FINDING THAT THE VENUE CLAUSE IN THE APPLICATION FOR NEW CURRENT ACCOUNTS IS NOT EXCLUSIVE.[6] Only CBC, and not petitioners PBCOM and dela Rosa, can move for dismissal on the ground of improper venue. The Application for New Current Accounts, which embodies the terms and conditions of respondent Trazos relationship with CBC, contains a stipulation on venue, to wit: In case of litigation hereunder, venue shall be in the City Court or Court of First Instance of Manila as the case may be for determination of any and all questions arising thereunder.[7] The RTC of Quezon City dismissed the complaint against CBC and Lim based on this stipulation, but the Court of Appeals reversed said dismissal. According to the Court of Appeals, absent any qualifying or restrictive words, a stipulation on venue should be considered merely as an agreement on an additional forum, and not to be considered as limiting venue to the specified place.[8] Before proceeding any further, it bears to point out that among the multiple defendants in the case filed by respondent Trazo, only CBC and its officer Lim can assert the alleged impropriety of venue since they are privy to and covered by the contract containing the venue stipulation. Indeed, the dispositive portion of the RTC decision shows that the dismissal on the ground of improper venue was effective only as against CBC and Lim. As CBC and Lim did not appeal the decision of the Court of Appeals reversing the RTC ruling, such decision has become final and executory as regards its disposition on the issue regarding venue. Nevertheless, We agree with the Court of Appeals that it was incorrect for the RTC to dismiss the complaint on the ground of improper venue. The parties must be able to show that the stipulation is exclusive. Thus, sans words expressing the parties intention to restrict the filing of a suit in a particular place, courts will allow the filing of a case in any of the venues prescribed by law or stipulated by the parties, as long as the jurisdictional requirements are followed.[9] The subject clause contains no qualifying nor restrictive words, such as must, or exclusively, as would indicate the parties intention mandatorily to restrict the venue of actions to the courts of (Manila) only.[10] In the 8 December 2000 case of Langkaan Realty Development, Inc. v. United Coconut Planters Bank,[11] where the venue stipulation contained the word shall,[12] we held that the stipulations of the parties lack qualifying or restrictive words to indicate the exclusivity of the agreed forum,[13] and therefore the stipulated place is considered only as an additional, not a limiting venue.[14] Consequently, the dismissal by the RTC of the complaint against CBC and Lim on ground of improper venue is erroneous, and was correctly reversed by the Court of Appeals. Respondent Trazos complaint

contains a cause of action against petitioners PBCOM and dela Rosa. As discussed above, the RTC dismissed the complaint, insofar as it operates against CBC and Lim, on the ground of improper venue. In the same Omnibus Order, the RTC also dismissed the same complaint on the ground of failure to state a cause of action, this time, insofar as the complaint operates against petitioners PBCOM and dela Rosa. The Court of Appeals, in reversing the Order of the RTC dismissing the complaint on the ground of failure to state a cause of action, held: Par. 13 of the complaint recites appellants alleged cause of action against [PBCOM and dela Rosa]. It reads: 13. Upon further personal inquiry with [PBCOM], [respondent Trazo] found out that on January 5, 1998 [petitioner] ROMEO G. DE LA ROSA, without [respondent Trazos] knowledge, consent and approval, wrote a letter and authorized/directed x x x CHINABANK and WILLIAM LIM `to debit the account of Elenita Trazo under C/A #101-003921-9 in the amount of PESOS: SEVEN THOUSAND PESOS ONLY P7,000.00 representing her medical and clothing subsidy for the year 1998. He even acknowledged and admitted that [respondent Trazo] resigned from PBCom effective December 31, 1997. He further stated that CHINABANK make the `Managers check payable to Philippine Bank of Communications. x x x. Crucial to appellants action against [PBCOM and dela Rosa] is the issue of whether the latter had the right to authorize/direct [CBC and Lim] to debit the amount of P7,000.00 from appellants current account and, if so, whether appellant was entitled to notice of such authority/directive. In authorizing/directing [CBC and Lim] to debit appellants current account, [PBCOM and dela Rosa] had, in effect, sought to recover, without resorting to a court action, an amount erroneously credited to her. And because appellant was not given the courtesy of a notice of such authority/directive, she was lulled into the belief that her funds at CBC were sufficient to cover the checks she was issuing. Nevertheless, the lower court ruled that the averment in par. 13 of the complaint is insufficient to make out a cause of action against [PBCOM and dela Rosa] on the theory that the debit (of) the amount of P7,000.00 from the account of [respondent Trazo] x x x cannot be attributed as the fault of

(PBCOM) since the fiduciary relationship exists only between (CBC) and [respondent Trazo] as its depositor and the primary responsibility whether to deposit or not lies with (CBC) alone. However, the lower court did not consider whether the act of authorizing/directing CBC/Lim to debit appellants current account without giving notice to her constitutes a cause of action against [PBCOM and dela Rosa], for abuse of rights. The modern tendency is to depart from the classical and traditional theory and to grant indemnity for damages in cases where there is an abuse of rights, even when the act is not illicit (Sea Commercial Company, Inc. vs. Court of Appeals, 319 SCRA 210). But even supposing that the asserted act of [PBCOM and dela Rosa] is insufficient to make out a case of abuse of rights, the lower court could have simply ordered appellant to amend the complaint. Thus, Sec. 1, Rule 10, in relation to Sec. 3, Rule 16, id., allows amendment of pleadings before a responsive pleading is served. Amendment of the complaint, by way of supplementing and amplifying facts as would carve out a clear abuse of rights situation, would prevent multiplicity of suits. This is so because of Our ruling that the dismissal of the complaint against [CBC and Lim] on ground of improper venue is erroneous, with the effect that the complaint against them is reinstated. However, affirmance of the dismissal of the complaint against [PBCOM and dela Rosa] anchored on failure to state a cause of action would trigger the filing of a new action against the latter, thereby spawning two suits, i.e., the instant action and the new one. Amendment, not dismissal, of the complaint is proper to avoid multiplicity of suits (Eugenio, Sr. vs. Velez, 185 SCRA 425). The policy in this jurisdiction is that amendment of pleadings is favored and liberally allowed in the interest of substantial justice. Amendment of the complaint may be allowed even if an order for its dismissal has been issued provided that the motion to amend is filed before the order of dismissal acquired finality (Tirona vs. Alejo, 367 SCRA 17). Rules of Procedure, after all, are but tools designed to facilitate the attainment of justice (Valenzuela vs. Court of Appeals, 363 SCRA 779).[15] Petitioners argue that the afore-quoted paragraph 13 shows that PBCOM and dela Rosa merely requested CBC to debit the account of respondent Trazo, and that nothing in said paragraph shows that PBCOM and dela Rosa were actually responsible for the alleged unlawful debiting of respondents account.[16] As regards the Court of Appeals finding that the complaint contains a cause of action against petitioners for abuse of rights,[17] petitioners claim that the elements of abuse of rights are not found in the complaint, since no bad faith was imputed to PBCOM and dela Rosa in requesting the debiting of the amount stated, and since there was no allegation showing that PBCOM and dela Rosa acted with the sole intent of prejudicing or injuring respondent in requesting the same.[18]

Property || Art. 429 to 444|| 18

While we agree with petitioners that the complaint does not contain a cause of action against them for abuse of rights, their petition would, nonetheless, fail. A cause of action is an act or omission of one party in violation of the legal right of the other.[19] A motion to dismiss based on lack of cause of action hypothetically admits the truth of the allegations in the complaint.[20] The allegations in a complaint are sufficient to constitute a cause of action against the defendants if, hypothetically admitting the facts alleged, the court can render a valid judgment upon the same in accordance with the prayer therein. A cause of action exists if the following elements are present, namely: (1) a right in favor of the plaintiff by whatever means and under whatever law it arises or is created; (2) an obligation on the part of the named defendant to respect or not to violate such right; and (3) an act or omission on the part of such defendant violative of the right of the plaintiff or constituting a breach of the obligation of the defendant to the plaintiff for which the latter may maintain an action for recovery of damages.[21] The Court of Appeals, like the RTC, seems to have acquiesced in the petitioners statement[22] that respondents cause of action against them is found exclusively in paragraph 13 of the complaint. An examination of the subject complaint, [23] however, reveals that it contains other provisions establishing the cause of action against petitioners PBCOM and de la Rosa, not the least of which is paragraph 23, which provides: 23. In debiting the checking/current account of the plaintiff, without her knowledge, consent and approval, defendants acted in a wanton, reckless and oppressive manner. Defendants PBCOM and ROMEO G. DE LA ROSA had no cause nor reason to unilaterally order the debiting of plaintiffs account as it was her personal property and not of defendant PBCOM. Even if defendant PBCOM erroneously credited plaintiff with monetary benefits, plaintiff was to receive, as she did receive separation benefits equivalent to more than FIVE HUNDRED THOUSAND PESOS (P500,000.00) more or less, from defendant PBCOM itself. A reasonable set-off or compensation should and could have been resorted to. However, defendant PBCOM never utilized this option. Defendant PBCOM neither informed plaintiff of said transaction, much less seek her approval and authority to debit her CHINABANK account when at the time of the debitting (sic), January 5, 1998, she was no longer an employee of PBCOM. (Emphasis supplied.)[24] that: As regards respondent Trazos entitlement to damages, the complaint recites In order not to jeopardize her housing loan obligations with BDC and Sara Lee, Phil., Inc., and considering the legal actions foisted against her, x x x [respondent Trazo] made immediate restitution to BDC and Sara Lee Phil., Inc. for her outstanding obligations, which included unwarranted charges and penalties which were not [respondent Trazos] making.[25] The Complaint also claims that the actions of defendants therein, including petitioners PBCOM and dela Rosa, caused mental anguish, moral shock, besmirched reputation, social humiliation, serious fright and anxiety, sleepless nights and wounded feelings.[26] The same was reiterated in Annex K of said complaint, wherein respondent Trazo, through her legal representative, wrote to petitioner dela Rosa, in his capacity as Assistant VicePresident of petitioner PBCOM, stating:

On January 5, 1997, you, as AVP of PBCOMs Human Resource Management Department, authorized CHINA BANKING CORPORATION to debit our clients account under C/A # 101 003921-9 in the amount of SEVEN THOUSAND PESOS (P7,000.00), representing her medical and clothing subsidy for the year 1998, without notifying our client, much less acquiring her consent and approval. However, our client resigned from PBCOM effective July 1, 1998, during which time the same account already ceased to be a payroll account. As a result of your action[,] our client incurred damages and injury in several personal transactions involving check payments made by her under said checking account with CHINA BANKING CORPORATION. This unfortunate incident caused her untold sufferings, not to mention lost opportunities in her profession and other businesses, besmirched reputation, sleepless nights, mental anguish and wounded feelings.[27] Paragraph 20[28] of the complaint makes its Annex K an integral part thereof. We find a sufficient cause of action in the above-quoted allegations. If these allegations are assumed to be true, respondent Trazo would indeed be entitled to damages, though the amount of the same would still depend on the evidence presented during trial. We carefully scrutinize the allegations in the Complaint. It provides that (d)efendants PBCOM and ROMEO G. DE LA ROSA had no cause nor reason to unilaterally order the debitting (sic) of plaintiffs account as it was her personal property and not of defendant PBCOM.[29] The Complaint also described the action of all defendants, including petitioners PBCOM and dela Rosa, as unjust and illegal,[30] and done in a wanton, reckless and oppressive manner.[31] The cause of action stated in the Complaint, therefore, consists in (1) a right in favor of the plaintiff, which in this case consists of a right to her personal property;[32] (2) an obligation on the part of the named defendant to respect her right to her personal property; and (3) an act of such defendant violative of the right of the plaintiff, which in this case is the order by petitioners to CBC and Lim to debit respondent Trazos account, an act which petitioners allege to have caused them damage. In the case at bar, the allegations in the complaint verily show a cause of action. To sustain a motion to dismiss for lack of cause of action, the Complaint must show that the claim for relief does not exist rather than that a claim has been defectively stated or is ambiguous, indefinite or uncertain.[33]

Whereas Article 19 provides for a cause of action for damages in cases when there is no law violated, the act causing damage being within rights or duties of defendant, Article 20 furnishes a general sanction for violations of provisions of law which do not especially provide their own sanction.[36] The complaint clearly alleges a violation of respondent Trazos property rights with respect to her checking account. Article 429 of the Civil Code provides that the owner or lawful possessor of the thing has the right to exclude any person from the enjoyment and disposal thereof. Petitioners retort that the complaint did not base its claim for damages on Articles 19, 20 and 21 of the Civil Code,[37] and faults the Court of Appeals for making out a cause of action for respondent on grounds not even alleged in the Complaint.[38] We, however, have held in Consolidated Dairy Products, Co. v. Court of Appeals,[39] that the applicable law to a set of facts stated in the complaint need not be set out directly. Consequently, the complaint need not state that the property right alleged to have been violated is found in Article 429 of the Civil Code, or that such violation entitled petitioner Trazo to damages pursuant to Article 20 of the same Code, which provides a cause of action therefor. Petitioners claim that respondent failed to specify in the complaint the standard of proper conduct and decency required of PBCOM and the basis of invoking such standard on PBCOM[40] did not improve their position any. The complaint should state only ultimate facts, not conclusions of law, nor evidentiary facts. In determining whether the allegations of a complaint are sufficient to support a cause of action, the complaint does not have to establish or allege the facts proving the existence of a cause of action at the outset; this will have to be done at the trial on the merits of the case.[41] Ultimate facts refer to the principal, determinative, constitutive facts upon the existence of which the cause of action rests. The term does not refer to details of probative matter or particulars of evidence which establish the material ingredients.[42] In their last ditch efforts to save their cause, petitioners assert that the duty to notify respondent regarding the debiting of her account properly belongs to CBC [43] and that, had CBC denied petitioners request, then there would have been no alleged debit of respondents account.[44] Petitioners add that the mere act of requesting a bank to return a certain amount of money erroneously credited to one of the banks depositors cannot be considered an act which violates the rights of said depositor.[45] Petitioners allegations are in the nature of defenses, and, thus, cannot be considered in determining the sufficiency of the cause of action. For the complaint to be dismissed for failure to state the cause of action, the insufficiency of the cause of action must appear on the face of the complaint.[46] If the allegations in a complaint can furnish a sufficient basis by which the complaint can be maintained, the same should not be dismissed regardless of the defenses that may be assessed by the defendants.[47] WHEREFORE, the instant petition is DENIED for lack of merit. The assailed Decision and Resolution of the Court of Appeals, which reversed and set aside the Regional Trial Court of Quezon Citys 7 October 1998 Omnibus Order dismissing respondents complaint, are AFFIRMED. Costs against petitioners. SO ORDERED.

We, however, disagree with the Court of Appeals when it decided that the allegations in the complaint show a cause of action against petitioners for abuse of rights under Article 19[34] of the Civil Code. The elements of abuse of rights are: (1) a legal right or duty; (2) which is exercised in bad faith; and (3) for the sole intent of prejudicing or injuring another.[35] Rather, the allegations bare commission of an act contrary to law under Article 20 of the same Code, which provides: Art. 20. Every person who, contrary to law, wilfully or negligently causes damage to another, shall indemnify the latter for the same.

Property || Art. 429 to 444|| 19

SECOND DIVISION [G.R. No. 116100. February 9, 1996]

SPOUSES CRISTINO and BRIGIDA CUSTODIO and SPOUSES LITO and MARIA CRISTINA SANTOS, petitioners, vs. COURT OF APPEALS, HEIRS OF PACIFICO C. MABASA and REGIONAL TRIAL COURT OF PASIG, METRO MANILA, BRANCH 181, respondents. DECISION REGALADO, J.: This petition for review on certiorari assails the decision of respondent Court of Appeals in CA-G.R. CV No. 29115, promulgated on November 10, 1993, which affirmed with modification the decision of the trial court, as well as its resolution dated July 8, 1994 denying petitioners motion for reconsideration.[1] On August 26, 1982, Civil Case No. 47466 for the grant of an easement of right of way was filed by Pacifico Mabasa against Cristino Custodio, Brigida R. Custodio, Rosalina R. Morato, Lito Santos and Maria Cristina C. Santos before the Regional Trial Court of Pasig and assigned to Branch 22 thereof.[2] The generative facts of the case, as synthesized by the trial court and adopted by the Court of Appeals, are as follows: Perusing the record, this Court finds that the original plaintiff Pacifico Mabasa died during the pendency of this case and was substituted by Ofelia Mabasa, his surviving spouse [and children]. The plaintiff owns a parcel of land with a two-door apartment erected thereon situated at Interior P. Burgos St., Palingon, Tipas, Taguig, Metro Manila. The plaintiff was able to acquire said property through a contract of sale with spouses Mamerto Rayos and Teodora Quintero as vendors last September 1981. Said property may be described to be surrounded by other immovables pertaining to defendants herein. Taking P. Burgos Street as the point of reference, on the left side, going to plaintiffs property, the row of houses will be as follows: That of defendants Cristino and Brigido Custodio, then that of Lito and Maria Cristina Santos and then that of Ofelia Mabasa. On the right side (is) that of defendant Rosalina Morato and then a Septic Tank (Exhibit D). As an access to P. Burgos Street from plaintiffs property, there are two possible passageways. The first passageway is approximately one meter wide and is about 20 meters distan(t) from Mabasas residence to P. Burgos Street. Such path is passing in be tween the previously mentioned row of houses. The second passageway is about 3 meters in width and length from plaintiff Mabasas residence to P. Burgos Street; it is about 26 meters. In passing thru said passageway, a less than a meter wide path through the septic tank and with 5-6 meters in length has to be traversed. When said property was purchased by Mabasa, there were tenants occupying the premises and who were acknowledged by plaintiff Mabasa as tenants. However, sometime in February, 1982. one of said tenants vacated the apartment and when plaintiff Mabasa went to see the premises, he saw that there had been built an adobe fence in the first passageway making it narrower in width. Said adobe fence was first constructed by defendants

Santoses along their property which is also along the first passageway. Defendant Morato constructed her adobe fence and even extended said fence in such a way that the entire passageway was enclosed (Exhibit 1 Santoses and Custodios, Exh. D for plaintiff, Exhs. 1-C, 1-D and I -E) And it was then that the remaining tenants of said apartment vacated the area. Defendant Ma. Cristina Santos testified that she constructed said fence because there was an incident when her daughter was dragged by a bicycle pedalled by a son of one of the tenants in said apartment along the first passageway. She also mentioned some other inconveniences of having (at) the front of her house a pathway such as when some of the tenants were drunk and would bang their doors and windows. Some of their footwear were even lost. x x x[3] (Italics in original text; corrections in parentheses supplied) On February 27, 1990, a decision was rendered by the trial court, with this dispositive part: Accordingly, judgment is hereby rendered as follows: 1) Ordering defendants Custodios and Santoses to give plaintiff permanent access - ingress and egress, to the public street; 2) Ordering the plaintiff to pay defendants Custodios and Santoses the sum of Eight Thousand Pesos (P8,000) as indemnity for the permanent use of the passageway. The parties to shoulder their respective litigation expenses.[4] Not satisfied therewith, therein plaintiff represented by his heirs, herein private respondents, went to the Court of Appeals raising the sole issue of whether or not the lower court erred in not awarding damages in their favor. On November 10, 1993, as earlier stated, the Court of Appeals rendered its decision affirming the judgment of the trial court with modification, the decretal portion of which disposes as follows: WHEREFORE, the appealed decision of the lower court is hereby AFFIRMED WITH MODIFICATION only insofar as the herein grant of damages to plaintiffs-appellants. The Court hereby orders defendantsappellees to pay plaintiffs-appellants the sum of Sixty Five Thousand (P65,000) Pesos as Actual Damages, Thirty Thousand (P30,000) Pesos as Moral Damages, and Ten Thousand (P10,000) Pesos as Exemplary Damages. The rest of the appealed decision is affirmed to all respects.[5] On July 8, 1994, the Court of Appeals denied petitioners motion for reconsideration.[6] Petitioners then took the present recourse to us, raising two issues, namely, whether or not the grant of right of way to herein private respondents is proper, and whether or not the award of damages is in order. With respect to the first issue, herein petitioners are already barred from raising the same. Petitioners did not appeal from the decision of the court a quo granting private respondents the right of way, hence they are presumed to be satisfied with the adjudication therein. With the finality of the judgment of the trial court as to petitioners, the issue of propriety of the grant of right of way has already been laid to rest. For failure to appeal the decision of the trial court to the Court of Appeals, petitioners cannot obtain any affirmative relief other than those granted in the decision of the trial court. That decision of the court below has become final as against them and can no longer be reviewed, much less reversed, by this Court. The rule in this jurisdiction is that whenever an appeal is taken in a civil case, an appellee who has not himself appealed may not obtain from the appellate court any affirmative relief other than what was granted in the decision of the lower court. The appellee can only advance any argument that he may

deem necessary to defeat the appellants claim or to uphold the decision that is being disputed, and he can assign errors in his brief if such is required to strengthen the views expressed by the court a quo. These assigned errors, in turn, may be considered by the appellate court solely to maintain the appealed decision on other grounds, but not for the purpose of reversing or modifying the judgment in the appellees favor and giving him other affirmative reliefs.[7] However, with respect to the second issue, we agree with petitioners that the Court of Appeals erred in awarding damages in favor of private respondents. The award of damages has no substantial legal basis. A reading of the decision of the Court of Appeals will show that the award of damages was based solely on the fact that the original plaintiff, Pacifico Mabasa, incurred losses in the form of unrealized rentals when the tenants vacated the leased premises by reason of the closure of the passageway. However, the mere fact that the plaintiff suffered losses does not give rise to a right to recover damages. To warrant the recovery of damages, there must be both a right of action for a legal wrong inflicted by the defendant, and damage resulting to the plaintiff therefrom. Wrong without damage, or damage without wrong, does not constitute a cause of action, since damages are merely part of the remedy allowed for the injury caused by a breach or wrong.[8] There is a material distinction between damages and injury. Injury is the illegal invasion of a legal right; damage is the loss, hurt, or harm which results from the injury; and damages are the recompense or compensation awarded for the damage suffered. Thus, there can be damage without injury in those instances in which the loss or harm was not the result of a violation of a legal duty. These situations are often called damnum absque injuria.[9] in order that a plaintiff may maintain an action for the injuries of which he complains, he must establish that such injuries resulted from a breach of duty which the defendant owed to the plaintiff - a concurrence of injury to the plaintiff and legal responsibility by the person causing it.[10] The underlying basis for the award of tort damages is the premise that an individual was injured in contemplation of law. Thus, there must first be the breach of some duty and the imposition of liability for that breach before damages may be awarded; it is not sufficient to state that there should be tort liability merely because the plaintiff suffered some pain and suffering)[11] Many accidents occur and many injuries are inflicted by acts or omissions which cause damage or loss to another but which violate no legal duty to such other person, and consequently create no cause of action in his favor. In such cases, the consequences must be borne by the injured person alone. The law affords no remedy for damages resulting from an act which does not amount to a legal injury or wrong. [12] In other words, in order that the law will give redress for an act causing damage, that act must be not only hurtful, but wrongful. There must be damnum et injuria.[13] If, as may happen in many cases, a person sustains actual damage, that is, harm or loss to his person or property, without sustaining any legal injury, that is, an act or omission which the law does not deem an injury, the damage is regarded as damnum absque injuria.[14] In the case at bar, although there was damage, there was no legal injury. Contrary to the claim of private respondents, petitioners could not be said to have violated the principle of abuse of right. In order that the principle of abuse of right provided in Article 21 of the Civil Code can be applied, it is essential that the following requisites concur: (1) The defendant should have acted in a manner that is contrary to morals, good customs or public policy; (2) The acts should be willful; and (3) There was damage or injury to the plaintiff.[15] The act of petitioners in constructing a fence within their lot is a valid exercise of their right as owners, hence not contrary to morals, good customs or public policy. The law recognizes in the owner the right to enjoy and dispose of a thing, without other limitations than those established by law.[16] It is within the right of petitioners, as owners, to enclose and fence their property. Article 430 of the Civil Code provides that (e)very owner may
Property || Art. 429 to 444|| 20

enclose or fence his land or tenements by means of walls, ditches, live or dead hedges, or by any other means without detriment to servitudes constituted thereon. At the time of the construction of the fence, the lot was not subject to any servitudes. There was no easement of way existing in favor of private respondents, either by law or by contract. The fact that private respondents had no existing right over the said passageway is confirmed by the very decision of the trial court granting a compulsory right of way in their favor after payment of just compensation. It was only that decision which gave private respondents the right to use the said passageway after payment of the compensation and imposed a corresponding duty on petitioners not to interfere in the exercise of said right. Hence, prior to said decision, petitioners had an absolute right over their property and their act of fencing and enclosing the same was an act which they may lawfully perform in the employment and exercise of said right. To repeat, whatever injury or damage may have been sustained by private respondents by reason of the rightful use of the said land by petitioners is damnum absque injuria.[17] A person has a right to the natural use and enjoyment of his own property, according to his pleasure, for all the purposes to which such property is usually applied. As a general rule, therefore, there is no cause of action for acts done by one person upon his own property in a lawful and proper manner, although such acts incidentally cause damage or an unavoidable loss to another, as such damage or loss is damnum absque injuria.[18] When the owner of property makes use thereof in the general and ordinary manner in which the property is used, such as fencing or enclosing the same as in this case, nobody can complain of having been injured, because the inconvenience arising from said use can be considered as a mere consequence of community life.[19] The proper exercise of a lawful right cannot constitute a legal wrong for which an action will lie,[20] although the act may result in damage to another, for no legal right has been invaded[21] One may use any lawful means to accomplish a lawful purpose and though the means adopted may cause damage to another, no cause of action arises in the latters favor. Any injury or damage occasioned thereby is damnum absque injuria. The courts can give no redress for hardship to an individual resulting from action reasonably calculated to achieve a lawful end by lawful means.[22] WHEREFORE, under the compulsion of the foregoing premises, the appealed decision of respondent Court of Appeals is hereby REVERSED and SET ASIDE and the judgment of the trial court is correspondingly REINSTATED. SO ORDERED.

