HEIRS OF ROMAN SORIANO, petitioners, vs. THE HONORABLE COURT OF APPEALS, SPOUSES BRAULIO ABALOS and AQUILINA ABALOS, respondents. D E C I S I O N YNARES-SANTIAGO, J.: May a winning party in a land registration case effectively eject the possessor thereof, whose security of tenure rights are still pending determination before the DARAB? The instant petition for certiorari seeks to set aside the Decisioni[1] dated September 20, 1996 of the Court of Appeals in CA-G.R. SP No. 34930 as well as its Resolutionii[2] dated January 15, 1997, denying petitioners Motion for Reconsideration. We quote the undisputed facts as narrated by the Court of Appeals, to wit The property subject of this case is a parcel of land containing an area of 24,550 square meters, more or less, located in Lingayen, Pangasinan, and particularly described as follows: A parcel of land (Nipa with an area of 8,410 square meters; fishpond with an area of 14,000 square meters; and residential land with an area of 1,740 square meters, more or less. Bounded on the N, by river and Filemon Anselmo; on the South by Alejandro Soriano and Filemon Anselmo; and on the West by Fortunata Soriano. Originally owned by Adriano Soriano until his death in 1947, the above-described property passed on to his heirs who leased the same to spouses David de Vera and Consuelo Villasista for a period of fifteen (15) years beginning July 1, 1967 with Roman Soriano, one of the children of Adriano Soriano, acting as caretaker of the property during the period of the lease. After executing an extra judicial settlement among themselves, the heirs of Adriano Soriano subsequently subdivided the property into two (2) lots, Lot No. 60052 and Lot No. 8459. Lot No. 60052 was assigned to Lourdes, Candido and the heirs of Dionisia while Lot No. 8459 was assigned to Francisca, Librada, Elocadio and Roman. In 1971, Lot No. 60052 was sold by Lourdes, Candido and the heirs of Dionisia to petitioner spouses Braulio and Aquilina Abalos (hereinafter referred to as petitioners), while, Elocadio, Francisca and Librada sold their three- fourths shares in Lot No. 8459 also to petitioners. On March 14, 1968, the de Vera spouses ousted Roman Soriano as caretaker and appointed Isidro Verzosa and Vidal Verzosa as his substitutes. Thereafter, Roman Soriano filed CAR Case No. 1724-P-68 for reinstatement and reliquidation against the de Vera spouses. The agrarian court authorized the ejectment of Roman Soriano but on appeal, the decision was reversed by the Court of Appeals, which decision became final and executory. However, prior to the execution of the said decision, the parties entered into a post-decisional agreement wherein the de Vera spouses allowed Roman Soriano to sub-lease the property until the termination of the lease in 1982. In an Order dated December 22, 1972, the post-decisional agreement was approved by the agrarian court. On August 16, 1976, petitioners filed with the Regional Trial Court of Lingayen, Pangasinan, Branch 38, an application for registration of title over Lot No. 60052 and three-fourths (3/4) pro- indiviso of Lot No. 8459, docketed as LRC Case No. N-3405. Said application for registration was granted by the trial court, acting as a land registration court, per Decision dated June 27, 1983. On appeal, the Court of Appeals affirmed the decision of the land registration court. The petition for review filed with the Supreme Court by Roman Soriano docketed as G.R. 70842, was denied for lack of merit and entry of judgment was entered on December 16, 1985. Meanwhile, it appears that on July 15, 1983, a day after the promulgation of the land registration courts decision, Roman Soriano, together with Elocadio and Librada Soriano, filed before the Regional Trial Court of Lingayen, Branch 37, and against petitioners, an action for annulment of document and/or redemption, ownership and damages, docketed as Civil Case No. 159568 (sic; should be 15958). Petitioners filed a motion to dismiss on the ground of res judicata, pendency of another action, laches, misjoinder of parties and lack of jurisdiction, which was denied by the trial court. Thereafter, on August 22, 1984, or eleven (11) years after the approval of the post-decisional agreement between Roman Soriano and the spouses de Vera in CAR Case No. 1724-P-68 for reinstatement and reliquidation, petitioners filed with the agrarian court a motion for execution of said post-decisional agreement which allowed Roman Soriano to sub-lease the property. The motion prayed that petitioners be placed in possession of the subject property, jointly with Roman Soriano, and to levy so much of Romans property to answer for the use and occupation by Soriano of 6/7 share of the property. On October 25, 1984, Roman Soriano filed a motion to suspend hearing on the rental demanded by petitioners, which, however, was denied by the agrarian court. The agrarian court likewise authorized the substitution of the de Vera spouses by petitioners. Sorianos motion for reconsideration was also denied, prompting Soriano to file a petition for certiorari with the Court of Appeals. In the meantime, Roman Soriano died on December 11, 1985. Thus, the complaint in Civil Case No. 159568 (sic) for annulment of document and/or redemption, ownership and damages, was amended to substitute Sorianos heirs, herein private respondents, as party-plaintiffs. The complaint was again amended to include Juanito Ulanday as party-defendant for having allegedly purchased part of the disputed property from petitioners. On motion of petitioners, the re-amended complaint was dismissed by the trial court on the ground that the re-amended complaint altered the cause of action. Upon reconsideration, the dismissal was set aside and petitioners were ordered to file their Answer, in view of which petitioners filed a petition for certiorari and prohibition with the Court of Appeals, docketed as C.A. GR SP No. 22149. On April 25, 1990, the Court of Appeals denied the petition filed by Roman Soriano (substituted by private respondents) impugning the denial of their motion to suspend hearing on the rental demanded by petitioners, and authorizing the substitution of the de Vera spouses by petitioners, on the ground that no grave abuse of discretion was committed by the agrarian court. Thus, private respondents filed a petition for review on certiorari with the Supreme Court, docketed as G.R. 93401. Meanwhile, on December 7, 1990, the Court of Appeals in C.A. GR SP No. 22149, also denied the petition for certiorari and prohibition filed by petitioners, ruling that the land registration court committed no error when it refused to adhere to the rule of res judicata. Petitioners then filed with the Supreme Court a petition for review on certiorari, docketed as G.R. 99843. On June 26, 1991, the Supreme Court promulgated its decision in G.R. 93401, and granted the petition filed by private respondents. Thus, the decision of the Court of Appeals denying the petition of private respondents was set aside, and the motion for execution filed by petitioners in CAR Case No. 1724-P-48 was denied. On June 22, 1993, the Supreme Court, in G.R. 99843, reversed and set aside the denial of the Court of Appeals in C.A. GR SP No. 22149, and consequently, Civil Case No. 15958 for annulment of document and/or redemption, ownership and damages, was ordered dismissed. On October 18, 1993, private respondents filed with the Department of Agrarian Adjudication Board (sic), a complaint against petitioners for Security of Tenure with prayer for Status Quo Order and Preliminary Injunction docketed as DARAB Case No. 528-P-93. Meanwhile, it appears that the decision of the land registration court in LRC Case No. N-3405 was partially executed with the creation of a Committee on Partition per Order dated March 25, 1987. On July 27, 1988, the land registration court approved the partition of Lot No. 8459, with Lot No. 8459-A assigned to private respondent, and Lot No. 8459-B assigned to petitioners. For Lot No. 60052, O.C.T. No. 22670 was issued in the name of petitioners; for Lot No. 8459-B, O.C.T. No. 22687 was issued, also in the name of petitioner; and for Lot No. 8459-A, O.C.T. No. 22686 was issued in the name of Roman Soriano. Dissatisfied with said partition, private respondents appealed to the Court of Appeals, docketed as CA G.R. SP No. 119497. The appellate court affirmed the partition but reversed the order of the land registration court directing the issuance of a writ of possession on the ground of pendency of Civil Case No. 15958. On November 15, 1993, the trial court in compliance with the decision of the Supreme Court in G.R. No. 99843, dismissed Civil Case No. 15958, in view of which, petitioner, on November 25, 1993, in LRC Case No. N-3405, moved for the issuance of an alias writ of execution and/or writ of possession to place them in possession of Lot No. 60052 and Lot No. 8459-B. Per Resolution dated January 21, 1994, said motion was held in abeyance by the land registration court until and after DARAB Case No. 528-P-93 for security of tenure with prayer for status quo, has been resolved. Their motion for reconsideration having been denied on April 5, 1984, petitioners interposed an appeal to the Supreme Court, docketed as G.R. 115073. In a Resolution dated July 27, 1994 issued by the Supreme Court, petitioners appeal, which was treated as a petition for certiorari, was referred to this Court [of Appeals] for determination and disposition.iii[3] The Court of Appeals annulled and set aside the Resolution of the land registration court and ordered instead the issuance of the corresponding writ of possession in favor of private respondents. With the denial of their Motion for Reconsideration, petitioners are now before us raising the following grounds: 1. THE DECISION AND RESOLUTION OF THE RESPONDENT COURT OF APPEALS ARE CONTRARY TO THE PROVISIONS OF THE AGRARIAN REFORM LAWS AND JURISPRUDENCE ON THE SECURITY OF TENURE OF TENANT-CARETAKER. 2. THE DECISION AND RESOLUTION OF THE RESPONDENT COURT OF APPEALS ARE VIOLATIVE OF THE PROVISION ON RIGHT TO DUE PROCESS. 3. THE HONORABLE COURT OF APPEALS GRAVELY ABUSED ITS DISCRETION IN GIVING DUE COURSE TO THE PETITION CONSIDERING THAT PRIVATE RESPONDENTS HAD EARLIER PERFECTED AN APPEAL OF THE RESOLUTION SUBJECT OF THEIR PETITION.iv[4] Possession and ownership are distinct legal concepts. There is ownership when a thing pertaining to one person is completely subjected to his will in a manner not prohibited by law and consistent with the rights of others. Ownership confers certain rights to the owner, among which are the right to enjoy the thing owned and the right to exclude other persons from possession thereof. On the other hand, possession is defined as the holding of a thing or the enjoyment of a right. Literally, to possess means to actually and physically occupy a thing with or without right. Possession may be had in one of two ways: possession in the concept of an owner and possession of a holder.v[5] A person may be declared owner but he may not be entitled to possession. The possession may be in the hands of another either as a lessee or a tenant. A person may have improvements thereon of which he may not be deprived without due hearing. He may have other valid defenses to resist surrender of possession. A judgment for ownership, therefore, does not necessarily include possession as a necessary incident.vi[6] There is no dispute that private respondents (petitioners below) title over the land under litigation has been confirmed with finality. As explained above, however, such declaration pertains only to ownership and does not automatically include possession, especially so in the instant case where there is a third party occupying the said parcel of land, allegedly in the concept of an agricultural tenant. While the issue of ownership of the subject land has been laid to rest in the final judgment of the land registration court, the right of possession thereof is, as yet, controverted. This is precisely what is put in issue in the security of tenure case filed by petitioners (private respondents below) before the DARAB. It is important to note that although private respondents have been declared titled owners of the subject land, the exercise of their rights of ownership are subject to limitations that may be imposed by law.vii[7] The Tenancy Act provides one such limitation. Agricultural lessees are entitled to security of tenure and they have the right to work on their respective landholdings once the leasehold relationship is established. Security of tenure is a legal concession to agricultural lessees which they value as life itself and deprivation of their landholdings is tantamount to deprivation of their only means of livelihood.viii[8] The exercise of the right of ownership, then, yields to the exercise of the rights of an agricultural tenant. However, petitioners status as tenant has not yet been declared by the DARAB. In keeping with judicial order, we refrain from ruling on whether petitioners may be dispossessed of the subject property. As ratiocinated in Nona v. Planix[9] It is to the credit of respondent Judge that he has shown awareness of the recent Presidential Decrees which are impressed with an even more solicitous concern for the rights of the tenants. If, therefore, as he pointed out in his order granting the writ of possession, there is a pending case between the parties before the Court of Agrarian Relations, ordinary prudence, let alone the letter of the law, ought to have cautioned him against granting the plea of private respondents that they be placed in possession of the land in controversy. x x x. At the time the challenged orders were issued, without any showing of how the tenancy controversy in the Court of Agrarian Relations was disposed of, respondent Judge could not by himself and with due observance of the restraints that cabin and confine his jurisdiction pass upon the question of tenancy. (Emphasis ours) In its challenged Decision, the Court of Appeals relied heavily on the principle of finality of judgments. It applied the legal doctrine that once a judgment has become final, the issuance of a writ of execution becomes ministerial. The appellate court held that petitioners situation does not fall under any of the exceptions to this rule since his occupation of the subject land did not transpire after the land registration courts adjudication became final. In so ruling, however, the Court of Appeals loses sight of the fact that petitioners claim of possession as a tenant of the litigated property, if proven, entitles him to protection against dispossession. Private respondents argue that petitioners tenancy claim is barred by res judicata, having been ruled upon in G.R. Nos. 99843 and 93401. However, not being an issue in the case before us, this question should properly be resolved in DARAB Case No. 528-P-93. To restate, the only issue before us is whether or not a winning party in a land registration case can effectively eject the possessor thereof, whose security of tenure rights are still pending determination before the DARAB. A judgment in a land registration case cannot be effectively used to oust the possessor of the land, whose security of tenure rights are still pending determination before the DARAB. Stated differently, the prevailing party in a land registration case cannot be placed in possession of the area while it is being occupied by one claiming to be an agricultural tenant, pending a declaration that the latters occupancy was unlawful. WHEREFORE, the instant petition for certiorari is hereby GRANTED. The Decision of respondent Court of Appeals in CA-G.R. SP No. 34930 dated September 20, 1996, as well as its Resolution dated January 15, 1997 are SET ASIDE. The Resolution of the Regional Trial Court of Lingayen, Pangasinan in LRC Case No. N-3405 dated January 21, 1994 is ordered REINSTATED. SO ORDERED. 2. G.R. No. L-13298 November 19, 1918 CORNELIO RAMOS, petitioner-appellant, vs. THE DIRECTOR OF LANDS, objector-appellee. Basilio Aromin for appellant. Office of the Solicitor-General Paredes for appellee.
MALCOLM, J .: This is an appeal by the applicant and appellant from a judgment of the Court of First Instance of Nueva Ecija, denying the registration of the larger portion of parcel No. 1 (Exhibit A of the petitioner), marked by the letters A, B, and C on the plan, Exhibit 1, of the Government. One Restituto Romero y Ponce apparently gained possession of a considerable tract of land located in the municipality of San Jose, Province of Nueva Ecija, in the year 1882. He took advantage of the Royal Decree of February 13, 1894, to obtain a possessory information title to the land, registered as such on February 8, 1896. Parcel No. 1, included within the limits of the possessory information title of Restituto Romero, was sold in February, 1907, to Cornelio Ramos, the instant petitioner, and his wife Ambrosia Salamanca. Ramos instituted appropriate proceedings to have his title registered. Opposition was entered by the Director of Lands on the ground that Ramos had not acquired a good title from the Spanish government and by the Director of Forestry on the ground that the first parcel was forest land. The trial court agreed with the objectors and excluded parcel No. 1 from registration. So much for the facts. As to the law, the principal argument of the Solicitor-General is based on the provisions of the Spanish Mortgage Law and of the Royal Decree of February 13, 1894, commonly known as the Maura Law. The Solicitor-General would emphasize that for land to come under the protective gis of the Maura Law, it must have been shown that the land was cultivated for six years previously, and that it was not land which pertained to the "zonas forestales." As proof that the land was, even as long ago as the years 1894 to 1896, forestal and not agricultural in nature is the fact that there are yet found thereon trees from 50 to 80 years of age. We do not stop to decide this contention, although it might be possible, following the doctrine laid down by the United States Supreme Court with reference to Mexican and Spanish grantes within the United States, where some recital is claimed to be false, to say that the possessory information, apparently having taken cognizance of the requisites for title, should not now be disturbed. (Hancock vs. McKinney [1851], 7 Tex., 192; Hornsby and Roland vs. United States [1869], 10 Wall., 224.) It is sufficient, as will later appear, merely to notice that the predecessor in interest to the petitioner at least held this tract of land under color of title. Subsection 6 of section 54, of Act No. 926, entitled The Public Land Law, as amended by Act No. 1908, reads as follows: 6. All persons who by themselves or their predecessors and interest have been in the open, continuous, exclusive, and notorious possession and occupation of agricultural public lands, as defined by said Act of Congress of July first, nineteen hundred and two, under a bona fide claim of ownership except as against the Government, for a period of ten years next preceding the twenty-sixth day of July, nineteen hundred and four, except when prevented by war or force majeure, shall be conclusively presumed to have performed all the conditions essential to a government grant and to have received the same, and shall be entitled to a certificate of title to such land under the provisions of this chapter. There are two parts to the above quoted subsection which must be discussed. The first relates to the open, continuous, exclusive, and notorious possession and occupation of what, for present purposes, can be conceded to be agricultural public land, under a bona fide claim of ownership. Actual possession of land consists in the manifestation of acts of dominion over it of such a nature as a party would naturally exercise over his own property. Relative to actuality of possession, it is admitted that the petitioner has cultivated only about one fourth of the entire tract. This is graphically portrayed by Exhibit 1 of the Government, following:
The question at once arises: Is that actual occupancy of a part of the land described in the instrument giving color of title sufficient to give title to the entire tract of land?lawphil.net The doctrine of constructive possession indicates the answer. The general rule is that the possession and cultivation of a portion of a tract under claim of ownership of all is a constructive possession of all, if the remainder is not in the adverse possession of another. (Barr vs. Gratz's Heirs [1819], 4 Wheat., 213; Ellicott vs. Pearl [1836], 10 Pet., 412; Smith vs. Gale [1892], 144 U. S., 509.) Of course, there are a number of qualifications to the rule, one particularly relating to the size of the tract in controversy with reference to the portion actually in possession of the claimant. It is here only necessary to apply the general rule. The claimant has color of title; he acted in good faith; and he has had open, peaceable, and notorious possession of a portion of the property, sufficient to apprise the community and the world that the land was for his enjoyment. (See arts. 446, 448, Civil Code.) Possession in the eyes of the law does not mean that a man has to have his feet on every square meter of ground before it can be said that he is in possession. Ramos and his predecessor in interest fulfilled the requirements of the law on the supposition that he premises consisted of agricultural public land. The second division of the law requires consideration of the term "agricultural public land." The law affirms that the phrase is denied by the Act of Congress of July 1st, 1902, known as the Philippine bill. Turning to the Philippine Bill, we find in sections 13 to 18 thereof that three classes of land are mentioned. The first is variously denominated "public land" or "public domain," the second "mineral land," and the third "timber land." Section 18 of the Act of Congress comes nearest to a precise definition, when it makes the determination of whether the land is more valuable for agricultural or for forest uses the test of its character. Although these sections of the Philippine Bill have come before the courts on numerous occasions, what was said in the case of Jones vs. Insular Government ([1906], 6 Phil., 122), is still true, namely: "The meaning of these sections is not clear and it is difficult to give to them a construction that will be entirely free from objection." In the case which gave most serious consideration to the subject (Mapa vs. Insular Government [1908], 10 Phil., 175), it was found that there does exist in the Act of Congress a definition of the phrase "agricultural public lands." It was said that the phrase "agricultural public lands" as used in Act No. 926 means "those public lands acquired from Spain which are not timber or mineral lands." The idea would appear to be to determine, by exclusion, if the land is forestal or mineral in nature and, if not so found, to consider it to be agricultural land. Here, again, Philippine law is not very helpful. For instance, section 1820 of the Administrative Code of 1917 provides: "For the purposes of this chapter, 'public forest' includes, except as otherwise specially indicated, all unreserved public land, including nipa and mangrove swamps, and all forest reserves of whatever character." This definition of "public forest," it will be noted, is merely "for the purposes of this chapter." A little further on, section 1827 provides: "Lands in public forests, not including forest reserves, upon the certification of the Director of Forestry that said lands are better adapted and more valuable for agricultural than for forest purposes and not required by the public interests to be kept under forest, shall be declared by the Department Head to be agricultural lands." With reference to the last section, there is no certification of the Director of Forestry in the record, as to whether this land is better adapted and more valuable for agricultural than for forest purposes. The lexicographers define "forest" as "a large tract of land covered with a natural growth of trees and underbrush; a large wood." The authorities say that he word "forest" has a significant, not an insignificant meaning, and that it does not embrace land only partly woodland. It is a tract of land covered with trees, usually of considerable extent. (Higgins vs. Long Island R. Co. [1908], 114 N. Y. Supp., 262; People vs. Long Island R. Co. [1908], 110 N. Y. Supp., 512.) The foresters say that no legal definition of "forest" is practicable or useful. B. H. Baden-Powell, in his work on Forest Law of India, states as follows: Every definition of a forest that can be framed for legal purposes will be found either to exclude some cases to which the law ought to apply, or on the other hand, to include some with which the law ought not to interfere. It may be necessary, for example, to take under the law a tract of perfectly barren land which at present has neither trees, brushwood, nor grass on it, but which in the course f time it is hoped will be "reboise;" but any definition wide enough to take in all such lands, would also take in much that was not wanted. On the other hand, the definition, if framed with reference to tree-growth, might (and indeed would be almost sure to) include a garden, shrubbery, orchard, or vineyard, which it was not designed to deal with. B. E. Fernow, in his work on the Economics of Forestry, states as follows: A forest in the sense in which we use the term, as an economic factor, is by no means a mere collection of trees, but an organic whole in which all parts, although apparently heterogeneous, jumbled together by accident as it were and apparently unrelated, bear a close relation to each other and are as interdependent as any other beings and conditions in nature. The Director of Forestry of the Philippine Islands has said: During the time of the passage of the Act of Congress of July 1, 1902, this question of forest and agricultural lands was beginning to receive some attention and it is clearly shown in section 18 of the above mentioned Act; it leaves to the Bureau of Forestry the certification as to what lands are for agricultural or forest uses. Although the Act states timber lands, the Bureau has in its administration since the passage of this act construed this term to mean forest lands in the sense of what was necessary to protect, for the public good; waste lands without a tree have been declared more suitable for forestry in many instances in the past. The term 'timber' as used in England and in the United States in the past has been applied to wood suitable for construction purposes but with the increase in civilization and the application of new methods every plant producing wood has some useful purpose and the term timber lands is generally though of as synonymous with forest lands or lands producing wood, or able to produce wood, if agricultural crops on the same land will not bring the financial return that timber will or if the same land is needed for protection purposes. x x x x x x x x x The laws in the United States recognize the necessity of technical advice of duly appointed boards and leave it in the hands of these boards to decide what lands are more valuable for forestry purposes or for agricultural purposes. In the Philippine Islands this policy is follows to as great an extent as allowable under the law. In many cases, in the opinion of the Bureau of Forestry, lands without a single tree on them are considered as true forest land. For instance, mountain sides which are too steep for cultivation under ordinary practice and which, if cultivated, under ordinary practice would destroy the big natural resource of the soil, by washing, is considered by this bureau as forest land and in time would be reforested. Of course, examples exist in the Mountain Province where steep hillsides have been terraced and intensive cultivation practiced but even then the mountain people are very careful not to destroy forests or other vegetative cover which they from experience have found protect their water supply. Certain chiefs have lodged protests with the Government against other tribes on the opposite side of the mountain cultivated by them, in order to prevent other tribes from cutting timber or destroy cover guarding their source of water for irrigation. Dr. M. S. Shaler, formerly Dean of the Lawrence Scientific School, remarked that if mankind could not devise and enforce ways dealing with the earth, which will preserve this source of like "we must look forward to the time, remote it may be, yet equally discernible, when out kin having wasted its great inheritance will fade from the earth because of the ruin it has accomplished." The method employed by the bureau of Forestry in making inspection of lands, in order to determine whether they are more adapted for agricultural or forest purposes by a technical and duly trained personnel on the different phases of the conservation of natural resources, is based upon a previously prepared set of questions in which the different characters of the land under inspection are discussed, namely: Slope of land: Level; moderate; steep; very steep. Exposure: North; South; East; West. Soil: Clay; sandy loam; sand; rocky; very rocky. Character of soil cover: Cultivated, grass land, brush land, brush land and timber mixed, dense forest. If cultivated, state crops being grown and approximate number of hectares under cultivation. (Indicate on sketch.) For growth of what agricultural products is this land suitable? State what portion of the tract is wooded, name of important timber species and estimate of stand in cubic meters per hectare, diameter and percentage of each species. If the land is covered with timber, state whether there is public land suitable for agriculture in vicinity, which is not covered with timber. Is this land more valuable for agricultural than for forest purposes? (State reasons in full.) Is this land included or adjoining any proposed or established forest reserve or communal forest? Description and ownership of improvements. If the land is claimed under private ownership, give the name of the claimant, his place of residence, and state briefly (if necessary on a separate sheet) the grounds upon which he bases his claim. When the inspection is made on a parcel of public land which has been applied for, the corresponding certificate is forwarded to the Director of Lands; if it is made on a privately claimed parcel for which the issuance of a title is requested from the Court of Land Registration, and the inspection shows the land to be more adapted for forest purposes, then the Director of Forestry requests the Attorney-General to file an opposition, sending him all data collected during the inspection and offering him the forest officer as a witness. It should be kept in mind that the lack of personnel of this Bureau, the limited time intervening between the notice for the trial on an expediente of land and the day of the trial, and the difficulties in communications as well as the distance of the land in question greatly hinder the handling of this work. In the case of lands claimed as private property, the Director of Forestry, by means of his delegate the examining officer, submits before the court all evidence referring to the present forest condition of the land, so that the court may compare them with the alleged right by the claimant. Undoubtedly, when the claimant presents a title issued by the proper authority or evidence of his right to the land showing that he complied with the requirements of the law, the forest certificate does not affect him in the least as such land should not be considered as a part of the public domain; but when the alleged right is merely that of possession, then the public or private character of the parcel is open to discussion and this character should be established not simply on the alleged right of the claimant but on the sylvical condition and soil characteristics of the land, and by comparison between this area, or different previously occupied areas, and those areas which still preserve their primitive character. Either way we look at this question we encounter difficulty. Indubitably, there should be conservation of the natural resources of the Philippines. The prodigality of the spendthrift who squanders his substance for the pleasure of the fleeting moment must be restrained for the less spectacular but surer policy which protects Nature's wealth for future generations. Such is the wise stand of our Government as represented by the Director of Forestry who, with the Forester for the Government of the United States, believes in "the control of nature's powers by man for his own good." On the other hand, the presumption should be, in lieu of contrary proof, that land is agricultural in nature. One very apparent reason is that it is for the good of the Philippine Islands to have the large public domain come under private ownership. Such is the natural attitude of the sagacious citizen. If in this instance, we give judicial sanction to a private claim, let it be noted that the Government, in the long run of cases, has its remedy. Forest reserves of public land can be established as provided by law. When the claim of the citizen and the claim of the Government as to a particular piece of property collide, if the Government desires to demonstrate that the land is in reality a forest, the Director of Forestry should submit to the court convincing proof that the land is not more valuable for agricultural than for forest purposes. Great consideration, it may be stated, should, and undoubtedly will be, paid by the courts to the opinion of the technical expert who speaks with authority on forestry matters. But a mere formal opposition on the part of the Attorney-General for the Director of Forestry, unsupported by satisfactory evidence will not stop the courts from giving title to the claimant. We hold that the petitioner and appellant has proved a title to the entire tract of land for which he asked registration, under the provisions of subsection 6, of section 54, of Act No. 926, as amended by Act No. 1908, with reference to the Philippine Bill and the Royal Decree of February 13, 1894, and his possessory information. Judgment is reversed and the lower court shall register in the name of the applicant the entire tract in parcel No. 1, as described in plan Exhibit A, without special finding as to costs. So ordered. 3. G.R. No. 82680 August 15, 1994 NICANOR SOMODIO, petitioner, vs. COURT OF APPEALS, EBENECER PURISIMA, and FELOMINO AYCO, respondents. Jose V. Panes for petitioner. Vencer, Purisima & Associates for private respondents.
QUIASON, J .: This is a petition for review on certiorari under Rule 45 of the Revised Rules of Court to reverse and set aside the Decision dated September 29, 1987 and the Resolution dated February 2, 1988 of the Court of Appeals in CA-G.R. SP No. 11602. I On October 21, 1974, Jose Ortigas executed an instrument designated as a Transfer of Rights, conveying to Wilfredo Mabugat the possession of a residential lot situated at Rajah Muda, Bula, General Santos City and described in the said instrument as: Lot No. (Unnumbered), bounded on the North by Temporary Road, on the South by Customs Zone (Sarangani Bay), on the East by Public Land, and on the West by Public Land. Nicanor Somodio, herein petitioner, contributed one-half of the purchase price. On October 22, 1974, Mabugat executed an Affidavit of Trust expressly recognizing the right of petitioner over one-half undivided portion of the lot. Later, petitioner discovered in the District Land Office that the lot was numbered "6328-X, Csd 2281-D." Thereafter, petitioner and Mabugat partitioned the property into two portions, with petitioner taking the western part. Immediately after the partition, petitioner took possession of his portion and planted thereon ipil-ipil trees, coconut trees and other fruit-bearing trees. In 1976, petitioner began construction of a structure with a dimension of 22-by-18 feet on his lot. His employment, however, took him to Kidapawan, North Cotabato, and he left the unfinished structure to the case of his uncle. He would visit the property every three months or on weekened when he had time. Sometime in October 1977, petitioner allowed respondent Felomino Ayco, to transfer his hut to petitioner's lot. About six years later, petitioner demanded that Ayco vacate the premises but such demand proved futile. Hence, on August 23, 1983, petitioner filed an action for unlawful detainer with damages against respondent Ayco before the Municipal Trial Court, Branch I, General Santos, docketed as Civil Case No. 2032-II. Meanwhile, on June 26, 1983, respondent Ebenecer Purisima entered the land and constructed a house thereon. Four days later, petitioner filed against respondent Purisima a complaint for forcible entry before the same court docketed as Civil Case No. 2013-I. Said case was later consolidated with Civil Case No. 2032-II. In his answer, respondent Purisima averred that the lot was a portion of the land subject of his application for miscellaneous sales patent with the Bureau of Lands. Purisima described the lot in question as: Lot No. 6328-Y, CSD-2281-D, Bula, General Santos, Cotabato. Bounded on the North by 6328-X; on the South by Sarangani Bay; on the East by a Municipal Road; and on the West by Lot No. 6328-W, containing an area of 1,095 square meters and covered by Tax Declaration No. 9647 (Rollo, p. 36; Emphasis supplied). Respondent Purisima contended that his father, a geodetic engineer, had surveyed the parcel of land comprising of Lots Nos. 6427 and 6328 for the Small Farmers Fishpond Association, Inc. in February 1958, and that his father's survey plan was approved by the Director of Lands in 1960. Respondent Ayco, on the other hand, did not present any evidence but merely anchored his right to possess the property on the evidence of Purisima. On April 30, 1986, the trial court rendered a decision finding that respondent Purisima built his house "almost on the spot where Somodio's unfinished house" stood "thru stealth and strategy," not knowing that the house was built on Lot No. 6328-X and not on Lot No. 6328-Y, the lot said respondent was claiming (Rollo, p. 43). The court went on to state that: . . . . He (private respondent Purisima) was a frequent visitor in Rajah Muda and had sometimes stayed with Mrs. Maturan in Judge Purisima's house on the adjoining lots, and could not have remained unaware of the possession of Somodio. He must have depended on the thought that it was his father who made the subdivision survey and had fenced an area which he had claimed. He did not exactly verify that the area fenced by his father had an area of only 1,095 square meters, which did not include the are Lot No. 6328-X could eventually be standing on his property, for Lot No. 6328-X is not claimed by him and has not been applied for even by his father. His father has been abroad and has not taken steps to apply for Lot No. 6328-X. This lot is not declared for taxation purposes in the name of any claimant- applicant. Unless and until there would be an administrative proceedings and the title ultimately issued in favor of an applicant, the possession of the actual claimant and occupant has to be respected and maintained in the interest of public order . . . (Rollo, pp. 43-44). The Municipal Trial Court further held that petitioner was the actual possessor of Lot No. 6328-X. The court did not believe respondent Ayco's claim that the administratrix of the estate of respondent Purisima's father authorized him to build a hut on Lot No. 6328-X in 1976. At any rate, the court said that respondent Ayco was willing to vacate the premises provided he be given financial assistance to do so (Rollo, pp. 43-44). Nothing that the ocular inspection of the area showed that the houses of respondents Purisima and Ayco were "inside Lot No. 6328-X" and not on Lot No. 6328-Y, the Municipal Trial Court held that the case became one which entailed mere removal of the houses from the lot in question. Accordingly, the court ordered private respondents to remove their respective houses, to deliver the land to petitioner, and to pay attorney's fees and litigation expenses. On appeal, the Regional Trial Court, Branch 22, General Santos City, affirmed in toto the decision of the Municipal Trial Court. Respondent then elevated the cases on a petition for review to the Court of Appeals, which, in its decision dated September 27, 1987, set aside the decisions of the two trial courts and ordered the dismissal of the two complaints filed by petitioner. The Court of Appeals held that herein petitioner had not "clearly and conclusively established physical, prior possession over Lot No. 6328- X." Petitioner's motion for the reconsideration of the decision of the Court of Appeals having been denied, he filed the instant petition for review on certiorari. We grant the petition. II The procedural issue raised by private respondents should first be resolved. The issue is whether the instant petition is proper considering that petitioner "merely touch(es) upon questions of fact which had been carefully considered" by the Court of Appeals (Rollo, p. 92). As a general rule, the findings of fact of the Court of Appeals are binding on this Court. This rule, however, is not without exceptions, one of which is when the factual findings of the Court of Appeals and the trial court are contrary to each other. In such a case, this Court may scrutinize the evidence on record in order to arrive at the correct findings based on the record (Valenzuela v. Court of Appeals, 191 SCRA 1 [1990]; Roman Catholic Bishop of Malolos, Inc. v. Intermediate Appellate Court, 191 SCRA 411 [1990]). Upon a review of the records, we are convinced that petitioner indeed enjoyed priority of possession over Lot No. 6328-X, notwithstanding respondent Purisima's claim to the contrary. In ejectment cases, the only issue for resolution is who is entitled to the physical or material possession of the property involved, independent of any claim of ownership set forth by any of the party-litigants. Anyone of them who can prove prior possession de facto may recover such possession even from the owner himself. This rule holds true regardless of the character of a party's possession, provided, that he has in his favor priority of time which entitles him to stay on the property until he is lawfully ejected by a person having a better right by either accion publiciana or accion reivindicatoria (De Luna v. Court of Appeals, 212 SCRA 276 [1992]). Petitioner took possession of the property sometime in 1974 when he planted the property to coconut trees, ipil- ipil trees and fruit trees. In 1976, he started the construction of a building on the property. It is immaterial that the building was unfinished and that he left for Kidapawan for employment reasons and visited the property only intermittently. Possession in the eyes of the law does not mean that a man has to have his feet on every square meter of ground before it can be said that he is in possession (Ramos v. Director of Lands, 39 Phil. 175 [1918]). It is sufficient that petitioner was able to subject the property to the action of his will. Article 531 of the Civil Code of the Philippines provides: Possession is acquired by the material occupation of a thing or the exercise of a right, or by the fact that it is subject to the action of our will, or by the proper acts and legal formalities established for acquiring such right. Even if the Court of Appeals is correct in its finding that petitioner started introducing improvements on the land only in 1981, he still enjoyed priority of possession because respondent Purisima entered the premises only in 1983. It should be emphasized that the Court of Appeals noted that none of the parties had produced tax declarations or applications as public land claimants. As such, what should have been scrutinized is who between the claimants had priority of possession. Moreover, neither is the fact that respondent Purisima's father surveyed the property of help to his cause. As the Court of Appeals found, respondent Purisima's father surveyed the land for the Small Farmers Fishpond Association, Inc., not for himself. Although respondent Purisima now claims that Lot No. 6328-X was in payment of his fee for the services of his father and that he caused the construction of a perimeter wall in the area, these facts do not mean that respondent Purisima himself had prior possession. He did not present any proof that his father had authorized him to enter the land as his successor-in-interest. Neither did he present proof that between 1958, when his father allegedly took possession of the land, and 1983, when said respondent himself entered the land, his father ever exercised whatever right of possession he should have over the property. Under these circumstances, priority in time should be the pivotal cog in resolving the issue of possession. The Court of Appeals opined that petitioner had not properly identified the lot he had occupied. The matter of identification of the land, however, had been resolved by respondent Purisima's admission in his pleadings, as well as by two ocular inspections. In his answer to the complaint, respondent Purisima claimed possession over Lot No. 6328-Y, while petitioner identified the lot adjacent to it, Lot NO. 6328-X, as the area where private respondents built their houses. That these two lots are distinct from one another was resolved by the ocular inspection conducted by a Senior Geodetic Engineer of the Office of the City Engineer, who found that "south of lot 6328-H across a 10 meter wide road is lot 6328-Y and from thence to the south is lot 6328-X." On June 13, 1985, the Municipal Trial Court judge himself went to the premises in question and discovered that aside from the houses of respondents Purisima and Ayco, five other houses had been built on Lot No. 6328-X. Petitioner's prior possession over the property, however, is not synonymous with his right of ownership over the same. As earlier stated, resolution of the issue of possession is far from the resolution of the issue of ownership. Forcible entry is merely a quieting process and never determines the actual title to an estate (German Management & Services, Inc. v. Court of Appeals, 177 SCRA 495 [1989]; Manuel v. Court of Appeals, 199 SCRA 603 [1991]. WHEREFORE, the decision of the Court of Appeals is REVERSED and SET ASIDE and that of the trial courts REINSTATED. Costs against private respondents. SO ORDERED. 4. G.R. No. L-42859 March 17, 1938 GABRIEL LASAM, applicant-appellee, vs. THE DIRECTOR OF LANDS and JOSE CHAN HONG HIN, ET AL., opponents- appellants. Acting Solicitor-General Melencio and B. Pobre for appellants. Alfredo Catolico for appellee. LAUREL, J .: On January 24, 1930, Gabriel Lasam filed with the Court of First Instance of Cagayan an application for the registration of 152 parcels of land containing a total area of 24,723,436 square meters, situated in the municipality of Solana, Province of Cagayan, described in the plan Exhibit K attached to the application. These 152 parcels include the parcel No. 9 here involved. According to the lower court, the portions of said parcel No. 9 which opposed during the time of survey were delimited and marked on its plan Psu-67516 attached to the record as lots A to Z, AA to HH, MM to ZZ, AAA to ZZZ, AAAA to ZZZZ, AAAAA, to FFFFF, NNNNN, 35 to 38, and 111 to 143, all inclusive. (Decision of the lower court, Bill of Exception of the Government, p. 35.) The Director of Lands opposed the application on the ground that it is not supported by any title fit for registration and that the land sought to be registered is public land. The brothers Felipe, Jose and Salvador, all surnamed Narag, who are first cousin to the applicant Lasam, also filed opposition on the ground that they are the owners of parcels No. 9. Opposition were also filed by Tomas Furigay and 35 other persons as homesteaders; by the provincial fiscal, representing the Directors of Forestry, on the ground that portions thereof are public forest; by Francisco Caronan and some 71 others parties, claiming the parcels occupied by them as their exclusive properties; by Jose Chan Hong Hin, on the ground that the applicant includes his property of about 22 hectares and 50 ares; and by Mauro Antonio, on the ground that the applicant includes the portion occupied by him and belonging to him. Pablo Soriano succeeded in having the order of general default set aside as to him and was allowed to registered his opposition at a latter date. Amendede applications and oppositions by the parties were subsequently permitted to be filed. After a protracted hearing, the lower court rejected and the oppositions filed, declaring the applicant, Gabriel Lasam, the owner of parcel No. 9 as indicated in the plan Psu-67516 (Exhibit K), and decreed the registration of said parcel in his favor. On September 10, 1934, counsel for various oppositors, after excepting to the decision, filed a motion for new trial which was denied, and the case was brought before this court by bill of exceptions. The Narag brothers and the Directors of Forestry appear to have abandoned their opposition. They made no attempt to substantiate their claims at the trial. Counsel for the Director of Lands, et al. and for Jose Chan Hong Hin, et al. make various assignments of error in their respective briefs. It is not believe necessary however, to consider each and every assignment made as the questions presented may, in our opinion, be reduced to the following propositions: (a) Whether or not the applicant, Gabriel Lasam, is entitled to the registered of parcel No. 9 on the basis of the document presented as Exhibit L, hereinafter to be referred to, or in the alternative, whether or not he is entitled to registered on the basis of public, continuous, and adverse possession under a claim of ownership during the time prescribed by law (par. 9, application); and the negative, (b) whether or not the numerous oppositors excluding the homesteader are entitled to the parcels which they allege are included in the controverted parcel No. 9. The rights of the homesteader necessarily depend on the resolution of these two propositions. Exhibit L purports to be an application dated June 27, 1873 addressed by Domingo Narag 1. to the Alcalde Mayor, in which the former stated that he had been in possession of the land above described and asked that informacion testifical be admitted. The informacion testifical was had before the Alcalde Mayor and appears to have been approved by the Judge of the Court of First Instance without objection on the part of the fiscal. It is the theory of the applicant that Domingo Narag 1. the original owner of parcel No. 5, described in Exhibit L, owned P1,000 from the applicant's which amount Narag needed for his candidacy gobernadorcillo of Tuguegarao, Cagayan, in 1880; that the original of Exhibit L was turned over by the applicant to his lawyer, Vicente Marasigan, who lost it, and for this reason, only a certificate copy of the document marked Exhibit L presented; and that the fifth parcel mentioned in the document, Exhibit L, is the parcel No. 9 described in the plan, Exhibit K. The Government contends that Exhibit L is not a valid titled and does not confer ownership that even if it were valid, it does not cover so extensive an area as that appearing on the plan, Exhibit K. The land designated as the fifth parcel is described in Exhibit L as follows: 5. Un terreno o pasto de ganados vacunos llamado Marguirig o Cagguban que linda al poniente con el estero Pagul, oriente con el pueblo de la Solana al norte con el sitio llamado y Calabbacao y al sur con el sitio llamado Atayo el cual tiene un cabida de siete mil brazaz y herede de mis Padres hace viente y dos aos y en la actualidad es donde mis granados de procreacion. Parcel No. 9, the registration of which is applied for in these proceedings, is described thus (brief of claimant-appellee p. 61): Por el norte con barrios de Iraga, Bauan y Bangag; Por el este con el Centro y los barrios de Basi, Natapian y Lanna; Por el sur con la carretera provincial; y Por el oeste barrios de Maguirig, Cagguban y estero Pangul. We are of the opinion that the court below committed no error in receiving Exhibit L as evidence for the claimant, but its admission by the court does not necessarily entitled the applicant Gabriel Lasam, to the registration of the parcel claimed by him in these proceedings. It is apparent that parcel No. 9, as indicated in the plan, Exhibit K, is not the same parcel No. 5 described in document Exhibit L. Whereas Exhibit L gives as boundaries on the north the sitios of Maasin and Calabbacao, Exhibit K gives the barrios of Iraga, Bauan, and Bangag; on the east Exhibit L gives the pueblo of Solana, whereas Exhibit K gives "el Centro y los barrios de Basi, Natappian y Lanna"; on the west Exhibit L gives estero Pangul, whereas Exhibit K gives the barrios of Maguirig, Cagguban and estero Pangul; on the south Exhibit L gives the sitio of Atayao, whereas Exhibit K gives the carretera provincial. While there may be partial indentity as to boundaries on the east and west, such indentity is lacking as to the boundaries on the north and south. This discrepancy is accentuated by the admmission of the applicant that the parcel whose registered is sought is much smaller than that described in paragraph 5 of Exhibit L. The explanation given by the surveyors Jose Mallanao, presented as witness by the claimant, is a follows: Because on the north side when we went around the lot and I asked for the barrios of Maasin and Calabacao the applicant pointed to me a place very far from where he was at the time and where he actually occupied the land, and on the south side he indicated to me the provincial road. I asked why he should not take the actual land indicated by this title and he told me that he was not occupying that portion . That is the reason why I took up the boundary on the south as provincial road. On the east side he indicated to me the center of the municipality of Solana, barrios of Basi, Nangalisan and Lanna, and on the west is a public land party bounded by the barrios of Maguirig, and Cagguban and estero Pangul. An applicant for registration of land, if he relies on a document evidencing his title thereto, must prove not only the genuiness of his title but the indentity of the land therein referred to. The document in such a case is either a basis of his claim for registration or not at all. If as in this case, he only claims a portion of what is included in his title, he must clearly prove that the property sought to be registered is included in that title. The surveyor, Jose Mallannao, did not actually check up the boundaries of parcel No. 5, as described in Exhibit L, and in testifying that parcel No. 9, in Exhibit K, is smaller than that described as parcel No. 5 in Exhibit L, he relied on hearsay. For instance, when asked whether north of barrios Iraga, Bauan and Bangag of the land described in plan Exhibit K, he would locate the sitios of Maasin and Calabacao, he replied: "They said that Calabbacao is north of that barrio Iraga yet." (Emphasis ours.) Aside from what has been said with reference to discrepanies in the boundaries, we cannot overlook the fact that the area in Exhibit L is vaguely given as 7,000 brazas. The surveyor for the applicant, Jose Mallannao, calculated the area of the property described in paragraph 5 of Exhibit L on the basis of 7,000 square brazas or 49,000,00 square as 15,695,500 hectares more or less (s.n. pp. 820-822). The area claimed here according to the amended application of February 26, 1930, and the plan Exhibit K is 24,723,437 square meters. According to the applicant before his occupation of the land ceded by Domingo Narag 1., only about 2 hectares were cultivated. (s.n. p. 56, Gabriel Lasam.) And, with reference to the payment of the land tax, the Solicitor-General in his brief (p. 12) makes the following observation: The property appears to have been declared for taxation purposes as evidenced by revisions of tax declarations, Exhibit G-20 and G-21 (pp. 136, 137, record). There had been previous declarations with an area of about 294 hectares (id.) but, according to Exhibit G-22 (p. 138, record), the area which was not previously declared contains 1,685 hectares. With the exception of a statement in which it appears that tax was paid in 1902 (p. 140, id.) there appears in the record no tax receipts evidencing the payment of taxes continuously from 1902 up to this time. It is not necessary to pass upon the contention of the Solicitor-General that the informacion testifical (Exhibit L) is no legal effect because of failure subsequently to solicit composition title pursuant to the Royal Decree of June 25, 19880 (Fuster vs. Director of Lands, G.R. No. 40129, Dec. 29, 1934), or to convert possession into a registration of ownership in accordance with article 393 of the Mortgage law (Fernandez Hermanos vs. Director of Lands, 57 Phil., 929), for even if we were to accord all the legal force to this document (Exhibit L), it would not serve as a basis for the registration of 24,723,437 square meters. Having arrived at this conclusion as to Exhibit L, is the applicant entitled to registration because of the required possession during the time prescribed by law? We have examined the evidence on this point both testimonial and documentary, and while there is evidence showing that the claimant might have possessed a portion of the parcel claimed by him and the registration of which is sought, we find the evidence lacking in certainly as to the particular portion occupied and the extend thereof. Counsel for the applicant invokes the doctrine laid down by us in Ramos vs. Director of Lands (39 Phil., 175, 180). (See also Roales vs. Director of Lands, 51 Phil., 302, 304.) But it should be observed that the applicant of the doctrine of constructive possession in that case is subject to certain qualifications, and this court was careful to observe that among these qualifications is "one particularly relating to the size of the tract in controversy with reference to the portion actually in possession of the claimant." While, therefore, "possession in the eyes of the law does not mean that a man has to have his feet on every square meter of ground before it can be said that he is in possession", possession under paragraph 6 of section 54 of Act No. 926, as amended by paragraph (b) of section 45 of Act No. 2874, is not gained by mere nominal claim. The mere planting of a sign or symbol of possession cannot justify a Magellan like claim of dominion over an immense tract of territory. Possession as a means of acquiring ownership, while it may be constructive, is not a mere fiction. In the present case, upon the description of 7,000 brazas as the area of the land said have been originally possessed by Domingo Narag 1. and conveyed to the applicant, only two hectares of which were according to the applicant cultivated at the time of such transfer, the applicant would on the basis of the computation hereinabove referred to and given at the trial by surveyor Jose Mallannao, be entitled under Exhibit L to more than 13,000 hectares, although only 2,432 odd hectares are now being sought for registration in these proceedings. The fact, however, that he is claiming only a portion of the land claimed by him to be included in his title, the further fact that according to his own testimony he has given up more than 1,000 hectares to the Bureau of Forestry, the discrepancies in the boundaries, his tax declarations, and the existence of numerous homesteaders and claimants are significant and tend to show that his possession over the entire portion of the land sought to be registered is not "such as to apprise the community and the world that the entire land was for his enjoyment." (Ramos vs. Director of Lands, supra.) Our attention is next directed to the decision of this court in Pamittan vs. Lasam and Mallonga (60 Phil., 908) which according to counsel for the claimant Lasam, is determinative of the ownership of the property now sought to be registered. Said case refers to an action for partition between the heirs of Sofia Pamittan, wife of Gabriel Lasam, originally brought in the Court of First Instance and appealed to this court. The trial court in that case found that parcel No. 7 which is said to correspond to parcel No. 9 sought to be registered in these proceedings "although during the existence of the conjugal partnership, was proven to be the exclusive property of the husband Gabriel Lasam". This court not have passed upon the question whether parcel No. 7 was the same parcel No. 9 in these proceedings; nor could it have passed upon the conflicting claims with reference to parcel No. 9, now sought to be registered. Whatever was said in that case could not bind the oppositors in the present case, who were not parties thereto. The grounds for opposition of the various oppositors are divergent and are based on (a) possession from time immemorial: (b) acquisition by inheritance, purchase and donations propters nuptias and inter vivos; (c) payment of land taxes from 1906, 1915 and 1918 up to the filing of oppositions; and (d) acquisition "a titulo de composicion" with the State. These oppositors denied tenants of the applicant Lasam. After persual of the evidence presented by them, we are constrained to accept the conclusion of the lower court that none of the portions or lots claimed by them or any one of them has been sufficiently identified, either by the oral or documentary evidence which they presented. In view thereof, and because of the insufficiency of the evidence presented, we are of the opinion that the lower court committed no error in dismissing their oppositions. In view of the foregoing, the judgement of the lower court is reserved, without prejudice to the filing by the applicant. Gabriel Lasam, of a new application and plan covering the portion of the land actually occupied by him since July 25, 1894. Upon the determination of that portion by the lower court, let judgement be rendered accordingly. The remaining portion or portions of lot No. 9 as indicated on plan Psu-67516 (Exhibit K) are hereby declared public lands, to be disposed of or otherwise death with in accordance with law. Without pronouncement as to costs. So ordered.
