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Republic of the Philippines SUPREME COURT Manila FIRST DIVISION G.R. No.

128118 February 15, 2002

GOVERNMENT SERVICE INSURANCE SYSTEM, petitioner, vs. THE HONORABLE COURT OF APPEALS and CONRADO O. COLARINA, respondents. YNARES-SANTIAGO, J.: This is a petition for review under Rule 45 of the Rules of Court assailing the October 28, 1996 Decision1 and the January 29, 1997 Resolution2 of the Court of Appeals3 in CA-G.R. SP. No. 40610, which set aside the March 13, 19964 and the April 24, 19965 Orders6 of the Regional Trial Court of Masbate, Branch 48, in Spec. Civil Case Nos. 4242-43. The instant controversy stemmed from a complaint7 for "Determination and Payment of Just Compensation" filed by private respondent against petitioner Government Service Insurance System (GSIS), the Secretary of Agrarian Reform and the Land Bank of the Philippines (LBP). The instant case involves fifteen (15) parcels of land8originally titled in the name of Associated Agricultural Activities, Inc. (AAA), with a total land area of 32,398,264 square meters, situated in Barrio Malaran and Lamintao, Municipality of Dimasalang (now Uson), Masbate. These parcels of land were mortgaged by AAA to petitioner GSIS as security for the payment of its loan. When AAA failed to pay the loan, petitioner foreclosed the mortgage constituted on the lots. Petitioner was the highest bidder at the foreclosure sale. Thereafter, the corresponding certificates of sale were issued, and subsequently registered on May 19, 1988, in the name of petitioner. On December 8, 1988, within the one-year redemption period, private respondent purchased subject lots from AAA.9 On April 25, 1989, he voluntarily offered to sell the said properties to the Department of Agrarian Reform (DAR). In a letter dated May 6, 1989, private respondent informed petitioner of his offer to sell the properties to the DAR. Private respondent manifested that since the properties in question were already under the coverage of the Comprehensive Agrarian Reform Program (CARP), the payment of the redemption price to the GSIS shall be assumed by the government through the DAR and the LBP. Likewise, in a letter dated May 18, 1989, private respondent informed petitioner of its willingness to pay 20% of the repurchase price within 30 days from receipt of the acceptance of his offer. He added that the balance shall be paid by him within one (1) year from payment of the aforesaid amount. Private respondent, however, received no reply from the petitioner.
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After the lapse of the redemption period without a redemption of the subject lots being effected, petitioner consolidated ownership over the subject lots in its name. Thereafter, on November 5, 1990, petitioner executed a Deed of Transfer of said lots in favor of the DAR

pursuant to Executive Order No. 407,10 which mandates all government owned and controlled corporations to transfer to the DAR all landholdings suitable for agriculture. By virtue of the transfer, the Register of Deeds of Masbate issued on December 11, 1990, TCT Nos. T-7882 to T-7891, in the name of the Republic of the Philippines, and thereafter, on April 16, 1991, Transfer Certificate of Title No. 94 to TCT No. T-103, in the names of farmer beneficiaries to whom the lots were subsequently awarded. Despite repeated demands of private respondent, the LBP and the DAR refused to determine and pay the just compensation for the controverted lots. Hence, on November 3, 1993, private respondent filed the instant case. In its Answer,11 petitioner alleged that it is the lawful owner of the lots in question; that the failure to redeem the said lots within the redemption period has the effect of consolidating the titles thereof in its name; that being the lawful owner of the lots, it can validly transfer said lots to the DAR in compliance with E.O. No. 407. On September 19, 1995, petitioner filed a motion to dismiss12 on the ground of failure to state a cause of action. Petitioner argued that private respondent had no right to sell the lots to the DAR because what it acquired from AAA was only the right to redeem the lots in question. Failing to so redeem, he never became the owner of said lots and therefore was not a real party in interest in the instant case for determination and payment of just compensation. In his Opposition to the Motion to Dismiss,13 private respondent did not dispute the claim of petitioner that he failed to redeem the properties within the alloted period. He simply declared that petitioner was a necessary party in this case being the mortgagee of the disputed lots. On March 13, 1996, the trial court dismissed private respondent's complaint for failure to state a cause of action. The dispositive portion thereof reads: WHEREFORE, in view of the foregoing, the complaints of the above-entitled cases are hereby ordered DISMISSED with costs against the plaintiff. SO ORDERED.14 With the denial of his motion for reconsideration on April 24, 1996, private respondent appealed to the Court of Appeals. On October 28, 1996, the respondent court set aside the assailed orders of the trial court and directed it to proceed with the trial on the merits. The decretal portion thereof states: Viewed from the foregoing, petition is hereby given due course and the Orders of respondent Court dated March 13, 1996 and April 24, 1996, respectively are hereby set aside. Respondent Court is hereby directed to proceed with the hearing of Spec. Civil Case No. 4243. SO ORDERED.15

Hence, the instant petition on the following alleged errors: I THE COURT OF APPEALS ERRED WHEN IT FAILED TO TAKE JUDICIAL NOTICE THAT ONLY REGISTERED LANDOWNERS CAN AVAIL THEMSELVES OF VOLUNTARY OFFER TO SELL (VOS) UNDER THE COMPREHENSIVE AGRARIAN REFORM PROGRAM (CARP). II THE COURT OF APPEALS ERRED IN RULING THAT THE DECISION OF THE TRIAL COURT WAS BASED ON CONCLUSION DESPITE THE CLEAR ADMISSION BY RESPONDENT COLARINA IN THE COMPLAINT THAT THE SUBJECT PROPERTIES IN QUESTION HAVE BEEN FORECLOSED BY THE PETITIONER AND THERE WAS FAILURE TO EXERCISE THE RIGHT OF REDEMPTION DURING THE ONE (1) YEAR REGLEMENTARY PERIOD OF REDEMPTION BY THE MORTGAGOR OR HIS SUCCESSORS-IN-INTEREST, AS SPECIFICALLY REQUIRED UNDER ACT 3135 as amended. III THE COURT OF APPEALS ERRED WHEN IT RULED THAT THE TRIAL COURT "DOUBTED" THE VERACITY OF THE COMPLAINT. ON THE CONTRARY, THE TRIAL COURT BASED ON THE ALLEGATIONS IN THE COMPLAINT AND NO OTHER, DISMISSED THE COMPLAINT FOR FAILURE TO STATE A CAUSE OF ACTION. IV THE COURT OF APPEALS ERRED WHEN IT CONSIDERED ANNEX "C-1" OF THE RESPONDENT'S PETITION, WHICH WAS NOT AMONG THE EVIDENCE ALLEGED, MUCH LESS ADDUCED IN THE TRIAL COURT.16 The decision of the Court of Appeals is premised on the ratiocination that since the motion to dismiss of petitioner is based on failure to state a cause of action, the evaluation of the court a quo should be limited to the complaint itself. Thus, it set aside the assailed orders of the trial court because the latter went beyond the allegations in the complaint in determining whether private respondents complaint states a cause of action. Indeed, the r ule is that, when the motion to dismiss is based on lack of cause of action, only the statements in the complaint may be properly considered, and the court cannot take cognizance of external facts or hold preliminary hearings to ascertain their existence.17 It must be noted, however, that the motion to dismiss in the case at bar was filed by petitioner after it has filed an answer. The motion was allowed and favorably acted upon by the trial court. Admittedly, the court a quoconsidered facts not stated in the complaint in assessing whether it states a cause of action. In effect, therefore, it treated the motion to dismiss as a motion for summary judgment. This is tenable under the circumstances,

inasmuch as the opposition to the motion to dismiss filed by private respondent did not tender a genuine issue.18Private respondent offered absolutely no denial to the averment that what he acquired from AAA was merely the right of redemption which he never exercised within the redemption period, resulting in the consolidation of ownership in petitioner. At any rate, it is settled that the only rights which a mortgagor can legally transfer, cede and convey after the foreclosure of his properties are the right to redeem the land, and the possession, use and enjoyment of the same during the period of redemption.19 But whatever right private respondent acquired from AAA loses legal significance in the present case in view of his failure to redeem the foreclosed properties. Thus, the lower court can validly dispense with the trial and proceed to render a summary judgment. While it is true that under DAR Administrative Order No. 3, series of 1989, it is not necessary that the voluntary offeror of the lot be the registered owner thereof, 20 private respondent failed to show that the DAR accepted and approved his offer to sell. Without said approval and acceptance, private respondent cannot safely presume that his voluntary offer to sell was accepted by the DAR. Notably, the word "offer," is subject to acceptance. The voluntary offer to sell is in fact reviewed and evaluated by the DAR before a corresponding notice of acceptance is sent to the landowner. The applicable rules and procedure governing voluntary offer to sell (VOS) at the time private respondent made his offer provides: IV. Operating procedures The following procedures shall be observed for every Voluntary Offer to Sell (VOS): xxx xxx xxx

B. Municipal Agrarian Reform Officer (MARO) xxx xxx xxx

2. Schedule an investigation of the land being offered for sale; after which notify the local BARC accordingly and then invite the prospective beneficiaries to a conference at the site of the land. 3. With the assistance of the BARC, determine the suitability/productivity of the land and prepare an investigation report with his findings and recommendations using CARP Form No. 2. If the subject landholdings is found not suited for agricultural productions, recommend the same for rejection. xxx xxx xxx

C. Provincial Agrarian Reform Officer (PARO) 1. Review and evaluate the MAROs report and all pertinent documents relative to the landowner's compensation as attached to the VOCF. xxx xxx xxx

D. Regional Director (RD) 1. Review and evaluate the VOCF and supporting documents. 2. Refer the VOCF to the Regional Attorney for review and to determine completeness and legal sufficiency of the documents submitted. 3. If the VOS is in order, notify the landowner of DARs decision to acquire the land. The notice shall be in writing and shall be served on the landowner by personal delivery or by registered mail, with copies thereof posted in a conspicuous place in the municipal building and barangay hall where the property is located (CARP Form No. 8) x x x.21 Evidently, without the notice informing the landowner of the DARs conformity with the offer to sell, private respondent cannot validly presume that his offer to sell has been accepted by the DAR and that the latter will now assume the payment of the loan to the GSIS. It is not disputed that the subject lots were not redeemed from petitioner. When the one (1) year redemption period expired without private respondent exercising the right of redemption, ownership over the foreclosed properties was consolidated in the name of petitioner. Hence, the latter can legally transfer ownership therein to the DAR in compliance with Executive Order No. 407. Clearly, private respondent had no personality to sue for the determination and payment of just compensation of said lots because he failed to show that his offer was accepted by the DAR, and more importantly, because whatever right he may have had over said lots was defeated by the consolidation of ownership in the name of petitioner who turned over the subject lots to the DAR. The questioned lots are presently titled in the name of the farmer beneficiaries not by reason of the DARs purchase thereof from private respondent, but by reason of petitioners transfer of ownership over said lots to the DAR. Private respondent may have the right to offer for sale what he expects to be his, but he certainly has no right to sell what never became his, much more, ask that he be compensated for that which was never bought from him.
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WHEREFORE, in view of all the foregoing, the petition is GRANTED. The October 28, 1996 Decision and the January 29, 1997 Resolution of the Court of Appeals in CA-G.R. SP. No. 40610 are SET ASIDE. The March 13, 1996 and April 24, 1996 Orders of the Regional Trial Court of Masbate, Branch 48, in Spec. Civil Case Nos. 4242-43 are REINSTATED. SO ORDERED.

Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. 134971 March 25, 2004

HERMINIO TAYAG, petitioner, vs. AMANCIA LACSON, ROSENDO LACSON, ANTONIO LACSON, JUAN LACSON, TEODISIA LACSON-ESPINOSA and THE COURT OF APPEALS, respondents. DECISION CALLEJO, SR., J.: Before us is a petition for review on certiorari of the Decision1 and the Resolution2 of respondent Court of Appeals in CA-G.R. SP No. 44883. The Case for the Petitioner Respondents Angelica Tiotuyco Vda. de Lacson,3 and her children Amancia, Antonio, Juan, and Teodosia, all surnamed Lacson, were the registered owners of three parcels of land located in Mabalacat, Pampanga, covered by Transfer Certificates of Title (TCT) Nos. 35922-R, 35923-R, and 35925-R, registered in the Register of Deeds of San Fernando, Pampanga. The properties, which were tenanted agricultural lands,4 were administered by Renato Espinosa for the owner. On March 17, 1996, a group of original farmers/tillers, namely, Julio Tiamson, Renato Gozun, Rosita Hernandez, Bienvenido Tongol, Alfonso Flores, Norma Quiambao, Rosita Tolentino, Jose Sosa, Francisco Tolentino, Sr., Emiliano Laxamana, Ruben Torres, Meliton Allanigue, Dominga Laxamana, Felicencia de Leon, Emiliano Ramos, and another group, namely, Felino G. Tolentino, Rica Gozun, Perla Gozun, Benigno Tolentino, Rodolfo Quiambao, Roman Laxamana, Eddie San Luis, Ricardo Hernandez, Nicenciana Miranda, Jose Gozun, Alfredo Sosa, Jose Tiamson, Augusto Tolentino, Sixto Hernandez, Alex Quiambao, Isidro Tolentino, Ceferino de Leon, Alberto Hernandez, Orlando Flores, and Aurelio Flores,5 individually executed in favor of the petitioner separate Deeds of Assignment6 in which the assignees assigned to the petitioner their respective rights as tenants/tillers of the landholdings possessed and tilled by them for and in consideration of P50.00 per square meter. The said amount was made payable "when the legal impediments to the sale of the property to the petitioner no longer existed." The petitioner was also granted the exclusive right to buy the property if and when the respondents, with the concurrence of the defendants-tenants, agreed to sell the property. In the interim, the petitioner gave varied sums of money to the tenants as partial payments, and the latter issued receipts for the said amounts. On July 24, 1996, the petitioner called a meeting of the defendants-tenants to work out the implementation of the terms of their separate agreements.7 However, on August 8, 1996, the defendants-tenants, through Joven Mariano, wrote the petitioner stating that they were not attending the meeting and instead gave notice of their collective decision to sell all their rights and interests, as tenants/lessees, over the landholding to the respondents.8 Explaining their reasons for their collective decision, they wrote as follows: Kami ay nagtiwala sa inyo, naging tapat at nanindigan sa lahat ng ating napagkasunduan, hindi tumanggap ng ibang buyer o ahente, pero sinira ninyo ang aming pagtitiwala sa

pamamagitan ng demanda ninyo at pagbibigay ng problema sa amin na hindi naman nagbenta ng lupa. Kaya kami ay nagpulong at nagpasya na ibenta na lang ang aming karapatan o ang aming lupang sinasaka sa landowner o sa mga pamilyang Lacson, dahil ayaw naming magkaroon ng problema. Kaya kung ang sasabihin ninyong itoy katangahan, lalo sigurong magiging katangahan kung ibebenta pa namin sa inyo ang aming lupang sinasaka, kaya pasensya na lang Mister Tayag. Dahil sinira ninyo ang aming pagtitiwala at katapatan.9 On August 19, 1996, the petitioner filed a complaint with the Regional Trial Court of San Fernando, Pampanga, Branch 44, against the defendants-tenants, as well as the respondents, for the court to fix a period within which to pay the agreed purchase price of P50.00 per square meter to the defendants, as provided for in the Deeds of Assignment. The petitioner also prayed for a writ of preliminary injunction against the defendants and the respondents therein.10 The case was docketed as Civil Case No. 10910. In his complaint, the petitioner alleged, inter alia, the following: 4. That defendants Julio Tiamson, Renato Gozun, Rosita Hernandez, Bienvenido Tongol, Alfonso Flores, Norma Quiambao, Rosita Tolentino, Jose Sosa, Francisco Tolentino, Sr., Emiliano Laxamana, Ruben Torres, Meliton Allanigue, Dominga Laxamana, Felicencia de Leon, Emiliano Ramos are original farmers or direct tillers of landholdings over parcels of lands covered by Transfer Certificate of Title Nos. 35922-R, 35923-R and 35925-R which are registered in the names of defendants LACSONS; while defendants Felino G. Tolentino, Rica Gozun, Perla Gozun, Benigno Tolentino, Rodolfo Quiambao, Roman Laxamana, Eddie San Luis, Alfredo Gozun, Jose Tiamson, Augusto Tolentino, Sixto Hernandez, Alex Quiambao, Isidro Tolentino, Ceferino de Leon, Alberto Hernandez, and Aurelio Flores are sub-tenants over the same parcel of land. 5. That on March 17, 1996 the defendants TIAMSON, et al., entered into Deeds of Assignment with the plaintiff by which the defendants assigned all their rights and interests on their landholdings to the plaintiff and that on the same date (March 17, 1996), the defendants received from the plaintiff partial payments in the amounts corresponding to their names. Subsequent payments were also received: 1st PAYMENT 1.Julio Tiamson - - - - - 2. Renato Gozun - - - - - [son of Felix Gozun (deceased)] P 20,000 P 10,000 2nd PAYMENT P 10,621.54 96,000 CHECK NO. 231281 TOTAL P 30,621.54 106,000.00

3. Rosita Hernandez - - - 4. Bienvenido Tongol - - [Son of Abundio Tongol (deceased)] 5. Alfonso Flores - - - - - 6. Norma Quiambao - - - 7. Rosita Tolentino - - - - 8. Jose Sosa - - - - - - - - -

P 5,000 P 10,000

14,374.24 14,465.90

231274 231285

P 19,374.24 24,465.90

P 30,000 P 10,000 P 10,000 P 10,000

26,648.40 41,501.10 22,126.08 14,861.31 24,237.62 -----P 33,587.31

231271 231279 231284 231291 231283 -----------

56,648.40 51,501.10 32,126.08 24,861.31 34,237.62 -----P 43,587.31 P 22,944.77 27,269.02 -----23,869.60 -------------------------------------------------------------

9. Francisco Tolentino, Sr. P 10,000 10. Emiliano Laxamana - - P 10,000 11. Ruben Torres - - - - - [Son of Mariano Torres (deceased)] 12. Meliton Allanigue 13. Dominga Laxamana 14. Felicencia de Leon 15. Emiliano Ramos 16. Felino G. Tolentino 17. Rica Gozun 18. Perla Gozun 19. Benigno Tolentino 20. Rodolfo Quiambao 21. Roman Laxamana 22. Eddie San Luis 23. Ricardo Hernandez 24. Nicenciana Miranda 25. Jose Gozun 26. Alfredo Sosa 27. Jose Tiamson P 10,000

P 10,000 P 5,000 10,000 5,000 10,000 5,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 5,000 10,000

12,944.77 22,269.02 -----18,869.60 -------------------------------------------------------------

231269 231275 -----231280 -------------------------------------------------------------

28. Augusto Tolentino 29. Sixto Hernandez 30. Alex Quiambao 31. Isidro Tolentino 32. Ceferino de Leon 33. Alberto Hernandez 34. Orlando Florez 35. Aurelio Flores

5,000 10,000 10,000 10,000 -----10,000 10,000 10,000

--------------------11,378.70 ----------------

--------------------231270 ----------------

-----------------------------------------

6. That on July 24, 1996, the plaintiff wrote the defendants TIAMSON, et al., inviting them for a meeting regarding the negotiations/implementations of the terms of their Deeds of Assignment; 7. That on August 8, 1996, the defendants TIAMSON, et al., through Joven Mariano, replied that they are no longer willing to pursue with the negotiations, and instead they gave notice to the plaintiff that they will sell all their rights and interests to the registered owners (defendants LACSONS). A copy of the letter is hereto attached as Annex "A" etc.; 8. That the defendants TIAMSON, et. al., have no right to deal with the defendants LACSON or with any third persons while their contracts with the plaintiff are subsisting; defendants LACSONS are inducing or have induced the defendants TIAMSON, et. al., to violate their contracts with the plaintiff; 9. That by reason of the malicious acts of all the defendants, plaintiff suffered moral damages in the forms of mental anguish, mental torture and serious anxiety which in the sum of P500,000.00 for which defendants should be held liable jointly and severally.11 In support of his plea for injunctive relief, the petitioner, as plaintiff, also alleged the following in his complaint: 11. That to maintain the status quo, the defendants TIAMSON, et al., should be restrained from rescinding their contracts with the plaintiff, and the defendants LACSONS should also be restrained from accepting any offer of sale or alienation with the defendants TIAMSON, et al., in whatever form, the latters rights and interests in the properties mentioned in paragraph 4 hereof; further, the LACSONS should be restrained from encumbering/alienating the subject properties covered by TCT No. 35922-R, 35923-R and TCT No. 35925-R, Registry of Deeds of San Fernando, Pampanga;

12. That the defendants TIAMSON, et al., threaten to rescind their contracts with the plaintiff and are also bent on selling/alienating their rights and interests over the subject properties to their co-defendants (LACSONS) or any other persons to the damage and prejudice of the plaintiff who already invested much money, efforts and time in the said transactions; 13. That the plaintiff is entitled to the reliefs being demanded in the complaint; 14. That to prevent irreparable damages and prejudice to the plaintiff, as the latter has no speedy and adequate remedy under the ordinary course of law, it is essential that a Writ of Preliminary Injunction be issued enjoining and restraining the defendants TIAMSON, et al., from rescinding their contracts with the plaintiff and from selling/alienating their properties to the LACSONS or other persons; 15. That the plaintiff is willing and able to put up a reasonable bond to answer for the damages which the defendants would suffer should the injunction prayed for and granted be found without basis.12 The petitioner prayed, that after the proceedings, judgment be rendered as follows: 1. Pending the hearing, a Writ of Preliminary Injunction be issued prohibiting, enjoining and restraining defendants Julio Tiamson, Renato Gozun, Rosita Hernandez, Bienvenido Tongol, Alfonso Flores, Norma Quiambao, Rosita Tolentino, Jose Sosa, Francisco Tolentino Sr., Emiliano Laxamana, Ruben Torres, Meliton Allanigue, Dominga Laxamana, Felicencia de Leon, Emiliano Ramos, Felino G. Tolentino, Rica Gozun, Perla Gozun, Benigno Tolentino, Rodolfo Quiambao, Roman Laxamana, Eddie San Luis, Ricardo Hernandez, Nicenciana Miranda, Jose Gozun, Alfredo Sosa, Jose Tiamson, Augusto Tolentino, Ceferino de Leon, Alberto Hernandez, Orlando Flores, and Aurelio Flores from rescinding their contracts with the plaintiff and from alienating their rights and interest over the aforementioned properties in favor of defendants LACSONS or any other third persons; and prohibiting the defendants LACSONS from encumbering/alienating TCT Nos. 35922R, 35923-R and 35925-R of the Registry of Deeds of San Fernando, Pampanga. 2. And pending the hearing of the Prayer for a Writ of Preliminary Injunction, it is prayed that a restraining order be issued restraining the aforementioned defendants (TIAMSON, et al.) from rescinding their contracts with the plaintiff and from alienating the subject properties to the defendants LACSONS or any third persons; further, restraining and enjoining the defendants LACSONS from encumbering/selling the properties covered by TCT Nos. 35922-R, 35923-R, and 35925-R of the Registry of Deeds of San Fernando, Pampanga. 3. Fixing the period within which plaintiff shall pay the balance of the purchase price to the defendants TIAMSON, et al., after the lapse of legal impediment, if any. 4. Making the Writ of Preliminary Injunction permanent;