Republic of the Philippines Supreme Court Manila THIRD DIVISION ANECO REALTY AND DEVELOPMENT CORPORATION, Petitioner, YNARES-SANTIAGO, J., G.R. No. 165952 Present:

Facts Fernandez Hermanos Development, Inc. (FHDI) is the original owner of a tract of land in San Francisco Del Monte, Quezon City. FHDI subdivided the land into thirty-nine (39) lots.[3] It later sold twenty-two (22) lots to petitioner Aneco and the remaining seventeen (17) lots to respondent Landex.[4] The dispute arose when Landex started the construction of a concrete wall on one of its lots. To restrain construction of the wall, Aneco filed a complaint for injunction[5] with the RTC in Quezon City. Aneco later filed two (2) supplemental complaints seeking to demolish the newly-built wall and to hold Landex liable for two million pesos in damages.[6] Landex filed its Answer[7] alleging, among others, that Aneco was not deprived access to its lots due to the construction of the concrete wall. Landex claimed that Aneco C has its own entrance to its property along Miller Street, Resthaven Street, and San h Francisco del Monte Street. The Resthaven access, however, was rendered inaccessible a when Aneco constructed a building on said street. Landex also claimed that FHDI sold i ordinary lots, not subdivision lots, to Aneco based on the express stipulation in the deed of r sale that FHDI was not interested in pursuing its own subdivision project. p e r s o RTC Disposition n , On June 19, 1996, the RTC rendered a Decision[8] granting the complaint for injunction, disposing as follows: CHICO-NAZARIO, NACHURA, and REYES, JJ. Wherefore, premises considered, and in the light aforecited decision of the Supreme Court judgment is hereby rendered in favor of the plaintiff and the defendant is hereby ordered: 1. To stop the completion of the concrete wall and excavation of the road lot in question and if the same is already completed, to remove the same and to return the lot to its original situation; To pay actual and compensatory damage to the plaintiff in the total amount of P50,000.00; To pay attorneys fees in the amount of P20,000.00; To pay the cost.

AUSTRIA-MARTINEZ, - versus -

LANDEX DEVELOPMENT CORPORATION,

Promulgated:

Respondent. July 28, 2008 2.

x--------------------------------------------------x DECISION REYES, R.T., J.: THIS is a simple case of a neighbor seeking to restrain the landowner from fencing his own property. The right to fence flows from the right of ownership. Absent a clear legal and enforceable right, We will not unduly restrain the landowner from exercising an inherent proprietary right. Before Us is a petition for review on certiorari of the Decision[1] of the Court of Appeals (CA) affirming the Order[2] of the Regional Trial Court (RTC) dismissing the complaint for injunction filed by petitioner Aneco Realty and Development Corporation (Aneco) against respondent Landex Development Corporation (Landex).

3. 4.

SO ORDERED.[9] Landex moved for reconsideration.[10] Records reveal that Landex failed to include a notice of hearing in its motion for reconsideration as required under Section 5, Rule 15 of the 1997 Rules of Civil Procedure. Realizing the defect, Landex later filed a motion[11] setting a hearing for its motion for reconsideration. Aneco countered with a motion for execution[12] claiming that the RTC decision is already final and executory.
Property || Art. 429 to 444|| 21

Acting on the motion of Landex, the RTC set a hearing on the motion for reconsideration on August 28, 1996. Aneco failed to attend the slated hearing. The RTC gave Aneco additional time to file a comment on the motion for reconsideration.[13] On March 13, 1997, the RTC issued an order[14] denying the motion for execution of Aneco. On March 31, 1997, the RTC issued an order granting the motion for reconsideration of Landex and dismissing the complaint of Aneco. In granting reconsideration, the RTC stated: In previously ruling for the plaintiff, this Court anchored its decision on the ruling of the Supreme Court in the case of White Plains Association vs. Legaspi, 193 SCRA 765, wherein the issue involved was the ownership of a road lot, in an existing, fully developed and authorized subdivision, which after a second look, is apparently inapplicable to the instant case at bar, simply because the property in question never did exist as a subdivision. Since, the property in question never did exist as a subdivision, the limitations imposed by Section 1 of Republic Act No. 440, that no portion of a subdivision road lot shall be closed without the approval of the Court is clearly in appropriate to the case at bar. The records show that the plaintiffs property has access to a public road as it has its own ingress and egress along Miller St.; That plaintiffs property is not isolated as it is bounded by Miller St. and Resthaven St. in San Francisco del Monte, Quezon City; that plaintiff could easily make an access to a public road within the bounds and limits of its own property; and that the defendant has not yet been indemnified whatsoever for the use of his property, as mandated by the Bill of rights. The foregoing circumstances, negates the alleged plaintiffs right of way.[15] Aneco appealed to the CA.[16] CA Disposition On March 31, 2003, the CA rendered a Decision[17] affirming the RTC order, disposing as follows: WHEREFORE, in consideration of the foregoing, the instant appeal is perforce dismissed. Accordingly, the order dated 31 March 1996 is hereby affirmed. SO ORDERED.[18] In affirming the RTC dismissal of the complaint for injunction, the CA held that Aneco knew at the time of the sale that the lots sold by FHDI were not subdivision units based on the express stipulation in the deed of sale that FHDI, the seller, was no longer interested in pursuing its subdivision project, thus: The subject property ceased to be a road lot when its former owner (Fernandez Hermanos, Inc.) sold it to appellant Aneco not as subdivision lots and without the intention of pursuing

the subdivision project. The law in point is Article 624 of the New Civil Code, which provides: Art. 624. The existence of an apparent sign of easement between two estates, established or maintained by the owner of both, shall be considered, should either of them be alienated, as a title in order that the easement may continue actively and passively, unless, at the time the ownership of the two estates is divided, the contrary should be provided in the title of conveyance of either of them, or the sign aforesaid should be removed before the execution of the deed. This provision shall also apply in case of the division of a thing owned in common by two or more persons. Viewed from the aforesaid law, there is no question that the law allows the continued use of an apparent easement should the owner alienate the property to different persons. It is noteworthy to emphasize that the lot in question was provided by the previous owner (Fernandez Hermanos, Inc.) as a road lot because of its intention to convert it into a subdivision project. The previous owner even applied for a development permit over the subject property. However, when the twenty-two (22) lots were sold to appellant Aneco, it was very clear from the sellers deed of sale that the lots sold ceased to be subdivision lots. The seller even warranted that it shall undertake to extend all the necessary assistance for the consolidation of the subdivided lots, including the execution of the requisite manifestation before the appropriate government agencies that the seller is no longer interested in pursuing the subdivision project. In fine, appellant Aneco knew from the very start that at the time of the sale, the 22 lots sold to it were not intended as subdivision units, although the titles to the different lots have yet to be consolidated. Consequently, the easement that used to exist on the subject lot ceased when appellant Aneco and the former owner agreed that the lots would be consolidated and would no longer be intended as a subdivision project. Appellant Aneco insists that it has the intention of continuing the subdivision project earlier commenced by the former owner. It also holds on to the previous development permit granted to Fernandez Hermanos, Inc. The insistence is futile. Appellant Aneco did not acquire any right from the said previous owner since the latter itself expressly stated in their agreement that it has no more intention of continuing the subdivision project. If appellant desires to convert its property into a subdivision project, it has to apply in its own name, and must have its own provisions for a road lot.[19] Anent the issue of compulsory easement of right of way, the CA held that Aneco failed to prove the essential requisites to avail of such right, thus:

An easement involves an abnormal restriction on the property of the servient owner and is regarded as a charge or encumbrance on the servient owner and is regarded as a charge or encumbrance on the servient estate (Cristobal v. CA, 291 SCRA 122). The essential requisites to be entitled to a compulsory easement of way are: 1) that the dominant estate is surrounded by other immovables and has no adequate outlet to a public highway; 2) that proper indemnity has been paid; 3) that the isolation was not due to acts of the proprietor of the dominant estate; 4) that the right of way claimed is at a point least prejudicial to the servient estate and in so far as consistent with this rule, where the distance from the dominant estate to a public highway may be the shortest (Cristobal v. Court of Appeals, 291 SCRA 122). An in depth examination of the evidence adduced and offered by appellant Aneco, showed that it had failed to prove the existence of the aforementioned requisites, as the burden thereof lies upon the appellant Aneco.[20] Aneco moved for reconsideration but its motion was denied.[21] Hence, the present petition or appeal by certiorari under Rule 45. Issues Petitioner Aneco assigns quadruple errors to the CA in the following tenor: A. THE COURT OF APPEALS GRAVELY ERRED IN DISMISSING PETITIONERS APPEAL AND SUSTAINING THE TRIAL COURTS ORDER DATED 31 MARCH 1997 GRANTING RESPONDENTS MOTION FOR RECONSIDERATION WHICH IS FATALLY DEFECTIVE FOR LACK OF NOTICE OF HEARING. B. THE COURT OF APPEALS GRAVELY ERRED IN AFFIRMING THE TRIAL COURTS ORDER WHICH GAVE FULL WEIGHT AND CREDIT TO THE MISLEADING AND ERRONEOUS CERTIFICATION ISSUED BY GILDA E. ESTILO WHICH SHE LATER EXPRESSLY AND CATEGORICALLY RECANTED BY WAY OF HER AFFIDAVIT. C. THE COURT OF APPEALS GRAVELY ERRED IN APPLYING THE LIBERAL CONSTRUCTION OF THE RULES IN ORDER TO SUSTAIN THE TRIAL COURTS ORDER DATED 31 MARCH 1997. D. THE COURT OF APPEALS GRAVELY ERRED IN AFFIRMING THE TRIAL COURTS ORDER THAT MADE NO PRONOUNCEMENTS AS TO COSTS, AND IN DISREGARDING THE MERIT OF THE PETITIONERS CAUSE OF ACTION.[22] Our Ruling The petition is without merit.
Property || Art. 429 to 444|| 22

Essentially, two (2) issues are raised in this petition. The first is the procedural issue of whether or not the RTC and the CA erred in liberally applying the rule on notice of hearing under Section 5, Rule 15 of the 1997 Rules of Civil Procedure. The second is the substantive issue of whether or not Aneco may enjoin Landex from constructing a concrete wall on its own property. We shall discuss the twin issues sequentially. Strict vs. Liberal Construction of Procedural Rules; Defective motion was cured when Aneco was given an opportunity to comment on the motion for reconsideration . Section 5, Rule 15 of the 1997 Rules of Civil Procedure[23] requires a notice of hearing for a contested motion filed in court. Records disclose that the motion for reconsideration filed by Landex of the RTC decision did not contain a notice of hearing. There is no dispute that the motion for reconsideration is defective. The RTC and the CA ignored the procedural defect and ruled on the substantive issues raised by Landex in its motion for reconsideration. The issue before Us is whether or not the RTC and the CA correctly exercised its discretion in ignoring the procedural defect. Simply put, the issue is whether or not the requirement of notice of hearing should be strictly or liberally applied under the circumstances. Aneco bats for strict construction. It cites a litany of cases which held that notice of hearing is mandatory. A motion without the required notice of hearing is a mere scrap of paper. It does not toll the running of the period to file an appeal or a motion for reconsideration. It is argued that the original RTC decision is already final and executory because of the defective motion.[24] Landex counters for liberal construction. It similarly cites a catena of cases which held that procedural rules may be relaxed in the interest of substantial justice. Landex asserts that the procedural defect was cured when it filed a motion setting a hearing for its motion for reconsideration. It is claimed that Aneco was properly informed of the pending motion for reconsideration and it was not deprived of an opportunity to be heard.[25] It is true that appeals are mere statutory privileges which should be exercised only in the manner required by law. Procedural rules serve a vital function in our judicial system. They promote the orderly resolution of cases. Without procedure, there will be chaos. It thus behooves upon a litigant to follow basic procedural rules. Dire consequences may flow from procedural lapses. Nonetheless, it is also true that procedural rules are mere tools designed to facilitate the attainment of justice. Their strict and rigid application should be relaxed when they hinder rather than promote substantial justice. Public policy dictates that court cases should, as much as possible, be resolved on the merits not on mere technicalities. Substantive justice trumps procedural rules. In Barnes v. Padilla,[26] this Court held:

Let it be emphasized that the rules of procedure should be viewed as mere tools designed to facilitate the attainment of justice. Their strict and rigid application, which would result in technicalities that tend to frustrate rather than promote substantial justice, must always be eschewed. Even the Rules of Court reflect this principle. The power to suspend or even disregard rules can be so pervasive and compelling as to alter even that which this Court itself has already declared to be final x x x. The emerging trend in the rulings of this Court is to afford every party litigant the amplest opportunity for the proper and just determination of his cause, free from the constraints of technicalities. Time and again, this Court has consistently held that rules must not be applied rigidly so as not to override substantial justice.[27] Here, We find that the RTC and the CA soundly exercised their discretion in opting for a liberal rather than a strict application of the rules on notice of hearing. It must be stressed that there are no vested right to technicalities. It is within the courts sound discretion to relax procedural rules in order to fully adjudicate the merits of a case. This Court will not interfere with the exercise of that discretion absent grave abuse or palpable error. Section 6, Rule 1 of the 1997 Rules of Civil Procedure even mandates a liberal construction of the rules to promote their objectives of securing a just, speedy, and inexpensive disposition of every action and proceeding. To be sure, the requirement of a notice of hearing in every contested motion is part of due process of law. The notice alerts the opposing party of a pending motion in court and gives him an opportunity to oppose it. What the rule forbids is not the mere absence of a notice of hearing in a contested motion but the unfair surprise caused by the lack of notice. It is the dire consequences which flow from the procedural error which is proscribed. If the opposing party is given a sufficient opportunity to oppose a defective motion, the procedural lapse is deemed cured and the intent of the rule is substantially complied. In E & L Mercantile, Inc. v. Intermediate Appellate Court,[28] this Court held: Procedural due process is not based solely on a mechanistic and literal application of a rule such that any deviation is inexorably fatal. Rules of procedure, and this includes the three (3) days notice requirement, are liberally construed in order to promote their object and to assist the parties in obtaining just, speedy, and inexpensive determination of every action and proceeding (Section 2, Rule 1, Rules of Court). In Case and Nantz v. Jugo (77 Phil. 517), this Court made it clear that lapses in the literal observance of a rule of procedure may be overlooked when they have not prejudiced the adverse party and have not deprived the court of its authority. A party cannot ignore a more than sufficient opportunity to exercise its right to be heard and once the court performs its duty and the outcome happens to be against that negligent party, suddenly interpose a procedural violation already cured, insisting that everybody should again go back to square one. Dilatory tactics cannot be the guiding principle. The rule in De Borja v. Tan (93 Phil. 167), that what the law prohibits is not the absence of previous notice, but the

absolute absence thereof and lack of opportunity to be heard, is the applicable doctrine. (See also Aguilar v. Tan, 31 SCRA 205; Omico v. Vallejos, 63 SCRA 285; Sumadchat v. Court of Appeals, 111 SCRA 488.) x x x[29] We also find that the procedural lapse committed by Landex was sufficiently cured when it filed another motion setting a hearing for its defective motion for reconsideration. Records reveal that the RTC set a hearing for the motion for reconsideration but Anecos counsel failed to appear. The RTC then gave Aneco additional time to file comment on the motion for reconsideration.[30] Aneco was afforded procedural due process when it was given an opportunity to oppose the motion for reconsideration. It cannot argue unfair surprise because it was afforded ample time to file a comment, as it did comment, on the motion for reconsideration. There being no substantial injury or unfair prejudice, the RTC and the CA correctly ignored the procedural defect. The RTC and the CA did not err in dismissing the complaint for injunction; factual findings and conclusions of law of the RTC and the CA are afforded great weight and respect. Anent the substantive issue, We agree with the RTC and the CA that the complaint for injunction against Landex should be dismissed for lack of merit. What is involved here is an undue interference on the property rights of a landowner to build a concrete wall on his own property. It is a simple case of a neighbor, petitioner Aneco, seeking to restrain a landowner, respondent Landex, from fencing his own land. Article 430 of the Civil Code gives every owner the right to enclose or fence his land or tenement by means of walls, ditches, hedges or any other means. The right to fence flows from the right of ownership. As owner of the land, Landex may fence his property subject only to the limitations and restrictions provided by law. Absent a clear legal and enforceable right, as here, We will not interfere with the exercise of an essential attribute of ownership. Well-settled is the rule that factual findings and conclusions of law of the trial court when affirmed by the CA are accorded great weight and respect. Here, We find no cogent reason to deviate from the factual findings and conclusion of law of the trial court and the appellate court. We have meticulously reviewed the records and agree that Aneco failed to prove any clear legal right to prevent, much less restrain, Landex from fencing its own property. Aneco cannot rely on the road lot under the old subdivision project of FHDI because it knew at the time of the sale that it was buying ordinary lots, not subdivision lots, from FHDI. This is clear from the deed of sale between FHDI and Aneco where FHDI manifested that it was no longer interested in pursuing its own subdivision project. If Aneco
Property || Art. 429 to 444|| 23

wants to transform its own lots into a subdivision project, it must make its own provision for road lots. It certainly cannot piggy back on the road lot of the defunct subdivision project of FHDI to the detriment of the new owner Landex. The RTC and the CA correctly dismissed the complaint for injunction of Aneco for lack of merit. WHEREFORE, the petition is DENIED and the appealed Decision AFFIRMED. HEIRS OF THE LATE JOAQUIN LIMENSE, namely: CONCESA LIMENSE, Surviving Spouse; and DANILO and JOSELITO, both surnamed Limense, children, Petitioners, - versus -

By virtue of the Deed of Donation executed by Dalmacio Lozada, OCT No. 7036, which was registered in his name, was cancelled and, in lieu thereof, Transfer Certificates of Title (TCTs) bearing Nos. 40041, 40042, 40043, 40044, and 40045 were issued in favor of the donees, except TCT No. 40044, which remained in his name. These new TCTs were annotated at the back of OCT No. 7036.[5] TCT No. 40043, which covered Lot No. 12-C, was issued in the name of its coowners Catalina Lozada, married to Sotero Natividad; Isabel Lozada, married to Isaac Limense; and Salud Lozada, married to Francisco Ramos. It covered an area of 68.60 square meters, more or less, was bounded on the northeast by Lot No. 12-A, on the southwest by Calle Beata, and on the northwest by Lot No. 12-D of the subdivision plan. In 1932, respondents' predecessor-in-interest constructed their residential building on Lot No. 12-D, adjacent to Lot No. 12-C. On May 16, 1969, TCT No. 96886[6] was issued in the name of Joaquin Limense covering the very same area of Lot No. 12-C. On October 1, 1981, Joaquin Limense secured a building permit for the construction of a hollow block fence on the boundary line between his aforesaid property and the adjacent parcel of land located at 2759 Beata Street, Pandacan, Manila, designated as Lot No. 12-D, which was being occupied by respondents. The fence, however, could not be constructed because a substantial portion of respondents' residential building in Lot No. 12-D encroached upon portions of Joaquin Limense's property in Lot No. 12-C.

Code. It cannot be denied that there is an alley which shows its existence. It is admitted that this alley was established by the original owner of Lot 12 and that in dividing his property, the alley established by him continued to be used actively and passively as such. Even when the division of the property occurred, the nonexistence of the easement was not expressed in the corresponding titles nor were the apparent sign of the alley made to disappear before the issuance of said titles. The Court also finds that when plaintiff acquired the lot (12-C) which forms the alley, he knew that said lot could serve no other purpose than as an alley. That is why even after he acquired it in 1969, the lot continued to be used by defendants and occupants of the other adjoining lots as an alley. The existence of the easement of right of way was therefore known to plaintiff who must respect the same in spite of the fact that his transfer certificate of title does not mention the lot of defendants as among those listed therein as entitled to such right of way. It is an established principle that actual notice or knowledge is as binding as registration.[11] Aggrieved by said decision, Joaquin Limense filed a notice of appeal. The records of the case were transmitted to the Court of Appeals (CA). During the pendency of the appeal with the CA, Joaquin Limense died in 1999.[12] The CA, Seventh Division, in CA-G.R. CV No. 33589, in its Decision[13] dated December 20, 2001 dismissed the appeal and affirmed in toto the decision of the RTC. Frustrated by this turn of events, petitioners, as surviving heirs of Joaquin Limense, elevated the case to this Court via a Petition for Review on Certiorari[14] raising the following issues: 1. DID THE HONORABLE COURT OF APPEALS COMMIT A GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION, IN HOLDING, LIKE THE TRIAL COURT DID, THAT RESPONDENTS' LOT 12-D HAS AN EASEMENT OF RIGHT OF WAY OVER JOAQUIN LIMENSE'S LOT 12-C? DID THE HONORABLE COURT OF APPEALS COMMIT A GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION, IN FAILING TO HOLD, LIKE THE TRIAL COURT DID, THAT THE PROTRUDING PORTIONS OF RESPONDENTS' HOUSE ON LOT 12-D EXTENDING INTO JOAQUIN LIMENSE'S LOT 12-C CONSTITUTE A NUISANCE AND, AS SUCH, SHOULD BE REMOVED?

RITA VDA. DE RAMOS, RESTITUTO RAMOS, VIRGILIO DIAZ, IRENEO RAMOS, BENJAMIN RAMOS, WALDYTRUDES RAMOS-BASILIO, TRINIDAD RAMOS-BRAVO, PAZ RAMOS-PASCUA, FELICISIMA RAMOS-REYES, and JACINTA RAMOS, Respondents. DECISION PERALTA, J., This is a petition for review on certiorari under Rule 45 of the Rules of Court seeking to annul and set aside the Decision[1] of the Court of Appeals dated December 20, 2001 in CA-G.R. CV No. 33589 affirming in toto the Decision[2] of the Regional Trial Court of Manila, Branch 15, dated September 21, 1990 in Civil Case No. 83-16128. The antecedent facts are as follows: Dalmacio Lozada was the registered owner of a parcel of land identified as Lot No. 12, Block No. 1074 of the cadastral survey of the City of Manila covered by Original Certificate of Title (OCT) No. 7036 issued at the City of Manila on June 14, 1927,[3] containing an area of 873.80 square meters, more or less, located in Beata Street, Pandacan, Manila. Dalmacio Lozada subdivided his property into five (5) lots, namely: Lot Nos. 12-A, 12-B, 12-C, 12-D and 12-E. Through a Deed of Donation dated March 9, 1932,[4] he donated the subdivided lots to his daughters, namely: Isabel, Salud, Catalina, and Felicidad, all surnamed Lozada. The Deed of Donation was registered with the office of the Register of Deeds of Manila on March 15, 1932. Under the said Deed of Donation, the lots were adjudicated to Dalmacio's daughters in the following manner: a. Lot No. 12-A in favor of Isabel Lozada, married to Isaac Limense; b. Lot No. 12-B in favor of Catalina Lozada, married to Sotero Natividad; c. Lot No. 12-C in favor of Catalina Lozada, married to Sotero Natividad; Isabel Lozada, married to Isaac Limense; and Salud Lozada, married to Francisco Ramos, in equal parts; d. Lot No. 12-D in favor of Salud Lozada, married to Francisco Ramos; and e. Lot No. 12-E in favor of Isabel Lozada, married to Isaac Limense, and Felicidad Lozada, married to Galicano Centeno.