5. [G.R. No. 109595. April 27, 2000] CRISTETA CHUA-BURCE, petitioner, vs. COURT OF APPEALS AND PEOPLE OF THE PHILIPPINES, respondents. D E C I S I O N QUISUMBING, J .: Subject of the present appeal by certiorari is the decision dated November 27, 1992 of the Court of Appeals in CA-G.R. CR No. 12037, (a) affirming in toto the trial courts decision finding petitioner guilty of estafa, and (b) denying her Motion for Reconsideration in a Resolution dated March 25, 1993. The Regional Trial Court, Calapan, Oriental Mindoro, Branch 40, rendered a joint decision finding petitioner guilty of estafa under Article 315, par. 1 (b) of the Revised Penal Code, in Criminal Case No. C-2313, and likewise found petitioner liable for the amount of P150,000.00 in Civil Case No. R-3733. Only the criminal case is before us for review. h Y The uncontroverted facts, as found by the Court of Appeals, are as follows: On August 16, 1985, Ramon Rocamora, the Manager (of Metropolitan Bank and Trust Company, Calapan Branch, Oriental Mindoro) requested Fructuoso Peaflor, Assistant Cashier, to conduct a physical bundle count of the cash inside the vault, which should total P4,000,000.00, more or less. During this initial cash count, they discovered a shortage of fifteen bundles of One Hundred Pesos denominated bills totalling P150,000.00. The One Hundred Peso bills actually counted was P3,850,000.00 as against the balance of P4,000,000.00 in the Cash in Vault (CIV) Summary Sheet, or a total shortage of P150,000.00. The next day, to determine if there was actually a shortage, a re-verification of the records and documents of the transactions in the bank was conducted. There was still a shortage of P150,000.00. The bank initiated investigations totalling four (4) in all. The first was by Ramon Rocamora, the Manager. The second was by the banks internal auditors headed by Antonio Batungbakal. Then, the banks Department of Internal Affairs conducted an independent investigation. Thereafter, the National Bureau of Investigation (NBI) came in to investigate. All of these investigations concluded that there was a shortage of P150,000.00, and the person primarily responsible was the banks Cash Custodian, Cristeta Chua-Burce, the herein accused. Jksm On November 4, 1985, unable to satisfactorily explain the shortage of P150,000.00, the accuseds service with the bank was terminated. To recover the missing amount, Metropolitan Bank and Trust Company (Metrobank) filed a Civil Case for Sum of Money and Damages with Preliminary Attachment and Garnishment docketed as Civil Case No. R-3733 against petitioner and her husband, Antonio Burce. Esm Prior to the filing of the Answer, the following Information for Estafa was filed against petitioner: "That on or about the 16th day of August 1985, and for a period prior and subsequent thereto, the above-named accused, with unfaithfulness or abuse of confidence, and with intent to defraud, did then and there wilfully, unlawfully, and feloniously, in her capacity as Cash Custodian of the Metrobank, Calapan Branch, take from the Banks Vault the amount of ONE HUNDRED FIFTY THOUSAND (P150,000.00) PESOS, which is under her direct custody and/or accountability, misappropriate and convert to her own personal use and benefit, without the knowledge and consent of the offended party, despite repeated demands for her to account and/or return the said amount, she refused and failed, and still fails and refuses to the damage and prejudice of the Metrobank, Calapan Branch, in the aforementioned amount of ONE HUNDRED FIFTY THOUSAND (P150,000.00) PESOS. Contrary to Article 315 of the Revised Penal Code. Calapan, Oriental Mindoro, November 27, 1985."1[1] Both civil and criminal cases were raffled to the same branch of the Regional Trial Court of Calapan, Oriental Mindoro, Branch 40. Esmsc Thereafter, petitioner moved for the suspension of the criminal case on the ground of the existence of a prejudicial question, viz., that the resolution of the civil case was
determinative of her guilt or innocence in the criminal case.2[2] The trial court, over the vehement opposition of the private and public prosecutors, granted the motion and suspended the trial of the criminal case.3[3] On petition for certiorari to the Court of Appeals, the appellate court ruled that there was no prejudicial question.4[4] Petitioner was arraigned and assisted by counsel de parte, entered a plea of not guilty.5[5] While the trial of the criminal case was suspended, the trial of the civil case continued. At the time of arraignment, the civil case was already submitted for decision. Hence, during the pre-trial conference of the criminal case, the parties agreed to adopt their respective evidence in the civil case as their respective evidence in the criminal case.6[6] The trial court ordered the parties to submit their written agreement pursuant to Section 4 of Rule 118 of the Rules of Court.7[7] Thereafter, petitioner, duly assisted by her counsel, with the conforme of the public prosecutor, entered into the following pre- trial agreement:8[8] "COMES NOW, the accused, assisted by counsel, and unto this Honorable Court most respectfully submits this Pre-Trial agreement:
1. That the evidence already adduced by the plaintiff in Civil Case No. R- 3733 will be adopted by the prosecution as its evidence in Criminal Case No. C-2313; 2. That the evidence to be adduced by the defendant in Civil Case No. R- 3733 will also be adopted as evidence for the defense in Criminal Case No. C-2313. WHEREFORE, premises considered, it is prayed that the foregoing pre- trial agreement be admitted in compliance with the Order of this Court dated April 19, 1988. RESPECTFULLY SUBMITTED. Calapan, Oriental Mindoro, August 20, 1990. CRISTETA CHUA-BURCE (sgd.) Accused Assisted By: RODRIGO C. DIMAYACYAC (sgd.) Defense Counsel San Vicente, Calapan Oriental Mindoro IBP O.R. No. 292575 May 11, 1990 Quezon City With Conformity: EMMANUEL S. PANALIGAN (sgd.) Prosecuting Fiscal Pursuant to the pre-trial agreement, the public prosecutor filed a Motion to Adopt Evidence.9[9] Both the pre-trial agreement and said Motion were granted by the trial court.10[10] On March 18, 1991, the trial court rendered a consolidated decision11[11] finding petitioner (a) guilty of estafa under Article 315 (1) (b) of the Revised Penal Code in the criminal case, and (b) liable for the amount of P150,000.00 in the civil case. The dispositive portion of decision provides - - In Criminal Case No. C-2313 - WHEREFORE, the Court hereby finds the accused Cristeta Chua-Burce guilty beyond reasonable doubt of the crime of Estafa, punishable under Art. 315, paragraph 1 (b) of the Revised Penal Code, which imposes a penalty of prision correccional in its maximum period to prision mayor in its minimum period but considering that the amount involved exceeds P22,000.00, the penalty provided for shall be imposed in its maximum period, adding one year for each additional P10,000.00, but the total amount not to exceed twenty years. Esmmis Applying the Indeterminate Sentence Law, the imposable penalty shall be one degree lower as minimum of arresto mayor with a penalty range of One Month and One Day to Six Months, as minimum to prision mayor in its maximum period, as maximum, or a penalty of Six years to Twelve Years. Considering the mitigating circumstance of voluntary surrender, the court hereby imposes upon the accused to suffer imprisonment from SIX (6) MONTHS of arresto mayor in its maximum period, as minimum, to EIGHT (8) YEARS of prision mayor, in its minimum period, as maximum. The civil liability shall not be imposed in this case due to a separate civil action. Esmso - In Civil Case No. R-3733 -
WHEREFORE, judgment is hereby rendered in favor of the plaintiff Metrobank, ordering defendants Cristeta Chua-Burce and Antonio Burce, spouses, to pay Metrobank the amount of P150,000.00 representing the amount misappropriated with the legal rate of six percent (6%) per annum from August 15, 1985 until fully paid and to pay the costs of suit. SO ORDERED." Petitioner seasonably appealed her conviction in the criminal case to the Court of Appeals. Petitioner filed a separate appeal in the civil case. In a decision dated November 27, 1992,12[12] the Court of Appeals affirmed the trial courts decision in toto. Petitioners Motion for Reconsideration was likewise denied.13[13] Hence, the recourse to this Court. Msesm Petitioner raises the following issues:14[14] 1. IS THE RESULT OF POLYGRAPH EXAMINATION ADMISSIBLE IN EVIDENCE? 2. CAN THE PRESIDING JUDGE OF THE REGIONAL TRIAL COURT ADMIT IN EVIDENCE THE EVIDENCE WHICH WAS ALREADY DENIED ADMISSION IN THE ORDER OF THE FORMER JUDGE OF THE SAME COURT? 3. DOES PRIMA FACIE PRESUMPTION OF MISAPPROPRIATION OR CONVERSION EXISTS (sic) AGAINST THE PETITIONER WHEN THERE WERE OTHER PERSONS WHO HAD DIRECT AND GREATER ACCESS IN THE CASH-IN-VAULT? 4. IS RULE 111 SECTION 2 (a) OF THE REVISED RULES ON CRIMINAL PROCEDURE APPLICABLE IN (sic)THE CASE AT BAR?
5. WAS THERE A VALID PROCEEDING WHEN THE FISCAL WAS NOT ACTUALLY PRESENT AND DID NOT CONTROL AND SUPERVISE THE PROSECUTION OF THE CASE? Exsm In gist, (1) petitioner contends that the trial court erred in taking into account the results of the polygraph examination as circumstantial evidence of guilt considering the inherent unreliability of such tests, and the fact that the previous trial judge who handled the case already ruled such evidence as inadmissible; (2) petitioner insists that there can be no presumption of misappropriation when there were other persons who had access to the cash in vault; and (3) petitioner questions the validity of the trial of criminal case considering that the pre-trial agreement dispensed with the intervention of the public prosecutor in a full-blown trial of the criminal case. Kyle The Office of the Solicitor General, for the State, contends that the guilt of petitioner has been proven beyond reasonable doubt by the following facts which were duly established during trial - first, petitioner was the cash custodian who was directly responsible and accountable for the cash-in-vault. Second, the other persons who had access to the vault facilities never used the duplicate keys to open the safety deposit boxes and the cash safe from where the P100.00 bill denominations were located. In fact, the duplicate keys were offered in evidence still in their sealed envelopes. Third, alterations and superimposition on the cash-in-vault summary sheet were made by petitioner to cover the cash shortage. Lastly, there was a valid joint trial of the civil and criminal cases. The crucial issues, in our mind, are (1) whether there was a valid trial of the criminal case, and (2) whether the elements of the crime of estafa under Article 315 (1) (b) of the Revised Penal Code were duly proven beyond reasonable doubt. Kycalr First, petitioner assails the validity of the proceedings in the trial court on the ground that the public prosecutor did not intervene and present any evidence during the trial of the criminal case. The records clearly show that the pre-trial agreement was prepared by petitioner with the conforme of the public prosecutor. Thereafter, petitioner filed a consolidated memorandum for both civil and criminal cases. Section 5 of Rule 11015[15] requires that all criminal actions shall be prosecuted under the direction and control of the public prosecutor. The rationale behind the rule is "to prevent malicious or unfounded prosecutions by private persons."16[16] The records show that the public prosecutor actively participated in the prosecution of the criminal case from its inception. It was during pre-trial conference when the parties agreed to adopt their respective
evidence in the civil case to the criminal case. This is allowed under Section 2 (e) of Rule 118 of the Rules of Court17[17] which provides that during pre-trial conference, the parties shall consider "such other matters as will promote a fair and expeditious trial." The parties, in compliance with Section 4 of Rule 118,18[18] reduced to writing such agreement. Petitioner, her counsel, and the public prosecutor signed the agreement. Petitioner is bound by the pre-trial agreement, and she cannot now belatedly disavow its contents.19[19] On the second issue. Petitioner was charged with the crime of estafa under Article 315 (1) (b) of the Revised Penal Code.20[20] In general, the elements of estafa are: (1) that the accused defrauded another (a) by abuse of confidence or (b) by means of deceit; and (2) that damage or prejudice capable of pecuniary estimation is caused to the offended party or third person.21[21] Deceit is not an essential requisite of estafa with abuse of confidence, since the breach of confidence takes the place of the fraud or deceit, which is a usual element in the other estafas.22[22] The elements of estafa through conversion or misappropriation under Art. 315 (1) (b) of the Revised Penal Code are:23[23]
(1) that personal property is received in trust, on commission, for administration or under any other circumstance involving the duty to make delivery of or to return the same, even though the obligation is guaranteed by a bond; (2) that there is conversion or diversion of such property by the person who has so received it or a denial on his part that he received it; (3) that such conversion, diversion or denial is to the injury of another and (4) that there be demand for the return of the property. Have the foregoing elements been met in the case at bar? We find the first element absent. When the money, goods, or any other personal property is received by the offender from the offended party (1) in trust or (2) on commission or (3) for administration, the offender acquires both material or physical possession and juridical possession of the thing received.24[24] Juridical possession means a possession which gives the transferee a right over the thing which the transferee may set up even against the owner.25[25] In this case, petitioner was a cash custodian who was primarily responsible for the cash-in-vault. Her possession of the cash belonging to the bank is akin to that of a bank teller, both being mere bank employees. Calrky In People v. Locson,26[26] the receiving teller of a bank misappropriated the money received by him for the bank. He was found liable for qualified theft on the theory that the possession of the teller is the possession of the bank. We explained in Locson that - "The money was in the possession of the defendant as receiving teller of the bank, and the possession of the defendant was the possession of the bank. When the defendant, with grave abuse of confidence, removed the money and appropriated it to his own use without the consent of the bank, there was the taking or apoderamiento contemplated in the definition of the crime of theft."27[27]
In the subsequent case of Guzman v. Court of Appeals,28[28] a travelling sales agent misappropriated or failed to return to his principal the proceeds of things or goods he was commissioned or authorized to sell. He was, however, found liable for estafa under Article 315 (1) (b) of the Revised Penal Code, and not qualified theft. In the Guzman case, we explained the distinction between possession of a bank teller and an agent for purposes of determining criminal liability - "The case cited by the Court of Appeals (People vs. Locson, 57 Phil. 325), in support of its theory that appellant only had the material possession of the merchandise he was selling for his principal, or their proceeds, is not in point. In said case, the receiving teller of a bank who misappropriated money received by him for the bank, was held guilty of qualified theft on the theory that the possession of the teller is the possession of the bank. There is an essential distinction between the possession by a receiving teller of funds received from third persons paid to the bank, and an agent who receives the proceeds of sales of merchandise delivered to him in agency by his principal. In the former case, payment by third persons to the teller is payment to the bank itself; the teller is a mere custodian or keeper of the funds received, and has no independent right or title to retain or possess the same as against the bank. An agent, on the other hand, can even assert, as against his own principal, an independent, autonomous, right to retain money or goods received in consequence of the agency; as when the principal fails to reimburse him for advances he has made, and indemnify him for damages suffered without his fault (Article 1915, [N]ew Civil Code; Article 1730, old)." Mesm Petitioner herein being a mere cash custodian had no juridical possession over the missing funds. Hence, the element of juridical possession being absent, petitioner cannot be convicted of the crime of estafa under Article 315, No. 1 (b) of the Revised Penal Code.29[29] WHEREFORE, the petition is hereby granted and petitioner is ACQUITTED of the crime of estafa under Article 315 (1) (b) of the Revised Penal Code. Petitioner is ordered RELEASED from custody unless she is being held for some other lawful cause. No costs. Slx
SO ORDERED. 6. [G.R. No. 116220. December 6, 2000] SPOUSES ROY PO LAM and JOSEFA ONG PO LAM, petitioners, vs. COURT OF APPEALS and FELIX LIM now JOSE LEE, respondents. R E S O L U T I O N MELO, J.: On October 13, 1999, this Division, under the ponencia of Mr. Justice Purisima handed down a decision declaring petitioners, the spouses Roy Po Lam and Josefa Ong Po Lam, as transferees pendente lite and not purchasers in good faith of Lots No. 1557 and 1558 and ordering them to reconvey said lots to private respondent Jose Lee. Forthwith, petitioners filed a motion for reconsideration which was received hereat on November 15, 1999. Respondents thereupon filed their opposition, as well as a separate comment, to which petitioners submitted a reply. Regrettably, however, for one reason or another, the motion for reconsideration remained unacted upon until the retirement of Justice Purisima in October, 2000, notwithstanding the fact that it was calendared or placed in the Courts agenda a number of times, as well as the urgings of both parties to have the matter resolved. Thus, with Justice Purisima leaving the Court and, in accordance with A.M. No. 99-8-99 promulgated by the Court En Banc on February 15, 2000, the matter of the motion for reconsideration was assigned by raffle to herein ponente for study and the preparation of the appropriate action. A review of the facts, uncontroverted though they are, is in order. Lots No. 1557 and 1558 are prime commercial lots located in the heart of Legaspi Citys commercial district. These were sold by Lim Kok Chiong to the Legaspi Avenue Hardware Company (hereafter referred to as LAHCO) sometime in the early 60s. On December 4, 1964, however, Felix Lim, Lim Kok Chiongs brother, filed a complaint with the then Court of First Instance of Albay against his brother and LAHCO to annul the deeds of sale covering said lots on the ground that the sale included the 3 /14 pro-indiviso portion of the lots which Felix Lim had inherited from his foster parents. The complaint was docketed as Civil Case No. 2953 of the Court of First Instance of Albay. On January 27, 1965, Felix Lim filed with the Register of Deeds of Albay a notice of lis pendens over the two lots. The same was inscribed on Transfer Certificates of Title No. 2580 and 2581, covering Lots No. 1557 and 1558, respectively. Later, the trial court, on motion of Felix Lim, dropped the case against Lim Kok Chiong. On March 15, 1969, the trial court rendered a decision declaring LAHCO to be the absolute owner of the two above-mentioned lots. As a consequence of its decision, the trial court ordered the cancellation of the notice of lis pendens inscribed on the titles of the two lots. Pursuant to this order, the notice of lis pendens inscribed on TCT No. 2580 was cancelled. However, the notice of lis pendens annotated on TCT No. 2581 remained uncancelled, allegedly because the duplicate owners copy of said TCT was with the Continental Bank, Lot No. 1558 having been mortgaged by LAHCO to said bank. Aggrieved, Felix Lim appealed to the Court of Appeals. On May 28, 1970, and during the pendency of the appeal, CA-G.R. No. 44770-R, LAHCO sold the two lots to herein petitioners, the spouses Roy Po Lam and Josefa Ong Po Lam. On May 20, 1974, petitioners, by virtue of the court order adverted to earlier, had the notice of lis pendens still inscribed on TCT No. 2581 cancelled. Felix Lim did not move for the reinstatement of the cancelled notices of lis pendens on TCT No. 2580 and 2581. Thereafter, said certificates of title were themselves cancelled and replaced by TCT No. 8102 and 13711, respectively, in the name of petitioners. On April 29, 1980, the Court of Appeals affirmed the decision of the trial court in Civil Case No. 2953, appellant Felix Lims counsel receiving a copy of thereof on May 16, 1980. On May 23, 1980, counsel for Felix Lim filed a motion for extension of time to file a motion for reconsideration. The appellate court gave Felix Lim up to June 20, 1980 to file one. On June 17, 1980, he filed a motion for reconsideration, which was, however, denied. Without leave of court, Felix Lim filed, on July 14, 1980, a second motion for reconsideration. This was acted upon favorably by the Court of Appeals on March 11, 1981, with the appellate court declaring that Felix Lim, by returning P20,000.00 to LAHCO, could exercise the right of redemption over the two lots sold by Lim Kok Chiong to LAHCO. Although LAHCO asked this Court for an extension of time to file a petition for review, none was ever filed, for which reason the Court remanded the case to the trial court for execution. On November 12, 1981, Felix Lim moved, in Civil Case No. 2953, to have the March 11, 1981 resolution of the Court of Appeals annotated on TCT No. 8102 and 13711. He also moved for the issuance of a writ of execution to enforce said resolution. Likewise, he filed a motion praying that the Clerk of Court execute a deed of conveyance over the disputed lots in his favor. All these motions were denied by the trial court on the ground that the Po Lam spouses could not be bound thereby since they were not impleaded as party-litigants in Civil Case No. 2953 or CA-G.R. No. 44770-R. However, the trial court reserved to Felix Lim the right to institute an action on whether or not the acquisition of the properties in question by spouses Roy Po Lam and Josefa Ong Po Lam were made in good faith or bad faith. In consonance with this ruling, Felix Lim filed a complaint for reconveyance and annulment of the sale and titles of said lots with the Regional Trial Court of Legaspi City, which was docketed therein as Civil Case No. 6767. On September 19, 1985, Felix Lim filed with the trial court, in the old case, Civil Case No. 2953, a motion to include as defendants the Po Lam spouses, as well as to execute the March 11, 1981 resolution of the Court of Appeals. Both motions were denied. On appeal (CA-G.R. No. 08533-CV), the Court of Appeals upheld the denial. Felix Lim appealed the decision to this Court. In the meantime, in June, 1970, or one month after the Po Lam spouses had purchased the two lots from LAHCO, they leased the commercial building erected on Lot No. 1557 to private respondent Jose Lee for one year. After the contract expired, Jose Lee continued to occupy the same, paying monthly rentals therefor. However, after September 15, 1981, Jose Lee refused to pay rentals to the Po Lam spouses, informing them that he would deposit the same in court since Felix Lim had promised to sell the property to him. Lees failure to pay rentals prompted the Po Lam spouses to file an unlawful detainer case against him with the Metropolitan Trial Court of Legaspi City. On October 29, 1990, Felix Lim assigned all his rights to and interests in the disputed lots to Jose Lee, who then substituted Felix Lim as party plaintiff, now private respondent. On December 19, 1993, the Metropolitan Trial Court of Legaspi City declared the Po Lam spouses to be the lawful owners of Lot No. 1557. On appeal, said judgment was affirmed by the regional trial court and thereafter, by the Court of Appeals in CA-G.R. No. 12316-SP. Aggrieved, Jose Lee filed an appeal with this Court, which consolidated the case with the appeal filed in CA-G.R. No. 08533-CV where the trial court in the original 1965 case refused to have petitioners impleaded as defendants, and to execute the March 11, 1981 resolution of the Court of Appeals, were upheld by the appellate court. It must be mentioned that in both CA-G.R. No. 12316-SP and CA-G.R. No. 08533-CV, the appellate court ruled that the March 11, 1981 resolution of the Court of Appeals in CA-G.R. No. 44770-R was null and void on the ground that the decision it had issued earlier on April 29, 1980 had already become final and executory when the above-said resolution was promulgated. The appellate court ruled that Felix Lims counsel should not have filed a motion for extension of time to file a motion for reconsideration, the same being a prohibited pleading under the rule laid down in Habaluyas v. Japson (138 SCRA 46 [1985]). Being a prohibited pleading, it was held that the extension granted to Lim did not arrest the running of the 15-day period. Thus, when Lim filed his motion for reconsideration on June 17, 1980, the same was already filed out of time, he having received a copy of the judgment of affirmance on May 16, 1980. The above finding of the appellate court was, however, debunked by this Court in G.R. No. 84145-55 (Lim v. Court of Appeals, 188 SCRA 23 [1988]) where we held that Habaluyas v. Japson (supra) must be applied prospectively so that when petitioner Lim filed thru registered mail on May 23, 1980 his motion for extension of time to file a motion for reconsideration, the motion was deemed properly filed contrary to the respondent courts ruling that it was a prohibited pleading. Ruling on the appeals filed from CA-G.R. No. 12316-SP and CA-G.R. No. 08533-CV, this Court thus declared, on February 18, 1988, in Lim vs. CA cited in the immediately preceding paragraph that: ACCORDINGLY, the decisions appealed from are modified. The portions of the appealed decisions dealing with the March 11, 1981 resolution in CA-G.R. No. 44770-R are reversed and set aside and the said resolution is ordered reinstated. The decisions are affirmed in all other respects. Costs against private respondents. SO ORDERED. In the interim, Civil Case No. 6767 for reconveyance and annulment of sale and titles filed by Felix Lim (now Jose Lee) went on until, on January 14, 1992, the Regional Trial Court of Legaspi City rendered a decision declaring the spouses Roy Po Lam and Josefa Ong Po Lam as transferees pendente lite and not purchasers in good faith. It held that the Po Lam spouses were bound by the March 11, 1981 resolution rendered in CA-G.R. No. 44770-R. The Po Lam spouses forthwith appealed to the Court of Appeals (CA-G.R. CV No. 37452) but said Court, on June 30, 1993, affirmed the trial courts decision. The Po Lam spouses thus filed a petition for certiorari with this Court. On October 13, 1999, we denied the petition and affirmed in toto the decision of the Court of Appeals in CA-G.R. CV No. 37452. We held that the Po Lam spouses could not be deemed buyers in good faith, ratiocinating in the process: As to Lot 1558, there is no question that they (petitioners) cannot be deemed buyers in good faith. The annotation of lis pendens on TCT No. 2581 which covers Lot 1558, served as notice to them that the said lot is involved in a pending litigation. Settled is the rule that one who deals with property subject of a notice of lis pendens cannot invoke the right of a purchaser in good faith. Neither can he acquire better rights than those of his predecessor in interest. A transferee pendente lite stands in the shoes of the transferor and is bound by any judgment or decree which may be rendered for or against the transferor. It is thus beyond cavil that the herein petitioners, who purchased Lot 1558 subject of a notice of lis pendens, are not purchasers in good faith and are consequently bound by the Resolution dated March 11, 1981 of the Court of Appeals. Can petitioners then be treated purchasers in good faith of Lot 1557 covered by TCT No. 2580 considering that the notice of lis pendens thereon had been already cancelled at the time of the sale? We rule in the negative. It is a firmly settled jurisprudence that a purchaser cannot close his eyes to facts which should put a reasonable man on guard and claim that he acted in good faith in the belief that there was no defect in the title of the vendor. His mere refusal to believe that such a defect exist, or his willful closing of his eyes to the possibility of the existence of a defect on his vendors title, will not make him innocent purchaser for value, if it develops afterwards that the title was in fact defective, and it appears that he had notice of such defect as would have led to its discovery had he acted with that measure of precaution which may reasonably be required of a prudent man in like situation. In the case under consideration, there exist circumstances which should have placed the herein petitioners on guard. As aptly stressed upon by the respondent court, while it is true that when the petitioners purchased Lot 1557, the notice of lis pendens affecting said lot had been cancelled, it could not be denied that such inscription appears on the Transfer Certificate of Title of the said lot together with the cancellation of the notice of lis pendens. This fact coupled with the non-cancellation of the notice of lis pendens on Transfer Certificate of Title No. 2581 covering Lot 1558, should have sufficiently alerted the petitioners vis--vis a possible defect in the title of LACHO, especially so that Lots 1557 and 1558 were simultaneously sold to the petitioners in a single deed of sale executed on May 28, 1969. Undeterred, the Po Lam spouses filed a motion for reconsideration, alleging, inter alia, that it was error to hold them as purchasers in bad faith. The motion for reconsideration is impressed with merit. It must be stressed that the sole basis for finding petitioners to be purchasers in bad faith was the subsistence of the notice of lis pendens inscribed on TCT No. 2581, which covered Lot No. 1558, at the time petitioners-spouses purchased the lots in dispute. And since Lot No. 1558 was sold simultaneously with Lot No. 1557, even if the notice of lis pendens on Lot No. 1557 had already been cancelled, petitioners were held to be purchasers in bad faith even in regard to Lot No. 1557. However, it must be pointed out that even if a notice of lis pendens on TCT No. 2581 (Lot No. 1558) was still subsisting at the time petitioners bought the property from LAHCO, there also was a court order ordering that the annotation be cancelled, as in fact, it was cancelled on May 20, 1974. A possessor in good faith has been defined as one who is unaware that there exists a flaw which invalidates his acquisition of the thing (See Article 526, Civil Code). Good faith consists in the possessors belief that the person from whom he received the thing was the owner of the same and could convey his title (Pio v. CA, 198 SCRA 434 [1991]). In this case, while petitioners bought Lot No. 2581 from LAHCO while a notice of lis pendens was still annotated thereon, there was also existing a court order canceling the same. Hence, petitioners cannot be considered as being aware of a flaw which invalidates their acquisition of the thing since the alleged flaw, the notice of lis pendens, was already being ordered cancelled at the time of the purchase. On this ground alone, petitioners can already be considered buyers in good faith. More importantly, however, the notice of lis pendens inscribed on TCT No. 2581 was cancelled on May 20, 1974, pursuant to the order of the trial court in Civil Case No. 2953. Felix Lim did not move for the reinstatement of the cancelled notices of lis pendens. What is the effect of this cancellation? To follow the prior ruling of the Court in the instant case, the cancellation of the notice of lis pendens would have no effect. Regardless of the cancellation of the notice of lis pendens, the Po Lam spouses are still considered as having notice of a possible defect in the title of LAHCO, making them purchasers in bad faith. As we shall elucidate, hewing to such an interpretation misunderstands the nature and effect of a notice of lis pendens. The meaning, nature, recording, and effects of a notice of lis pendens are clearly stated in Section 14, Rule 13 of the 1997 Rules of Civil Procedure, thus: SEC. 14. Notice of lis pendens. In an action affecting the title or the right of possession of real property, the plaintiff and the defendant, when affirmative relief is claimed in his answer, may record in the office of the registry of deeds of the province in which the property is situated a notice of the pendency of the action. Said notice shall contain the names of the parties and the object of the action or defense, and a description of the property in that province affected thereby. Only from the time of filing such notice for record shall a purchaser, or encumbrancer of the property affected thereby, be deemed to have constructive notice of the pendency of the action, and only of its pendency against the parties designated by their real names. The notice of lis pendens hereinabove mentioned may be cancelled only upon order of the court, after proper showing that the notice is for the purpose of molesting the adverse party, or that it is not necessary to protect the right of the party who caused it to be recorded. Lis pendens literally means a pending suit or a pending litigation; and the doctrine of lis pendens has been defined as the jurisdiction, power, or control which a court acquires over property involved in a suit, pending the continuance of the action, and until final judgment therein (54 C.J.S. Lis Pendens 1). A notice of lis pendens is an announcement to the whole world that a particular real property is in litigation, serving as a warning that one who acquires an interest over said property does so at his own risk, or that he gambles on the result of the litigation over the said property (AFPMBAI v. CA, G.R. No. 104769, March 3, 2000). The filing of a notice of lis pendens charges all strangers with a notice of the particular litigation referred to therein and, therefore, any right they may thereafter acquire on the property is subject to the eventuality of the suit (Laroza v. Guia, 134 SCRA 341 [1985]). Notice of lis pendens has been conceived and, more often than not, availed of, to protect the real rights of the registrant while the case involving such rights is pending resolution or decision. With the notice of lis pendens duly recorded, and while it remains uncancelled, the registrant could rest secure that he would not lose the property or any part of it during the litigation (People v. Regional Trial Court of Manila, 178 SCRA 299 [1989]). The filing of a notice of lis pendens in effect (1) keeps the subject matter of the litigation within the power of the court until the entry of the final judgment so as to prevent the defeat of the latter by successive alienations; and (2) binds a purchaser of the land subject of the litigation to the judgment or decree that will be promulgated thereon whether such a purchaser is a bona fide purchaser or not; but (3) does not create a non-existent right or lien (Somes v. Government, 62 Phil. 432 [1935]). The doctrine of lis pendens is founded upon reason of public policy and necessity, the purpose of which is to keep the subject matter of the litigation within the power of the court until the judgment or decree shall have been entered; otherwise by successive alienations pending the litigation, its judgment or decree shall be rendered abortive and impossible of execution (Laroza v. Guia, supra; People v. Regional Trial Court of Manila, supra). The doctrine of lis pendens is based on considerations of public policy and convenience, which forbid a litigant to give rights to others, pending the litigation, so as to affect the proceedings of the court then progressing to enforce those rights, the rule being necessary to the administration of justice in order that decisions in pending suits may be binding and may be given full effect, by keeping the subject matter in controversy within the power of the court until final adjudication, that there may be an end to litigation, and to preserve the property that the purpose of the pending suit may not be defeated by successive alienations and transfers of title (54 C.J.S. Lis Pendens, supra). From the above, it can be seen that the basis of the doctrine of lis pendens is public policy and convenience, under the view that once a court has taken cognizance of a controversy, it should be impossible to interfere with consummation of the judgment by any ad interim transfer, encumbrance, or change of possession (51 Am Jur 2d, Lis Pendens, 3). However, to hold that the Po Lam spouses are still bound by the results of the litigation over the property, despite and notwithstanding the cancellation of the notices of lis pendens prior to the termination of litigation, would consider the doctrine of lis pendens as one of implied or constructive notice. This view is erroneous. While the doctrine of lis pendens is frequently spoken of as one of implied or constructive notice, according to many authorities, the doctrine is not founded on any idea of constructive notice, since its true foundation rests, as has already been stated, on principles of public policy and necessity. The lis pendens annotation, although considered a general notice to all the world, . . . it is not correct to speak of it as part of the doctrine of notice; the purchaser pendente lite is affected, not by notice, but because the law does not allow litigating parties to give to others, pending the litigation, rights to the property in dispute as to prejudice the opposite party. The doctrine rests upon public policy, not notice (Tirado v. Sevilla, 188 SCRA 321 [1990]). The doctrine of lis pendens, as generally understood and applied by the courts of this country, is not based upon presumption of notice, but upon a public policy, imperatively demanded by a necessity which can be met and overcome in no other way. It is careless use of language which has led judges to speak of it as notice, because it happens to have in some instance similar effect with notice (Smith v. Kimball, 13 P. 801, 36 Kan. 474). And since the doctrine rests on public policy, not notice, upon the cancellation of the notice of lis pendens, the Po Lam spouses cannot then be considered as having constructive notice of any defect in the title of LAHCO as to make them transferees pendente lite and purchasers in bad faith of Lots No. 1557 and 1558. To hold otherwise would render nugatory the cancellation of the notices of lis pendens inscribed on TCT Nos. 2580 and 2581. Differently stated, to hold the Po Lam spouses still bound by the notice of lis pendens inscribed on TCT No. 2581 despite its subsequent cancellation on May 20, 1974, would render said cancellation an empty, unavailing, and purposeless act, which could not have been the intent of the law. Lex neminem cogit ad van seu inutilia peragenda. The law will not compel one to do useless things. As adverted to earlier, while the notice of lis pendens is duly recorded and as long as it remains uncancelled, the litigant can rest secure that he would not lose the property or any part of it during litigation. Conversely, cancellation of the notice of pendency terminates the effects of such notice. Therefore, with the cancellation of the notices of lis pendens on TCT No. 2580 and 2581, the effects of such notice were terminated, resulting in the Po Lam spouses not being bound thereby. In fine, they cannot be considered transferees pendente lite and purchasers in bad faith of the property. Moreover, since its operation is arbitrary and it may be harsh in particular instances, the doctrine of lis pendens is to be strictly construed and applied. It should not be extended without strict necessity (54 C.J.S. Lis Pendens 1). To consider the Po Lam spouses still bound by the notice of lis pendens even after the same had been cancelled would be extending the doctrine when there is no reason therefor. Lastly, Felix Lims claim is barred by the equitable principle of laches. At the time the notices of lis pendens were cancelled in 1969 and 1974, Felix Lim did not move to reinstate the same. Nor did he act when TCT No. 2580 and 2581 were replaced by TCT No. 8102 and 13711. Instead, he waited seven years, or until 1981, to have his claim on the disputed pieces of property recognized. Felix Lims long inaction and passivity in asserting his rights over the disputed property precludes him from recovering them from petitioners-spouses. WHEREFORE, premises considered, the Motion for Reconsideration of petitioners- spouses Roy Po Lam and Josefa Ong Po Lam is hereby GRANTED. Consequently, the decision dated October 13, 1999, is VACATED and SET ASIDE. A new judgment is hereby entered declaring petitioners-spouses to be PURCHASERS IN GOOD FAITH and Transfer Certificates of Title No. 8102 and 13711 in their name valid, without prejudice on the part of private respondent Jose Lee to file a separate action for reimbursement for the value of said property from the Legaspi Avenue Hardware Company. SO ORDERED. 