5. Ordering the defendants to pay the plaintiff the sum of P500,000.00 as moral damages; 6. Ordering the defendants to pay the plaintiff attorneys fees in the sum of P100,000.00 plus litigation expenses of P50,000.00; Plaintiff prays for such other relief as may be just and equitable under the premises. 13 In their answer to the complaint, the respondents as defendants asserted that (a) the defendant Angelica Vda. de Lacson had died on April 24, 1993; (b) twelve of the defendants were tenants/lessees of respondents, but the tenancy status of the rest of the defendants was uncertain; (c) they never induced the defendants Tiamson to violate their contracts with the petitioner; and, (d) being merely tenants-tillers, the defendants-tenants had no right to enter into any transactions involving their properties without their knowledge and consent. They also averred that the transfers or assignments of leasehold rights made by the defendants-tenants to the petitioner is contrary to Presidential Decree (P.D.) No. 27 and Republic Act No. 6657, the Comprehensive Agrarian Reform Program (CARP).14 The respondents interposed counterclaims for damages against the petitioner as plaintiff. The defendants-tenants Tiamson, et al., alleged in their answer with counterclaim for damages, that the money each of them received from the petitioner were in the form of loans, and that they were deceived into signing the deeds of assignment: a) That all the foregoing allegations in the Answer are hereby repleaded and incorporated in so far as they are material and relevant herein; b) That the defendants Tiamson, et al., in so far as the Deeds of Assignment are concern[ed] never knew that what they did sign is a Deed of Assignment. What they knew was that they were made to sign a document that will serve as a receipt for the loan granted [to] them by the plaintiff; c) That the Deeds of Assignment were signed through the employment of fraud, deceit and false pretenses of plaintiff and made the defendants believe that what they sign[ed] was a mere receipt for amounts received by way of loans; d) That the documents signed in blank were filled up and completed after the defendants Tiamson, et al., signed the documents and their completion and accomplishment was done in the absence of said defendants and, worst of all, defendants were not provided a copy thereof; e) That as completed, the Deeds of Assignment reflected that the defendants Tiamson, et al., did assign all their rights and interests in the properties or landholdings they were tilling in favor of the plaintiff. That if this is so, assuming arguendo that the documents were voluntarily executed, the defendants Tiamson, et al., do not have any right to transfer their interest in the landholdings they are tilling as they have no right whatsoever in the landholdings, the landholdings belong to their co-defendants, Lacson, et al., and therefore, the contract is null and void;

f) That while it is admitted that the defendants Tiamson, et al., received sums of money from plaintiffs, the same were received as approved loans granted by plaintiff to the defendants Tiamson, et al., and not as part consideration of the alleged Deeds of Assignment; and by way of:15 At the hearing of the petitioners plea for a writ of preliminary injunction, the respondents counsel failed to appear. In support of his plea for a writ of preliminary injunction, the petitioner adduced in evidence the Deeds of Assignment,16 the receipts17 issued by the defendants-tenants for the amounts they received from him; and the letter 18 the petitioner received from the defendants-tenants. The petitioner then rested his case. The respondents, thereafter, filed a Comment/Motion to dismiss/deny the petitioners plea for injunctive relief on the following grounds: (a) the Deeds of Assignment executed by the defendants-tenants were contrary to public policy and P.D. No. 27 and Rep. Act No. 6657; (b) the petitioner failed to prove that the respondents induced the defendants-tenants to renege on their obligations under the "Deeds of Assignment;" (c) not being privy to the said deeds, the respondents are not bound by the said deeds; and, (d) the respondents had the absolute right to sell and dispose of their property and to encumber the same and cannot be enjoined from doing so by the trial court. The petitioner opposed the motion, contending that it was premature for the trial court to resolve his plea for injunctive relief, before the respondents and the defendants-tenants adduced evidence in opposition thereto, to afford the petitioner a chance to adduce rebuttal evidence and prove his entitlement to a writ of preliminary injunction. The respondents replied that it was the burden of the petitioner to establish the requisites of a writ of preliminary injunction without any evidence on their part, and that they were not bound to adduce any evidence in opposition to the petitioners plea for a writ of preliminary injunction. On February 13, 1997, the court issued an Order19 denying the motion of the respondents for being premature. It directed the hearing to proceed for the respondents to adduce their evidence. The court ruled that the petitioner, on the basis of the material allegations of the complaint, was entitled to injunctive relief. It also held that before the court could resolve the petitioners plea for injunctive relief, there was need for a hearing to enable the respondents and the defendants-tenants to adduce evidence to controvert that of the petitioner. The respondents filed a motion for reconsideration, which the court denied in its Order dated April 16, 1997. The trial court ruled that on the face of the averments of the complaint, the pleadings of the parties and the evidence adduced by the petitioner, the latter was entitled to injunctive relief unless the respondents and the defendants-tenants adduced controverting evidence. The respondents, the petitioners therein, filed a petition for certiorari in the Court of Appeals for the nullification of the February 13, 1997 and April 16, 1997 Orders of the trial court. The case was docketed as CA-G.R. SP No. 44883. The petitioners therein prayed in their petition that: 1. An order be issued declaring the orders of respondent court dated February 13, 1997 and April 16, 1997 as null and void;

2. An order be issued directing the respondent court to issue an order denying the application of respondent Herminio Tayag for the issuance of a Writ of Preliminary Injunction and/or restraining order. 3. In the meantime, a Writ of Preliminary Injunction be issued against the respondent court, prohibiting it from issuing its own writ of injunction against Petitioners, and thereafter making said injunction to be issued by this Court permanent. Such other orders as may be deemed just & equitable under the premises also prayed for. 20 The respondents asserted that the Deeds of Assignment executed by the assignees in favor of the petitioner were contrary to paragraph 13 of P.D. No. 27 and the second paragraph of Section 70 of Rep. Act No. 6657, and, as such, could not be enforced by the petitioner for being null and void. The respondents also claimed that the enforcement of the deeds of assignment was subject to a supervening condition: 3. That this exclusive and absolute right given to the assignee shall be exercised only when no legal impediments exist to the lot to effect the smooth transfer of lawful ownership of the lot/property in the name of the ASSIGNEE.21 The respondents argued that until such condition took place, the petitioner would not acquire any right to enforce the deeds by injunctive relief. Furthermore, the petitioners plea in his complaint before the trial court, to fix a period within which to pay the balance of the amounts due to the tenants under said deeds after the "lapse" of any legal impediment, assumed that the deeds were valid, when, in fact and in law, they were not. According to the respondents, they were not parties to the deeds of assignment; hence, they were not bound by the said deeds. The issuance of a writ of preliminary injunction would restrict and impede the exercise of their right to dispose of their property, as provided for in Article 428 of the New Civil Code. They asserted that the petitioner had no cause of action against them and the defendants-tenants. On April 17, 1998, the Court of Appeals rendered its decision against the petitioner, annulling and setting aside the assailed orders of the trial court; and permanently enjoining the said trial court from proceeding with Civil Case No. 10901. The decretal portion of the decision reads as follows: However, even if private respondent is denied of the injunctive relief he demands in the lower court still he could avail of other course of action in order to protect his interest such as the institution of a simple civil case of collection of money against TIAMSON, et al. For all the foregoing considerations, the orders dated 13 February 1997 and 16 April 1997 are hereby NULLIFIED and ordered SET ASIDE for having been issued with grave abuse of discretion amounting to lack or excess of jurisdiction. Accordingly, public respondent is permanently enjoined from proceeding with the case designated as Civil Case No. 10901.22 The CA ruled that the respondents could not be enjoined from alienating or even encumbering their property, especially so since they were not privies to the deeds of assignment executed by the defendants-tenants. The defendants-tenants were not yet

owners of the portions of the landholdings respectively tilled by them; as such, they had nothing to assign to the petitioner. Finally, the CA ruled that the deeds of assignment executed by the defendants-tenants were contrary to P.D. No. 27 and Rep. Act No. 6657. On August 4, 1998, the CA issued a Resolution denying the petitioners motion for reconsideration.23 Hence, the petitioner filed his petition for review on certiorari before this Court, contending as follows: I A MERE ALLEGATION IN THE ANSWER OF THE TENANTS COULD NOT BE USED AS EVIDENCE OR BASIS FOR ANY CONCLUSION, AS THIS ALLEGATION, IS STILL THE SUBJECT OF TRIAL IN THE LOWER COURT (RTC).24 II THE COURT OF APPEALS CANNOT ENJOIN THE HEARING OF A PETITION FOR PRELIMINARY INJUNCTION AT A TIME WHEN THE LOWER COURT (RTC) IS STILL RECEIVING EVIDENCE PRECISELY TO DETERMINE WHETHER OR NOT THE WRIT OF PRELIMINARY INJUNCTION BEING PRAYED FOR BY TAYAG SHOULD BE GRANTED OR NOT.25 III THE COURT OF APPEALS CANNOT USE "FACTS" NOT IN EVIDENCE, TO SUPPORT ITS CONCLUSION THAT THE TENANTS ARE NOT YET "AWARDEES OF THE LAND REFORM.26 IV THE COURT OF APPEALS CANNOT CAUSE THE PERMANENT STOPPAGE OF THE ENTIRE PROCEEDINGS BELOW INCLUDING THE TRIAL ON THE MERITS OF THE CASE CONSIDERING THAT THE ISSUE INVOLVED ONLY THE PROPRIETY OF MAINTAINING THE STATUS QUO.27 V THE COURT OF APPEALS CANNOT INCLUDE IN ITS DECISION THE CASE OF THE OTHER 35 TENANTS WHO DO NOT QUESTION THE JURISDICTION OF THE LOWER COURT (RTC) OVER THE CASE AND WHO ARE IN FACT STILL PRESENTING THEIR EVIDENCE TO OPPOSE THE INJUNCTION PRAYED FOR, AND TO PROVE AT THE SAME TIME THE COUNTER-CLAIMS THEY FILED AGAINST THE PETITIONER.28 VI

THE LOWER COURT (RTC) HAS JURISDICTION OVER THE CASE FILED BY TAYAG FOR "FIXING OF PERIOD" UNDER ART. 1197 OF THE NEW CIVIL CODE AND FOR "DAMAGES" AGAINST THE LACSONS UNDER ART. 1314 OF THE SAME CODE. THIS CASE CANNOT BE SUPPRESSED OR RENDERED NUGATORY UNCEREMONIOUSLY.29 The petitioner faults the Court of Appeals for permanently enjoining the trial court from proceeding with Civil Case No. 10910. He opines that the same was too drastic, tantamount to a dismissal of the case. He argues that at that stage, it was premature for the appellate court to determine the merits of the case since no evidentiary hearing thereon was conducted by the trial court. This, the Court of Appeals cannot do, since neither party moved for the dismissal of Civil Case No. 10910. The petitioner points out that the Court of Appeals, in making its findings, went beyond the issue raised by the private respondents, namely, whether or not the trial court committed a grave abuse of discretion amounting to excess or lack of jurisdiction when it denied the respondents motion for the denial/dismissal of the petitioners plea for a writ of preliminary injunction. He, likewise, points out that the appellate court erroneously presumed that the leaseholders were not DAR awardees and that the deeds of assignment were contrary to law. He contends that leasehold tenants are not prohibited from conveying or waiving their leasehold rights in his favor. He insists that there is nothing illegal with his contracts with the leaseholders, since the same shall be effected only when there are no more "legal impediments." At bottom, the petitioner contends that, at that stage, it was premature for the appellate court to determine the merits of his case since no evidentiary hearing on the merits of his complaint had yet been conducted by the trial court. The Comment/Motion of the Respondents to Dismiss/Deny Petitioners Plea for a Writ of Preliminary Injunction Was Not Premature. Contrary to the ruling of the trial court, the motion of the respondents to dismiss/deny the petitioners plea for a writ of preliminary injunction after the petitioner had adduced his evidence, testimonial and documentary, and had rested his case on the incident, was proper and timely. It bears stressing that the petitioner had the burden to prove his right to a writ of preliminary injunction. He may rely solely on the material allegations of his complaint or adduce evidence in support thereof. The petitioner adduced his evidence to support his plea for a writ of preliminary injunction against the respondents and the defendants-tenants and rested his case on the said incident. The respondents then had three options: (a) file a motion to deny/dismiss the motion on the ground that the petitioner failed to discharge his burden to prove the factual and legal basis for his plea for a writ of preliminary injunction and, if the trial court denies his motion, for them to adduce evidence in opposition to the petitioners plea; (b) forgo their motion and adduce testimonial and/or documentary evidence in opposition to the petitioners plea for a writ of preliminary injunction; or, (c) waive their right to adduce evidence and submit the incident for consideration on the basis of the pleadings of the parties and the evidence of the petitioner. The respondents opted not to adduce any evidence, and instead filed a motion to deny or dismiss the petitio ners plea

for a writ of preliminary injunction against them, on their claim that the petitioner failed to prove his entitlement thereto. The trial court cannot compel the respondents to adduce evidence in opposition to the petitioners plea if the respond ents opt to waive their right to adduce such evidence. Thus, the trial court should have resolved the respondents motion even without the latters opposition and the presentation of evidence thereon. The RTC Committed a Grave Abuse of Discretion Amounting to Excess or Lack of Jurisdiction in Issuing its February 13, 1997 and April 16, 1997 Orders In its February 13, 1997 Order, the trial court ruled that the petitioner was entitled to a writ of preliminary injunction against the respondents on the basis of the material averments of the complaint. In its April 16, 1997 Order, the trial court denied the respondents motion for reconsideration of the previous order, on its finding that the petitioner was entitled to a writ of preliminary injunction based on the material allegations of his complaint, the evidence on record, the pleadings of the parties, as well as the applicable laws: For the record, the Court denied the LACSONS COMMENT/MOTION on the basis of the facts culled from the evidence presented, the pleadings and the law applicable unswayed by the partisan or personal interests, public opinion or fear of criticism (Canon 3, Rule 3.02, Code of Judicial Ethics).30 Section 3, Rule 58 of the Rules of Court, as amended, enumerates the grounds for the issuance of a writ of preliminary injunction, thus: (a) That the applicant is entitled to the relief demanded, and the whole or part of such relief consists in restraining the commission or continuance of the act or acts complained of, or in requiring the performance of an act or acts, either for a limited period or perpetually; (b) That the commission, continuance or non-performance of the act or acts complained of during the litigation would probably work injustice to the applicant; or (c) That a party, court, agency or a person is doing, threatening, or is attempting to do, or is procuring or suffering to be done, some act or acts probably in violation of the rights of the applicant respecting the subject of the action or proceeding, and tending to render the judgment ineffectual. A preliminary injunction is an extraordinary event calculated to preserve or maintain the status quo of things ante litem and is generally availed of to prevent actual or threatened acts, until the merits of the case can be heard. Injunction is accepted as the strong arm of equity or a transcendent remedy.31 While generally the grant of a writ of preliminary injunction rests on the sound discretion of the trial court taking cognizance of the case, extreme caution must be observed in the exercise of such discretion.32 Indeed, in Olalia v. Hizon,33 we held:

It has been consistently held that there is no power the exercise of which is more delicate, which requires greater caution, deliberation and sound discretion, or more dangerous in a doubtful case, than the issuance of an injunction. It is the strong arm of equity that should never be extended unless to cases of great injury, where courts of law cannot afford an adequate or commensurate remedy in damages. Every court should remember that an injunction is a limitation upon the freedom of action of the defendant and should not be granted lightly or precipitately. It should be granted only when the court is fully satisfied that the law permits it and the emergency demands it. 34 The very foundation of the jurisdiction to issue writ of injunction rests in the existence of a cause of action and in the probability of irreparable injury, inadequacy of pecuniary compensation and the prevention of the multiplicity of suits. Where facts are not shown to bring the case within these conditions, the relief of injunction should be refused. 35 For the court to issue a writ of preliminary injunction, the petitioner was burdened to establish the following: (1) a right in esse or a clear and unmistakable right to be protected; (2) a violation of that right; (3) that there is an urgent and permanent act and urgent necessity for the writ to prevent serious damage.36 Thus, in the absence of a clear legal right, the issuance of the injunctive writ constitutes a grave abuse of discretion. Where the complainants right is doubtful or disputed, injunction is not proper. Injunction is a preservative remedy aimed at protecting substantial rights and interests. It is not designed to protect contingent or future rights. The possibility of irreparable damage without proof of adequate existing rights is not a ground for injunction.37 We have reviewed the pleadings of the parties and found that, as contended by the respondents, the petitioner failed to establish the essential requisites for the issuance of a writ of preliminary injunction. Hence, the trial court committed a grave abuse of its discretion amounting to excess or lack of jurisdiction in denying the respondents comment/motion as well as their motion for reconsideration. First. The trial court cannot enjoin the respondents, at the instance of the petitioner, from selling, disposing of and encumbering their property. As the registered owners of the property, the respondents have the right to enjoy and dispose of their property without any other limitations than those established by law, in accordance with Article 428 of the Civil Code. The right to dispose of the property is the power of the owner to sell, encumber, transfer, and even destroy the property. Ownership also includes the right to recover the possession of the property from any other person to whom the owner has not transmitted such property, by the appropriate action for restitution, with the fruits, and for indemnification for damages.38 The right of ownership of the respondents is not, of course, absolute. It is limited by those set forth by law, such as the agrarian reform laws. Under Article 1306 of the New Civil Code, the respondents may enter into contracts covering their property with another under such terms and conditions as they may deem beneficial provided they are not contrary to law, morals, good conduct, public order or public policy. The respondents cannot be enjoined from selling or encumbering their property simply and merely because they had executed Deeds of Assignment in favor of the petitioner, obliging themselves to assign and transfer their rights or interests as agricultural

farmers/laborers/sub-tenants over the landholding, and granting the petitioner the exclusive right to buy the property subject to the occurrence of certain conditions. The respondents were not parties to the said deeds. There is no evidence that the respondents agreed, expressly or impliedly, to the said deeds or to the terms and conditions set forth therein. Indeed, they assailed the validity of the said deeds on their claim that the same were contrary to the letter and spirit of P.D. No. 27 and Rep. Act No. 6657. The petitioner even admitted when he testified that he did not know any of the respondents, and that he had not met any of them before he filed his complaint in the RTC. He did not even know that one of those whom he had impleaded as defendant, Angelica Vda. de Lacson, was already dead. Q: But you have not met any of these Lacsons? A: Not yet, sir. Q: Do you know that two (2) of the defendants are residents of the United States? A: I do not know, sir. Q: You do not know also that Angela Tiotuvie (sic) Vda. de Lacson had already been dead? A: I am aware of that, sir.39 We are one with the Court of Appeals in its ruling that: We cannot see our way clear on how or why injunction should lie against petitioners. As owners of the lands being tilled by TIAMSON, et al., petitioners, under the law, have the right to enjoy and dispose of the same. Thus, they have the right to possess the lands, as well as the right to encumber or alienate them. This principle of law notwithstanding, private respondent in the lower court sought to restrain the petitioners from encumbering and/or alienating the properties covered by TCT No. 35922-R, 35923-R and TCT No. 35925-R of the Registry of Deeds of San Fernando, Pampanga. This cannot be allowed to prosper since it would constitute a limitation or restriction, not otherwise established by law on their right of ownership, more so considering that petitioners were not even privy to the alleged transaction between private respondent and TIAMSON, et al.40 Second. A reading the averments of the complaint will show that the petitioner clearly has no cause of action against the respondents for the principal relief prayed for therein, for the trial court to fix a period within which to pay to each of the defendants-tenants the balance of the P50.00 per square meter, the consideration under the Deeds of Assignment executed by the defendants-tenants. The respondents are not parties or privies to the deeds of assignment. The matter of the period for the petitioner to pay the balance of the said amount to each of the defendants-tenants is an issue between them, the parties to the deed. Third. On the face of the complaint, the action of the petitioner against the respondents and the defendants-tenants has no legal basis. Under the Deeds of Assignment, the obligation of the petitioner to pay to each of the defendants-tenants the balance of the purchase price

was conditioned on the occurrence of the following events: (a) the respondents agree to sell their property to the petitioner; (b) the legal impediments to the sale of the landholding to the petitioner no longer exist; and, (c) the petitioner decides to buy the property. When he testified, the petitioner admitted that the legal impediments referred to in the deeds were (a) the respondents refusal to sell their property; and, (b) the lack of approval of the Department of Agrarian Reform: Q : There is no specific agreement prior to the execution of those documents as when they will pay? A : We agreed to that, that I will pay them when there are no legal impediment, sir. Q : Many of the documents are unlattered (sic) and you want to convey to this Honorable Court that prior to the execution of these documents you have those tentative agreement for instance that the amount or the cost of the price is to be paid when there are no legal impediment, you are using the word "legal impediment," do you know the meaning of that? A : When there are (sic) no more legal impediment exist, sir. Q : Did you make how (sic) to the effect that the meaning of that phrase that you used the unlettered defendants? A : We have agreed to that, sir. ATTY. OCAMPO: May I ask, Your Honor, that the witness please answer my question not to answer in the way he wanted it. COURT: Just answer the question, Mr. Tayag. WITNESS: Yes, Your Honor. ATTY. OCAMPO: Q : Did you explain to them? A : Yes, sir. Q : What did you tell them? A : I explain[ed] to them, sir, that the legal impediment then especially if the Lacsons will not agree to sell their shares to me or to us it would be hard to (sic) me to pay

them in full. And those covered by DAR. I explain[ed] to them and it was clearly stated in the title that there is [a] prohibited period of time before you can sell the property. I explained every detail to them.41 It is only upon the occurrence of the foregoing conditions that the petitioner would be obliged to pay to the defendants-tenants the balance of the P50.00 per square meter under the deeds of assignment. Thus: 2. That in case the ASSIGNOR and LANDOWNER will mutually agree to sell the said lot to the ASSIGNEE, who is given an exclusive and absolute right to buy the lot, the ASSIGNOR shall receive the sum of FIFTY PESOS (P50.00) per square meter as consideration of the total area actually tilled and possessed by the ASSIGNOR, less whatever amount received by the ASSIGNOR including commissions, taxes and all allowable deductions relative to the sale of the subject properties. 3. That this exclusive and absolute right given to the ASSIGNEE shall be exercised only when no legal impediments exist to the lot to effect the smooth transfer of lawful ownership of the lot/property in the name of the ASSIGNEE; 4. That the ASSIGNOR will remain in peaceful possession over the said property and shall enjoy the fruits/earnings and/or harvest of the said lot until such time that full payment of the agreed purchase price had been made by the ASSIGNEE. 42 There is no showing in the petitioners complaint that the respondents had agreed to sell their property, and that the legal impediments to the agreement no longer existed. The petitioner and the defendants-tenants had yet to submit the Deeds of Assignment to the Department of Agrarian Reform which, in turn, had to act on and approve or disapprove the same. In fact, as alleged by the petitioner in his complaint, he was yet to meet with the defendants-tenants to discuss the implementation of the deeds of assignment. Unless and until the Department of Agrarian Reform approved the said deeds, if at all, the petitioner had no right to enforce the same in a court of law by asking the trial court to fix a period within which to pay the balance of the purchase price and praying for injunctive relief. We do not agree with the contention of the petitioner that the deeds of assignment executed by the defendants-tenants are perfected option contracts.43 An option is a contract by which the owner of the property agrees with another person that he shall have the right to buy his property at a fixed price within a certain time. It is a condition offered or contract by which the owner stipulates with another that the latter shall have the right to buy the property at a fixed price within a certain time, or under, or in compliance with certain terms and conditions, or which gives to the owner of the property the right to sell or demand a sale. It imposes no binding obligation on the person holding the option, aside from the consideration for the offer. Until accepted, it is not, properly speaking, treated as a contract.44 The second party gets in praesenti, not lands, not an agreement that he shall have the lands, but the right to call for and receive lands if he elects. 45 An option contract is a separate and distinct contract from which the parties may enter into upon the conjunction of the option.46

In this case, the defendants-tenants-subtenants, under the deeds of assignment, granted to the petitioner not only an option but the exclusive right to buy the landholding. But the grantors were merely the defendants-tenants, and not the respondents, the registered owners of the property. Not being the registered owners of the property, the defendantstenants could not legally grant to the petitioner the option, much less the "exclusive right" to buy the property. As the Latin saying goes, "NEMO DAT QUOD NON HABET." Fourth. The petitioner impleaded the respondents as parties-defendants solely on his allegation that the latter induced or are inducing the defendants-tenants to violate the deeds of assignment, contrary to the provisions of Article 1314 of the New Civil Code which reads: Art. 1314. Any third person who induces another to violate his contract shall be liable for damages to the other contracting party. In So Ping Bun v. Court of Appeals,47 we held that for the said law to apply, the pleader is burdened to prove the following: (1) the existence of a valid contract; (2) knowledge by the third person of the existence of the contract; and (3) interference by the third person in the contractual relation without legal justification. Where there was no malice in the interference of a contract, and the impulse behind ones conduct lies in a proper business interest rather than in wrongful motives, a party cannot be a malicious interferer. Where the alleged interferer is financially interested, and such interest motivates his conduct, it cannot be said that he is an officious or malicious intermeddler.48 In fine, one who is not a party to a contract and who interferes thereon is not necessarily an officious or malicious intermeddler. The only evidence adduced by the petitioner to prove his claim is the letter from the defendants-tenants informing him that they had decided to sell their rights and interests over the landholding to the respondents, instead of honoring their obligation under the deeds of assignment because, according to them, the petitioner harassed those tenants who did not want to execute deeds of assignment in his favor, and because the said defendants-tenants did not want to have any problem with the respondents who could cause their eviction for executing with the petitioner the deeds of assignment as the said deeds are in violation of P.D. No. 27 and Rep. Act No. 6657.49 The defendants-tenants did not allege therein that the respondents induced them to breach their contracts with the petitioner. The petitioner himself admitted when he testified that his claim that the respondents induced the defendants-assignees to violate contracts with him was based merely on what "he heard," thus: Q: Going to your last statement that the Lacsons induces (sic) the defendants, did you see that the Lacsons were inducing the defendants? A: I heard and sometime in [the] first week of August, sir, they went in the barrio (sic). As a matter of fact, that is the reason why they sent me letter that they will sell it to the Lacsons. Q: Incidentally, do you knew (sic) these Lacsons individually?