Joaquin Limense demanded the removal of the encroached area; however, respondent ignored both oral and written demands. The parties failed to amicably settle the differences between them despite referral to the barangay. Thus, on March 9, 1983, Joaquin Limense, duly represented by his Attorney-in-Fact, Teofista L. Reyes, instituted a Complaint[7] against respondents before the Regional Trial Court (RTC) of Manila, Branch 15, for removal of obstruction and damages. Joaquin Limense prayed that the RTC issue an order directing respondents, jointly and severally, to remove the portion which illegally encroached upon his property on Lot No. 12-C and, likewise, prayed for the payment of damages, attorneys fees and costs of suit. Respondents, on the other hand, averred in their Answer[8] that they were the surviving heirs of Francisco Ramos,[9] who, during his lifetime, was married to Salud Lozada, one of the daughters of Dalmacio Lozada, the original owner of Lot No. 12. After subdividing the said lot, Dalmacio Lozada donated Lot No. 12-C in favor of his daughters Catalina, married to Sotero Natividad; Isabel, married to Isaac Limense; and Salud, married to Francisco Ramos. Being the surviving heirs of Francisco Ramos, respondents later became co-owners of Lot No. 12-C. Lot No. 12-C has served as right of way or common alley of all the heirs of Dalmacio Lozada since 1932 up to the present. As a common alley, it could not be closed or fenced by Joaquin Limense without causing damage and prejudice to respondents. After trial on the merits, the RTC rendered a Decision[10] dated September 21, 1990 dismissing the complaint of Joaquin Limense. It ruled that an apparent easement of right of way existed in favor of respondents. Pertinent portions of the decision read as follows: The Court finds that an apparent easement of right of way exists in favor of the defendants under Article 624 of the Civil

2.

Petitioners aver that the CA erred in ruling that since Lot No. 12-C was covered by two TCT's, i.e., TCT Nos. 40043 and 96886, and there was no evidence on record to show how Joaquin Limense was able to secure another title over an already titled property, then one of these titles must be of dubious origin. According to the CA, TCT No. 96886, issued in the name of Joaquin Limense, was spurious because the Lozada sisters never disposed of the said property covered by TCT No. 40043. The CA further ruled that a coownership existed over Lot No. 12-C between petitioners and respondents. Petitioners
Property || Art. 429 to 444|| 24

countered that TCT No. 96886, being the only and best legitimate proof of ownership over Lot No. 12-C, must prevail over TCT No. 40043. Respondents allege that it was possible that TCT No. 96886, in the name of Joaquin Limense, was obtained thru fraud, misrepresentation or falsification of documents because the donees of said property could not possibly execute any valid transfer of title to Joaquin Limense, as they were already dead prior to the issuance of TCT No. 96886 in 1969. Respondents further allege that petitioners failed to produce proof substantiating the issuance of TCT No. 96886 in the name of Joaquin Limense.

of by Catalina, Isabel and Salud Lozada, is improper and constitutes an indirect attack on TCT No. 96886. As we see it, TCT No. 96886, at present, is the best proof of Joaquin Limenses ownership over Lot No. 12-C. Thus, the CA erred in ruling that respondents and petitioners co-owned Lot No. 12-C, as said lot is now registered exclusively in the name of Joaquin Limense. Due to the foregoing, Joaquin Limense, as the registered owner of Lot 12-C, and his successors-in-interest, may enclose or fence his land or tenements by means of walls, ditches, live or dead hedges, or by any other means without detriment to servitudes constituted thereon.[21] However, although the owner of the property has the right to enclose or fence his property, he must respect servitudes constituted thereon. The question now is whether respondents are entitled to an easement of right of way. Petitioners contend that respondents are not entitled to an easement of right of way over Lot No. 12-C, because their Lot No. 12-D is not duly annotated at the back of TCT No. 96886 which would entitle them to enjoy the easement, unlike Lot Nos. 12-A-1, 12-A-2, 12-A-3, 12-A-4, 12-A-5, and 12-A-6. Respondents, on the other hand, allege that they are entitled to an easement of right of way over Lot No. 12-C, which has been continuously used as an alley by the heirs of Dalmacio Lozada, the residents in the area and the public in general from 1932 up to the present. Since petitioners are fully aware of the long existence of the said alley or easement of right of way, they are bound to respect the same. As defined, an easement is a real right on another's property, corporeal and immovable, whereby the owner of the latter must refrain from doing or allowing somebody else to do or something to be done on his property, for the benefit of another person or tenement.[22] Easements may be continuous or discontinuous, apparent or non-apparent. Continuous easements are those the use of which is or may be incessant, without the intervention of any act of man. Discontinuous easements are those which are used at intervals and depend upon the acts of man. Apparent easements are those which are made known and are continually kept in view by external signs that reveal the use and enjoyment of the same. Non-apparent easements are those which show no external indication of their existence.[23] In the present case, the easement of right of way is discontinuous and apparent. It is discontinuous, as the use depends upon the acts of respondents and other persons passing through the property. Being an alley that shows a permanent path going to and from Beata Street, the same is apparent. Being a discontinuous and apparent easement, the same can be acquired only by virtue of a title.[24] In the case at bar, TCT No. 96886, issued in the name of Joaquin Limense, does not contain any annotation that Lot No. 12-D was given an easement of right of way over Lot No. 12-C. However, Joaquin Limense and his successors-in-interests are fully aware that Lot No. 12-C has been continuously used and utilized as an alley by respondents and residents in the area for a long period of time. Joaquin Limense's Attorney-in-Fact, Teofista L. Reyes, testified that respondents and several other residents in the area have been using the alley to reach Beata Street since 1932. Thus: Atty. Manuel B. Tomacruz:

Q:

A: Q: A: Q: A: Q: A:

Mrs. Witness, by virtue of that Deed of Donation you claim that titles were issued to the children of Dalmacio Lozada namely Salud Lozada, Catalina Lozada and Isabel Lozada, is that right? Yes, sir. And after the said property was adjudicated to his said children the latter constructed their houses on their lots. Yes, sir. As a matter of fact, the herein defendants have constructed their houses on the premises alloted to them since the year 1932? Yes, sir, they were able to construct their house fronting Beata Street. And that house they have constructed on their lot in 1932 is still existing today? Yes, sir and they still used the alley in question and they are supposed to use Beata Street but they are not using Beata Street. They are using the alley? Yes, sir, they are using the alley and they do not pass through Beata Street.

Apparently, respondents are questioning the legality of TCT No. 96886, an issue that this Court cannot pass upon in the present case. It is a rule that the validity of a torrens title cannot be assailed collaterally.[15] Section 48 of Presidential Decree (PD) No. 1529 provides that: [a] certificate of title shall not be subject to collateral attack. It cannot be altered, modified, or cancelled except in a direct proceeding in accordance with law. In the case at bar, the action filed before the RTC against respondents was an action for removal of obstruction and damages. Respondents raised the defense that Joaquin Limense's title could have been obtained through fraud and misrepresentation in the trial proceedings before the RTC. Such defense is in the nature of a collateral attack, which is not allowed by law. Further, it has been held that a certificate of title, once registered, should not thereafter be impugned, altered, changed, modified, enlarged or diminished, except in a direct proceeding permitted by law. Otherwise, the reliance on registered titles would be lost. The title became indefeasible and incontrovertible after the lapse of one year from the time of its registration and issuance. Section 32 of PD 1529 provides that upon the expiration of said period of one year, the decree of registration and the certificate of title shall become incontrovertible. Any person aggrieved by such decree of registration in any case may pursue his remedy by action for damages against the applicant or other persons responsible for the fraud.[16] It has, therefore, become an ancient rule that the issue on the validity of title, i.e., whether or not it was fraudulently issued, can only be raised in an action expressly instituted for that purpose.[17] In the present case, TCT No. 96886 was registered in 1969 and respondents never instituted any direct proceeding or action to assail Joaquin Limense's title. Additionally, an examination of TCT No. 40043 would readily show that there is an annotation that it has been CANCELLED.[18] A reading of TCT No. 96886 would also reveal that said title is a transfer from TCT No. 48866[19] and not TCT 40043. Thus, it is possible that there was a series of transfers effected from TCT No. 40043 prior to the issuance of TCT No. 96886. Hence, respondents' position that the issuance of TCT No. 96886 in the name of Joaquin Limense is impossible, because the registered owners of TCT No. 40043 were already dead prior to 1969 and could not have transferred the property to Joaquin Limense, cannot be taken as proof that TCT No. 96886 was obtained through fraud, misrepresentation or falsification of documents. Findings of fact of the CA, although generally deemed conclusive, may admit review by this Court if the CA failed to notice certain relevant facts that, if properly considered, would justify a different conclusion, and if the judgment of the CA is premised on a misapprehension of facts.[20] As with the present case, the CA's observation that TCT No. 96886 is of dubious origin, as TCT No. 40043 does not appear to have been disposed

Q: A:

Q: And they have been using the alley since 1932 up to the present? A: Yes, sir they have been using the alley since that time. That was their mistake and they should be using Beata Street because they are fronting Beata Strret. Q: A: Q: A: Q: A: Q: A: As a matter of fact, it is not only herein defendants who have been using that alley since 1932 up to the present? Yes, sir they are using the alley up to now. As a matter of fact, in this picture marked as Exh. C1 the alley is very apparent. This is the alley? Yes, sir. And there are houses on either side of this alley? Yes, sir. As a matter of fact, all the residents on either side of the alley are passing through this alley? Yes, sir, because the others have permit to use this alley and they are now allowed to use the alley but the Ramos's family are now [not] allowed to use this alley.[25]

In Mendoza v. Rosel,[26] this Court held that: Petitioners claim that inasmuch as their transfer certificates of title do not mention any lien or encumbrance on their
Property || Art. 429 to 444|| 25

lots, they are purchasers in good faith and for value, and as such have a right to demand from respondents some payment for the use of the alley. However, the Court of Appeals found, as a fact, that when respondents acquired the two lots which form the alley, they knew that said lots could serve no other purpose than as an alley. The existence of the easement of right of way was therefore known to petitioners who must respect the same, in spite of the fact that their transfer certificates of title do not mention any burden or easement. It is an established principle that actual notice or knowledge is as binding as registration. Every buyer of a registered land who takes a certificate of title for value and in good faith shall hold the same free of all encumbrances except those noted on said certificate. It has been held, however, that where the party has knowledge of a prior existing interest that was unregistered at the time he acquired a right to the same land, his knowledge of that prior unregistered interest has the effect of registration as to him.[27] In the case at bar, Lot No. 12-C has been used as an alley ever since it was donated by Dalmacio Lozada to his heirs. It is undisputed that prior to and after the registration of TCT No. 96886, Lot No. 12-C has served as a right of way in favor of respondents and the public in general. We quote from the RTC's decision: x x x It cannot be denied that there is an alley which shows its existence. It is admitted that this alley was established by the original owner of Lot 12 and that in dividing his property the alley established by him continued to be used actively and passively as such. Even when the division of the property occurred, the nonexistence of the easement was not expressed in the corresponding titles nor were the apparent sign of the alley made to disappear before the issuance of said titles. The Court also finds that when plaintiff acquired the lot (12-C) which forms the alley, he knew that said lot could serve no other purpose than as an alley. That is why even after he acquired it in 1969 the lot continued to be used by defendants and occupants of the other adjoining lots as an alley. x x x[28] Thus, petitioners are bound by the easement of right of way over Lot No. 12-C, even though no registration of the servitude has been made on TCT No. 96886. However, respondents right to have access to the property of petitioners does not include the right to continually encroach upon the latters property. It is not disputed that portions of respondents' house on Lot No. 12-D encroach upon Lot No. 12-C. Geodetic Engineer Jose Agres, Jr. testified on the encroachment of respondents' house on Lot No. 12-C, which he surveyed.[29] In order to settle the rights of the parties relative to the encroachment, We should determine whether respondents were builders in good faith. Good faith is an intangible and abstract quality with no technical meaning or statutory definition; and it encompasses, among other things, an honest belief, the absence of malice and the absence of a design to defraud or to seek an unconscionable advantage. An individuals personal good faith is a concept of his own mind and, therefore, may not conclusively be determined by his protestations alone. It implies honesty of intention, and freedom from knowledge of circumstances which ought to put the holder upon inquiry. The essence of good faith lies in an honest belief in the validity of ones right, ignorance of a superior claim, and absence of intention to overreach another. Applied to possession, one is considered in good faith if he is not aware that there exists in his title or mode of acquisition any flaw which invalidates it.[30]

Good faith is always presumed, and upon him who alleges bad faith on the part of the possessor rests the burden of proof.[31] It is a matter of record that respondents' predecessor-in-interest constructed their residential building on Lot No. 12-D, adjacent to Lot No. 12-C, in 1932.[32] Respondents' predecessor-in-interest owned the 1/3 portion of Lot No. 12-C at the time the property was donated to them by Dalmacio Lozada in 1932. The Deed of Donation executed by the late Dalmacio Lozada, dated March 9, 1932, specifically provides that: I hereby grant, cede and donate in favor of Catalina Lozada married to Sotero Natividad, Isabel Lozada married to Isaac Simense and Salud Lozada married to Francisco Ramos, all Filipinos, of legal age, the parcel of land known as Lot No. 12-C, in equal parts.[33] The portions of Lot No. 12-D, particularly the overhang, covering 1 meter in width and 17 meters in length; the stairs; and the concrete structures are all within the 1/3 share alloted to them by their donor Dalmacio Lozada and, hence, there was absence of a showing that respondents acted in bad faith when they built portions of their house on Lot No. 12-C. Using the above parameters, we are convinced that respondents' predecessors-in-interest acted in good faith when they built portions of their house on Lot 12-C. Respondents being builders in good faith, we shall now discuss the respective rights of the parties relative to the portions encroaching upon respondents' house. Articles 448 and 546 of the New Civil Code provide: Art. 448. The owner of the land on which anything has been built, sown or planted in good faith, shall have the right to appropriate as his own the works, sowing or planting, after payment of the indemnity provided for in Articles 546 and 548, or to oblige the one who built or planted to pay the price of the land, and the one who sowed, the proper rent. However, the builder or planter cannot be obliged to buy the land if its value is considerably more than that of the building or trees. In such case, he shall pay reasonable rent, if the owner of the land does not choose to appropriate the building or trees after proper indemnity. The parties shall agree upon the terms of the lease and, in case of disagreement, the court shall fix the terms thereof. Art. 546. Necessary expenses shall be refunded to every possessor; but only the possessor in good faith may retain the thing until he has been reimbursed therefor. Useful expenses shall be refunded only to the possessor in good faith with the same right of retention, the person who has defeated him in the possession having the option of refunding the amount of the expenses or of paying the increase in value which the thing may have acquired by reason thereof. In Spouses Del Campo v. Abesia,[34] this provision was applied to one whose house, despite having been built at the time he was still co-owner, overlapped with the land of another. In that case, this Court ruled:

The court a quo correctly held that Article 448 of the Civil Code cannot apply where a co-owner builds, plants or sows on the land owned in common for then he did not build, plant or sow upon the land that exclusively belongs to another but of which he is a co-owner. The co-owner is not a third person under the circumstances, and the situation is governed by the rules of coownership. However, when, as in this case, the ownership is terminated by the partition and it appears that the house of defendants overlaps or occupies a portion of 5 square meters of the land pertaining to plaintiffs which the defendants obviously built in good faith, then the provisions of Article 448 of the new Civil Code should apply. x x x[35] In other words, when the co-ownership is terminated by a partition, and it appears that the house of an erstwhile co-owner has encroached upon a portion pertaining to another co-owner, but the encroachment was in good faith, then the provisions of Article 448 should apply to determine the respective rights of the parties. In this case, the coownership was terminated due to the transfer of the title of the whole property in favor of Joaquin Limense. Under the foregoing provision, petitioners have the right to appropriate said portion of the house of respondents upon payment of indemnity to respondents, as provided for in Article 546 of the Civil Code. Otherwise, petitioners may oblige respondents to pay the price of the land occupied by their house. However, if the price asked for is considerably much more than the value of the portion of the house of respondents built thereon, then the latter cannot be obliged to buy the land. Respondents shall then pay the reasonable rent to petitioners upon such terms and conditions that they may agree. In case of disagreement, the trial court shall fix the terms thereof. Of course, respondents may demolish or remove the said portion of their house, at their own expense, if they so decide.[36] The choice belongs to the owner of the land, a rule that accords with the principle of accession that the accessory follows the principal and not the other way around.[37] Even as the option lies with the landowner, the grant to him, nevertheless, is preclusive. He must choose one. He cannot, for instance, compel the owner of the building to instead remove it from the land.[38] The obvious benefit to the builder under this article is that, instead of being outrightly ejected from the land, he can compel the landowner to make a choice between two options: (1) to appropriate the building by paying the indemnity required by law, or (2) to sell the land to the builder.[39] The raison detre for this provision has been enunciated, thus: Where the builder, planter or sower has acted in good faith, a conflict of rights arises between the owners, and it becomes necessary to protect the owner of the improvements without causing injustice to the owner of the land. In view of the impracticability of creating a state of forced co-ownership, the law has provided a just solution by giving the owner of the land the option to acquire the improvements after payment of the proper indemnity, or to oblige the builder or planter to pay for the land and the sower the proper rent. He cannot refuse to exercise either option. It is the owner of the land who is authorized to exercise the
Property || Art. 429 to 444|| 26

option, because his right is older, and because, by the principle of accession, he is entitled to the ownership of the accessory thing.[40] In accordance with Depra v. Dumlao,[41] this case must be remanded to the trial court to determine matters necessary for the proper application of Article 448 in relation to Article 546. Such matters include the option that petitioners would take and the amount of indemnity that they would pay, should they decide to appropriate the improvements on the lots. Anent the second issue, although it may seem that the portions encroaching upon respondents' house can be considered a nuisance, because it hinders petitioners' use of their property, it cannot simply be removed at respondents' expense, as prayed for by petitioner. This is because respondents built the subject encroachment in good faith, and the law affords them certain rights as discussed above. WHEREFORE, the petition is DENIED, the Decision of the Court of Appeals dated December 20, 2001 in CA-G.R. CV No. 33589 is AFFIRMED with the following MODIFICATIONS: 1. No co-ownership exists over Lot No. 12-C, covered by TCT No. 96886, between petitioners and respondents. 2. The case is REMANDED to the Regional Trial Court, Branch 15, Manila, for further proceedings without further delay to determine the facts essential to the proper application of Articles 448 and 546 of the Civil Code.

FIRST DIVISION NATIONAL POWER CORPORATION, -versusLUCMAN G. IBRAHIM, OMAR G. MARUHOM, ELIAS G. MARUHOM, BUCAY G. MARUHOM, FAROUK G. MARUHOM, HIDJARA G. MARUHOM, ROCANIA G. MARUHOM, POTRISAM G. MARUHOM, LUMBA G. MARUHOM, SINAB G. MARUHOM, ACMAD G. MARUHOM, SOLAYMAN G. MARUHOM, MOHAMAD M. IBRAHIM, and CAIRONESA M. IBRAHIM, G.R. No. 168732 Petitioner, Present: PUNO, C.J., Chairperson, SANDOVAL-GUTIERREZ,* CORONA, AZCUNA, and GARCIA, JJ. Promulgated: June 29, 2007

NAPOCORs Agus II, III, IV, V, VI, VII projects located in Saguiran, Lanao del Sur; Nangca and Balo-i in Lanao del Norte; and Ditucalan and Fuentes in Iligan City. On September 19, 1992, respondent Omar G. Maruhom requested the Marawi City Water District for a permit to construct and/or install a motorized deep well in Lot 3 located in Saduc, Marawi City but his request was turned down because the construction of the deep well would cause danger to lives and property. On October 7, 1992, respondents demanded that NAPOCOR pay damages and vacate the sub-terrain portion of their lands but the latter refused to vacate much less pay damages. Respondents further averred that the construction of the underground tunnels has endangered their lives and properties as Marawi City lies in an area of local volcanic and tectonic activity. Further, these illegally constructed tunnels caused them sleepless nights, serious anxiety and shock thereby entitling them to recover moral damages and that by way of example for the public good, NAPOCOR must be held liable for exemplary damages. Disputing respondents claim, NAPOCOR filed an answer with counterclaim denying the material allegations of the complaint and interposing affirmative and special defenses, namely that (1) there is a failure to state a cause of action since respondents seek possession of the sub-terrain portion when they were never in possession of the same, (2) respondents have no cause of action because they failed to show proof that they were the owners of the property, and (3) the tunnels are a government project for the benefit of all and all private lands are subject to such easement as may be necessary for the same.[2] On August 7, 1996, the RTC rendered a Decision, the decretal portion of which reads as follows: WHEREFORE, judgment is hereby rendered: 1. Denying plaintiffs [private respondents] prayer for defendant [petitioner] National Power Corporation to dismantle the underground tunnels constructed between the lands of plaintiffs in Lots 1, 2, and 3 of Survey Plan FP (VII-5) 2278; 2. Ordering defendant to pay to plaintiffs the fair market value of said 70,000 square meters of land covering Lots 1, 2, and 3 as described in Survey Plan FP (VII-5) 2278 less the area of 21,995 square meters at P1,000.00 per square meter or a total of P48,005,000.00 for the remaining unpaid portion of 48,005 square meters; with 6% interest per annum from the filing of this case until paid; 3. Ordering defendant to pay plaintiffs a reasonable monthly rental of P0.68 per square meter of the total area of 48,005 square meters effective from its occupancy of the foregoing area in 1978 or a total of P7,050,974.40. 4. Ordering defendant to pay plaintiffs the sum of P200,000.00 as moral damages; and 5. Ordering defendant to pay the further sum of P200,000.00 as attorneys fees and the costs. SO ORDERED.[3]

Respondents.