7. [G.R. No. 115548. March 5, 1996] STATE INVESTMENT HOUSE INC., petitioner, vs. COURT OF APPEALS, ET AL., respondents. D E C I S I O N FRANCISCO, J.: The factual background of the case, aptly summarized in the decision of the Office of the President and cited by respondent Court of Appealsx[1] in its assailed decision, and which we have verified to be supported by the record is herein reproduced as follows: The uncontroverted facts of the case as recited in the decision of the Office of the President are as follows: Records show that, on October 15, 1969, Contract to Sell No. 36 was executed by the Spouses Canuto and Ma. Aranzazu Oreta, and the Solid Homes, Inc. (SOLID), involving a parcel of land identified as Block No. 8, Lot No. 1, Phase I of the Capitol Park Homes Subdivision, Quezon City, containing 511 square meters for a consideration of P39,347.00. Upon signing of the contract, the spouses Oreta made payment amounting to P7,869.40, with the agreement that the balance shall be payable in monthly installments of P45 1.70, at 12% interest per annum. On November 4, 1976, SOLID executed several real estate mortgage contracts in favor of State Investment Homes, (sic) Inc. (STATE) over its subdivided parcels of land, one of which is the subject lot covered by Transfer Certificate of Title No. 209642. For Failure of SOLID to comply with its mortgage obligations contract, STATE extra-judicially foreclosed the mortgaged properties including the subject lot on April 6, 1983, with the corresponding certificate of sale issued therefor to STATE annotated at the back of the titles covering the said properties on October 13, 1983. On June 23, 1984, SOLID thru a Memorandum of Agreement negotiated for the deferment of consolidation of ownership over the foreclosed properties by committing to redeem the properties from STATE. On August 15, 1988, the spouses filed a complaint before the Housing and Land Use Regulatory Board, HLRB, against the developer SOLID and STATE for failure on the part of SOLID to execute the necessary absolute deed of sale as well as to deliver title to said property x x x in violation of the contract to sell x x x, despite full payment of the purchase price as of January 7, 1981. In its Answer, SOLID, by way of alternative defense, alleged that the obligations under the Contract to Sell has become so difficult x x x the herein respondents be partially released from said obligation by substituting subject lot with another suitable residential lot from another subdivision which respondents own/operates. Upon the other hand, STATE, to which the subject lot was mortgaged, averred that unless SOLID pays the redemption price of P125,1955.00, (sic) it has a right to hold on and not release the foreclosed properties. On May 23, 1989, the Office of Appeals, Adjudication and Legal Affairs (OAALA) rendered a decision the decretal portion of which reads: 1. Ordering respondent, State Investment House, Inc. to execute a Deed of Conveyance of Lot 1, B lock 8, in Capital Park Homes Subdivision in favor of complainants and to deliver to the latter the corresponding certificate of title; 2. Ordering respondent, Solid Homes, Inc. to pay State Investment House, Inc. that portion of its loan which corresponds to the value of the lot as collateral; 3. Ordering respondent, Solid Homes, Inc. to pay to this Board the amount of Six Thousand Pesos (P6,000.00) as administrative fine in accordance with Section 25 in relation to Section 38 of P.D. 957. Both the STATE and SOLID appealed to the Board of Commissioners, HLRB, which affirmed on June 5, 1990 the OAALAs decision (Annex C of the Petition; ibid., p. 34). Again, both STATE and SOLID appealed the decision of the Board of Commissioners, HLRB, to the Office of the President which dismissed the twin appeals on February 26, 1993. Petitioner filed with the Supreme Court this petition for review of decision of the Office of the President where it was docketed as G.R. No. 109364. However, in a resolution dated May 13, 1993, the Supreme Court referred this case to this Court for proper disposition. On the other hand, SOLID does not appear to have joined herein petitioner in this petition for review.xi[2] [Italics added.] In a decision dated May 19, 1994, respondent court sustained the judgment of the Office of the President. Hence, this petition substantially anchored on these two alleged errors, namely: (1) error in ruling that private respondent spouses Oretas unregistered rights over the subject property are superior to the registered mortgage rights of petitioner State Investment House, Inc. (STATE); and (2) error in not applying the settled rule that that persons dealing with property covered by torrens certificate of title are not required to go beyond what appears on the face of the title. At the outset, we note that herein petitioner argues more extensively on the second assigned issue, than on the first. In fact, petitioner admits the superior rights of respondents-spouses Oreta over the subject property as it did not pray for the nullification of the contract between respondents-spouses and SOLID, but instead asked for the payment of the release value of the property in question, plus interest, attorneys fees and costs of suit against SOLID or, in case of the latters inability to pay, against respondents-spouses before it can be required to release the title of the subject property in favor of the respondent spouses.xii[3] And even if we were to pass upon the first assigned error, we find respondent courts ruling on the matter to be well-founded. STATEs registered mortgage right over the property is inferior to that of respondents-spouses unregistered right. The unrecorded sale between respondents-spouses and SOLID is preferred for the reason that if the original owner (SOLID, in this case) had parted with his ownership of the thing sold then he no longer had ownership and free disposal of that thing so as to be able to mortgage it again.xiii[4] Registration of the mortgage is of no moment since it is understood to be without prejudice to the better right of third parties.xiv[5] Anent the second issue, petitioner asserts that a purchaser or mortgagee of land/s covered under the Torrens System is not required to do more than rely upon the certificate of title [for] it is enough that the [purchaser or mortgagee] examines the pertinent certificate of title [without] need [of] look[ing] beyond such title.xv[6] As a general rule, where there is nothing in the certificate of title to indicate any cloud or vice in the ownership of the property, or any encumbrance thereon, the purchaser is not required to explore further than what the Torrens Title upon its face indicates in quest for any hidden defect or inchoate right that may subsequently defeat his right thereto. This rule, however, admits of an exception as where the purchaser or mortgagee, has knowledge of a defect or lack of title in his vendor, or that he was aware of sufficient facts to induce a reasonably prudent man to inquire into the status of the title of the property in litigation.xvi[7] In this case, petitioner was well aware that it was dealing with SOLID, a business entity engaged in the business of selling subdivision lots. In fact, the OAALA found that at the time the lot was mortgaged, respondent State Investment House, Inc., [now petitioner] had been aware of the lots location and that said lot formed part of Capital Park/Homes Subdivision.xvii[8] In Sunshine Finance and investment Corp. v. Intermediate Appellate Court,xviii[9] the Court, noting petitioner therein to be a financing corporation, deviated from the general rule that a purchaser or mortgagee of a land is not required to look further than what appears on the face of the Torrens Title. Thus: Nevertheless, we have to deviate from the general rule because of the failure of the petitioner in this case to take the necessary precautions to ascertain if there was any flaw in the title of the Nolascos and to examine the condition of the property they sought to mortgage. The petitioner is an investment and financing corporation. We presume it is experienced in its business. Ascertainment of the status and condition of properties offered to it as security for the loans it extends must be a standard and indispensable part of its operations. Surely, it cannot simply rely on an examination of a Torrens certificate to determine what the subject property looks like as its condition is not apparent in the document. The land might be in a depressed area. There might be squatters on it. It might be easily inundated. It might be an interior lot, without convenient access. These and other similar factors determine the value of the property and so should be of practical concern to the petitioner. xxx xxx xxx Our conclusion might have been different if the mortgagee were an ordinary individual or company without the expertise of the petitioner in the mortgage and sale of registered land or if the land mortgaged were some distance from the mortgagee and could not be conveniently inspected. But there were no such impediments in this case. The facilities of the petitioner were not so limited as to prevent it from making a more careful examination of the land to assure itself that there were no unauthorized persons in possession.xix[10] [Emphasis supplied.] The above-enunciated rule should apply in this case as petitioner admits of being a financing institution.xx[11] We take judicial notice of the uniform practice of financing institutions to investigate, examine and assess the real property offered as security for any loan application especially where, as in this case, the subject property is a subdivision lot located at Quezon City, M.M. It is a settled rule that a purchaser or mortgagee cannot close its eyes to facts which should put a reasonable man upon his guard, and then claim that he acted in good faith under the belief that there was no defect in the title of the vendor or mortgagor.xxi[12] Petitioners constructive knowledge of the defect in the title of the subject property, or lack of such knowledge due to its negligence, takes the place of registration of the rights of respondents-spouses. Respondent court thus correctly ruled that petitioner was not a purchaser or mortgagee in good faith; hence petitioner can not solely rely on what merely appears on the face of the Torrens Title. ACCORDINGLY, finding no reversible error in the assailed judgment, the same is hereby AFFIRMED SO ORDERED. 8. [G.R. No. 111737. October 13, 1999] DEVELOPMENT BANK OF THE PHILIPPINES, petitioner, vs. THE HONORABLE COURT OF APPEALS AND SPOUSES TIMOTEO and SELFIDA S. PIEDA, respondents. D E C I S I O N GONZAGA-REYES, J.: Before us is a Petition for Review on Certiorari of the decision of the Court of Appealsxxii[1] in CA-G.R. CV No. 28549 entitled SPOUSES TIMOTEO PIEDA, ET. AL. vs. DEVELOPMENT BANK OF THE PHILIPPINES which affirmed the decision of the Regional Trial Court (RTC), Branch 16xxiii[2], Roxas City in Civil Case No. V-4590, for cancellation of certificate of title and/or specific performance, accounting and damages with a prayer for the issuance of a writ of preliminary injunction. The records show that respondent spouses Pieda (PIEDAS) are the registered owners of a parcel of land (Lot 11-14-1-14) situated at barangay Astorga Dumarao, Capiz containing an area of 238,406 square meters, more or less, and covered by Homestead Patent No. 0844 and Original Certificate of Title No. P-1930. On March 7, 1972, the PIEDAS mortgaged the above described parcel of land to petitioner, Development Bank of the Philippines (DBP) to secure their agricultural loan in the amount of P20,000.00. The PIEDAS failed to comply with the terms and conditions of the mortgage compelling DBP to extrajudicially foreclose on February 2, 1977. In the foreclosure sale, DBP was the highest bidder and a Sheriff Certificate of Sale was executed in its favor. In the corresponding Certificate of Sale, the sheriff indicated that This property is sold subject to the redemption within five (5) years from the date of registration of this instrument and in the manner provided for by law applicable to this case. The certificate of sale was registered in the Register of Deeds of Capiz on April 25, 1977. On March 10, 1978, after the expiration of the one-year redemption period provided for under Section 6, ACT 3135, DBP consolidated its title over the foreclosed property by executing an Affidavit of Consolidation of Ownership. Subsequently, a Final Deed of Sale was executed in DBPs favor, which was registered together with the Affidavit of Consolidation of Ownership with the Register of Deeds of Capiz on May 30, 1978. Consequently, Original Certificate of Title No. P- 1930 was cancelled and TCT No. T-15559 was issued in the name of DBP. Thereafter, DBP took possession of the foreclosed property and appropriated the produce thereof. On July 5, 1978, the Ministry of Justice issued Opinion No. 92, Series of 1978xxiv[3] which declared that lands covered by P.D. No. 27xxv[4], like the herein subject property, may not be the object of foreclosure proceedings after the promulgation of said decree on Oct. 21, 1972. On August 24, 1981, the PIEDAS offered to redeem the foreclosed property by offering P10,000.00 as partial redemption payment. This amount was accepted by DBP who issued O.R. No. 1665719 and through a letter, conditionally approved the offer of redemption considering the P10,000.00 as down payment.xxvi[5] However, on November 11, 1981, DBP sent the PIEDAS another letter informing them that pursuant to P.D. 27, their offer to redeem and/or repurchase the subject property could not be favorably considered for the reason that said property was tenanted.xxvii[6] On November 16, 1981, in deference to the above-mentioned opinion, DBP through Ramon Buenaflor sent a letter to the Acting Register of Deeds of Capiz requesting the latter to cancel TCT No. T-15559 and to restore Original Certificate of Title No. P-1930 in the name of the PIEDAS. The Acting Register of Deeds, in reply to such request, suggested that DBP file a petition in court pursuant to Section 108 of Presidential Decree 1529xxviii[7]. In compliance with said suggestion, DBP petitioned for the cancellation of TCT No. T-15559 with then Court of First Instance of Capiz, Branch II, docketed as Special Case No. 2653. The petition was favorably acted upon on February 22, 1982. Thus, the foreclosure proceeding conducted on February 2, 1977 was declared null and void and the Register of Deeds of Capiz was ordered to cancel TCT No. 15559; OCT No. 1930 was ordered revived. Meanwhile, on December 21, 1981, the PIEDAS filed the instant complaint against DBP for cancellation of certificate of title and/or specific performance, accounting and damages with a prayer for the issuance of a writ of preliminary injunction averring that DBP, in evident bad faith, caused the consolidation of its title to the parcel of land in question in spite of the fact that the 5-year redemption period expressly stated in the Sheriffs Certificate of Sale had not yet lapsed and that their offer to redeem the foreclosed property was made well within said period of redemption.xxix[8] After trial, the RTC ruled in favor of the PIEDAS stating that DBP violated the stipulation in the Sheriffs Certificate of Sale which provided that the redemption period is five (5) years from the registration thereof in consonance with Section 119xxx[9] of CA No. 141xxxi[10]. DBP should therefore assume liability for the fruits that said property produced from said land considering that it prematurely took possession thereof. The dispositive portion of the decision reads: WHEREFORE, judgment is hereby rendered in favor of plaintiffs and against the defendant Development Bank of the Philippines as follows: 1. Condemning the defendant DBP to pay the plaintiffs P201,138.28 less whatever amount the plaintiffs still have to pay the said defendant DBP as balance of their loan account reckoned up to the date of this decision; P20,000.00 as attorneys fees; P5,000.00 as litigation expenses and costs. SO ORDERED.xxxii[11] DBP appealed to the Court of Appeals, which affirmed the decision of the RTC. The Court of Appeals stated that since DBP was in evident bad faith when it unlawfully took possession of the property subject of the dispute and defied what was written on the Sheriffs Certificate of Sale, the PIEDAS were entitled to recover the fruits produced by the property or its equivalent valued at P72,000.00 per annum or a total of P216,000.00 for the three-year period. Respondent court stated that said amount was not rebutted by DBP and was fair considering the size of the land in question. The court added that any discussion with respect to the redemption period was of little significance since the foreclosure proceeding was declared null and void in Special Civil Case No. 2653xxxiii[12] on February 22, 1982. Thus, the right of the PIEDAS to redeem the property has become moot and academic. Finally, the award of attorneys fees amounting to P10,000.00xxxiv[13] was justified considering that the PIEDAS were compelled to protect their interests.xxxv[14] DBPs Motion for Reconsiderationxxxvi[15] was denied; hence this petition where it assigns the following errors: Ground No. 1 The Honorable Court Of Appeals Gravely Erred In Affirming The Court A Quos Decision Awarding Actual Damages In The Amount Of P216,000.00 In Favor Of The Private Respondents Notwithstanding The Absence Of Evidence Substantiating Said Award. Thus, The Honorable Court Of Appeals Had Decided This Instant Case In A Way Not In Accord With Applicable Law And Jurisprudence. 2. Ground No. 2 - The Honorable Court Of Appeals Gravely Erred In Affirming The Court A Quos Finding That DBP Was In Bad Faith When It Took Possession Of The Property In Question Notwithstanding the Contrary Evidence Adduced By Petitioner DBP. Thus, The Honorable Court Of Appeals Departed From The Accepted And Usual Course of Judicial Proceedings. 3. Ground No. 3 - The Honorable Court Of Appeals Gravely Erred In Affirming The Court A Quos Decision Awarding Attorneys Fees And Litigation Costs In Favor Of The Private Respondents Notwithstanding Absence Of Evidence Proving the Same. Clearly, The Lower Court Committed Misapprehension Of Facts That Can Be Considered A Question Of Law.xxxvii[16] DBP maintains that the valuation of the income derived from the property in dispute allegedly amounting to P216,000.00 was not proven by the PIEDAS. DBP argues that they granted the PIEDAS a loan of P20,000.00 in March 7, 1972 and up to the time of the foreclosure of the property, the PIEDAS have paid only P2,000.00 on their principal. The failure of the PIEDAS to pay this loan is attributable to the fact that said property did not produce income amounting to P72,000.00 per annum. According to DBP, in the absence of receipts or other evidence to support such a claim, the Court of Appeals should not have granted said amount considering that the PIEDAS had the burden of proving actual damages. Furthermore, Selfida Pieda herself admitted that the property never produced income amounting to P72,000.00 per annum. At any rate, the actual amount earned by the property in terms of rentals turned over by the tenant-farmers or caretakers of the land were duly receipted and were duly accounted for by the DBP. DBP also alleges that the mere fact that DBP took possession and administration of the property does not warrant a finding that DBP was in bad faith. First, records show that the PIEDAS consented to and approved the takeover of DBP. Second, Sec. 7xxxviii[17] of Act No. 3135xxxix[18] allows the mortgagee-buyer to take possession of the mortgaged property even during the redemption period. Third, DBPs act of consolidating the title of the property in its name does not constitute bad faith as there is no law which prohibits the purchaser at public auction from consolidating title in its name after the expiration of the one (1) year redemption period reckoned from the time the Certificate of Sale was registered; and neither is there any law or jurisprudence which prohibits the PIEDAS from exercising their right of redemption over said property within five (5) years even if title is consolidated in the name of the purchaser. When DBP consolidated title over the property in its name, the new TCT issued in its favor was subject to the lien i.e. the right of redemption of the PIEDAS; if there was a failure to register this in the TCT, DBP should not be faulted. Besides, even if the five (5) year period of redemption was not indicated therein, Sec. 44xl[19] and 46xli[20] of Presidential Decree No. 1529xlii[21] attaches such lien by operation of law even in the absence of an annotation in the title. Moreover, Sec. 119 of CA No. 141 also makes said right of redemption a statutory lien, which subsists and binds the whole world despite the absence of registration. DBP also could not have been in bad faith when it denied the PIEDAS offer to redeem the property since the denial was premised on Opinion No. 92 of the Minister of Justice series of 1978 which stated that said land was covered under P.D. 27 and could not be the subject of foreclosure proceedings. For this reason, DBP immediately filed a petition to nullify the foreclosure proceedings which was favorably acted upon prior to the service of summons and the complaint in the present case on DBP on June 30,1982. If DBP was really in bad faith, it would not have filed said petition for said petition was against its own interests. Further, DBP asserts that PIEDAS appointed DBP as their attorney-in-fact or agent in case of foreclosure of the property under Section 4 of the mortgage contract, which provides: 4. xxx In case of foreclosure, the Mortgagor hereby consents to the appointment of the mortgagee or any of its employees as receiver, without any bond, to take charge of the mortgage property at once, and to hold possession of the case and the rents and profits derived from the mortgaged property before the sale. xxxxliii[22] DBP was therefore entitled to take possession of the property pursuant to the mortgage contract. Finally, considering that DBP lawfully had material possession of the property after it consolidated its title, DBP was entitled to the fruits and income thereof pursuant to Section 34, Rule 39 of the Rules of Court: Sec. 34. Rents and Profits Pending Redemption. Statement thereof and credit therefor on redemption. The purchaser, from the time of the sale until a redemption, and a redemptioner, from the time of his redemption until another redemption, is entitled to receive the rents of the property sold or the value of the use or occupation thereof when such property is in the possession of a tenant. xxx Taking all this into consideration, DBP cannot be faulted for taking over possession of the property in question. The core issue in this case is whether DBP was in bad faith when it took possession of the disputed lot. We rule in the negative and find DBPs contentions meritorious. A possessor in good faith is one who is not aware that there exists in his title or mode of acquisition any flaw, which invalidates it.xliv[23] Good faith is always presumed, and upon him who alleges bad faith on the part of a possessor rests the burden of proof.xlv[24] It was therefore incumbent on the PIEDAS to prove that DBP was aware of the flaw in its title i.e. the nullity of the foreclosure. This, they failed to do. Respondent PIEDAS argue that DBPs bad faith stems from the fact that DBP consolidated title over the disputed property despite the statement in the Sheriffs Certificate of Sale to the effect that said land was subject to a five year redemption period. The period of redemption of extrajudicially foreclosed land is provided under Section 6 of ACT No. 3135 to wit: Sec. 6. In all cases in which an extrajudicial sale is made under the special power hereinbefore referred to, the debtor, his successors in interest or any judicial creditor or judgment creditor of said debtor, or any person having a lien on the property subsequent to the mortgage or deed of trust under which the property is sold, may redeem the same at any time within the term of one year from and after the date of sale; and such redemption shall be governed by the provisions of section four hundred and sixty-four to four hundred and sixty-six, inclusive, of the Code of Civil Procedurexlvi[25], in so far as these are not inconsistent with the provisions of this Act. If no redemption is made within one year, the purchaser is entitled as a matter of right to consolidatexlvii[26] and to possessxlviii[27] the property.xlix[28] Accordingly, DBPs act of consolidating its title and taking possession of the subject property after the expiration of the period of redemption was in accordance with law. Moreover, it was in consonance with Section 4 of the mortgage contract between DBP and the PIEDAS where they agreed to the appointment of DBP as receiver to take charge and to hold possession of the mortgage property in case of foreclosure. DBPs acts cannot therefore be tainted with bad faith. The right of DBP to consolidate its title and take possession of the subject property is not affected by the PIEDAS right to repurchase said property within five years from the date of conveyance granted by Section 119 of CA No. 141. In fact, without the act of DBP consolidating title in its name, the PIEDAS would not be able to assert their right to repurchase granted under the aforementioned section. Respondent PIEDAS are of the erroneous belief that said section prohibits a purchaser of homestead land in a foreclosure sale from consolidating his title over said property after the one-year period to redeem said property has expired. Section 119 does not contain any prohibition to convey homestead land but grants the homesteader, his widow or legal heirs a right to repurchase said land within a period of five years in the event that he conveys said land. This is in consonance with the policy of homestead laws to distribute disposable agricultural lands of the State to land-destitute citizens for their home and cultivation.l[29] The right to repurchase under Section 119 aims to preserve and keep in the family of the homesteader that portion of public land which the State had gratuitously given him.li[30] Such right is based on the assumption that the person under obligation to reconvey the property has the full title to the property because it was voluntarily conveyed to him or that he consolidated his title thereto by reason of a redemptioners failure to exercise his right of redemption.lii[31] It is also settled that the five-year period of redemption fixed in Section 119 of the Public Land Law of homestead sold at extrajudicial foreclosure begins to run from the day after the expiration of the one-year period of repurchase allowed in an extrajudicial foreclosure.liii[32] Thus DBPs consolidation of title did not derogate from or impair the right of the PIEDAS to redeem the same under C.A. No. 141. It may be argued that P.D. 27 was already in effect when DBP foreclosed the property. However, the legal propriety of the foreclosure of the land was put into question only after Opinion No. 92 series of 1978 of the Ministry of Justice declared that said land was covered by P.D. 27 and could not be subject to foreclosure proceedings. The Opinion of the Ministry of Justice was issued on July 5, 1978 or almost two months after DBP consolidated its title to the property on March 10, 1978. By law and jurisprudence, a mistake upon a doubtful or difficult question of law may properly be the basis of good faith.liv[33] In the case of Maneclang vs. Baun,lv[34] we held that when a contract of sale is void, the possessor is entitled to keep the fruits during the period for which it held the property in good faith. Good faith of the possessor ceases when an action to recover possession of the property is filed against him and he is served summons therefore.lvi[35] In the present case, DBP was served summons on June 30, 1982.lvii[36] By that time, it was no longer in possession of the disputed land as possession thereof was given back to the PIEDAS after the foreclosure of DBP was declared null and void on February 22, 1982. Therefore, any income collected by DBP after it consolidated its title and took possession of the property on May 30, 1978 up to February 22, 1982 belongs to DBP as a possessor in good faith since its possession was never legally interrupted. Finally, we delete the award for attorneys fees. Although attorneys fees may be awarded if the claimant is compelled to litigate with third persons or to incur expenses to protect his interest by reason of an unjustified act or omission of the party from whom it is soughtlviii[37], we hold that DBPs acts were clearly not unjustified. WHEREFORE, the instant petition is hereby GRANTED, and the appealed decision of the Court of Appeals is REVERSED. The Development Bank of the Philippines is absolved from any liability to Timoteo and Selfida Pieda in so far as it orders the DBP to pay the PIEDAS P216,000.00 as annual produce value of the land; P20,000.00 in attorneys fees, P5,000.00 in litigation expenses and the costs of the suit. This decision is without prejudice to whatever liability the PIEDAS may still have to the DBP with respect to their loan. SO ORDERED. 9. G.R. No. 57667 May 28, 1990 SAN MIGUEL CORPORATION, petitioner, vs. COURT OF APPEALS and DIRECTOR OF LANDS, respondents. Ciriaco Lopez, Jr. & Associates for petitioner.
FERNAN, C.J .: In this petition for review on certiorari, San Miguel Corporation seeks the reversal of the decision of the Court of Appeals 1 denying its application for registration of a parcel of land in view of its failure to show entitlement thereto. On December 23, 1975, petitioner San Miguel Corporation (SMC for brevity) purchased from Silverio Perez Lot 684, a 14,531 square-meter parcel of land located in Sta. Anastacia, Sto. Tomas, Batangas, in consideration of the sum of P133,084.80. 2 On February 21,1977, claiming ownership in fee simple of the land, SMC filed before the then Court of First Instance, now Regional Trial Court of Batangas an application for its registration under the Land Registration Act. The Solicitor General, appearing for the Republic of the Philippines, opposed the application for registration contending that SMC's claim of ownership in fee simple on the basis of a Spanish title or grant could no longer be availed of by the applicant as the six-month period from February 16, 1976 prescribed by Presidential Decree No. 892 had elapsed; that the parcel of land in question is part of the public domain, and that SMC, being a private corporation, is disqualified under Section 11, Article XIV of the Constitution from holding alienable lands of the public domain. The Solicitor General thereafter authorized the Provincial Fiscal of Batangas to appear in said case, subject to his supervision and control. At the initial and only hearing held on October 12, 197 7, the Court, upon motion of SMC and there being no opposition to the application except that of the Republic of the Philippines, issued an order of general default. SMC was allowed to mark documentary evidence to establish jurisdictional facts and to present additional evidence before the Clerk of Court who was appointed Commissioner for that purpose. On December 12, 1977, the lower court, presided by Judge Eduardo C. Abaya, rendered a decision granting the application for registration and adjudicating the property in favor of SMC. The Solicitor General appealed to the Court of Appeals. In its decision of March 23, 1981, said court reversed the decision of the lower court and declared the parcel of land involved as public land. Hence, the instant petition with SMC submitting the following alleged "grave errors" of the Court of Appeals for this Court's resolution: (1) the Court of Appeals' failure to hold that "prescription is a mode of acquiring title or ownership of land and that the title thus acquired is registrable"; (2) the Court of Appeals' disregard of SMC's evidence "not on the basis of controverting evidence but on the basis of unfounded suppositions and conjectures," and (3) the Court of Appeals' reversal of the factual findings of the trial court which had the opportunity of observing the demeanor and sincerity of the witnesses. 3
We need not dwell lengthily on the third "error" assigned by petitioner. Suffice it to state that while trial courts may have the opportunity to observe the demeanor of witnesses, their factual findings may nonetheless be reversed by the Court of Appeals, the appellate court vested by law to resolve both legal and factual issues, if, by the evidence on record, it appears that the trial court involved erred. What is of primary concern to us in this case is the issue of whether or not the evidence presented by the petitioner is sufficient to warrant a ruling that SMC and/or its predecessor-in-interest has a registrable right over Lot 684. Open, exclusive and undisputed possession of alienable public land for the period prescribed by law creates the legal fiction whereby the land, upon completion of the requisite period ipso-jure and without the need of judicial or other sanction, ceases to be public land and becomes private property. 4 Such open, continuous, exclusive and notorious occupation of the disputed properties for more than 30 years must, however, be conclusively established. 6 This quantum of proof is necessary to avoid the erroneous validation of actually fictitious claims of possession over the property in dispute. In this case, petitioner's claim that its predecessor-in-interest had open, exclusive and undisputed possession of Lot 684 for more than thirty years is anchored on certain documentary and testimonial evidence. Its documentary evidence consist of tax declaration No. 923 wherein it appears that in 1974, Silverio Perez declared as his own for taxation purposes, a certain riceland with an area of 1.5657 hectares located in Sta. Anastacia, Sto. Tomas, Batangas, 6 and a certification of the Office of the Treasurer of Sto. Tomas to the effect that in 1977, Silverio Perez paid realty taxes for the land subject of tax declaration no. 923. 7
Tax declarations and receipts are not conclusive evidence of ownership or right of possession over a piece of land. 8 They are merely indicia of a claim of ownership. 9 Tax declarations only become strong evidence of ownership of land acquired by prescription, a mode of acquisition of ownership relied upon by petitioner in this case, when accompanied by proof of actual possession. 10
Such proof of actual possession was sought to be provided by the testimony of vendor Silverio Perez that he had been in possession of the property since 1933 until he sold it to SMC in 1975; that the property was given to him by his parents when he got married; that no document evidenced that transfer; that it had been in the possession of his parents since 1925; that he had declared the property in his name for taxation purposes; that he had paid taxes therefor, and that he was in peaceful, continuous and exclusive possession of the property until its sale to SMC. 11
Petitioner did not present other witnesses to corroborate Perez' testimony. Its other witness, Antonio M. de las Alas, Jr., a lawyer of the petitioner, simply testified that he handled the negotiations for the purchase of the property; that SMC was authorized to own and acquire property as shown by its articles of incorporation and by-laws; that since its acquisition in 1975, the property had been used as a hatchery farm of SMC; that SMC's possession in the concept of an owner had been continuous, adverse and against the whole world, and that the land was declared for taxation purposes still in the name of Silverio Perez . 12
We hold that there is paucity of evidence of actual, notorious and exclusive possession of the property on the part of vendor Silverio Perez so as to attach to it the character of an express grant from the govemment. 13 Indeed, as correctly held by the Court of Appeals, Silverio Perez's testimony, being uncorroborated, is simply self-serving and hence, undeserving of any weight. WHEREFORE, the decision of the Court of Appeals is hereby AFFIRMED. Costs against the petitioner. SO ORDERED. 10. G.R. No. 106063 November 21, 1996 EQUATORIAL REALTY DEVELOPMENT, INC. & CARMELO & BAUERMANN, INC., petitioners, vs. MAYFAIR THEATER, INC., respondent.