A: No, sir, it was only Mr. Espinosa who I knew (sic) personally, the alleged negotiator and has the authority to sell the property.50 Even if the respondents received an offer from the defendants-tenants to assign and transfer their rights and interests on the landholding, the respondents cannot be enjoined from entertaining the said offer, or even negotiating with the defendants-tenants. The respondents could not even be expected to warn the defendants-tenants for executing the said deeds in violation of P.D. No. 27 and Rep. Act No. 6657. Under Section 22 of the latter law, beneficiaries under P.D. No. 27 who have culpably sold, disposed of, or abandoned their land, are disqualified from becoming beneficiaries. From the pleadings of the petitioner, it is quite evident that his purpose in having the defendants-tenants execute the Deeds of Assignment in his favor was to acquire the landholding without any tenants thereon, in the event that the respondents agreed to sell the property to him. The petitioner knew that under Section 11 of Rep. Act No. 3844, if the respondents agreed to sell the property, the defendants-tenants shall have preferential right to buy the same under reasonable terms and conditions: SECTION 11. Lessees Right of Pre-emption. In case the agricultural lessor desires to sell the landholding, the agricultural lessee shall have the preferential right to buy the same under reasonable terms and conditions: Provided, That the entire landholding offered for sale must be pre-empted by the Land Authority if the landowner so desires, unless the majority of the lessees object to such acquisition: Provided, further, That where there are two or more agricultural lessees, each shall be entitled to said preferential right only to the extent of the area actually cultivated by him. 51 Under Section 12 of the law, if the property was sold to a third person without the knowledge of the tenants thereon, the latter shall have the right to redeem the same at a reasonable price and consideration. By assigning their rights and interests on the landholding under the deeds of assignment in favor of the petitioner, the defendants-tenants thereby waived, in favor of the petitioner, who is not a beneficiary under Section 22 of Rep. Act No. 6657, their rights of preemption or redemption under Rep. Act No. 3844. The defendants-tenants would then have to vacate the property in favor of the petitioner upon full payment of the purchase price. Instead of acquiring ownership of the portions of the landholding respectively tilled by them, the defendants-tenants would again become landless for a measly sum of P50.00 per square meter. The petitioners scheme is subversive, not only of public policy, but also of the letter and spirit of the agrarian laws. That the scheme of the petitioner had yet to take effect in the future or ten years hence is not a justification. The respondents may well argue that the agrarian laws had been violated by the defendants-tenants and the petitioner by the mere execution of the deeds of assignment. In fact, the petitioner has implemented the deeds by paying the defendantstenants amounts of money and even sought their immediate implementation by setting a meeting with the defendants-tenants. In fine, the petitioner would not wait for ten years to evict the defendants-tenants. For him, time is of the essence. The Appellate Court Erred In Permanently Enjoining The Regional Trial Court

From Continuing with the Proceedings in Civil Case No. 10910. We agree with the petitioners contention that the appellate court erred when it permanently enjoined the RTC from continuing with the proceedings in Civil Case No. 10910. The only issue before the appellate court was whether or not the trial court committed a grave abuse of discretion amounting to excess or lack of jurisdiction in denying the respondents m otion to deny or dismiss the petitioners plea for a writ of preliminary injunction. Not one of the parties prayed to permanently enjoin the trial court from further proceeding with Civil Case No. 10910 or to dismiss the complaint. It bears stressing that the petitioner may still amend his complaint, and the respondents and the defendants-tenants may file motions to dismiss the complaint. By permanently enjoining the trial court from proceeding with Civil Case No. 10910, the appellate court acted arbitrarily and effectively dismissed the complaint motu proprio, including the counterclaims of the respondents and that of the defendants-tenants. The defendants-tenants were even deprived of their right to prove their special and affirmative defenses. IN LIGHT OF ALL THE FOREGOING, the petition is PARTIALLY GRANTED. The Decision of the Court of Appeals nullifying the February 13, 1996 and April 16, 1997 Orders of the RTC is AFFIRMED. The writ of injunction issued by the Court of Appeals permanently enjoining the RTC from further proceeding with Civil Case No. 10910 is hereby LIFTED and SET ASIDE. The Regional Trial Court of Mabalacat, Pampanga, Branch 44, is ORDERED to continue with the proceedings in Civil Case No. 10910 as provided for by the Rules of Court, as amended. SO ORDERED. Puno, (Chairman), Quisumbing, Austria-Martinez, and Tinga, JJ., concur.

Republic of the Philippines SUPREME COURT Manila THIRD DIVISION G.R. No. 165952 July 28, 2008

ANECO REALTY AND DEVELOPMENT CORPORATION, Petitioner, vs. LANDEX DEVELOPMENT CORPORATION, Respondent. 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 Decision1 of the Court of Appeals (CA) affirming the Order2 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). 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 injunction5 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 Answer7 alleging, among others, that Aneco was not deprived access to its lots due to the construction of the concrete wall. Landex claimed that Aneco has its own entrance to its property along Miller Street, Resthaven Street, and San Francisco del Monte Street. The Resthaven access, however, was rendered inaccessible when Aneco constructed a building on said street. Landex also claimed that FHDI sold ordinary lots, not subdivision lots, to Aneco based on the express stipulation in the deed of sale that FHDI was not interested in pursuing its own subdivision project. RTC Disposition On June 19, 1996, the RTC rendered a Decision8 granting the complaint for injunction, disposing as follows: 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; 2. To pay actual and compensatory damage to the plaintiff in the total amount of P50,000.00; 3. To pay attorneys fees in the amount of P20,000.00; 4. To pay the cost.

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 motion11 setting a hearing for its motion for reconsideration. Aneco countered with a motion for execution12 claiming that the RTC decision is already final and executory. 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 order14 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 Decision17 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.

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 Procedure23 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.
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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 x29 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 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. SO ORDERED. RUBEN T. REYES Associate Justice WE CONCUR:

CONSUELO YNARES-SANTIAGO Associate Justice Chairperson MA. ALICIA AUSTRIA-MARTINEZ Associate Justice MINITA V. CHICO-NAZARIO Associate Justice

ANTONIO EDUARDO B. NACHURA Associate Justice ATTESTATION I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division. CONSUELO YNARES-SANTIAGO Associate Justice Chairperson CERTIFICATION Pursuant to Section 13, Article VIII of the Constitution and the Division Chairpersons Attestation, I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division. REYNATO S. PUNO Chief Justice

Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. 178096 March 23, 2011

ROSA DELOS REYES, Petitioner, vs. SPOUSES FRANCISCO ODONES and ARWENIA ODONES, NOEMI OTALES, and GREGORIO RAMIREZ,Respondents. DECISION NACHURA, J.:

This petition for certiorari under Rule 45 of the Rules of Court seeks the reversal of the February 19, 2007 Decision1 and the May 22, 2007 Resolution2 of the Court of Appeals (CA), affirming the June 20, 2006 decision3of the Regional Trial Court (RTC), Branch 68, Camiling, Tarlac, which in turn set aside the March 28, 2006 decision4 of the Municipal Trial Court (MTC) of Camiling, Tarlac, in a complaint for unlawful detainer, disposed as follows: WHEREFORE, judgment is hereby rendered in favor of the plaintiff and against defendants, ordering defendants, spouses Arwenia Odones and Francisco Odones, their heirs and assigns and all persons acting in their behalves to vacate the premises and to surrender possession thereof to the plaintiff. Defendants are likewise ordered to pay One Thousand (P1,000.00) Pesos as reasonable compensation for the use of the land and Attorneys fees in the amount of Five Thousand (P5,000.00) Pesos. SO ORDERED.5 The Facts This case emanated from a complaint for Unlawful Detainer with Preliminary Injunction 6 filed by petitioner Rosa delos Reyes (petitioner) against respondents spouses Arwenia and Francisco Odones, Noemi Otales, and Gregorio Ramirez (respondents) before the MTC of Camiling, Tarlac, on July 12, 2005. The complaint alleged these material facts: 3. That [petitioner] is the owner of a parcel of land covered x x x by Transfer Certificate of Title No. 392430, of the Land Records for the Province of Tarlac, located at Pao, Camiling, Tarlac, x x x. 4. That even before the document upon which the title was based, [petitioner] has long been the owner thereof; 5. That [respondents] are staying on the said property with a house/improvements therein, with the mere tolerance of [petitioner] only without any contract whatsoever and for which there is an implied understanding to vacate upon the demand; 6. That [petitioner] previously demanded verbally upon [respondents] to vacate which they refused and for which a written notice was sent advising them to vacate the said property within fifteen (15) days from receipt of the letter to vacate x x x. 7. That the said letter was sent by registered mail on June 17, 2005, which was duly received x x x.7 In their Answer with Counterclaim,8 respondents claimed that they are the owners of the lot, having purchased the same by virtue of an Extrajudicial Succession of Estate and Sale9 dated January 29, 2004, executed by the heirs of Donata Lardizabal, the lands original owner. Respondents denied that their occupancy of the property was by virtue of petitioners tolerance.10

Respondents further argued that the basis of petitioners Transfer Certificate of Title (TCT), which is a Deed of Absolute Sale dated April 18, 1972,11 was a forgery because the purported vendors therein, Donata Lardizabal and Francisco Razalan, died on June 30, 192612 and June 5, 1971,13 respectively. Incidentally, the said TCT and Deed of Absolute Sale are the subject of a pending case for annulment of title before the RTC, Branch 68, Camiling, Tarlac.14 In a decision dated March 28, 2006, the MTC ruled in favor of petitioner, and ordered respondents to vacate the property and to pay rent for the use and occupation of the same, plus attorney's fees. Respondents appealed15 to the RTC, arguing that since the complaint failed to allege how respondents entered the property or when they erected their houses thereon, it is an improper action for unlawful detainer, and the MTC had no jurisdiction over the same.16 In its June 20, 2006 decision,17 the RTC set aside the MTCs judgment and dismissed the complaint. The RTC held that the complaint failed to aver acts constitutive of forcible entry or unlawful detainer since it did not state how entry was effected or how and when the dispossession started. Hence, the remedy should either be accion publiciana or accion reivindicatoria in the proper RTC. Aggrieved, petitioner sought recourse with the CA, asseverating that the RTC misappreciated the allegations in the complaint and that respondents were estopped from assailing the MTCs jurisdiction because they did not raise such issue in the proceedings before that court. Petitioner insisted that, as the registered owner of the lot, she has a preferential right of possession over it.18 On February 19, 2007, the CA affirmed the judgment of the RTC, adding that, as pronounced in Go, Jr. v. Court of Appeals,19 in order to justify an action for unlawful detainer, the owners permission or tolerance must be present at the beginning of the possession.20 Petitioner moved for reconsideration,21 but the motion was denied in a Resolution dated May 22, 2007.22 Hence, the instant petition23 ascribing the following errors to the CA: THE HON. COURT OF APPEALS ERRED IN APPLYING THE CASE OF GO, JR. v. COURT OF APPEALS. THE HON. COURT OF APPEALS ERRED IN HOLDING THAT THE HON. MUNICIPAL TRIAL COURT OF CAMILING, TARLAC NEVER ACQUIRED JURISDICTION OVER THE CASE. THE HON. COURT OF APPEALS ERRED IN NOT HOLDING THAT THE RESPONDENTS ARE ALREADY ESTOPPED FROM RAISING THE ISSUE OF JURISDICTION. THE HON. COURT OF APPEALS ERRED IN NOT APPLYING THE PRINCIPLE OF STARE DECISIS.24 The petition is meritorious.

Well-settled is the rule that what determines the nature of the action, as well as the court which has jurisdiction over the case, are the allegations in the complaint. In ejectment cases, the complaint should embody such statement of facts as to bring the party clearly within the class of cases for which the statutes provide a remedy, as these proceedings are summary in nature. The complaint must show enough on its face to give the court jurisdiction without resort to parol evidence.25 Unlawful detainer is an action to recover possession of real property from one who illegally withholds possession after the expiration or termination of his right to hold possession under any contract, express or implied. The possession by the defendant in unlawful detainer is originally legal but became illegal due to the expiration or termination of the right to possess.26 The proceeding is summary in nature, jurisdiction over which lies with the proper MTC or metropolitan trial court. The action must be brought up within one year from the date of last demand, and the issue in the case must be the right to physical possession. 27 A complaint sufficiently alleges a cause of action for unlawful detainer if it recites the following: 1. initially, possession of property by the defendant was by contract with or by tolerance of the plaintiff; 2. eventually, such possession became illegal upon notice by plaintiff to defendant of the termination of the latter's right of possession; 3. thereafter, the defendant remained in possession of the property and deprived the plaintiff of the enjoyment thereof; and 4. within one year from the last demand on defendant to vacate the property, the plaintiff instituted the complaint for ejectment.28 Contrary to the findings of the RTC and the CA, petitioners allegations in the complaint clearly makes out a case for unlawful detainer, essential to confer jurisdiction over the subject matter on the MTC. Petitioner alleges that she is the owner of the lot, as shown by TCT No. 392430, issued by the Registry of Deeds of Tarlac; that respondents are occupying the lot by virtue of petitioners tolerance; and that petitioner sent a letter to respondents on June 17, 2005, demanding that they vacate the property, but they failed and refused to do so. The complaint was filed on July 12, 2005, or within one year from the time the last demand to vacate was made. Firm is the rule that as long as these allegations demonstrate a cause of action for unlawful detainer, the court acquires jurisdiction over the subject matter. The CA misapplied the ruling in Go29 that tolerance must be present right from the start of possession, which possession is sought to be recovered. The CA, in affirming the RTC, likewise erroneously applied the rule that jurisdictional facts must appear on the face of the complaint for ejectment, such that when the complaint fails to faithfully aver facts constitutive of unlawful detainer, as where it does not state when and how entry was

effected, or how and when dispossession started, the remedy should either be accion publiciana or accion reivindicatoria in the proper RTC. The requirement that the complaint should aver, as jurisdictional facts, when and how entry into the property was made by the defendants applies only when the issue is the timeliness of the filing of the complaint before the MTC, and not when the jurisdiction of the MTC is assailed because the case is one for accion publiciana cognizable by the RTC.30 This is because, in forcible entry cases, the prescriptive period is counted from the date of defendants actual entry into the property; whereas, in unlawful detainer cases, it is counted from the date of the last demand to vacate. Hence, to determine whether the case was filed on time, there is a necessity to ascertain whether the complaint is one for forcible entry or for unlawful detainer; and since the main distinction between the two actions is when and how defendant entered the property, the determinative facts should be alleged in the complaint.31
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In Go, there was evidence that the possession by the defendant was illegal at the inception and not merely tolerated as alleged in the complaint. No such similar finding is extant in this case. Further, one of the factual issues raised in Go was whether the action was filed within one (1) year from the date the last demand was made. Here, it is beyond dispute that the complaint for unlawful detainer was filed within one (1) year from the date the demand letter was sent on June 17, 2005. Based on the foregoing, the MTC validly acquired jurisdiction over the complaint and we agree with its conclusion that petitioner is entitled to the physical possession of the lot, she having been able to prove by preponderance of evidence, through the TCT registered in her name, that she is entitled to possession of the property as owner. The countervailing evidence presented by respondents that sought to dispute the authenticity of petitioners TCT cannot be given weight in this case. Settled is the rule that the validity of a certificate of title cannot be attacked in an action for ejectment.32 This notwithstanding, the determination made herein as regards petitioners ownership of the lot by virtue of TCT No. 392430 is only prima facie and only for purposes of resolving the issue of physical possession. These pronouncements are without prejudice to the case of annulment of the deed of sale and TCT filed by respondents against petitioner. 33 Lastly, these pronouncements are not binding on respondents Noemi Otales and Gregorio Ramirez over whose persons no jurisdiction was acquired by the MTC.34 WHEREFORE, the petition is GRANTED. The February 19, 2007 Decision and the May 22, 2007 Resolution of the Court of Appeals are hereby REVERSED and SET ASIDE. The March 28, 2006 decision of the Municipal Trial Court of Camiling, Tarlac, is REINSTATED and AFFIRMED. SO ORDERED. ANTONIO EDUARDO B. NACHURA Associate Justice WE CONCUR:

ANTONIO T. CARPIO Associate Justice Chairperson ARTURO D. BRION* Associate Justice DIOSDADO M. PERALTA Associate Justice

ROBERTO A. ABAD Associate Justice ATTESTATION I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division. ANTONIO T. CARPIO Associate Justice Chairperson, Second Division CERTIFICATION Pursuant to Section 13, Article VIII of the Constitution and the Division Chairperson's Attestation, I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division. RENATO C. CORONA Chief Justice

Republic of the Philippines SUPREME COURT Manila FIRST DIVISION G.R. No. 159710 September 30, 2009

CARMEN A. BLAS, Petitioner, vs. SPOUSES EDUARDO and SALUD GALAPON, Respondents. DECISION BERSAMIN, J.:

By petition for review on certiorari, the petitioner appeals the April 30, 2002 decision and the September 1, 2003 resolution of the Court of Appeals (CA) in C.A.-G.R. SP No. 49535, affirming the decision of the Office of the President (OP) that awarded in equal shares to the petitioner and the respondents the 50-square meter lot on which ZIP Tag Structure No. 86313 stood. Antecedents In pursuit of the urban land reform program of the Government under Presidential Decree No. 1517,1Proclamation No. 1893,2 and National Housing Authority (NHA) Circular No. 13,3 the NHA conducted in 1987 the Zonal Improvement Program (ZIP) census and tagging of structures as pre-qualifying requisites for determining the potential lot beneficiaries in the Peafrancia ZIP zone in Paco, Manila. In the census, the petitioner was determined to be an absentee structure owner of the dwelling unit tagged as Structure No. 86-313,4 while respondent Eduardo Galapon and three others, namely Carlos Menodiado, Martin Nobleza and Buenaventura A. Zapanta, were censused to be the renters of the petitioner in the structure. The petitioner, then a 78-year old widow living in her son's dwelling unit tagged as Structure No. 86-305, had been renting Structure No. 86-313 out as a source of income. NHA Circular No. 13 disqualified any absentee or uncensused structure owner from owning a lot within a ZIP zone. Alarmed that she might be disqualified to own the 50-square meter lot located at Lot 12, Block 2, Peafrancia ZIP zone where Structure No. 86-313 stood, the petitioner filed a petition for change of status from absentee structure owner to residing structure owner with the Awards and Arbitration Committee (AAC) of NHA. The Ruling of the NHA The AAC recommended the approval of the petitioner's petition for change of status. Aggrieved, respondent Spouses Eduardo and Salud Galapon appealed the recommendation of the AAC. The NHA gave due course to the appeal and ultimately awarded the 50-square meter lot to them on January 30, 1996,5stating: Records show the following: 1. During the 1987 census survey of the project, you were censused as absentee owner of the structure with Tag No. 86-313 while Eduardo Galapon, Jr., Carlos Menodiado, Martin Nobleza and Buenaventura A. Zapanta were censused as your renters. 2. Although you have not left the project prior to, during and after the 1987 census survey, you were not found to be residing at the structure with Tag No. 86-313, allegedly owned by your daughter, Fe Blas. 3. Your daughter Fe Blas, is forty (40) years old, single and physically disabled making her dependent on you for physical and financial support.

4. Despite the foregoing facts, the Awards and Arbitration Committee recommended the approval of your request for change of status and the award in your favor of 50.0 sq. m. portion, more or less of Lot 12 Block 2. 5. On September 1, 1995, the District Manager, in an answer to our query, informed our Legal Department of the following: 4. The Civil Status of Fe Blas, 40 years old, is single. 5. Mrs Carmen Blas do not have any personal belongings nor does she maintain her own room in the contested structure. She is renting out the subject structure to renters, Carlos Menodiado, Eduardo Galapon Jr., Martin Nobleza and Buenaventura Zapanta at the time of the census to augment her income for old age and medicine." 6. The census masterlist provided by the project office indicates that you were censused as absentee owner of the structure with Tag No. 86-313 with remarks which is owned by your son, Rodrigo Blas. He is also an absentee structure owner. The abode date contradicts findings of the AAC that you lived with your daughter, Fe Blas in the structure with Tag No. 86-274. 7. You maintain the structure with Tag No. 83-313 not as your residence but for purely commercial purposes by renting it out. In view of all the foregoing, your petition for change of census status from absentee structure owner to residing structure owner and the award of 50.0 sq. m. portion, more or less, of Lot 12 Blk. 2 is hereby DENIED. The petitioner elevated for review the NHA decision to the OP, which docketed her appeal as OP Case No. 96-E-6455. In the meantime, the petitioner filed an ejectment action against the respondents on October 18, 1996. She obtained a favorable judgment. After she was issued a writ of execution, the respondents voluntarily vacated the structure on November 17, 1996. Ruling of the OP On October 13, 1997, the OP found the petitioner and the respondents to be the longstanding bona fide qualified applicants and awarded the disputed lot and the structure to both of them in equal shares,6 viz: WHEREFORE, premises considered, the appealed letter-decision of the NHA General Manager Mariano Pineda, dated January 30, 1996 is hereby SET ASIDE, and another one entered, dividing the area into two equal parts as much as possible, and allocating the same to appellant and appellees in the manner indicated in the body of this decision. SO ORDERED.