X----------------------------------------------------------------------------------------X SO ORDERED. AZCUNA, J.: This is a petition for review on certiorari under Rule 45 of the Rules of Court seeking to annul the Decision[1] dated June 8, 2005 rendered by the Court of Appeals (CA) in C.A.-G.R. CV No. 57792. The facts are as follows: On November 23, 1994, respondent Lucman G. Ibrahim, in his personal capacity and in behalf of his co-heirs Omar G. Maruhom, Elias G. Maruhom, Bucay G. Maruhom, Mamod G. Maruhom, Farouk G. Maruhom, Hidjara G. Maruhom, Rocania G. Maruhom, Potrisam G. Maruhom, Lumba G. Maruhom, Sinab G. Maruhom, Acmad G. Maruhom, Solayman G. Maruhom, Mohamad M. Ibrahim and Caironesa M. Ibrahim, instituted an action against petitioner National Power Corporation (NAPOCOR) for recovery of possession of land and damages before the Regional Trial Court (RTC) of Lanao del Sur. In their complaint, Ibrahim and his co-heirs claimed that they were owners of several parcels of land described in Survey Plan FP (VII-5) 2278 consisting of 70,000 square meters, divided into three (3) lots, i.e. Lots 1, 2, and 3 consisting of 31,894, 14,915, and 23,191 square meters each respectively. Sometime in 1978, NAPOCOR, through alleged stealth and without respondents knowledge and prior consent, took possession of the sub-terrain area of their lands and constructed therein underground tunnels. The existence of the tunnels was only discovered sometime in July 1992 by respondents and then later confirmed on November 13, 1992 by NAPOCOR itself through a memorandum issued by the latters Acting Assistant Project Manager. The tunnels were apparently being used by NAPOCOR in siphoning the water of Lake Lanao and in the operation of DECISION

Property || Art. 429 to 444|| 27

On August 15, 1996, Ibrahim, joined by his co-heirs, filed an Urgent Motion for Execution of Judgment Pending Appeal. On the other hand, NAPOCOR filed a Notice of Appeal by registered mail on August 19, 1996. Thereafter, NAPOCOR filed a vigorous opposition to the motion for execution of judgment pending appeal with a motion for reconsideration of the Decision which it had received on August 9, 1996. On August 26, 1996, NAPOCOR filed a Manifestation and Motion withdrawing its Notice of Appeal purposely to give way to the hearing of its motion for reconsideration. On August 28, 1996, the RTC issued an Order granting execution pending appeal and denying NAPOCORs motion for reconsideration, which Order was received by NAPOCOR on September 6, 1996. On September 9, 1996, NAPOCOR filed its Notice of Appeal by registered mail which was denied by the RTC on the ground of having been filed out of time. Meanwhile, the Decision of the RTC was executed pending appeal and funds of NAPOCOR were garnished by respondents Ibrahim and his co-heirs. On October 4, 1996, a Petition for Relief from Judgment was filed by respondents Omar G. Maruhom, Elias G. Maruhom, Bucay G. Maruhom, Mamod G. Maruhom, Farouk G. Maruhom, Hidjara G. Maruhom, Potrisam G. Maruhom and Lumba G. Maruhom asserting as follows: 1) they did not file a motion to reconsider or appeal the decision within the reglementary period of fifteen (15) days from receipt of judgment because they believed in good faith that the decision was for damages and rentals and attorneys fees only as prayed for in the complaint: it was only on August 26, 1996 that they learned that the amounts awarded to the plaintiffs represented not only rentals, damages and attorneys fees but the greatest portion of which was payment of just compensation which in effect would make the defendant NPC the owner of the parcels of land involved in the case; when they learned of the nature of the judgment, the period of appeal has already expired; they were prevented by fraud, mistake, accident, or excusable negligence from taking legal steps to protect and preserve their rights over their parcels of land in so far as the part of the decision decreeing just compensation for petitioners properties; they would never have agreed to the alienation of their property in favor of anybody, considering the fact that the parcels of land involved in this case were among the valuable properties they inherited from their dear father and they would rather see their land crumble to dust than sell it to anybody.[4]

WHEREFORE, a modified judgment is hereby rendered: 1) Reducing the judgment award of plaintiffs for the fair market value of P48,005,000.00 by 9,526,000.00 or for a difference by P38,479,000.00 and by the further sum of P33,603,500.00 subject of the execution pending appeal leaving a difference of 4,878,500.00 which may be the subject of execution upon the finality of this modified judgment with 6% interest per annum from the filing of the case until paid. Awarding the sum of P1,476,911.00 to herein petitioners Omar G. Maruhom, Elias G. Maruhom, Bucay G. Maruhom, Mahmod G. Maruhom, Farouk G. Maruhom, Hidjara G. Maruhom, Portrisam G. Maruhom and Lumba G. Maruhom as reasonable rental deductible from the awarded sum of P7,050,974.40 pertaining to plaintiffs. Ordering defendant embodied in the August 7, 1996 decision to pay plaintiffs the sum of P200,000.00 as moral damages; and further sum of P200,000.00 as attorneys fees and costs. SO ORDERED.[5] Subsequently, both respondent Ibrahim and NAPOCOR appealed to the CA. In the Decision dated June 8, 2005, the CA set aside the modified judgment and reinstated the original Decision dated August 7, 1996, amending it further by deleting the award of moral damages and reducing the amount of rentals and attorneys fees, thus: WHEREFORE, premises considered, herein Appeals are hereby partially GRANTED, the Modified Judgment is ordered SET ASIDE and rendered of no force and effect and the original Decision of the court a quo dated 7 August 1996 is hereby RESTORED with the MODIFICATION that the award of moral damages is DELETED and the amounts of rentals and attorneys fees are REDUCED to P6,888,757.40 and P50,000.00, respectively. In this connection, the Clerk of Court of RTC Lanao del Sur is hereby directed to reassess and determine the additional filing fee that should be paid by Plaintiff-Appellant IBRAHIM taking into consideration the total amount of damages sought in the complaint vis--vis the actual amount of damages awarded by this Court. Such additional filing fee shall constitute a lien on the judgment.

SO ORDERED.[6] Hence, this petition ascribing the following errors to the CA: (a) RESPONDENTS WERE NOT DENIED THE BENEFICIAL USE OF THEIR SUBJECT PROPERTIES TO ENTITLE THEM TO JUST COMPENSATION BY WAY OF DAMAGES; ASSUMING THAT RESPONDENTS ARE ENTITLED TO JUST COMPENSATION BY WAY OF DAMAGES, NO EVIDENCE WAS PRESENTED ANENT THE VALUATION OF RESPONDENTS PROPERTY AT THE TIME OF ITS TAKING IN THE YEAR 1978 TO JUSTIFY THE AWARD OF ONE THOUSAND SQUARE METERS (P1000.00/SQ. M.) EVEN AS PAYMENT OF BACK RENTALS IS ITSELF IMPROPER.

(b)

2)

3)

This case revolves around the propriety of paying just compensation to respondents, and, by extension, the basis for computing the same. The threshold issue of whether respondents are entitled to just compensation hinges upon who owns the subterrain area occupied by petitioner. Petitioner maintains that the sub-terrain portion where the underground tunnels were constructed does not belong to respondents because, even conceding the fact that respondents owned the property, their right to the subsoil of the same does not extend beyond what is necessary to enable them to obtain all the utility and convenience that such property can normally give. In any case, petitioner asserts that respondents were still able to use the subject property even with the existence of the tunnels, citing as an example the fact that one of the respondents, Omar G. Maruhom, had established his residence on a part of the property. Petitioner concludes that the underground tunnels 115 meters below respondents property could not have caused damage or prejudice to respondents and their claim to this effect was, therefore, purely conjectural and speculative.[7] The contention lacks merit. Generally, in an appeal by certiorari under Rule 45 of the Rules of Court, the Court does not pass upon questions of fact. Absent any showing that the trial and appellate courts gravely abused their discretion, the Court will not examine the evidence introduced by the parties below to determine if they correctly assessed and evaluated the evidence on record.[8] The jurisdiction of the Court in cases brought to it from the CA is limited to reviewing and revising the errors of law imputed to it, its findings of fact being as a rule conclusive and binding on the Court. In the present case, petitioner failed to point to any evidence demonstrating grave abuse of discretion on the part of the CA or to any other circumstances which would call for the application of the exceptions to the above rule. Consequently, the CAs findings which upheld those of the trial court that respondents owned and possessed the property and that its substrata was possessed by petitioner since 1978 for the underground tunnels, cannot be disturbed. Moreover, the Court sustains the finding of the lower courts that the sub-terrain portion of the property similarly belongs to respondents. This conclusion is drawn from Article 437 of the Civil Code which provides:

2)

3) 4)

5)

The RTC granted the petition and rendered a modified judgment dated September 8, 1997, thus:

Property || Art. 429 to 444|| 28

ART. 437. The owner of a parcel of land is the owner of its surface and of everything under it, and he can construct thereon any works or make any plantations and excavations which he may deem proper, without detriment to servitudes and subject to special laws and ordinances. He cannot complain of the reasonable requirements of aerial navigation. Thus, the ownership of land extends to the surface as well as to the subsoil under it. In Republic of the Philippines v. Court of Appeals,[9] this principle was applied to show that rights over lands are indivisible and, consequently, require a definitive and categorical classification, thus: The Court of Appeals justified this by saying there is no conflict of interest between the owners of the surface rights and the owners of the sub-surface rights. This is rather strange doctrine, for it is a well-known principle that the owner of a piece of land has rights not only to its surface but also to everything underneath and the airspace above it up to a reasonable height. Under the aforesaid ruling, the land is classified as mineral underneath and agricultural on the surface, subject to separate claims of title. This is also difficult to understand, especially in its practical application. Under the theory of the respondent court, the surface owner will be planting on the land while the mining locator will be boring tunnels underneath. The farmer cannot dig a well because he may interfere with the mining operations below and the miner cannot blast a tunnel lest he destroy the crops above. How deep can the farmer, and how high can the miner go without encroaching on each others rights? Where is the dividing line between the surface and the sub-surface rights? The Court feels that the rights over the land are indivisible and that the land itself cannot be half agricultural and half mineral. The classification must be categorical; the land must be either completely mineral or completely agricultural. Registered landowners may even be ousted of ownership and possession of their properties in the event the latter are reclassified as mineral lands because real properties are characteristically indivisible. For the loss sustained by such owners, they are entitled to just compensation under the Mining Laws or in appropriate expropriation proceedings.[10] Moreover, petitioners argument that the landowners right extends to the subsoil insofar as necessary for their practical interests serves only to further weaken its case. The theory would limit the right to the sub-soil upon the economic utility which such area offers to the surface owners. Presumably, the landowners right extends to such height or depth where it is possible for them to obtain some benefit or enjoyment, and it is extinguished beyond such limit as there would be no more interest protected by law.[11] In this regard, the trial court found that respondents could have dug upon their property motorized deep wells but were prevented from doing so by the authorities precisely because of the construction and existence of the tunnels underneath the surface of their property. Respondents, therefore, still had a legal interest in the sub-terrain portion insofar as they could have excavated the same for the construction of the deep well. The fact that they could not was appreciated by the RTC as proof that the tunnels interfered with

respondents enjoyment of their property and deprived them of its full use and enjoyment, thus: Has it deprived the plaintiffs of the use of their lands when from the evidence they have already existing residential houses over said tunnels and it was not shown that the tunnels either destroyed said houses or disturb[ed] the possession thereof by plaintiffs? From the evidence, an affirmative answer seems to be in order. The plaintiffs and [their] co-heirs discovered [these] big underground tunnels in 1992. This was confirmed by the defendant on November 13, 1992 by the Acting Assistant Project Manager, Agus 1 Hydro Electric Project (Exh. K). On September 16, 1992, Atty. Omar Maruhom (co-heir) requested the Marawi City Water District for permit to construct a motorized deep well over Lot 3 for his residential house (Exh. Q). He was refused the permit because the construction of the deep well as (sic) the parcels of land will cause danger to lives and property. He was informed that beneath your lands are constructed the Napocor underground tunnel in connection with Agua Hydroelectric plant (Exh. Q-2). There in fact exists ample evidence that this construction of the tunnel without the prior consent of plaintiffs beneath the latters property endangered the lives and properties of said plaintiffs. It has been proved indubitably that Marawi City lies in an area of local volcanic and tectonic activity. Lake Lanao has been formed by extensive earth movements and is considered to be a drowned basin of volcano/tectonic origin. In Marawi City, there are a number of former volcanoes and an extensive amount of faulting. Some of these faults are still moving. (Feasibility Report on Marawi City Water District by Kampsa-Kruger, Consulting Engineers, Architects and Economists, Exh. R). Moreover, it has been shown that the underground tunnels [have] deprived the plaintiffs of the lawful use of the land and considerably reduced its value. On March 6, 1995, plaintiffs applied for a two-million peso loan with the Amanah Islamic Bank for the expansion of the operation of the Ameer Construction and Integrated Services to be secured by said land (Exh. N), but the application was disapproved by the bank in its letter of April 25, 1995 (Exh. O) stating that: Apropos to this, we regret to inform you that we cannot consider your loan application due to the following reasons, to wit: That per my actual ocular inspection and verification, subject property offered as collateral has an existing underground tunnel by the NPC for the Agus I Project, which tunnel is traversing underneath your property, hence, an encumbrance. As a matter of bank policy, property with an existing encumbrance cannot be considered neither accepted as collateral for a loan. All the foregoing evidence and findings convince this Court that preponderantly plaintiffs have established the condemnation of their land covering an area of 48,005 sq. meters

located at Saduc, Marawi City by the defendant National Power Corporation without even the benefit of expropriation proceedings or the payment of any just compensation and/or reasonable monthly rental since 1978.[12] In the past, the Court has held that if the government takes property without expropriation and devotes the property to public use, after many years, the property owner may demand payment of just compensation in the event restoration of possession is neither convenient nor feasible.[13] This is in accordance with the principle that persons shall not be deprived of their property except by competent authority and for public use and always upon payment of just compensation.[14] Petitioner contends that the underground tunnels in this case constitute an easement upon the property of respondents which does not involve any loss of title or possession. The manner in which the easement was created by petitioner, however, violates the due process rights of respondents as it was without notice and indemnity to them and did not go through proper expropriation proceedings. Petitioner could have, at any time, validly exercised the power of eminent domain to acquire the easement over respondents property as this power encompasses not only the taking or appropriation of title to and possession of the expropriated property but likewise covers even the imposition of a mere burden upon the owner of the condemned property.[15] Significantly, though, landowners cannot be deprived of their right over their land until expropriation proceedings are instituted in court. The court must then see to it that the taking is for public use, that there is payment of just compensation and that there is due process of law.[16] In disregarding this procedure and failing to recognize respondents ownership of the sub-terrain portion, petitioner took a risk and exposed itself to greater liability with the passage of time. It must be emphasized that the acquisition of the easement is not without expense. The underground tunnels impose limitations on respondents use of the property for an indefinite period and deprive them of its ordinary use. Based upon the foregoing, respondents are clearly entitled to the payment of just compensation.[17] Notwithstanding the fact that petitioner only occupies the sub-terrain portion, it is liable to pay not merely an easement fee but rather the full compensation for land. This is so because in this case, the nature of the easement practically deprives the owners of its normal beneficial use. Respondents, as the owners of the property thus expropriated, are entitled to a just compensation which should be neither more nor less, whenever it is possible to make the assessment, than the money equivalent of said property.[18] The entitlement of respondents to just compensation having been settled, the issue now is on the manner of computing the same. In this regard, petitioner claims that the basis for the computation of the just compensation should be the value of the property at the time it was taken in 1978. Petitioner also impugns the reliance made by the CA upon National Power Corporation v. Court of Appeals and Macapanton Mangondato [19] as the basis for computing the amount of just compensation in this action. The CA found that the award of damages is not excessive because the P1000 per square meter as the fair market value was sustained in a case involving a lot adjoining the property in question which case involved an expropriation by [petitioner] of portion of Lot 1 of the subdivision plan (LRC) PSD 116159 which is adjacent to Lots 2 and 3 of the same subdivision plan which is the subject of the instant controversy.[20] Just compensation has been understood to be the just and complete equivalent of the loss[21] and is ordinarily determined by referring to the value of the land and its character at the time it was taken by the expropriating authority.[22] There is a taking in this sense when the owners are actually deprived or dispossessed of their property, where there is a practical destruction or a material impairment of the value of their property, or when they are deprived of the ordinary use thereof. There is a taking in this
Property || Art. 429 to 444|| 29

context when the expropriator enters private property not only for a momentary period but for more permanent duration, for the purpose of devoting the property to a public use in such a manner as to oust the owner and deprive him of all beneficial enjoyment thereof.[23] Moreover, taking of the property for purposes of eminent domain entails that the entry into the property must be under warrant or color of legal authority.[24] Under the factual backdrop of this case, the last element of taking mentioned, i.e., that the entry into the property is under warrant or color of legal authority, is patently lacking. Petitioner justified its nonpayment of the indemnity due respondents upon its mistaken belief that the property formed part of the public dominion. This situation is on all fours with that in the Mangondato case. NAPOCOR in that case took the property of therein respondents in 1979, using it to build its Aqua I Hydroelectric Plant Project, without paying any compensation, allegedly under the mistaken belief that it was public land. It was only in 1990, after more than a decade of beneficial use, that NAPOCOR recognized therein respondents ownership and negotiated for the voluntary purchase of the property. In Mangondato, this Court held: The First Issue: Date of Taking or Date of Suit? The general rule in determining just compensation in eminent domain is the value of the property as of the date of the filing of the complaint, as follows: Sec. 4. Order of Condemnation. When such a motion is overruled or when any party fails to defend as required by this rule, the court may enter an order of condemnation declaring that the plaintiff has a lawful right to take the property sought to be condemned, for the public use or purpose described in the complaint, upon the payment of just compensation to be determined as of the date of the filing of the complaint. x x x (Italics supplied). Normally, the time of the taking coincides with the filing of the complaint for expropriation. Hence, many ruling of this Court have equated just compensation with the value of the property as of the time of filing of the complaint consistent with the above provision of the Rules. So too, where the institution of the action precedes entry to the property, the just compensation is to be ascertained as of the time of filing of the complaint. The general rule, however, admits of an exception: where this Court fixed the value of the property as of the date it was taken and not the date of the commencement of the expropriation proceedings. In the old case of Provincial Government of Rizal vs. Caro de Araullo, the Court ruled that x x x the owners of the land have no right to recover damages for this unearned increment resulting from the construction of the public improvement (lengthening of Taft Avenue from Manila to Pasay) from which the land was taken. To permit them to do so would be to allow them to recover more than the value of the land at the time it was taken, which is the true measure of the damages, or just compensation, and would discourage the construction of important public improvements.

In subsequent cases, the Court, following the above doctrine, invariably held that the time of taking is the critical date in determining lawful or just compensation . Justifying this stance, Mr. Justice (later Chief Justice) Enrique Fernando, speaking for the Court in Municipality of La Carlota vs. The Spouses Felicidad Baltazar and Vicente Gan, said, x x x the owner as is the constitutional intent, is paid what he is entitled to according to the value of the property so devoted to public use as of the date of taking. From that time, he had been deprived thereof. He had no choice but to submit. He is not, however, to be despoiled of such a right. No less than the fundamental law guarantees just compensation. It would be injustice to him certainly if from such a period, he could not recover the value of what was lost. There could be on the other hand, injustice to the expropriator if by a delay in the collection, the increment in price would accrue to the owner. The doctrine to which this Court has been committed is intended precisely to avoid either contingency fraught with unfairness. Simply stated, the exception finds the application where the owner would be given undue incremental advantages arising from the use to which the government devotes the property expropriated -- as for instance, the extension of a main thoroughfare as was in the case in Caro de Araullo. In the instant case, however, it is difficult to conceive of how there could have been an extra-ordinary increase in the value of the owners land arising from the expropriation, as indeed the records do not show any evidence that the valuation of P1,000.00 reached in 1992 was due to increments directly caused by petitioners use of the land. Since the petitioner is claiming an exception to Rule 67, Section 4, it has the burden in proving its claim that its occupancy and use -- not ordinary inflation and increase in land values -- was the direct cause of the increase in valuation from 1978 to 1992. Side Issue: When is there Taking of

to oust the owner and deprive him of all beneficial enjoyment of the property.(Italics supplied) In this case, the petitioners entrance in 1978 was without intent to expropriate or was not made under warrant or color of legal authority, for it believed the property was public land covered by Proclamation No. 1354. When the private respondent raised his claim of ownership sometime in 1979, the petitioner flatly refused the claim for compensation, nakedly insisted that the property was public land and wrongly justified its possession by alleging it had already paid financial assistance to Marawi City in exchange for the rights over the property. Only in 1990, after more than a decade of beneficial use, did the petitioner recognize private respondents ownership and negotiate for the voluntary purchase of the property. A Deed of Sale with provisional payment and subject to negotiations for the correct price was then executed. Clearly, this is not the intent nor the expropriation contemplated by law. This is a simple attempt at a voluntary purchase and sale. Obviously, the petitioner neglected and/or refused to exercise the power of eminent domain. Only in 1992, after the private respondent sued to recover possession and petitioner filed its Complaint to expropriate, did petitioner manifest its intention to exercise the power of eminent domain. Thus the respondent Court correctly held: If We decree that the fair market value of the land be determined as of 1978, then We would be sanctioning a deceptive scheme whereby NAPOCOR, for any reason other than for eminent domain would occupy anothers property and when later pressed for payment, first negotiate for a low price and then conveniently expropriate the property when the land owner refuses to accept its offer claiming that the taking of the property for the purpose of the eminent domain should be reckoned as of the date when it started to occupy the property and that the value of the property should be computed as of the date of the taking despite the increase in the meantime in the value of the property. In Noble vs. City of Manila, the City entered into a lease-purchase agreement of a building constructed by the petitioners predecessor-in-interest in accordance with the specifications of the former. The Court held that being bound by the said contract, the City could not expropriate the building. Expropriation could be resorted to only when it is made necessary by the opposition of the owner to the sale or by the lack of any agreement as to the price. Said the Court: The contract, therefore, in so far as it refers to the purchase of the building, as we have interpreted it, is in force, not having been revoked by the parties or by judicial decision. This being the case, the city being bound to buy the building at an agreed price, under a valid and subsisting contract, and the plaintiff being agreeable to its sale, the expropriation thereof, as sought by the defendant, is baseless. Expropriation lies only when it is made necessary by the opposition of the owner to the sale or
Property || Art. 429 to 444|| 30

Property?

But there is yet another cogent reason why this petition should be denied and why the respondent Court should be sustained. An examination of the undisputed factual environment would show that the taking was not really made in 1978. This Court has defined the elements of taking as the main ingredient in the exercise of power of eminent domain, in the following words: A number of circumstances must be present in taking of property for purposes of eminent domain: (1) the expropriator must enter a private property; (2) the entrance into private property must be for more than a momentary period; (3) the entry into the property should be under warrant or color of legal authority; (4) the property must be devoted to a public use or otherwise informally appropriated or injuriously affected; and (5) the utilization of the property for public use must be in such a way

by the lack of any agreement as to the price. There being in the present case a valid and subsisting contract, between the owner of the building and the city, for the purchase thereof at an agreed price, there is no reason for the expropriation. (Italics supplied) In the instant case, petitioner effectively repudiated the deed of sale it entered into with the private respondent when it passed Resolution No. 92-121 on May 25, 1992 authorizing its president to negotiate, inter alia, that payment shall be effective only after Agus I HE project has been placed in operation. It was only then that petitioners intent to expropriate became manifest as private respondent disagreed and, barely a month, filed suit.[25] In the present case, to allow petitioner to use the date it constructed the tunnels as the date of valuation would be grossly unfair. First, it did not enter the land under warrant or color of legal authority or with intent to expropriate the same. In fact, it did not bother to notify the owners and wrongly assumed it had the right to dig those tunnels under their property. Secondly, the improvements introduced by petitioner, namely, the tunnels, in no way contributed to an increase in the value of the land. The trial court, therefore, as affirmed by the CA, rightly computed the valuation of the property as of 1992, when respondents discovered the construction of the huge underground tunnels beneath their lands and petitioner confirmed the same and started negotiations for their purchase but no agreement could be reached.[26] As to the amount of the valuation, the RTC and the CA both used as basis the value of the adjacent property, Lot 1 (the property involved herein being Lots 2 and 3 of the same subdivision plan), which was valued at P1,000 per sq. meter as of 1990, as sustained by this Court in Mangondato, thus: The Second Issue: Valuation We now come to the issue of valuation. The fair market value as held by the respondent Court, is the amount of P1,000.00 per square meter. In an expropriation case where the principal issue is the determination of just compensation, as is the case here, a trial before Commissioners is indispensable to allow the parties to present evidence on the issue of just compensation. Inasmuch as the determination of just compensation in eminent domain cases is a judicial function and factual findings of the Court of Appeals are conclusive on the parties and reviewable only when the case falls within the recognized exceptions, which is not the situation obtaining in this petition, we see no reason to disturb the factual findings as to valuation of the subject property. As can be gleaned from the records, the court-and-the-parties-appointed commissioners did not abuse their authority in evaluating the evidence submitted to them nor misappreciate the clear preponderance of evidence. The amount fixed and agreed to by the respondent appellate Court is not grossly exorbitant. To quote: Commissioner Ali comes from the Office of the Register of Deeds who may well be considered an expert, with a general knowledge of the appraisal of real estate and the prevailing prices of land in the vicinity of the land in question so that his opinion on the valuation of the property cannot be lightly brushed aside.

The prevailing market value of the land is only one of the determinants used by the commissioners report the other being as herein shown: xxx xxx Commissioner Doromals report, recommending P300.00 per square meter, differs from the 2 commissioners only because his report was based on the valuation as of 1978 by the City Appraisal Committee as clarified by the latters chairman in response to NAPOCORs general counsels query. In sum, we agree with the Court of Appeals that petitioner has failed to show why it should be granted an exemption from the general rule in determining just compensation provided under Section 4 of Rule 67. On the contrary, private respondent has convinced us that, indeed, such general rule should in fact be observed in this case.[27] Petitioner has not shown any error on the part of the CA in reaching such a valuation. Furthermore, these are factual matters that are not within the ambit of the present review. WHEREFORE, the petition is DENIED and the Decision of the Court of Appeals in C.A.-G.R. CV No. 57792 dated June 8, 2005 is AFFIRMED. No costs. SO ORDERED.