HERMOSISIMA, JR., J .: Before us is a petition for review of the decision 1 of the Court of Appeals 2 involving questions in the resolution of which the respondent appellate court analyzed and interpreted particular provisions of our laws on contracts and sales. In its assailed decision, the respondent court reversed the trial court 3 which, in dismissing the complaint for specific performance with damages and annulment of contract, 4 found the option clause in the lease contracts entered into by private respondent Mayfair Theater, Inc. (hereafter, Mayfair) and petitioner Carmelo & Bauermann, Inc. (hereafter, Carmelo) to be impossible of performance and unsupported by a consideration and the subsequent sale of the subject property to petitioner Equatorial Realty Development, Inc. (hereafter, Equatorial) to have been made without any breach of or prejudice to, the said lease contracts. 5
We reproduce below the facts as narrated by the respondent court, which narration, we note, is almost verbatim the basis of the statement of facts as rendered by the petitioners in their pleadings: Carmelo owned a parcel of land, together with two 2-storey buildings constructed thereon located at Claro M Recto Avenue, Manila, and covered by TCT No. 18529 issued in its name by the Register of Deeds of Manila. On June 1, 1967 Carmelo entered into a contract of lease with Mayfair for the latter's lease of a portion of Carmelo's property particularly described, to wit: A PORTION OF THE SECOND FLOOR of the two-storey building, situated at C.M. Recto Avenue, Manila, with a floor area of 1,610 square meters. THE SECOND FLOOR AND MEZZANINE of the two-storey building, situated at C.M. Recto Avenue, Manila, with a floor area of 150 square meters. for use by Mayfair as a motion picture theater and for a term of twenty (20) years. Mayfair thereafter constructed on the leased property a movie house known as "Maxim Theatre." Two years later, on March 31, 1969, Mayfair entered into a second contract of lease with Carmelo for the lease of another portion of Carmelo's property, to wit: A PORTION OF THE SECOND FLOOR of the two-storey building, situated at C.M. Recto Avenue, Manila, with a floor area of 1,064 square meters. THE TWO (2) STORE SPACES AT THE GROUND FLOOR and MEZZANINE of the two-storey building situated at C.M. Recto Avenue, Manila, with a floor area of 300 square meters and bearing street numbers 1871 and 1875, for similar use as a movie theater and for a similar term of twenty (20) years. Mayfair put up another movie house known as "Miramar Theatre" on this leased property. Both contracts of lease provides (sic) identically worded paragraph 8, which reads: That if the LESSOR should desire to sell the leased premises, the LESSEE shall be given 30-days exclusive option to purchase the same. In the event, however, that the leased premises is sold to someone other than the LESSEE, the LESSOR is bound and obligated, as it hereby binds and obligates itself, to stipulate in the Deed of Sale hereof that the purchaser shall recognize this lease and be bound by all the terms and conditions thereof. Sometime in August 1974, Mr. Henry Pascal of Carmelo informed Mr. Henry Yang, President of Mayfair, through a telephone conversation that Carmelo was desirous of selling the entire Claro M. Recto property. Mr. Pascal told Mr. Yang that a certain Jose Araneta was offering to buy the whole property for US Dollars 1,200,000, and Mr. Pascal asked Mr. Yang if the latter was willing to buy the property for Six to Seven Million Pesos. Mr. Yang replied that he would let Mr. Pascal know of his decision. On August 23, 1974, Mayfair replied through a letter stating as follows: It appears that on August 19, 1974 your Mr. Henry Pascal informed our client's Mr. Henry Yang through the telephone that your company desires to sell your above-mentioned C.M. Recto Avenue property. Under your company's two lease contracts with our client, it is uniformly provided: 8. That if the LESSOR should desire to sell the leased premises the LESSEE shall be given 30-days exclusive option to purchase the same. In the event, however, that the leased premises is sold to someone other than the LESSEE, the LESSOR is bound and obligated, as it is (sic) herebinds (sic) and obligates itself, to stipulate in the Deed of Sale thereof that the purchaser shall recognize this lease and be bound by all the terms and conditions hereof (sic). Carmelo did not reply to this letter. On September 18, 1974, Mayfair sent another letter to Carmelo purporting to express interest in acquiring not only the leased premises but "the entire building and other improvements if the price is reasonable. However, both Carmelo and Equatorial questioned the authenticity of the second letter. Four years later, on July 30, 1978, Carmelo sold its entire C.M. Recto Avenue land and building, which included the leased premises housing the "Maxim" and "Miramar" theatres, to Equatorial by virtue of a Deed of Absolute Sale, for the total sum of P11,300,000.00. In September 1978, Mayfair instituted the action a quo for specific performance and annulment of the sale of the leased premises to Equatorial. In its Answer, Carmelo alleged as special and affirmative defense (a) that it had informed Mayfair of its desire to sell the entire C.M. Recto Avenue property and offered the same to Mayfair, but the latter answered that it was interested only in buying the areas under lease, which was impossible since the property was not a condominium; and (b) that the option to purchase invoked by Mayfair is null and void for lack of consideration. Equatorial, in its Answer, pleaded as special and affirmative defense that the option is void for lack of consideration (sic) and is unenforceable by reason of its impossibility of performance because the leased premises could not be sold separately from the other portions of the land and building. It counterclaimed for cancellation of the contracts of lease, and for increase of rentals in view of alleged supervening extraordinary devaluation of the currency. Equatorial likewise cross-claimed against co-defendant Carmelo for indemnification in respect of Mayfair's claims. During the pre-trial conference held on January 23, 1979, the parties stipulated on the following: 1. That there was a deed of sale of the contested premises by the defendant Carmelo . . . in favor of defendant Equatorial . . .; 2. That in both contracts of lease there appear (sic) the stipulation granting the plaintiff exclusive option to purchase the leased premises should the lessor desire to sell the same (admitted subject to the contention that the stipulation is null and void); 3. That the two buildings erected on this land are not of the condominium plan; 4. That the amounts stipulated and mentioned in paragraphs 3 (a) and (b) of the contracts of lease constitute the consideration for the plaintiff's occupancy of the leased premises, subject of the same contracts of lease, Exhibits A and B; xxx xxx xxx 6. That there was no consideration specified in the option to buy embodied in the contract; 7. That Carmelo & Bauermann owned the land and the two buildings erected thereon; 8. That the leased premises constitute only the portions actually occupied by the theaters; and 9. That what was sold by Carmelo & Bauermann to defendant Equatorial Realty is the land and the two buildings erected thereon. xxx xxx xxx After assessing the evidence, the court a quo rendered the appealed decision, the decretal portion of which reads as follows: WHEREFORE, judgment is hereby rendered: (1) Dismissing the complaint with costs against the plaintiff; (2) Ordering plaintiff to pay defendant Carmelo & Bauermann P40,000.00 by way of attorney's fees on its counterclaim; (3) Ordering plaintiff to pay defendant Equatorial Realty P35,000.00 per month as reasonable compensation for the use of areas not covered by the contract (sic) of lease from July 31, 1979 until plaintiff vacates said area (sic) plus legal interest from July 31, 1978; P70,000 00 per month as reasonable compensation for the use of the premises covered by the contracts (sic) of lease dated (June 1, 1967 from June 1, 1987 until plaintiff vacates the premises plus legal interest from June 1, 1987; P55,000.00 per month as reasonable compensation for the use of the premises covered by the contract of lease dated March 31, 1969 from March 30, 1989 until plaintiff vacates the premises plus legal interest from March 30, 1989; and P40,000.00 as attorney's fees; (4) Dismissing defendant Equatorial's crossclaim against defendant Carmelo & Bauermann. The contracts of lease dated June 1, 1967 and March 31, 1969 are declared expired and all persons claiming rights under these contracts are directed to vacate the premises. 6
The trial court adjudged the identically worded paragraph 8 found in both aforecited lease contracts to be an option clause which however cannot be deemed to be binding on Carmelo because of lack of distinct consideration therefor. The court a quo ratiocinated: Significantly, during the pre-trial, it was admitted by the parties that the option in the contract of lease is not supported by a separate consideration. Without a consideration, the option is therefore not binding on defendant Carmelo & Bauermann to sell the C.M. Recto property to the former. The option invoked by the plaintiff appears in the contracts of lease . . . in effect there is no option, on the ground that there is no consideration. Article 1352 of the Civil Code, provides: Contracts without cause or with unlawful cause, produce no effect whatever. The cause is unlawful if it is contrary to law, morals, good custom, public order or public policy. Contracts therefore without consideration produce no effect whatsoever. Article 1324 provides: When the offeror has allowed the offeree a certain period to accept, the offer may be withdrawn at any time before acceptance by communicating such withdrawal, except when the option is founded upon consideration, as something paid or promised. in relation with Article 1479 of the same Code: A promise to buy and sell a determine thing for a price certain is reciprocally demandable. An accepted unilateral promise to buy or to sell a determine thing for a price certain is binding upon the promissor if the promise is supported by a consideration distinct from the price. The plaintiff cannot compel defendant Carmelo to comply with the promise unless the former establishes the existence of a distinct consideration. In other words, the promisee has the burden of proving the consideration. The consideration cannot be presumed as in Article 1354: Although the cause is not stated in the contract, it is presumed that it exists and is lawful unless the debtor proves the contrary. where consideration is legally presumed to exists. Article 1354 applies to contracts in general, whereas when it comes to an option it is governed particularly and more specifically by Article 1479 whereby the promisee has the burden of proving the existence of consideration distinct from the price. Thus, in the case of Sanchez vs. Rigor, 45 SCRA 368, 372-373, the Court said: (1) Article 1354 applies to contracts in general, whereas the second paragraph of Article 1479 refers to sales in particular, and, more specifically, to an accepted unilateral promise to buy or to sell. In other words, Article 1479 is controlling in the case at bar. (2) In order that said unilateral promise may be binding upon the promissor, Article 1479 requires the concurrence of a condition, namely, that the promise be supported by a consideration distinct from the price. Accordingly, the promisee cannot compel the promissor to comply with the promise, unless the former establishes the existence of said distinct consideration. In other words, the promisee has the burden of proving such consideration. Plaintiff herein has not even alleged the existence thereof in his complaint. 7
It follows that plaintiff cannot compel defendant Carmelo & Bauermann to sell the C.M. Recto property to the former. Mayfair taking exception to the decision of the trial court, the battleground shifted to the respondent Court of Appeals. Respondent appellate court reversed the court a quo and rendered judgment: 1. Reversing and setting aside the appealed Decision; 2. Directing the plaintiff-appellant Mayfair Theater Inc. to pay and return to Equatorial the amount of P11,300,000.00 within fifteen (15) days from notice of this Decision, and ordering Equatorial Realty Development, Inc. to accept such payment; 3. Upon payment of the sum of P11,300,000, directing Equatorial Realty Development, Inc. to execute the deeds and documents necessary for the issuance and transfer of ownership to Mayfair of the lot registered under TCT Nos. 17350, 118612, 60936, and 52571; and 4. Should plaintiff-appellant Mayfair Theater, Inc. be unable to pay the amount as adjudged, declaring the Deed of Absolute Sale between the defendants-appellants Carmelo & Bauermann, Inc. and Equatorial Realty Development, Inc. as valid and binding upon all the parties. 8
Rereading the law on the matter of sales and option contracts, respondent Court of Appeals differentiated between Article 1324 and Article 1479 of the Civil Code, analyzed their application to the facts of this case, and concluded that since paragraph 8 of the two lease contracts does not state a fixed price for the purchase of the leased premises, which is an essential element for a contract of sale to be perfected, what paragraph 8 is, must be a right of first refusal and not an option contract. It explicated: Firstly, the court a quo misapplied the provisions of Articles 1324 and 1479, second paragraph, of the Civil Code. Article 1324 speaks of an "offer" made by an offeror which the offeree may or may not accept within a certain period. Under this article, the offer may be withdrawn by the offeror before the expiration of the period and while the offeree has not yet accepted the offer. However, the offer cannot be withdrawn by the offeror within the period if a consideration has been promised or given by the offeree in exchange for the privilege of being given that period within which to accept the offer. The consideration is distinct from the price which is part of the offer. The contract that arises is known as option. In the case of Beaumont vs. Prieto, 41 Phil. 670, the Supreme court, citing Bouvier, defined an option as follows: "A contract by virtue of which A, in consideration of the payment of a certain sum to B, acquires the privilege of buying from or selling to B, certain securities or properties within a limited time at a specified price," (pp. 686-7). Article 1479, second paragraph, on the other hand, contemplates of an "accepted unilateral promise to buy or to sell a determinate thing for a price within (which) is binding upon the promisee if the promise is supported by a consideration distinct from the price." That "unilateral promise to buy or to sell a determinate thing for a price certain" is called an offer. An "offer", in laws, is a proposal to enter into a contract (Rosenstock vs. Burke, 46 Phil. 217). To constitute a legal offer, the proposal must be certain as to the object, the price and other essential terms of the contract (Art. 1319, Civil Code). Based on the foregoing discussion, it is evident that the provision granting Mayfair "30- days exclusive option to purchase" the leased premises is NOT AN OPTION in the context of Arts. 1324 and 1479, second paragraph, of the Civil Code. Although the provision is certain as to the object (the sale of the leased premises) the price for which the object is to be sold is not stated in the provision Otherwise stated, the questioned stipulation is not by itself, an "option" or the "offer to sell" because the clause does not specify the price for the subject property. Although the provision giving Mayfair "30-days exclusive option to purchase" cannot be legally categorized as an option, it is, nevertheless, a valid and binding stipulation. What the trial court failed to appreciate was the intention of the parties behind the questioned proviso. xxx xxx xxx The provision in question is not of the pro-forma type customarily found in a contract of lease. Even appellees have recognized that the stipulation was incorporated in the two Contracts of Lease at the initiative and behest of Mayfair. Evidently, the stipulation was intended to benefit and protect Mayfair in its rights as lessee in case Carmelo should decide, during the term of the lease, to sell the leased property. This intention of the parties is achieved in two ways in accordance with the stipulation. The first is by giving Mayfair "30-days exclusive option to purchase" the leased property. The second is, in case Mayfair would opt not to purchase the leased property, "that the purchaser (the new owner of the leased property) shall recognize the lease and be bound by all the terms and conditions thereof." In other words, paragraph 8 of the two Contracts of lease, particularly the stipulation giving Mayfair "30-days exclusive option to purchase the (leased premises)," was meant to provide Mayfair the opportunity to purchase and acquire the leased property in the event that Carmelo should decide to dispose of the property. In order to realize this intention, the implicit obligation of Carmelo once it had decided to sell the leased property, was not only to notify Mayfair of such decision to sell the property, but, more importantly, to make an offer to sell the leased premises to Mayfair, giving the latter a fair and reasonable opportunity to accept or reject the offer, before offering to sell or selling the leased property to third parties. The right vested in Mayfair is analogous to the right of first refusal, which means that Carmelo should have offered the sale of the leased premises to Mayfair before offering it to other parties, or, if Carmelo should receive any offer from third parties to purchase the leased premises, then Carmelo must first give Mayfair the opportunity to match that offer. In fact, Mr. Pascal understood the provision as giving Mayfair a right of first refusal when he made the telephone call to Mr. Yang in 1974. Mr. Pascal thus testified: Q Can you tell this Honorable Court how you made the offer to Mr. Henry Yang by telephone? A I have an offer from another party to buy the property and having the offer we decided to make an offer to Henry Yang on a first-refusal basis. (TSN November 8, 1983, p. 12.). and on cross-examination: Q When you called Mr. Yang on August 1974 can you remember exactly what you have told him in connection with that matter, Mr. Pascal? A More or less, I told him that I received an offer from another party to buy the property and I was offering him first choice of the enter property. (TSN, November 29, 1983, p. 18). We rule, therefore, that the foregoing interpretation best renders effectual the intention of the parties. 9
Besides the ruling that paragraph 8 vests in Mayfair the right of first refusal as to which the requirement of distinct consideration indispensable in an option contract, has no application, respondent appellate court also addressed the claim of Carmelo and Equatorial that assuming arguendo that the option is valid and effective, it is impossible of performance because it covered only the leased premises and not the entire Claro M. Recto property, while Carmelo's offer to sell pertained to the entire property in question. The Court of Appeals ruled as to this issue in this wise: We are not persuaded by the contentions of the defendants-appellees. It is to be noted that the Deed of Absolute Sale between Carmelo and Equatorial covering the whole Claro M. Recto property, made reference to four titles: TCT Nos. 17350, 118612, 60936 and 52571. Based on the information submitted by Mayfair in its appellant's Brief (pp. 5 and 46) which has not been controverted by the appellees, and which We, therefore, take judicial notice of the two theaters stand on the parcels of land covered by TCT No. 17350 with an area of 622.10 sq. m and TCT No. 118612 with an area of 2,100.10 sq. m. The existence of four separate parcels of land covering the whole Recto property demonstrates the legal and physical possibility that each parcel of land, together with the buildings and improvements thereof, could have been sold independently of the other parcels. At the time both parties executed the contracts, they were aware of the physical and structural conditions of the buildings on which the theaters were to be constructed in relation to the remainder of the whole Recto property. The peculiar language of the stipulation would tend to limit Mayfair's right under paragraph 8 of the Contract of Lease to the acquisition of the leased areas only. Indeed, what is being contemplated by the questioned stipulation is a departure from the customary situation wherein the buildings and improvements are included in and form part of the sale of the subjacent land. Although this situation is not common, especially considering the non-condominium nature of the buildings, the sale would be valid and capable of being performed. A sale limited to the leased premises only, if hypothetically assumed, would have brought into operation the provisions of co-ownership under which Mayfair would have become the exclusive owner of the leased premises and at the same time a co-owner with Carmelo of the subjacent land in proportion to Mayfair's interest over the premises sold to it. 10
Carmelo and Equatorial now comes before us questioning the correctness and legal basis for the decision of respondent Court of Appeals on the basis of the following assigned errors: I THE COURT OF APPEALS GRAVELY ERRED IN CONCLUDING THAT THE OPTION CLAUSE IN THE CONTRACTS OF LEASE IS ACTUALLY A RIGHT OF FIRST REFUSAL PROVISO. IN DOING SO THE COURT OF APPEALS DISREGARDED THE CONTRACTS OF LEASE WHICH CLEARLY AND UNEQUIVOCALLY PROVIDE FOR AN OPTION, AND THE ADMISSION OF THE PARTIES OF SUCH OPTION IN THEIR STIPULATION OF FACTS. II WHETHER AN OPTION OR RIGHT OF FIRST REFUSAL, THE COURT OF APPEALS ERRED IN DIRECTING EQUATORIAL TO EXECUTE A DEED OF SALE EIGHTEEN (18) YEARS AFTER MAYFAIR FAILED TO EXERCISE ITS OPTION (OR, EVEN ITS RIGHT OF FIRST REFUSAL ASSUMING IT WAS ONE) WHEN THE CONTRACTS LIMITED THE EXERCISE OF SUCH OPTION TO 30 DAYS FROM NOTICE. III THE COURT OF APPEALS GRIEVOUSLY ERRED WHEN IT DIRECTED IMPLEMENTATION OF ITS DECISION EVEN BEFORE ITS FINALITY, AND WHEN IT GRANTED MAYFAIR A RELIEF THAT WAS NOT EVEN PRAYED FOR IN THE COMPLAINT. IV THE COURT OF APPEALS VIOLATED ITS OWN INTERNAL RULES IN THE ASSIGNMENT OF APPEALED CASES WHEN IT ALLOWED THE SAME DIVISION XII, PARTICULARLY JUSTICE MANUEL HERRERA, TO RESOLVE ALL THE MOTIONS IN THE "COMPLETION PROCESS" AND TO STILL RESOLVE THE MERITS OF THE CASE IN THE "DECISION STAGE". 11
We shall first dispose of the fourth assigned error respecting alleged irregularities in the raffle of this case in the Court of Appeals. Suffice it to say that in our Resolution, 12 dated December 9, 1992, we already took note of this matter and set out the proper applicable procedure to be the following: On September 20, 1992, counsel for petitioner Equatorial Realty Development, Inc. wrote a letter-complaint to this Court alleging certain irregularities and infractions committed by certain lawyers, and Justices of the Court of Appeals and of this Court in connection with case CA-G.R. CV No. 32918 (now G.R. No. 106063). This partakes of the nature of an administrative complaint for misconduct against members of the judiciary. While the letter-complaint arose as an incident in case CA-G.R. CV No. 32918 (now G.R. No. 106063), the disposition thereof should be separate and independent from Case G.R. No. 106063. However, for purposes of receiving the requisite pleadings necessary in disposing of the administrative complaint, this Division shall continue to have control of the case. Upon completion thereof, the same shall be referred to the Court En Banc for proper disposition. 13
This court having ruled the procedural irregularities raised in the fourth assigned error of Carmelo and Equatorial, to be an independent and separate subject for an administrative complaint based on misconduct by the lawyers and justices implicated therein, it is the correct, prudent and consistent course of action not to pre-empt the administrative proceedings to be undertaken respecting the said irregularities. Certainly, a discussion thereupon by us in this case would entail a finding on the merits as to the real nature of the questioned procedures and the true intentions and motives of the players therein. In essence, our task is two-fold: (1) to define the true nature, scope and efficacy of paragraph 8 stipulated in the two contracts of lease between Carmelo and Mayfair in the face of conflicting findings by the trial court and the Court of Appeals; and (2) to determine the rights and obligations of Carmelo and Mayfair, as well as Equatorial, in the aftermath of the sale by Carmelo of the entire Claro M. Recto property to Equatorial. Both contracts of lease in question provide the identically worded paragraph 8, which reads: That if the LESSOR should desire to sell the leased premises, the LESSEE shall be given 30-days exclusive option to purchase the same. In the event, however, that the leased premises is sold to someone other than the LESSEE, the LESSOR is bound and obligated, as it hereby binds and obligates itself, to stipulate in the Deed of Sale thereof that the purchaser shall recognize this lease and be bound by all the terms and conditions thereof. 14
We agree with the respondent Court of Appeals that the aforecited contractual stipulation provides for a right of first refusal in favor of Mayfair. It is not an option clause or an option contract. It is a contract of a right of first refusal. As early as 1916, in the case of Beaumont vs. Prieto, 15 unequivocal was our characterization of an option contract as one necessarily involving the choice granted to another for a distinct and separate consideration as to whether or not to purchase a determinate thing at a predetermined fixed price. It is unquestionable that, by means of the document Exhibit E, to wit, the letter of December 4, 1911, quoted at the beginning of this decision, the defendant Valdes granted to the plaintiff Borck the right to purchase the Nagtajan Hacienda belonging to Benito Legarda, during the period of three months and for its assessed valuation, a grant which necessarily implied the offer or obligation on the part of the defendant Valdes to sell to Borck the said hacienda during the period and for the price mentioned . . . There was, therefore, a meeting of minds on the part of the one and the other, with regard to the stipulations made in the said document. But it is not shown that there was any cause or consideration for that agreement, and this omission is a bar which precludes our holding that the stipulations contained in Exhibit E is a contract of option, for, . . . there can be no contract without the requisite, among others, of the cause for the obligation to be established. In his Law Dictionary, edition of 1897, Bouvier defines an option as a contract, in the following language: A contract by virtue of which A, in consideration of the payment of a certain sum to B, acquires the privilege of buying from, or selling to B, certain securities or properties within a limited time at a specified price. (Story vs. Salamon, 71 N.Y., 420.) From vol. 6, page 5001, of the work "Words and Phrases," citing the case of Ide vs. Leiser (24 Pac., 695; 10 Mont., 5; 24 Am. St. Rep., 17) the following quotation has been taken: An agreement in writing to give a person the option to purchase lands within a given time at a named price is neither a sale nor an agreement to sell. It is simply a contract by which the owner of property agrees with another person that he shall have the right to buy his property at a fixed price within a certain time. He does not sell his land; he does not then agree to sell it; but he does sell something; that is, the right or privilege to buy at the election or option of the other party. The second party gets in praesenti, not lands, nor an agreement that he shall have lands, but he does get something of value; that is, the right to call for and receive lands if he elects. The owner parts with his right to sell his lands, except to the second party, for a limited period. The second party receives this right, or, rather, from his point of view, he receives the right to elect to buy. But the two definitions above cited refer to the contract of option, or, what amounts to the same thing, to the case where there was cause or consideration for the obligation, the subject of the agreement made by the parties; while in the case at bar there was no such cause or consideration. 16 (Emphasis ours.) The rule so early established in this jurisdiction is that the deed of option or the option clause in a contract, in order to be valid and enforceable, must, among other things, indicate the definite price at which the person granting the option, is willing to sell. Notably, in one case we held that the lessee loses his right to buy the leased property for a named price per square meter upon failure to make the purchase within the time specified; 17 in one other case we freed the landowner from her promise to sell her land if the prospective buyer could raise P4,500.00 in three weeks because such option was not supported by a distinct consideration; 18 in the same vein in yet one other case, we also invalidated an instrument entitled, "Option to Purchase" a parcel of land for the sum of P1,510.00 because of lack of consideration; 19 and as an exception to the doctrine enumerated in the two preceding cases, in another case, we ruled that the option to buy the leased premises for P12,000.00 as stipulated in the lease contract, is not without consideration for in reciprocal contracts, like lease, the obligation or promise of each party is the consideration for that of the other. 20 In all these cases, the selling price of the object thereof is always predetermined and specified in the option clause in the contract or in the separate deed of option. We elucidated, thus, in the very recent case of Ang Yu Asuncion vs. Court of Appeals 21 that: . . . In sales, particularly, to which the topic for discussion about the case at bench belongs, the contract is perfected when a person, called the seller, obligates himself, for a price certain, to deliver and to transfer ownership of a thing or right to another, called the buyer, over which the latter agrees. Article 1458 of the Civil Code provides: Art. 1458. By the contract of sale one of the contracting parties obligates himself to transfer the ownership of and to deliver a determinate thing, and the other to pay therefor a price certain in money or its equivalent. A contract of sale may be absolute or conditional. When the sale is not absolute but conditional, such as in a "Contract to Sell" where invariably the ownership of the thing sold in retained until the fulfillment of a positive suspensive condition (normally, the full payment of the purchase price), the breach of the condition will prevent the obligation to convey title from acquiring an obligatory force. . . . An unconditional mutual promise to buy and sell, as long as the object is made determinate and the price is fixed, can be obligatory on the parties, and compliance therewith may accordingly be exacted. An accepted unilateral promise which specifies the thing to be sold and the price to be paid, when coupled with a valuable consideration distinct and separate from the price, is what may properly be termed a perfected contract of option. This contract is legally binding, and in sales, it conforms with the second paragraph of Article 1479 of the Civil Code, viz: Art. 1479. . . . An accepted unilateral promise to buy or to sell a determinate thing for a price certain is binding upon the promisor if the promise is supported by a consideration distinct from the price. (1451a). Observe, however, that the option is not the contract of sale itself. The optionee has the right, but not the obligation, to buy. Once the option is exercised timely, i.e., the offer is accepted before a breach of the option, a bilateral promise to sell and to buy ensues and both parties are then reciprocally bound to comply with their respective undertakings. Let us elucidate a little. A negotiation is formally initiated by an offer. An imperfect promise (policitacion) is merely an offer. Public advertisements or solicitations and the like are ordinarily construed as mere invitations to make offers or only as proposals. These relations, until a contract is perfected, are not considered binding commitments. Thus, at any time prior to the perfection of the contract, either negotiating party may stop the negotiation. The offer, at this stage, may be withdrawn; the withdrawal is effective immediately after its manifestation, such as by its mailing and not necessarily when the offeree learns of the withdrawal (Laudico vs. Arias, 43 Phil. 270). Where a period is given to the offeree within which to accept the offer, the following rules generally govern: (1) If the period is not itself founded upon or supported by a consideration, the offeror is still free and has the right to withdraw the offer before its acceptance, or if an acceptance has been made, before the offeror's coming to know of such fact, by communicating that withdrawal to the offeree (see Art. 1324, Civil Code; see also Atkins, Kroll & Co. vs. Cua, 102 Phil. 948, holding that this rule is applicable to a unilateral promise to sell under Art. 1479, modifying the previous decision in South Western Sugar vs. Atlantic Gulf, 97 Phil. 249; see also Art. 1319, Civil Code; Rural Bank of Paraaque, Inc. vs. Remolado, 135 SCRA 409; Sanchez vs. Rigos, 45 SCRA 368). The right to withdraw, however, must not be exercised whimsically or arbitrarily; otherwise, it could give rise to a damage claim under Article 19 of the Civil Code which ordains that "every person must, in the exercise of his rights and in the performance of his duties, act with justice, give everyone his due, and observe honesty and good faith." (2) If the period has a separate consideration, a contract of "option" deemed perfected, and it would be a breach of that contract to withdraw the offer during the agreed period. The option, however, is an independent contract by itself; and it is to be distinguished from the projected main agreement (subject matter of the option) which is obviously yet to be concluded. If, in fact, the optioner-offeror withdraws the offer before its acceptance (exercise of the option) by the optionee-offeree, the latter may not sue for specific performance on the proposed contract ("object" of the option) since it has failed to reach its own stage of perfection. The optioner-offeror, however, renders himself liable for damages for breach of the opinion. . . In the light of the foregoing disquisition and in view of the wording of the questioned provision in the two lease contracts involved in the instant case, we so hold that no option to purchase in contemplation of the second paragraph of Article 1479 of the Civil Code, has been granted to Mayfair under the said lease contracts. Respondent Court of Appeals correctly ruled that the said paragraph 8 grants the right of first refusal to Mayfair and is not an option contract. It also correctly reasoned that as such, the requirement of a separate consideration for the option, has no applicability in the instant case. There is nothing in the identical Paragraphs "8" of the June 1, 1967 and March 31, 1969 contracts which would bring them into the ambit of the usual offer or option requiring an independent consideration. An option is a contract granting a privilege to buy or sell within an agreed time and at a determined price. It is a separate and distinct contract from that which the parties may enter into upon the consummation of the option. It must be supported by consideration. 22 In the instant case, the right of first refusal is an integral part of the contracts of lease. The consideration is built into the reciprocal obligations of the parties. To rule that a contractual stipulation such as that found in paragraph 8 of the contracts is governed by Article 1324 on withdrawal of the offer or Article 1479 on promise to buy and sell would render in effectual or "inutile" the provisions on right of first refusal so commonly inserted in leases of real estate nowadays. The Court of Appeals is correct in stating that Paragraph 8 was incorporated into the contracts of lease for the benefit of Mayfair which wanted to be assured that it shall be given the first crack or the first option to buy the property at the price which Carmelo is willing to accept. It is not also correct to say that there is no consideration in an agreement of right of first refusal. The stipulation is part and parcel of the entire contract of lease. The consideration for the lease includes the consideration for the right of first refusal. Thus, Mayfair is in effect stating that it consents to lease the premises and to pay the price agreed upon provided the lessor also consents that, should it sell the leased property, then, Mayfair shall be given the right to match the offered purchase price and to buy the property at that price. As stated in Vda. De Quirino vs. Palarca, 23 in reciprocal contract, the obligation or promise of each party is the consideration for that of the other. The respondent Court of Appeals was correct in ascertaining the true nature of the aforecited paragraph 8 to be that of a contractual grant of the right of first refusal to Mayfair. We shall now determine the consequential rights, obligations and liabilities of Carmelo, Mayfair and Equatorial. The different facts and circumstances in this case call for an amplification of the precedent in Ang Yu Asuncion vs. Court of Appeals. 24
First and foremost is that the petitioners acted in bad faith to render Paragraph 8 "inutile". What Carmelo and Mayfair agreed to, by executing the two lease contracts, was that Mayfair will have the right of first refusal in the event Carmelo sells the leased premises. It is undisputed that Carmelo did recognize this right of Mayfair, for it informed the latter of its intention to sell the said property in 1974. There was an exchange of letters evidencing the offer and counter-offers made by both parties. Carmelo, however, did not pursue the exercise to its logical end. While it initially recognized Mayfair's right of first refusal, Carmelo violated such right when without affording its negotiations with Mayfair the full process to ripen to at least an interface of a definite offer and a possible corresponding acceptance within the "30-day exclusive option" time granted Mayfair, Carmelo abandoned negotiations, kept a low profile for some time, and then sold, without prior notice to Mayfair, the entire Claro M Recto property to Equatorial. Since Equatorial is a buyer in bad faith, this finding renders the sale to it of the property in question rescissible. We agree with respondent Appellate Court that the records bear out the fact that Equatorial was aware of the lease contracts because its lawyers had, prior to the sale, studied the said contracts. As such, Equatorial cannot tenably claim to be a purchaser in good faith, and, therefore, rescission lies. . . . Contract of Sale was not voidable but rescissible. Under Article 1380 to 1381(3) of the Civil Code, a contract otherwise valid may nonetheless be subsequently rescinded by reason of injury to third persons, like creditors. The status of creditors could be validly accorded the Bonnevies for they had substantial interests that were prejudiced by the sale of the subject property to the petitioner without recognizing their right of first priority under the Contract of Lease. According to Tolentino, rescission is a remedy granted by law to the contracting parties and even to third persons, to secure reparation for damages caused to them by a contract, even if this should be valid, by means of the restoration of things to their condition at the moment prior to the celebration of said contract. It is a relief allowed for the protection of one of the contracting parties and even third persons from all injury and damage the contract may cause, or to protect some incompatible and preferent right created by the contract. Rescission implies a contract which, even if initially valid, produces a lesion or pecuniary damage to someone that justifies its invalidation for reasons of equity. It is true that the acquisition by a third person of the property subject of the contract is an obstacle to the action for its rescission where it is shown that such third person is in lawful possession of the subject of the contract and that he did not act in bad faith. However, this rule is not applicable in the case before us because the petitioner is not considered a third party in relation to the Contract of Sale nor may its possession of the subject property be regarded as acquired lawfully and in good faith. Indeed, Guzman, Bocaling and Co. was the vendee in the Contract of Sale. Moreover, the petitioner cannot be deemed a purchaser in good faith for the record shows that it categorically admitted it was aware of the lease in favor of the Bonnevies, who were actually occupying the subject property at the time it was sold to it. Although the Contract of Lease was not annotated on the transfer certificate of title in the name of the late Jose Reynoso and Africa Reynoso, the petitioner cannot deny actual knowledge of such lease which was equivalent to and indeed more binding than presumed notice by registration. A purchaser in good faith and for value is one who buys the property of another without notice that some other person has a right to or interest in such property and pays a full and fair price for the same at the time of such purchase or before he has notice of the claim or interest of some other person in the property. Good faith connotes an honest intention to abstain from taking unconscientious advantage of another. Tested by these principles, the petitioner cannot tenably claim to be a buyer in good faith as it had notice of the lease of the property by the Bonnevies and such knowledge should have cautioned it to look deeper into the agreement to determine if it involved stipulations that would prejudice its own interests. The petitioner insists that it was not aware of the right of first priority granted by the Contract of Lease. Assuming this to be true, we nevertheless agree with the observation of the respondent court that: If Guzman-Bocaling failed to inquire about the terms of the Lease Contract, which includes Par. 20 on priority right given to the Bonnevies, it had only itself to blame. Having known that the property it was buying was under lease, it behooved it as a prudent person to have required Reynoso or the broker to show to it the Contract of Lease in which Par. 20 is contained. 25
Petitioners assert the alleged impossibility of performance because the entire property is indivisible property. It was petitioner Carmelo which fixed the limits of the property it was leasing out. Common sense and fairness dictate that instead of nullifying the agreement on that basis, the stipulation should be given effect by including the indivisible appurtenances in the sale of the dominant portion under the right of first refusal. A valid and legal contract where the ascendant or the more important of the two parties is the landowner should be given effect, if possible, instead of being nullified on a selfish pretext posited by the owner. Following the arguments of petitioners and the participation of the owner in the attempt to strip Mayfair of its rights, the right of first refusal should include not only the property specified in the contracts of lease but also the appurtenant portions sold to Equatorial which are claimed by petitioners to be indivisible. Carmelo acted in bad faith when it sold the entire property to Equatorial without informing Mayfair, a clear violation of Mayfair's rights. While there was a series of exchanges of letters evidencing the offer and counter-offers between the parties, Carmelo abandoned the negotiations without giving Mayfair full opportunity to negotiate within the 30-day period. Accordingly, even as it recognizes the right of first refusal, this Court should also order that Mayfair be authorized to exercise its right of first refusal under the contract to include the entirety of the indivisible property. The boundaries of the property sold should be the boundaries of the offer under the right of first refusal. As to the remedy to enforce Mayfair's right, the Court disagrees to a certain extent with the concluding part of the dissenting opinion of Justice Vitug. The doctrine enunciated in Ang Yu Asuncion vs. Court of Appeals should be modified, if not amplified under the peculiar facts of this case. As also earlier emphasized, the contract of sale between Equatorial and Carmelo is characterized by bad faith, since it was knowingly entered into in violation of the rights of and to the prejudice of Mayfair. In fact, as correctly observed by the Court of Appeals, Equatorial admitted that its lawyers had studied the contract of lease prior to the sale. Equatorial's knowledge of the stipulations therein should have cautioned it to look further into the agreement to determine if it involved stipulations that would prejudice its own interests. Since Mayfair has a right of first refusal, it can exercise the right only if the fraudulent sale is first set aside or rescinded. All of these matters are now before us and so there should be no piecemeal determination of this case and leave festering sores to deteriorate into endless litigation. The facts of the case and considerations of justice and equity require that we order rescission here and now. Rescission is a relief allowed for the protection of one of the contracting parties and even third persons from all injury and damage the contract may cause or to protect some incompatible and preferred right by the contract. 26 The sale of the subject real property by Carmelo to Equatorial should now be rescinded considering that Mayfair, which had substantial interest over the subject property, was prejudiced by the sale of the subject property to Equatorial without Carmelo conferring to Mayfair every opportunity to negotiate within the 30-day stipulated period. 27
This Court has always been against multiplicity of suits where all remedies according to the facts and the law can be included. Since Carmelo sold the property for P11,300,000.00 to Equatorial, the price at which Mayfair could have purchased the property is, therefore, fixed. It can neither be more nor less. There is no dispute over it. The damages which Mayfair suffered are in terms of actual injury and lost opportunities. The fairest solution would be to allow Mayfair to exercise its right of first refusal at the price which it was entitled to accept or reject which is P11,300,000.00. This is clear from the records. To follow an alternative solution that Carmelo and Mayfair may resume negotiations for the sale to the latter of the disputed property would be unjust and unkind to Mayfair because it is once more compelled to litigate to enforce its right. It is not proper to give it an empty or vacuous victory in this case. From the viewpoint of Carmelo, it is like asking a fish if it would accept the choice of being thrown back into the river. Why should Carmelo be rewarded for and allowed to profit from, its wrongdoing? Prices of real estate have skyrocketed. After having sold the property for P11,300,000.00, why should it be given another chance to sell it at an increased price? Under the Ang Yu Asuncion vs. Court of Appeals decision, the Court stated that there was nothing to execute because a contract over the right of first refusal belongs to a class of preparatory juridical relations governed not by the law on contracts but by the codal provisions on human relations. This may apply here if the contract is limited to the buying and selling of the real property. However, the obligation of Carmelo to first offer the property to Mayfair is embodied in a contract. It is Paragraph 8 on the right of first refusal which created the obligation. It should be enforced according to the law on contracts instead of the panoramic and indefinite rule on human relations. The latter remedy encourages multiplicity of suits. There is something to execute and that is for Carmelo to comply with its obligation to the property under the right of the first refusal according to the terms at which they should have been offered then to Mayfair, at the price when that offer should have been made. Also, Mayfair has to accept the offer. This juridical relation is not amorphous nor is it merely preparatory. Paragraphs 8 of the two leases can be executed according to their terms. On the question of interest payments on the principal amount of P11,300,000.00, it must be borne in mind that both Carmelo and Equatorial acted in bad faith. Carmelo knowingly and deliberately broke a contract entered into with Mayfair. It sold the property to Equatorial with purpose and intend to withhold any notice or knowledge of the sale coming to the attention of Mayfair. All the circumstances point to a calculated and contrived plan of non-compliance with the agreement of first refusal. On the part of Equatorial, it cannot be a buyer in good faith because it bought the property with notice and full knowledge that Mayfair had a right to or interest in the property superior to its own. Carmelo and Equatorial took unconscientious advantage of Mayfair. Neither may Carmelo and Equatorial avail of considerations based on equity which might warrant the grant of interests. The vendor received as payment from the vendee what, at the time, was a full and fair price for the property. It has used the P11,300,000.00 all these years earning income or interest from the amount. Equatorial, on the other hand, has received rents and otherwise profited from the use of the property turned over to it by Carmelo. In fact, during all the years that this controversy was being litigated, Mayfair paid rentals regularly to the buyer who had an inferior right to purchase the property. Mayfair is under no obligation to pay any interests arising from this judgment to either Carmelo or Equatorial. WHEREFORE, the petition for review of the decision of the Court of Appeals, dated June 23, 1992, in CA-G.R. CV No. 32918, is HEREBY DENIED. The Deed of Absolute Sale between petitioners Equatorial Realty Development, Inc. and Carmelo & Bauermann, Inc. is hereby deemed rescinded; petitioner Carmelo & Bauermann is ordered to return to petitioner Equatorial Realty Development the purchase price. The latter is directed to execute the deeds and documents necessary to return ownership to Carmelo and Bauermann of the disputed lots. Carmelo & Bauermann is ordered to allow Mayfair Theater, Inc. to buy the aforesaid lots for P11,300,000.00. SO ORDERED.
EFFECTS OF POSSESSION 1.
SECOND DIVISION
[G.R. No. L-63277. November 29, 1983.]
PETRA VDA. DE BORROMEO, Petitioner, v. HON. JULIAN B. POGOY, Municipality/City Trial Court of Cebu City, and ATTY. RICARDO REYES, Respondents.
Antonio T. Uy for Petitioner.
Numeriano G. Estenzo for Respondents.
SYLLABUS
1. CIVIL LAW; ACTIONS FOR FORCIBLE ENTRY AND DETAINER; PRESCRIPTIVE PERIOD; ACTION NOT BARRED IN THE CASE AT BAR. Under Article 1147 of the Civil Code, the period for filing actions for forcible entry and detainer is one year, and this period is counted from demand to vacate the premises. (Desbarat v. Vda. de Laureano, 18 SCRA 116, Calubayan v. Pascual, 21 SCRA 146, Development Bank of the Philippines v. Canonoy, 35 SCRA 197) In the case at bar, the letter-demand was dated August 28, 1982, while the complaint for ejectment was filed in court on September 16, 1982. Between these two dates, less than a month had elapsed, thereby leaving at least eleven (11) full months of the prescriptive period provided for in Article 1147 of the Civil Code. Under the procedure outlined in Section 4 of PD 1508, the time needed for the conciliation proceeding before the Barangay Chairman and the Pangkat should take no more than 60 days. Giving private respondent nine (9) months-ample time indeed- within which to bring his case before the proper court should conciliation efforts fail. Thus, it cannot be truthfully asserted, as private respondent would want Us to believe, that his case would be barred by the Statute of Limitations if he had to course his action to the Barangay Lupon.
2. REMEDIAL LAW; SECTION 4 (A) OF P.D. No. 1508; CONSTRUED. Under Section 4(a) of PD 1508, referral of a dispute to the Barangay Lupon is required only where the parties thereto are "individuals." An "individual" means "a single human being as contrasted with a social group or institution." Obviously, the law applies only to cases involving natural persons, and not where any of the parties is a juridical person such as a corporation, partnership, corporation sole, testate or intestate, estate, etc.
3. ID.; JURIDICAL PERSON; REAL PARTY IN INTEREST; REFERRAL TO BARANGAY LUPON, NOT REQUIRED. In Civil Case No. R-239l5, plaintiff Ricardo Reyes is a mere nominal party who is suing in behalf of the Intestate Estate of Vito Borromeo. while it is true that Section 3, Rule 3 of the Rules of Court allows the administrator of an estate to sue or be sued without joining the party for whose benefit the action is presented or defended, it is indisputable that the real party in interest in Civil Case No. R-23915 is the intestate estate under administration. Since the said estate is a juridical person (Limjoco v. Intestate of Fragante, 80 Phil. 776) plaintiff administrator may file the complaint directly in court, without the same being coursed to the Barangay Lupon for arbitration.
D E C I S I O N
ESCOLIN, J.:
Petitioner herein seeks to stop respondent Judge Julian B. Pogoy of the Municipal Trial Court of Cebu City from taking cognizance of an ejectment suit for failure of the plaintiff to refer the dispute to the Barangay Lupon for conciliation.
The intestate estate of the late Vito Borromeo is the owner of a building bearing the deceaseds name, located at F. Ramos St., Cebu City. Said building has been leased and occupied by petitioner Petra Vda. de Borromeo at a monthly rental of P500.00 payable in advance within the first five days of the month.
On August 28, 1982, private respondent Atty. Ricardo Reyes, administrator of the estate and a resident of Cebu City, served upon petitioner a letter demanding that she pay the overdue rentals corresponding to the period from March to September 1982, and thereafter to vacate the premises. As petitioner failed to do so, Atty. Reyes instituted on September 16, 1982 an ejectment case against the former in the Municipal Trial Court of Cebu City. The complaint was docketed as Civil Case No. R-23915 and assigned to the sala of respondent judge.
On November 12, 1982, petitioner moved to dismiss the case, advancing, among others, the want of jurisdiction of the trial court. Pointing out that the parties are residents of the same city, as alleged in the complaint, petitioner contended that the court could not exercise jurisdiction over the case for failure of respondent Atty. Reyes to refer the dispute to the Barangay Court, as required by PD No. 1508, otherwise known as Katarungang Pambarangay Law.chanroblesvi rtualawlibrary
Respondent judge denied the motion to dismiss. He justified the order in this wise:jgc:chanrobles. com.ph
"The Clerk of Court when this case was filed accepted for filing same. That from the acceptance from (sic) filing, with the plaintiff having paid the docket fee to show that the case was docketed in the civil division of this court could be considered as meeting the requirement or precondition for were it not so, the Clerk of Court would not have accepted the filing of the case especially that there is a standing circular from the Chief Justice of the Supreme Court without even mentioning the Letter of Instruction of the President of the Philippines that civil cases and criminal cases with certain exceptions must not be filed without passing the barangay court." (Order dated December 14, 1982, Annex "c", P. 13, Rollo).
Unable to secure a reconsideration of said order, petitioner came to this Court through this petition forcertiorari. In both his comment and memorandum, private respondent admitted not having availed himself of the barangay conciliation process, but justified such omission by citing paragraph 4, section 6 of PD 1508 which allows the direct filing of an action in court where the same may otherwise be barred by the Statute of Limitations, as applying to the case at bar.
The excuse advanced by private respondent is unsatisfactory. Under Article 1147 of the Civil Code, the period for filing actions for forcible entry and detainer is one year, 1 and this period is counted from demand to vacate the premises. 2
In the case at bar, the letter-demand was dated August 28, 1982, while the complaint for ejectment was filed in court on September 16, 1982. Between these two dates, less than a month had elapsed, thereby leaving at least eleven (11) full months of the prescriptive period provided for in Article 1147 of the Civil Code. Under the procedure outlined in Section 4 of PD 1508, 3 the time needed for the conciliation proceeding before the Barangay Chairman and the Pangkat should take no more than 60 days. Giving private respondent nine (9) months ample time indeed within which to bring his case before the proper court should conciliation efforts fail. Thus, it cannot be truthfully asserted, as private respondent would want Us to believe, that his case would be barred by the Statute of Limitations if he had to course his action to the Barangay Lupon.