Both parties sought reconsideration of the OP decision. The petitioner's motion was not acted upon by the OP while that of the respondents was denied for being filed out of time. On August 13, 1998, the respondents, through their representative, Prospero M. de la Torre, wrote a letter seeking reconsideration to then Chief Presidential Legal Counsel Harriet O. Demetriou. In response, the OP issued a resolution dated October 15, 1998 denying the request.7 Ruling of the CA The petitioner filed a petition for review in the CA, assailing the October 13, 1997 decision and the October 15, 1998 resolution of the OP. She prayed that the disputed lot and structure be awarded to her solely considering that the respondents had already vacated the structure even prior to the promulgation of the OP decision. On April 30, 2002, the CA denied the petition for review for lack of merit, 8 holding: The fact that she rented out her tagged structure proved that she did not live in that dwelling unit, hence, she remained under the law an absentee owner who was disqualified outright. If at all the Office of the President awarded her one-half of the disputed lot, it was out of pure beneficence of this Office and not because she had that right under the law. Moreover Blas did not allege in the petition nor prove that the Office of the President committed grave abuse of discretion, fraud or error in law in dividing the disputed lot between her and the Galapons. While she assigned as an error on the part of the Office of the President in having the said lot divided, it was only upon the ground that the Galapons have already ceased to be renters after they were ejected by the court. This nevertheless does not constitute an error for the fact remains that the Galapons were the occupants at the time of the census, and not Blas. Administrative decisions on matters within the executive jurisdiction can only be set aside on proof of grave abuse of discretion , fraud, or error of law (Itogon-Suyoc Mines, Inc. vs. Office of the President, 270 SCRA 63; Zabat vs. CA, 338 SCRA 551). Absent these badges of executive excesses, this petition must fail. The Office of the President in awarding the disputed lot to both in equal shares, did so because it was censused that the Galapons were renters of the Tagged Structure owned by Blas. As such the Galapons similarly were potential ZIP Beneficiaries who enjoyed the right of preemption and security of tenure as defined in the NHA Implementing guidelines. The fact that they were ejected in a case before Branch 25, Metropolitan Trial Court of Manila, did not render them automatically disqualified from being awardees of the ZIP project. Under the Implementing Guidelines (VIII. Ejectment, par. 1, p. 111, rollo) an ejected censused renter may only lose his status as a potential ZIP beneficiary if he does not inform the NHA or the local government unit of his address. There is nothing said and proved in the petition that spouses Galapon failed to up-date NHA of their address.9 The CA also denied the petitioners motion for reconsideration on September 1, 2003. Issues

The petitioner now seeks the review and reversal of the decision of the CA upon the following issues: (1) Whether or not the petitioner was an absentee structure owner; and (2) Whether or not the respondents were disqualified to be awardees of Lot 12, Block 2, Peafrancia ZIP Project. Ruling of the Court The petition lacks merit. I Petitioner Was an Absentee Structure Owner The ZIP is designed to upgrade the legal, environmental, social and economic conditions of slum residents within Metro Manila, in line with the spirit of the constitutional provision guaranteeing housing and a decent quality of life for every Filipino. The ownership of land by the landless is the primary objective of the ZIP.10 The Code of Policies embodied in NHA Circular No. 13 governed the implementation of the ZIP as to the classification and treatment of existing structures, the selection and qualification of intended beneficiaries, the disposition and award of fully developed lots in all ZIP zones within Metro Manila, and other related activities.11 Paragraph V of the Code of Policies laid down the rules on beneficiary selection and lot allocation,12 to wit: V. BENEFICIARY SELECTION AND LOT ALLOCATION 1. The official Zip census and tagging shall be the primary basis for determining potential program beneficiaries and structures or dwelling units in the project area. 2. Issuance of Zip tag number in no way constitutes a guarantee for Zip lot allocation. 3. Absentee censused households and all uncensused households are automatically disqualified from lot allocation. 4. Only those household included in the ZIP census and who, in addition, qualify under the provisions of the Code of Policies, are the beneficiaries of the Zonal Improvement Program. 5. A qualified censused-household is entitled to only one residential lot within the ZIP project areas of Metro Manila.

6. Documentation supporting lot allocation shall be made in the name of the qualified household head. 7. An Awards and Arbitration (AAC) shall be set up in each ZIP project area to be composed of representative each from the Authority, the local government, the barangay and the community. The AAC shall determine lot allocation amongst qualified beneficiaries, arbitrate in matters of claims and disputes, and safeguard the rights of all residents in ZIP project areas by any legal means it may consider appropriate. All decisions of the AAC shall be subject to review and approval of the General Manager of the Authority, the local Mayors, and finally the Governor of the Metropolitan Manila Commission.13 The declaration of policy in the Code of Policies stated that an absentee or uncensused structure owner was disqualified from owning a lot within the ZIP zones. 14 A careful perusal of the Code of Policies shows the following persons to be automatically disqualified, namely: (1) Absentee censused household censused household that vacates a duly tagged structure or dwelling unit and leaves the project area for a continuous period for at least six months without written notice to the NHA and the local government unit; 15 (2) Uncensused household household that is not registered in the official ZIP census;16 (3) Absentee structure owner any individual who owns a structure or dwelling unit in a ZIP project area and who has not occupied it prior to the official closure of the Census;17 and (4) Uncensused structure owner any person who owns a structure or dwelling unit not registered in the official ZIP census.18 The CA categorically declared the petitioner as an absentee structure owner disqualified to the award of the disputed lot. On the other hand, the petitioner insists that she was not an absentee structure owner because she never abandoned nor relinquished her right over Structure No. 86-313. According to her, she occupied the disputed lot since 1938 although she was not living thereat during the time of the official ZIP census. We agree with the CA. The following requisites must concur for one to be considered an absentee structure owner: one, the person must own a structure or dwelling unit within the ZIP zone; and two, the person has not occupied the structure or dwelling unit prior to the official closure of the census. The petitioner did not meet the second requisite because it was the respondents, not her, who were living in or occupying Structure No. 86-313 at the time of the official ZIP census and until they vacated the premises on November 17, 1996.

In the award of the ZIP lot allocation, the primary bases for determining the potential program beneficiaries and structures or dwelling units in the project area were the official ZIP census and tagging conducted in 1987. It was, therefore, the primordial requisite that the intended beneficiary must be the occupant of the tagged structure at the time of the official ZIP census or at the closure thereof. Otherwise, the person was considered an absentee structure owner for being absent from his usual residence or domicile. At any rate, the Code of Policies made it clear that the issuance of a ZIP tag number to a structure did not guarantee ZIP lot allocation to the owner of the tagged structure.19 Such interpretation of the Code of Policies was in harmony with the objectives and principles underlying the program to provide adequate shelter and place of abode to the legally qualified beneficiaries. That the petitioner was the person who built Structure No. 86-313 did not necessarily mean that the lot on which the structure stood would be automatically awarded to her. Like any other beneficiary, she must first comply with the requirements imposed by the Government before being deemed entitled to the lot allocation. Unfortunately, she was not using Structure No. 86-313 as a dwelling or living quarters, but as a source of income, which only signified that she was not a homeless person whom the ZIP intended to benefit. To consider her a homelot beneficiary would be contrary to the spirit of the Code of Policies and would defeat the very object of the ZIP. II Respondents are not disqualified to be awardees of Lot 12, Block 2, Peafrancia ZIP Project The petitioner claims that the respondents were disqualified to become homelot beneficiaries because they had been evicted by virtue of the judgment rendered in the ejectment case she had filed against them; and that when they vacated Structure No. 86313, they did not inform the NHA of their present address, an omission that violated Paragraph III of the Code of Policies, which reads: III. EJECTMENT 1. A censused renter or censused rent-free occupant who has been ejected should inform the Authority and the local government of his address in order that he may not lose his status as a potential ZIP beneficiary. 2. A qualified censused structure owner who succeeds in ejecting his renter or rentfree occupant or legal grounds, may be allowed to transfer to his structure or dwelling unit, with the prior written clearance of the Authority or its duly authorized representative, as certified by the local government.20 We are not persuaded by the petitioners claims. It is undisputed that the respondents were the censused renters or occupants of Structure No. 86-313. Such status could not automatically be changed by their judicial ejectment at the petitioners instance, considering that their right to become lot beneficiaries of the ZIP was consistently recognized by the AAC, the NHA, the OP and the CA. The discretion to determine who were the qualified homelot beneficiaries belonged to the AAC, subject to the

review and approval of the NHA General Manager.21 The NHA ruling on the issue was conclusive and binding in the absence of any clear showing of any grave abuse of discretion on the part of such administrative office directly tasked to execute, implement and administer the ZIP. That such ruling was even upheld by the OP and then the CA strengthened even more the presumption of correctness in its favor. The petitioner cannot rely on the judgment rendered in the ejectment case to buttress her claim of the ownership of the structure. Neither was that judgment a valid basis for asserting a better right to the lot on which the structure stood. In ejectment cases, the only issue is the physical and material possession of the property involved, the resolution being independent of any claim of ownership made by any of the litigants. The question of ownership is, at best, merely provisionally decided, but only for the sole purpose of determining which party has the better right to the physical possession of the property.22 Indeed, the judgment in the ejectment case could only determine who between the petitioner and the respondents had a better right to possess Structure No. 86-313. It did not, as it could not, decide that the petitioner was entitled to the award of the lot, or that the respondents could not be considered as qualified beneficiaries of the ZIP.
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We further affirm the ruling of the CA to the effect that the petitioner did not substantiate her claim that the respondents had failed to inform the NHA of their present address; and that contrary to the Code of Policies, she did not allege that she now lived in her structure following her eviction of the respondents with prior written clearance from the NHA or its duly authorized representative, as verified by the City Government of Manila. The respondents, being qualified homelot beneficiaries of Lot 12, Block 2, enjoyed the right of pre-emption vis--vis Structure No. 86-313, which was a right granted to them as the censused renters of the structure to have the first option to acquire or to purchase the structure.23 WHEREFORE, we deny the petition for review on certiorari for lack of merit. The April 30, 2002 decision and the September 1, 2003 resolution in C.A.-G.R. SP No. 49535 are modified, awarding the 50-square meter portion of Lot 12, Block 2 of the Peafrancia ZIP Project on which Structure No. 86-313 stood exclusively to the respondents. Costs of suit to be paid by the petitioner. SO ORDERED. LUCAS P. BERSAMIN Associate Justice WE CONCUR: REYNATO S. PUNO Chief Justice Chairperson

RENATO C. CORONA Associate Justice

MINITA V. CHICO-NAZARIO* Associate Justice

TERESITA J. LEONARDO-DE CASTRO Associate Justice CERTIFICATION Pursuant to Section 13, Article VIII of the Constitution, I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division. REYNATO S. PUNO Chief Justice

Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. 163495 May 8, 2009

SAMUEL MALABANAN, Petitioners, vs. RURAL BANK OF CABUYAO, INC., Respondent. DECISION TINGA, J.: This petition for review on certiorari1 seeks to set aside the decision2 of the Court of Appeals dated 7 May 2004 in CA-G.R. SP No. 82223 which sustained the judgment3 of the Regional Trial Court (RTC), Branch 55, Calamba City. The RTC, in the exercise of its appellate jurisdiction, reversed an earlier decision of the Municipal Trial Court in Cities4 (MTCC) and ordered the ejectment of herein petitioner. The following facts are uncontroverted. Samuel Malabanan (petitioner) was indebted to the Rural Bank of Cabuyao (respondent) in the amount ofP5,000,000.00. To secure the payment of said loan, petitioner executed a Real Estate Mortgage5 (REM) on 18 April 1996 in favor of respondent over a parcel of land in Calamba, Laguna, with an area of 1,021 square meters, covered by Transfer Certificate of Title (TCT) No. 255916.6

When petitioner failed to settle his loan, he executed a dacion en pago over the mortgaged property in favor of respondent on 12 November 2001.7 By virtue thereof, the transfer of registration of said property was effected and TCT No. T-4935068 was subsequently issued in respondents name. For refusal of petitioner to surrender possession of subject property despite repeated demands, respondent filed a complaint for unlawful detainer before the MTCC.9 It also prayed for the award of reasonable rental amounting to P100,000.00; anotherP100,000.00 as exemplary damages, and P300,000.00 as attorneys fees.10 In his Answer,11 petitioner denied having executed a dacion en pago, stated that he never appeared before the Notary Public, and that its Executive Vice-President/General Manager, Renato Delfino, who purportedly represented respondent, was no longer officially connected with the latter since 1999. He also made a counterclaim for damages.12 Prior to the filing of the ejectment case, however, petitioner had already filed an action for an Annulment of the dacion en pago and TCT No. T-493506 and reconveyance before Branch 35, RTC-Calamba.13 In the preliminary conference held on 18 July 2003, the parties agreed and stipulated on the following facts: 1. The execution of the real estate mortgage in favor of herein plaintiff executed by defendant Samuel Malabanan. 2. That prior to the institution of this instant case, Civil Case No. 3316-2002 for the Annulment of Dacion En Pago and Transfer Certificate of Title No. T-493506 and Reconveyance with Damages and Temporary Restraining Order and/or Injunction entitled Samuel [Malabanan] v. Rural Bank of Cabuyao Inc., Renato Delfino, Notary Public Ruben Avenido and The Register of Deeds for Calamba City, Laguna was filed on September 25, 2002. 3. That the alleged Dacion en Pago refers to TCT-T-255916. 4. The existence and receipt of the demand letter dated August 12, 2002. 14 On 8 September 2003, the MTCC dismissed the complaint, as well as the counterclaim, for lack of merit.15 The lower court noted that respondent was not able to prove that petitioners continued occupancy of the subject premises was by mere tolerance in order to sustain a cause of action for unlawful detainer.16 On appeal, the RTC reversed the MTCC decision and ordered petitioner to vacate the subject property and to pay respondent P100,000.00 for rentals and P20,000.00 as attorneys fees.17 Petitioner elevated the case to the Court of Appeals by way of Petition for Review with Urgent Prayer for Issuance of a Temporary Restraining Order and/or Writ of Preliminary Injunction.18 Petitioner imputed error on the part of the trial court in not dismissing the complaint for unlawful detainer on the ground of litis pendencia. He also faulted the RTC for not simultaneously resolving the ejectment case and the annulment of dacion en pago.

On 7 May 2004, the Fifth Division of the Court of Appeals promulgated the assailed decision affirming in toto the RTC ruling.19 In the present petition, petitioner raises substantially the same issues brought before the Court of Appeals, which can be summarized into two: (1) whether the complaint for unlawful detainer can be dismissed on ground of litis pendencia and forum shopping; and (2) whether the allegations in the complaint make out a case of unlawful detainer. 20 Petitioner asserts that there is a pending case for annulment of dacion en pago and TCT No. T-493506 before the RTC in which the issue to be resolved also involves possession as in this case. The allegations and the evidence to be presented in both complaints are identical. Hence, the instant complaint for unlawful detainer must be dismissed on grounds of litis pendencia and forum shopping.21 Assuming without conceding that the complaint cannot be dismissed, petitioner urges at least the suspension of the ejectment proceedings pending resolution of the annulment case. The Court of Appeals squarely addressed this issue, viz: It is established that in ejectment cases, the only issue for resolution is who is entitled to the physical possession or material possession of the property involved, independent of any claim of ownership set forth by any of the party-litigants. While it is true that both parties raised the issue of ownership over the subject property, yet it is emphasized that in ejectment cases, even if the question of ownership is raised in the pleadings, the court may pass upon such issue but only to determine the question of possession especially if the former is inseparably linked with the latter, but such determination of ownership is not clothed with finality and neither will it affect ownership of the property nor constitute a binding and conclusive adjudication on the merits with respect to the issue of ownership. Therefore, the judgment in the present case would not amount to res judicata in the other case which is the pending Annulment of Dacion En Pago. 22 Forum-shopping exists where the elements of litis pendentia are present, namely: (a) identity of parties or at least such as representing the same interests in both actions; (b) identity of rights asserted and reliefs prayed for, the relief being founded on the same facts; and (c) the identity in the two cases should be such that the judgment that may be rendered in one would, regardless of which party is successful, amounts to res judicata in the other. 23 Petitioner and respondent are the same parties in the annulment and ejectment cases. The issue of ownership was likewise being contended, with same set of evidence being presented in both cases. However, it cannot be inferred that a judgment in the ejectment case would amount to res judicata in the annulment case, and vice-versa. This issue is hardly a novel one. It has been laid to rest by heaps of cases iterating the principle that a judgment rendered in an ejectment case shall not bar an action between the same parties respecting title to the land or building nor shall it be conclusive as to the facts therein found in a case between the same parties upon a different cause of action involving possession.24

It bears emphasizing that in ejectment suits, the only issue for resolution is the physical or material possession of the property involved, independent of any claim of ownership by any of the party litigants. However, the issue of ownership may be provisionally ruled upon for the sole purpose of determining who is entitled to possession de facto.25 Therefore, the provisional determination of ownership in the ejectment case cannot be clothed with finality. Corollarily, the incidental issue of whether a pending action for annulment would abate an ejectment suit must be resolved in the negative. A pending action involving ownership of the same property does not bar the filing or consideration of an ejectment suit, nor suspend the proceedings. This is so because an ejectment case is simply designed to summarily restore physical possession of a piece of land or building to one who has been illegally or forcibly deprived thereof, without prejudice to the settlement of the parties' opposing claims of juridical possession in appropriate proceedings.26 The crux of the controversy centers on the propriety of the unlawful detainer suit. In unlawful detainer, one unlawfully withholds possession thereof after the expiration or termination of his right to hold possession under any contract, express or implied.27 In such case, the possession was originally lawful but became unlawful by the expiration or termination of the right to possess; hence, the issue of rightful possession is decisive for, in such action, the defendant is in actual possession and the plaintiffs cause of action is the termination of the defendants right to continue in possession.28 The pertinent allegations in the complaint read: 4. That on various occasion, defendant Samuel Malabanan obtained loans from plaintiff in the total principal amount of FIVE MILLION PESOS (P5,000,000.00) Philippine currency using as collateral that parcel of land located in Bo. Parian, Calamba, Laguna consisting of 1,021 sq. m. including all the improvements found therein and covered by TCT No. T-265916 of the Registry of Deeds of Calamba, Laguna (hereinafter referred to as "subject property" for brevity). x x x 5. Unfortunately, however, defendant Malabanan failed to pay his loans with the plaintiff; 6. On November [12, 2001], to settle his loans with plaintiff, defendant Samuel Malabanan executed a dacion en pago (deed of assignment in payment of debt). x x x 7. Through the said dacion en pago, plaintiff was able to effect [the] transfer of registration of the subject property in its name on [February 14, 2002] as evidenced by TCT No. T-493506 issued by the Registry of Deeds of Calamba, Laguna in its name. x x x 8. Under the circumstances, plaintiff is entitled to the immediate possession of the subject property;

9. But through tolerance, plaintiff allowed defendant Malabanan to remain in the subject property without requiring him to pay any rentals; 10. However, when the need of the plaintiff for the subject property arose, plaintiff has demanded unto defendant Malabanan to peacefully surrender the possession of the subject property, the last of which was received by defendant on September [1, 2002] sent by [the] undersigned counsel which was received by defendant on September 16, 2002. x x x xxx 12. Defendant Malabanan has been unlawfully detaining the subject property from plaintiff and defendant Malabanan and all persons acting his authority should be ejected therefrom and possession thereof surrendered to plaintiff; x x x29 An examination of the complaint reveals that initially, petitioner exercised possession over the subject property as the registered owner. He executed a real estate mortgage in favor of respondent and for his failure to pay his obligation, he purportedly executed a dacion en pago, whereby ownership over the property was transferred to respondent. Subsequently, a new TCT was issued in respondents name. Thus, respondent became entitled to possession. Petitioner insists that the allegations in the complaint were not supported by sufficient evidence to justify the remedy of an action for unlawful detainer. He challenges the allegations of how respondent came "to possess" the subject property and anchors his claim on the alleged simulated dacion en pago. To prove fraud in the execution of said deed, petitioner points out that the subject property is formerly covered by TCT No. T265916 in his name while the subject of the dacion en pago refers to TCT No. T-255916, registered in the name of Ledesco Development Corporation.30 While petitioner harps on the supposed variance between the two certificate of titles, he failed to explain why the supposed erroneous TCT No. T-255916 covers the property subject of the Real Estate Mortgage, which he himself admitted to having executed. To bolster the reasonable conclusion that indeed it was a mere typographical error, the technical description of the mortgaged property clearly refers to the lot situated in Calamba, Laguna. In dismissing petitioners contention, the trial court observed that the variance in the TCT numbers appearing on the title and the deed may be attributed to a typographical oversight because the technical descriptions of the properties covered by TCT No. T-255916 and TCT No. T-265916 would clearly show that the properties covered therein refer to one and the same property, which is the property in dispute.31 The appellate court added that what is controlling is the technical description of the property. Moreover, petitioner admitted having executed the Real Estate Mortgage which also bears the erroneous TCT No. T-255916.32

Petitioner accuses respondent of employing fraudulent means and pretenses in procuring his signature in the said deed as he never consented to its execution. He further denies appearing before the Notary Public and that the Community Tax Certificate Number appearing on the document was not his. It can readily be inferred that petitioner is primarily asserting his ownership over the subject property. It should be reiterated, at the point of being repetitive, that in an unlawful detainer case, the only issue to be resolved is who between the parties is entitled to the physical or material possession of the property in dispute. The trial court and the appellate court were one in saying that respondent had overwhelmingly established its right of possession by virtue of the dacion en pago and the torrens title.
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At this juncture, it may not be amiss to note that in a petition for review under Rule 45 of the Rules of Court, only questions of law may be raised for the simple reason that the Court is not a trier of facts. It is not duty-bound to analyze and weigh again the evidence considered in the proceedings below. The factual findings of the trial court, especially when adopted and affirmed by the Court of Appeals as in the present case, are final and conclusive and may not be reviewed on appeal.33 In the case at bar, both the trial court and the appellate court lent more credence to the validity of the dacion en pago and respondents title. This determination, however, is regarded merely as provisional. It is a settled doctrine that courts in ejectment cases may determine questions of ownership whenever necessary to decide the question of possession.34 In any case, we sustain the finding that the respondents have the better right to possess the subject property. Well-established is the rule that if possession is by tolerance as has been alleged in the complaint such possession becomes illegal upon demand to vacate, with the possessor refusing to comply with such demand.35
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Going over the allegations in the complaint, it is clear that respondents action for unlawful detainer is based on petitioners possession by mere tolerance. From the time the title to the property was transferred in the name of respondent, petitioners possession was converted into one by mere tolerance of the owner. The forbearance ceased when respondent made a demand on petitioner to vacate the lot. Thenceforth, petitioners occupancy had become unlawful. A person who occupies the land of another with the latters tolerance or permission, without any contract between them, is necessarily bound by an implied promise that he will vacate upon demand, failing which a summary action for ejectment is the proper remedy against him.36 There is no doubt that the plaintiff in an ejectment case is entitled to damages caused by his loss of the use and possession of the premises. Damages in the context of Section 17, Rule 70 of the 1997 Rules of Civil Procedure is limited to "rent" or fair rental value or the reasonable compensation for the use and occupation of the property.37