G.R. No. 30240 August 23, 1929 AQUILINA TACAS ET AL. vs. EVARISTO TOBON 053 Phil 356 FIRST DIVISION [G.R. No. 30240. August 23, 1929.] AQUILINA TACAS ET AL., plaintiffs-appellees, vs. EVARISTO TOBON, defendantappellant. Simeon Ramos, Benito Soliven and J. Belmonte for appellant. Vicente Paz for appellees. SYLLABUS 1. LANDS; POSSESSION IN GOOD FAITH; TITLE OR MODE OF ACQUISITION. According to article 433 of the Civil Code, one who is not aware of a flaw in his title or mode of acquiring the ownership, is deemed a possessor in good faith. And according to article 451 of the same Code, the possessor in good faith acquires the fruits while his possession is not legally interrupted. 2. ID.; ID.; INTERRUPTION OF POSSESSION; RETURN OF FRUITS. But every possessor in good faith becomes a possessor in bad faith from the moment he becomes aware that what he believed to be true is not so. His possession is legally interrupted when he is summoned to the trial, according to article 1945 of the Civil Code, and from that time he is obliged to return the fruits received, for he ceases to be considered a possessor in good faith. 3. ID.; ID.; ID.; ID. "The decisions of April 27, 1877, April 22, May 10, and June 13, 1878, February 11, and October 5, 1885, March 17, 1891, March 4, and May 17, 1893, held that good faith ceased when the answer to the complaint was filed, taking this doctrine from the Partidas. By analogy, the service of the summons, doubtless more certain and more difficult to evade, is now admitted, according to articles 451 and 1945 of the Code, and it is in this sense that the decisions of the Supreme Court of January 28, 1896, December 7, 1899, November 23, 1990, and July 11, 1903, must be understood, all of them holding that even the possessor in good faith must return the fruits received from the time the answer to the complaint was filed, that is, from the time he became aware that he was in undue possession." (Manresa, Commentaries on the Civ. Code, vol. 4, pp. 270, 271.) DECISION VILLAMOR, J p: This is an action to recover from the defendant the ownership and possession of three parcels of land described in the sketch attached to the complaint, together with the fruits collected by him during the time he was in possession of said land that is, since January, 1912, it being alleged that the defendant unlawfully took said parcels upon the death of Francisco Dumadag, predecessor in interest of the plaintiff; and that he remained in possession, enjoying the fruits to the value of P700 annually. In his answer the defendant alleges that he is the owner of said lands, having purchased them from one Exequiel or Gil Tacas, deceased, about fifteen years before the amended answer dated December 5, 1924. At the trial the parties adduced their respective evidence, and thereafter the trial court declared it sufficiently proven by a preponderance of the evidence that the three parcels of land under discussion, were parts of an estate belonging to Francisco Dumadag, whose title is a possessory information recorded in the registry of deeds of Ilocos Sur, having inherited them from his parents (Exhibit H); that during his lifetime, said Francisco Dumadag was in possession of the land as owner for many years, until his death on November 17, 1911, enjoying its fruits, consisting in rice, corn, tobacco, and vegetables; that said Francisco Dumadag had filed a declaration for tax purposes in his own name; that the land tax had been paid by Francisco Dumadag during the years 1908 and 1911, and in
Property || Art. 429 to 444|| 31

his name in the years from 1912 to 1914 (Exhibits I to P); that in January, 1912, during the season for planting tobacco immediately following the death of Francisco Dumadag, Evaristo Tobon took possession of the three parcels of land in question planting them with tobacco; that from 1912 up to the present, the defendant Evaristo Tobon has been collecting the fruits therefrom, consisting of 300 sheaves of rice and 300 manos of first, second, and third-class tobacco each year, at the approximate rate of P0.30 for each sheaf of rice, and P3 for each mano of first-class tobacco, P2.50 for second-class tobacco, and P2 for third-class tobacco. There is no evidence of record regarding the amount and price of the corn collected by the defendant. And by virtue thereof, the trial court declared the plaintiffs to be the absolute owners of the three parcels of land in litigation, and ordered the defendant Evaristo Tobon to deliver said parcels of land to the plaintiffs, together with the fruits collected each year since 1912 until the complete termination of this case, and in default thereof, to pay to said plaintiffs the sum of P11,040, which is the total value of the rice and tobacco from 1912 to 1927, at P0.30 per sheaf of rice, and P2 per mano of tobacco. From this judgment, the defendant duly appealed in time, prosecuting his appeal to this court by the proper bill of exceptions. The appellant has made several assignments of error. In the first place, he contends that the identity of the pieces of land in litigation has not been established. We find no merit in this contention. It appears from the allegations of the complaint and the answer, that the case refers to the lands held by defendant and alleged by the latter to have been purchased from one Exequiel or Gil Tacas, brother to the plaintiff Aquilina Tacas. With regard to the probatory value of the documents presented by the parties, to wit, Exhibit H of the plaintiffs, and Exhibits 1 and 2 of the defendant, it is well to note that Exhibit H is a possessory information record duly approved on March 22, 1895 and inscribed in the registry of deeds of Ilocos Sur on November 4, 1917 in favor of Francisco Dumadag, covering some land situated in the sitio of Sisin, municipality of Magsingal, Ilocos Sur. On the other hand, Exhibit 1 of the defendant is an instrument executed on January 17, 1905 whereby one Exequiel or Gil Tacas sold three parcels of farm land in the placed called Sisin to Evaristo Tobon for P300 conan. And Exhibit 2 of the same defendant is another instrument executed on May 15, 1909 from which it appears, that Francisco Dumadag and his brother-in-law, Gil Tacas, agreed that the three parcels of land belonging to the latter, together with the two parcels of the former in the Anteng, barrio of Carisquis, would be put in Dumadag's name in the possessory proceedings. The court below made a detailed analysis of the signature of Ramon G. Tolentino who, as justice of the peace, signed the ratification of the document Exhibit 1, comparing it with the unquestioned signature of the same person, appearing in Exhibit 2, and concludes that the instrument Exhibit 1 is false. It is unnecessary to descend to the discussion of the characteristics of Ramon G. Tolentino's signature, he being the justice of the peace who ratified the document Exhibit 1, for, even granting that said instrument is genuine, it appears that Gil or Exequiel Tacas could not validly convey the lands in question to the defendant Evaristo Tobon, inasmuch as according to the possessory information, said lands belong to and were in possession of Francisco Dumadag even before 1895, until his death, which took place in November, 1911. The document Exhibit 2 argues nothing against our conclusion, for it is a contradiction to hold that in 1909 Francisco Dumadag agreed with his brother-in-law, Exequiel Tacas, that the three parcels of land belonging to the latter should be included in the former's possessory proceedings, considering that the latter had already been approved by the order of March 22, 1895. In the ordinary course of events, if such an agreement had really been entered into, it should have been at the time of the institution of the possessory proceeding. Dumadag did not know how to sign his name, and besides, no one has identified said document, Exhibit 2. There is another reason why Exhibit 1 cannot prevail over Exhibit H, namely, that supposing that a sale was made in favor of the defendant in 1905, it was only in 1909 that Exhibit 2 was drawn in order to legalize the alleged transfer. Besides, despite the transfer of the lands in favor of the defendant having taking place in 1905, according to Exhibit 1, the

defendant did not enter upon the possession of said lands until after the death of the original owner Francisco Dumadag, which occurred in November, 1911. Another error alleged by the appellant is that the trial court ordered him to deliver to the plaintiffs the fruits of the land from 1912 to 1927, or to pay their value, P11,040. The complaint in this case was filed on February 1, 1918. The bill of exceptions does not show when the defendant was summoned but it does show that the latter docketed his answer to the complaint on April 11, 1918. Evidence being lacking to show that when he entered upon the possession of the lands in question, he was aware of any flaw in his title or mode of acquiring it, he is deemed a possessor in good faith (article 433, Civil Code), and in accordance with article 451 of the Civil Code, the fruits of said lands were his, until he was summoned upon the complaint, or until he filed his answer thereto. (Saul vs. Hawkins, 1 Phil., 275; Javier vs. Javier, 6 Phil., 493; Cleto vs. Salvador, 11 Phil., 416; Valencia vs. Jimenez and Fuster, 11 Phil., 492; Araujo vs. Celis, 16 Phil., 329; Alcala and Alviedo vs. Hernandez and Pacleb, 32 Phil., 628; Tolentino vs. Vitug, 39 Phil., 126; Aquino vs. Taedo, 39 Phil., 517; Rivera vs. Roman Catholic Archbishop of Manila, 40 Phil., 717; and Velazquez vs. Teodoro, 46 Phil., 757.) Article 451 of the same Code provides: "ART. 451. Fruits received by one in possession in good faith before possession is legally interrupted become his own. "Natural and industrial fruits are deemed to have been received as soon as they are gathered or harvested. "Civil fruits are deemed to accrue from day to day, and belong to the possessor in good faith in this proportion.' In his comments upon this article of the Civil Code, Manresa, among other things, says: "But to every possessor in good faith there comes a time when he is considered a possessor in bad faith. When the owner or possessor with a better right comes along, when he becomes aware that what he had taken for granted is at least doubtful, and when he learns the grounds in support of the adverse contention, good faith ceases. The possessor may still believe that his right is more secure, because we resign ourselves with difficulty to the sight of our vanishing hopes; but when the final judgment of the court deprives him of the possession, all illusion necessarily disappears. Although he may not have been convinced of it before, the possessor becomes aware that his possession is unlawful from the time he learns of the complaint, from the time he is summoned to the trial. It is at this time that his possession is interrupted, according to article 1945, and that he ceases to receive the fruits, according to the first paragraph of article 451. The ruling of the court retroacts to that time; but shall good faith be deemed to cease then? Although there is a great difference between requiring the possessor in good faith to return the fruits he received from the time when his possession was legally interrupted, and considering him a possessor in bad faith for all legal purposes from that time, the law had to establish a definite rule in the matter, which is none other than that deducible from a combination of articles 452, 1945, and 435. Whether or not the defendant be a possessor in good faith, for there is no doubt that he can be, and the law makes no attempts to deny it, from the service of judicial summons, there exists an act that this possessor knows that his right is not secure, that someone disputes it, and that he may yet lose it; and if the court holds that restitution be made, that time determines all the legal consequences of the interruption, the time when the possession in good faith ceased to be so before the law. "The decisions of April 27, 1877, April 22, May 10 and June 13, 1878, February 11, and October 5, 1885, March 17, 1891, March 4, and May 17, 1893, held that good faith ceased when the answer to the complaint was filed, taking this doctrine from the Partidas. By analogy, the service of the summons, doubtless more certain and more difficult to evade, is now admitted, according to articles 451 and 1945 of the Code, and it is in this sense that the decisions of the Supreme Court of January 28, 1896, December 7, 1899, November 23, 1900, and July 11, 1903, must be understood, all of them holding that even the possessor in good faith must return the fruits received from the time the answer to the complaint was filed, that is, from the time he became aware that he was in undue possession." (Manresa, Commentaries on the Spanish Civil Code, vol. 4, pp. 270, 271.)

By virtue of the foregoing, the judgment appealed from must be, as it is hereby, affirmed in so far as it holds that the plaintiffs are the owners of the lands in question, and that the defendant is bound to return them to the former. And with regard to the award of damages, said judgment is hereby modified so that the defendant is only bound to return to the plaintiffs the fruits received from April, 1918 to 1927, that is, 300 sheaves of rice and 300 manos of tobacco, with the right to deduct the expenses of planting and harvesting (art. 365 of the Civil Code), which shall be determined by the trial court, after hearing both parties. The appellant shall pay the costs of the trial. So ordered.

Property || Art. 429 to 444|| 32

G.R. No. 35223 September 17, 1931 BACHRACH MOTOR CO. vs. TALISAY- SILAY MILLING CO., ET AL. 056 Phil 117 EN BANC [G.R. No. 35223. September 17, 1931.] THE BACHRACH MOTOR CO., INC., plaintiff-appellee, vs. TALISAY- SILAY MILLING CO. ET AL., defendants-appellees. THE PHILIPPINE NATIONAL BANK, intervenor-appellant. Ramon J. Lacson for intervenor-appellant. Mariano Ezpeleta for plaintiff-appellee. Nolan & Hernaez for defedants-appellees Talisay-Silay Milling Co. and Cesar Ledesma. SYLLABUS 1. REAL PROPERTY; CIVIL FRUITS. The bonus which the Talisay-Silay Milling Co., Inc., had to pay the planters who had mortgaged their lands to the Philippine National Bank in order to secure the payment of the company's debt to the bank, is not a civil fruit of the mortgaged property. 2. ID.; ID. Article 355 of the Civil Code considers three things as civil truths; (1) rents from building, (2) proceeds from leases of lands, and (3) the income from perpetual or life annuities or similar sources of revenue. The phrase "u otras analogas" used (in the original Spanish, art. 355, last paragraph, Civil Code) in the following context: "Y el importe de las rentas perpetuas, vitalicias u otras analogas," refers to "rentas," for the adjectives "otras" and "analogas" agree with the noun "rentas," as do also the other adjectives "perpetuas" and "vitalicias." DECISION ROMUALDEZ, J p: This proceeding originated in a complaint filed by the Bachrach Motor Co., Inc. against the Talisay-Silay Milling Co., Inc., for the delivery of the amount of P13,850 or promissory notes or other instruments of credit for that sum payable on June 30, 1930, as bonus in favor of Mariano Lacson Ledesma; the complaint further prays that the sugar central be ordered to render an accounting of the amounts it owes Mariano Lacson Ledesma by way of bonus, dividends, or otherwise, and to pay the plaintiff a sum sufficient to satisfy the judgment mentioned in the complaint, and that the sale made by said Mariano Lacson Ledesma be declared null and void. The Philippine National Bank filed a third party claim alleging a preferential right to receive any amount which Mariano Lacson Ledesma might be entitled to from the Talisay-Silay Milling Co. as bonus, because that would be civil fruits of the land mortgaged to said bank by said debtor for the benefit of the central referred to, and by virtue of a deed on assignment, and praying that said central be ordered to deliver directly to the intervening bank said sum on account of the latter's credit against the aforesaid Mariano Lacson Ledesma. The corporation Talisay-Silay Milling Co., Inc., answered the complaint stating that of Mariano Lacson Ledesma's credit, P7,500 belonged to Cesar Ledesma because he had purchased it, and praying that it be absolved from the complaint and that the proper party be named so that the remainder might be delivered. Cesar Ledesma, in turn, claiming to be the owner by purchase in good faith and for a consideration of the P7,500 which is a part of the credit referred to above, answered praying that he be absolved from the complaint. The plaintiff Bachrach Motor Co., Inc., answered the third party claim alleging that its credit against Mariano Lacson Ledesma was prior and preferential to that of the intervening bank, and praying that the latter's complaints be dismissed.

At the trial all the parties agreed to recognize and respect the sale made in Favor of Cesar Ledesma of the P7,500 part of the credit in question, for which reason the trial court dismissed the complaint and cross-complaint against Cesar Ledesma authorizing the defendant central to deliver to him the aforementioned sum of P7,500. And upon conclusion of the hearing, the court held that the Bachrach Motor Co., Inc., had a preferred right to receive the amount of P11,076.02 which was Mariano Lacson Ledesma's bonus, and it ordered the defendant central to deliver said sum to the plaintiff. The Philippine National Bank appeals, assigning the following alleged errors as committed by the trial court: "1. In holding that the bonus which the Talisay-Silay Milling Co., Inc., bound itself to pay the planters who had mortgaged their land to the Philippine National Bank to secure the payment of the debt of said central to said bank is not civil fruits of said land. "2. In not holding that said bonus became subject to the mortgage executed by the defendant Mariano Lacson Ledesma to the Philippine National Bank to secure the payment of his personal debt to said bank when it fell due. "3. In holding that the assignment (Exhibit 9, P. N. B.) of said bonus made on March 7, 1930, by Mariano Lacson Ledesma to the Philippine National Bank to be applied to the payment of his debt to said Philippine National Bank is fraudulent. "4. In holding that the Bachrach Motor Co., Inc., in civil case No. 31597 of the Court of First Instance of Manila levied a valid attachment upon the bonus in question. "5. In admitting and considering the supplementary complaint filed by the Bachrach Motor Co., Inc., alleging as a cause of action the attachment of the bonus in question which said Bachrach Motor Co., Inc., in civil case No. 31821 of the Court of First Instance of Manila levied after the filing of the original complaint in this case, and after Mariano Lacson Ledesma in this case had been declared in default. "6. In holding that the Bachrach Motor Co., Inc., has a preferential right to receive from the Talisay-Silay Milling Co., Inc., the amount of P11,076.02 which is in the possession of said corporation as the bonus to be paid to Mariano Lacson Ledesma, and in ordering the Talisay-Silay Milling Co., Inc., to deliver said amount to the Bachrach Motor Co., Inc. "7. In not holding that the Philippine National Bank has a preferential right to receive from the Talisay-Silay Milling Co., Inc., the amount of P11,076.02 held by said corporation as Mariano Lacson Ledesma's bonus, and in not ordering said Talisay-Silay Milling Co., Inc., to deliver said amount to the Philippine National Bank. "8. In not holding that the amended complaint and the supplementary complaint of the Bachrach Motor Co., Inc., do not state facts sufficient to constitute a cause of action in favor of the Bachrach Motor Co., Inc., and against the Talisay-Silay Milling Co., Inc., or against the Philippine National Bank." The appellant bank bases its preferential right upon the contention that the bonus in question is civil fruits of the land which the owners had mortgaged for the benefit of the central giving the bonus, and that, a civil fruits of said land, said bonus was assigned by Mariano Lacson Ledesma on March 7, 1930, by virtue of the document Exhibit 9 of said intervening institution, which admitted in its brief that "if the bonus in question is not civil fruits or rent which became subject to the mortgage in favor of the Philippine National Bank when Mariano Lacson Ledesma's personal obligation fell due, the assignment of March 7, 1930 (Exhibit 9, P. N. B.), is null and void, not because it is fraudulent, for there was no intent of fraud in executing the deed, that the cause or consideration of the assignment was erroneous, for it was based upon the proposition that the bonus was civil fruits of the land mortgaged to the Philippine National Bank." (P. 31.) The fundamental question, then, submitted to our consideration is whether or not the bonus in question is civil fruits. This is how that bonus came to be granted: On December 22, 1923, the Talisay-Silay Milling Co., Inc., was indebted to the Philippine National Bank. To secure the payment of its debt, it succeeded in inducing its planters, among whom was Mariano Lacson Ledesma, to mortgage their land to the creditor bank. And in order to compensate those planters for the risk they were running with their property under that mortgage, the aforesaid central, by a resolution passed on that same date, i.e., December 22, 1923, and amended on March 23,

1928, undertook to credit the owners of the plantation thus mortgaged every year with a sum equal to two per centum of the debt secured according to the yearly balance, the payment of the bonus being made at once, or in part from time to time, as soon as the central became free of its obligations to the aforesaid bank, and of those contracted by virtue of the contract of supervision, and had funds which might be so used, or as soon as it obtained from said bank authority to make such payment. (Exhibits 5, 6; P. N. B.) Article 355 of the Civil Code considers three things as civil fruits: First, the rents of buildings; second, the proceeds from leases of lands; and, third, the income from perpetual or life annuities, or other similar sources of revenue. It may be noted that according to the context of the law, the phrase "u otras analogas" refers only to rents or income, for the adjectives "otras" and "analogas" agree with the noun "rentas," as do also the other adjectives "perpetuas" and "vitalicias." That is why we say that by "civil fruits" the Civil Code understands one of three and only three things, to wit: the rent of a building, the rent of land, and certain kinds of income. As the bonus in question is not the rent of a building or of land, the only meaning of "civil fruits" left to be examined is that of "income." Assuming that in the broad juridical sense of the word "income" it might be said that the bonus in question is "income" under article 355 of the Civil Code, it is obvious to inquire whether it is derived from the land mortgaged by Mariano Lacson Ledesma to the appellant bank for the benefit of the central; for if it is not obtained from that land but from something else, it is not civil fruits of that land, and the bank's contention is untenable. It is to be noted that the said bonus bears no immediate, but only a remote and accidental relation to the land mentioned, having been granted as compensation for the risk of having subjected one's land to a lien in favor of the bank, for the benefit of the entity granting said bonus. If this bonus be income or civil fruits of anything, it is income arising from said risk, or, if one chooses, from Mariano Lacson Ledesma's generosity in facing the danger for the protection of the central, but certainly it is not civil fruits or income from the mortgaged property, which, as far as this case is concerned, has nothing to do with it. Hence, the amount of the bonus, according to the resolution of the central granting it, is not based upon the value, importance or any other circumstance of the mortgaged property, but upon the total value of the debt thereby secured, according to the annual balance, which is something quite distinct from and independent of the property referred to. Finding no merit in this appeal, the judgment appealed from is affirmed, without express finding as to costs. So ordered.