With certain exceptions, PD 1508 makes the conciliation process at the Barangay level a condition precedent for filing of actions in those instances where said law applies. For this reason, Circular No. 22 addressed to "ALL JUDGES OF THE COURTS OF FIRST INSTANCE, CIRCUIT CRIMINAL COURTS, JUVENILE AND DOMESTIC RELATIONS COURT, COURTS OF AGRARIAN RELATIONS, CITY COURTS, MUNICIPAL COURTS AND THEIR CLERKS OF COURT" was issued by Chief Justice Enrique M. Fernando on November 9, 1979. Said Circular reads:chanrobles.com:cralaw:red
"Effective upon your receipt of the certification by the Minister of Local Government and Community Development that all the barangays within your respective jurisdictions have organized their Lupons provided for in Presidential Decree No. 1508, otherwise known as the Katarungang Pambarangay Law, in implementation of the barangay system of settlement of disputes, you are hereby directed to desist from receiving complaints, petitions, actions or proceedings in cases falling within the authority of said Lupons."cralaw virtua1aw library
While respondent acknowledged said Circular in his order of December 14, 1982, he nevertheless chose to overlook the failure of the complaint in Civil Case No. R-23915 to allege compliance with the requirement of PD 1508. Neither did he cite any circumstance as would place the suit outside the operation of said law. Instead, he insisted on relying upon the pro tanto presumption of regularity in the performance by the clerk of court of his official duty, which to Our mind has been sufficiently overcome by the disclosure by the Clerk of Court that there was no certification to file action from the Lupon or Pangkat secretary attached to the complaint. 4
Be that as it may, the instant petition should be dismissed. Under Section 4(a) of PD No. 1508, referral of a dispute to the Barangay Lupon is required only where the parties thereto are "individuals." An "individual" means "a single human being as contrasted with a social group or institution." 5 Obviously, the law applies only to cases involving natural persons, and not where any of the parties is a juridical person such as a corporation, partnership, corporation sole, testate or intestate, estate, etc.
In Civil Case No. R-23915, plaintiff Ricardo Reyes is a mere nominal party who is suing in behalf of the Intestate Estate of Vito Borromeo. While it is true that Section 3, Rule 3 of the Rules of Court allows the administrator of an estate to sue or be sued without joining the party for whose benefit the action is presented or defended, it is indisputable that the real party in interest in Civil Case No. R-23915 is the intestate estate under administration. Since the said estate is a juridical person 6 plaintiff administrator may
file the complaint directly in court, without the same being coursed to the Barangay Lupon for arbitration.
ACCORDINGLY, the petition is hereby dismissed. Respondent judge is ordered to try and decide Civil Case No. R-23915 without unnecessary delay. No costs.
SO ORDERED.
Makasiar (Chairman), Concepcion, Jr., Guerrero, Abad Santos and De Castro, JJ., concur.
Aquino J., concurs in the result.
2. G.R. No. 97637 April 10, 1992 WILMON AUTO SUPPLY CORPORATION, ILOILO MULTI PARTS SUPPLY CORP., VIRGILIO ANG, SOUTHERN SALES CORP. and CHANG LIANG, JR., petitioners, vs. HON. COURT OF APPEALS and STAR GROUP RESOURCES AND DEVELOPMENT, INC., respondents. G.R. Nos. 98700-01 April 10, 1992 RAMON QUE, SOUTHERN SALES CORP. and HENRY TAN, petitioners, vs. HON. RICARDO M. ILARDE, Judge, RTC of Iloilo (Br. 26), and STAR GROUP RESOURCES AND DEVELOPMENT, INC., respondents.
NARVASA, C.J .: The principal question in the proceedings at bar is whether or not an action of unlawful detainer filed in the Municipal Trial Court against a lessee grounded on the expiration of the latter's lease should be abated or suspended by an action filed in the Regional Trial Court by the defendant lessee on the claim that he is entitled to a right of preemption (or prior purchase) of the premises in question and wishes to have said right judicially enforced. The question arises from facts not disputed and now briefly narrated. Wilmon Auto Supply Corporation (or Ramon Que), Iloilo, Multi Parts Supply Corporation (or Ramon Que), Virgilio Ang, Henry Tan, Southern Sales Corporation, and Chang Liang, Jr. were lessees of a commercial building and bodegas standing on registered land in Iloilo City owned in common by Lucy A. Solinap, Fr. Jerry R. Locsin, Lourdes C. Locsin, Manuel C. Locsin and Ester L. Jarantilla. 1 The leases were embodied in uniformly worded deeds executed by the individual petitioners, as lessees, and Lourdes C. Locsin, representing the lessors-co-owners. 2 The lease contracts, among others 1) stipulated fixed terms or periods (September 1, 1987 to August 30, 1989);
2) provided for a deposit of an amount equal to two months' rents; 3) provided that the lessee should give the lessor 30 days prior notice of the intention to terminate or renew the contract, and that if no such written notice were given, the lessor would consider the contract terminated on the expiration of the term; and 4) contained a "reservation of lights" reading as follows: 3
Reservation of rights. LESSOR reserves the rights to sell, mortgage, hypothecate or encumber the property so long as it requires the purchase(r) or mortgage creditors to respect the terms of this lease contract; provided further that LESSEE shall be duly informed about LESSOR's plan to sell the property. On September 18, 1989, after the expiration of the period fixed in the lease agreements, the lessors executed a public instrument entitled "Deed of Absolute Sale," 4 in virtue of which they sold the leased property to Star Group Resources and Development Inc. (hereafter, simply referred to as Star Group). The deed provided inter alia that the "Vendee shall henceforth deal with the lessees and occupants of the properties herein sold without any further warranty or obligation on the part of the Vendors." On November 22, 1989, the buyer, Star Group, brought separate actions of unlawful detainer in the Municipal Trial Court In Cities of Iloilo City against the lessees, which were docketed as follows: 1) that filed against Virgilio Ang: Civil Case No. 227 (89), assigned to Branch 3; 2) that instituted against Chang Liang, Jr.: Civil Case No. 230 (89), raffled to Branch 2; 3) that filed against Henry Tan and Southers Sales Corporation: Civil Case No. 232 (89), assigned to Branch 2: 4) that filed against Ramon Que "(for the premises occupied by WILMON AUTO SUPPLY CORPORATION):" Civil Case No. 233, assigned to Branch 2; and 5) that commenced against Ramon Que "(for the premises occupied by ILOILO MULTI PARTS SUPPLY CORPORATION):" Civil Case No. 234, raffled to Branch 2. The lessees refused to concede, and indeed impugned, Star Group's right to eject them. They argued that in so selling the properties and seeking their ejectment therefrom, the lessors and their buyer had violated their leasehold rights because (i) they (the lessees) were not accorded the right of preemption, (b) the buyer was not required to honor the leases, and (c) the lessees were denied the option to renew their leases upon the expiration thereof. These propositions they set forth in their answers with counterclaims in the unlawful detainer actions against them in the Municipal Trial Courts (Branches 2 and 3). The same propositions were also set out as causes of action in a complaint filed on December 1, 1989 by some of them Wilmon, Iloilo Multi Parts, Virgilio Ang (doing business under the name and style of "Iloilo Rightway Marketing"), Southern Sales and Chang Liang, Jr. (doing business under the name and style of "Iloilo Bright Construction Supply") 5 in the Regional Trial Court of Iloilo. Impleaded as defendants in the complaint were the Star Group Resources and Development, Inc. and its President, Juanito Sio alias Juanito Sio Soy Liong, and the co-owners-vendors, namely: Lucy A. Solinap,
Lourdes C. Locsin, Manuel C. Locsin, Ester Locsin Jarantila, and Fr. Jerry R. Locsin, the latter as Administrator of the Estate of the deceased Jose C. Locsin. 6 The action thus commenced was docketed as Civil Case No. 18931 and raffled to Branch 28. In their complaint, the plaintiffs-lessees prayed chiefly that 1) the sale of the building, bodegas and the land on which they stand be declared null and void ab initio; 2) they be allowed to exercise their right of pre-emption or redemption, and to recover their two-month deposits; 3) the titles to the properties be conveyed to them; 4) they be paid by the defendants jointly and severally moral damages in the sum of 1.5 million pesos, exemplary damages in the amount of P10,000.00, and attormey's fees in the sum of P200,000.00. In the unlawful detainer actions, position papers were required by the courts and submitted by the parties on the issue of whether or not the unlawful detainer actions should be covered by the rules of summary procedure. The courts ruled that Cases Numbered 227 (against Virgilio Ang), 230 (against Chang Liang, Jr.) and 234 (against Iloilo Multi Parts Supply Corporation), must be so tried, but not Civil Cases Numbered 232 (against Henry Tan and Southern Sales Corporation ) and 233 (against Wilmon Auto Supply Corporation), as to which the summary procedure rules were inapplicable. The lessees moved for reconsideration of the order and additionally prayed for dismissal of the ejectment suits on the grounds of litis pendentia (adverting no doubt to Civil Case No. 18931 instituted by them in the RTC) and lack of jurisdiction over the nature of the actions. Their pleas were denied. Thereupon three of the lessees Ramon Que, Southern Sales Corporation, and Henry T. Tan quite precipitately and improperly, filed petitions for certiorari with this Court for the annulment and setting aside of the orders of the Municipal Trial Court (Branch 2), which were docketed as G.R. Nos. 94855 and 94856. Another lessee, Antonio Chua also instituted a similar action of certiorari in this Court, docketed as G.R. No. 95371. 7 Predictably, the Court refused to take cognizance of their petitions. G.R. No. 9537l was referred to the Court of Appeals by Resolution of the Second Division dated October 15, 1990 "for proper determination and disposition" that Court's jurisdiction being concurrent with this Court's. G.R. Nos. 94855 and 94856 were referred to the Regional Trial Court of Iloilo City, 8 to which the lessees should have gone for relief in the first place. 9 In the Regional Trial Court, the cases were docketed as Civil Cases Numbered 19420 (Ramon Que v. Hon. Honrado, etc., et al.) and 19421 (Southern Sales Corporation and Henry T. Tan v. Hon. Honrado, etc., et al.). The Executive Judge of the Trial Court (Hon. Ricardo M. Ilarde) issued a restraining order dated October 18, 1990 enjoining proceedings in the unlawful detainer cases. However, on March 11, 1991, His Honor promulgated judgment on the merits dismissing the petitions and dissolving the preliminary injunction of October 18, 1990. Judge Ilarde ruled that the unlawful detainer cases fall within the jurisdiction of the Municipal Trial Court in Cities, Iloilo City, and that the pendency of Civil Case No. 18931 in the RTC did not warrant suspension of the unlawful detainer cases, "the only issue in the . . . (the latter suits being) physical possession or possession de facto while the issue involved in Civil Case No. 18931 . . . is basically one of ownership," and it being "settled rule that the pendency of an action involving ownership and annulment of sale . . . does not stay the proceedings in the ejectment case." 10 The lessees filed a motion for reconsideration, but this was denied by Judge Ilarde, by Order dated April 22, 1991.
From the decision of March 11, 1991, Ramon Que, Southern Sales Corporation and Henry Tan have appealed to this Court on the legal issue of "whether or not . . . (Judge Ilarde) erred in finding that the Municipal Trial Court in Cities did not abuse its discretion in denying the petitioners' motion to dismiss or to hold in abeyance the proceedings in the subject unlawful detainer cases." (Rollo, G.R. No. 98700-01, p. 5) Their appeal was docketed asG.R. Nos. 98700-01. 11
On the other hand, two (2) of the lessees, Wilmon Auto Supply Corporation (represented by Ramon Que) and Chang Liang who are among the plaintiffs in Civil Case No. 18931 pending in Branch 28 of the Regional Trial Court, Iloilo City took a different tack. They filed a motion in said Court praying for a writ of preliminary injunction to stop the Municipal Trial Court from hearing their ejectment cases. They argued that the decision in Civil Case No. 18931 would be decisive of the rights of the parties, particularly on the question of the lessees' claimed option to renew their leases. The Trial Court however denied their motion. To nullify the Trial Court's denial of their plea for injunctive relief, they repaired to the Court of Appeals by way of a petition for certiorari. Their action was docketed as CA-G.R. SP No. 23750. The Court of Appeal ruled adversely to them. In its Decision promulgated on February 28, 1991, the Appellate Tribunal pointed out (a) that "the issues . . (the petitioners) are raising in the Regional Trial Court are the very same issues they, as defendants in the ejectment cases, are raising" . . and (considering that "the Municipal Trial Court's jurisdiction is not in question") there is no reason why simply because the same issues are raised in the action brought in the Regional Trial Court the ejectment proceedings should be suspended, and (b) that in truth," questions pertaining to the relation between landlord and tenant, the period or life of the lease or tenancy, the reasonableness, of the rental, the right of the tenant (to remain in occupancy) against the will of the landlord, etc. are (precisely) the sort of questions which should be decided in the ejectment case." 12 From this judgment, the lessees have taken an appeal to this Court. Their appeal was docketed as G.R. No 97637. 13
The issues raised in G.R. No. 97637 and G.R. Nos. 98700-01, are substantially the same, viz.: 14
a) whether or not, in light of Vda. de Murga v. Chan, 25 SCRA 441 and Valderama Lumber Manufacturers Co., Inc. v. L.S. Sarmiento Co., 5 SCRA 287, the Municipal Trial Court has jurisdiction over the actions which are real in nature and involve interpretation of lease contracts over immovables; b) whether or not the Court of Appeals deviated from the doctrine laid down in Vda. de Legaspi v.Avendao, 79 SCRA 135, 145; c) whether or not, pursuant to Quiambao v. Osorio, 158 SCRA 674, and Orellano v. Alvestir, 76 SCRA 536, the actions in the Municipal Trial Court for the ejectment of the lessees from the property occupied by them should be suspended until adjudgment of the cases in the RTC involving the sale, ownership and physical possession of said property; and d) whether or not Dante v. Sison, 174 SCRA 517 and other precedents invoked by the petitioners should apply. As stated in this opinion's opening paragraph, the crucial question, at bottom, is whether or not Star Group's unlawful detainer suits in the Municipal Trial Court against petitioner lessees for the reason that their leases had expired, should be abated by the actions filed in the Regional Trial Court by said petitioner lessees based on the contention that they are entitled to a right of preemption or prior purchase of the leased premises. It is a question that is far from novel, one that has been passed
upon and resolved by this Court in numerous cases, and one to which a negative answer has invariably been given. The relevant precedents are hereunder outlined. 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 [l988]). 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], Pardo de Tavera v. Encarnacion, 22 SCRA 632 [1968], 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. [annullment 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]). The underlying reasons for the above rulings were that the actions in the Regional Trial Court did not involve physical or de facto possession and, on not a few occasions, that the case in the Regional Trial Court was merely a ploy to delay disposition of the ejectment proceeding, or that the issues presented in the former could quite as easily be set up as defenses in the ejectment action and there resolved. This is specially true in the cases at bar, where the petitioners-lessees' claims that the lessors (and the buyer of the leased premises) had violated their leasehold rights because (a) they (the lessees) were not accorded the right of preemption, (b) the buyer was not required to respect their leases, and (c) the lessees were denied the option to renew their leases upon the expiration
thereof constituted their causes of action in the suits commenced by them in the Regional Court. 15
In Leopoldo Sy v. Court of Appeals, et al., G.R. No. 95818, August 2, 1991, 16 for instance, the following pronouncements were made: Private respondents insist that the Rule on Summary Procedure does not apply since there is a question of ownership involved albeit in another case pending in another court, that is, the aforesaid Civil Case No. 88-47264 in the Regional Trial Court of Manila. We apprehend that if this theory is adopted, the applicability of the Rule on Summary Procedure in ejectment cases could easily be thwarted by the defendant through the simple expedient of filing an action in the regional trial court contesting the plaintiff's ownership over the property from which defendant is sought to be evicted. Hence, the obvious intimation of private respondents that the regular procedure, and not the summary procedure, should be followed . . . does not impress us as being endowed with legal or logical support. xxx xxx xxx Thus, the fact that the tenant had previously filed a separate action in the former Court of First Instance involving the ownership of the land is not a valid reason to frustrate the summary remedy of ejectment. Such action filed by the tenant only lends credence to the fact that the ejectment case filed by plaintiffs against the former does not involve the question of title. (Lozada vs. Abragan, et al., 66 SCRA 600 [1975]). This is so because the judgment rendered in an ejectment case shall not bar an action between the same parties respecting title to the land nor building nor shall it be held conclusive of the facts therein found in a case between the same parties upon a different cause of action involving possession. (Ang Ping, et al. vs. Regional Trial Court of Manila, Branch 40, et al., 154 SCRA 77 [1987]). Furthermore, in ejectment cases the jurisdiction of the court is determined by the allegations of the complaint, not by the defense raised by defendant. (Ramirez v. Chit, 21 SCRA 1364 [1967]). . . . The pendency of the action for reconveyance does not constitute a compelling reason to delay the termination of an ejectment case for it gives rise merely to an expectnacy that the documents assailed therein may be nullified and the subject properties may be ordered reconveyed to private respondents, as compared to the clear, actual and existing legal right of petitioner to the possession of the subject property as the registered owner. (Galgala, et al. vs. Benguet Consolidated, Inc. et al., 177 SCRA 288 [1989]). The precedents invoked by the petitioners 17 do not represent current and prevailing doctrine; they might at most be deemed exceptions justifying the general rule. Moreover, the facts in the rulings invoked by them are quite readily distinguishable from the numerous precedents upholding said general rule. Thus, as regards the seemingly contrary ruling in Vda. de Legaspi v. Avendao, 79 SCRA 135 (1977), this Court observed, in Salinas v. Navarro, 126 SCRA, 167, 172-173 (1983), that "the exception to the rule in this case of Vda.de Legaspi is based on strong reasons of equity not found in the present petition. The right of the petitioners is not so seriously placed in issue in the annulment case as to warrant a deviation, on equitable grounds, from the imperative nature of the rule. In
the Vda. de Legaspi case, execution of the decision in the ejectment case would also have meant demolition of the premises, a factor not present in this petition." Vda. de Murga v. Chan, 25 SCRA. 441 (1968) is not in point. In that case, the essential requisite of an unequivocal demand to vacate and surrender the premises had not been fulfilled, as the demand actually made on the lessee was in the alternative: either pay rentals at an increased rate, or if this be unacceptable, to surrender the leased property. Furthermore, it appeared that the defendant's lease had not been legitimately ended but, on the contrary, had been automatically renewed in virtue of a special clause in this lease contract. It was for these reasons that this Court held that the case was "outside the jurisdiction of the municipal court . . ." 18
Neither is Valderrama Lumber Manufacturer's Co., Inc. v. L.S. Sarmiento, Co., 5 SCRA 287 (1962), also relied upon by the petitioners, in point. Here, the ejectment complaint was also found to be fatally defective in that it failed to allege that the plaintiff had been in prior possession of the premises in question, or had been deprived thereof by any of the means set forth in Section 1, Rule 72 of the Rules of Court or that possession was being unlawfully withheld from said plaintiff. The facts in Quiambao vs. Osorio, 158 SCRA 674 (1988) are also quite peculiar and differ from those in the cases at bar. Quiambao v. Osorio originated from a complaint for forcible entry filed against Quiambao in the Malabon Municipal Court by persons claiming to be legitimate possessors of a 30,835-square-meter lot by virtue of Agreement to Sell No. 3482 executed in their favor by the former Land Tenure Administration (later, the Land Authority, then the Department of Agrarian Reform). Quiambao moved to dismiss the action, alleging that the agreement had been impugned in an administrative case before the Land Authority and said case constituted a "prejudicial question." The motion was denied, and Quiambao instituted a special action of certiorari in the Court of First Instance to nullify the order of denial and cause dismissal of the ejectment suit. In this certiorari suit, the Land Authority, by leave of court, intervened "praying that the petition for certiorari be granted and . . . (it, the Land Authority) be allowed to decide the matter exclusively." It further appears that subsequently, the Land Authority promulgated judgment in the administrative case "affirming the cancellation of Agreement to Sell No. 3482" thus making more apparent "the folly of allowing the ejectment case to proceed . . ." Upon these facts, it appearing that the contract on which the plaintiff's cause of action for ejectment was founded had been cancelled by the proper administrative authority, this Court ordered dismissal of the ejectment case. Orellano v. Alvestir, 76 SCRA 536 (1977), another precedent cited by the petitioners, originated from an action instituted by Alvestir in the Court of First Instance praying that he be adjudged to have the right to continue in possession of a parcel of land despite the sale thereof by the Archbishop of Manila to Orellano because said sale had been executed in violation of "Republic Act 1162 as amended by Republic Act No. 1599 to the effect that: 'That no lot or portion thereof actually occupied by a tenant or occupant shall be sold by the landowner to any other persons than such tenant or occupant unless the latter renounces in a public instrument his right under this Act.'" What Orellano did was to file a suit of unlawful detainer against Alvestir in the city court invoking his superior right of possession in virtue of said sale to him by the Archbishop of Manila of the premises in question. Upon these facts, this Court held: 19
. . . Orellano's claim of better right of possession in his complaint for ejecment is already in issue in Alvestir's action for recission pending in the Court of First Instance. It does not matter that Orellano is defendant in that case whereas he is plaintiff in the city court, as long as the issues raised in the pleadings by either of the parties require the resolution of the same cause. There is no question here that the same parties are involved in both cases, albeit in Civil Case No. 53664, there are
other parties who are not parties in the ejectment suit. (Alzua vs. Johnson, 21 Phil 308; Juan vs. Go Cotay, 26 Phil. 328). The subject matter is possession of the identical land in dispute. And the cause of Alvestir in the Court of First Instance case is the same cause he alleged as affirmative defense in the detainer case. In any event, it is beyond cavil of doubt that until the question of whether or not Alvestir has a right of priority, under the laws invoked by him, over Orellano to purchase the land in dispute is decided, the matter of who between appellant and appellee has the better right of possession over it cannot be determined. We are not in any way suggesting that appellee's action for recission is clearly meritorious. What is apparent is that it is not on its face groundless. The contention of appellant that Alvestir cannot have any standing in law, even under the provisions of Republic Act 1162, as amended, invoked by him is a matter that We cannot resolve here. It is but proper, therefore, from any point of view, that Civil Case No. 63664 be allowed to follow its course and the ejectment suit be dismissed. As will be seen, a special law was a necessary factor in the controversy, which is a feature that may well serve to distinguish the case from the precedents relied upon by the Trial Court and the Court of Appeals in their adjudication of the cases at bar. In any event, even assuming that there is irreconcilable conflict between Orellano and the other precedents listed and outlined in this opinion, there is no difficulty whatever in concluding that the overwhelming weight of authority is decidedly contrary to Orellano, precluding application thereof to the present cases. It may well be stressed in closing that as the law now stands, even when, in forcible entry and lawful detainer cases, "the defendant raises the question of ownership in his pleadings and the question of possession cannot be resolved without deciding that issue of ownership," the Metropolitan Trial Courts, Municipal Trial courts, and Municipal Trial Courts nevertheless have the undoubted competence to resolve "the issue of ownership . . . only to determine the issue of possession." 20
WHEREFORE, the challenged decision of the Court of Appeals, being entirely in accord with the facts on record and applicable law and jurisprudence, the same is AFFIRMED in toto, and the petitions are DISMISSED. Costs against petitioners. SO ORDERED.
3. G.R. No. 76031 March 2, 1994 MIGUEL SEMIRA, petitioner, vs. COURT OF APPEALS and BUENAVENTURA AN, respondents. Antonio M. Chavez for petitioner. Onofre K. Quizon for private respondent.
BELLOSILLO, J .:
Juana Gutierrez owned a parcel of land, later designated as Lot 4221, situated in Sto. Nio, Taysan, Batangas which she sold to private respondent Buenaventura An for P850.00 by means of a "Kasulatan ng Bilihan ng Lupa" executed on 4 January 1961. 1 Aside from the estimated area of 822.5 square meters appearing in the deed of sale, the following boundaries of the lot are also stated: on the north, by Taysan-Lobo-Sto. Nio-Pinagbayanan and Sto. Nio-Dagatan Road (Junction or Intersection road); on the east, by Sto. Nio-Pinagbayanan Road and Juana Gutierrez; on the south, by Sto. Nio School site; and, on the west, by Sto. Nio-Dagatan Road. Thereafter, private respondent entered the premises observing thereby the boundaries of the property and not the area given. 2
Subsequently, he acquired two (2) other parcels of land, Lot 4215 with an area of 8,606-square meters located on the east of Lot 4221 from the spouses Pascual Hornilla and Gliceria Ilao on 30 June 1964, and another lot with an area of 11,000-square meters from Santiago Asi. Pascual Hornilla is the son of Juana Gutierrez. On 18 October 1972, private respondent sold Lot 4221 to his nephew, Cipriano Ramirez, and spouse by means of another "Kasulatan ng Bilihan ng Lupa" for P2,500.00, 3 where the lot was described with the same area and boundaries mentioned in the 4 January 1961 "Kasulatan ng Bilihan ng Lupa" with the exception of the boundary on the east; which was changed from "Juana Gutierrez" to "Buenaventura An" to reflect the acquisition by private respondent of the adjoining Lot 4215. Like his uncle before him, Cipriano Ramirez occupied the lot by observing the boundaries stated in the document of sale. Subsequently, he applied for a new tax declaration to replace the one in the name of his uncle but was denied in view of an existing mortgage executed by Buenaventura An in favor of the Taysan Rural Bank, which was only settled in 1979. On 12 March 1979, Cipriano Ramirez sold the lot to petitioner Miguel Semira for P20,000.00. However, the area stated in the "Kasulatan ng Bilihan ng Lupa" 4 was 2,200 square meters and not 822.5 appearing in the previous document. As delimited by its boundaries, the lot is actually much bigger than 822.5 square meters. This was confirmed by the Taysan Cadastral Mapping Survey conducted in 1974 where it is definitely stated that the area of Lot 4221 is 2,200 square meters; hence, the reason for the change. On 17 March 1979, Miguel Semira entered the very same premises previously occupied by Ramirez and began the construction of a new rice-mill. However, on 18 April 1979, a complaint for forcible entry was filed against him by private respondent in the Municipal Circuit Trial Court of Taysan- Lobo. 5 The latter claimed that the area of Lot 4221 was 822.5 square meters only and that the excess of 1,377 square meters forcibly occupied by petitioner formed part of Lot 4215 which he acquired from the Hornillas in 1964. Petitioner admits having entered the disputed portion on 17 March 1979, but denies having illegally done so. In his answer, petitioner claims ownership over the property by invoking the 1979 deed of sale in his favor by Cipriano Ramirez. Meanwhile, during the pendency of the case, private respondent applied for and was issued original Certificate of Title No. P-12694 over the lots he purchased from the Hornillas and that from Santiago Asi with a combined area of 19,606 square meters. However, the title was issued for 2 hectares, 8 ares and 33 centares or 20,833 square meters. No explanation was given for the difference.
The case was initially dismissed for lack of jurisdiction. 6 The municipal court of Taysan-Lobo ruled that since the issue of prior physical possession could not be resolved without first deciding on the ownership, dismissal was proper since forcible entry cases involve the sole issue of prior physical possession. However, upon motion, and in view of the passage of B.P. Blg. 129, which took effect 14 August 1981, providing that "[m]etropolitan trial courts, municipal trial courts, and municipal circuit trial courts, without distinction, may try cases of forcible entry and detainer even if the question of ownership is raised in the pleadings and possession could not be resolved without deciding the ownership," 7 the trial court modified its earlier resolution and adjudged petitioner the rightful and lawful owner and possessor of the area in question and cannot therefore be ejected therefrom. 8
Private respondent appealed to the Regional Trial Court which reversed the Municipal Circuit Trial Court, ruling that it was not necessary to delve on the issue of ownership since the question of prior physical possession could be resolved independently, and that since petitioner admitted having possessed the disputed area on 12 March 1979 while the possession of private respondent began way back in 1964, the latter clearly had prior possession. 9 Since petitioner did not specifically deny the allegation of forcible deprivation of property in his Answer, the averment in that regard was deemed admitted under Sec. 1, Rule 9, of the Rules of Court. 10 As a final word, the RTC held that "no matter how righteous defendant's claim of ownership over the property may be, he has not the right to take the law into his own hands by forcibly depriving plaintiff of his prior actual possession of the property." 11
Petitioner appealed to the Court of Appeals, but without success. 12 In its Decision of 22 April 1986, respondent appellate court dismissed the petition for review and affirmed the RTC decision in toto. 13
Petitioner contends that the Court of Appeals erred: (1) in upholding this ejectment from the disputed area despite the absence of clear and indubitable proof that private respondent had prior physical possession and that he was deprived of the same by force, intimidation, strategy or stealth; and, (2) in not holding that the question of ownership is so necessarily involved that it would be impossible to decide the question of bare possession without first setting that of ownership. 14
We agree with the position of petitioner and sustain the Municipal Circuit Trial Court in holding that in the case at bench the issue of possession cannot be decide independently of the question of ownership. Hence, we reverse the Court of Appeals as well as the Regional Trial Court. In his complaint in the MCTC, private respondent claims constructive possession of the disputed portion since 30 June 1964 when he bought the same as part of Lot 4215 of the Hornilla spouses. Likewise, petitioner bases his occupancy of the disputed portion on the 1979 sale of Lot 4221 in his favor, which he contends is separate and distinct from Lot 4215 of private respondent. Clearly, the question of who has prior possession hinges on the question of who the real owner of the disputed portion is. And the latter, in turn, depends on whether such portion is part of Lot 4215 of private respondent or of Lot 4221 of petitioner. It is not disputed that Lot 4221 of petitioner was once owned by private respondent; that the latter sold the same to his nephew, Cipriano Ramirez, in 1972 for the lump sum of P2,500.00; that the "Kasulatan ng Bilihan ng Lupa" incorporated both the estimated area and the definite boundaries of the land; and, that private respondent's nephew in turn sold the lot to petitioner in 1979 with the very same boundaries mentioned in the deed of sale executed in his favor by his uncle Buenaventura An. Petitioner claims that owns the entire 2,200 square meters since it is the size of Lot 4221 following its established boundaries. On the other hand, private respondent insists that he only sold 822.5 square meters, hence, his nephew could not have transferred a bigger area to petitioner.
We sustain petitioner as did the Municipal Circuit Trial Court. We have repeatedly ruled that where land is sold for a lump sum and not so much per unit of measure or number, the boundaries of the land stated in the contract determine the effects and scope of the sale, not the area thereof. 15 Hence, the vendors are obligated to deliver all the land included within the boundaries, regardless of whether the real area should be greater or smaller than that recited in the deed. This is particularly true where the area is described as "humigit kumulang," that is, more or less. 16 These conclusions are drawn from Art. 1542 of the Civil code which states In the sale of real estate, made for a lump sum and not at the rate of a certain sum for a unit of measure or number, there shall be no increase or decrease of the price, although there be a greater or less are or number than that stated in the contract. The same rule shall be applied when two or more immovables are sold for a single price; but if, besides mentioning the boundaries, which is indispensable in every conveyance of real estate, its area or number should be designated in the contract, the vendor shall be bound to deliver all that is included within said boundaries, even when it exceeds the area or number specified in the contract; and, should he not be able to do so, he shall suffer a reduction in the price, in proportion to what is lacking in the area or number, unless the contract is rescinded because the vendee does not accede to the failure to deliver what has been stipulated. Hence, when private respondent Buenaventura An sold Lot 4221 to his nephew Cipriano Ramirez by means of a "Kasulatan ng Bilihan ng Lupa" which incorporated both the area and the definite boundaries of the lot, the former transferred not merely the 822.5 square meters stated in their document of sale but the entire area circumscribed within its boundaries. The fact that the area turned out to be 2,200 square meters; instead of only 822.5 square meters, is of no moment and does not entitle private respondent to the difference because the definite object sold was Lot 4221 in its entirety and not just any unit of measure or number. 17 That the sale resulted in a disadvantage to private respondent does not confer on him any cause of action against petitioner. 18
Besides, we are hardly convinced that Buenaventura An entered into the sale unaware that Lot 4221 actually had a much bigger area than it purported to be. Even as early as the sale between him and his nephew, private respondent was already aware of the difference between the stated area of Lot 4221 and its actual size. His nephew Cipriano Ramirez testified, and private respondent did not dispute, that when asked why the area of Lot 4221 stated in their deed of sale was much smaller than the actual size, private respondent explained that it was to minimize taxes. 19 Private respondent likewise did not deny that his nephew merely transferred to petitioner the very same area which he himself had acquired and possessed in 1961 when he bought the same from Juana Gutierrez, the original owner of the lot. Considering the foregoing, it is not difficult to sustain petitioner over private respondent when the latter failed even to prove prior possession in his favor. Absent such element, it cannot be said that he was forcibly deprived of the disputed portion. Hence, his action for forcible entry must fail. It should be emphasized, however, that the case before us is merely an action for forcible entry and that the issue of ownership was decided for the sole purpose of resolving priority of possession. Hence, any 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. 20
WHEREFORE, the Decision of the Intermediate Appellate Court (now Court of Appeals) dated 22 April 1986 affirming that of the Regional Trial Court of 13 January 1984 in toto is REVERSED and SET ASIDE and another one entered REINSTATING, AFFIRMING and REITERATING the Decision of 4 May 1983 of the Municipal Circuit Trial Court of Taysan-Lobo, Batangas, with costs against private respondent Buenaventura An. SO ORDERED.
4. G.R. No. L-50264 October 21, 1991 IGNACIO WONG, petitioner, vs. HON. LUCAS D. CARPIO, as Presiding Judge, Court of First Instance of Davao del Sur, Branch V and MANUEL MERCADO, respondents. Rodolfo B. Quiachon for petitioner. Jose M. Ilagan for private respondent.
BIDIN, J .:p This is a petition for review on certiorari, certified to this Court by the Court of Appeals as it involves purely question of law, seeking the annulment of the September 29, 1978 decision of the then Court of First Instance ** of Davao del Sur, Branch V, in Civil Case No. 1258 which reversed the February 20, 1978 decision of the Municipal Court of Sta. Maria, *** Davao del Sur in an action for Forcible Entry (Civil Case No. 13) ordering the dismissal of the complaint as well as the counterclaim. The undisputed facts of this case, as found by both the trial court and the then Court of First Instance of Davao del Sur, are as follows: On the basis of the admission of parties in their respective pleadings, the oral testimonies of all witnesses for both plaintiff and defendants and the documentary evidence offered and admitted this Court finds that plaintiff Manuel Mercado acquired
his rights to possess the land in litigation, particularly lot 3 (LRC) Pcs-295, (situated at Colonga, Sta. Maria, Davao del Sur) and which is particularly described and embraced in Transfer Certificate of title No. (T-4244) T-972 from William Giger by virtue of a deed of sale with right to repurchase which was executed in 1972 for a consideration of P3,500.00 (testimony of plaintiff, T.S.N., p. 3, hearing of January 7, 1977). Then, in 1973, William Giger again asked an additional amount of P2,500.00 from plaintiff and so he required William Giger to sign a new deed of Pacto de Retro Sale (Exhibit "A") on November 5,1973 at Davao City before Notary Public Gregorio C. Batiller (T.S.N., p. 5, hearing of January 7, 1977). In 1972, plaintiff began harvesting only the coconut fruits and he paid the taxes on the land (Exhibits B to E) for Mr. Giger. He went periodically to the land to make copra but he never placed any person on the land in litigation to watch it. Neither did he reside on the land as he is a businessman and storekeeper by occupation and resides at Lower Sta. Maria, Davao del Sur while the land in litigation is at Colongan, Sta. Maria. Neither did he put any sign or hut to show that he is in actual possession (p. 8, T.S.N., p. 7, hearing of January 14, 1978). He knew defendants' laborers were in the land in suit as early as August, 1976 and that they have a hut there but he did not do anything to stop them. Instead plaintiff was happy that there were people and a hut on the land in suit (p. 14, T.S.N., hearing of January 14, 1978). Before July, 1976, defendant Ignacio Wong went to the land in litigation to find out if there were other people residing there or claiming it besides the owner and he found none. So, in July, 1976, defendant Ignacio Wong bought the parcel of land in litigation from William Giger and his wife Cecilia Valenzuela (Exhibit 5). After the execution of Exhibit 5, defendant Ignacio Wong asked for the delivery of the title to him and so he has in his possession TCT No. (T-4244) T-974 (Exhibit 6) in the name of William Giger. Mr. Wong declared the land in suit for taxation purposes in his name (Exhibit 7). He tried to register thepacto de retro sale with the Register of Deeds by paying the registration fee (Exhibit 8) but due to some technicalities, the pacto de retro sale could not be registered. The defendant Wong placed laborers on the land in suit, built a small farm house after making some clearings and fenced the boundaries. He also placed signboards (T.S.N., pp. 14-15, hearing of September 15, 1977). On September 27, 1976, plaintiff Manuel Mercado again went to the land in suit to make copras. That was the time the matter was brought to the attention of the police of Sta. Maria, Davao del Sur and the incident entered in the police blotter (Exhibit 11). Then on November 18, 1976, defendant Wong ordered the hooking of the coconuts from the land in litigation and nobody disturbed him. But on November 29, 1976, defendant received a copy of plaintiff's complaint for forcible entry with summons to answer which is the case now before the Court. During the pendency of this instant complaint for forcible entry, spouses William Giger and Cecilia Valenzuela filed a case for reformation of instrument with the Court of First Instance of Digos, Davao del Sur against plaintiff Mercado (Exhibit 4). The case pertains to Exhibit "A" of plaintiff. (pp. 1-3, CA Decision, pp. 82-84, Rollo). On the basis of the aforestated undisputed facts, the Municipal Court of Sta. Maria, Davao del Sur in its February 20, 1978 Decision found that herein petitioner (defendant Ignacio Wong) had prior, actual and continuous physical possession of the disputed property and dismissed both the complaint and the counter-claim. On appeal, the then Court of First Instance of Davao del Sur, in its September 29, 1978 Decision drew a completely different conclusion from the same set of facts and ruled in favor of herein private respondent (plaintiff Manuel Mercado). The decretal portion of the said decision, reads:
WHEREFORE, the Court finds the plaintiff to have taken possession of the property earlier in point of time and defendant is an intruder and must, as he is hereby ordered to return, the possession of the land in question for the plaintiff, paying a monthly rental of P400.00 from August, 1976, till the property is returned with costs against the defendant. Judgment is reversed. Petitioner filed the instant petition with the Court of Appeals. But the Court of Appeals, in its March 1, 1979 Resolution **** found that the only issue is a pure question of law the correctness of the conclusion drawn from the undisputed facts and certified the case to this Court. In its April 4, 1979 Resolution, the Second Division of this Court docketed the case in this Court and considered it submitted for decision. Petitioner alleged two (2) errors committed by respondent judge, to wit: A) THE CONCLUSION DRAWN BY RESPONDENT JUDGE THAT PETITIONER IS AN INTRUDER IS WITHOUT FACTUAL AND LEGAL BASIS FOR PURPOSES OF A FORCIBLE ENTRY. B) THE CONCLUSION DRAWN BY RESPONDENT JUDGE THAT PETITIONER MUST PAY A MONTHLY RENTAL OF P400.00 FROM AUGUST, 1976 TILL THE PROPERTY IS RETURNED HAS NO LEGAL AND FACTUAL BASIS. The petition is without merit. Petitioner, in claiming that the private respondent has not established prior possession, argues that private respondent's periodic visit to the lot to gather coconuts may have been consented to and allowed or tolerated by the owner thereof for the purposes of paying an obligation that may be due to the person gathering said nuts and that a person who enters a property to gather coconut fruits and convert the same to copras may only be a hired laborer who enters the premises every harvest season to comply with the contract of labor with the true owner of the property. The argument is untenable. It should be stressed that "possession is acquired by the material occupation of a thing or the exercise of a right, or by the fact that it is subject to the action of our will, or by the proper acts and legal formalities for acquiring such right." (Art. 531, Civil Code; Rizal Cement Co., Inc. vs. Villareal, 135 SCRA 15 [1985]); and that the execution of a sale thru a public instrument shall be equivalent to the delivery of the thing, unless there is stipulation to the contrary . . . . If, however, notwithstanding the execution of the instrument, the purchaser cannot have the enjoyment and material tenancy of the thing and make use of it herself, because such tenancy and enjoyment are opposed by another, then delivery has not been effected. (Paras, Civil Code of the Philippines, Vol. II, 1989 Ed., p. 400). Applying the above pronouncements on the instant case, it is clear that possession passed from vendor William Giger to private respondent Manuel Mercado by virtue of the first sale a retro (Exhibit A), and accordingly, the later sale a retro (Exhibit 5) in favor of petitioner failed to pass the possession of the property because there is an impediment the possession exercised by private respondent. Possession as a fact cannot be recognized at the same time in two different personalities except in the cases of co-possession. Should a question arise regarding the fact of possession, the present possessor shall be preferred; if there are two possessions, the one longer in possession, if the dates of possession are the same, the one who presents a title; and if these
conditions are equal, the thing shall be placed in judicial deposit pending determination of its possession or ownership through proper proceedings (Art. 538, Civil Code). As to petitioner's query that "Is the entry of petitioner to the property characterized by force, intimidation, threat, strategy, or stealth in order to show that private respondent has had possession so that the case is within the jurisdiction of the inferior court?" (p. 15, Petition; p. 16, Rollo). The same is answered in the affirmative. The act of entering the property and excluding the lawful possessor therefrom necessarily implies the exertion of force over the property, and this is all that is necessary. Under the rule, entering upon the premises by strategy or stealth is equally as obnoxious as entering by force. The foundation of the action is really the forcible exclusion of the original possessor by a person who has entered without right. The words "by force, intimidation, threat, strategy, or stealth" include every situation or condition under which one person can wrongfully enter upon real property and exclude another who has had prior possession therefrom. If a trespasser enters upon land in open daylight, under the very eyes of person already clothed with lawful possession, but without the consent of the latter, and there plants himself and excludes such prior possessor from the property, the action of forcible entry and detainer can unquestionably be maintained, even though no force is used by the trespasser other than such as is necessarily implied from the mere acts of planting himself on the ground and excluding the other party. (Tolentino, Civil Code of the Philippines, Vol. II, 1983 Ed., pp. 243-244; Drilon vs. Gaurana, 149 SCRA 342 [1987]). Anent the award of rentals in favor of private respondent, the same is in order. Petitioner's argument that there is no legal or factual basis for the payment of monthly rentals because bad faith on the part of petitioner was never proved deserves no merit. It should be noted that possession acquired in good faith does not lose this character except in the case and from the moment facts exist which show that the possessor is not unaware that he possesses the thing improperly or wrongfully. (Art. 528, Civil Code). Possession in good faith ceases from the moment defects in the title are made known to the possessors, by extraneous evidence or by suit for recovery of the property by the true owner. Whatever may be the cause or the fact from which it can be deduced that the possessor has knowledge of the defects of his title or mode of acquisition, it must be considered sufficient to show bad faith. (Tolentino, Civil Code of the Philippines, Vol. II, p. 226). Such interruption takes place upon service of summons (Manotok Realty vs. Judge Tecson, 164 SCRA 587 [1988] citing Mindanao Academy, Inc. v. Yap (13 SCRA 190 [1965]). In the latter case, this Court held: . . . Although the bad faith of one party neutralizes that of the other and hence as between themselves their rights would be as if both of them had acted in good faith at the time of the transaction, this legal fiction of Yap's good faith ceased when the complaint against him was filed, and consequently the court's declaration of liability for the rents thereafter is correct and proper. A possessor in good faith is entitled to the fruits only so long as his possession is not legally interrupted, and such interruption takes place upon service of judicial summons (Arts. 544 and 1123, Civil Code). A perusal of the records of the case shows that petitioner received private respondent's complaint for forcible entry with summons on November 29, 1976 (Rollo, p. 46). His good faith therefore ceased on November 29,1976. Accordingly, the computation of the payment of monthly rental should start from December, 1976, instead of August, 1976.