Respondent, as the plaintiff in the complaint for unlawful detainer brought before the MTCC, had sought therein the award of P100,000.00 a month as reasonable rental.38 Before this Court, petitioner asserts that respondent had failed to prove his claim that the reasonable rental value is P100,000.00 a month.39 Respondent, as the plaintiff in the complaint before the MTCC, had the burden to adduce evidence to prove the fair rental value or reasonable compensation for the subject property,40 but it failed to discharge its burden. All that it did was to make through his counsel a self-serving and uncorroborated assertion in the unverified Position Paper41 before the MCTC that "(g)iven the size and strategic location of the subject property the reasonable rentals" for its use "can be safely estimated at P100,000.00 a month."42 Neither did the trial court make any ratiocination when it granted the rentals rentals prayed for by respondent. WHEREFORE, premises considered, the Petition is GRANTED IN PART. The Decision dated 7 May 2004 of the Court of Appeals is AFFIRMED WITH MODIFICATION in that its affirmation of the Regional Trial Courts award of reasonable rentals in favor of respondent is DELETED and SET ASIDE, SO ORDERED. DANTE O. TINGA Associate Justice WE CONCUR: CONCHITA CARPIO MORALES* Associate Justice Acting Chairperson PRESBITERO J. VELASCO, JR. Associate Justice TERESITA J. LEONARDO-DE CASTRO** Associate Justice

ARTURO D. BRION Associate Justice ATTESTATION I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division. CONCHITA CARPIO MORALES Associate Justice Acting Chairperson, Second Division CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairpersons Attestation, it is hereby certified that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division. REYNATO S. PUNO Chief Justice

Republic of the Philippines SUPREME COURT Manila THIRD DIVISION G.R. No. 176413 November 25, 2009

SPOUSES DANILO T. SAMONTE and ROSALINDA N. SAMONTE, Petitioners, vs. CENTURY SAVINGS BANK, Respondent. DECISION NACHURA, J.: This is a petition for review on certiorari of the Court of Appeals (CA) Decision1 dated September 27, 2006 and Resolution2 dated January 24, 2007 in CA-G.R. SP No. 86875. The assailed decision affirmed in toto the Regional Trial Court (RTC)3 Decision4 dated September 17, 2004 in Civil Case No. 04-913, which in turn affirmed the Metropolitan Trial Court (MeTC)5 Decision6 dated May 6, 2004 in Civil Case No. 79002 for Ejectment. The facts are as follows: Petitioners Danilo T. Samonte and Rosalinda N. Samonte obtained a loan amounting to P1,500,000.00 from respondent Century Savings Bank secured by a Real Estate Mortgage7 over a property located at 7142 M. Ocampo Street, Pio del Pilar, Makati City. For petitioners failure to pay the obligation, the mortgage was extrajudicially foreclosed on December 9, 1999 and the property was sold at public auction and was eventually awarded to respondent as the highest bidder.8 Having failed to redeem the property, petitioners entered into a Contract of Lease 9 with respondent, wherein the former agreed to pay the latter a monthly rental of P10,000.00 for and in consideration of their continuing occupation of the subject property from January 16, 2001-January 16, 2002. Petitioners further acknowledged respondents valid and legal title to enter into the contract as absolute owner of the property in question. 10

On March 28, 2001, respondent consolidated its ownership over the property, which led to the cancellation of petitioners title and the issuance of a new one in respondents name. 11 Of the agreed monthly rentals, petitioners only paid a total amount of P40,000.00. On April 4, 2002, respondent sent a letter12 to petitioners demanding that the latter pay their unpaid rentals and vacate the leased premises. Petitioners, however, refused to heed the demand. Hence, the complaint for ejectment docketed as Civil Case No. 79002. In their Answer,13 petitioners admitted having entered into the contract of lease but claimed that it was void, since their consent was vitiated by mistake and they were made to believe that it was a requirement for the loan-restructuring agreement with the bank. To justify their failure to pay the rents and to vacate the premises, petitioners insisted on the nullity of the foreclosure proceedings. Petitioners had, in fact, commenced an action for the nullification of the foreclosure proceedings docketed as Civil Case No. 01-1564.14 On May 6, 2004, the MeTC rendered a decision in favor of respondent, the dispositive portion of which reads: WHEREFORE, judgment is rendered in favor of plaintiff Century Savings Bank Corporation. Defendants spouses Danilo T. Samonte and Rosalinda N. Samonte and all persons unlawfully withholding subject property located at 7142 M. Ocampo Street, Pio Del Pilar, Makati City, and/or claiming rights under them are directed, as follows: 1. To immediately vacate subject property and peacefully surrender possession thereof to plaintiff; 2. To pay plaintiff, jointly and severally, P80,000.00 as monthly rental in arrears plus P10,000.00 per month as reasonable compensation for their continued use and occupancy of subject premises starting 16 January 2002 until they actually vacate and surrender possession to it; 3. To pay plaintiff, jointly and severally, P10,000.00 as Attorneys fees; and 4. To pay plaintiff, jointly and severally, the cost of suits. SO ORDERED.15 On appeal, the RTC affirmed the MeTC decision, thus: WHEREFORE, premises considered, the decision of the Metropolitan Trial Court, Branch 67, Makati City in Civil Case No. 79002 dated May 6, 2004 is hereby AFFIRMED IN TOTO with costs against the defendants-appellants. SO ORDERED.16

Aggrieved, petitioners elevated the matter to the CA. They insisted that the ejectment case should await the result of the separate action they instituted for the nullification of the foreclosure proceedings. They likewise contended that should the court declare respondent entitled to the possession of the subject property, the same should be provisional and subject to the courts decision in the nullification case. Lastly, they questioned the award of back rentals as they were allegedly awarded based on incorrect computation.17 On September 27, 2006, the CA rendered the assailed decision affirming the RTC decision. The appellate court concluded that the nullification of foreclosure proceedings is not a valid reason to frustrate the summary remedy of ejectment. The CA also refused to make a declaration that respondents right to possess the subject property would depend on the outcome of the nullification case as it would be in the nature of a conditional judgment which is void. The CA thus upheld respondents better right to possess the property subject matter of this controversy. Hence, the instant petition. The only issue for determination is whether the instant ejectment case should be suspended pending the resolution of the action for nullity of foreclosure. We answer in the negative. As a general rule, an ejectment suit cannot be abated or suspended by the mere filing of another action raising ownership of the property as an issue.18 The Court has, in fact, affirmed this rule in the following precedents: 1. Injunction suits instituted in the RTC by defendants in ejectment actions in the municipal trial courts or other courts of the first level (Nacorda v. Yatco, 17 SCRA 920 [1966]) do not abate the latter; and neither do proceedings on consignation of rentals (Lim Si v. Lim, 98 Phil. 868 [1956], citing Pue, et al. v. Gonzales, 87 Phil. 81 [1950]). 2. An "accion publiciana" does not suspend an ejectment suit against the plaintiff in the former (Ramirez v. Bleza, 106 SCRA 187 [1981]). 3. A "writ of possession case" where ownership is concededly the principal issue before the Regional Trial Court does not preclude nor bar the execution of the judgment in an unlawful detainer suit where the only issue involved is the material possession or possession de facto of the premises (Heirs of F. Guballa, Sr. v. C.A., et al.; etc., 168 SCRA 518 [1988]). 4. An action for quieting of title to property is not a bar to an ejectment suit involving the same property (Quimpo v. de la Victoria, 46 SCRA 139 [1972]). 5. Suits for specific performance with damages do not affect ejectment actions (e.g., to compel renewal of a lease contract) (Desamito v. Cuyegkeng, 18 SCRA 1184 [1966]; Rosales v. CFI, 154 SCRA 153 [1987]; Commander Realty, Inc. v. C.A., 161 SCRA 264 [1988]).

6. An action for reformation of instrument (e.g., from deed of absolute sale to one of sale with pacto de retro) does not suspend an ejectment suit between the same parties (Judith v. Abragan, 66 SCRA 600 [1975]). 7. An action for reconveyance of property or "accion reivindicatoria" also has no effect on ejectment suits regarding the same property (Del Rosario v. Jimenez, 8 SCRA 549 [1963]; Salinas v. Navarro, 126 SCRA 167; De la Cruz v. C.A., 133 SCRA 520 [1984]); Drilon v. Gaurana, 149 SCRA 352 [1987]; Ching v. Malaya, 153 SCRA 412 [1987]; Philippine Feeds Milling Co., Inc. v. C.A., 174 SCRA 108; Dante v. Sison, 174 SCRA 517 [1989]; Guzman v. C.A. [annulment of sale and reconveyance], 177 SCRA 604 [1989]; Demamay v. C.A., 186 SCRA 608 [1990]; Leopoldo Sy v. C.A., et al., [annulment of sale and reconveyance], G.R. No. 95818, Aug. 2, 1991). 8. Neither do suits for annulment of sale, or title, or document affecting property operate to abate ejectment actions respecting the same property (Salinas v. Navarro [annulment of deed of sale with assumption of mortgage and/or to declare the same an equitable mortgage], 126 SCRA 167 [1983]; Ang Ping v. RTC [annulment of sale and title], 154 SCRA 153 [1987]; Caparros v. C.A. [annulment of title], 170 SCRA 758 [1989]; Dante v. Sison [annulment of sale with damages], 174 SCRA 517; Galgala v. Benguet Consolidated, Inc. [annulment of document], 177 SCRA 288 [1989]).19 Only in rare instances is suspension allowed to await the outcome of a pending civil action. In Vda. de Legaspi v. Avendao,20 and Amagan v. Marayag,21 we ordered the suspension of the ejectment proceedings on considerations of equity. We explained that the ejectment of petitioners therein would mean a demolition of their house and would create confusion, disturbance, inconvenience, and expense.22 Needlessly, the court would be wasting much time and effort by proceeding to a stage wherein the outcome would at best be temporary but the result of enforcement would be permanent, unjust and probably irreparable. 23 In the present case, petitioners were the previous owners of the subject property. However, they lost their right over the property in an extrajudicial foreclosure of mortgage wherein respondent emerged as the highest bidder. Petitioners, however, remained in possession thereof as lessees in a contract of lease executed after the expiration of the redemption period. For failure to pay the stipulated rents, respondent commenced an action for ejectment. Petitioners, in turn, instituted a case for the nullification of the foreclosure proceedings involving the same property. When the ejectment case reached the CA, petitioners sought the suspension of the proceedings solely by reason of the pendency of the nullification case. Given these factual antecedents, the instant case hardly falls within the exception cited in Vda. de Legaspi and Amagan as the resolution of the ejectment suit will not result in the demolition of the leased premises.24 Verily, petitioners failed to show "strong reasons of equity" to sustain the suspension or dismissal of the ejectment case. Faced with the same scenario on which the general rule is founded, and finding no reason to deviate therefrom, the Court adheres to settled jurisprudence that suits involving ownership may not be successfully pleaded in abatement of an action for ejectment.25 This rule is not without good

reason. If the rule were otherwise, ejectment cases could easily be frustrated through the simple expedient of filing an action contesting the ownership over the property subject of the controversy. This would render nugatory the underlying philosophy of the summary remedy of ejectment which is to prevent criminal disorder and breaches of the peace and to discourage those who, believing themselves entitled to the possession of the property, resort to force rather than to some appropriate action in court to assert their claims. 26 We are not unmindful of the afflictive consequences that will be suffered by petitioners if the ejectment is ordered, only to be reinstated later if they eventually win the nullification of the foreclosure case. However, respondent will also suffer an injustice if denied the remedy of ejectment, resort to which is not only allowed but, in fact, encouraged by law. 27 We would like to stress that unlawful detainer and forcible entry suits under Rule 70 of the Rules of Court are designed to summarily restore physical possession of a piece of land or building to one who has been illegally or forcibly deprived thereof, without prejudice to the settlement of the parties opposing claims of juridical possession in appropriate proceedings.28 These actions are intended to avoid disruption of public order by those who would take the law in their hands purportedly to enforce their claimed right of possession.29 In these cases, the issue is pure physical or de facto possession, and pronouncements made on questions of ownership are provisional in nature. 30 The provisional determination of ownership in the ejectment case cannot be clothed with finality.31 In any case, we sustain the finding that respondent has the better right to possess the subject property. The Contract of Lease executed by petitioners and respondent remains valid. It is undisputed that petitioners failed to comply with the terms thereof by their failure to pay the stipulated rent. As lessor of the subject property, respondent has the right to demand that petitioners pay their unpaid obligations and, in case of their failure, that they vacate the premises. Considering that the lease contract has long expired, with more reason should respondent be allowed to recover the subject property. There is also no doubt that the plaintiff in the ejectment case (respondent herein) is entitled to damages caused by the loss of the use and possession of the premises. 32 We quote with approval the appellate courts findings, viz.: On the matter of whether the court a quo erred in the computation of the amounts awarded, representing back rentals and reasonable value for the use and occupation of the premises, We rule in the negative. The award of back rentals amounting to Php80,000.00 and Php10,000.00 as reasonable compensation for the continued use and occupation of the property is proper. As stated in the decision of the court a quo, to which We agree, the monthly rentals in arrears amounted to Php80,000.00 as of 16 January 2002, the date of expiration of the contract of lease. Petitioners were only able to pay Php40,000.00, equivalent to four-month rentals at the rate of Php10,000.00 per month. It would not be in accord with the law if petitioners are not also made to pay Php10,000.00 commencing 16 January 2002 until they finally vacate and surrender possession of the property to respondent. The latter amount

represents the reasonable value for the continued use and occupancy of the property after the lease contract has expired. Inevitably, no error can be imputed to the court a quo when it ordered petitioners to pay respondent jointly and severally the amount of Php80,000.00 as monthly rental in arrears plus Php10,000.00 per month as reasonable compensation for the continued use and occupancy of the property starting January 16, 2002 until they actually vacate and surrender possession of the property to respondent.33 WHEREFORE, premises considered, the petition is DENIED for lack of merit. The Court of Appeals Decision dated September 27, 2006 and Resolution dated January 24, 2007 in CAG.R. SP No. 86875 are AFFIRMED. SO ORDERED. ANTONIO EDUARDO B. NACHURA Associate Justice WE CONCUR: RENATO C. CORONA Associate Justice Chairperson MINITA V. CHICO-NAZARIO Associate Justice PRESBITERO J. VELASCO, JR. Associate Justice

DIOSDADO M. PERALTA Associate Justice ATTESTATION I attest that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Courts Division. RENATO C. CORONA Associate Justice Chairperson, Third Division CERTIFICATION Pursuant to Section 13, Article VIII of the Constitution and the Division Chairperson's Attestation, I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court s Division.

REYNATO S. PUNO Chief Justice

Republic of the Philippines SUPREME COURT Manila THIRD DIVISION G.R. No. 163053 November 25, 2009

AGRIFINA PANGANIBAN, Petitioner, vs. SPOUSES ROMEO ROLDAN and ELIZABETH ROLDAN, Respondents. DECISION NACHURA, J.: This is a petition for review on certiorari of the decision1 of the Court of Appeals (CA) dated March 31, 2004 in CA-G.R. SP No. 67696 and its resolution denying the motion for reconsideration thereof. The facts are as follows: On April 7, 1998, petitioner Agrifina Panganiban filed a complaint against herein respondents, spouses Romeo Roldan and Elizabeth Roldan, for recovery of possession and damages in the Municipal Trial Court (MTC), Third Judicial Region, Subic, Zamabales. She alleged that she was the registered owner of a parcel of land with an area of 271 square meters, covered by Original Certificate of Title (OCT) No. P-12388, located in Ilwas, Subic, Zambales; that sometime in 1984, respondents entered the land and built a small hut on a portion thereof without her knowledge and consent; that respondents asked permission if they could temporarily reside thereat, since they came from Bicol and had no place to stay in Zambales; that she took pity on them and agreed on the condition that they would vacate upon demand; that in 1997, petitioner asked respondents to vacate the land, as she would be putting up a fence thereon; that respondents, who were occupying an area measuring about 103 sq m, refused to vacate; that because of their obstinate refusal to vacate, she suffered mental anxiety; and that for being deprived of the use and enjoyment of the land, respondents should be required to pay a rental of P500.00 per month from December 1997 until they vacate. In their defense, respondents denied that they entered into an agreement with petitioner allowing them to stay on the land. They claimed that they had been occupying the lot as caretakers of the heirs of Concepcion dela Paz-Lesaca since 1973, as evidenced by a Kasunduan. They alleged that the lot was part of the land covered by Transfer Certificate of

Title (TCT) No. 14884 issued in 1972, registered in the name of Concepcion dela PazLesaca; and that in December 1997, two (2) men who were barangay officials went to the premises in order to survey the lot for purposes of putting up a fence. Respondents thus objected to the intrusion knowing that petitioner had no right or personality to eject them from the land. Respondents averred that petitioner was merely a neighbor and that they were surprised to find out that she was able to secure a new title over their portion of the land. On March 23, 2001, the MTC rendered judgment2 in favor of petitioner. The MTC did not admit respondents evidence presented during the trial consisting of: (1) the TCT of the subject property registered under the name of Concepcion dela Paz-Lesaca; and (2) the Kasunduan purportedly executed by Concepcion dela Paz-Lesaca allowing Spouses Roldan to stay on the land on the ground that these matters were not raised in their Answer or in their Pre-trial Brief. The MTC discerned a "variance of the allegation and proof," and thus considered the evidence as no proof at all.3 The MTC stated that in such situation, the remedy was to amend the Answer to conform to the evidence, and this, respondents failed to do. The dispositive portion of the decision, as amended on June 1, 2001 to include payment of rentals, reads as follows: WHEREFORE, judgment is hereby rendered in favor of the plaintiff and against the defendants: 1. For the defendants to vacate the premises; 2. For the defendants to pay the plaintiff the amount of P20,000.00 as rental from the date of the filing of the complaint until March 2001 and to pay the additional amount of P500.00 every month thereafter until the defendants vacate and surrender the premises to the plaintiff; 3. To pay attorneys fees in the amount of P10,000.00; and 4. To pay the costs of the proceedings. SO ORDERED.4 On appeal, the Regional Trial Court of Olongapo City affirmed the MTC Decision in toto. It, likewise, disregarded the Kasunduan and the TCT, since they were not raised as a defense in respondents answer, and the same could not be raised for the first time on appeal.5 Aggrieved, respondents went up to the CA. On March 31, 2004, the CA reversed the decision and found for respondents. It admitted the document denominated as Kasunduan, which provided that respondents were allowed to stay on the subject land by its owners, heirs of Concepcion dela Paz-Lesaca, as well as TCT No. T-14882 issued in 1972 in the name of Concepcion dela Paz-Lesaca. The CA found that the title from which respondents derived their right of possession was an earlier title, thus, superior to petitioners OCT P-12388, which was only issued on June 22, 19946 by virtue of a free patent application. Accordingly, the appellate court ruled that

respondents right of possession must prevail. The dispositive portion of the assailed decision reads as follows: WHEREFORE, the Petition is hereby GRANTED. The Decision of the Regional Trial Court of Olongapo City, Branch 72, is hereby ANNULED AND SET ASIDE. Appellants[] right to possess the disputed land is hereby recognized. SO ORDERED.7 Thus, the instant petition where petitioner raises the following assignment of errors: 1. THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT THE ALLEGED TITLE OF A CERTAIN CONCEPCION DELA PAZ LESACA, NAMELY TCT NO. T-14882, AND THE DOCUMENT DENOMINATED "KASUNDUAN" SHOULD HAVE BEEN ADMITTED BY THE COURT A QUO. 2. THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT THE SAID EXCLUDED DOCUMENTS ARE FAVORABLE TO THE CAUSE OF THE RESPONDENTS AND GAVE THEM RIGHTS TO THE POSSESSION OF THE PROPERTY IN LITIGATION. 3. THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT TCT NO. T-14882 OF CONCEPCION DELA PAZ LESACA ALSO COVERS THE PROPERTY IN LITIGATION. [4.] THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT RESPONDENTS MAY NOT BE DISTURBED IN THEIR POSSESSION AND THAT ANOTHER PROCEEDING FOR QUIETING OF TITLE IS NECESSARY IN ORDER TO PROVE THAT PETITIONERS TITLE IS SUPERIOR TO THAT OF CONCEPCION DELA PAZ LESACA.8 The petition is denied. The Court finds no reversible error in the ruling of the appellate court, admitting as evidence the Kasunduan and TCT No. T-14882. We agree with the following justification of the CA: Section 5, Rule 10 of the Rules of Court provides that issues not raised by the pleadings may be tried by express or implied consent of the parties, as if they had been raised in the pleadings and the court can validly resolve them. There is express consent to the evidence on an issue not raised in the pleading when the adverse party agrees to its presentation by the other party. There is implied consent when the adverse party fails to object thereto. The general rule is that a judgment must conform to the pleading and the theory of the action under which the case is tried. But court may also rule and render judgment on the basis of the evidence before it, even though the relevant pleading has not been previously amended, so long as no surprise or prejudice to the adverse party is thereby caused and there is express or implied consent to the presentation of evidence. In fact, there is no need

to formally amend the pleadings to raise the issues because such issues are considered as if they have been in the pleadings. In the case at bench, since there was no dispute that no objection was interposed by appellee to the presentation of the evidence, the same should have been admitted by the court a quo, consonant with Section 5, Rule 10 and the rule on liberal construction under Section 2, Rule 1 of the Rules of Court.9 We have stressed that the rule on amendment need not be applied rigidly, particularly where no surprise or prejudice is caused the objecting party. Where there is a variance in defendants pleadings and the evidence adduced at the trial, the Court may treat the pleading as if it had been amended to conform to the evidence.10 In Royal Cargo Corporation v. DFS Sports Unlimited, Inc.,11 the Court stated that: The failure of a party to amend a pleading to conform to the evidence adduced during trial does not preclude adjudication by the court on the basis of such evidence which may embody new issues not raised in the pleadings. x x x Although, the pleading may not have been amended to conform to the evidence submitted during trial, judgment may nonetheless be rendered, not simply on the basis of the issues alleged but also on the issues discussed and the assertions of fact proved in the course of the trial. The court may treat the pleading as if it had been amended to conform to the evidence, although it had not been actually amended. x x x Clearly, a court may rule and render judgment on the basis of the evidence before it even though the relevant pleading had not been previously amended, so long as no surprise or prejudice is thereby caused to the adverse party. Put a little differently, so long as the basic requirements of fair play had been met, as where the litigants were given full opportunity to support their respective contentions and to object to or refute each others evidence, the court may validly treat the pleadings as if they had been amended to conform to the evidence and proceed to adjudicate on the basis of all the evidence before it. (Emphasis supplied) Thus, the CA cannot be faulted for admitting the evidence because it found them necessary to prove respondents right of possession. A scrutiny of the records further reveals that there is no prohibition on the admission of the Kasunduan and the TCT. The evidence when presented and offered were not actually excluded by the lower court. In the pre-trial brief, respondents (defendants therein) reserved the right to present additional documentary exhibits in the course of the trial, considering that the evidence was not yet available at the time.12 For the proper disposition and resolution of the issue as to who has the right of possession of the subject land, the admission and consideration of the documents were in order.
1 a vv p h i 1

In unlawful detainer and forcible entry cases, the only issue to be determined is who between the contending parties has the better right to possess the contested property, independent of any claim of ownership. However, where the issue of ownership is so intertwined with the issue of possession, the courts may pass upon the issue of ownership if only to determine who has the better right to possess the property. 13 In the instant case, petitioners cause of action for ejectment was grounded on her alleged ownership of the property, as shown by the title registered under her name, OCT P-12388.