Property || Art. 429 to 444|| 33

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

Deed of Extrajudicial Partition[9] dated December 3, 1962. On December 12, 1964, the Torbela siblings executed a Deed of Absolute Quitclaim[10] over Lot No. 356-A in favor of Dr. Rosario. According to the said Deed, the Torbela siblings for and in consideration of the sum of NINE PESOS (P9.00) x x x transfer[red] and convey[ed] x x x unto the said Andres T. Rosario, that undivided portion of THREE HUNDRED SEVENTY-FOUR square meters of that parcel of land embraced in Original Certificate of Title No. 16676 of the land records of Pangasinan x x x.[11] Four days later, on December 16, 1964, OCT No. 16676 in Valerianos name was partially cancelled as to Lot No. 356-A and TCT No. 52751[12] was issued in Dr. Rosarios name covering the said property. Another Deed of Absolute Quitclaim[13] was subsequently executed on December 28, 1964, this time by Dr. Rosario, acknowledging that he only borrowed Lot No. 356-A from the Torbela siblings and was already returning the same to the latter for P1.00. The Deed stated: That for and in consideration of the sum of one peso (P1.00), Philippine Currency and the fact that I only borrowed the above described parcel of land from MARIA TORBELA, married to Eulogio Tosino, EUFROSINA TORBELA, married to Pedro Rosario, PEDRO TORBELA, married to Petra Pagador, LEONILA TORBELA, married to Fortunato Tamen, FERNANDO TORBELA, married to Victoriana Tablada, DOLORES TORBELA, widow, LEONORA TORBELA, married to Matias Agustin and SEVERINA TORBELA, married to Jorge Ildefonso, x x x by these presents do hereby cede, transfer and convey by way of this ABSOLUTE QUITCLAIM unto the said Maria, Eufrosina, Pedro, Leonila, Fernando, Dolores, Leonora and Severina, all surnamed Torbela the parcel of land described above.[14] (Emphasis ours.) The aforequoted Deed was notarized, but was not immediately annotated on TCT No. 52751. Following the issuance of TCT No. 52751, Dr. Rosario obtained a loan from the Development Bank of the Philippines (DBP) on February 21, 1965 in the sum of P70,200.00, secured by a mortgage constituted on Lot No. 356-A. The mortgage was annotated on TCT No. 52751 on September 21, 1965 as Entry No. 243537.[15] Dr. Rosario used the proceeds of the loan for the construction of improvements on Lot No. 356-A. On May 16, 1967, Cornelio T. Tosino (Cornelio) executed an Affidavit of Adverse Claim,[16] on behalf of the Torbela siblings. Cornelio deposed in said Affidavit: 3. That ANDRES T. ROSARIO later quitclaimed his rights in favor of the former owners by virtue of a Deed of Absolute Quitclaim which he executed before Notary Public Banaga, and entered in his Notarial Registry as Dec. No. 43; Page No. 9; Book No. I; Series of 1964; 4. That it is the desire of the parties, my aforestated kins, to register ownership over the above-described property or to perfect their title over the same but their Deed could not be registered because the registered owner now, ANDRES T. ROSARIO mortgaged the property with the DEVELOPMENT BANK OF THE PHILIPPINES, on September 21, 1965, and for

which reason, the Title is still impounded and held by the said bank; 5. That pending payment of the obligation with the DEVELOPMENT BANK OF THE PHILIPPINES or redemption of the Title from said bank, I, CORNELIO T. TOSINO, in behalf of my mother MARIA TORBELA-TOSINO, and my Aunts EUFROSINA TORBELA, LEONILA TORBELA-TAMEN, DOLORES TORBELA, LEONORA TORBELA-AGUSTIN, SEVERINA TORBELA-ILDEFONSO, and my Uncles PEDRO TORBELA and FERNANDO, also surnamed TORBELA, I request the Register of Deeds of Pangasinan to annotate their adverse claim at the back of Transfer Certificate of Title No. 52751, based on the annexed document, Deed of Absolute Quitclaim by ANDRES T. ROSARIO, dated December 28, 1964, marked as Annex A and made a part of this Affidavit, and it is also requested that the DEVELOPMENT BANK OF THE PHILIPPINES be informed accordingly.[17] The very next day, on May 17, 1967, the Torbela siblings had Cornelios Affidavit of Adverse Claim dated May 16, 1967 and Dr. Rosarios Deed of Absolute Quitclaim dated December 28, 1964 annotated on TCT No. 52751 as Entry Nos. 274471[18] and 274472,[19] respectively. The construction of a four-storey building on Lot No. 356-A was eventually completed. The building was initially used as a hospital, but was later converted to a commercial building. Part of the building was leased to PT&T; and the rest to Mrs. Andrea Rosario-Haduca, Dr. Rosarios sister, who operated the Rose Inn Hotel and Restaurant. Dr. Rosario was able to fully pay his loan from DBP. Under Entry No. 520197 on TCT No. 52751[20] dated March 6, 1981, the mortgage appearing under Entry No. 243537 was cancelled per the Cancellation and Discharge of Mortgage executed by DBP in favor of Dr. Rosario and ratified before a notary public on July 11, 1980. In the meantime, Dr. Rosario acquired another loan from the Philippine National Bank (PNB) sometime in 1979-1981. Records do not reveal though the original amount of the loan from PNB, but the loan agreement was amended on March 5, 1981 and the loan amount was increased to P450,000.00. The loan was secured by mortgages constituted on the following properties: (1) Lot No. 356-A, covered by TCT No. 52751 in Dr. Rosarios name; (2) Lot No. 4489, with an area of 1,862 square meters, located in Dagupan City, Pangasinan, covered by TCT No. 24832; and (3) Lot No. 5-F-8-C-2-B-2-A, with an area of 1,001 square meters, located in Nancayasan, Urdaneta, Pangasinan, covered by TCT No. 104189.[21] The amended loan agreement and mortgage on Lot No. 356-A was annotated on TCT No. 52751 on March 6, 1981 as Entry No. 520099.[22] Five days later, on March 11, 1981, another annotation, Entry No. 520469,[23] was made on TCT No. 52751, canceling the adverse claim on Lot No. 356-A under Entry Nos. 274471-274472, on the basis of the Cancellation and Discharge of Mortgage executed by Dr. Rosario on March 5, 1981. Entry No. 520469 consisted of both stamped and handwritten portions, and exactly reads: Entry No. 520469. Cancellation of Adverse Claim executed by Andres Rosario in favor of same. The incumbrance/mortgage appearing under Entry No. 274471-72 is now cancelled as per Cancellation and Discharge of Mortgage Ratified before Notary
Property || Art. 429 to 444|| 34

DECISION LEONARDO-DE CASTRO, J.: Presently before the Court are two consolidated Petitions for Review on Certiorari under Rule 45 of the Rules of Court, both assailing the Decision[1] dated June 29, 1999 and Resolution[2] dated October 22, 1999 of the Court of Appeals in CA-G.R. CV No. 39770. The petitioners in G.R. No. 140528 are siblings Maria Torbela,[3] Pedro Torbela,[4] Eufrosina Torbela Rosario,[5] Leonila Torbela Tamin, Fernando Torbela,[6] Dolores Torbela Tablada, Leonora Torbela Agustin,[7] and Severina Torbela Ildefonso (Torbela siblings). The petitioner in G.R. No. 140553 is Lena Duque-Rosario (Duque-Rosario), who was married to, but now legally separated from, Dr. Andres T. Rosario (Dr. Rosario). Dr. Rosario is the son of Eufrosina Torbela Rosario and the nephew of the other Torbela siblings. The controversy began with a parcel of land, with an area of 374 square meters, located in Urdaneta City, Pangasinan (Lot No. 356-A). It was originally part of a larger parcel of land, known as Lot No. 356 of the Cadastral Survey of Urdaneta, measuring 749 square meters, and covered by Original Certificate of Title (OCT) No. 16676,[8] in the name of Valeriano Semilla (Valeriano), married to Potenciana Acosta. Under unexplained circumstances, Valeriano gave Lot No. 356-A to his sister Marta Semilla, married to Eugenio Torbela (spouses Torbela). Upon the deaths of the spouses Torbela, Lot No. 356A was adjudicated in equal shares among their children, the Torbela siblings, by virtue of a

Public Mauro G. Meris on March 5, 1981: Doc. No. 215; Page No. 44; Book No. 1; Series Of 1981. Lingayen, Pangasinan, 3-11, 19981

On December 9, 1987, the Torbela siblings filed before the RTC their Amended Complaint,[31] impleading Banco Filipino as additional defendant in Civil Case No. U-4359 and praying that the spouses Rosario be ordered to redeem Lot No. 356-A from Banco Filipino. The spouses Rosario instituted before the RTC on March 4, 1988 a case for annulment of extrajudicial foreclosure and damages, with prayer for a writ of preliminary injunction and temporary restraining order, against Banco Filipino, the Provincial Ex Officio Sheriff and his Deputy, and the Register of Deeds of Pangasinan. The case was docketed as Civil Case No. U-4667. Another notice of lis pendens was annotated on TCT No. 52751 on March 10, 1988 as Entry No. 627059, viz: Entry No. 627059 Lis Pendens Dr. Andres T. Rosario and Lena Duque Rosario, Plaintiff versus Banco Filipino, et. al. Civil Case No. U-4667 or Annulment of ExtraJudicial Foreclosure of Real Estate Mortgage The parcel of land described in this title is subject to Notice of Lis Pendens subscribed and sworn to before Notary Public Mauro G. Meris, as Doc. No. 21; Page No. 5; Book 111; S-1988. March 7, 1988-1988 March 10, 1:00 p.m. (SGD.) RUFINO M. MORENO, SR. Register of Deeds[32] The Torbela siblings intervened in Civil Case No. U-4667. Eventually, on October 17, 1990, the RTC issued an Order[33] dismissing without prejudice Civil Case No. U-4667 due to the spouses Rosarios failure to prosecute. Meanwhile, the Torbela siblings tried to redeem Lot No. 356-A from Banco Filipino, but their efforts were unsuccessful. Upon the expiration of the one-year redemption period in April 1988, the Certificate of Final Sale[34] and Affidavit of Consolidation[35] covering all three foreclosed properties were executed on May 24, 1988 and May 25, 1988, respectively. On June 7, 1988, new certificates of title were issued in the name of Banco Filipino, particularly, TCT No. 165812 for Lot No. 5-F-8-C-2-B-2-A and TCT No. 165813 for Lot No. 356-A .[36] The Torbela siblings thereafter filed before the RTC on August 29, 1988 a Complaint[37] for annulment of the Certificate of Final Sale dated May 24, 1988, judicial cancelation of TCT No. 165813, and damages, against Banco Filipino, the Ex Officio Provincial Sheriff, and the Register of Deeds of Pangasinan, which was docketed as Civil Case No. U-4733. On June 19, 1991, Banco Filipino filed before the RTC of Urdaneta City a Petition for the issuance of a writ of possession. In said Petition, docketed as Pet. Case No. U-822, Banco Filipino prayed that a writ of possession be issued in its favor over Lot No. 5F-8-C-2-B-2-A and Lot No. 356-A, plus the improvements thereon, and the spouses Rosario and other persons presently in possession of said properties be directed to abide by said writ. The RTC jointly heard Civil Case Nos. U-4359 and U-4733 and Pet. Case No. U-822. The Decision[38] on these three cases was promulgated on January 15, 1992, the dispositive portion of which reads:

WHEREFORE, judgment is rendered: 1. Declaring the real estate mortgage over Lot 356-A covered by TCT 52751 executed by Spouses Andres Rosario in favor of Banco Filipino, legal and valid; 2. Declaring the sheriffs sale dated April 2, 1987 over Lot 356-A covered by TCT 52751 and subsequent final Deed of Sale dated May 14, 1988 over Lot 356-A covered by TCT No. 52751 legal and valid; 3. Declaring Banco Filipino the owner of Lot 356-A covered by TCT No. 52751 (now TCT 165813); 4. Banco Filipino is entitled to a Writ of Possession over Lot 356-A together with the improvements thereon (Rose Inn Building). The Branch Clerk of Court is hereby ordered to issue a writ of possession in favor of Banco Filipino; 5. [The Torbela siblings] are hereby ordered to render accounting to Banco Filipino the rental they received from tenants of Rose Inn Building from May 14, 1988; 6. [The Torbela siblings] are hereby ordered to pay Banco Filipino the sum of P20,000.00 as attorneys fees; 7. Banco Filipino is hereby ordered to give [the Torbela siblings] the right of first refusal over Lot 356-A. The Register of Deeds is hereby ordered to annotate the right of [the Torbela siblings] at the back of TCT No. 165813 after payment of the required fees; 8. Dr. Rosario and Lena Rosario are hereby ordered to reimburse [the Torbela siblings] the market value of Lot 356-A as of December, 1964 minus payments made by the former; 9. Dismissing the complaint of [the Torbela siblings] against Banco Filipino, Pedro Habon and Rufino Moreno in Civil Case No. U-4733; and against Banco Filipino in Civil Case No. U-4359.[39]

[Signed: Pedro dela Cruz] Register of Deeds

[24]

On December 8, 1981, Dr. Rosario and his wife, Duque-Rosario (spouses Rosario), acquired a third loan in the amount of P1,200,000.00 from Banco Filipino Savings and Mortgage Bank (Banco Filipino). To secure said loan, the spouses Rosario again constituted mortgages on Lot No. 356-A, Lot No. 4489, and Lot No. 5-F-8-C-2-B-2-A. The mortgage on Lot No. 356-A was annotated on TCT No. 52751 as Entry No. 533283[25] on December 18, 1981. Since the construction of a two-storey commercial building on Lot No. 5-F-8-C-2-B-2-A was still incomplete, the loan value thereof as collateral was deducted from the approved loan amount. Thus, the spouses Rosario could only avail of the maximum loan amount of P830,064.00 from Banco Filipino. Because Banco Filipino paid the balance of Dr. Rosarios loan from PNB, the mortgage on Lot No. 356-A in favor of PNB was cancelled per Entry No. 533478[26] on TCT No. 52751 dated December 23, 1981. On February 13, 1986, the Torbela siblings filed before the Regional Trial Court (RTC) of Urdaneta, Pangasinan, a Complaint for recovery of ownership and possession of Lot No. 356-A, plus damages, against the spouses Rosario, which was docketed as Civil Case No. U-4359. On the same day, Entry Nos. 593493 and 593494 were made on TCT No. 52751 that read as follows: Entry No. 593494 Complaint Civil Case No. U-4359 (For: Recovery of Ownership and Possession and Damages. (Sup. Paper). Entry No. 593493 Notice of Lis Pendens The parcel of land described in this title is subject to Lis Pendens executed by Liliosa B. Rosario, CLAO, Trial Attorney dated February 13, 1986. Filed to TCT No. 52751 February 13, 1986-1986 February 13 3:30 p.m. (SGD.) PACIFICO M. BRAGANZA Register of Deeds[27] The spouses Rosario afterwards failed to pay their loan from Banco Filipino. As of April 2, 1987, the spouses Rosarios outstanding principal obligation and penalty charges amounted to P743,296.82 and P151,524.00, respectively.[28] Banco Filipino extrajudicially foreclosed the mortgages on Lot No. 356-A, Lot No. 4489, and Lot No. 5-F-8-C-2-B-2-A. During the public auction on April 2, 1987, Banco Filipino was the lone bidder for the three foreclosed properties for the price of P1,372,387.04. The Certificate of Sale[29] dated April 2, 1987, in favor of Banco Filipino, was annotated on TCT No. 52751 on April 14, 1987 as Entry No. 610623.[30]

The RTC released an Amended Decision[40] dated January 29, 1992, adding the following paragraph to the dispositive: Banco Filipino is entitled to a Writ of Possession over Lot-5-F-8-C-2-[B]-2-A of the subdivision plan (LRC) Psd-122471, covered by Transfer Certificate of Title 104189 of the Registry of Deeds of Pangasinan[.][41] The Torbela siblings and Dr. Rosario appealed the foregoing RTC judgment before the Court of Appeals. Their appeal was docketed as CA-G.R. CV No. 39770. In its Decision[42] dated June 29, 1999, the Court of Appeals decreed:
Property || Art. 429 to 444|| 35

WHEREFORE, foregoing considered, the appealed decision is hereby AFFIRMED with modification. Items No. 6 and 7 of the appealed decision are DELETED. Item No. 8 is modified requiring [Dr. Rosario] to pay [the Torbela siblings] actual damages, in the amount of P1,200,000.00 with 6% per annum interest from finality of this decision until fully paid. [Dr. Rosario] is further ORDERED to pay [the Torbela siblings] the amount of P300,000.00 as moral damages; P200,000.00 as exemplary damages and P100,000.00 as attorneys fees. Costs against [Dr. Rosario].[43] The Court of Appeals, in a Resolution[44] dated October 22, 1999, denied the separate Motions for Reconsideration of the Torbela siblings and Dr. Rosario. The Torbela siblings come before this Court via the Petition for Review in G.R. No. 140528, with the following assignment of errors: First Issue and Assignment of Error: THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN NOT FINDING THAT THE REGISTRATION OF THE DEED OF ABSOLUTE QUITCLAIM EXECUTED BY [DR. ANDRES T. ROSARIO] IN FAVOR OF THE [TORBELA SIBLINGS] DATED DECEMBER 28, 1964 AND THE REGISTRATION OF THE NOTICE OF ADVERSE CLAIM EXECUTED BY THE [TORBELA SIBLINGS], SERVE AS THE OPERATIVE ACT TO CONVEY OR AFFECT THE LAND AND IMPROVEMENTS THEREOF IN SO FAR AS THIRD PERSONS ARE CONCERNED. Second Issue and Assignment of Error: THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN FINDING THAT THE SUBJECT PROPERTY COVERED BY T.C.T. NO. 52751 IS CLEAN AND FREE, DESPITE OF THE ANNOTATION OF ENCUMBRANCES OF THE NOTICE OF ADVERSE CLAIM AND THE DEED OF ABSOLUTE QUITCLAIM APPEARING AT THE BACK THEREOF AS ENTRY NOS. 274471 AND 274472, RESPECTIVELY. Third Issue and Assignment of Error: THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN FINDING THAT THE NOTICE OF ADVERSE CLAIM OF THE [TORBELA SIBLINGS] UNDER ENTRY NO. 274471 WAS VALIDLY CANCELLED BY THE REGISTER OF DEEDS, IN THE ABSENCE OF A PETITION DULY FILED IN COURT FOR ITS CANCELLATION.

Fourth Issue and Assignment of Error: THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN FINDING THAT RESPONDENT BANCO FILIPINO SAVINGS AND MORTGAGE BANK IS A MORTGAGEE IN GOOD FAITH. Fifth Issue and Assignment of Error: THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN NOT FINDING THAT THE FILING OF A CIVIL CASE NO. U-4359 ON DECEMBER 9, 1987, IMPLEADING RESPONDENT BANCO FILIPINO AS ADDITIONAL PARTY DEFENDANT, TOLL OR SUSPEND THE RUNNING OF THE ONE YEAR PERIOD OF REDEMPTION. Sixth Issue and Assignment of Error: THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN NOT FINDING THAT THE OWNERSHIP OVER THE SUBJECT PROPERTY WAS PREMATURELY CONSOLIDATED IN FAVOR OF RESPONDENT BANCO FILIPINO SAVINGS AND MORTGAGE BANK. Seventh Issue and Assignment of Error: THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN FINDING THAT THE SUBJECT PROPERTY IS AT LEAST WORTH P1,200,000.00.[45] The Torbela siblings ask of this Court: WHEREFORE, in the light of the foregoing considerations, the [Torbela siblings] most respectfully pray that the questioned DECISION promulgated on June 29, 1999 (Annex A, Petition) and the RESOLUTION dated October 22, 1999 (Annex B, Petition) be REVERSED and SET ASIDE, and/or further MODIFIED in favor of the [Torbela siblings], and another DECISION issue ordering, among other reliefs, the respondent Banco Filipino to reconvey back Lot No. 356-A, covered by T.C.T. No. 52751, in favor of the [Torbela siblings] who are the actual owners of the same. The [Torbela siblings] likewise pray for such other reliefs and further remedies as may be deemed just and equitable under the premises.[46] Duque-Rosario, now legally separated from Dr. Rosario, avers in her Petition for Review in G.R. No. 140553 that Lot No. 4489 and Lot No. 5-F-8-C-2-B-2-A were registered in her name, and she was unlawfully deprived of ownership of said properties because of the following errors of the Court of Appeals:

A THE HON. COURT OF APPEALS PATENTLY ERRED IN NOT FINDING THAT THE PERIOD TO REDEEM THE PROPERTY HAS NOT COMMENCED, HENCE, THE CERTIFICATE OF SALE, THE CONSOLIDATION OF OWNERSHIP BY [BANCO FILIPINO], ARE NULL AND VOID. B THE COURT OF APPEALS PATENTLY ERRED IN REFUSING TO RULE THAT THE FILING OF THE COMPLAINT BEFORE THE COURT A QUO BY THE [TORBELA SIBLINGS] HAD ALREADY BEEN PRESCRIBED.[47] Duque-Rosario prays that the appealed decision of the Court of Appeals be reversed and set aside, and that Lot No. 4489 and Lot No. 5-F-8-C-2-B-2-A be freed from all obligations and encumbrances and returned to her. Review of findings of fact by the RTC and the Court of Appeals warranted. A disquisition of the issues raised and/or errors assigned in the Petitions at bar unavoidably requires a re-evaluation of the facts and evidence presented by the parties in the court a quo. In Republic v. Heirs of Julia Ramos,[48] the Court summed up the rules governing the power of review of the Court: Ordinarily, this Court will not review, much less reverse, the factual findings of the Court of Appeals, especially where such findings coincide with those of the trial court. The findings of facts of the Court of Appeals are, as a general rule, conclusive and binding upon this Court, since this Court is not a trier of facts and does not routinely undertake the reexamination of the evidence presented by the contending parties during the trial of the case. The above rule, however, is subject to a number of exceptions, such as (1) when the inference made is manifestly mistaken, absurd or impossible; (2) when there is grave abuse of discretion; (3) when the finding is grounded entirely on speculations, surmises, or conjectures; (4) when the judgment of the Court of Appeals is based on misapprehension of facts; (5) when the findings of fact are conflicting; (6) when the Court of Appeals, in making its findings, went beyond the issues of the case and the same is contrary to the admissions of both parties; (7) when the findings of the Court of Appeals are contrary to those of the trial court; (8) when the findings of fact are conclusions without citation of specific evidence on which they are based; (9) when the Court of Appeals manifestly overlooked certain relevant facts not disputed by the parties and which, if properly considered, would justify a different conclusion; and (10) when the findings of fact of the Court of Appeals are premised on the absence of evidence and are contradicted by the evidence on record.[49]
Property || Art. 429 to 444|| 36

As the succeeding discussion will bear out, the first, fourth, and ninth exceptions are extant in these case. Barangay conciliation was not a prerequisite to the institution of Civil Case No. U-4359. Dr. Rosario contends that Civil Case No. U-4359, the Complaint of the Torbela siblings for recovery of ownership and possession of Lot No. 356-A, plus damages, should have been dismissed by the RTC because of the failure of the Torbela siblings to comply with the prior requirement of submitting the dispute to barangay conciliation. The Torbela siblings instituted Civil Case No. U-4359 on February 13, 1986, when Presidential Decree No. 1508, Establishing a System of Amicably Settling Disputes at the Barangay Level, was still in effect.[50] Pertinent provisions of said issuance read: Section 2. Subject matters for amicable settlement. The Lupon of each barangay shall have authority to bring together the parties actually residing in the same city or municipality for amicable settlement of all disputes except: 1. Where one party is the government, or any subdivision or instrumentality thereof; 2. Where one party is a public officer or employee, and the dispute relates to the performance of his official functions; Offenses punishable by imprisonment exceeding 30 days, or a fine exceeding P200.00; Offenses where there is no private offended party; Such other classes of disputes which the Prime Minister may in the interest of justice determine upon recommendation of the Minister of Justice and the Minister of Local Government. 2. xxxx

municipalities, except where such barangays adjoin each other; and involving real property located in different municipalities.

Section 6. Conciliation, pre-condition to filing of complaint. No complaint, petition, action or proceeding involving any matter within the authority of the Lupon as provided in Section 2 hereof shall be filed or instituted in court or any other government office for adjudication unless there has been a confrontation of the parties before the Lupon Chairman or the Pangkat and no conciliation or settlement has been reached as certified by the Lupon Secretary or the Pangkat Secretary, attested by the Lupon or Pangkat Chairman, or unless the settlement has been repudiated. x x x. (Emphases supplied.) The Court gave the following elucidation on the jurisdiction of the Lupong Tagapayapa in Tavora v. Hon. Veloso[51]: The foregoing provisions are quite clear. Section 2 specifies the conditions under which the Lupon of a barangay shall have authority to bring together the disputants for amicable settlement of their dispute: The parties must be actually residing in the same city or municipality. At the same time, Section 3 while reiterating that the disputants must be actually residing in the same barangay or in different barangays within the same city or municipality unequivocably declares that the Lupon shall have no authority over disputes involving parties who actually reside in barangays of different cities or municipalities, except where such barangays adjoin each other. Thus, by express statutory inclusion and exclusion, the Lupon shall have no jurisdiction over disputes where the parties are not actual residents of the same city or municipality, except where the barangays in which they actually reside adjoin each other. It is true that immediately after specifying the barangay whose Lupon shall take cognizance of a given dispute, Sec. 3 of PD 1508 adds: "However, all disputes which involve real property or any interest therein shall be brought in the barangay where the real property or any part thereof is situated." Actually, however, this added sentence is just an ordinary proviso and should operate as such. The operation of a proviso, as a rule, should be limited to its normal function, which is to restrict or vary the operation of the principal clause, rather than expand its scope, in the absence of a clear indication to the contrary.

The natural and appropriate office of a proviso is . . . to except something from the enacting clause; to limit, restrict, or qualify the statute in whole or in part; or to exclude from the scope of the statute that which otherwise would be within its terms. (73 Am Jur 2d 467.) Therefore, the quoted proviso should simply be deemed to restrict or vary the rule on venue prescribed in the principal clauses of the first paragraph of Section 3, thus: Although venue is generally determined by the residence of the parties, disputes involving real property shall be brought in the barangay where the real property or any part thereof is situated, notwithstanding that the parties reside elsewhere within the same city/municipality.[52] (Emphases supplied.) The original parties in Civil Case No. U-4359 (the Torbela siblings and the spouses Rosario) do not reside in the same barangay, or in different barangays within the same city or municipality, or in different barangays of different cities or municipalities but are adjoining each other. Some of them reside outside Pangasinan and even outside of the country altogether. The Torbela siblings reside separately in Barangay Macalong, Urdaneta, Pangasinan; Barangay Consolacion, Urdaneta, Pangasinan; Pangil, Laguna; Chicago, United States of America; and Canada. The spouses Rosario are residents of Calle Garcia, Poblacion, Urdaneta, Pangasinan. Resultantly, the Lupon had no jurisdiction over the dispute and barangay conciliation was not a pre-condition for the filing of Civil Case No. U-4359. The Court now looks into the merits of Civil Case No. U-4359. There was an express trust between the Torbela siblings and Dr. Rosario. There is no dispute that the Torbela sibling inherited the title to Lot No. 356-A from their parents, the Torbela spouses, who, in turn, acquired the same from the first registered owner of Lot No. 356-A, Valeriano. Indeed, the Torbela siblings executed a Deed of Absolute Quitclaim on December 12, 1964 in which they transferred and conveyed Lot No. 356-A to Dr. Rosario for the consideration of P9.00. However, the Torbela siblings explained that they only executed the Deed as an accommodation so that Dr. Rosario could have Lot No. 356-A registered in his name and use said property to secure a loan from DBP, the proceeds of which would be used for building a hospital on Lot No. 356-A a claim supported by testimonial and documentary evidence, and borne out by the sequence of events immediately following the execution by the Torbela siblings of said Deed. On December 16, 1964, TCT No. 52751, covering Lot No. 356-A, was already issued in Dr. Rosarios name. On December 28, 1964, Dr. Rosario executed his own Deed of Absolute Quitclaim, in which he expressly acknowledged that he only borrowed Lot No. 356 -A and was transferring and conveying the same back to the Torbela siblings for the consideration of
Property || Art. 429 to 444|| 37

3.