WHEREFORE, with the modification that the computation of the monthly rental should start from December, 1976 instead of August, 1976, the September 29, 1978 decision of respondent judge is Affirmed in all other respects, with costs against petitioner. SO ORDERED.
5. G.R. No. L-48050 October 10, 1994 FELICIDAD JAVIER, petitioner, vs. HON. REGINO T. VERIDIANO II, Presiding Judge, Branch I, Court of First Instance of Zambales and REINO ROSETE, respondents. Cesar E. Palma for petitioner. Saturnino V. Bactad for private respondent.
BELLOSILLO, J .: Petitioner Felicidad Javier questions before us the order of a regional trial court citing the final decision of the city court previously dismissing her complaint for forcible entry, and on the basis thereof, dismissed her petition to quiet title on the ground of res judicata. We summon the time- honored remedies accion interdictal, accion publiciana andaccion reivindicatoria or accion de reivindicacion to resolve the issues presented in the petition.
It appears that on 25 January 1963, petitioner filed a Miscellaneous Sales Application for Lot No. 1641, Ts-308 of the Olongapo Townsite Subdivision, Lower Kalaklan, Olongapo City, with the District Land Officer, Bureau of Lands, Olongapo City. Sometime in December 1970, alleging that she was forcibly dispossessed of a portion of the land by a certain Ben Babol, she instituted a complaint for forcible entry before the City Court of Olongapo City, docketed as Civil Case No. 926, stating in pars. 2 and 3 therein that . . . plaintiff is the true, lawful and in actual, prior physical possession of a certain parcel of land situated at Lower Kalaklan, City of Olongapo, said lot being designated as Lot No. 1641, Ts-308 of the Olongapo Townsite Subdivision since 1961 and up to the present time, until the day and incidents hereinafter narrated. . . . Sometime on December 12, 1970, the defendant, without express consent of plaintiff and without lawful authority, through scheme, strategy and stealth, forcibly entered a portion on the southwestern part of Lot No. 1641, Ts-308, with the assistance of hired helpers, started construction of riprap along the Kalaklan River perimeter of said portion of land; said entry was further augmented by removing plaintiff's chain link, fence with galvanized iron posts embedded in concrete, likewise destroying plants introduced by plaintiff by removing existing BL (Bureau of Lands) monuments thereon, and by these actions, defendant started exercising illegal possession of said portion of land which contains an area of 200 square meters, more or less. 1
On 7 November 1972 the City Court of Olongapo City, Br. 4, 2 dismissed Civil Case No. 926 on the ground that "it appears to the Court that the Bureau of Lands has considered the area in question to be outside Lot 1641 of the plaintiff. . . ." 3 The Decision of the City Court of Olongapo City became final and executory on 30 April 1973 when the then Court of First Instance of Zambales and Olongapo City, Br. 3, 4 dismissed the appeal and affirmed the findings and conclusions of the City Court holding that appellant (herein petitioner) failed to give sufficient evidence to prove that the area in question was within the boundaries of Lot No. 1641. 5
Subsequently, on 17 December 1973, petitioner was granted Miscellaneous Sales Patent No. 5548 and issued Original Certificate of Title No. P-3259 covering Lot No. 1641. Meanwhile, Ben Babol who was the defendant and appellee in the complaint for forcible entry had sold the property he was occupying, including the portion of about 200 square meters in question, to a certain Reino Rosete. Thus petitioner demanded the surrender of the same area in dispute from Reino Rosete who repeatedly refused to comply with the demand. On 29 June 1977, or after about four (4) years from the finality of the dismissal of Civil Case No. 926, petitioner instituted a complaint for quieting of title and recovery of possession with damages against Ben Babol and Reino Rosete before the then Court of First Instance of Zambales and Olongapo City, docketed as Civil Case No. 2203-0, alleging in pars. 2 and 3 therein that . . . plaintiff is the absolute owner in fee simple of a parcel of land identified as Lot No. 1641, Ts-308, Olongapo Townsite Subdivision . . . covered by Original Certificate of Title No. P-3259, issued by the Register of Deeds for the province of Zambales. . . . Sometime in December, 1970, and until present, defendants, relying on an application filed on December 23, 1969, with the Bureau of Lands, however have squatted, illegally occupied and unlawfully possessed the southwestern portion of plaintiff's above-described property of about 200 square meters, then by defendant BEN BABOL and now by defendant REINO ROSETE, the former having sold the entirety of his property to the latter, including the portion in question. . . . 6
Instead of filing a responsive pleading, therein defendant Reino Rosete (private respondent herein) moved to dismiss the complaint on the ground of res judicata. Defendant Ben Babol did not file any pleading. In its Order dated 27 January 1978, 7 the then Court of First Instance of Zambales, Br. 1, 8 sustained the argument of Rosete and granted his motion to dismiss. Thereafter, petitioner's motion for reconsideration was denied. 9 Hence, this petition for review on certiorari. Petitioner contends that res judicata cannot apply in the instant case since there is no identity of parties and causes of action between her complaint for forcible entry, which had long become final and executory, and her subsequent petition for quieting of title. She argues that private respondent Reino Rosete, who invokes the defense or res judicata, was never impleaded in the forcible entry case, which is an action in personam; neither was he a purchaserpendente lite who, perhaps, could have validly invoked the defense of res judicata. With regard to the cause of action, she maintains that there is no identity of causes of action since the first case was for forcible entry, which is merely concerned with the possession of the property, whereas the subsequent case was for quieting of title, which looks into the ownership of the disputed land. Private respondent however submits that there is identity of parties in the two cases since he is a successor in interest by title of the defendant in the first case after the commencement of the first action. On the issue of identity of causes of action, he simply states that neither of the two cases, i.e., the complaint for forcible entry and the subsequent petition for quieting of title, alleges a cause of action. Thus, private respondent continues, both cases have to be dismissed. Time and again it has been said that for res judicata to bar the institution of a subsequent action the following requisites must concur: (1) There must be a final judgment or order; (2) The court rendering the judgment must have jurisdiction over the subject matter; (3) The former judgment is a judgment on the merits; and, (4) There is between the first and second actions identity of parties, of subject matter and of causes of action. 10 The presence of the first three requirements and the identity of subject matter in the fourth requirement are not disputed. Hence, the only issues remaining are whether as between Civil Case No. 926 and Civil Case No. 2203-0 there is identity of parties and of causes of action which would bar the institution of Civil Case No. 2203-0.
Petitioner's argument that there is no identity of parties between the two actions is without merit. We have repeatedly ruled that for res judicata to apply, what is required is not absolute but only substantial identity of parties. 11 It is fundamental that the application of res judicata may not be evaded by simply including additional parties in a subsequent litigation. In fact we have said that there is still identity of parties although in the second action there is one party who was not joined in the first action, if it appears that such party is not a necessary party either in the first or second action, 12 or is a mere nominal party. 13 Thus, Sec. 49, par. (b), Rule 39, Rules of Court, provides that ". . . the judgment or order is, with respect to the matter directly adjudged or as to any other matter that could have been raised in relation thereto, conclusive between
the parties and their successors in interest by title subsequent to the commencement of the action or special proceeding, litigating for the same thing and under the same title and in the same capacity." In the case at bench, it is evident that private respondent Reino Rosete is a successor in interest of Ben Babol by title subsequent to the commencement and termination of the first action. Hence, there is actual, if not substantial, identity of the parties between the two actions. But, there is merit in petitioner's argument that there is no identity of causes of action between Civil Case No. 926 and Civil Case No. 2203-0. Civil Case No. 926 is a complaint for forcible entry, where what is at issue is prior possession, regardless of who has lawful title over the disputed property. 14 Thus, "[t]he only issue in an action for forcible entry is the physical or material possession of real property, that is, possession de facto and not possession de jure. The philosophy underlying this remedy is that irrespective of the actual condition of the title to the property, the party in peaceable quiet possession shall not be turned out by strong hand, violence or terror." 15 And, a judgment rendered in a case for recovery of possession is conclusive only on the question of possession and not on the ownership. It does not in any way bind the title or affect the ownership of the land or building. 16
On the other hand, Civil Case No. 2203-0 while inaccurately captioned as an action for "Quieting of Title and Recovery of Possession with Damages" is in reality an action to recover a parcel of land or an accion reivindicatoriaunder Art. 434 17 of the Civil Code, and should be distinguished from Civil Case No. 926, which is an accion interdictal. From the averments of the complaint in Civil Case No. 2203-0, plaintiff therein (petitioner herein) clearly sets up title to herself and prays that respondent Rosete be ejected from the disputed land and that she be declared the owner and given possession thereof. Certainly, the allegations partake of the nature of an accion reivindicatoria. 18
The doctrine in Emilia v. Bado, 19 , decided more than twenty-five years ago, is still good law and has preserved the age-old remedies available under existing laws and jurisprudence to recover possession of real property, namely accion interdictal, which is the summary action for forcible entry (detentacion) where the defendant's possession of the property is illegal ab initio, or the summary action for unlawful detainer (desahuico) where the defendant's possession was originally lawful but ceased to be so by the expiration of his right to possess, both of which must be brought within one year from the date of actual entry on the land, in case of forcible entry, and from the date of last demand, in case of unlawful detainer, in the proper municipal trial court or metropolitan trial court; 20 accion publiciana which is a plenary action for recovery of the right to possess and which should be brought in the proper regional trial court when the dispossession has lasted for more than one year; and, accion reivindicatoria or accion de reivindicacion which seeks the recovery of ownership and includes thejus utendi and the jus fruendi brought in the proper regional trial court. Accion reivindicatoria or accion de reivindicacion is thus an action whereby plaintiff alleges ownership over a parcel of land and seeks recovery of its full possession. 21 It is different from accion interdictal or accion publiciana where plaintiff merely alleges proof of a better right to possess without claim of title. 22
In Civil Case No. 926 petitioner merely claimed a better right or prior possession over the disputed area without asserting title thereto. It should be distinguished from Civil Case No. 2203-0 where she expressly alleged ownership, specifically praying that she be declared the rightful owner and given possession of the disputed portion. Hence, in Civil Case No. 926 petitioner merely alleged that she was "the true, lawful (possessor) and in actual, prior physical possession" of the subject parcel of land, whereas in Civil Case No. 2203-0 she asserted that she was "the absolute owner in fee simple" of the parcel of land "covered by Original Transfer Certificate of Title No. P-3259." The complaint in Civil Case No. 2203-
0 definitely raises the question of ownership and clearly gives defendants therein notice of plaintiff's claim of exclusive and absolute ownership, including the right to possess which is an elemental attribute of such ownership. Thus, this Court has ruled that a judgment in forcible entry or detainer case disposes of no other issue than possession and declares only who has the right of possession, but by no means constitutes a bar to an action for determination of who has the right or title of ownership. 23
And, applying the ruling of the Court En Banc in Quimpo v. De la Victoria, 24 even if we treat Civil Case No. 2203-0 as a petition to quiet title, as its caption suggests, still it has a cause of action different from that for ejectment. Consequently, there being no identity of causes of action between Civil Case No. 926 and Civil Case No. 2203-0, the prior complaint for ejectment cannot bar the subsequent action for recovery, or petition to quiet title. WHEREFORE, the petition is GRANTED. The Order dated 27 January 1978 of the then Court of First Instance of Zambales, Br. I, with station in Olongapo City, dismissing Civil Case No. 2203-0, and its subsequent Order denying reconsideration of the dismissal are REVERSED and SET ASIDE. The Clerk of Court is directed to remand the records immediately to the court of a quo and the latter to proceed with the trial of Civil Case No. 2203-0 with deliberate dispatch. This decision is immediately executory. SO ORDERED.
6. G.R. No. 93451 March 18, 1991 LIM KIEH TONG, INC., petitioner, vs. THE COURT OF APPEALS, HON. JUDGE ROGELIO M. PIZARRO, Presiding Judge of Branch 16 of the Metropolitan Trial Court of Manila, and REGINALDO Y. LIM, respondents. Balgos & Perez for petitioner. Madamba, Lim & Tan for private respondent.
GANCAYCO, J .:p The issue of whether a complaint filed in the Metropolitan Trial Court of Manila is one for forcible entry and detainer or one for specific performance is the center of this litigation. The facts are not disputed as related by the respondent Court of Appeals in its questioned decision dated December 7, 1988
The record reveals that on October 23, 1987, the appellee, Reginaldo Y. Lim, had filed a complaint before the Metropolitan Trial Court of Manila, in part, alleging, as follows: 3. Plaintiff and his family had for some time resided in Room 301 of the building adverted to in the next preceding paragraph, until they transferred to their present residence at No. 3 Igdalig Street, Quezon City; 4. The said room 301 has thereafter been utilized by plaintiff as a place where he keeps some of his important belongings, such as his law books, important documents, appliances, etc.; 5. The aforementioned building has only one common main door through which all the occupants of the various rooms therein, including that of plaintiff, can get in and out therefrom; 6. Accordingly, each and every occupant of any and all of the rooms of the building including plaintiff has been given a key or a duplicate key to the doorlock by Rafael Lim, the Officer-in-Charge of defendant corporation; 7. When plaintiff wanted to go inside his room in the following morning of September 30, 1987 to fetch three (3) of his law books, which he needed to read in connection with a case he is handling, he was surprised to find out that the key given him could no longer fit the door lock which was then already changed; 8. Consequently, plaintiff had to buy three (3) new law books for which he incurred expenses in the sum of Pl,253.00, if only to be able to prepare for his cases; 9. Plaintiff was only able to contact defendant through its Officer-in- Charge, Mr. Rafael Lim, the following day, October 1, 1987, but his request for him to be provided with the appropriate key produced negative result, hence, this suit where plaintiff incurred expenses in the form of attorney's fees and costs of suit. ALLEGATIONS IN SUPPORT OF PRAYER FOR PRELIMINARY MANDATORY INJUNCTION/RESTRAINING ORDER 10. Plaintiff repleads all the foregoing allegations by way of reference to form part of the prayer for the issuance of a writ of preliminary mandatory injunction; 11. The failure and/or refusal of defendant to furnish plaintiff the appropriate key, above-cited, constitutes a violation of the substantial rights of plaintiff, who has a clear and unmistakable right to the use and enjoyment of Room 301 of the building owned by defendant corporation, such that there is an urgent and paramount necessity for
the issuance of the writ of preliminary injunction/restraining order commanding defendant to furnish plaintiff the appropriate key in order to prevent great and and/or irreparable damages and injury upon plaintiff. In conclusion, the said appellee prayed, as follows: PREMISES CONSIDERED, it is most respectfully prayed of the Honorable Court that a writ of preliminary mandatory injunction/restraining order commanding defendant to provide plaintiff the appropriate key or a duplicate key to the lock of the main door of the building be immediately issued, and, after hearing the case on its merits, judgment be rendered in favor of plaintiff and against defendant ordering: l. the injunction prayed for in the complaint; 2. defendant to pay plaintiff the sum of Pl,253.00 as actual compensatory damages; 3. defendant to pay plaintiff the sum of P5,000.00 as and for attorney's fees; and 4. the cost of suit. Plaintiff prays for such other reliefs and/or remedies which the Honorable Court may deem just and proper in the premises. (p. 13, orig. rec.) The opening paragraphs of the questioned decision relate what had happened in the courts below: This is a special civil action for certiorari under Rule 65, grounded on pure questions of law. The case is simplicity itself. The undisputed facts are as follows: Petitioner is a duly organized domestic corporation and is the owner of a building located at 1231 Piedad Street corner Benavidez Street, Manila; Public respondent is the Presiding Judge of the Metropolitan Trial Court, Branch 16; For sometime prior to the filing of this petition, Lim Eng Piao, father of private respondent, occupied said premises as a dwelling unit at the above given address together with all the members of his family. Lim Eng Piao subsequently died. Said occupancy was continued by
private respondent. Later, the latter was able to acquire a house and lot at No. 3 Igdalig Street, Quezon (sic). In spite of having transferred residence, private respondent did not vacate Room 301 of the building in question. Instead, he utilized the same as a place where he keeps some of his important belongings, papers, books, documents and appliances . . . On or about September 1987, petitioner changed the lock of the common main door of the building. On the morning of September 30, 1987, private respondent tried to go to Room 301 but found that the key given him could not fit and open the main door. As one of the occupants of the building in question, private respondent demanded from petitioner's officer-in- charge the delivery to him of the appropriate keys to the said common main door so that he could enter the premises and be restored to possession of said Room No. 301 of the building, but his efforts proved futile as the officer in charge did not heed his demand . . . On October 2, 1987, by reason of the unjustifiable ouster of private respondent from said premises, he instituted Civil Case No. 122546 entitled Reginaldo Y. Lim vs. Rafael Lim and Lim Kieh Tong & Co., Inc. before the Metropolitan Trial Court which was raffled to Branch 25. Said complaint was denominated as an action for damages with injunction despite the allegations contained therein . . .. The aforesaid case was subsequently dismissed for lack of jurisdiction . . . On October 23, 1987, private respondent again instituted another action at the Metropolitan Trial Court docketed as Civil Case No. 122775 which was raffled to Branch 16. The complaint reiterated the same allegations . . . On November 2, 1987, a temporary restraining order was issued by respondent judge pending trial on the merits, commanding petitioner to deliver the appropriate keys to private respondent and allow him to enter the premises and occupancy of Room No. 301 of the building . . . On November 3, 1987, petitioners instituted the instant petition; On the same date after an ex-parte hearing, the Executive Judge of this Court, in order to obviate any possible injustice pending the determination of the issuance of the injunctive writ, issued a temporary restraining order, enjoining the enforcement of the temporary restraining order earlier issued by respondent judge and from further taking cognizance of said Civil Case No. 122775; . . . In ruling in favor of the private appellee, the appellee judge, in part, stated:
In this case force was used by petitioner to deprive private respondent of the physical possession of Room 301 when the lock of the main door was changed without his knowledge and consent. The issued (sic) involved is mere physical possession (possession de facto) and not juridical possession (possession de jure) nor ownership (Mercado vs. Go Bio, 78 Phil. 279; Masallo, vs. Cesar, 39 Phil. 134). The purpose of forcible entry is that regardless of the actual condition of the title to property, the party in peaceable and quiet possession shall not be turned out by strong hand, violence or terror . . . In affording this remedy, breaches of the peace and criminal disorder would be minimized. A party out of possession must respect and resort to the law alone to obtain what he claims is his. (Supia and Batioco vs. Quintero and Ayala, 59 Phil. 312). Considering that respondent judge found the applicability of the Rule in Summary Procedure, the motion to dismiss was correctly denied. A motion to dismiss being one of the prohibited pleadings and motions under Section 15 of the 1983 Rules on Summary Procedure. Hence, the petition must fail on this score alone. Anent the second issue, petitioner contended that when the amount of damages claimed is not specifically alleged in the complaint, jurisdiction over the case would fall under the Regional Trial Courts, as the failure to so allege would characterize the subject matter as one which is incapable of pecuniary estimation. Petitioner's contentions is (sic) not well-taken. In Singson vs. Aragon, 92 Phil. 514, the Supreme Court held that exemplary damages must be specified and if not, the municipal trial court could still grant it, if together with the other money claims, the amount of the total claim does not exceed P10,000.00 (now P20,000.00). As to moral damages, the aforesaid ruling can likewise be made to apply. What confers jurisdiction on the inferior court in forcible entry and illegal detainer cases is NOT the amount of unpaid rentals or damages involved, but rather the nature of the action because the rents or damages are only incidental to the main action (Vichanco vs. Laurilla, L-13935, June 30, 1960). 1
An appeal was taken to the Court of Appeals. The appeal was dismissed for lack of merit. 2 A motion for reconsideration filed by petitioner was denied in a resolution dated May 9, 1990. 3
Hence, this petition for review the main thrust of which is that the action being one for specific performance the jurisdiction thereof is vested in the Regional Trial Court. The petition must fail. A reading of the allegations of the complaint show that private respondent and his family resided in Room 301 of the building of petitioner until they transferred to their present residence at No. 3 Igdalig St., Quezon City. However, private respondent retained possession of said room to keep his important belongings, such as his law books, important documents, appliances, etc. The building has only one common main door through which all the occupants of the various rooms therein can get in and out. Accordingly, all occupants including private respondent were given a key to the main doorlock by petitioner. However, when private respondent wanted to go inside his room on September 30, 1987 to get three (3) of his lawbooks which he needed to read in connection with a case he was then handling, he found that the key he possessed was no longer compatible with the lock, i.e., the same was changed. Private respondent had to buy three (3) new lawbooks for Pl,253.00 to prepare for his cases. He requested private respondent to provide him the appropriate key but his request was denied. Petitioner also alleges that he has a clear and unmistakable right to the use of said room entitling him to the writ of preliminary mandatory injunction to command petitioner to provide him the appropriate key to the lock of the main building; and to pay damages in the amount of Pl,253.000, P5,000.00 attorney's fees and costs of the suit. From the foregoing facts alleged in the complaint, the Court holds that the suit is one for forcible entry and detainer under Rule 70 of the Rules of Court. Private respondent retained the possession of Room 301 of petitioner's building which he claimed to have the right to use and enjoy, but petitioner prevented him from enjoying his right by depriving him of the right of egress and ingress through the main door of the building. Through stealth, petitioner changed the key to the main door thus depriving private respondent of the possession of his rented room. Any person deprived of possession of any land or building or part thereof, may file an action for forcible entry and detainer in the proper inferior court against the person unlawfully depriving or withholding possession from him 4 This relief is not only available to a landlord, vendor, or vendee, but also to a lessee or tenant or any other person against whom the possession of any land or building, or a part thereof, is unlawfully withheld, or is otherwise unlawfully deprived possession thereof, within one (1) year after such unlawful deprivation or withholding of possession. WHEREFORE, the petition is DENIED. No costs. SO ORDERED.
7. G.R. No. 112734 July 7, 1994 SPOUSES NAZARIO P. PENAS, JR. represented by ELPIDIO R. VIERNES, ATTORNEY-IN- FACT, petitioners,
vs. COURT OF APPEALS and LUPO CALAYCAY, respondents. Mark Anthony B. Plotea for petitioners. David B. Agoncillo for private respondent.
PADILLA, J .: The only issue to be resolved in this ejectment case is whether or not the Metropolitan Trial Court had jurisdiction over the complaint filed by herein petitioner-spouses represented by their attorney- in-fact Elpidio R. Viernes. The undisputed facts of the case as summed up by the trial court and adopted by respondent Court of Appeals are as follows: Subject of this controversy [are the] premises identified as 24-B Scout Santiago Street, Barangay Laging Handa, Quezon City, also identified as 26-B [South] D Street, Quezon City. It was the object of a written lease contract executed by the late Nazario Penas in favor of [private respondent] Lupo Calaycay on June 26, 1964, at an agreed monthly rental of One Hundred Ten (P110.00) Pesos, Philippine Currency. The written lease contract was on a month to month basis. Nazario Penas, Sr. died on February 5, 1976 and, thereafter, on June 15, 1976, an extra-judicial settlement of his estate was executed by his surviving heirs, one of whom is his son, Nazario Penas, Jr. Likewise, after the death of plaintiff's mother Concepcion P. Penas on March 2, 1985, her children including [petitioner] Nazario Penas, Jr. executed an extra judicial settlement of her estate. As time [went] on, the monthly rental on the subject premises had been gradually increased by the [petitioners], the latest of which was Six Hundred Ninety One and 20/100 (P691.20) Pesos, Philippine Currency. In a letter of January 18, 1990, [petitioner]-spouses Penas, through counsel notified the [private respondent] that effective March 1990, they were terminating the written month to month lease contract as they were no longer interested to renew the same and demanded from the latter to vacate the premises in question on or before February 28, 1990. In the same letter, [petitioners] opted to allow the defendant to continue occupying the leased premises provided he will agree to execute a new lease contract for a period of one (1) year at an increased monthly rental of Two Thousand Five Hundred Pesos (P2,500.00) Pesos, Philippine Currency, plus two (2) months deposit and, further, gave the [private respondent] up to February 28, 1990 to decide, otherwise judicial action for unlawful detainer against the [private respondent] shall ensue. [Petitioners] later finally reduced the monthly rental to Two Thousand (P2,000.00) Pesos, Philippine Currency, only. [Private respondent] failed to abide by the demand of the [petitioners]. However, he continued staying on the leased premises and effective March 1990, he deposited the monthly rentals in the subject premises with the PNB in his name ITF (in trust for) spouses Lucila and Nazario Penas, Jr. under Account No. 688930. Prior to such deposit, [private respondent] together with others, in a letter of March 26, 1990,
informed the [petitioners], inter alia, that since [petitioners'] representative refused to accept the rentals, he will deposit the same with a reputable bank and he will [hold] the same intact for the [petitioners]. There was no instance that [petitioners] manifested any desire to withdraw the same deposit in the bank. On August 10, 1992, plaintiffs through counsel sent another letter to the defendant to vacate the subject premises and to pay back rental arrearages in the sum of Two Thousand (P2,000.00) Pesos, Philippine Currency, per month from March 1990 in the total sum of Sixty Thousand (P60,000.00) Pesos, Philippine Currency, which defendant failed to satisfy. Accordingly, on September 25, 1992, after the corresponding Certification to File Action was issued by Barangay Laging Handa, Quezon City, [petitioners] filed the present suit for unlawful detainer on the grounds of termination of the month to month lease contract and failure of the defendant to execute a new lease agreement with increased rentals. [Petitioners] tried to impress the Court that after they [had] agreed [to] a new monthly rental of Two Thousand (P2,000.00) Pesos, Philippine Currency, [private respondent] refused to enter into a new contract and insisted in paying at a lower rate; that they gave defendant allowance of more than one (1) year within which to sign a new contract of lease but still he refused to do so; that even if conciliation before the barangay is unnecessary as [petitioners] reside abroad, their attorney-in-fact referred the case to the barangay level. (reference to Annexes omitted) 1
The parties were required to submit their respective position papers after which the Metropolitan Trial Court, Branch 33 of Quezon City rendered a decision dated 16 March 1993 dismissing herein petitioners' complaint for lack of jurisdiction. The trial court based its decision on the finding that the complaint was filed more than one (1) year after private respondent began unlawfully occupying the premises. On appeal to the Regional Trial Court, the trial court decision was upheld, the RTC ruling that herein petitioners' remedy was converted from an actio de mero hecho to an accion publiciana since more than one (1) year had elapsed from the demand upon defendants to vacate. The Regional Trial Court concluded that herein petitioners could initiate a proper complaint with the Regional Trial Court. Respondent Court of Appeals in a decision * in CA G.R. SP No. 31480 dated 19 November 1993 upheld the RTC. The Court of Appeals ruled that since herein petitioners were not collecting the rentals being deposited by private respondent, there no longer was any lease contract between the parties for two (2) years since the first letter of petitioners to private respondent. The Court of Appeals thus agreed that the proper remedy of the petitioners is to file an action for recovery of possession in the Regional Trial Court. We do not agree with the decision of the Court of Appeals, and hence set it aside. Petitioners correctly cite our ruling in Sy Oh v. Garcia 2 upholding the established rule that the one (1) year period provided for in section 1, Rule 70 of the Rules of Court within which a complaint for unlawful detainer can be filed should be counted from the LAST letter of demand to vacate, the reason being that the lessor has the right to waive his right of action based on previous demands and let the lessee remain meanwhile in the premises. 3
In the present case, it is of note that the first demand letter addressed by petitioners to private respondent gave the latter the option to either vacate the premises on or before 28 February 1990 or
agree to execute a new lease contract for one (1) year at an increased rental rate of P2,500 per month. In Vda. de Murga v. Chan 4 we held that: The notice giving the lessee the alternative either to pay the increased rental or otherwise vacate the land is not the demand contemplated by the Rules of Court in unlawful detainer cases. When after such notice, the lessee elects to stay, he thereby merely assumes the new rental and cannot be ejected until he defaults in said obligation and necessary demand is first made. The facts of this case do not warrant a departure from said settled doctrine. It should be noted that even if the private respondent was depositing rentals in trust for the petitioners, what was being deposited were rentals at the old rate, which petitioners were not bound to accept or withdraw. When private respondent elected to remain in the premises after petitioners had sent him the letter of 18 January 1990 giving him the option to vacate by 28 February 1990 or to sign a new lease contract for one (1) year at an increased rental rate of P2,500.00 (later reduced to P2,000.00) a month, he assumed the new rental rate and could be ejected from the premises only upon default and by a proper demand from the petitioners. The demand was made on 10 August 1992, followed by the action for unlawful detainer on 25 September 1992. WHEREFORE, based on the foregoing, the decision of the Court of Appeals in CA G.R. SP No. 31480 is hereby SET ASIDE and a new decision rendered: 1. Ordering private respondent Lupo Calaycay to immediately vacate the premises located at 24-B Scout Santiago Street, Barangay Laging Handa, Quezon City. 2. Ordering private respondent Lupo Calaycay to pay back rentals in the amount of Two Thousand (P2,000.00) Pesos per month from March 1990 until he finally vacates the leased premises. 3. Ordering private respondent to pay Ten Thousand (P10,000.00) Pesos as attorney's fees. Costs against private respondent. SO ORDERED 8. [G.R. No. 117051. January 22, 1996] FRANCEL REALTY CORPORATION, petitioner, vs. COURT OF APPEALS and FRANCISCO T. SYCIP,respondents. D E C I S I O N MENDOZA, J .:
Petitioner Francel Realty Corporation filed a complaint for unlawful detainer against private respondent Francisco T. Sycip. The case was filed in the Municipal Trial Court (MTC) of Bacoor, Cavite. In its complaint, petitioner alleged that it had executed a Contract to Sell to private respondent Lot 16, Building No. 14 of the Francel Townhomes, at 22 Real Street, Maliksi, Bacoor, Cavite, for P451,000.00. The Contract to Sell provides inter alia that in case of default in the payment of two or more installments, the whole obligation will become due and demandable and the seller will then be entitled to rescind the contract and take possession of the property; the buyer will vacate the premises without the necessity of any court action and the downpayment will be treated as earnest money or as rental for the use of the premises. Petitioner alleged that private respondent failed to pay the monthly amortization of P9,303.00 since October 30, 1990 despite demands to update his payments and to vacate the premises, the latest of which was the demand made in the letter dated September 26, 1992, and that because of private respondents unjust refusal to vacate, petitioner was constrained to engage the services of counsel. Petitioner prayed that private respondent be ordered to vacate the premises and pay a monthly rental of P9,303.00 beginning October 30, 1990 until he shall have vacated the premises, and P25,000.00 as attorneys fees plus appearance fee of P 1,000.00 per hearing and expenses of litigation. On November 9, 1992, private respondent moved to dismiss the complaint but his motion was denied by the MTC. On January 20, 1993 he filed his answer, [1] in which he alleged that he had stopped paying the monthly amortizations because the townhouse unit sold to him by petitioner was of defective construction. He alleged that he had in fact filed a complaint for unsound real estate business practice in the Housing and Land Use Regulatory Board (HLURB Case No. REM-07-9004-80) against petitioner. Private respondent prayed that petitioner be ordered to pay P500,000.00 as moral damages, P500,000.00 as exemplary damages, P75,000.00 as attorneys fees and that he be given all other remedies just and equitable. In its resolution dated February 24, 1993, the MTC ruled that the answer was filed out of time on the ground that it was filed more than ten days after the service of summons. [2] On March 17, 1993, however, it dismissed the complaint for lack of jurisdiction. The MTC held that the case was cognizable by the HLURB. But it also ordered petitioner to pay private respondent P10,000.00 as moral damages, P10,000.00 as exemplary damages, P3,000.00 as attorneys fees, and to pay costs.
On appeal the Regional Trial Court affirmed the decision of the MTC. It held that the case was exclusively cognizable by the HLURB which had jurisdiction not only over complaints of buyers against subdivision developers but also over actions filed by developers for the unpaid price of the lots or units. Petitioner filed a petition for review in the Court of Appeals, alleging that: (a) The amounts of damages prayed for by the private respondent in his Answer are enormous and way beyond the jurisdiction of the inferior court; and (b) Since the inferior court and the respondent court ruled that it has no jurisdiction over this case, then it has no reason, much more jurisdiction to award damages in excess of the P20,000.00 jurisdiction of the inferior Court. [3]
The appellate court dismissed the petition, holding that the MTC had jurisdiction over cases of forcible entry and unlawful detainer, regardless of the amount of damages on unpaid rentals sought to be recovered in view of 1A(1) of the Revised Rule on Summary Procedure. [4]
Petitioner moved for reconsideration. It contended that since the MTC had ruled that it had no jurisdiction over this case, then it had no jurisdiction either to grant the counterclaim for damages in the total sum of P23,000.00. Its motion was, however, denied for lack of any cogent reason to reverse the appellate courts resolution of June 15, 1994. [5]
Hence this petition for review on certiorari. It is important to first determine whether the MTC has jurisdiction over petitioners complaint. For if it has no jurisdiction, then the award of damages made by it in its decision is indeed without any basis. It is only if the MTC has jurisdiction of the subject matter of the action that it is necessary to determine the correctness of the award of damages, including attorneys fees. Petitioners complaint is for unlawful detainer. While generally speaking such action falls within the original and exclusive jurisdiction of the MTC, the determination of the ground for ejectment requires a consideration of the rights of a buyer on installment basis of real property. Indeed private respondent claims that he has a right under P.D. No. 957, 23 to stop paying monthly amortizations after givingdue notice to the owner or developer of his decision to do so because of petitioners alleged failure to develop the subdivision or condominium project according to the approved plans and within the time for complying with the same. The case thus involves a
determination of the rights and obligations of parties in a sale of real estate under P.D. No. 957. Private respondent has in fact filed a complaint against petitioner for unsound real estate business practice with the HLURB. This is, therefore, not a simple case for unlawful detainer arising from the failure of the lessee to pay the rents, comply with the conditions of a lease agreement or vacate the premises after the expiration of the lease. Since the determinative question is exclusively cognizable by the HLURB, the question of the right of petitioner must be determined by the agency. Petitioners cause of action against private respondent should instead be filed as a counterclaim in HLURB Case No. REM-07-9004-80 in accordance with Rule 6, 6 of the Rules of Court which is of suppletory application to the 1987 HLURB Rules of Procedure per 3 of the same. In the case of Estate Developers and Investors Corporation v. Antonio Sarte and Erlinda Sarte [6] the developer filed a complaint to collect the balance of the price of a lot bought on installment basis, but its complaint was dismissed by the Regional Trial Court for lack of jurisdiction. It appealed the order to this Court. In dismissing the appeal, we held: The action here is not a simple action to collect on a promissory note; it is a complaint to collect amortization payments arising from or in connection with a sale of a subdivision lot under PD. Nos. 957 and 1344, and accordingly falls within the exclusive original jurisdiction of the HLURB to regulate the real estate trade and industry, and to hear and decide cases of unsound real estate business practices. Although the case involving Antonio Sarte is still pending resolution before the HLURB Arbiter, and there is as yet no order from the HLURB authorizing suspension of payments on account of the failure of plaintiff developer to make good its warranties, there is no question to Our mind that the matter of collecting amortizations for the sale of the subdivision lot is necessarily tied up to the complaint against the plaintiff and it affects the rights and correlative duties of the buyer of a subdivision lot as regulated by NHA pursuant to P.D. 957 as amended. It must accordingly fall within the exclusive original jurisdiction of the said Board, and We find that the motion to dismiss was properly granted on the ground that the regular court has no jurisdiction to take cognizance of the complaint. Accordingly, we hold that the MTC correctly held itself to be without jurisdiction over petitioners complaint. But it was error for the MTC to grant private respondents counterclaim for damages for expenses incurred and inconveniences allegedly suffered by him as a result of the filing of the ejectment case. [7]
Pursuant to Rule 6, 8 a party may file a counterclaim only if the court has jurisdiction to entertain the claim. Otherwise the counterclaim cannot be filed. [8]
Even assuming that the MTC had jurisdiction, however the award of damages to private respondent must be disallowed for the following reasons: (1) The MTC decision itself stated that the answer with its counterclaim was filed out of time or more than 10 days from private respondents receipt of summons. In effect, therefore, private respondent did not make any counterclaim. (2) Moreover, a reading of the MTC decision showed no justification for the award of moral and exemplary damages and attorneys fees. As held in Buan v. Camaganacan, [9] an award of attorneys fees without justification is a conclusion without a premise, its basis being improperly left to speculation and conjecture. It should accordingly be stricken out. With respect to the award of moral and exemplary damages, the record is bereft of any proof that petitioner acted maliciously or in bad faith in filing the present action which would warrant such an award. [10]
WHEREFORE, the decision of the Court of Appeals is REVERSED and the complaint against private respondent is DISMISSED. The private respondents counterclaim is likewise DISMISSED. SO ORDERED.
9. G.R. No. L-11977 April 29, 1959 LEONARDO AZARCON, MANUEL AZARCON and ESTEBAN ABOBO, petitioner, vs. VICTOR EUSEBIO, respondent. Leonardo N. Azarcon in his own behalf and for his co-petitioners. Melion Pajarillaga for respondent. LABRADOR, J .:
Appeal from an order of the Court of Appeals, Fourth Division, in CA-G.R. No. 15444-R, promulgated September 5, 1956, finding Leonardo Azarcon, Manuel Azarcon and Esteban Abobo guilty of contempt of court, ordering each of them to pay a fine of P100, to remove certain improvements that they have constructed on the land, etc. The record discloses that respondent Victor Eusebio and petitioners herein had a dispute over the possession of a certain parcel of public land in the year 1954. Victor Eusebio had filed a lease application, No. V-79, for a parcel of land known as lot No. 3807, containing an area of about 349 hectares. A portion thereof was occupied by petitioners herein, Leonardo L. Azarcon and his companions, under a homestead application. The conflict between the lessee and the homesteaders was ordered to be investigated on May 25, 1955 by the Director of Lands and again on August 3, 1955 by the Secretary of Agriculture and natural Resources. Before the dispute could be settled and on April 28, 1954, Victor Eusebio filed a complaint in the Court of First Instance of Nueva Ecija, alleging that he had acquired a big parcel of land, 349 hectares in area, by lease from the Bureau of Lands (lease application No. V-79); that while he was in possession thereof defendants occupied a portion, known as lot No. 2807, containing an area of six hectares more or less. He, therefore, prayed that defendants be ordered to vacate the six hectares occupied by them and pay damages. Defendant Leonardo Azarcon answered the complaint alleging that he is in actual possession of a portion of 24 hectares since 1941 by virtue of a homestead application, No. V-42995; that the lease application of plaintiff is subsequent to said homestead application of Leonardo Azarcon; that Azarcon had occupied the land since 1941 with interruption during the war and again in 1950 up to the time of the filing of the action. He, therefore, prayed that the action be dismissed. The answer was filed on June 2, 1954 and on motion of plaintiffs dated March 15, 1955, the defendants were declared in default. A motion to set aside the default was denied, and a judgment by default was entered by the court on April 26, 1955. It ordered defendants to restore possession of the land to plaintiff. Having failed to obtain a reconsideration of the above decision, defendants appealed to the Court of Appeals. While the case was pending in the Court of Appeals, a writ for the execution of the judgment of the lower court was issued on October 3, 1955. On October 8, 1955, defendants moved and the court on October 21 ordered that the said writ of execution be stayed upon defendants' depositing of a supersedeas bond of P1,000. The writ of execution was actually served on the defendants on October 7, 1955. Various petitions were submitted by the parties, and among them was that of defendants-appellants asking for the lifting of the writ of execution. This petition, dated October 14, 1955, was granted on November 1, 1955, and the court again fixed the supersedeas bond to stay execution in the amount of P1,000 to be filed with and approved by the Court of First Instance of Nueva Ecija as to its sufficiency. In the same order of November 7, the Court of Appeals denied a petition of the plaintiff-appellee to file a counter-supersedeas bond as well as plaintiff appellee's motion for injunction. In the meanwhile the defendants-appellants had presented on November 21, 1955 the supersedeas bond required for the approval of the Court of First Instance of Nueva Ecija and the said bond was filed and approved on November 21, 1955. This fact was certified to by the clerk of the Court of First Instance of Nueva Ecija on November 14, 1955. On December 2, 1955 the Court of Appeals on motion of plaintiff, reconsidered its order or resolution of November 7, 1955 authorizing the stay of execution upon the filing of the bond by the defendants- appellants, on the ground that the defendants-appellants have not filed any supersedeas bond as required. On January 19, 1956, the Court of Appeals denied a petition of defendants-appellants to reconsider said order of December 2, 1955 on the ground that the writ of execution issued on October 3, 1955 had already been executed.