The said title was issued on June 22, 1994 and registered on July 18, 1994. 14 Petitioner asserted that since she had title over the land, and that respondents had none, she could rightfully order respondents to vacate. Respondents vehemently disputed this claim, knowing that the land possessed by them was titled in the name of another person, and registered under the name of Concepcion dela Paz-Lesaca under TCT No. T-14882, issued on March 1, 1972. The mother title of TCT No. T-14882 was OCT No. 39 issued in 1912 by the Register of Deeds of Zambales. Petitioners title over the land, which was obtained at a much later date, appears to be rather specious since no two titles can be issued over the same parcel of land. Given these conflicting claims, we must abide by the rule that where two certificates of title purport to include the same land, the earlier in date prevails.15 Thus, without any legal or factual basis to lay claim over the land, petitioner had clearly no right to order respondents eviction from the land. Respondents right to occupy the land emanates from the authority given to them by the registered and rightful owner of the land, Concepcion dela Paz-Lesaca, as evidenced by the Kasunduan which was executed on August 8, 1973. From then on, respondents were in actual possession of the land. As against a written or documentary evidence giving respondents the authority to occupy the land, petitioners mere claim that she merely tolerated respondents stay on the land cannot be given weight. The Kasunduan executed by the rightful owner is sufficient proof that petitioner has no privity of contract with respondents and, therefore, has no right to evict them from the land. By virtue of the title and the written agreement which are prior in time, coupled with the actual possession of the subject land, respondents right to possess the land should enjoy greater preference under the circumstances. While it is conceded that respondents right to possess may be temporary since they are mere caretakers of the land owned by Concepcion dela Paz-Lesaca, this possession may not be disturbed unless petitioner successfully proves that her title is superior to that of Concepcion dela Paz-Lesaca. And such conflict in ownership should be threshed out in another proceeding. WHEREFORE, the decision of the Court of Appeals dated March 31, 2004 in CA-G.R. SP No. 67696 is AFFIRMED. SO ORDERED. ANTONIO EDUARDO B. NACHURA Associate Justice WE CONCUR: RENATO C. CORONA Associate Justice Chairperson MINITA V. CHICO-NAZARIO PRESBITERO J. VELASCO, JR.

Associate Justice

Associate Justice

DIOSDADO M. PERALTA Associate Justice ATTESTATION I attest that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Courts Division. RENATO C. CORONA Associate Justice Chairperson, Third Division CERTIFICATION Pursuant to Section 13, Article VIII of the Constitution and the Division Chairperson's Attestation, I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division. REYNATO S. PUNO Chief Justice

Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. 172547 June 30, 2009

PRECY BUNYI and MILA BUNYI, Petitioners, vs. FE S. FACTOR, Respondent. DECISION QUISUMBING, J.: For review on certiorari are the Decision1 dated January 16, 2006 and Resolution2 dated April 26, 2006 of the Court of Appeals in CA-G.R. SP No. 90397, which had affirmed the Decision3 dated March 7, 2005 of the Regional Trial Court (RTC) of Las Pias City, Branch 198 in Civil Case No. LP-04-0160.

The antecedent facts are as follows: Respondent Fe S. Factor is one of the co-owners of an 18-hectare piece of land located in Almanza, Las Pias City. The ownership of the land originated from respondents paternal grandparents Constantino Factor and Maura Mayuga-Factor who had been in actual, continuous, peaceful, public, adverse and exclusive possession and occupation of the land even before 1906.4 On December 9, 1975, the children of Constantino Factor and Maura Mayuga-Factor filed a Petition for Original Registration and Confirmation of Imperfect Title to the said parcel of land, or Lots 1, 2, 3 and 4 of Psu-253567, before the RTC of Pasig City, Branch 71.5 On December 8, 1994, the trial court granted the petition in LRC Case No. N-9049 and declared the children of Constantino Factor and Maura Mayuga-Factor as co-owners of the property. 6 The children of Constantino Factor and Maura Mayuga-Factor thereafter sold seven (7) hectares of the Factor family property during the same year. The siblings, except Enrique Factor, respondents father, shared and divided the proceeds of the s ale among themselves, with the agreement that Enrique would have as his share the portion of the property located in Antioch Street, Pilar Executive Village, Almanza I, Las Pias City, known as the Factor compound. Following his acquisition thereof, Enrique caused the construction of several houses in the compound including the subject property, a rest house, where members of the Factor family stayed during get-togethers and visits.7Petitioners Precy Bunyi and her mother, Mila Bunyi, were tenants in one of the houses inside the compound, particularly in No. 8 Antioch St., Pilar Village, Almanza, Las Pias City since 1999.8 When Enrique Factor died on August 7, 1993, the administration of the Factor compound including the subject rest house and other residential houses for lease was transferred and entrusted to Enriques eldest child, Gloria Factor-Labao. Gloria Factor-Labao, together with her husband Ruben Labao and their son Reggie F. Labao, lived in Tipaz, Taguig, Metro Manila but visited and sometimes stayed in the rest house because Gloria collected the rentals of the residential houses and oversaw the Factor compound. When Gloria died on January 15, 2001, the administration and management of the Factor compound including the subject rest house, passed on to respondent Fe S. Factor as co-owner of the property. As an act of goodwill and compassion, considering that Ruben Labao was sickly and had no means of income, respondent allowed him to stay at the rest house for brief, transient and intermittent visits as a guest of the Factor family. On May 31, 2002, Ruben Labao married petitioner Precy Bunyi. On November 10, 2002, Ruben Labao died. At about this time, respondent discovered that petitioners forcibly opened the doors of the rest house and stole all the personal properties owned by the Factor family and then audaciously occupied the premises. Respondent alleged that petitioners unlawfully deprived her and the Factor family of the subject propertys lawful use and possession. Respondent also added that when she tried to enter the rest house on December 1, 2002, an

unidentified person who claimed to have been authorized by petitioners to occupy the premises, barred, threatened and chased her with a jungle bolo. Thus, on September 12, 2003, respondent Fe S. Factor filed a complaint9 for forcible entry against herein petitioners Precy Bunyi and Mila Bunyi. Petitioners, for their part, questioned Fes claim of ownership of the subject property and the alleged prior ownership of her father Enrique Factor. They asserted that the subject property was owned by Ruben Labao, and that petitioner Precy with her husband moved into the subject property, while petitioner Mila Bunyi, mother of Precy, remained in No. 8 Antioch St. On July 13, 2004, the Metropolitan Trial Court (MeTC) of Las Pias City, Branch 79 ruled in favor of Fe S. Factor. The dispositive portion of the decision reads: WHEREFORE, judgment is hereby rendered in favor of the plaintiff and against the defendants ordering the latter and all persons claiming rights under them to: 1. To immediately vacate the subject premises and surrender possession thereof to the plaintiff. 2. To pay the monthly rental of P2,000.00 from December 1, 2002 up to the time they finally vacate the premises. 3. To pay attorneys fee of Php 10,000.00. The counter-claim is dismissed for lack of merit. SO ORDERED.10 Petitioners appealed the decision to the RTC of Las Pias City, Branch 198, which, however, affirmed in toto the decision of the MeTC and later denied their motion for reconsideration.11 Undaunted, petitioners filed a petition for review before the Court of Appeals but it was denied also. Hence, the instant petition before us. Petitioners submit the following issues for the Courts consideration: I. [WHETHER] THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN LAW AND JURISPRUDENCE WHEN IT AFFIRMED THE DECISION OF THE REGIONAL TRIAL COURT THAT FORCE, THREAT, INTIMIDATION AND STEALTH HAD BEEN COMMITTED BY THE PETITIONERS IN OCCUPYING THE SUBJECT RESIDENTIAL HOUSE; II.

[WHETHER] THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED WHEN IT MISAPPRECIATED THE FACT THAT THE RESPONDENT HAS A BETTER RIGHT OF PHYSICAL AND MATERIAL POSSESSION OF THE SUBJECT PROPERTY; III. [WHETHER] THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN AFFIRMING THE FINDING OF THE REGIONAL [TRIAL] COURT HOLDING PETITIONERS LIABLE TO PAY THE MONTHLY RENTAL OF P2,000.00 FROM DECEMBER 1, 2002 UP TO THE TIME THEY FINALLY VACATE PREMISES.12 The resolution of the first issue raised by petitioners requires us to inquire into the sufficiency of the evidence presented below, a course of action which this Court will not do, consistent with our repeated holding that the Supreme Court is not a trier of facts. 13 The resolution of factual issues is the function of lower courts, whose findings on these matters are received with respect and considered binding by the Supreme Court subject only to certain exceptions, none of which is present in the instant petition. 14 Noteworthy, in this case, the cited findings of the RTC have been affirmed by the Court of Appeals. As to the second issue, the resolution thereof boils down to a determination of who, between petitioners and respondent, would be entitled to the physical possession of the subject property. Both parties anchor their right of material possession of the disputed property on their respective claims of ownership. Petitioners insist that petitioner Precy has a better right of possession over the subject property since she inherited the subject property as the surviving spouse and sole heir of Ruben Labao, who owned the property before his death. Respondent, on the other hand, hinges her claim of possession on the fact that her predecessor-in-interest had prior possession of the property as early as 1975. After careful consideration, we find in favor of the respondent. In ejectment cases, the only issue for resolution is who is entitled to the physical or material possession of the property involved, independent of any claim of ownership set forth by any of the party-litigants. The one who can prove prior possession de facto may recover such possession even from the owner himself.15 Possession de facto is the physical possession of real property. Possession de facto and not possession de jure is the only issue in a forcible entry case.16 This rule holds true regardless of the character of a partys possession, provided, that he has in his favor priority of time which entitles him to stay on the property until he is lawfully ejected by a person having a better right by either accion publiciana or accion reivindicatoria.17 Petitioners argue that respondent was never in possession of the subject property since the latter never occupied the same. They claim that they have been in actual possession of the disputed property from the time petitioner Precy married Ruben Labao in 2002. In this instance, however, petitioners contention is unconvincing.

For one to be considered in possession, one need not have actual or physical occupation of every square inch of the property at all times.18 Possession can be acquired not only by material occupation, but also by the fact that a thing is subject to the action of ones wi ll or by the proper acts and legal formalities established for acquiring such right. 19 Possession can be acquired by juridical acts. These are acts to which the law gives the force of acts of possession. Examples of these are donations, succession, execution and registration of public instruments, and the inscription of possessory information titles. 20 While petitioners claim that respondent never physically occupied the subject property, they failed to prove that they had prior possession of the subject property. On record, petitioner Precy Bunyi admitted that Gloria Factor-Labao and Ruben Labao, as spouses, resided in Tipaz, Taguig, Metro Manila and used the subject property whenever they visit the same.21 Likewise, as pointed out by the MeTC and the RTC, Ruben and petitioner Precys marriage certificate revealed that at the time of their marriage, Ruben was residing at 123 A. Lake St., San Juan, Metro Manila. Even Rubens death certificate showed that his place of death and residence was at #4 Labao St., Tipaz, Taguig, Metro Manila. Considering that her husband was never a resident of the subject property, petitioner Precy failed to explain convincingly how she was able to move in with Ruben Labao in the subject property during their marriage. On the other hand, it was established that respondents grandparents, Constantino Factor and Maura Mayuga-Factor, had been the occupants and in possession of various agricultural parcel of lands situated in Almanza, Las Pias City, in the concept of owners, for more than thirty years prior to 1975. In fact, the RTC in its Decision dated December 8, 1994 in LRC Case No. N-9049 has confirmed the rights of respondents predecessors over the subject property and ordered the issuance of the corresponding certificate of title in their favor.22 The right of respondents predecessors over the subject property is more than sufficient to uphold respondents right to possession over the same. Respondents right to the property was vested in her along with her siblings from the moment of their fathers death. 23 As heir, respondent had the right to the possession of the property, which is one of the attributes of ownership. Such rights are enforced and protected from encroachments made or attempted before the judicial declaration since respondent acquired hereditary rights even before judicial declaration in testate or intestate proceedings.24 After the death of Enrique Factor, it was his eldest child, Gloria Factor-Labao who took over the administration of the subject property. And as a consequence of co-ownership,25 soon after the death of Gloria, respondent, as one of the surviving co-owners, may be subrogated to the rights of the deceased co-owner, which includes the right to the administration and management of the subject property. As found by the Court of Appeals, petitioners unsupported claim of possession must yield to that of the respondent who traces her possession of the subject property to her predecessors-in-interest who have always been in possession of the subject property. Even assuming that respondent was never a resident of the subject property, she could legally continue possessing the property. Visiting the property on weekends and holidays is evidence of actual or physical possession.26 The fact of her residence somewhere else, by

itself, does not result in loss of possession of the subject property. The law does not require one in possession of a house to reside in the house to maintain his possession. 27 For, again, possession in the eyes of the law does not mean that a man has to have his feet on every square meter of the ground before he is deemed in possession.28 There is no cogent reason to deviate from this doctrine. All things considered, this Court finds that respondent Fe S. Factor successfully proved the extent and character of her possession over the disputed property. As a consequence of her ownership thereof, respondent is entitled to its possession, considering petitioners failure to prove prior possession. The Court stresses, however, that its determination of ownership in the instant case is not final. It is only a provisional determination for the sole purpose of resolving the issue of possession. It would not bar or prejudice a separate action between the same parties involving the quieting of title to the subject property. 29 As regards the means upon which the deprivation took effect, it is not necessary that the respondent must demonstrate that the taking was done with force, intimidation threat, strategy or stealth. The Supreme Court, in Baes v. Lutheran Church in the Philippines,30 explained: In order to constitute force that would justify a forcible entry case, the trespasser does not have to institute a state of war. The act of going to the property and excluding the lawful possessor therefrom necessarily implies the exertion of force over the property which is all that is necessary and sufficient to show that the action is based on the provisions of Section 1, Rule 70 of the Rules of Court.31 As expressly stated in David v. Cordova:32 The words by force, intimidation, threat, strategy or stealth include every situation or condition under which one person can wrongfully enter upon real property and exclude another, who has had prior possession therefrom. If a trespasser enters upon land in open daylight, under the very eyes of the person already clothed with lawful possession, but without the consent of the latter, and there plants himself and excludes such prior possessor from the property, the action of forcible entry and detainer can unquestionably be maintained, even though no force is used by the trespasser other than such as is necessarily implied from the mere acts of planting himself on the ground and excluding the other party.33 Respondent, as co-owner, has the control of the subject property even if she does not stay in it. So when petitioners entered said property without the consent and permission of the respondent and the other co-owners, the latter were deprived of its possession. Moreover, the presence of an unidentified man forbidding respondent from entering the subject property constitutes force contemplated by Section 1,34 Rule 70 of the Rules of Court.
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As to the last issue, we have previously ruled that while the courts may fix the reasonable amount of rent for the use and occupation of a disputed property, they could not simply rely on their own appreciation of land values without considering any evidence. The reasonable amount of any rent could not be determined by mere judicial notice but by supporting

evidence.35 In the instant case, we find no evidence on record to support the MeTCs award of rent. On the matter of attorneys fees awarded to the respondent, we are in agreement to delete it. It is a well-settled rule that where attorneys fees are granted, the court must explicitly state in the body of the decision, and not only in the dispositive portion thereof, the legal reason for the award.36 Again, nothing in the body of both decisions of RTC and MeTC explicitly stated the reasons for the award of attorneys fees. WHEREFORE, the instant petition is DENIED. The challenged Decision dated January 16, 2006 and Resolution dated April 26, 2006 of the Court of Appeals in CA-G.R. SP No. 90397 are AFFIRMED with MODIFICATION that the award of rentals and attorneys fees are DELETED. No pronouncement as to costs. SO ORDERED. LEONARDO A. QUISUMBING Associate Justice WE CONCUR: CONSUELO YNARES-SANTIAGO* Associate Justice MINITA V. CHICO-NAZARIO** Associate Justice ARTURO D. BRION Associate Justice

DIOSDADO M. PERALTA*** Associate Justice ATTESTATION I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division. LEONARDO A. QUISUMBING Associate Justice Chairperson CERTIFICATION Pursuant to Section 13, Article VIII of the Constitution and the Division Chairpersons Attestation, I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the C ourts Division.

REYNATO S. PUNO Chief Justice

Republic of the Philippines SUPREME COURT Manila THIRD DIVISION G.R. No. 184225 September 4, 2009

SPOUSES ROGELIO F. LOPEZ AND TEOTIMA G. LOPEZ, Petitioners, vs. SPOUSES SAMUEL R. ESPINOSA AND ANGELITA S. ESPINOSA, Respondents. DECISION YNARES-SANTIAGO, J.: Assailed in this petition1 for review on certiorari is the March 24, 2008 Decision2 of the Court of Appeals in CA-G.R. CV No. 00113 finding petitioners, Spouses Rogelio F. Lopez and Teotima G. Lopez, liable for forcible entry and damages as well as the August 7, 2008 Resolution3 denying petitioners motion for reconsideration. Respondents, Spouses Samuel R. Espinosa and Angelita S. Espinosa, owned a house located at Barangay Washington, Surigao City. Constructed in 1983, the house was situated at the back of petitioners residence and stood over a portion of a parcel of land covered by Transfer Certificate of Title No. T-123324, which was issued under the name of petitioners on June 28, 1996. It appears from the records that the parties have had conflicting claims over the subject property since 1994 when petitioners, together with a Mr. Nolan Kaimo, filed an action for recovery of possession against respondents. The case was docketed as Civil Case No. 4301 before Branch 2 of the Municipal Trial Court in Cities of Surigao City, but was dismissed on September 7, 1994 on technical grounds.5 On June 9, 1997 and July 2, 1997, petitioners were also summoned by the Office of the Punong Barangay of Barangay Washington, in connection with a complaint for malicious mischief filed by respondents.6 Meanwhile, the instant case stemmed from a complaint7 for Forcible Entry with Damages filed by respondents against petitioners on September 30, 2002. The case was docketed as Civil Case No. 02-5950 before Branch 2 of the Municipal Trial Court in Cities of Surigao City. Respondents alleged that on May 10, 2002, petitioners took advantage of their absence and demolished their house by means of stealth and strategy. Aided by hired personnel,

petitioners removed and destroyed respondents house and enclosed the property with a concrete fence. In their Answer,8 petitioners denied having demolished respondents house and claimed that it was destroyed by the elements. They also averred that respondents permanently transferred residence in 1999 considering that they paid their water bill only until February 1999 while the electrical utility was disconnected on the same year. 9 On February 5, 2004, the Municipal Trial Court in Cities ruled in favor of respondents and held that petitioners forcibly entered the subject premises. It noted that: [I]n 1994 defendant Lopez and a certain Nolan Kaimo filed a case for recovery of possession versus herein plaintiffs [respondents] who were already occupants of a portion thereof, but the same was dismissed for technical reasons. In 1996, the defendants were able to secure TCT T-12332 in their name and which cover not only their residential lot but also the adjacent lot which plaintiffs occupied and where their house was erected. Then, in 1997 the plaintiffs had a clash with defendants when the latter allegedly destroyed plaintiffs fence which conflict reached Barangay Captain Laxas attention. These series of events clearly tend to show the many attempts of defendant Lopez to oust the plaintiffs from the premises and occupy the same as his own. And, the last event is the one related in the instant case where the defendants, sensing that plaintiffs were not present and their house already destroyed by the elements, had the lot relocated and fenced as a consequence of which plaintiffs were totally deprived of possession thereof.10 The Municipal Trial Court did not lend credence to petitioners claims that respondents abandoned their house and that the same was destroyed by natural elements. It held that despite petitioners constructive possession following the issuance of TCT No. T -12332, they were not justified in making such forcible entry.11 The dispositive portion of the Decision12 states: WHEREFORE, judgment is hereby rendered: 1. Directing defendants [petitioners] to remove the concrete fence, steel gate, grills and other structures found on the premises occupied by plaintiffs previous to the forcible entry, and after which to deliver possession thereof to plaintiffs smoothly and peacefully; 2. Directing defendants [petitioners] to pay the value of the house and improvements in the sum of P85,200.00; 3. Ordering defendants [petitioners] to further pay litigation expenses and the costs, and the sum of P10,000.00 as attorneys fees. SO ORDERED.13 Petitioners appealed to the Regional Trial Court of Surigao City/Surigao del Norte, which reversed the ruling of the Municipal Trial Court in Cities. In its August 17, 2004

Decision, 14 the Regional Trial Court dismissed the case on the ground that the evidence clearly prove abandonment on the part of respondents.15 Respondents filed a petition for review16 before the Court of Appeals which affirmed in toto the Decision of the Municipal Trial Court in Cities. It found that while respondents left the house in 1999 when respondent Samuel was assigned to Placer, Surigao del Norte, this fact alone does not establish abandonment. Moreover, the appellate court noted that respondents enjoy priority of possession, and that they paid the corresponding taxes due on the house.17 Thus: WHEREFORE, the instant petition is hereby GRANTED. The Decision dated 17 August 2004 of the Regional Trial Court, Tenth (10th) Judicial Region, Branch No. 29 of Surigao City in Civil Case No. 6229 is REVERSED and SET ASIDE. The Judgment dated 05 February 2004 of the Municipal Trial Court in Cities, Branch No. 2 of Surigao City in Civil Case No. 02-5950 for Forcible Entry with Damages is AFFIRMED IN TOTO. SO ORDERED.18 Petitioners motion for reconsideration was denied, hence this petition on the following grounds: THE COURT OF APPEALS ERRED IN RULING THAT THE HEREIN RESPONDENTS DID NOT ABANDON THEIR NIPA HOUSE DESPITE THE FOLLOWING UNDISPUTED FACTS, TO WIT: A THE LOT OVER WHICH THE NIPA HOUSE WAS CONSTRUCTED IS OWNED BY THE HEREIN PETITIONERS AND COVERED BY TCT-T12332; B NOBODY WAS LEFT STAYING IN THE NIPA HOUSE FOR YEARS AND THE WATER AND ELECTRICAL CONNECTIONS IN THE NIPA HOUSE WERE ALREADY CUT OFF AS EARLY AS 1999. Petitioners argue that the disconnection of water and electric supply in respondents house is proof of their intention to abandon the house, especially because respondents are not the owners of the land on which the house stood. Petitioners also allege that, even assuming arguendo that the Municipal Trial Court correctly decided on the issue of possession, the award of Php85,200.00 representing the value of improvements and attorneys fees is not supported by evidence. On the other hand, respondents claim that they did not abandon their house, and that the abandonment of a right, claim or property must be clear, absolute, and irrevocable. On the award of Php85,200.00, respondents aver that the issue was raised for the first time on appeal.