4. 5.

Section 3. Venue. Disputes between or among persons actually residing in the same barangay shall be brought for amicable settlement before the Lupon of said barangay. Those involving actual residents of different barangays within the same city or municipality shall be brought in the barangay where the respondent or any of the respondents actually resides, at the election of the complainant. However, all disputes which involved real property or any interest therein shall be brought in the barangay where the real property or any part thereof is situated. The Lupon shall have no authority over disputes: 1. involving parties who actually reside in barangays of different cities or

P1.00. On February 21, 1965, Dr. Rosarios loan in the amount of P70,200.00, secured by a mortgage on Lot No. 356-A, was approved by DBP. Soon thereafter, construction of a hospital building started on Lot No. 356-A. Among the notable evidence presented by the Torbela siblings is the testimony of Atty. Lorenza Alcantara (Atty. Alcantara), who had no apparent personal interest in the present case. Atty. Alcantara, when she was still a boarder at the house of Eufrosina Torbela Rosario (Dr. Rosarios mother), was consulted by the Torbela siblings as regards the extrajudicial partition of Lot No. 356-A. She also witnessed the execution of the two Deeds of Absolute Quitclaim by the Torbela siblings and Dr. Rosario. In contrast, Dr. Rosario presented TCT No. 52751, issued in his name, to prove his purported title to Lot No. 356-A. In Lee Tek Sheng v. Court of Appeals,[53] the Court made a clear distinction between title and the certificate of title: The certificate referred to is that document issued by the Register of Deeds known as the Transfer Certificate of Title (TCT). By title, the law refers to ownership which is represented by that document. Petitioner apparently confuses certificate with title. Placing a parcel of land under the mantle of the Torrens system does not mean that ownership thereof can no longer be disputed. Ownership is different from a certificate of title. The TCT is only the best proof of ownership of a piece of land. Besides, the certificate cannot always be considered as conclusive evidence of ownership. Mere issuance of the certificate of title in the name of any person does not foreclose the possibility that the real property may be under co-ownership with persons not named in the certificate or that the registrant may only be a trustee or that other parties may have acquired interest subsequent to the issuance of the certificate of title. To repeat, registration is not the equivalent of title, but is only the best evidence thereof. Title as a concept of ownership should not be confused with the certificate of title as evidence of such ownership although both are interchangeably used. x x x.[54] (Emphases supplied.) Registration does not vest title; it is merely the evidence of such title. Land registration laws do not give the holder any better title than what he actually has. [55] Consequently, Dr. Rosario must still prove herein his acquisition of title to Lot No. 356-A, apart from his submission of TCT No. 52751 in his name. Dr. Rosario testified that he obtained Lot No. 356-A after paying the Torbela siblings P25,000.00, pursuant to a verbal agreement with the latter. The Court though observes that Dr. Rosarios testimony on the execution and existence of the verbal agreement with the Torbela siblings lacks significant details (such as the names of the parties present, dates, places, etc.) and is not corroborated by independent evidence. In addition, Dr. Rosario acknowledged the execution of the two Deeds of Absolute Quitclaim dated December 12, 1964 and December 28, 1964, even affirming his own signature on the latter Deed. The Parol Evidence Rule provides that when the terms of the agreement have been reduced into writing, it is considered as containing all the terms agreed upon and there can be, between the parties and their successors in interest, no evidence of such terms other than the contents of the written agreement.[56] Dr. Rosario may not modify, explain, or add to the terms in the two written Deeds of Absolute Quitclaim since he did not put in issue in his pleadings (1) an intrinsic ambiguity, mistake, or imperfection in the Deeds; (2) failure of the Deeds to express the true intent and the

agreement of the parties thereto; (3) the validity of the Deeds; or (4) the existence of other terms agreed to by the Torbela siblings and Dr. Rosario after the execution of the Deeds.[57] Even if the Court considers Dr. Rosarios testimony on his alleged verbal agreement with the Torbela siblings, the Court finds the same unsatisfactory. Dr. Rosario averred that the two Deeds were executed only because he was planning to secure loan from the Development Bank of the Philippines and Philippine National Bank and the bank needed absolute quitclaim[.][58] While Dr. Rosarios explanation makes sense for the first Deed of Absolute Quitclaim dated December 12, 1964 executed by the Torbela siblings (which transferred Lot No. 356-A to Dr. Rosario for P9.00.00), the same could not be said for the second Deed of Absolute Quitclaim dated December 28, 1964 executed by Dr. Rosario. In fact, Dr. Rosarios Deed of Absolute Quitclaim (in which he admitted that he only borrowed Lot No. 356-A and was transferring the same to the Torbela siblings for P1.00.00) would actually work against the approval of Dr. Rosarios loan by the banks. Since Dr. Rosarios Deed of Absolute Quitclaim dated December 28, 1964 is a declaration against his self-interest, it must be taken as favoring the truthfulness of the contents of said Deed.[59] It can also be said that Dr. Rosario is estopped from claiming or asserting ownership over Lot No. 356-A based on his Deed of Absolute Quitclaim dated December 28, 1964. Dr. Rosario's admission in the said Deed that he merely borrowed Lot No. 356-A is deemed conclusive upon him. Under Article 1431 of the Civil Code, [t]hrough estoppel an admission or representation is rendered conclusive upon the person making it, and cannot be denied or disproved as against the person relying thereon.[60] That admission cannot now be denied by Dr. Rosario as against the Torbela siblings, the latter having relied upon his representation. Considering the foregoing, the Court agrees with the RTC and the Court of Appeals that Dr. Rosario only holds Lot No. 356-A in trust for the Torbela siblings. Trust is the right to the beneficial enjoyment of property, the legal title to which is vested in another. It is a fiduciary relationship that obliges the trustee to deal with the property for the benefit of the beneficiary. Trust relations between parties may either be express or implied. An express trust is created by the intention of the trustor or of the parties, while an implied trust comes into being by operation of law.[61] Express trusts are created by direct and positive acts of the parties, by some writing or deed, or will, or by words either expressly or impliedly evincing an intention to create a trust. Under Article 1444 of the Civil Code, [n]o particular words are required for the creation of an express trust, it being sufficient that a trust is clearly intended.[62] It is possible to create a trust without using the word trust or trustee. Conversely, the mere fact that these words are used does not necessarily indicate an intention to create a trust. The question in each case is whether the trustor manifested an intention to create the kind of relationship which to lawyers is known as trust. It is immaterial whether or not he knows that the relationship which he intends to create is called a trust, and whether or not he knows the precise characteristics of the relationship which is called a trust.[63] In Tamayo v. Callejo,[64] the Court recognized that a trust may have a constructive or implied nature in the beginning, but the registered owners subsequent express acknowledgement in a public document of a previous sale of the property to another party, had the effect of imparting to the aforementioned trust the nature of an express trust. The same situation exists in this case. When Dr. Rosario was able to register Lot No. 356-A in his name under TCT No. 52751 on December 16, 1964, an implied trust was initially established between him and the Torbela siblings under Article 1451 of the Civil Code, which provides:

ART. 1451. When land passes by succession to any person and he causes the legal title to be put in the name of another, a trust is established by implication of law for the benefit of the true owner. Dr. Rosarios execution of the Deed of Absolute Quitclaim on December 28, 1964, containing his express admission that he only borrowed Lot No. 356-A from the Torbela siblings, eventually transformed the nature of the trust to an express one. The express trust continued despite Dr. Rosario stating in his Deed of Absolute Quitclaim that he was already returning Lot No. 356-A to the Torbela siblings as Lot No. 356-A remained registered in Dr. Rosarios name under TCT No. 52751 and Dr. Rosario kept possession of said property, together with the improvements thereon.

The right of the Torbela siblings to recover Lot No. 356-A has not yet prescribed. The Court extensively discussed the prescriptive period for express trusts in the Heirs of Maximo Labanon v. Heirs of Constancio Labanon,[65] to wit: On the issue of prescription, we had the opportunity to rule in Bueno v. Reyes that unrepudiated written express trusts are imprescriptible: While there are some decisions which hold that an action upon a trust is imprescriptible, without distinguishing between express and implied trusts, the better rule, as laid down by this Court in other decisions, is that prescription does supervene where the trust is merely an implied one. The reason has been expressed by Justice J.B.L. Reyes in J.M. Tuason and Co., Inc. vs. Magdangal, 4 SCRA 84, 88, as follows: Und er Section 40 of the old Code of Civil Procedure, all actions for recovery of real property prescribed in 10 years, excepting only actions based on continuing or subsisting trusts that were
Property || Art. 429 to 444|| 38

considered by section 38 as imprescriptible. As held in the case of Diaz v. Gorricho, L11229, March 29, 1958, however, the continuing or subsisting trusts contemplated in section 38 of the Code of Civil Procedure referred only to express unrepudiated trusts, and did not include constructive trusts (that are imposed by law) where no fiduciary relation exists and the trustee does not recognize the trust at all. This principle was amplified in Escay v. Court of Appeals this way: Express trusts prescribe 10 years from the repudiation of the trust (Manuel Diaz, et al. vs. Carmen Gorricho et al., 54 O.G. p. 8429, Sec. 40, Code of Civil Procedure). In the more recent case of Secuya v. De Selma, we again ruled that the prescriptive period for the enforcement of an express trust of ten (10) years starts upon the repudiation of the trust by the trustee.[66] To apply the 10-year prescriptive period, which would bar a beneficiarys action to recover in an express trust, the repudiation of the trust must be proven by clear and convincing evidence and made known to the beneficiary.[67] The express trust disables the trustee from acquiring for his own benefit the property committed to his management or custody, at least while he does not openly repudiate the trust, and makes such repudiation known to the beneficiary or cestui que trust. For this reason, the old Code of Civil Procedure (Act 190) declared that the rules on adverse possession do not apply to continuing and subsisting (i.e., unrepudiated) trusts. In an express trust, the delay of the beneficiary is directly attributable to the trustee who undertakes to hold the property for the former, or who is linked to the beneficiary by confidential or fiduciary relations. The trustee's possession is, therefore, not adverse to the beneficiary, until and unless the latter is made aware that the trust has been repudiated.[68] Dr. Rosario argues that he is deemed to have repudiated the trust on December 16, 1964, when he registered Lot No. 356-A in his name under TCT No. 52751, so when on February 13, 1986, the Torbela siblings instituted before the RTC Civil Case

No. U-4359, for the recovery of ownership and possession of Lot No. 356-A from the spouses Rosario, over 21 years had passed. Civil Case No. U-4359 was already barred by prescription, as well as laches. The Court already rejected a similar argument in Ringor v. Ringor[69] for the following reasons: A trustee who obtains a Torrens title over a property held in trust for him by another cannot repudiate the trust by relying on the registration. A Torrens Certificate of Title in Joses name did not vest ownership of the land upon him. The Torrens system does not create or vest title. It only confirms and records title already existing and vested. It does not protect a usurper from the true owner. The Torrens system was not intended to foment betrayal in the performance of a trust. It does not permit one to enrich himself at the expense of another. Where one does not have a rightful claim to the property, the Torrens system of registration can confirm or record nothing. Petitioners cannot rely on the registration of the lands in Joses name nor in the name of the Heirs of Jose M. Ringor, Inc., for the wrong result they seek. For Jose could not repudiate a trust by relying on a Torrens title he held in trust for his co-heirs. The beneficiaries are entitled to enforce the trust, notwithstanding the irrevocability of the Torrens title. The intended trust must be sustained.[70] (Emphasis supplied.) In the more recent case of Heirs of Tranquilino Labiste v. Heirs of Jose Labiste,[71] the Court refused to apply prescription and laches and reiterated that: [P]rescription and laches will run only from the time the express trust is repudiated. The Court has held that for acquisitive prescription to bar the action of the beneficiary against the trustee in an express trust for the recovery of the property held in trust it must be shown that: (a) the trustee has performed unequivocal acts of repudiation amounting to an ouster of the cestui que trust; (b) such positive acts of repudiation have been made known to the cestui que trust, and (c) the evidence thereon is clear and conclusive. Respondents cannot rely on the fact that the Torrens title was issued in the name of Epifanio and the other heirs of Jose. It has been held that a trustee who obtains a Torrens title over property held in trust by him for another cannot repudiate the trust by relying on the registration. The rule requires a clear repudiation of the trust duly communicated to the beneficiary. The only act that can be construed as repudiation was when respondents filed the petition for reconstitution in October 1993. And since petitioners filed their complaint in January 1995, their cause of action has not yet prescribed, laches cannot be attributed to them.[72] (Emphasis supplied.) It is clear that under the foregoing jurisprudence, the registration of Lot No. 356-A by Dr. Rosario in his name under TCT No. 52751 on December 16, 1964 is not the repudiation that would have caused the 10-year prescriptive period for the enforcement of an express trust to run. The Court of Appeals held that Dr. Rosario repudiated the express trust when he acquired another loan from PNB and constituted a second mortgage on Lot No. 356-A

sometime in 1979, which, unlike the first mortgage to DBP in 1965, was without the knowledge and/or consent of the Torbela siblings. The Court only concurs in part with the Court of Appeals on this matter. For repudiation of an express trust to be effective, the unequivocal act of repudiation had to be made known to the Torbela siblings as the cestuis que trust and must be proven by clear and conclusive evidence. A scrutiny of TCT No. 52751 reveals the following inscription: Entry No. 520099 Amendment of the mortgage in favor of PNB inscribed under Entry No. 490658 in the sense that the consideration thereof has been increased to PHILIPPINE PESOS Four Hundred Fifty Thousand Pesos only (P450,000.00) and to secure any and all negotiations with PNB, whether contracted before, during or after the date of this instrument, acknowledged before Notary Public of Pangasinan Alejo M. Dato as Doc. No. 198, Page No. 41, Book No. 11, Series of 1985. Date of Instrument March 5, 1981 Date of Inscription March 6, 1981[73] Although according to Entry No. 520099, the original loan and mortgage agreement of Lot No. 356-A between Dr. Rosario and PNB was previously inscribed as Entry No. 490658, Entry No. 490658 does not actually appear on TCT No. 52751 and, thus, it cannot be used as the reckoning date for the start of the prescriptive period. The Torbela siblings can only be charged with knowledge of the mortgage of Lot No. 356-A to PNB on March 6, 1981 when the amended loan and mortgage agreement was registered on TCT No. 52751 as Entry No. 520099. Entry No. 520099 is constructive notice to the whole world[74] that Lot No. 356-A was mortgaged by Dr. Rosario to PNB as security for a loan, the amount of which was increased to P450,000.00. Hence, Dr. Rosario is deemed to have effectively repudiated the express trust between him and the Torbela siblings on March 6, 1981, on which day, the prescriptive period for the enforcement of the express trust by the Torbela siblings began to run. From March 6, 1981, when the amended loan and mortgage agreement was registered on TCT No. 52751, to February 13, 1986, when the Torbela siblings instituted before the RTC Civil Case No. U-4359 against the spouses Rosario, only about five years had passed. The Torbela siblings were able to institute Civil Case No. U-4359 well before the lapse of the 10-year prescriptive period for the enforcement of their express trust with Dr. Rosario. Civil Case No. U-4359 is likewise not barred by laches. Laches means the failure or neglect, for an unreasonable and unexplained length of time, to do that which by exercising due diligence could or should have been done earlier. It is negligence or omission to assert a right within a reasonable time, warranting a presumption that the party entitled to assert it either has abandoned it or declined to assert it. As the Court explained in the preceding paragraphs, the Torbela siblings instituted Civil Case No. U-4359 five years after Dr. Rosarios repudiation of the express trust, still within the 10 -year prescriptive period for enforcement of such trusts. This does not constitute an unreasonable delay in asserting one's right. A delay within the prescriptive period is sanctioned by law and is not considered to be a delay that would bar relief. Laches apply only in the absence of a statutory prescriptive period.[75]
Property || Art. 429 to 444|| 39

Banco Filipino is not a mortgagee and buyer in good faith. Having determined that the Torbela siblings are the true owners and Dr. Rosario merely the trustee of Lot No. 356-A, the Court is next faced with the issue of whether or not the Torbela siblings may still recover Lot No. 356-A considering that Dr. Rosario had already mortgaged Lot No. 356-A to Banco Filipino, and upon Dr. Rosarios default on his loan obligations, Banco Filipino foreclosed the mortgage, acquired Lot No. 356-A as the highest bidder at the foreclosure sale, and consolidated title in its name under TCT No. 165813. The resolution of this issue depends on the answer to the question of whether or not Banco Filipino was a mortgagee in good faith. Under Article 2085 of the Civil Code, one of the essential requisites of the contract of mortgage is that the mortgagor should be the absolute owner of the property to be mortgaged; otherwise, the mortgage is considered null and void. However, an exception to this rule is the doctrine of mortgagee in good faith. Under this doctrine, even if the mortgagor is not the owner of the mortgaged property, the mortgage contract and any foreclosure sale arising therefrom are given effect by reason of public policy. This principle is based on the rule that all persons dealing with property covered by a Torrens Certificate of Title, as buyers or mortgagees, are not required to go beyond what appears on the face of the title. This is the same rule that underlies the principle of innocent purchasers for value. The prevailing jurisprudence is that a mortgagee has a right to rely in good faith on the certificate of title of the mortgagor to the property given as security and in the absence of any sign that might arouse suspicion, has no obligation to undertake further investigation. Hence, even if the mortgagor is not the rightful owner of, or does not have a valid title to, the mortgaged property, the mortgagee in good faith is, nonetheless, entitled to protection.[76] On one hand, the Torbela siblings aver that Banco Filipino is not a mortgagee in good faith because as early as May 17, 1967, they had already annotated Cornelios Adverse Claim dated May 16, 1967 and Dr. Rosarios Deed of Absolute Quitclaim dated December 28, 1964 on TCT No. 52751 as Entry Nos. 274471-274472, respectively. On the other hand, Banco Filipino asseverates that it is a mortgagee in good faith because per Section 70 of Presidential Decree No. 1529, otherwise known as the Property Registration Decree, the notice of adverse claim, registered on May 17, 1967 by the Torbela siblings under Entry Nos. 274471-274472 on TCT No. 52751, already lapsed after 30 days or on June 16, 1967. Additionally, there was an express cancellation of Entry Nos. 274471-274472 by Entry No. 520469 dated March 11, 1981. So when Banco Filipino approved Dr. Rosarios loan for P1,200,000.00 and constituted a mortgage on Lot No. 356A (together with two other properties) on December 8, 1981, the only other encumbrance on TCT No. 52751 was Entry No. 520099 dated March 6, 1981, i.e., the amended loan and mortgage agreement between Dr. Rosario and PNB (which was eventually cancelled after it was paid off with part of the proceeds from Dr. Rosarios loan from Banco Filipino). Hence, Banco Filipino was not aware that the Torbela siblings adverse claim on Lot No. 356-A still subsisted. The Court finds that Banco Filipino is not a mortgagee in good faith. Entry Nos. 274471-274472 were not validly cancelled, and the improper cancellation should have been apparent to Banco Filipino and aroused suspicion in said bank of some defect in Dr. Rosarios title.

The purpose of annotating the adverse claim on the title of the disputed land is to apprise third persons that there is a controversy over the ownership of the land and to preserve and protect the right of the adverse claimant during the pendency of the controversy. It is a notice to third persons that any transaction regarding the disputed land is subject to the outcome of the dispute.[77] Adverse claims were previously governed by Section 110 of Act No. 496, otherwise known as the Land Registration Act, quoted in full below: ADVERSE CLAIM SEC. 110. Whoever claims any part or interest in registered land adverse to the registered owner, arising subsequent to the date of the original registration, may, if no other provision is made in this Act for registering the same, make a statement in writing setting forth fully his alleged right or interest, and how or under whom acquired, and a reference to the volume and page of the certificate of title of the registered owner, and a description of the land in which the right or interest is claimed. The statement shall be signed and sworn to, and shall state the adverse claimants residence, and designate a place at which all notices may be served upon him. This statement shall be entitled to registration as an adverse claim, and the court, upon a petition of any party in interest, shall grant a speedy hearing upon the question of the validity of such adverse claim and shall enter such decree therein as justice and equity may require. If the claim is adjudged to be invalid, the registration shall be cancelled. If in any case the court after notice and hearing shall find that a claim thus registered was frivolous or vexatious, it may tax the adverse claimant double or treble costs in its discretion. Construing the aforequoted provision, the Court stressed in Ty Sin Tei v. Lee Dy Piao[78] that [t]he validity or efficaciousness of the [adverse] claim x x x may only be determined by the Court upon petition by an interested party, in which event, the Court shall order the immediate hearing thereof and make the proper adjudication as justice and equity may warrant. And it is ONLY when such claim is found unmeritorious that the registration thereof may be cancelled. The Court likewise pointed out in the same case that while a notice of lis pendens may be cancelled in a number of ways, the same is not true in a registered adverse claim, for it may be cancelled only in one instance, i.e., after the claim is adjudged invalid or unmeritorious by the Court x x x; and if any of the registrations sho uld be considered unnecessary or superfluous, it would be the notice of lis pendens and not the annotation of the adverse claim which is more permanent and cannot be cancelled without adequate hearing and proper disposition of the claim. With the enactment of the Property Registration Decree on June 11, 1978, Section 70 thereof now applies to adverse claims: SEC. 70. Adverse claim. Whoever claims any part or interest in registered land adverse to the registered owner, arising subsequent to the date of the original registrations, may, if no other provision is made in this Decree for registering the same, make a statement in writing setting forth fully his alleged right, or interest, and how or under whom acquired, a reference to the number of the certificate of title of the registered owner, the name

of the registered owner, and a description of the land in which the right or interest is claimed. The statement shall be signed and sworn to, and shall state the adverse claimants residence, and a place at which all notices may be served upon him. This statement shall be entitled to registration as an adverse claim on the certificate of title. The adverse claim shall be effective for a period of thirty days from the date of registration. After the lapse of said period, the annotation of adverse claim may be cancelled upon filing of a verified petition therefor by the party in interest: Provided, however, that after cancellation, no second adverse claim based on the same ground shall be registered by the same claimant. Before the lapse of thirty days aforesaid, any party in interest may file a petition in the Court of First Instance where the land is situated for the cancellation of the adverse claim, and the court shall grant a speedy hearing upon the question of the validity of such adverse claim, and shall render judgment as may be just and equitable. If the adverse claim is adjudged to be invalid, the registration thereof shall be ordered cancelled. If, in any case, the court, after notice and hearing, shall find that the adverse claim thus registered was frivolous, it may fine the claimant in an amount not less than one thousand pesos nor more than five thousand pesos, in its discretion. Before the lapse of thirty days, the claimant may withdraw his adverse claim by filing with the Register of Deeds a sworn petition to that effect. (Emphases supplied.) In Sajonas v. Court of Appeals,[79]the Court squarely interpreted Section 70 of the Property Registration Decree, particularly, the new 30-day period not previously found in Section 110 of the Land Registration Act, thus: In construing the law aforesaid, care should be taken that every part thereof be given effect and a construction that could render a provision inoperative should be avoided, and inconsistent provisions should be reconciled whenever possible as parts of a harmonious whole. For taken in solitude, a word or phrase might easily convey a meaning quite different from the one actually intended and evident when a word or phrase is considered with those with which it is associated. In ascertaining the period of effectivity of an inscription of adverse claim, we must read the law in its entirety. Sentence three, paragraph two of Section 70 of P.D. 1529 provides: The adverse claim shall be effective for a period of thirty days from the date of registration. At first blush, the provision in question would seem to restrict the effectivity of the adverse claim to thirty days. But the above provision cannot and should not be treated separately, but should be read in relation to the sentence following, which reads: After the lapse of said period, the annotation of adverse claim
Property || Art. 429 to 444|| 40