The following appear to be clear: (a) the writ of execution dated October 3, 1955 was furnished the defendants on October 7, 1955; (b) said order of execution was set aside in an order of October 21, 1955, which order authorized the defendants-appellants to file a supersedeas bond in the amount of P1,000, the same to be approved by the Court of First Instance of Nueva Ecija; (c) said supersedeas bond was filed with Court of First Instance on November 21, 1955, but the certificate showing such filing of the bond was issued by the clerk of the Court of First Instance of Nueva Ecija only on December 14, 1955; and the Court of Appeals, not having been notified of the fact that the defendants have already secured the approval of their supersedeas bond, set aside the order to stay execution on December 2, 1955. The evidence shows that in spite of the receipt by the defendants of the notice of the writ of execution of October 3, 1955, which writ of execution commanded defendants "to forthwith remove from said premises and that plaintiff have restitution of the same," defendants-appellants nevertheless entered the land to gather palay which was then pending harvest. We gather further from the record that the rice found on the disputed land at the time of the service of the order of execution had been planted by defendants-appellants, who appear to have been in possession of the land from 1951. While the court order of October 3, 1955 ordered the defendant-appellant to move out from the premises, it did not prohibit them from gathering the crop then existing thereon. Under the law a person who is in possession and who is being ordered to leave a parcel of land while products thereon are pending harvest, has the right to a part of the net harvest, as expressly provided by Article 545 of the Civil Code. ART. 545. If at the time the good faith ceases, there should be any natural or industrial fruits, the possessor shall have a right to a part of the expenses of cultivation, and to a part of the net harvest, both in proportion to the time of the possession. x x x x x x x x x As the order of execution did not expressly prohibit the defendants-appellants from gathering the pending fruits, which fruits were the result of their possession and cultivation of the land, it cannot be said that the defendants-appellants committed an act which is clear violation of the courts' order. Besides, the defendants-appellants had presented, after receipt of the order of execution, a motion to set aside the said order of execution, and this motion to stay execution was granted. Defendants furthermore presented a bond in accordance with the order of the court and had it approved by the Court of First Instance. It was perhaps in expectation of this resolution of the court setting aside the order of execution that defendants-appellants may have felt justified in entering the land and harvesting the fruits existing thereon. Again the order of the court setting aside its order to stay execution was issued in the belief that the defendants-appellants had not presented before the Court of First Instance of Nueva Ecija and which said court actually approved). Under the circumstances above stated, we are not ready to conclude that the defendants-appellants can be held to have committed a clear defiance of the order of the court. Their act in harvesting the pending fruits was not only justified by law but was not expressly prohibited by the court's order, and was even ratified when the court ordered the suspension of the execution. There was, therefore, no open, clear and contumacious refusal to obey a definite order of the court such as would constitute contempt. Furthermore, a person who has been ordered to leave certain premises is ordinarily not prohibited from taking with him his own effects and possession, unless there is an express prohibition to this effect. No such, prohibition was contained in the order for the defendants to leave the land. There may have been a technical violation of an order not to enter the premises, but not of one prohibiting them from removing anything therefrom.
Such technical violation of the order cannot be considered as one amounting to a defiance of the court's authority, punishable as contempt. For the foregoing considerations, the order appealed from should be, as it is hereby, set aside, and the defendants-appellants acquitted of the charge against them. Without cost.
10. G.R. No. L-30402 January 28, 1980 MANGULON CALAGAN, FERNANDO CALAGAN, ASUNCION CALAGAN, MIRASOL CALAGAN, ARSENIA CALAGAN, PAULA CALAGAN, CRISTITUTO CALAGAN, CANDELARIA CALAGAN and CRISPINA CALAGAN,petitioners, vs. HON. COURT OF FIRST INSTANCE OF DAVAO (BRANCH II) and PETRA SANDOVAL, respondents. G. F. Vega for petitioners. T Q. Osorio for private respondent.
MELENCIO-HERRERA, J .: Sought to be reviewed herein is that portion of the judgment of the Court of First Instance of Davao, Branch II, ordering the payment by petitioners to private respondent of the amount of P3,000.00 representing the value of the house constructed on the homestead in question by said private respondent. The antecedent facts show that in 1954, petitioner Mangulon Calagan and his wife, Takura, were granted a Homesstead Patent over a 5.2905 hectares in Dawis Digos Davao, and were issued Original Certificate of Title No. P-2388 therefor. In 1955, Takura died. survived by her husband, Mangulan and their children, Fernando, Asuncion, Mirasol, Arsenia, Paula, Cristituto, Candelaria and Crispina, all surnamed Calagan, all of whom are petitioners herein. On August 8, 1961, Mangulon and his daughter, Paula sold a portion of 9,230 square meters of their homestead to private respondent, Petra Sandoval in consideration of the sum of P2,340.00. Petitioners title to the land was borrowed by private respondent so that the latter could have the sale annotated thereon. In 1963, Mangulon offered to the portion sold but private respondent refuse. Petition subsequent offers to repurchase but private was adamant. The latter maintains that she was to comply with petitioners' demands provided she was imbursed the value of the house that she had constructed on the subject land On April 15, 1966, petitioners brought this action for reconveyance against private respondent On October 10, 1968, the trial Court rendered judgment, the dispositive portion of which reads:
IN VIEW OF THE FOREGOING judgment is hereby entered for the plaintiffs and against the defendant: (1) That the defendant is ordered to reconvey unto the plaintiffs the piece of land having an area of 9,230 described in the complaint upon returning of the sum of P2,340.00 and payment of P3,000 as value of the house constructed in good faith by the defendant on the said lot. (2) To deliver to the plaintiffs the duplicate certificate of Title No. P-2388. (3) To pay attorney's fees in the sum of P500.00. (4) And to pay the costs. SO ORDERED. In this appeal petitioners maintain solely that the Court erred in ordering petitioners to pay the sum of P3,000.00 "as value of the house constructed in good faith." There is no dispute on the following basic points: 1) the subject land is a portion of a homestead belonging to petitioners; 2) a repurchase is proper pursuant to Section 119 of the Public Land Act (CA No. 141) providing that "every conveyance of land acquired under the free patent or homestead provisions, when proper, shall be subject to repurchase by the applicant, his widow or legal heir within a period of five years from the date of the conveyance"; and 3) this action for repurchase was filed within the five-year period from the date of sale. The controversy revolves around the legality of that portion of the judgment requiring petitioners to pay private respondent another amount of P3,000.00 representing the value of the residential house built by private respondent on the portion of the land which petitioners seek to repurchase. Petitioner present their digest of arguments thus: 1. Only necessary expenses are subject to reimbursement. House constructed on a coconut land is not necessary It is only useful, 2. In a repurchase under Section 119 of the Public Land Act,, a homesteader is only supposed to tender the purchase price. To require him to pay for the value of the house constructed on the land sought to be repurchased, in addition to the purchase price, constitutes a circumvention of the Public Land Act. 3. A vendee who introduced a building on a land sought to be repurchased under the Public Land Act, and during the time when the homesteader can validly repurchase the same, cannot be considered a in good faith, because his possesion over the land is of a precarious character: 1
Private respondent's counter-argument is that when she bought the land in dispute "she was not merely a tenant nor a lessee or a possessor in good faith therein but the owner of the tenement itself. 2 As she needed a house where she and her family could live, she constructed a modest house in the lawful exercise of her rights as an owner.
There is no provision in the Public Land Act (CA No. 141) which provides for the terms and conditions under which repurchase may be effected by a homesteader except that it should be made within five years from the date of conveyance. That Act is silent as to the nature of expenses that should be reimbursed by a repurchasing homesteader or his heir. Resort may, however, be had to the general provisions of the Civil Code on the subject, particularly Article 1616 (formerly Article 1518), which provides: Art. 1616. The vendor cannot avail himself of the right of repurchase without returning to the vendee the price of the sale, and in addition: 1) The expenses of the contract, and any other ligitimate payments made by reason of the sale; 2) The necessary and useful expenses made on the thing sold. Under the above-quoted codal provision, the vendor a retro cannot avail himself of the right of repurchase without returning to the vendee the price of the sale, the expenses of the contract and other legitimate payments, and the necessary and useful expenses made on the thing sold. There can be no question but that the house which private respondent constructed is a useful expense, defined as that which increases the value or augments the income of the property, as contrasted to a necessary expense which is incurred for the preservation of the thing. 3
We agree that the provision of Article 1616 of the Civil Code, supra, on redemption, is, in general, the applicable law to a homesteader desirous to redeem his property. However, considering the purpose of the law on homesteads, which is to conserve ownership in the hands of the homesteader and his family Article 1616 of the Civil Code should be construed in conjunction with Articles 546 and 547 of the Civil Code prescribing the rules on refund of necessary and useful expenses, inasmuch as a vendee a retro is, as a rule, considered in good faith. Said Articles read thus: ART. 546. Necessary expenses shall be refunded to every possessor; but only the possessor in good faith may retain the thing until he has been reimbursed therefor. Useful expenses shall be refunded only to the possessor in good faith with the same right of retention, the person who has defeated him in the possession having the option of refunding the amount of the expenses or of paying the increase in value which the thing may have acquired by reason thereof. ART. 547. If the useful improvements can be removed without damage to the principal thing, the possessor in good faith may remove them unless the person who recovers the possession exercises the option under paragraph 2 of the preceding article. Applying Article 547, therefore, the homesteader desiring to repurchase should be given the option to require the vendee a retro to remove the useful improvements on the land subject of the sale a retro, which option is not granted the vendor a retro under Article 1616. Under the latter Article, the vendor a retro must pay for the useful improvements introduced by the vendee a retro, otherwise, the latter may retain possession of the property until reimbursement is made. 4 To allow a vendee a retro of a homestead, however, the right of retention until payment of useful expenses is made by the redemptioner would be to render nugatory the right of repurchase granted by law to a homesteader because all a vendee a retro can do to prevent repurchase is to build something on the homestead
beyond the capacity to pay of the homesteader who seeks to repurchase. Such a situation should not be allowed to pass. To the same effect was our ruling in Philippine National Bank v. Landeta 5 where we held that although the mortgagee-bank therein (after it had bought it at the foreclosure sale), had sold the homestead to a third party within the five-year period, the homesteader should be allowed to repurchase the mortgaged homestead from the bank and not from the third person for, otherwise, a vendee a retro could make "conveyance of the property for amounts beyond the capacity of said owner to pay. To recapitulate, it being obvious that petitioners are not exercising the option to refund the amount of the expenses incurred by private respondent for the house that the latter built, not to pay the increase in value acquired by the land by reason of such expenses as provided for in Article 546 of the Civil Code, private respondent, as the vendeea retro, may remove her house since this can be done without damage to the principal thing, as stipulated in Article 547 of the Civil Code. Petitioners should not, as opined by the trial Court, be made to refund the value of that house to private respondent, else, the salutary policy behind the Public Land Law would be thwarted and rendered meaningless. WHEREFORE, the judgment appealed from is modified by eliminating that portion requiring petitioners to pay private respondent the amount of P3,000.00 representing the value of the house constructed by her. Private respondent, however, is given the right to remove her house without damage to the land on which it is built. In all other respects, the judgment of the trial Court is affirmed. No costs. SO ORDERED.
11. Republic of the Philippines SUPREME COURT Manila EN BANC April 13, 1956 G.R. No. L-8257 JOSE R. CRUZ, plaintiff-appellant, vs. REYNALDO PAHATI, ET AL., defendants-appellees. Panganiban Law Offices and Arsenio Roldan for appellant. Carlos, Laurea, Fernando and Padilla for appellees. BAUTISTA ANGELO, J .:
This is an action of replevin instituted by plaintiff in the Court of Firts Instance of Manila to recover the possession of an automobile and certain amount as damages and attorney's fees resulting from his illegal deprivation thereof. The original defendants were Reynaldo Pahati and Felixberto Bulahan but, upon amendment of the complaint, Jesusito Belizo was included as party defendant who was summoned by publication because his whereabouts were not known. Belizo failed to appear or answer the complaint and so he was declared default. Pahati admitted having bought the automobile from Bulahan, for the sum of P4,900 which he paid in check. When the Manila Police Department impounded the automobile, he cancelled the sale and stopped the payment of the check and as a result he returned the automobile to Bulahan who in turned surrended the check for cancellation. He set up a counterclaim for the sum of P2,000 as attorney's fees. Bulahan on his part claims that he acquired the automobile from Jesusito Belizo for value and without having any knowledge of any defect in the title of the latter; that plaintiff had previously acquired title to said automobile by purchase from Belizo as evidenced by a deed of sale executed to that effect; that later plaintiff delivered the possession of the automobile to Belizo for resale and to facilitate it he gave the latter a letter of authority to secure a new certificate of registration in his name (plaintiff's) and that by having clothed Belizo with an apparent ownership or authority to sell the automobile, plaintiff is now estopped to deny such ownership or authority. Bulahan claims that between two innocent parties, he who gave occasion, through his conduct, to the falsification committed by Belizo, should be the one to suffer the loss and this one is the plaintiff. Bulahan also set up a counterclaim for P17,000 as damages and attorney's fees. After the presentation of the evidence, the court rendered judgment declaring defendant Bulahan entitled to the automobile in question and consequently ordered the plaintiff to return it to said defendant and, upon his failure to do so, to pay him the sum of P4,900, with legal interest from the date of the decision. The claim for damages and attorney's fees of Bulahan was denied. Defendant Belizo was however
ordered to indemnify the plaintiff in the amount of P4,900 and pay the sum of P5,000 as moral damages. The counterclaim of defendant Pahati was denied for lack of evidence. The case was taken directly to this Court by the plaintiff. The lower court found that the automobile in question was originally owned by the Nothern Motors, Inc. which later sold it to Chinaman Lu Dag. This Chinaman sold it afterwards to Jesusito Belizo and the latter in turn sold it to plaintiff. Belizo was then a dealer in second hand cars. One year thereafter, Belizo offered the plaintiff to sell the automobile for him claiming to have a buyer for it. Plaintiff agreed. At that time, plaintiff's certificate of registration was missing and, upon the suggestion of Belizo, plaintiff wrote a letter addressed to the Motor Section of the Bureau of Public Works for the issuance of a new registration certificate alleging as reason the loss of the one previously issued to him and stating that he was intending to sell his car. This letter was delivered to Belizo on March 3, 1952. He also turned over Belizo the automobile on the latter's pretext that he was going to show it to a prospective buyer. On March 7, 1952, the letter was falsified and converted into an authorized deed of sale in favor of Belizo by erasing a portion thereof and adding in its place the words "sold the above car to Mr. Jesusito Belizo of 25 Valencia, San Francisco del Monte, for Five Thousand Pesos (P5,000)." Armed with this deed of sale, Belizo succeeded in ontaining a certificate of registration in his name on the same date, March 7, 1952, and also on the same date, Belizo sold the car to Felixberto Bulahan who in turn sold it to Reynaldo Pahati, a second hand car dealer. These facts show that the letter was falsified by Belizo to enable him to sell the car to Bulahan for a valuable consideration. This is a case which involves a conflict of rights of two persons who claim to be the owners of the same property; plaintiff and defendant Bulahan. Both were found by the lower court to be innocent and to have acted in good faith. They were found to be the victims of Belizo who falsified the letter given him by plaintiff to enable him to sell the car of Bulahan for profit. Who has, therefore, a better right of the two over the car? The law applicable to the case is Article 559 of the new Civil Code which provides:
ART. 559. The possession of movable property acquired in good faith is equivalent to a title. Nevertheless, one who has lost any movable or has been unlawfully deprived thereof, may recover it from the person in possession of the same. If the possessor of a movable lost or of which the owner has been unlawfully deprived, has acquired it in good faith at a public sale, the owner cannot obtain its return without reimbursing the price paid therefor. It appears that "one who has lost any movable or has been unlawfully deprived thereof, may recover it from the person in possession of the same" and the only defense the latter may have is if he "has acquired it in good faith at a public sale" in which case "the owner cannot obtain its return without reimbursing the price paid therefor." And supplementing this provision, Article 1505 of the same Code provides that "where goods are sold by a person who is not the owner thereof, and who does not sell them under authority or with the consent of the owner, the buyer acquires no better title to the goods than the seller had, unless the owner of the goods is by his conduct precluded from denying the seller's authority to sell. Applying the above legal provisions to the facts of this case, one is inevitably led to the conclusion that plaintiff has a better right to the car in question than defendant Bulahan for it cannot be disputed that plaintiff had been illegally deprived thereof because of the ingenious scheme utilized by Belizo to enable him to dispose of it as if he were the owner thereof. Plaintiff therefore can still recover the possession of the car even if defendant Bulahan had acted in good faith in purchasing it from Belizo. Nor can it be pretended that the conduct of plaintiff in giving Belizo a letter to secure the issuance of a new certificate of registration constitutes a sufficient defense that would preclude recovery because of the undisputed fact that that letter was falsified and this fact can be clearly seen by a cursory examination of the document. If Bulahan had been more diligent he could have seen that the pertinent portion of the letter had been erased which would have placed him on guard to make an inquiry as regards the authority of Belizo to sell the car. This he failed to do.
The right of the plaintiff to the car in question can also be justified under the doctrine laid down in U. S. vs. Sotelo, 28 Phil., 147. This is a case of estafa wherein one Sotelo misappropriated a ring belonging to Alejandra Dormir. In the course of the decision, the Court said that "Whoever may have been deprived of his property in consequence of a crime is entitled to the recovery thereof, even if such property is in the possession of a third party who acquired it by legal means other than those expressly stated in Article 464 of the Civil Code" (p. 147), which refers to property pledged in the "Monte de Piedad", an establishment organized under the authority of the Government. The Court further said: It is a fundamental principle of our law of personal property that no man can be divested of it without his own consent; consequently, even an honest purchaser, under a defective title, cannot resist the claim of the true owner. The maxim that 'No man can transfer a better title than he has himself "obtain in the civil as well as in the common law." (p. 158). Counsel for appellee places much reliance on the common law principle that "Where one of two innocent parties must suffer by a fraud perpetrated by another, the law imposes the loss upon the party who, by his misplaced confidence, has enabled the fraud to be committed" (Sager vs. W. T. Rawleight Co. 153 Va. 514, 150 S. E. 244, 66 A.L.R. 305), and contends that, as between plaintiff and Bulahan, the former should bear the loss because of the confidence he reposed in Belizo which enabled the latter to commit the falsification. But this principle cannot be applied to this case which is coverred by an express provision of our new Civil Code. Between a common law principle and a statutory provision, the latter must undoubtedly prevail in this jurisdiction. Moreover we entertain serious doubt if, under the circumstances obtaining, Bulahan may be considered more innocent than the plaintiff in dealing with the car in question. We prefer not to elaborate on this matter it being necessary considering the conclusion we have reached. Wherefore, the decision appealed from is reversed. The Court declares plaintiff to be entitled to recover the car in question, and orders defendant Jesusito Belizo to pay him the sum of P5,000 as moral damages, plus P2,000 as attorney's fees. The Court absolves defendant Bulahan and Pahati from the complaint as regards the claim for
damages, reserving to Bulahan whatever action he may deem proper to take against Jesusito Belizo. No costs.
12. G.R. No. L-18536 March 31, 1965 JOSE B. AZNAR, plaintiff-appellant, vs. RAFAEL YAPDIANGCO, defendant-appellee; TEODORO SANTOS, intervenor-appellee. Florentino M. Guanlao for plaintiff-appellant. Rafael Yapdiangco in his own behalf as defendant-appellee. Lorenzo Sumulong, R. B. Hilao and B. S. Felipe for intervenor-appellee. REGALA, J .: This is an appeal, on purely legal questions, from a decision of the Court of First Instance of Quezon City, Branch IV, declaring the intervenor-appellee, Teodoro Santos, entitled to the possession of the car in dispute. The records before this Court disclose that sometime in May, 1959, Teodoro Santos advertised in two metropolitan papers the sale of his FORD FAIRLANE 500. In the afternoon of May 28, 1959, a certain L. De Dios, claiming to be a nephew of Vicente Marella, went to the Santos residence to answer the ad. However, Teodoro Santos was out during this call and only the latter's son, Irineo Santos, received and talked with De Dios. The latter told the young Santos that he had come in behalf of his uncle, Vicente Marella, who was interested to buy the advertised car. On being informed of the above, Teodoro Santos instructed his son to see the said Vicente Marella the following day at his given address: 1642 Crisostomo Street, Sampaloc, Manila. And so, in the morning of May 29, 1959, Irineo Santos went to the above address. At this meeting, Marella agreed to buy the car for P14,700.00 on the understanding that the price would be paid only after the car had been registered in his name. Irineo Santos then fetched his father who, together with L. De Dios, went to the office of a certain Atty. Jose Padolina where the deed of the sale for the car was executed in Marella's favor. The parties to the contract thereafter proceeded to the Motor Vehicles Office in Quezon City where the registration of the car in Marella's name was effected. Up to this stage of the transaction, the purchased price had not been paid. From the Motor Vehicles Office, Teodoro Santos returned to his house. He gave the registration papers and a copy of the deed of sale to his son, Irineo, and instructed him not to part with them until Marella shall have given the full payment for the car. Irineo Santos and L. De Dios then proceeded to 1642 Crisostomo Street, Sampaloc, Manila where the former demanded the payment from Vicente Marella. Marella said that the amount he had on hand then was short by some P2,000.00 and begged off to be allowed to secure the shortage from a sister supposedly living somewhere on
Azcarraga Street, also in Manila. Thereafter, he ordered L. De Dios to go to the said sister and suggested that Irineo Santos go with him. At the same time, he requested the registration papers and the deed of sale from Irineo Santos on the pretext that he would like to show them to his lawyer. Trusting the good faith of Marella, Irineo handed over the same to the latter and thereupon, in the company of L. De Dios and another unidentified person, proceeded to the alleged house of Marella's sister. At a place on Azcarraga, Irineo Santos and L. De Dios alighted from the car and entered a house while their unidentified companion remained in the car. Once inside, L. De Dios asked Irineo Santos to wait at the sala while he went inside a room. That was the last that Irineo saw of him. For, after a considerable length of time waiting in vain for De Dios to return, Irineo went down to discover that neither the car nor their unidentified companion was there anymore. Going back to the house, he inquired from a woman he saw for L. De Dios and he was told that no such name lived or was even known therein. Whereupon, Irineo Santos rushed to 1642 Crisostomo to see Marella. He found the house closed and Marella gone. Finally, he reported the matter to his father who promptly advised the police authorities. That very same day, or on the afternoon of May 29, 1959 Vicente Marella was able to sell the car in question to the plaintiff-appellant herein, Jose B. Aznar, for P15,000.00. Insofar as the above incidents are concerned, we are bound by the factual finding of the trial court that Jose B. Aznar acquired the said car from Vicente Marella in good faith, for a valuable consideration and without notice of the defect appertaining to the vendor's title. While the car in question was thus in the possession of Jose B. Aznar and while he was attending to its registration in his name, agents of the Philippine Constabulary seized and confiscated the same in consequence of the report to them by Teodoro Santos that the said car was unlawfully taken from him. In due time, Jose B. Aznar filed a complaint for replevin against Captain Rafael Yapdiangco, the head of the Philippine Constabulary unit which seized the car in question Claiming ownership of the vehicle, he prayed for its delivery to him. In the course of the litigation, however, Teodoro Santos moved and was allowed to intervene by the lower court. At the end of the trial, the lower court rendered a decision awarding the disputed motor vehicle to the intervenor-appellee, Teodoro Santos. In brief, it ruled that Teodoro Santos had been unlawfully deprived of his personal property by Vicente Marella, from whom the plaintiff-appellant traced his right. Consequently, although the plaintiff-appellant acquired the car in good faith and for a valuable consideration from Vicente Marella, the said decision concluded, still the intervenor-appellee was entitled to its recovery on the mandate of Article 559 of the New Civil Code which provides: ART. 559. The possession of movable property acquired in good faith is equivalent to title. Nevertheless, one who lost any movable or has been unlawfully deprived thereof, may recover it from the person in possession of the same. If the possessor of a movable lost or of which the owner has been unlawfully deprived, has acquired it in good faith at a public sale, the owner cannot obtain its return without reimbursing the price paid therefor. From this decision, Jose B. Aznar appeals.
The issue at bar is one and simple, to wit: Between Teodoro Santos and the plaintiff-appellant, Jose B. Aznar, who has a better right to the possession of the disputed automobile? We find for the intervenor-appellee, Teodoro Santos. The plaintiff-appellant accepts that the car in question originally belonged to and was owned by the intervenor-appellee, Teodoro Santos, and that the latter was unlawfully deprived of the same by Vicente Marella. However, the appellant contends that upon the facts of this case, the applicable provision of the Civil Code is Article 1506 and not Article 559 as was held by the decision under review. Article 1506 provides: ART. 1506. Where the seller of goods has a voidable title thereto, but his, title has not been voided at the time of the sale, the buyer acquires a good title to the goods, provided he buys them in good faith, for value, and without notice of the seller's defect of title. The contention is clearly unmeritorious. Under the aforequoted provision, it is essential that the seller should have a voidable title at least. It is very clearly inapplicable where, as in this case, the seller had no title at all. Vicente Marella did not have any title to the property under litigation because the same was never delivered to him. He sought ownership or acquisition of it by virtue of the contract. Vicente Marella could have acquired ownership or title to the subject matter thereof only by the delivery or tradition of the car to him. Under Article 712 of the Civil Code, "ownership and other real rights over property are acquired and transmitted by law, by donation, by testate and intestate succession, and in consequence of certain contracts, by tradition." As interpreted by this Court in a host of cases, by this provision, ownership is not transferred by contract merely but by tradition or delivery. Contracts only constitute titles or rights to the transfer or acquisition of ownership, while delivery or tradition is the mode of accomplishing the same (Gonzales v. Rojas, 16 Phil. 51; Ocejo, Perez and Co. v. International Bank, 37 Phil. 631, Fidelity and Deposit Co. v. Wilson, 8 Phil. 51; Kuenzle & Streiff v. Wacke & Chandler, 14 Phil. 610; Easton v. Diaz Co., 32 Phil. 180). For the legal acquisition and transfer of ownership and other property rights, the thing transferred must be delivered, inasmuch as, according to settled jurisprudence, the tradition of the thing is a necessary and indispensable requisite in the acquisition of said ownership by virtue of contract. (Walter Laston v. E. Diaz & Co. & the Provincial Sheriff of Albay, supra.) So long as property is not delivered, the ownership over it is not transferred by contract merely but by delivery. Contracts only constitute titles or rights to the transfer or acquisition of ownership, while delivery or tradition is the method of accomplishing the same, the title and the method of acquiring it being different in our law. (Gonzales v. Roxas, 16 Phil. 51) In the case on hand, the car in question was never delivered to the vendee by the vendor as to complete or consummate the transfer of ownership by virtue of the contract. It should be recalled that while there was indeed a contract of sale between Vicente Marella and Teodoro Santos, the former, as vendee, took possession of the subject matter thereof by stealing the same while it was in the custody of the latter's son.
There is no adequate evidence on record as to whether Irineo Santos voluntarily delivered the key to the car to the unidentified person who went with him and L. De Dios to the place on Azcarraga where a sister of Marella allegedly lived. But even if Irineo Santos did, it was not the delivery contemplated by Article 712 of the Civil Code. For then, it would be indisputable that he turned it over to the unidentified companion only so that he may drive Irineo Santos and De Dios to the said place on Azcarraga and not to vest the title to the said vehicle to him as agent of Vicente Marella. Article 712 above contemplates that the act be coupled with the intent of delivering the thing. (10 Manresa 132) The lower court was correct in applying Article 559 of the Civil Code to the case at bar, for under it, the rule is to the effect that if the owner has lost a thing, or if he has been unlawfully deprived of it, he has a right to recover it, not only from the finder, thief or robber, but also from third persons who may have acquired it in good faith from such finder, thief or robber. The said article establishes two exceptions to the general rule of irrevindicability, to wit, when the owner (1) has lost the thing, or (2) has been unlawfully deprived thereof. In these cases, the possessor cannot retain the thing as against the owner, who may recover it without paying any indemnity, except when the possessor acquired it in a public sale. (Del Rosario v. Lucena, 8 Phil. 535; Varela v. Finnick, 9 Phil. 482; Varela v. Matute, 9 Phil. 479; Arenas v. Raymundo, 19 Phil. 46. Tolentino, id., Vol. II, p. 261.) In the case of Cruz v. Pahati, et al., 52 O.G. 3053 this Court has already ruled that Under Article 559 of the new Civil Code, a person illegally deprived of any movable may recover it from the person in possession of the same and the only defense the latter may have is if he has acquired it in good faith at a public sale, in which case, the owner cannot obtain its return without reimbursing the price paid therefor. In the present case, plaintiff has been illegally deprived of his car through the ingenious scheme of defendant B to enable the latter to dispose of it as if he were the owner thereof. Plaintiff, therefore, can still recover possession of the car even if it is in the possession of a third party who had acquired it in good faith from defendant B. The maxim that "no man can transfer to another a better title than he had himself" obtains in the civil as well as in the common law. (U.S. v. Sotelo, 28 Phil. 147) Finally, the plaintiff-appellant here contends that inasmuch as it was the intervenor-appellee who had caused the fraud to be perpetrated by his misplaced confidence on Vicente Marella, he, the intervenor-appellee, should be made to suffer the consequences arising therefrom, following the equitable principle to that effect. Suffice it to say in this regard that the right of the owner to recover personal property acquired in good faith by another, is based on his being dispossessed without his consent. The common law principle that where one of two innocent persons must suffer by a fraud perpetrated by another, the law imposes the loss upon the party who, by his misplaced confidence, has enabled the fraud to be committed, cannot be applied in a case which is covered by an express provision of the new Civil Code, specifically Article 559. Between a common law principle and a statutory provision, the latter must prevail in this jurisdiction. (Cruz v. Pahati, supra) UPON ALL THE FOREGOING, the instant appeal is hereby dismissed and the decision of the lower court affirmed in full. Costs against the appellant.
13. G.R. No. L-20264 January 30, 1971 CONSUELO S. DE GARCIA and ANASTACIO GARCIA, petitioners, vs. HON. COURT OF APPEALS, ANGELINA D. GUEVARA and JUAN B. GUEVARA, respondents. Deogracias T. Reyes and Jose M. Luison for petitioners. Tolentino and Garcia and D.R. Cruz for private respondents.
FERNANDO, J .: This petition for certiorari to review a decision of respondent Court of Appeals was given due course because it was therein vigorously asserted that legal questions of gravity and of moment, there being allegations of an unwarranted departure from and a patent misreading of applicable and controlling decisions, called for determination by this Tribunal. The brief for petitioners-spouses, however, failed to substantiate such imputed failings of respondent Court. The performance did not live up to the promise. On the basis of the facts as duly found by respondent Court, which we are not at liberty to disregard, and the governing legal provisions, there is no basis for reversal. We affirm. The nature of the case presented before the lower court by private respondent Angelina D. Guevara, assisted by her spouse, Juan B. Guevara, as plaintiffs, was noted in the decision of respondent Court of Appeals thus: "Plaintiff seeks recovery of `one (1) lady's diamond ring 18 cts. white gold mounting, with one (1) 2.05 cts. diamond-solitaire, and four (4) brills 0.10 cts. total weight' which she bought on October 27, 1947 from R. Rebullida, Inc." 1 Then came a summary of now respondent Guevara of her evidence: "Plaintiff's evidence tends to show that around October 11, 1953 plaintiff while talking to Consuelo S. de Garcia, owner of La Bulakea restaurant recognized her ring in the finger of Mrs. Garcia and inquired where she bought it, which the defendant answered from her comadre. Plaintiff explained that that ring was stolen from her house in February, 1952. Defendant handed the ring to plaintiff and it fitted her finger. Two or three days later, at the request of plaintiff, plaintiff, her husband Lt. Col. Juan Guevara, Lt. Cementina of Pasay PD, defendant and her attorney proceeded to the store of Mr. Rebullida to whom they showed the ring in question. Mr. Rebullida a examined the ring with the aid of high power lens and after consulting the stock card thereon, concluded that it was the very ring that plaintiff bought from him in 1947. The ring was returned to defendant who despite a written request therefor failed to deliver the ring to plaintiff. Hence, this case. Later on when the sheriff tried to serve the writ of seizure (replevin), defendant refused to deliver the ring which had been examined by Mr. Rebullida, claiming it was lost." 2
How the defendant, Consuelo S. de Garcia, the present petitioner before us, along with her husband Anastacio Garcia, sought to meet plaintiff's claim was narrated thus: "On the other hand, defendant denied having made any admission before plaintiff or Mr. Rebullida or the sheriff. Her evidence tends to show that the ring (Exhibit 1) was purchased by her from Mrs. Miranda who got it from Miss Angelita Hinahon who in turn got it from the owner, Aling Petring, who was boarding in her house; that the ring she bought could be similar to, but not the same ring plaintiff purchased from Mr. Rebullida which was stolen; that according to a pawn-shop owner the big diamond on Exhibit 1 was before the trial never dismantled. When dismantled, defendant's diamond was found to weigh 2.57 cts." 3
Plaintiff lost in the lower court. She elevated the matter to respondent Court of Appeals with the judgment of the lower court being reversed. It is this decision now under review. These are the facts as found by respondent Court of Appeals: "That the ring brought by the parties for examination by Rafael Rebullida on December 14, 1953 was the same ring purchased by plaintiff from R. Rebullida, Inc. on October 27, 1947 and stolen in February, 1952 has been abundantly established by plaintiff's evidence. Before plaintiff lost the ring, she had been wearing it for six years and became familiar with it. Thus, when she saw the missing ring in the finger of defendant, she readily and definitely identified it. Her identification was confirmed by Mr. Rafael Rebullida, whose candid testimony is entitled to great weight, with his 30 years experience behind him in the jewelry business and being a disinterested witness since both parties are his customers. Indeed, defendant made no comment when in her presence Rebullida after examining the ring and stock card told plaintiff that that was her ring, nor did she answer plaintiff's letter of demand, ... asserting ownership. Further confirmation may be found in the extra-judicial admissions, contained in defendant's original and first amended answers ..." 4
These further facts likewise appeal therein: "The foregoing proof is not counter-balanced by the denial on the part of defendant or the presentation of the ring, Exhibit I, which has a diamond- solitaire 2.57 cts., or much heavier than the lost diamond weighing 2.05 cts. only. It is noteworthy that defendant gave a rather dubious source of her ring. Aling Petring from whom the ring supposedly came turned out to be a mysterious and ephemeral figure. Miss Hinahon did not even know her true and full name, nor her forwarding address. She appeared from nowhere, boarded three months in the house of Miss Hinahon long enough to sell her diamond ring, disappearing from the scene a week thereafter. Indeed, the case was terminated without any hearing on the third-party and fourth-party complaints, which would have shown up the falsity of defendant's theory. Moreover, Mrs. Baldomera Miranda, third-party defendant, who tried to corroborate defendant on the latter's alleged attempt to exchange the ring defendant bought through her, is [belied] by her judicial admission in her Answer that appellee `suggested that she would make alterations to the mounting and structural design of the ring to hide the true identity and appearance of the original one' (Cunanan vs. Amparo, 45 O.G. 3796). Finally, defendant is refuted by her own extra-judicial admissions ... although made by defendant's counsel. For an attorney who acts as counsel of record and is permitted to act such, has the authority to manage the cause, and this includes the authority to make admission for the purpose of the litigation... Her proffered explanation that her counsel misunderstood her is puerile because the liability to error as to the identity of the vendor and the exchange of the ring with another ring of the same value, was rather remote." 5
It is in the light of the above facts as well as the finding that the discrepancy as to the weight between the diamond-solitaire in Exhibit I and the lost diamond was due to defendant having "substituted a diamond-solitaire of plaintiff with a heavier stone" that the decision was rendered, respondent Court reversing the lower court and ordering defendant, now petitioner Consuelo S. de Garcia, to return plaintiff's ring or fact value of P1,000.00 and costs, as well as to pay plaintiff P1,000.00 as attorney's fee and P1,000.00 as exemplary damages. Hence this appeal. To repeat, there is no occasion to reverse respondent Court. It correctly applied the law to the facts as found. 1. The controlling provision is Article 559 of the Civil Code. It reads thus: "The possession of movable property acquired in good faith is equivalent to a title. Nevertheless, one who has lost any movable or has been unlawfully deprived thereof may recover it from the person in possession of the same. If the possessor of a movable lost of which the owner has been unlawfully deprived, has acquired it in good faith at a public sale, the owner cannot obtain its return without reimbursing the
price paid therefor." Respondent Angelina D. Guevara, having been unlawfully deprived of the diamond ring in question, was entitled to recover it from petitioner Consuelo S. de Garcia who was found in possession of the same. The only exception the law allows is when there is acquisition in good faith of the possessor at a public sale, in which case the owner cannot obtain its return without reimbursing the price. As authoritative interpreted in Cruz v. Pahati, 6 the right of the owner cannot be defeated even by proof that there was good faith by the acquisition by the possessor. There is a reiteration of this principle in Aznar v. Yapdiangco. 7 Thus: "Suffice it to say in this regard that the right of the owner to recover personal property acquired in good faith by another, is based on his being dispossessed without his consent. The common law principle that where one of two innocent persons must suffer by a fraud perpetrated by the another, the law imposes the loss upon the party who, by his misplaced confidence, has enabled the fraud to be committed, cannot be applied in a case which is covered by an express provision of the new Civil Code, specifically Article 559. Between a common law principle and statutory provision, the latter must prevail in this jurisdiction." 8
2. It is thus immediately apparent that there is no merit to the contention raised in the first assigned error that her possession in good faith, equivalent to title, sufficed to defeat respondent Guevara's claim. As the above cases demonstrate, even on that assumption the owner can recover the same once she can show illegal deprivation. Respondent Court of Appeals was so convinced from the evidence submitted that the owner of the ring in litigation is such respondent. That is a factual determination to which we must pay heed. Instead of proving any alleged departure from legal norms by respondent Court, petitioner would stress Article 541 of the Civil Code, which provides: 'A possessor in the concept of owner has in his favor the legal presumption that he possesses with a just title and he cannot be obliged to show or prove it." She would accord to it a greater legal significance than that to which under the controlling doctrines it is entitled.lwph1. t The brief for respondents did clearly point out why petitioner's assertion is lacking in support not only from the cases but even from commentators. Thus: "Actually, even under the first clause, possession in good faith does not really amount to title, for the reason that Art. 1132 of the Code provides for a period of acquisitive prescription for movables through `uninterrupted possession for four years in good faith' (Art. 1955 of the old Spanish Code, which provided a period of three years), so that many Spanish writers, including Manresa, Sanchez Roman, Scaevola, De Buen, and Ramos, assert that under Art. 464 of the Spanish Code (Art. 559 of the New Civil Code), the title of the possessor is not that of ownership, but is merely a presumptive title sufficient to serve as a basis of acquisitive prescription (II Tolentino, Civil Code of the Phil. p. 258: IV Manresa, Derecho Civil Espaol, 6th Ed., p. 380). And it is for the very reason that the title established by the first clause of Art. 559 is only a presumptive title sufficient to serve as a basis for acquisitive prescription, that the clause immediately following provides that `one who has lost any movable or has been unlawfully deprived thereof, may recover it from the person in possession of the same.' As stated by the Honorable Justice Jose B. L. Reyes of this Court in Sotto vs. Enage (C.A.), 43 Off. Gaz. 5075, Dec. 1947: `Article 559 in fact assumes that possessor is as yet not the owner; for it is obvious that where the possessor has come to acquire indefeasible title by, let us say, adverse possession for the necessary period, no proof of loss or illegal deprivation could avail the former owner of the chattel. He would no longer be entitled to recover it under any condition.' " 9
The second assigned error is centered on the alleged failure to prove the identity of the diamond ring. Clearly the question raised is one of the fact. What the Court of Appeals found is conclusive. Again, petitioner could not demonstrate that in reaching such a conclusion the Court of Appeals acted in an arbitrary manner. As made mention of in the brief for respondents two disinterested witnesses, Mr. Rafael Rebullida as well as Lt. Col. Reynaldo Cementina of the Pasay City Police Department, both of whom could not be accused of being biased in favor of respondent Angelina D. Guevara, did testify as to the identity of the ring.