The petition lacks merit. In Dy v. Mandy Commodities Co., Inc.,19 the Court held that there is forcible entry or desahucio when one is deprived of physical possession of land or building by means of force, intimidation, threat, strategy or stealth. The basic inquiry centers on who has the prior possession de facto. The plaintiff must prove that he was in prior possession and that he was deprived thereof. In the instant case, respondents house was constructed in 1983 and they had prior physical possession until they were deprived thereof by petitioners. To substantiate their claims, respondents submitted the affidavit, dated September 20, 2002, 20 of Carlos C. Menil and Lolito S. Bito, who witnessed the demolition of respondents house during the latters absence. Mr. Menil and Mr. Bito attested that they saw petitioner Rogelio personally supervising the demolition of respondents house, and that he erected a concrete fence enclosing the area where the house formerly stood. Petitioners failed to refute the foregoing allegations except with bare denials. While petitioners hold title to the subject property where the house was located, the sole issue in forcible entry cases is who had prior possession de facto of the disputed property.21 In Dy, the Court held that these are summary proceedings intended to provide an expeditious means of protecting actual possession or right of possession of property. Title is not involved; that is why it is a special civil action with a special procedure. 22
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The Court of Appeals correctly held that respondents did not abandon their house. Abandonment requires (a) a clear and absolute intention to renounce a right or claim or to desert a right or property; and (b) an external act by which that intention is expressed or carried into effect. The intention to abandon implies a departure, with the avowed intent of never returning, resuming or claiming the right and the interest that have been abandoned.23There is none in this case. The disconnection of water and electric supply and the fact that respondents left the house when respondent Samuel was assigned to Surigao del Norte in 1999, do not constitute abandonment. As correctly found by the Court of Appeals, respondents left valuables inside the house and had the same padlocked, which acts constitute assertion and protection of their right over the subject house and negate renunciation and intention to lose the same. 24 It bears stressing that the instant case was preceded by the filing of actions for recovery of possession and malicious mischief before the Office of the Punong Barangay. Likewise, upon discovery of petitioners acts of intrusion, respondents immediately filed a complaint for forcible entry and damages before the Municipal Trial Court in Cities. The Certification to File Action dated August 26, 2002 shows that no settlement or conciliation was reached. 25 It is clear from the foregoing that respondents have not been remiss in asserting their rights and that petitioners claims over the subject property have not gone unchallenged. The Court affirms the award of Php85,200.00 representing the value of improvements and attorneys fees. The issue on the propriety of the award was raised for the first time on motion for reconsideration before the Court of Appeals. Well-settled is the rule that issues not raised below cannot be raised for the first time on appeal.26

WHEREFORE, based on the foregoing, the petition is DENIED. The March 24, 2008 Decision of the Court of Appeals in CA-G.R. SP No. 00113-MIN finding petitioners liable for forcible entry is AFFIRMED. SO ORDERED. CONSUELO YNARES-SANTIAGO Associate Justice WE CONCUR: MINITA V. CHICO-NAZARIO Associate Justice PRESBITERO J. VELASCO, JR. Associate Justice ANTONIO EDUARDO B. NACHURA Associate Justice

DIOSDADO M. PERALTA Associate Justice ATTESTATION I attest that the conclusions in the above decision were reached in consultation before the case was assigned to the writer of the opinion of the Courts Division. CONSUELO YNARES-SANTIAGO Associate Justice Chairperson, Third Division CERTIFICATION Pursuant to Section 13, Article VIII of the Constitution and the Division Chairpersons Attestation, it is hereby certified that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Courts Division. REYNATO S. PUNO Chief Justice

Republic of the Philippines SUPREME COURT Manila THIRD DIVISION

G.R. No. 184285

September 25, 2009

RODOLFO "RUDY" CANLAS, VICTORIA CANLAS, FELICIDAD CANLAS and SPOUSES PABLO CANLAS AND CHARITO CANLAS, Petitioners, vs. ILUMINADA TUBIL, Respondent. DECISION YNARES-SANTIAGO, J.: Assailed in this petition for review on certiorari is the June 12, 2008 Decision1 of the Court of Appeals in CA-G.R. SP No. 99736, which reversed the April 11, 2007 Decision2 of the Regional Trial Court (RTC) of Guagua, Pampanga, Branch 50, in Special Civil Case No. G06-544, and ordered said Regional Trial Court to decide the case on merits, pursuant to Section 8, par. 2 of Rule 40 of the Rules of Court. The RTC affirmed the Decision 3 of the Municipal Trial Court (MTC) of Guagua, Pampanga, Branch 2, which dismissed Civil Case No. 3582 for unlawful detainer filed by respondent Iluminada Tubil. Also assailed is the September 1, 2008 Resolution4 of the Court of Appeals which denied the Motion for Reconsideration. The facts are as follows: On June 9, 2004, a complaint for unlawful detainer was filed by respondent Iluminada Tubil against petitioners Rodolfo Canlas, Victoria Canlas, Felicidad Canlas and spouses Pablo and Charito Canlas before the MTC. The pertinent allegations read: xxxx 3. That the plaintiff is the owner, together with the other heirs of her late husband Nicolas Tubil who are their children, of a residential land located at San Juan, Betis, Guagua, Pampanga, identified as Cadastral Lot No. 2420, with an area of 332 square meters, covered by Original Certificate of Title No. 11199 of the Registry of Deeds of Pampanga, x x x; xxxx 4. That before the aforesaid parcel of land was titled, it was declared for taxation purposes in the name of plaintiff Iluminada Tubil in the Municipal Assessors Office of Guagua, Pampanga, x x x; xxxx 6. That sometime ago, the defendants Roldolfo Rudy Canlas, Victoria Canlas and Felicidad Canlas erected a house in the aforesaid land of the plaintiff, which they are presently occupying as their residential house;

7. That likewise sometime ago defendants spouses Pablo Canlas and Charito Canlas erected a house in the aforesaid land of the plaintiff, which they are presently occupying as their residential house; 8. That the said houses of the defendants were erected in the aforesaid land and their stay therein was by mere tolerance of the plaintiff, as well as co-heirs, considering that defendants are plaintiffs relatives; 9. That plaintiff and her co-heirs wish to use and dedicate the aforesaid parcel of land fruitfully, demands were verbally made upon the defendants to vacate and remove their house therefrom, but defendants just ignored the plea of plaintiff and co-heirs, and instead failed and refused to remove the houses without any lawful and justifiable reason; 10. That in light of said refusal, the plaintiff referred the matter to a lawyer, who sent defendants demand letters to vacate dated January 12, 2004, but inspite of receipt of the same defendants failed and refused to vacate and remove their houses and continue to fail and refuse to do so without lawful justification x x x; 11. That this matter was ventilated with before the barangay government for conciliation, mediation, arbitration and settlement prior to the filing of this case with this court, but no settlement was arrived at inspite of the effort exerted by the barangay authorities and so a certification to file action was issued by the Pangkat Chairman of Barangay San Juan, Betis, Guagua, Pampanga x x x;5 Petitioners filed a motion to dismiss alleging that the MTC is without jurisdiction over the subject matter, and that the case was not prosecuted in the name of the real parties in interest.6 On September 14, 2004, the MTC denied the motion because the grounds relied upon were evidentiary in nature which needed to be litigated.7 Thus, petitioners filed their answer where they denied the allegations in the complaint. They claimed that together with their predecessors-in-interest, they had been in open, continuous, adverse, public and uninterrupted possession of the land for more than 60 years; that respondents title which was issued pursuant to Free Patent No. 03540 was dubious, spurious and of unlawful character and nature; and that respondents cause of action was for an accion publiciana, which is beyond the jurisdiction of the MTC. 8 On October 23, 2006, the MTC rendered judgment dismissing the complaint for unlawful detainer because respondent failed to show that the possession of the petitioners was by mere tolerance. Respondent appealed to the RTC which rendered its Decision on April 11, 2007 affirming in toto the judgment of the MTC. Respondent filed a motion for reconsideration but it was denied in an Order9 dated June 8, 2007.

Respondent filed a petition for review with the Court of Appeals, which rendered the assailed decision on June 12, 2008, which reversed the Regional Trial Courts Decision, the dispositive portion of which reads: WHEREFORE, in view of all the foregoing premises, judgment is hereby rendered by us SETTING ASIDE the decision rendered by Branch 50 of the RTC in Guagua, Pampanga on April 11, 2007 in Special Civil Case No. G-06-544 and ORDERING the said regional trial court branch to decide Special Civil Case No. G-06-544 on the merits based on the entire record of the proceedings had in the Municipal Trial Court of Guagua, Pampanga in Civil Case No. 3582 and such memoranda as are filed therewith, without prejudice to the admission of amended pleadings and additional evidence in the interest of justice, pursuant to par. 2 of Section 8 of Rule 40 of the 1997 Revised Rules of Court. IT IS SO ORDERED.10 Petitioners moved for reconsideration but it was denied by the Court of Appeals in its September 1, 2008 Resolution.11 Hence, this petition for review on certiorari alleging that: x x x THE COURT OF APPEALS COMMITTED A REVERSIBLE ERROR WHEN IT SET ASIDE THE DECISION RENDERED BY BRANCH 50 OF THE REGIONAL TRIAL COURT OF GUAGUA, PAMPANGA ON APRIL 11, 2007 IN SPECIAL CIVIL CASE NO. G-06-544 AND IN ORDERING THE SAID COURT TO DECIDE SPECIAL CIVIL CASE NO. G-06-544 ON THE MERITS BASED ON THE ENTIRE RECORD OF THE PROCEEDINGS HAD IN THE MUNICIPAL TRIAL COURT OF GUAGUA, PAMPANGA IN CIVIL CASE NO. 3582, WITHOUT PREJUDICE TO THE ADMISSION OF AMENDED PLEADINGS AND ADDITIONAL EVIDENCE PURSUANT TO PARAGRAPH 2 OF SECTION 8 OF RULE 40 OF THE 1997 RULES OF CIVIL PROCEDURE AS AMENDED, DESPITE THE FACT THAT BRANCH 50 OF THE REGIONAL TRIAL COURT OF GUAGUA, PAMPANGA DOES NOT HAVE ORIGINAL JURISDICTION OVER THE SUBJECT MATTER OF CIVIL CASE NO. 3582 FILED IN THE MUNICIPAL TRIAL COURT OF GUAGUA, PAMPANGA ON JUNE 9, 2004.12 Petitioners contend that the RTC does not have original jurisdiction over the subject matter of the case, thus, it cannot validly decide on the merits, as ordered by the Court of Appeals, pursuant to paragraph 2 of Section 8, Rule 40 of the Rules of Court, which reads: SEC. 8. Appeal from orders dismissing case without trial; lack of jurisdiction. xxxx If the case was tried on the merits by the lower court without jurisdiction over the subject matter, the Regional Trial Court on appeal shall not dismiss the case if it has original jurisdiction thereof, but shall decide the case in accordance with the preceding section, without prejudice to the admission of amended pleadings and additional evidence in the interest of justice.

We note that when petitioners filed their motion to dismiss before the MTC, they claimed that it is the RTC which has jurisdiction over the subject matter. However, in the instant petition for review, petitioners changed their theory; they now claim that it is the MTC, and not the RTC, which has jurisdiction over the subject matter since the dispossession was only for five months counted from respondents last demand to the filing of the complaint for unlawful detainer before the MTC. As a rule, a change of theory cannot be allowed.13 However, when the factual bases thereof would not require presentation of any further evidence by the adverse party in order to enable it to properly meet the issue raised in the new theory, 14 as in this case, the Court may give due course to the petition and resolve the principal issues raised therein. The issue to be resolved is which court, the MTC or the RTC has jurisdiction over the subject matter. If it is an unlawful detainer case, the action was properly filed in the MTC. However, if the suit is one for accion publiciana, original jurisdiction is with the RTC, which is mandated not to dismiss the appeal but to decide the case on the merits pursuant to Section 8 of Rule 40 of the Rules of Court. Well-settled is the rule that what determines the nature of the action as well as the court which has jurisdiction over the case are the allegations in the complaint.15 In ejectment cases, the complaint should embody such statement of facts as to bring the party clearly within the class of cases for which the statutes provide a remedy, as these proceedings are summary in nature. The complaint must show enough on its face to give the court jurisdiction without resort to parol evidence.16 Unlawful detainer is an action to recover possession of real property from one who illegally withholds possession after the expiration or termination of his right to hold possession under any contract, express or implied. The possession of the defendant in unlawful detainer is originally legal but became illegal due to the expiration or termination of the right to possess.17 An unlawful detainer proceeding is summary in nature, jurisdiction of which lies in the proper municipal trial court or metropolitan trial court. The action must be brought within one year from the date of last demand and the issue in said case is the right to physical possession.18 On the other hand, accion publiciana is the plenary action to recover the right of possession which should be brought in the proper regional trial court when dispossession has lasted for more than one year. It is an ordinary civil proceeding to determine the better right of possession of realty independently of title. In other words, if at the time of the filing of the complaint, more than one year had elapsed since defendant had turned plaintiff out of possession or defendants possession had become illegal, the action will be, not one of forcible entry or illegal detainer, but an accion publiciana. In Cabrera v. Getaruela,19 the Court held that a complaint sufficiently alleges a cause of action for unlawful detainer if it recites the following:

(1) initially, possession of property by the defendant was by contract with or by tolerance of the plaintiff; (2) eventually, such possession became illegal upon notice by plaintiff to defendant of the termination of the latters right of possession; (3) thereafter, the defendant remained in possession of the property and deprived the plaintiff of the enjoyment thereof; and (4) within one year from the last demand on defendant to vacate the property, the plaintiff instituted the complaint for ejectment. In the instant case, respondents allegations in the complaint clearly make a case for an unlawful detainer, essential to confer jurisdiction on the MTC over the subject matter. Respondent alleged that she was the owner of the land as shown by Original Certificate of Title No. 111999 issued by the Register of Deeds of Pampanga; that the land had been declared for taxation purposes and she had been paying the taxes thereon; that petitioners entry and construction of their houses were tolerated as they are relatives; and that she sent on January 12, 2004 a letter demanding that petitioners vacate the property but they failed and refused to do so. The complaint for unlawful detainer was filed on June 9, 2004, or within one year from the time the last demand to vacate was made. It is settled that as long as these allegations demonstrate a cause of action for unlawful detainer, the court acquires jurisdiction over the subject matter. This principle holds, even if the facts proved during the trial do not support the cause of action thus alleged, in which instance the court - after acquiring jurisdiction - may resolve to dismiss the action for insufficiency of evidence.20
1avvphi 1

The ruling cited by the Court of Appeals in Sarmiento v. Court of Appeals,21 i.e., that jurisdictional facts must appear on the face of the complaint for ejectment such that when the complaint fails to faithfully aver facts constitutive of forcible entry or unlawful detainer, as where it does not state how entry was effected, or how and when dispossession started, the remedy should either be an accion publiciana or an accion reinvindicatoria in the proper regional trial court,22 finds no application in the instant case. In Sarmiento, the complaint did not characterize the entry into the land as legal or illegal. It was also not alleged that dispossession was effected through force, intimidation, threat, strategy or stealth to make out a case of forcible entry, nor was there a contract, express or implied, as would qualify the case as unlawful detainer.23 Contrarily, the complaint in this case specifically alleged that possession of the petitioners was by tolerance. The rule is that possession by tolerance is lawful, but such possession becomes unlawful upon demand to vacate made by the owner and the possessor by tolerance refuses to comply with such demand. 24 In Sarmiento, the claim that possession of the land was by tolerance was a mere afterthought, raised only in subsequent pleadings but not in the complaint.25 The requirement that the complaint should aver jurisdictional facts, like when and how entry on the land was made by the defendants, applies only when at issue is the timeliness of the filing of the complaint before the MTC and not when the jurisdiction of the MTC is assailed

as being one for accion publiciana cognizable by the RTC. Thus, in Javelosa v. Court of Appeals,26 it was held that: The ruling in the Sarona case cited by petitioner i.e., that a complaint for unlawful detainer should allege when and how entry on the land was made by the defendant, finds no application to the case at bar. In Sarona, the main issue was the timeliness of the filing of the complaint before the MTC. In forcible entry cases, the prescriptive period is counted from the date of defendants actual entry on the land; in unlawful detainer, from the date of the last demand to vacate. Hence, to determine whether the case was filed on time, there was a necessity to ascertain whether the complaint was one for forcible entry or unlawful detainer. In light of these considerations, the Court ruled that since the main distinction between the two actions is when and how defendant entered the land, the determinative facts should be alleged in the complaint. Thus, in Sarona, the jurisdiction of the MTC over the complaint was never in issue for whether the complaint was one for forcible entry or unlawful detainer, the MTC had jurisdiction over it. The case at bar is different for at issue is the jurisdiction of the MTC over the unlawful detainer case for petitioner (defendant therein) asserts that the case is one for accion publiciana cognizable by the RTC. In the instant case, the timeliness of the filing of the complaint is not at issue as the dispossession of the property by the respondent has not lasted for more than one year. Thus, the ruling of the RTC that the length of time she was dispossessed of the property is almost 36 years, which made her cause of action beyond the ambit of unlawful detainer and became one for accion publiciana,27 lacks legal and factual basis. Section 1, Rule 70 of the Rules of Court allows a plaintiff to bring an action in the proper inferior court for unlawful detainer within one year, after such unlawful withholding of possession, counted from the date of the last demand.28 The records show that respondent sent the demand to vacate the property to the petitioners on January 24, 2004 and filed the complaint for unlawful detainer on June 9, 2004, which is well within the one-year period. Having ruled that the MTC acquired jurisdiction over Civil Case No. 3582, it thus properly exercised its discretion in dismissing the complaint for unlawful detainer for failure of the respondent to prove tolerance by sufficient evidence. Consquently, Section 8 (2nd par.) of Rule 40 of the Rules of Court which ordains the Regional Trial Court not to dismiss the cases appealed to it from the metropolitan or municipal trial court which tried the same albeit without jurisdiction, but to decide the said case on the merits, finds no application here. WHEREFORE, the petition is GRANTED. The June 12, 2008 Decision of the Court of Appeals in CA-G.R. SP No. 99736 ordering the Regional Trial Court of Guagua, Pampanga, Branch 50 to decide Special Civil Case No. G-06-544, as well as its September 1, 2008 Resolution denying the Motion for Reconsideration, are REVERSED and SET ASIDE. The October 23, 2006 Decision of the MTC of Guagua, Pampanga, Branch 2, dismissing the complaint for unlawful detainer for failure of respondent to show that petitioners possession of the subject property was by mere tolerance is REINSTATED and AFFIRMED. SO ORDERED.

CONSUELO YNARES-SANTIAGO Associate Justice WE CONCUR: MINITA V. CHICO-NAZARIO Associate Justice PRESBITERO J. VELASCO, JR. Associate Justice ANTONIO EDUARDO B. NACHURA Associate Justice

DIOSDADO M. PERALTA Associate Justice ATTESTATION I attest that the conclusions in the above decision were reached in consultation before the case was assigned to the writer of the opinion of the Courts Division. CONSUELO YNARES-SANTIAGO Associate Justice Chairperson, Third Division CERTIFICATION Pursuant to Section 13, Article VIII of the Constitution and the Division Chairpersons Attestation, it is hereby certified that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Courts Division. CONSUELO YNARES-SANTIAGO Acting Chief Justice

Republic of the Philippines SUPREME COURT Manila THIRD DIVISION EN BANC G.R. No. 169956 January 19, 2009

SPOUSES JONEL PADILLA and SARAH PADILLA, Petitioners, vs. ISAURO A. VELASCO, TEODORA A. VELASCO, DELIA A. VELASCO, VALERIANO A.

VELASCO, JR., IDA A. VELASCO, AMELITA C. VELASCO, ERIBERTO C. VELASCO, JR., and CELIA C. VELASCO, Respondents. DECISION NACHURA, J.: Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court assailing the Decision1dated February 11, 2005 and the Resolution2 dated October 4, 2005 of the Court of Appeals (CA) in CA-G.R. CV No. 69997 entitled Isauro A. Velasco, Teodora A. Velasco, Delia A. Velasco, Valeriano A. Velasco, Jr., Ida A. Velasco, Amelita C. Velasco, Eriberto C. Velasco, Jr. and Celia C. Velasco v. Spouses Jonel Padilla and Sarah Padilla. The facts The facts of the case are as follows: Respondents are the heirs of Dr. Artemio A. Velasco (Artemio), who died single and without any issue on January 22, 1949. During his lifetime, Artemio acquired Lot No. 2161 consisting of 7,791 square meters situated at Barangay Pinagsanjan, Pagsanjan, Laguna, covered by Tax Declaration No. 4739. Artemio acquired the lot from spouses Brigido Sacluti and Melitona Obial, evidenced by a deed of sale dated February 14, 1944. In October 1987, petitioners entered the property as trustees by virtue of a deed of sale executed by the Rural Bank of Pagsanjan in favor of spouses Bartolome Solomon, Jr. and Teresita Padilla (Solomon spouses). Respondents demanded that petitioners vacate the property, but the latter refused. The matter was referred to the barangay for conciliation; however, the parties failed to reach an amicable settlement. Thereafter, petitioners caused the cutting of trees in the area, fenced it and built a house thereon. They harvested the crops and performed other acts of dominion over the property. On October 14, 1991, respondents filed a complaint for accion publiciana, accounting and damages against petitioners before the Regional Trial Court (RTC) of Santa Cruz, Laguna. They asked the court to order petitioners to vacate the property and to pay moral and exemplary damages, attorneys fees and cost of suit. Isauro A. Velasco (Isauro), the brother of the deceased Artemio, as administrator of the property, was presented as a witness. He testified that Artemio owned the property. As evidence thereof, he presented the Kasulatan ng Bilihang Tuluyan executed by spouses Brigido Sacluti and Melitona Obial in favor of Artemio, and declared that he (Isauro) was present during the signing of the instrument. He offered in evidence tax declarations and tax receipts covering Lot No. 2161 which were all in the name of Artemio. A certification from the Land Registration Authority (LRA) was likewise presented by Isauro which states that based on the records of the LRA, Decree No. 403348 was issued on October 10, 1930 covering Lot No. 2161.3