may be cancelled upon filing of a verified petition therefor by the party in interest. If the rationale of the law was for the adverse claim to ipso facto lose force and effect after the lapse of thirty days, then it would not have been necessary to include the foregoing caveat to clarify and complete the rule. For then, no adverse claim need be cancelled. If it has been automatically terminated by mere lapse of time, the law would not have required the party in interest to do a useless act. A statute's clauses and phrases must not be taken separately, but in its relation to the statute's totality. Each statute must, in fact, be construed as to harmonize it with the pre-existing body of laws. Unless clearly repugnant, provisions of statutes must be reconciled. The printed pages of the published Act, its history, origin, and its purposes may be examined by the courts in their construction. x x x. xxxx Construing the provision as a whole would reconcile the apparent inconsistency between the portions of the law such that the provision on cancellation of adverse claim by verified petition would serve to qualify the provision on the effectivity period. The law, taken together, simply means that the cancellation of the adverse claim is still necessary to render it ineffective, otherwise, the inscription will remain annotated and shall continue as a lien upon the property. For if the adverse claim has already ceased to be effective upon the lapse of said period, its cancellation is no longer necessary and the process of cancellation would be a useless ceremony. It should be noted that the law employs the phrase "may be cancelled," which obviously indicates, as inherent in its decision making power, that the court may or may not order the cancellation of an adverse claim, notwithstanding such provision limiting the effectivity of an adverse claim for thirty days from the date of registration. The court cannot be bound by such period as it would be inconsistent with the very authority vested in it. A fortiori, the limitation on the period of effectivity is immaterial in determining the validity or invalidity of an adverse claim which is the principal issue to be decided in the court hearing. It will therefore depend upon the evidence at a proper hearing for the court to determine whether it will order the cancellation of the adverse claim or not. To interpret the effectivity period of the adverse claim as absolute and without qualification limited to thirty days defeats the very purpose for which the statute provides for the remedy of an inscription of adverse claim, as the annotation of an adverse claim is a measure designed to protect the interest of a person over a piece of real property where the registration of such interest or right is not otherwise provided for by the Land Registration Act or Act 496 (now P.D. 1529 or the Property Registration Decree), and serves as a warning to third parties dealing with said property

that someone is claiming an interest or the same or a better right than the registered owner thereof. The reason why the law provides for a hearing where the validity of the adverse claim is to be threshed out is to afford the adverse claimant an opportunity to be heard, providing a venue where the propriety of his claimed interest can be established or revoked, all for the purpose of determining at last the existence of any encumbrance on the title arising from such adverse claim. This is in line with the provision immediately following: Provided, however, that after cancellation, no second adverse claim shall be registered by the same claimant. Should the adverse claimant fail to sustain his interest in the property, the adverse claimant will be precluded from registering a second adverse claim based on the same ground. It was held that validity or efficaciousness of the claim may only be determined by the Court upon petition by an interested party, in which event, the Court shall order the immediate hearing thereof and make the proper adjudication as justice and equity may warrant. And it is only when such claim is found unmeritorious that the registration of the adverse claim may be cancelled, thereby protecting the interest of the adverse claimant and giving notice and warning to third parties.[80] (Emphases supplied.) Whether under Section 110 of the Land Registration Act or Section 70 of the Property Registration Decree, notice of adverse claim can only be cancelled after a party in interest files a petition for cancellation before the RTC wherein the property is located, and the RTC conducts a hearing and determines the said claim to be invalid or unmeritorious. No petition for cancellation has been filed and no hearing has been conducted herein to determine the validity or merit of the adverse claim of the Torbela siblings. Entry No. 520469 cancelled the adverse claim of the Torbela siblings, annotated as Entry Nos. 274471-774472, upon the presentation by Dr. Rosario of a mere Cancellation and Discharge of Mortgage. Regardless of whether or not the Register of Deeds should have inscribed Entry No. 520469 on TCT No. 52751, Banco Filipino could not invoke said inscription in support of its claim of good faith. There were several things amiss in Entry No. 520469 which should have already aroused suspicions in Banco Filipino, and compelled the bank to look beyond TCT No. 52751 and inquire into Dr. Rosarios title. First, Entry No. 520469 does not mention any court order as basis for the cancellation of the adverse claim. Second, the adverse claim was not a mortgage which could be cancelled with Dr. Rosarios Cancellation and Discharge of Mortgage. And third, the adverse claim was against Dr. Rosario, yet it was cancelled based on a document also executed by Dr. Rosario. It is a well-settled rule that a purchaser or mortgagee cannot close his eyes to facts which should put a reasonable man upon his guard, and then claim that he acted in good faith under the belief that there was no defect in the title of the vendor or mortgagor. His mere refusal to believe that such defect exists, or his willful closing of his eyes to the possibility of the existence of a defect in the vendor's or mortgagor's title, will not make him

an innocent purchaser or mortgagee for value, if it afterwards develops that the title was in fact defective, and it appears that he had such notice of the defects as would have led to its discovery had he acted with the measure of precaution which may be required of a prudent man in a like situation.[81] While the defective cancellation of Entry Nos. 274471-274472 by Entry No. 520469 might not be evident to a private individual, the same should have been apparent to Banco Filipino. Banco Filipino is not an ordinary mortgagee, but is a mortgagee-bank, whose business is impressed with public interest. In fact, in one case, [82] the Court explicitly declared that the rule that persons dealing with registered lands can rely solely on the certificate of title does not apply to banks. In another case,[83] the Court adjudged that unlike private individuals, a bank is expected to exercise greater care and prudence in its dealings, including those involving registered lands. A banking institution is expected to exercise due diligence before entering into a mortgage contract. The ascertainment of the status or condition of a property offered to it as security for a loan must be a standard and indispensable part of its operations. Banco Filipino cannot be deemed a mortgagee in good faith, much less a purchaser in good faith at the foreclosure sale of Lot No. 356-A. Hence, the right of the Torbela siblings over Lot No. 356-A is superior over that of Banco Filipino; and as the true owners of Lot No. 356-A, the Torbela siblings are entitled to a reconveyance of said property even from Banco Filipino. Nonetheless, the failure of Banco Filipino to comply with the due diligence requirement was not the result of a dishonest purpose, some moral obliquity, or breach of a known duty for some interest or ill will that partakes of fraud that would justify damages.[84] Given the reconveyance of Lot No. 356-A to the Torbela siblings, there is no more need to address issues concerning redemption, annulment of the foreclosure sale and certificate of sale (subject matter of Civil Case No. U-4733), or issuance of a writ of possession in favor of Banco Filipino (subject matter of Pet. Case No. U-822) insofar as Lot No. 356-A is concerned. Such would only be superfluous. Banco Filipino, however, is not left without any recourse should the foreclosure and sale of the two other mortgaged properties be insufficient to cover Dr. Rosarios loan, for the bank may still bring a proper suit against Dr. Rosario to collect the unpaid balance. The rules on accession shall govern the improvements on Lot No. 356A and the rents thereof. The accessory follows the principal. The right of accession is recognized under Article 440 of the Civil Code which states that [t]he ownership of property gives the right by accession to everything which is produced thereby, or which is incorporated or attached thereto, either naturally or artificially. There is no question that Dr. Rosario is the builder of the improvements on Lot No. 356-A. The Torbela siblings themselves alleged that they allowed Dr. Rosario to register Lot No. 356-A in his name so he could obtain a loan from DBP, using said parcel of land as security; and with the proceeds of the loan, Dr. Rosario had a building constructed on Lot No. 356-A, initially used as a hospital, and then later for other commercial purposes. Dr. Rosario supervised the construction of the building, which began in 1965; fully liquidated the loan from DBP; and maintained and administered the building, as well as
Property || Art. 429 to 444|| 41

collected the rental income therefrom, until the Torbela siblings instituted Civil Case No. U4359 before the RTC on February 13, 1986. When it comes to the improvements on Lot No. 356-A, both the Torbela siblings (as landowners) and Dr. Rosario (as builder) are deemed in bad faith. The Torbela siblings were aware of the construction of a building by Dr. Rosario on Lot No. 356-A, while Dr. Rosario proceeded with the said construction despite his knowledge that Lot No. 356-A belonged to the Torbela siblings. This is the case contemplated under Article 453 of the Civil Code, which reads: ART. 453. If there was bad faith, not only on the part of the person who built, planted or sowed on the land of another, but also on the part of the owner of such land, the rights of one and the other shall be the same as though both had acted in good faith. It is understood that there is bad faith on the part of the landowner whenever the act was done with his knowledge and without opposition on his part. (Emphasis supplied.) When both the landowner and the builder are in good faith, the following rules govern: ART. 448. The owner of the land on which anything has been built, sown or planted in good faith, shall have the right to appropriate as his own the works, sowing or planting, after payment of the indemnity provided for in articles 546 and 548, or to oblige the one who built or planted to pay the price of the land, and the one who sowed, the proper rent. However, the builder or planter cannot be obliged to buy the land if its value is considerably more than that of the building or trees. In such case, he shall pay reasonable rent, if the owner of the land does not choose to appropriate the building or trees after proper indemnity. The parties shall agree upon the terms of the lease and in case of disagreement, the court shall fix the terms thereof. ART. 546. Necessary expenses shall be refunded to every possessor; but only the possessor in good faith may retain the thing until he has been reimbursed therefor. Useful expenses shall be refunded only to the possessor in good faith with the same right of retention, the person who has defeated him in the possession having the option of refunding the amount of the expenses or of paying the increase in value which the thing may have acquired by reason thereof. ART. 548. Expenses for pure luxury or mere pleasure shall not be refunded to the possessor in good faith; but he may remove the ornaments with which he has embellished the principal thing if it suffers no injury thereby, and if his successor in the possession does not prefer to refund the amount expended. Whatever is built, planted, or sown on the land of another, and the improvements or repairs made thereon, belong to the owner of the land. Where, however, the planter, builder, or sower has acted in good faith, a conflict of rights arises between the

owners and it becomes necessary to protect the owner of the improvements without causing injustice to the owner of the land. In view of the impracticability of creating what Manresa calls a state of "forced co-ownership," the law has provided a just and equitable solution by giving the owner of the land the option to acquire the improvements after payment of the proper indemnity or to oblige the builder or planter to pay for the land and the sower to pay the proper rent. It is the owner of the land who is allowed to exercise the option because his right is older and because, by the principle of accession, he is entitled to the ownership of the accessory thing.[85] The landowner has to make a choice between appropriating the building by paying the proper indemnity or obliging the builder to pay the price of the land. But even as the option lies with the landowner, the grant to him, nevertheless, is preclusive. He must choose one. He cannot, for instance, compel the owner of the building to remove the building from the land without first exercising either option. It is only if the owner chooses to sell his land, and the builder or planter fails to purchase it where its value is not more than the value of the improvements, that the owner may remove the improvements from the land. The owner is entitled to such remotion only when, after having chosen to sell his land, the other party fails to pay for the same.[86] This case then must be remanded to the RTC for the determination of matters necessary for the proper application of Article 448, in relation to Article 546, of the Civil Code. Such matters include the option that the Torbela siblings will choose; the amount of indemnity that they will pay if they decide to appropriate the improvements on Lot No. 356A; the value of Lot No. 356-A if they prefer to sell it to Dr. Rosario; or the reasonable rent if they opt to sell Lot No. 356-A to Dr. Rosario but the value of the land is considerably more than the improvements. The determination made by the Court of Appeals in its Decision dated June 29, 1999 that the current value of Lot No. 356-A is P1,200,000.00 is not supported by any evidence on record. Should the Torbela siblings choose to appropriate the improvements on Lot No. 356-A, the following ruling of the Court in Pecson v. Court of Appeals[87] is relevant in the determination of the amount of indemnity under Article 546 of the Civil Code: Article 546 does not specifically state how the value of the useful improvements should be determined. The respondent court and the private respondents espouse the belief that the cost of construction of the apartment building in 1965, and not its current market value, is sufficient reimbursement for necessary and useful improvements made by the petitioner. This position is, however, not in consonance with previous rulings of this Court in similar cases. In Javier vs. Concepcion, Jr., this Court pegged the value of the useful improvements consisting of various fruits, bamboos, a house and camarin made of strong material based on the market value of the said improvements. In Sarmiento vs. Agana, despite the finding that the useful improvement, a residential house, was built in 1967 at a cost of between eight thousand pesos (P8,000.00) to ten thousand pesos (P10,000.00), the landowner was ordered to reimburse the builder in the amount of forty thousand pesos (P40,000.00), the value of the house at the time of the trial. In the same way, the landowner was required to pay the "present value" of the house, a useful improvement, in the case of De Guzman vs. De la Fuente, cited by the petitioner. The objective of Article 546 of the Civil Code is to administer justice between the parties involved. In this regard, this Court had long ago stated in Rivera vs. Roman Catholic Archbishop of Manila that the said provision was formulated in

trying to adjust the rights of the owner and possessor in good faith of a piece of land, to administer complete justice to both of them in such a way as neither one nor the other may enrich himself of that which does not belong to him. Guided by this precept, it is therefore the current market value of the improvements which should be made the basis of reimbursement. A contrary ruling would unjustly enrich the private respondents who would otherwise be allowed to acquire a highly valued income-yielding four-unit apartment building for a measly amount. Consequently, the parties should therefore be allowed to adduce evidence on the present market value of the apartment building upon which the trial court should base its finding as to the amount of reimbursement to be paid by the landowner.[88] (Emphases supplied.) Still following the rules of accession, civil fruits, such as rents, belong to the owner of the building.[89] Thus, Dr. Rosario has a right to the rents of the improvements on Lot No. 356-A and is under no obligation to render an accounting of the same to anyone. In fact, it is the Torbela siblings who are required to account for the rents they had collected from the lessees of the commercial building and turn over any balance to Dr. Rosario. Dr. Rosarios right to the rents of the improvements on Lot No. 356 -A shall continue until the Torbela siblings have chosen their option under Article 448 of the Civil Code. And in case the Torbela siblings decide to appropriate the improvements, Dr. Rosario shall have the right to retain said improvements, as well as the rents thereof, until the indemnity for the same has been paid.[90] Dr. Rosario is liable for damages to the Torbela siblings. The Court of Appeals ordered Dr. Rosario to pay the Torbela siblings P300,000.00 as moral damages; P200,000.00 as exemplary damages; and P100,000.00 as attorneys fees. Indeed, Dr. Rosarios deceit and bad faith is evident when, being fully aware that he only held Lot No. 356-A in trust for the Torbela siblings, he mortgaged said property to PNB and Banco Filipino absent the consent of the Torbela siblings, and caused the irregular cancellation of the Torbela siblings adverse claim on TCT No. 52751. Irrefragably, Dr. Rosarios betrayal had caused the Torbela siblings (which included Dr. Rosarios own mother, Eufrosina Torbela Rosario) mental anguish, serious anxiety, and wounded feelings. Resultantly, the award of moral damages is justified, but the amount thereof is reduced to P200,000.00. In addition to the moral damages, exemplary damages may also be imposed given that Dr. Rosarios wrongful acts were accompanied by bad faith. However, judicial discretion granted to the courts in the assessment of damages must always be exercised with balanced restraint and measured objectivity. The circumstances of the case call for a reduction of the award of exemplary damages to P100,000.00. As regards attorney's fees, they may be awarded when the defendant's act or omission has compelled the plaintiff to litigate with third persons or to incur expenses to protect his interest. Because of Dr. Rosarios acts, the Torbela siblings were constrained to institute several cases against Dr. Rosario and his spouse, Duque-Rosario, as well as Banco Filipino, which had lasted for more than 25 years. Consequently, the Torbela siblings
Property || Art. 429 to 444|| 42

are entitled to an award of attorney's fees and the amount of P100,000.00 may be considered rational, fair, and reasonable. Banco Filipino is entitled to a writ of possession for Lot No. 5-F-8-C2-B-2-A. The Court emphasizes that Pet. Case No. U-822, instituted by Banco Filipino for the issuance of a writ of possession before the RTC of Urdaneta, included only Lot No. 5-F-8-C-2-B-2-A and Lot No. 356-A (Lot No. 4489, the third property mortgaged to secure Dr. Rosarios loan from Banco Filipino, is located in Dagupan City, Pangasinan, and t he petition for issuance of a writ of possession for the same should be separately filed with the RTC of Dagupan City). Since the Court has already granted herein the reconveyance of Lot No. 356-A from Banco Filipino to the Torbela siblings, the writ of possession now pertains only to Lot No. 5-F-8-C-2-B-2-A. To recall, the Court of Appeals affirmed the issuance by the RTC of a writ of possession in favor of Banco Filipino. Dr. Rosario no longer appealed from said judgment of the appellate court. Already legally separated from Dr. Rosario, Duque-Rosario alone challenges the writ of possession before this Court through her Petition in G.R. No. 140553. Duque-Rosario alleges in her Petition that Lot No. 5-F-8-C-2-B-2-A had been registered in her name under TCT No. 104189. Yet, without a copy of TCT No. 104189 on record, the Court cannot give much credence to Duque-Rosarios claim of sole ownership of Lot No. 5-F-8-C-2-B-2-A. Also, the question of whether Lot No. 5-F-8-C-2-B-2-A was the paraphernal property of Duque-Rosario or the conjugal property of the spouses Rosario would not alter the outcome of Duque-Rosarios Petition. The following facts are undisputed: Banco Filipino extrajudicially foreclosed the mortgage constituted on Lot No. 5-F-8-C-2-B-2-A and the two other properties after Dr. Rosario defaulted on the payment of his loan; Banco Filipino was the highest bidder for all three properties at the foreclosure sale on April 2, 1987; the Certificate of Sale dated April 2, 1987 was registered in April 1987; and based on the Certificate of Final Sale dated May 24, 1988 and Affidavit of Consolidation dated May 25, 1988, the Register of Deeds cancelled TCT No. 104189 and issued TCT No. 165812 in the name of Banco Filipino for Lot No. 5-F-8-C-2-B-2-A on June 7, 1988. The Court has consistently ruled that the one-year redemption period should be counted not from the date of foreclosure sale, but from the time the certificate of sale is registered with the Registry of Deeds.[91] No copy of TCT No. 104189 can be found in the records of this case, but the fact of annotation of the Certificate of Sale thereon was admitted by the parties, only differing on the date it was made: April 14, 1987 according to Banco Filipino and April 15, 1987 as maintained by Duque-Rosario. Even if the Court concedes that the Certificate of Sale was annotated on TCT No. 104189 on the later date, April 15, 1987, the one-year redemption period already expired on April 14, 1988.[92] The Certificate of Final Sale and Affidavit of Consolidation were executed more than a month thereafter, on May 24, 1988 and May 25, 1988, respectively, and were clearly not premature. It is true that the rule on redemption is liberally construed in favor of the original owner of the property. The policy of the law is to aid rather than to defeat him in the exercise of his right of redemption.[93] However, the liberal interpretation of the rule on redemption is inapplicable herein as neither Duque-Rosario nor Dr. Rosario had made any

attempt to redeem Lot No. 5-F-8-C-2-B-2-A. Duque-Rosario could only rely on the efforts of the Torbela siblings at redemption, which were unsuccessful. While the Torbela siblings made several offers to redeem Lot No. 356-A, as well as the two other properties mortgaged by Dr. Rosario, they did not make any valid tender of the redemption price to effect a valid redemption. The general rule in redemption is that it is not sufficient that a person offering to redeem manifests his desire to do so. The statement of intention must be accompanied by an actual and simultaneous tender of payment. The redemption price should either be fully offered in legal tender or else validly consigned in court. Only by such means can the auction winner be assured that the offer to redeem is being made in good faith.[94] In case of disagreement over the redemption price, the redemptioner may preserve his right of redemption through judicial action, which in every case, must be filed within the one-year period of redemption. The filing of the court action to enforce redemption, being equivalent to a formal offer to redeem, would have the effect of preserving his redemptive rights and freezing the expiration of the one-year period.[95] But no such action was instituted by the Torbela siblings or either of the spouses Rosario. Duque-Rosario also cannot bar the issuance of the writ of possession over Lot No. 5-F-8-C-2-B-2-A in favor of Banco Filipino by invoking the pendency of Civil Case No. U-4359, the Torbela siblings action for recovery of ownership and possession and damages, which supposedly tolled the period for redemption of the foreclosed properties. Without belaboring the issue of Civil Case No. U-4359 suspending the redemption period, the Court simply points out to Duque-Rosario that Civil Case No. U-4359 involved Lot No. 356-A only, and the legal consequences of the institution, pendency, and resolution of Civil Case No. U-4359 apply to Lot No. 356-A alone. Equally unpersuasive is Duque-Rosarios argument that the writ of possession over Lot No. 5-F-8-C-2-B-2-A should not be issued given the defects in the conduct of the foreclosure sale (i.e., lack of personal notice to Duque-Rosario) and consolidation of title (i.e., failure to provide Duque-Rosario with copies of the Certificate of Final Sale). The right of the purchaser to the possession of the foreclosed property becomes absolute upon the expiration of the redemption period. The basis of this right to possession is the purchaser's ownership of the property. After the consolidation of title in the buyer's name for failure of the mortgagor to redeem, the writ of possession becomes a matter of right and its issuance to a purchaser in an extrajudicial foreclosure is merely a ministerial function.[96] The judge with whom an application for a writ of possession is filed need not look into the validity of the mortgage or the manner of its foreclosure. Any question regarding the validity of the mortgage or its foreclosure cannot be a legal ground for the refusal to issue a writ of possession. Regardless of whether or not there is a pending suit for the annulment of the mortgage or the foreclosure itself, the purchaser is entitled to a writ of possession, without prejudice, of course, to the eventual outcome of the pending annulment case. The issuance of a writ of possession in favor of the purchaser in a foreclosure sale is a ministerial act and does not entail the exercise of discretion.[97] WHEREFORE, in view of the foregoing, the Petition of the Torbela siblings in G.R. No. 140528 is GRANTED, while the Petition of Lena Duque-Rosario in G.R. No. 140553 is DENIED for lack of merit. The Decision dated June 29, 1999 of the Court of Appeals in CA-G.R. CV No. 39770, which affirmed with modification the Amended Decision dated January 29, 1992 of the RTC in Civil Case Nos. U-4359 and U-4733 and Pet. Case No. U-822, is AFFIRMED WITH MODIFICATIONS, to now read as follows: (1) Torbela siblings; Banco Filipino is ORDERED to reconvey Lot No. 356-A to the

(2) The Register of Deeds of Pangasinan is ORDERED to cancel TCT No. 165813 in the name of Banco Filipino and to issue a new certificate of title in the name of the Torbela siblings for Lot No. 356-A; (3) The case is REMANDED to the RTC for further proceedings to determine the facts essential to the proper application of Articles 448 and 546 of the Civil Code, particularly: (a) the present fair market value of Lot No. 356-A; (b) the present fair market value of the improvements thereon; (c) the option of the Torbela siblings to appropriate the improvements on Lot No. 356-A or require Dr. Rosario to purchase Lot No. 356-A; and (d) in the event that the Torbela siblings choose to require Dr. Rosario to purchase Lot No. 356-A but the value thereof is considerably more than the improvements, then the reasonable rent of Lot No. 356-A to be paid by Dr. Rosario to the Torbela siblings; (4) The Torbela siblings are DIRECTED to submit an accounting of the rents of the improvements on Lot No. 356-A which they had received and to turn over any balance thereof to Dr. Rosario; (5) Dr. Rosario is ORDERED to pay the Torbela siblings P200,000.00 as moral damages, P100,000.00 as exemplary damages, and P100,000.00 as attorneys fees; and (6) Banco Filipino is entitled to a writ of possession over Lot-5-F-8-C2-B-2-A, covered by TCT No. 165812. The RTC Branch Clerk of Court is ORDERED to issue a writ of possession for the said property in favor of Banco Filipino. SO ORDERED.

Property || Art. 429 to 444|| 43