Rolando R. Flores, a geodetic engineer, also testified that on January 16, 1993, upon prior notice to petitioners, he conducted a survey of the land based on the technical description of the property and the map from the Bureau of Lands. The purpose of the survey was to verify if the area occupied by petitioners was Lot No. 2161. Upon his examination and based on his survey, he concluded that the land occupied by petitioners was Lot No. 2161.4 On the other hand, petitioners averred that the Solomon spouses owned the property; that the said spouses bought it from the Rural Bank of Pagsanjan as evidenced by a deed of sale dated September 4, 1987; that the land was identified as Lot No. 76-pt, consisting of 10,000 square meters, located at Pinagsanjan, Pagsanjan, Laguna; and that the spouses authorized petitioners to occupy the land and introduce improvements thereon. Petitioners further claimed that subsequent to the sale of the property to the Solomon spouses, Lot No. 76-pt. was levied on in Civil Case No. 320 under the jurisdiction of the Municipal Trial Court of Pagsanjan, Laguna. The case was entitled Rural Bank of Pagsanjan, Inc. v. Spouses Hector and Emma Velasco, Valeriano Velasco and Virginia Miso. Petitioners alleged that Valeriano Velasco obtained a loan from the Rural Bank of Pagsanjan, with Hector Velasco as co-maker, and the land was mortgaged by Valeriano as collateral. Valerianos failure to pay the loan caused the foreclosure of the land, and on September 17, 1980, Lot No. 76-pt was sold at a public auction by the Provincial Sheriff. The Rural Bank of Pagsanjan was the highest bidder. Pedro Zalameda Trinidad, Jr. (Pedro), as a witness for the petitioners, testified that he was born in Barangay Pinagsanjan, Pagsanjan, Laguna, and had been residing there since birth. He said that based on his knowledge, the land belonged to Nonong (Valeriano) Velasco because he used to buy coconuts harvested from the said land and it was Nonong Velasco who caused the gathering of coconuts thereon.5 Petitioner Jonel Padilla also took the witness stand. He testified that Pedro was occupying the land when he initially visited it. A representative of the Rural Bank of Pagsanjan disclosed to him that the land previously belonged to Valeriano. He verified from the Municipal Assessor the technical description of the land, but no longer verified from the Bureau of Lands because he trusted the bank. Upon his recommendation, his sister and his brother-in-law purchased the property after verifying the supporting documents. It was his brother-in-law who went to the Bureau of Lands and found that it was Lot No. 2161. 6 On July 27, 1999, the RTC rendered a Decision,7 the dispositive portion of which reads: WHEREFORE, PREMISES CONSIDERED, judgment is hereby rendered in favor of the [respondents] ordering the [petitioners] to vacate the land presently occupied by them and restore possession thereof to the [respondents], to render an accounting of the proceeds from the crop harvested therefrom starting September 1987 up to the time the property is returned to the [respondents], and to remove at their expense all the structures they constructed thereon.8 Petitioners filed an appeal before the CA, but on February 11, 2005, the CA issued the assailed decision affirming the decision of the RTC. They consequently filed a motion for

reconsideration. However, the same was denied in the assailed resolution dated October 4, 2005. Hence, the instant petition. The Issues Petitioners anchor their petition on the following grounds: I. The alleged sale executed between Brigido Sacluti and Melitona Obial as seller and Dr. Artemio [Velasco] as buyer was never established, respondents having failed to present the original copy thereof during the trial despite their clear and categorical commitment to do so. Furthermore, the purported Original Certificate of Title issued in the name of Brigido Sacluti and Melitona Obial was never presented in evidence, thus, creating the presumption that had it been presented, the same would have been adverse to respondents. 9 II. The spouses Solomon acquired the subject property from its lawful owner in good faith and for value.10 III. The spouses Solomon acquired the subject property at the public auction sale conducted by the provincial sheriff of Laguna based on the judgment and writ of execution issued by the Municipal Trial Court of Laguna against respondent Valeriano Velasco for non-payment of a loan considering that (1) the issuance of Tax Declaration No. 4624 in the name of respondent Valeriano Velasco is entitled to the presumption of regularity especially since respondents have not explained how and why it was wrongly issued in the name of their own brother, respondent Valeriano Velasco and without any of them taking any action to correct the alleged mistake; and (2) by their failure to assert their alleged ownership of the property and their inaction [by not] questioning the legal action taken by the bank against their co-respondent Valeriano Velasco and the subject property despite their full awareness since 1980, respondents are barred by estoppel from denying the title of the bank and the Solomon spouses.11 IV. The action a quo was barred by prescription considering that respondents filed their legal action against the petitioners only on October 14, 1991, more than ten (10) years after the bank had acquired the subject property on September 17, 1980 at the public auction conducted by the Provincial Sheriff of Laguna.12 V. At the very least, respondents are guilty of laches, they having slept on their rights for an unreasonable length of time such that to dispossess petitioners of the property after they had introduced substantial improvements thereon in good faith would result in undue damage and injury to them all due to the silence and inaction of respondents in asserting their alleged ownership over the property.13 VI. The evidence proves that Lot no. 2161 and Lot no. 76-pt are one and the same.14 VII. The failure of Atty. Asinas to present other witnesses, additional documents and to respond to certain pleadings brought about by his serious illnesses constitutes excusable negligence or incompetency to warrant a new trial considering that the Supreme Court itself

had recognized negligence or incompetency of counsel as a ground for new trial especially if it has resulted in serious injustice or to an uneven playing field. 15 VIII. The overwhelming testimonial and documentary evidence, if presented, would have altered the result and the decision now appealed from.16 IX. The petitioners should be awarded their counterclaim for exemplary damages, attorneys fees and litigation expenses.17 The arguments submitted by petitioners may be summed up in the following issues: I. Who, as between the parties, have a better right of possession of Lot No. 2161; II. Whether the complaint for accion publiciana has already prescribed; and III. Whether the negligence of respondents counsel entitles them to a new trial. The Ruling of the Court We deny the instant petition. First. The instant case is for accion publiciana, or for recovery of the right to possess. This was a plenary action filed in the regional trial court to determine the better right to possession of realty independently of the title.18Accion publiciana is also used to refer to an ejectment suit where the cause of dispossession is not among the grounds for forcible entry and unlawful detainer, or when possession has been lost for more than one year and can no longer be maintained under Rule 70 of the Rules of Court. The objective of the plaintiffs in accion publiciana is to recover possession only, not ownership.19 Based on the findings of facts of the RTC which were affirmed by the CA, respondents were able to establish lawful possession of Lot No. 2161 when the petitioners occupied the property. Lot No. 2161 was the subject of Decree No. 403348 based on the decision dated October 10, 1930 in Cadastre (Cad.) Case No. 11, LRC Record No. 208. The Original Certificate of Title to the land was issued to Brigido Sacluti and Melitona Obial. On February 14, 1944, the original owners of the land sold the same to Artemio. From the date of sale, until Artemios death on January 22, 1949, he was in continuous possession of the land. When Artemio died, Isauro acted as administrator of the land with Tomas Vivero as caretaker. In 1987, petitioners occupied the property by virtue of a deed of sale between the Rural Bank of Pagsanjan and the Solomon spouses. The land bought by the Solomon spouses from the Bank is denominated as Lot No. 76-pt and previously owned by Valeriano. However, it was proved during trial that the land occupied by petitioners was Lot No. 2161 in the name of Artemio, whereas the land sold by the bank to the petitioners was Lot No. 76-pt. Given this factual milieu, it can readily be deduced that respondents are legally entitled to the possession of Lot No. 2161.

It is a long-standing policy of this Court that the findings of facts of the RTC which were adopted and affirmed by the CA are generally deemed conclusive and binding. This Court is not a trier of facts and will not disturb the factual findings of the lower courts unless there are substantial reasons for doing so.20 In the instant case, we find no exceptional reason to depart from this policy. Second. The case filed by respondents for accion publiciana has not prescribed. The action was filed with the RTC on October 14, 1991. Petitioners dispossessed respondents of the property in October 1987. At the time of the filing of the complaint, only four (4) years had elapsed from the time of dispossession. Under Article 555(4) of the Civil Code of the Philippines, the real right of possession is not lost till after the lapse of ten years. It is settled that the remedy of accion publiciana prescribes after the lapse of ten years.21 Thus, the instant case was filed within the allowable period. Third. Petitioners put in issue that Lot No. 2161 and Lot 76-pt are one and the same, and that the land was owned by Valeriano when it was foreclosed by the bank. This, in effect, is a collateral attack on the title over the property which is registered in the name of Artemio. We cannot countenance this stance of the petitioners, and perforce, must strike it down. Title to a registered land cannot be collaterally attacked.22 A separate action is necessary to raise the issue of ownership. In accion publiciana, the principal issue is possession, and ownership is merely ancillary thereto. Only in cases where the possession cannot be resolved without resolving the issue of ownership may the trial court delve into the claim of ownership. This rule is enunciated in Refugia v. CA,23 where the Court declared, viz.: Where the question of who has prior possession hinges on the question of who the real owner of the disputed portion is, the inferior court may resolve the issue of ownership and make a declaration as to who among the contending parties is the real owner. In the same vein, where the resolution of the issue of possession hinges on a determination of the validity and interpretation of the document of title or any other contract on which the claim of possession is premised, the inferior court may likewise pass upon these issues. This is because, and it must be so understood, that any such pronouncement made affecting ownership of the disputed portion is to be regarded merely as provisional, hence, does not bar nor prejudice an action between the same parties involving title to the land. Fourth. Petitioners aver that they are entitled to a new trial due to the failure of their counsel in the proceedings before the RTC to present testimonial and documentary evidence necessary for them to obtain a favorable judgment. They maintain that the failure of their counsel to present these other evidence was due to counsels lingering illness at tha t time, and therefore, constitutes excusable negligence. It may be reiterated that mistakes of counsel as to the competency of witnesses, the sufficiency and relevancy of evidence, the proper defense, or the burden of proof, as well as his failure to introduce certain evidence or to summon witnesses and to argue the case, are

not proper grounds for a new trial, unless the incompetence of counsel be so great that his client is prejudiced and prevented from fairly presenting his case.24 In this case, the illness of petitioners counsel and his alleged failure to present additional evidence during the trial of the case do not constitute sufficient ground for a new trial. The Order25 issued by the trial court in its denial of the motion for new trial filed by petitioners aptly explains the reason why a new trial is unnecessary, viz.: Assuming that Atty. Asinas failed to perform the imputed acts by reason of his ailments, still, the same is insufficient ground to grant a new trial. The evidence on record established the fact that [respondents] and their predecessors-in-interest have been in possession of the subject realty for a long time. Their possession was interrupted by [petitioners] who entered the property in [1987] pursuant to a deed of sale between the Rural Bank of Pagsanjan and spouses Bartolome C. Solomon and Teresita Padilla. Considering that this is an accion publiciana and [respondents] earlier rightful possession of the subject parcel of land has been adequately established, the testimonial and documentary evidence sought to be adduced in a new trial would not adversely affect the findings of the Court. The ownership and possession of the property purchased by the Solomon spouses from the Rural Bank of Pagsanjan could be the subject of an appropriate action. WHEREFORE, the instant petition is DENIED for lack of merit. Costs against the petitioners. SO ORDERED. ANTONIO EDUARDO B. NACHURA Associate Justice

WE CONCUR: CONSUELO YNARES-SANTIAGO Associate Justice Chairperson MA. ALICIA AUSTRIA-MARTINEZ Associate Justice MINITA V. CHICO-NAZARIO Associate Justice

TERESITA J. LEONARDO-DE CASTRO Associate Justice ATTESTATION I attest that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.

CONSUELO YNARES-SANTIAGO Associate Justice Chairperson,Third Division CERTIFICATION Pursuant to Section 13, Article VIII of the Constitution and the Division Chairperson's Attestation, I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division. REYNATO S. PUNO Chief Justice

Republic of the Philippines SUPREME COURT Manila THIRD DIVISION G.R. No. 161925 November 25, 2009

SPOUSES EXEQUIEL LOPEZ and EUSEBIA LOPEZ, Petitioners, vs. SPOUSES EDUARDO LOPEZ and MARCELINA R. LOPEZ, Respondents. DECISION NACHURA, J.: This is a petition for review on certiorari of the Court of Appeals (CA) Decision1 dated January 26, 2004, which ordered the cancellation of Transfer Certificate of Title (TCT) No. T-5066 in the name of petitioners. Respondents, spouses Eduardo and Marcelina Lopez, are the owners and occupants of an 80-square-meter residential lot situated in San Pascual, Hagonoy, Bulacan. They acquired the property by donation inter vivos from Maria Alvarado and Agatona Caparas, in whose names the lot was previously declared for taxation purposes. Respondents have occupied the lot since 1977.2 In November 1992, respondents discovered that Victor Villadares was granted a free patent over an 885-sq-m land, which included respondents lot, and was subsequently issued Original Certificate of Title (OCT) No. RP-253 (P-8511) on March 8, 1978. Thereafter, Villadares subdivided the entire parcel of land into 3 lots, namely: Lot 9954-A, Lot 9954-B and Lot 9954-C. As shown in the Deed of Absolute Sale of Portions of a Parcel of Land, Villadares sold Lot 9954-B with an area of 273 sq m to petitioners, spouses Eusebia and

Exequiel Lopez, and Lot 9954-C with an area of 337 square meters to Filomena Caparas. Consequently, OCT No. RP-253 (P-8511) was cancelled and TCT Nos. T-5065, T-5066 and T-5067 were issued to Villadares, to petitioners, and to Caparas, respectively. Respondents filed an action for reconveyance, declaration of nullity of a deed of absolute sale, cancellation of titles, and damages against Villadares and petitioners. The action was filed only against the two parties because respondents property is situated between their properties, Lots 9954-A and 9954-B. In their Answer, petitioners averred that respondents had no personality to institute the action, that the free patent in favor of Villadares was issued pursuant to law, that they were innocent purchasers for value, and that their certificate of title was already incontrovertible.3 During trial, Pedro Manansala, a witness for respondents, testified that petitioners lot consisted of 168 sq m only, which they bought from him for P20,000.00 sometime after Martial Law.4 Petitioner Eusebia Lopez refuted this by stating that she bought a 273-sq-m lot from Pedro Manansala.5 She admitted that she filed a protest against Villadares application for registration but claimed that Villadares later agreed to sell the property to her for P30,000.00.6 Villadares corroborated her testimony, saying that when petitioners showed him proof that they owned a portion of the lot registered in his name, he agreed to transfer the title of the said portion to their names.7 The Regional Trial Court ruled in favor of respondents. According to the trial court, the declaration of the subject property for taxation purposes in the name of respondents, coupled with their actual possession thereof, strongly indicated that they owned the same. It held that petitioners were not buyers in good faith because it appeared that the execution of the deed of sale was only an afterthought. The dispositive portion of the trial courts decision reads: WHEREFORE, premises considered, judgment is hereby rendered in favor of the plaintiffs and against herein defendants: 1. that the deed of absolute sale, dated May 8, 1990 is hereby declared null and void; 2. that defendants reconvey to the plaintiffs the subject 80-square meter lot; 3. the Register of Deeds of Tabang, Guiguinto, Bulacan is hereby ordered to cancel TCT Nos. T-5065 in the name of defendant Victor Villadares and T-5066 in the name of defendants/Spouses Exequiel and Eusebia Lopez; 4. that defendants jointly and severally pay the plaintiffs the sum of: P10,000.00 for moral damages;P10,000.00 for exemplary damages and P10,000.00 for attorneys fees and cost of suit. SO ORDERED.8

Subsequently, the case was elevated to the CA on appeal, through petitioners and Villadares respective notices of appeal. Based on the doctrine that land registration proceedings cannot shield fraud or permit the enrichment of a person at the expense of another, the CA affirmed the trial courts decision. In so ruling, the appellate court considered the following: (a) respondents ownership of the 80-sq-m lot was admitted by petitioners during pre-trial; (b) petitioners were not innocent purchasers for value; (c) respondents were in possession of the subject property and paid the real property taxes thereon; and (d) the conveyance of the 273-sq-m lot from Villadares to petitioners was simulated.9 Only Villadares filed a motion for reconsideration with the CA; petitioners elevated the case immediately to this Court. In a Resolution10 dated April 28, 2004, the CA resolved to hold in abeyance the resolution of Villadares motion and to consider it abandoned if the present petition would be given due course by this Court. In this petition, petitioners ascribe the following errors to the CA: I. THE HONORABLE COURT OF APPEALS FAILED TO RECOGNIZE THE ACTUAL POSSESSION OF PETITIONERS AND THEIR PREDECESSORS-IN-INTEREST ON (sic) THE PROPERTY NOW COVERED BY TCT NO. T-5066 OF THE REGISTRY OF DEEDS FOR THE PROVINCE OF BULACAN FOR MORE THAN FIFTY (50) YEARS. II. THE HONORABLE COURT OF APPEALS FAILED TO RECOGNIZE THAT PETITIONERS EXEQUIEL LOPEZ AND EUSEBIA LOPEZ HAVE BEEN PAYING REAL ESTATE TAXES ON THE SUBJECT PROPERTY AFTER THEY HAVE BOUGHT IT FROM PEDRO MANANSALA AND MIGUELA AYUSON MANANSALA ON AUGUST 2, 1974. III. THE HONORABLE COURT OF APPEALS ERRED IN CONSIDERING THE POSSESSION OF RESPONDENTS ON (sic) THE SUBJECT PROPERTY FOR LESS THAN THIRTY (30) YEARS. IV. THE HONORABLE COURT OF APPEALS FAILED TO RECOGNIZE THAT THE DEED OF ABSOLUTE SALE OF PORTION OF PARCEL OF LAND EXECUTED BY DEFENDANT VICTOR VILLADARES IN FAVOR OF PETITIONERS, EXEQUIEL LOPEZ AND EUSEBIA LOPEZ, WAS MERELY TO SETTLE THEIR CONFLICT OF OWNERSHIP ON THE SUBJECT PROPERTY AND TO EXPEDITE THE TRANSFER THEREOF TO THE PETITIONERS. V.

THE HONORABLE COURT OF APPEALS ERRED IN AFFIRMING THE RULING OF THE LOWER COURT FOR THE CANCELLATION OF TCT NO. T-5065 WITH AN AREA OF 275 SQUARE METERS IN THE NAME OF DEFENDANT VICTOR VILLADARES AND THE CANCELLATION OF TCT NO. T-5066 WITH AN AREA OF 273 SQUARE METERS IN THE NAME OF PETITIONERS EXEQUIEL LOPE[Z] AND EUSEBIA LOPEZ, WHEN THE CLAIM OF RESPONDENTS IS ONLY EIGHTY (80) SQUARE METERS.11 The petition is partly meritorious. An action for reconveyance is a legal and equitable remedy granted to the rightful owner of a land which has been wrongfully or erroneously registered in the name of another for the purpose of compelling the latter to transfer or reconvey the land to him. 12 The action does not seek to reopen the registration proceedings and to set aside the decree of registration but only purports to show that the person who secured the registration of the property in controversy is not the real owner thereof.13 Initially, we affirm the CAs findings of fact that respondents are the rightful owners of the subject property, an 80-sq-m portion of land, wrongfully included in either or in both of the certificates of title of petitioners or Villadares, and that petitioners were not innocent purchasers for value. As neighbors of respondents, petitioners certainly would have known that respondents actually occupied the subject property. Thus, Villadares, not being the owner of the subject property, could not have transferred ownership of the subject 80-sq-m portion of land to petitioners. As a logical consequence, petitioners did not become the owners of the subject property even after a TCT had been issued in their names. After all, registration does not vest title. Certificates of title merely confirm or record title already existing and vested. They cannot be used to protect a usurper from the true owner, nor can they be used as a shield for the commission of fraud, or to permit one to enrich oneself at the expense of others. 14 Hence, reconveyance of the subject property is warranted. It is well to remember that in an action for reconveyance, the decree of registration is highly regarded as incontrovertible. What is sought is the transfer of the property or its title, which has been wrongfully or erroneously registered in another persons name, to its rightful owner or to one who has a better right.15 The present action for reconveyance only entails the segregation of the portion wrongfully included in the certificate of title. The decree of registration is to be respected, but the certificate of title will be cancelled for the purpose of amending it in order to exclude the portion wrongfully included therein. A new certificate covering the portion reconveyed shall then be subsequently issued in the name of the real owner. However, the CA went beyond this and declared the entire deed of sale, covering 273 sq m, void for being simulated. As such, the CA decision would result not only in the amendment of petitioners certificate of title, but in the absolute revocation of petitioners title itself. The property would then revert to its previous owner, subject to the right of respondents over the portion of the lot which they claim as their own.

Understandably, petitioners anxiously insist that their TCT should not be cancelled even if the deed of sale is declared void. They maintain that they own the entire Lot 9954-B, not because they purchased the same from Villadares, but because they previously acquired the same from Pedro Manansala, in whose name the lot was previously declared for taxation purposes. Petitioners allegedly acquired the property from Pedro Manansala long before they bought the property from Villadares, and they claim that they and their predecessors-in-interest have been in possession thereof for more than 50 years. Hence, even if the deed of sale executed by Villadares in their favor is nullified, they would remain owners of the land and their title thereto should not be cancelled. 16 However, petitioners are barred from raising this issue as it constitutes a collateral attack on the decree of registration. The record shows that petitioners had participated in the land registration proceeding by filing their opposition to Villadares application for registration. Petitioners alleged possession of the property prior to Villadares filing of the application for registration was, in fact, the meat of their opposition in the land registration proceeding. And in a proceeding for land registration, whether with or without opposition, the final judgment of the court confirming the title of the applicant or oppositor, as the case may be, and ordering its registration in his name constitutes res judicata against the whole world.17 Thus, the Court is compelled to exercise its authority to review the validity of the Deed of Absolute Sale of Portions of a Parcel of Land, though not specifically assigned as error in this petition, because its resolution is necessary to arrive at a just decision and complete disposition of the case.18 In finding that the contract of sale was simulated, the CA held that petitioners opposition to Villadares application for registration, together with Pedro Manansalas testimony that petitioners actually bought the property from him, evinces the falsity of the claim that petitioners purchased the property from Villadares. We are not convinced. The primary consideration in determining the true nature of a contract is the intention of the parties. Such intention is determined not only from the express terms of their agreement, but also from the contemporaneous and subsequent acts of the parties.19
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Simulation takes place when the parties do not really want the contract they have executed to produce the legal effects expressed by its wordings.20 This Courts pronouncement in Valerio v. Refresca21 is instructive Article 1345 of the Civil Code provides that the simulation of a contract may either be absolute or relative. In absolute simulation, there is a colorable contract but it has no substance as the parties have no intention to be bound by it. The main characteristic of an absolute simulation is that the apparent contract is not really desired or intended to produce legal effect or in any way alter the juridical situation of the parties. As a result, an absolutely simulated or fictitious contract is void, and the parties may recover from each other what they may have given under the contract. However, if the parties state a false cause in the contract to conceal their real agreement, the contract is relatively simulated and the parties are still bound by their real agreement. Hence, where the essential requisites of a contract are present and the simulation refers only to the content or terms of the contract, the

agreement is absolutely binding and enforceable between the parties and their successors in interest.22
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Based on the foregoing, the subject deed of sale can hardly be considered simulated. There is no showing that the parties did not intend to be bound by the contract and to comply with its terms. In fact, Villadares surrendered to petitioners any right he had over the property. He caused the titling of the property and the transfer of the tax declaration in petitioners names, and thereafter, delivered the certificate of title and the tax declaration to petitioners and accepted the purchase price from them. To recall, Villadares admitted that he was swayed by petitioners claim that they had a right over the property and thus, he agreed to sell it to them. Such motivation for entering into the contract would not negate the efficacy of the contract. In the same way, petitioners opposition in the land registration case does not necessarily mean that petitioners did not really intend to purchase the property. Petitioners could have accepted or acquiesced to Villadares title and entered into the agreement to finally settle their claim over the property. The following testimony of petitioner Eusebia Lopez is telling: Q Then after filing the protest, what did you do? A I talked with Victor Villadares and we agreed that he will sell the land in a much lower price, sir. Q Did he comply with his promise? A Yes, sir. Q So how much was it sold [to] you[;] as you said it will be sold to you at a lower price. How much was the selling price? A P30,000.00, sir. Q Did you pay the P30,000.00 to him? A Yes, sir. Q When did you pay it to defendant Victor Villadares? A When the title was given to me by him as well as the tax declaration and the Bilihang Patuluyan, sir.23 We, therefore, uphold the validity of the deed of sale subject to the reconveyance of respondents 80-sq-m portion of the land. WHEREFORE, premises considered, the petition is PARTIALLY GRANTED. The Court of Appeals Decision dated January 26, 2004 is AFFIRMED WITH MODIFICATIONS. The Deed of Absolute Sale of Portions of a Parcel of Land dated May 8, 1990 is declared VALID but subject to our disposition hereunder. Petitioners and Victor Villadares are directed to cause a SURVEY of Lots 9954-A and 9954-B in order to determine the exact location of the

80-sq m portion pertaining to respondents. Thereafter, the Register of Deeds of Tabang, Guiguinto, Bulacan is ordered to ISSUE the corresponding transfer certificates of title in the names of petitioners, respondents and Victor Villadares, in accordance with said survey. SO ORDERED. ANTONIO EDUARDO B. NACHURA Associate Justice WE CONCUR: RENATO C. CORONA Associate Justice Chairperson MINITA V. CHICO-NAZARIO Associate Justice PRESBITERO J. VELASCO, JR. Associate Justice

DIOSDADO M. PERALTA Associate Justice ATTESTATION I attest that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Courts Division. RENATO C. CORONA Associate Justice Chairperson, Third Division CERTIFICATION Pursuant to Section 13, Article VIII of the Constitution and the Division Chairperson's Attestation, I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division. REYNATO S. PUNO Chief Justice

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