The third assigned error of petitioners would find fault with respondent Court relying "on the weakness of the title or evidence" of petitioner Consuelo S. de Garcia. It is true, in the decision under review, mention was made of petitioner Consuelo S. de Garcia making no comment when in her presence Rebullida, after examining the ring the stock card, told respondent Angelina L. Guevara that that was her ring, nor did petitioner answer a letter of the latter asserting ownership. It was likewise stated in such decision that there were extra-judicial admissions in the original and first amended answers of petitioner. In the appraisal of her testimony, respondent Court likewise spoke of her giving a rather dubious source of her ring, the person from whom she allegedly bought it turning out "to be a mysterious and ephemeral figure." As a matter of fact, as set forth a few pages back, respondent Court did enumerate the flaws in the version given by petitioner. From the weakness of the testimony offered which, as thus made clear, petitioner, did not even seek to refute, she would raise the legal question that respondent Court relied on the "weakness of [her] title or evidence" rather than on the proof justifying respondent Angelina D. Guevara's claim of ownership. Petitioner here would ignore the finding of fact of respondent Court that such ownership on her part "has been abundantly established" by her evidence. Again here, in essence, the question raised is one of fact, and there is no justification for us to reverse respondent Court. The legal question raised in the fourth assignment of error is that the matter of the substitution of the diamond on the ring was a question raised for the first time on appeal as it was never put in issue by the pleadings nor the subject of reception of evidence by both parties and not touched upon in the decision of the lower court. Why no such question could be raised in the pleadings of respondent Angelina D. Guevara was clarified by the fact that the substitution came after it was brought for examination to Mr. Rebullida. After the knowledge of such substitution was gained, however, the issue was raised at the trial according to the said respondent resulting in that portion of the decision where the lower court reached a negative conclusion. As a result, in the motion for reconsideration, one of the points raised as to such decision being contrary to the evidence is the finding that there was no substitution. It is not necessary to state that respondent Court, exercising its appellate power reversed the lower court. What was held by it is controlling. What is clear is that there is no factual basis for the legal arguments on which the fourth assigned error is predicated. What is said takes care of the fifth assigned error that respondent Court was mistaken in its finding that there was such a substitution. Again petitioner would have us pass on a question of credibility which is left to respondent Court of Appeals. The sixth assigned error would complain against the reversal of the lower court judgment as well as petitioner Consuelo S. de Garcia being made to pay respondent Angelina D. Guevara exemplary damages, attorney's fees and costs. The reversal is called for in the light of the appraisal of the evidence of record as meticulously weighed by respondent Court. As to the attorney's fees and exemplary damages, this is what respondent Court said in the decision under review: "Likewise, plaintiff is entitled to recover reasonable attorney's fees in the sum of P1,000, it being just and equitable under the circumstances, and another P1,000 as exemplary damages for the public good to discourage litigants from resorting to fraudulent devices to frustrate the ends of justice, as defendant herein tried to substitute the ring, Exhibit 1, for plaintiff's ring." 10 Considering the circumstances, the cursory discussion of the sixth assigned error on the matter by petitioner fails to demonstrate that respondent Court's actuation is blemished by legal defects. WHEREFORE, the decision of respondent Court of Appeals of August 6, 1962 is hereby affirmed. With costs.
14. G.R. No. L-30817 September 29, 1972 DOMINADOR DIZON, doing business under the firm name "Pawnshop of Dominador Dizon", petitioner, vs. LOURDES G. SUNTAY, respondent. Andres T. Velarde for petitioner. Rafael G. Suntay for respondent.
FERNANDO, J .:p In essence there is nothing novel in this petition for review of a decision of the Court of Appeals affirming a lower court judgment sustaining the right of an owner of a diamond ring, respondent Lourdes G. Suntay, as against the claim of petitioner Dominador Dizon, who owns and operates a pawnshop. The diamond ring was turned over to a certain Clarita R. Sison, for sale on commission, along with other pieces of jewelry of respondent Suntay. It was then pledged to petitioner. Since what was done was violative of the terms of the agency, there was an attempt on her part to recover possession thereof from petitioner, who refused. She had to file an action then for its recovery. She was successful, as noted above, both in the lower court and thereafter in the Court of Appeals. She prevailed as she had in her favor the protection accorded by Article 559 of the Civil Code. 1 The matter was then elevated to us by petitioner. Ordinarily, our discretion would have been exercised against giving due course to such petition for review. The vigorous plea however, grounded on estoppel, by his counsel, Atty. Andres T. Velarde, persuaded us to act otherwise. After a careful perusal of the respective contentions of the parties, we fail to perceive any sufficient justification for a departure from the literal language of the applicable codal provision as uniformly interpreted by this Court in a number of decisions. The invocation of estoppel is therefore unavailing. We affirm. The statement of the case as well as the controlling facts may be found in the Court of Appeals decision penned by Justice Perez. Thus: "Plaintiff is the owner of a three-carat diamond ring valued at P5,500.00. On June 13, 1962, the plaintiff and Clarita R. Sison entered into a transaction wherein the plaintiff's ring was delivered to Clarita R. Sison for sale on commission. Upon receiving the ring, Clarita R. Sison executed and delivered to the plaintiff the receipt ... . The plaintiff had already previously known Clarita R. Sison as the latter is a close friend of the plaintiff's cousin and they had frequently met each other at the place of the plaintiff's said cousin. In fact, about one year before their transaction of June 13, 1962 took place, Clarita R. Sison received a piece of jewelry from the plaintiff to be sold for P500.00, and when it was sold, Clarita R. Sison gave the price to the plaintiff. After the lapse of a considerable time without Clarita R. Sison having returned to the plaintiff the latter's ring, the plaintiff made demands on Clarita R. Sison for the return of her ring but the latter could not comply with the demands because, without the knowledge of the plaintiff, on June 15, 1962 or three days after the ring above-mentioned was received by Clarita R. Sison from the plaintiff, said ring was pledged by Melia Sison, niece of the husband of Clarita R. Sison, evidently in connivance with the latter, with the defendant's pawnshop for P2,600.00 ... ." 2 Then came this portion of the decision under review: "Since the plaintiff insistently demanded from Clarita R. Sison the return of her ring, the latter finally delivered to the former the pawnshop ticket ... which is the receipt of the pledge with the defendant's pawnshop of the plaintiff's ring. When the plaintiff found out that Clarita R. Sison pledged, she took steps to file a case of estafa against the latter with the fiscal's office. Subsequently thereafter, the plaintiff, through her lawyer, wrote a letter ... dated September 22, 1962, to the defendant
asking for the delivery to the plaintiff of her ring pledged with defendant's pawnshop under pawnshop receipt serial-B No. 65606, dated June 15, 1962 ... . Since the defendant refused to return the ring, the plaintiff filed the present action with the Court of First Instance of Manila for the recovery of said ring, with P500.00 as attorney's fees and costs. The plaintiff asked for the provisional remedy of replevin by the delivery of the ring to her, upon her filing the requisite bond, pending the final determination of the action. The lower court issued the writ of replevin prayed for by plaintiff and the latter was able to take possession of the ring during the pendency of the action upon her filing the requisite bond." 3 It was then noted that the lower court rendered judgment declaring that plaintiff, now respondent Suntay, had the right to the possession of the ring in question. Petitioner Dizon, as defendant, sought to have the judgment reversed by the Court of Appeals. It did him no good. The decision of May 19, 1969, now on review, affirmed the decision of the lower court. In the light of the facts as thus found by the Court of Appeals, well-nigh conclusive on use, with the applicable law being what it is, this petition for review cannot prosper. To repeat, the decision of the Court of Appeals stands. 1. There is a fairly recent restatement of the force and effect of the governing codal norm in De Gracia v. Court of Appeals. 4 Thus: "The controlling provision is Article 559 of the Civil Code. It reads thus: 'The possession of movable property acquired in good faith is equivalent to a title. Nevertheless, one who has lost any movable or has been unlawfully deprived thereof may recover it from the person in possession of the same. If the possessor of a movable lost of which the owner has been unlawfully deprived, has acquired it in good faith at a public sale, the owner cannot obtain its return without reimbursing the price paid therefor.' Respondent Angelina D. Guevara, having been unlawfully deprived of the diamond ring in question, was entitled to recover it from petitioner Consuelo S. de Garcia who was found in possession of the same. The only exception the law allows is when there is acquisition in good faith of the possessor at a public sale, in which case the owner cannot obtain its return without reimbursing the price. As authoritatively interpreted in Cruz v. Pahati, the right of the owner cannot be defeated even by proof that there was good faith in the acquisition by the possessor. There is a reiteration of this principle in Aznar v. Yapdiangco. Thus: 'Suffice it to say in this regard that the right of the owner to recover personal property acquired in good faith by another, is based on his being dispossessed without his consent. The common law principle that were one of two innocent persons must suffer by a fraud perpetrated by another, the law imposes the loss upon the party who, by his misplaced confidence, has enabled the fraud to be committed, cannot be applied in a case which is covered by an express provision of the new Civil Code, specifically Article 559. Between a common law principle and a statutory provision, the latter must prevail in this jurisdiction." " 5
2. It must have been a recognition of the compulsion exerted by the above authoritative precedents that must have caused petitioner to invoke the principle of estoppel. There is clearly a misapprehension. Such a contention is devoid of any persuasive force. Estoppel as known to the Rules of Court 6 and prior to that to the Court of Civil Procedure, 7 has its roots in equity. Good faith is its basis. 8 It is a response to the demands of moral right and natural justice. 9 For estoppel to exist though, it is indispensable that there be a declaration, act or omission by the party who is sought to be bound. Nor is this all. It is equally a requisite that he, who would claim the benefits of such a principle, must have altered his position, having been so intentionally and deliberately led to comport himself thus, by what was declared or what was done or failed to be done. If thereafter a litigation arises, the former would not be allowed to disown such act, declaration or omission. The principle comes into full play. It may successfully be relied upon. A court is to see to it then that there is no turning back on one's word or a repudiation of one's act. So it has been from our earliest decisions. As Justice Mapa pointed out in the first case, a 1905 decision, Rodriguez v. Martinez, 10 a party should not be permitted "to go against his own acts to the prejudice of [another]. Such a holding would be contrary to the most rudimentary principles of justice and law." 11 He is not, in the language of Justice Torres, in Irlanda v. Pitargue, 12 promulgated in 1912, "allowed to gainsay [his] own acts or deny rights which [he had]
previously recognized." 13 Some of the later cases are to the effect that an unqualified and unconditional acceptance of an agreement forecloses a claim for interest not therein provided. 14 Equally so the circumstance that about a month after the date of the conveyance, one of the parties informed the other of his being a minor, according to Chief Justice Paras, "is of no moment, because [the former's] previous misrepresentation had already estopped him from disavowing the contract. 15 It is easily understandable why, under the circumstances disclosed, estoppel is a frail reed to hang on to. There was clearly the absence of an act or omission, as a result of which a position had been assumed by petitioner, who if such elements were not lacking, could not thereafter in law be prejudiced by his belief in what had been misrepresented to him. 16 As was put by Justice Labrador, "a person claimed to be estopped must have knowledge of the fact that his voluntary acts would deprive him of some rights because said voluntary acts are inconsistent with said rights." 17 To recapitulate, there is this pronouncement not so long ago, from the pen of Justice Makalintal, who reaffirmed that estoppel "has its origin in equity and, being based on moral right and natural justice, finds applicability wherever and whenever the special circumstances of a case so demand." 18
How then can petitioner in all seriousness assert that his appeal finds support in the doctrine of estoppel? Neither the promptings of equity nor the mandates of moral right and natural justice come to his rescue. He is engaged in a business where presumably ordinary prudence would manifest itself to ascertain whether or not an individual who is offering a jewelry by way of a pledge is entitled to do so. If no such care be taken, perhaps because of the difficulty of resisting opportunity for profit, he should be the last to complain if thereafter the right of the true owner of such jewelry should be recognized. The law for this sound reason accords the latter protection. So it has always been since Varela v. Finnick, 19 a 1907 decision. According to Justice Torres: "In the present case not only has the ownership and the origin of the jewels misappropriated been unquestionably proven but also that the accused, acting fraudulently and in bad faith, disposed of them and pledged them contrary to agreement, with no right of ownership, and to the prejudice of the injured party, who was thereby illegally deprived of said jewels; therefore, in accordance with the provisions of article 464, the owner has an absolute right to recover the jewels from the possession of whosoever holds them, ... ." 20 There have been many other decisions to the same effect since then. At least nine may be cited. 21 Nor could any other outcome be expected, considering the civil code provisions both in the former Spanish legislation 22 and in the present Code. 23 Petitioner ought to have been on his guard before accepting the pledge in question. Evidently there was no such precaution availed of. He therefore, has only himself to blame for the fix he is now in. It would be to stretch the concept of estoppel to the breaking point if his contention were to prevail. Moreover, there should have been a realization on his part that courts are not likely to be impressed with a cry of distress emanating from one who is in a business authorized to impose a higher rate of interest precisely due to the greater risk assumed by him. A predicament of this nature then does not suffice to call for less than undeviating adherence to the literal terms of a codal provision. Moreover, while the activity he is engaged in is no doubt legal, it is not to be lost sight of that it thrives on taking advantage of the necessities precisely of that element of our population whose lives are blighted by extreme poverty. From whatever angle the question is viewed then, estoppel certainly cannot be justly invoked. WHEREFORE, the decision of the Court of Appeals of May 19, 1969 is affirmed, with costs against petitioner.
15. G.R. No. 80298 April 26, 1990 EDCA PUBLISHING & DISTRIBUTING CORP., petitioner, vs. THE SPOUSES LEONOR and GERARDO SANTOS, doing business under the name and style of "SANTOS BOOKSTORE," and THE COURT OF APPEALS, respondents.
Emiliano S. Samson, R. Balderrama-Samson, Mary Anne B. Samson for petitioner. Cendana Santos, Delmundo & Cendana for private respondents.
CRUZ, J .: The case before us calls for the interpretation of Article 559 of the Civil Code and raises the particular question of when a person may be deemed to have been "unlawfully deprived" of movable property in the hands of another. The article runs in full as follows: Art. 559. The possession of movable property acquired in good faith is equivalent to a title. Nevertheless, one who has lost any movable or has been unlawfully deprived thereof, may recover it from the person in possession of the same. If the possessor of a movable lost or of which the owner has been unlawfully deprived has acquired it in good faith at a public sale, the owner cannot obtain its return without reimbursing the price paid therefor. The movable property in this case consists of books, which were bought from the petitioner by an impostor who sold it to the private respondents. Ownership of the books was recognized in the private respondents by the Municipal Trial Court, 1 which was sustained by the Regional Trial Court, 2 which was in turn sustained by the Court of Appeals. 3 The petitioner asks us to declare that all these courts have erred and should be reversed. This case arose when on October 5, 1981, a person identifying himself as Professor Jose Cruz placed an order by telephone with the petitioner company for 406 books, payable on delivery. 4 EDCA prepared the corresponding invoice and delivered the books as ordered, for which Cruz issued a personal check covering the purchase price of P8,995.65. 5 On October 7, 1981, Cruz sold 120 of the books to private respondent Leonor Santos who, after verifying the seller's ownership from the invoice he showed her, paid him P1,700.00. 6
Meanwhile, EDCA having become suspicious over a second order placed by Cruz even before clearing of his first check, made inquiries with the De la Salle College where he had claimed to be a dean and was informed that there was no such person in its employ. Further verification revealed that Cruz had no more account or deposit with the Philippine Amanah Bank, against which he had drawn the payment check. 7 EDCA then went to the police, which set a trap and arrested Cruz on October 7, 1981. Investigation disclosed his real name as Tomas de la Pea and his sale of 120 of the books he had ordered from EDCA to the private respondents. 8
On the night of the same date, EDCA sought the assistance of the police in Precinct 5 at the UN Avenue, which forced their way into the store of the private respondents and threatened Leonor Santos with prosecution for buying stolen property. They seized the 120 books without warrant, loading them in a van belonging to EDCA, and thereafter turned them over to the petitioner. 9
Protesting this high-handed action, the private respondents sued for recovery of the books after demand for their return was rejected by EDCA. A writ of preliminary attachment was issued and the petitioner, after initial refusal, finally surrendered the books to the private respondents. 10 As
previously stated, the petitioner was successively rebuffed in the three courts below and now hopes to secure relief from us. To begin with, the Court expresses its disapproval of the arbitrary action of the petitioner in taking the law into its own hands and forcibly recovering the disputed books from the private respondents. The circumstance that it did so with the assistance of the police, which should have been the first to uphold legal and peaceful processes, has compounded the wrong even more deplorably. Questions like the one at bar are decided not by policemen but by judges and with the use not of brute force but of lawful writs. Now to the merits It is the contention of the petitioner that the private respondents have not established their ownership of the disputed books because they have not even produced a receipt to prove they had bought the stock. This is unacceptable. Precisely, the first sentence of Article 559 provides that "the possession of movable property acquired in good faith is equivalent to a title," thus dispensing with further proof. The argument that the private respondents did not acquire the books in good faith has been dismissed by the lower courts, and we agree. Leonor Santos first ascertained the ownership of the books from the EDCA invoice showing that they had been sold to Cruz, who said he was selling them for a discount because he was in financial need. Private respondents are in the business of buying and selling books and often deal with hard-up sellers who urgently have to part with their books at reduced prices. To Leonor Santos, Cruz must have been only one of the many such sellers she was accustomed to dealing with. It is hardly bad faith for any one in the business of buying and selling books to buy them at a discount and resell them for a profit. But the real issue here is whether the petitioner has been unlawfully deprived of the books because the check issued by the impostor in payment therefor was dishonored. In its extended memorandum, EDCA cites numerous cases holding that the owner who has been unlawfully deprived of personal property is entitled to its recovery except only where the property was purchased at a public sale, in which event its return is subject to reimbursement of the purchase price. The petitioner is begging the question. It is putting the cart before the horse. Unlike in the cases invoked, it has yet to be established in the case at bar that EDCA has been unlawfully deprived of the books. The petitioner argues that it was, because the impostor acquired no title to the books that he could have validly transferred to the private respondents. Its reason is that as the payment check bounced for lack of funds, there was a failure of consideration that nullified the contract of sale between it and Cruz. The contract of sale is consensual and is perfected once agreement is reached between the parties on the subject matter and the consideration. According to the Civil Code: Art. 1475. The contract of sale is perfected at the moment there is a meeting of minds upon the thing which is the object of the contract and upon the price. From that moment, the parties may reciprocally demand performance, subject to the provisions of the law governing the form of contracts.
xxx xxx xxx Art. 1477. The ownership of the thing sold shall be transferred to the vendee upon the actual or constructive delivery thereof. Art. 1478. The parties may stipulate that ownership in the thing shall not pass to the purchaser until he has fully paid the price. It is clear from the above provisions, particularly the last one quoted, that ownership in the thing sold shall not pass to the buyer until full payment of the purchase only if there is a stipulation to that effect. Otherwise, the rule is that such ownership shall pass from the vendor to the vendee upon the actual or constructive delivery of the thing soldeven if the purchase price has not yet been paid. Non-payment only creates a right to demand payment or to rescind the contract, or to criminal prosecution in the case of bouncing checks. But absent the stipulation above noted, delivery of the thing sold will effectively transfer ownership to the buyer who can in turn transfer it to another. In Asiatic Commercial Corporation v. Ang, 11 the plaintiff sold some cosmetics to Francisco Ang, who in turn sold them to Tan Sit Bin. Asiatic not having been paid by Ang, it sued for the recovery of the articles from Tan, who claimed he had validly bought them from Ang, paying for the same in cash. Finding that there was no conspiracy between Tan and Ang to deceive Asiatic the Court of Appeals declared: Yet the defendant invoked Article 464 12 of the Civil Code providing, among other things that "one who has been unlawfully deprived of personal property may recover it from any person possessing it." We do not believe that the plaintiff has been unlawfully deprived of the cartons of Gloco Tonic within the scope of this legal provision. It has voluntarily parted with them pursuant to a contract of purchase and sale. The circumstance that the price was not subsequently paid did not render illegal a transaction which was valid and legal at the beginning. In Tagatac v. Jimenez, 13 the plaintiff sold her car to Feist, who sold it to Sanchez, who sold it to Jimenez. When the payment check issued to Tagatac by Feist was dishonored, the plaintiff sued to recover the vehicle from Jimenez on the ground that she had been unlawfully deprived of it by reason of Feist's deception. In ruling for Jimenez, the Court of Appeals held: The point of inquiry is whether plaintiff-appellant Trinidad C. Tagatac has been unlawfully deprived of her car. At first blush, it would seem that she was unlawfully deprived thereof, considering that she was induced to part with it by reason of the chicanery practiced on her by Warner L. Feist. Certainly, swindling, like robbery, is an illegal method of deprivation of property. In a manner of speaking, plaintiff- appellant was "illegally deprived" of her car, for the way by which Warner L. Feist induced her to part with it is illegal and is punished by law. But does this "unlawful deprivation" come within the scope of Article 559 of the New Civil Code? xxx xxx xxx . . . The fraud and deceit practiced by Warner L. Feist earmarks this sale as a voidable contract (Article 1390 N.C.C.). Being a voidable contract, it is susceptible of either ratification or annulment. If the contract is ratified, the action to annul it is extinguished (Article 1392, N.C.C.) and the contract is cleansed from all its defects (Article 1396, N.C.C.); if the contract is annulled, the contracting parties are restored
to their respective situations before the contract and mutual restitution follows as a consequence (Article 1398, N.C.C.). However, as long as no action is taken by the party entitled, either that of annulment or of ratification, the contract of sale remains valid and binding. When plaintiff- appellant Trinidad C. Tagatac delivered the car to Feist by virtue of said voidable contract of sale, the title to the car passed to Feist. Of course, the title that Feist acquired was defective and voidable. Nevertheless, at the time he sold the car to Felix Sanchez, his title thereto had not been avoided and he therefore conferred a good title on the latter, provided he bought the car in good faith, for value and without notice of the defect in Feist's title (Article 1506, N.C.C.). There being no proof on record that Felix Sanchez acted in bad faith, it is safe to assume that he acted in good faith. The above rulings are sound doctrine and reflect our own interpretation of Article 559 as applied to the case before us. Actual delivery of the books having been made, Cruz acquired ownership over the books which he could then validly transfer to the private respondents. The fact that he had not yet paid for them to EDCA was a matter between him and EDCA and did not impair the title acquired by the private respondents to the books. One may well imagine the adverse consequences if the phrase "unlawfully deprived" were to be interpreted in the manner suggested by the petitioner. A person relying on the seller's title who buys a movable property from him would have to surrender it to another person claiming to be the original owner who had not yet been paid the purchase price therefor. The buyer in the second sale would be left holding the bag, so to speak, and would be compelled to return the thing bought by him in good faith without even the right to reimbursement of the amount he had paid for it. It bears repeating that in the case before us, Leonor Santos took care to ascertain first that the books belonged to Cruz before she agreed to purchase them. The EDCA invoice Cruz showed her assured her that the books had been paid for on delivery. By contrast, EDCA was less than cautious in fact, too trusting in dealing with the impostor. Although it had never transacted with him before, it readily delivered the books he had ordered (by telephone) and as readily accepted his personal check in payment. It did not verify his identity although it was easy enough to do this. It did not wait to clear the check of this unknown drawer. Worse, it indicated in the sales invoice issued to him, by the printed terms thereon, that the books had been paid for on delivery, thereby vesting ownership in the buyer. Surely, the private respondent did not have to go beyond that invoice to satisfy herself that the books being offered for sale by Cruz belonged to him; yet she did. Although the title of Cruz was presumed under Article 559 by his mere possession of the books, these being movable property, Leonor Santos nevertheless demanded more proof before deciding to buy them. It would certainly be unfair now to make the private respondents bear the prejudice sustained by EDCA as a result of its own negligence. We cannot see the justice in transferring EDCA's loss to the Santoses who had acted in good faith, and with proper care, when they bought the books from Cruz. While we sympathize with the petitioner for its plight, it is clear that its remedy is not against the private respondents but against Tomas de la Pea, who has apparently caused all this trouble. The private respondents have themselves been unduly inconvenienced, and for merely transacting a
customary deal not really unusual in their kind of business. It is they and not EDCA who have a right to complain. WHEREFORE, the challenged decision is AFFIRMED and the petition is DENIED, with costs against the petitioner.
16. RHODORA M. LEDESMA, petitioner, vs. COURT OF APPEALS and HON. MAXIMIANO C. ASUNCION, in his capacity as Presiding Judge of RTC, Quezon City, respondents. D E C I S I O N PANGANIBAN, J .: When confronted with a motion to withdraw an information on the ground of lack of probable cause based on a resolution of the secretary of justice, the bounden duty of the trial court is to make an independent assessment of the merits of such motion. Having acquired jurisdiction over the case, the trial court is not bound by such resolution but is required to evaluate it before proceeding further with the trial. While the secretarys ruling is persuasive, it is not binding on courts. A trial court, however, commits reversible error or even grave abuse of discretion if it refuses/neglects to evaluate such recommendation and simply insists on proceeding with the trial on the mere pretext of having already acquired jurisdiction over the criminal action. This principle is explained in this Decision resolving a petition for review on certiorari of the Decision [1] of the Court of Appeals, [2] promulgated on September 14, 1993 in CA-G.R. SP No. 30832 which in effect affirmed an order of the Regional Trial Court of Quezon City denying the prosecutions withdrawal of a criminal information against petitioner. The Antecedent Facts From the pleadings submitted in this case, the undisputed facts are as follows: Sometime in April 1992, a complaint for libel was filed by Dr. Juan F. Torres, Jr. against Dr. Rhodora M. Ledesma, petitioner herein, before the Quezon City
Prosecutors Office, docketed as I.S. No. 92-5433A. Petitioner filed her counter- affidavit to the complaint. Finding sufficient legal and factual basis, the Quezon City Prosecutors Office filed on July 6, 1992 an Information for libel against petitioner with the Regional Trial Court of Quezon City, Branch 104. [3] The Information filed by Assistant City Prosecutor Augustine A. Vestil reads: [4]
That on or about the 27th day of June 1991, in Quezon City, Metro Manila, Philippines, the said accused, acting with malice, did, then and there, wilfully, unlawfully and feloniously send a letter addressed to Dr. Esperanza I. Cabral, Director of Philippine Heart Center, East Avenue, this city, and furnished the same to other officers of the said hospital, said letter containing slanderous and defamatory remarks against DR. JUAN F. TORRES, JR., which states in part, to wit: 27June 1991 Dr. Esperanza I. Cabral Director Subject: Return of all professional fees due Dr. Rhodora M. Ledesma, Nuclear Medicine Specialist/Consultant, Philippine Heart Center, from January 31, 1989 to January 31, 1991. Respondents: Dr. Juan F. Torres, Jr., Chief, Nuclear Medicine Section Dr. Orestes P. Monzon, Staff Consultant Dear Dr. Cabral, This is to demand the return of all professional fees due me as a consultant in Nuclear Medicine, this Center, since January 31, 1989 until my resignation effective January 31, 1991, amounting to at least P100,000.00 for the year 1990 alone. Records in the Nuclear Medicine Section will show that from January 1989 to January 1991, a total of 2,308 patients were seen. Of these, I had officially supervised, processed, and interpreted approximately a total of 1,551 cases as against approximately 684 and 73 cases done by Dr. Monzon and Dr. Torres respectively.
Until my resignation I had received a monthly share of professional fees averaging P1,116.90/month supposedly representing 20% of the total monthly professional fees. The rest were divided equally between Dr. Monzon and Dr. Torres. There was never any agreement between us three consultants that this should be the arrangement and I am certain that this was not with your approval. The burden of unfairness would have been lesser if there was an equal distribution of labor and the schedule of duties were strictly followed. As it was, the schedule of duties submitted monthly to the office of the Asst. Director for Medical Services was simply a dummy to comply with administrative requirements rather than a guideline for strict compliance. Both consultants have complete daily time records even if they did not come regularly. Dr. Torres came for an hour every week, Dr. Monzon came sporadically during the week while I was left with everything from training the residents and supervising the Techs to processing and interpreting the results on a regular basis. I had a part time appointment just like Dr. Monzon and Dr. Torres. In the interest of fairness and to set a precedent for the protection of future PHC Nuclear Medicine Alumni I am calling your attention to the unfair and inhuman conditions I went through as a Consultant in that Section. I trust that your sense of professionalism will put a stop to this corruption. I suggest that a committee be formed to make an audit of the distribution of professional fees in this Section. At this point, let me stress that since professional fees vary according to the type of procedure done and since there was no equity of labor between us I am not settling for an equal percentage share. I demand that I be indemnified of all professional fees due me on a case to case basis. Let me make clear my intention of pursuing this matter legally should there be no favorable action in my behalf. Let me state at this point6 that the actions of Dr. Torres and Dr. Monzon are both unprofessional and unbecoming and are clearly violating the code of ethics of the medical profession and the Philippine Civil Service Rules and Regulations related to graft and corruption. Thank you. and other words of similar import, when in truth and in fact, as the accused very well knew, the same are entirely false and untrue but were publicly made for no other purpose than to expose said DR. JUAN F. TORRES, JR. to public ridicule, thereby casting dishonor, discredit and contempt upon the person of the said offended party, to his damage and prejudice.
A petition for review of the resolution of Assistant City Prosecutor Vestil was filed by petitioner before the Department of Justice pursuant to P.D. No. 77 as amended by P.D. No. 911. The Department of Justice gave due course to the petition and directed the Quezon City prosecutor to move for deferment of further proceedings and to elevate the entire records of the case. [5] Accordingly, a Motion to Defer Arraignment dated September 7, 1992 was filed by Prosecutor Tirso M. Gavero before the court a quo. [6] On September 9, 1992, the trial court granted the motion and deferred petitioners arraignment until the final termination of the petition for review. [7]
Without the consent or approval of the trial prosecutor, private complainant, through counsel, filed a Motion to Lift the Order dated September 9, 1992 and to Set the Case for Arraignment/Trial. [8]
On January 8, 1993, the trial court issued an Order setting aside its earlier Order of September 9, 1992 and scheduling petitioners arraignment on January 18, 1993 at two oclock in the afternoon. [9]
In a resolution dated January 27, 1993, then Justice Secretary Franklin M. Drilon reversed the Quezon City investigating prosecutor. Pertinent portions of Drilons ruling read: [10]
From the circumstances obtaining, the subject letter was written to bring to the attention of the Director of the Philippine Heart Center for Asia and other responsible authorities the unjust and unfair treatment that Dr. Ledesma was getting from complainants. Since complainants and respondent are government employees, and the subject letter is a complaint to higher authorities of the PHCA on a subject matter in which respondent has an interest and in reference to which she has a duty to question the same is definitely privileged (US vs. Bustos, 37 Phil. 131). Moreover, in Ang vs. Castro, 136 SCRA 455, the Supreme Court, citing Santiago vs. Calvo, 48 Phil. 922, ruled that A communication made in good faith upon any subject matter in which the party making the communication has an interest or concerning which he has a duty is privileged... although it contains incriminatory or derogatory matter which, without the privilege, would be libelous and actionable. The follow-up letter sent by respondent to the director of the PHCA, is a direct evidence of respondents righteous disposition of following the rule of law and is a clear indication that her purpose was to seek relief from the proper higher authority who is the Director of PHCA.
The same interpretation should be accorded the civil and administrative complaints which respondent filed against complainants. They are mere manifestations of her earnest desire to pursue proper relief for the alleged injustice she got from complainants. If she was motivated by malice and ill-will in sending the subject communication to the Director of the PHCA, she would not have sent the second letter and filed the administrative and civil cases against complainants. Moreover, it is unbelievable that it took complainants one year to realize that the questioned letter subjected them to public and malicious imputation of a vice or omission. It is beyond the ordinary course of human conduct for complainants to start feeling the effects of the alleged libelous letter - that of experiencing sleepless nights, wounded feelings, serious anxiety, moral shock and besmirched reputation - one year after they read the communication in question. The claim that the case of Crespo vs. Mogul, 151 SCRA 462 is applicable to the instant case is unfounded. In the first place, the instant cases are not being reinvestigated. It is the resolutions of the investigating prosecutor that are under review. Further, the record shows that the court has issued an order suspending the proceedings pending the resolutions of the petitions for review by this Office. In the issuance of its order, the court recognizes that the Secretary of Justice has the power and authority to review the resolutions of prosecutors who are under his control and supervision. In view of the foregoing, the appealed resolutions are hereby reversed. You are directed to withdraw the Informations which you filed in Court. Inform this Office of the action taken within ten (10) days from receipt hereof. In obedience to the above directive, Quezon City Trial Prosecutor Tirso M. Gavero filed a Motion to Withdraw Information dated February 17,1993, [11] attaching thereto the resolution of Secretary Drilon. The trial judge denied this motion in his Order dated February 22, 1993, as follows: [12]
The motion of the trial prosecutor to withdraw the information in the above-entitled case is denied. Instead, the trial prosecutor of this court is hereby directed to prosecute the case following the guidelines and doctrine laid down by the Supreme Court in the case of Crespo vs. Mogul, 151 SCRA 462. Petitioners motion for reconsideration [13] was denied by the trial judge in the Order dated March 5, 1993, as follows: [14]
Finding no cogent reason to justify the reconsideration of the ruling of this Court dated February 22, 1993, the Motion for Reconsideration dated March 1, 1993 filed by the accused through counsel is hereby denied. Aggrieved, petitioner filed a petition for certiorari and prohibition with the Supreme Court. In a Resolution dated March 31, 1993, this Court referred the case to the Court of Appeals for proper determination and disposition pursuant to Section 9, paragraph 1 of B.P. 129. [15]
Respondent Court dismissed the petition for lack of merit, holding that it had no jurisdiction to overturn the doctrine laid down inCrespo vs. Mogul -- once a complaint or information has been filed in court, any disposition of the case, i.e., dismissal, conviction or acquittal of the accused, rests on the sound discretion of the trial court. [16]
Hence, this recourse to this Court. The Issues For unexplained reasons, petitioner failed to make an assignment of errors against the appellate court. Her counsel merely repeated the alleged errors of the trial court: [17]
I. The Orders, dated February 22, 1993 and March 5, 1993, of respondent Judge Asuncion relied solely on the Crespo vs. Mogul (151 SCRA 462) decision. It is respectfully submitted that said case is not applicable because: 1. It infringes on the constitutional separation of powers between the executive and judicial branches of the government; 2. It constitutes or it may lead to misuse or misapplication of judicial power as defined in the Constitution; 3. It goes against the constitutional proscription that rules of procedure should not diminish substantive rights; 4. It goes against the principle of non-delegation of powers; 5. It sets aside or disregards substantive and procedural rules; 6. It deprives a person of his constitutional right to procedural due process;
7. Its application may constitute or lead to denial of equal protection of laws; 8. It deprives the secretary of justice or the president of the power to control or review the acts of a subordinate official; 9. It will lead to, encourage, abet or promote abuse or even corruption among the ranks of investigating fiscals; 10. It does not subserve the purposes of a preliminary investigation because - (10.a) It subjects a person to the burdens of an unnecessary trial, specially in cases where the investigating fiscal recommends no bail for the accused; (10.b) It subjects the government, both the executive and the judiciary, to unnecessary time and expenses attendant to an unnecessary trial; (10.c) It contributes to the clogging of judicial dockets; and 11. It has no statutory or procedural basis or precedent. II. On the assumption that Crespo vs. Mogul is applicable, it is submitted that - 1. Respondent Judge Asuncion committed grave abuse of discretion, amounting to lack of jurisdiction, when he denied the Motion to Withdraw Information since he had already deferred to, if not recognized, the authority of the Secretary of Justice; and 2. The facts in Crespo vs. Mogul are different from the instant case. Hence, respondent Judge Asuncion committed grave abuse of discretion, amounting to lack of jurisdiction, when he relied solely on said case in denying the Motion to Withdraw Information. In sum, the main issue in this petition is: Did Respondent Court commit any reversible error in affirming the trial courts denial of the prosecutions Motion to Withdraw Information? The Courts Ruling The petition is impressed with merit. We answer the above question in the affirmative.
Preliminary Matter Before discussing the substance of this case, the Court will preliminarily address a procedural matter. Prior to the effectivity of the 1997 Rules of Civil Procedure on July 1, 1997, Section 2 of Rule 45, which governed appeals from the Court of Appeals to the Supreme Court, provided: SEC. 2. Contents of petition.The petition shall contain a concise statement of x x x the assignment of errors made in the court below x x x. A petition for review on certiorari under Rule 45 requires a concise statement of the errors committed by the Court of Appeals, not of the trial court. For failure to follow this Rule, the petition could have been dismissed by this Court motu proprio, considering that under Section 4 of the same Rule, review is not a matter of right but of sound discretion. We take this occasion to stress the need for precision and clarity in the assignment of errors. Review under this rule is unlike an appeal in a criminal case where the death penalty, reclusin perpetua or life imprisonment is imposed and where the whole case is opened for review. Under Rule 45, only the issues raised therein by the petitioner will be passed upon by the Court, such that an erroneous specification of the issues may cause the dismissal of the petition. We stressed this in Circular No. 2-90, entitled Guidelines to be Observed in Appeals to the Court of Appeals and to the Supreme Court, as follows: 4. Erroneous Appeals. x x x x e) Duty of counsel.It is therefore incumbent upon every attorney who would seek review of a judgment or order promulgated against his client to make sure of the nature of the errors he proposes to assign, whether these be of fact or of law; then upon such basis to ascertain carefully which Court has appellate jurisdiction; and finally, to follow scrupulously the requisites for appeal prescribed by law, ever aware that any error or imprecision in compliance may well be fatal to his clients cause. FOR STRICT COMPLIANCE. Be that as it may, the Court noting the importance of the substantial matters raised decided to overlook petitioners lapse and granted due course to the petition per Resolution dated July 15, 1996, with a warning that
henceforth petitions which fail to specify an assignment of errors of the proper lower court may be denied due course motu proprio by this Court. Determination of Probable Cause Is an Executive Function The determination of probable cause during a preliminary investigation is judicially recognized as an executive function and is made by the prosecutor. The primary objective of a preliminary investigation is to free a respondent from the inconvenience, expense, ignominy and stress of defending himself/herself in the course of a formal trial, until the reasonable probability of his or her guilt has been passed upon in a more or less summary proceeding by a competent officer designated by law for that purpose. Secondarily, such summary proceeding also protects the state from the burden of unnecessary expense and effort in prosecuting alleged offenses and in holding trials arising from false, frivolous or groundless charges. [18]
Such investigation is not a part of the trial. A full and exhaustive presentation of the parties evidence is not required, but only such as may engender a well-grounded belief that an offense has been committed and that the accused is probably guilty thereof. [19] By reason of the abbreviated nature of preliminary investigations, a dismissal of the charges as a result thereof is not equivalent to a judicial pronouncement of acquittal. Hence, no double jeopardy attaches. In declaring this function to be lodged in the prosecutor, the Court distinguished the determination of probable cause for the issuance of a warrant of arrest or a search warrant from a preliminary investigation proper in this wise: [20]
xxx Judges and prosecutors alike should distinguish the preliminary inquiry which determines probable cause for the issuance of a warrant of arrest from a preliminary investigation proper which ascertains whether the offender should be held for trial or released. xxx The determination of probable cause for the warrant of arrest is made by the Judge. The preliminary investigation proper--whether xxx there is reasonable ground to believe that the accused is guilty of the offense charged and, therefore, whether xxx he should be subjected to the expense, rigors and embarrassment of trial- -is the function of the prosecutor. We reiterate that preliminary investigation should be distinguished as to whether it is an investigation for the determination of a sufficient ground for the filing of the
information or it is an investigation for the determination of a probable cause for the issuance of a warrant of arrest. The first kind of preliminary investigation is executive in nature. It is part of the prosecutors job. The second kind of preliminary investigation which is more properly called preliminary examination is judicial in nature and is lodged with the judge. Sound policy supports this distinction. Otherwise, judges would be unduly laden with the preliminary examination and investigation of criminal complaints instead of concentrating on hearing and deciding cases filed before their courts. The Separate Opinion of Mr. Chief Justice Andres R. Narvasa in Roberts, Jr. vs. Court of Appeals stressed that the determination of the existence of probable cause properly pertains to the public prosecutor in the established scheme of things, and that the proceedings therein are essentially preliminary, prefatory and cannot lead to a final, definite and authoritative judgment of the guilt or innocence of the persons charged with a felony or a crime. [21]
In Crespo vs. Mogul, [22] the Court emphasized the cardinal principle that the public prosecutor controls and directs the prosecution of criminal offenses thus: It is a cardinal principle that all criminal actions either commenced by complaint or by information shall be prosecuted under the direction and control of the fiscal. The institution of a criminal action depends upon the sound discretion of the fiscal. He may or may not file the complaint or information, follow or not follow that presented by the offended party, according to whether the evidence in his opinion, is sufficient or not to establish the guilt of the accused beyond reasonable doubt. The reason for placing the criminal prosecution under the direction and control of the fiscal is to prevent malicious or unfounded prosecution by private persons. It cannot be controlled by the complainant. Prosecuting officers under the power vested in them by law, not only have the authority but also the duty of prosecuting persons who, according to the evidence received from the complainant, are shown to be guilty of a crime committed within the jurisdiction of their office. They have equally the legal duty not to prosecute when after an investigation they become convinced that the evidence adduced is not sufficient to establish a prima facie case. In the same case, the Court added that where there is a clash of views between a judge who did not investigate and a fiscal who conducted a reinvestigation, those of the prosecutor should normally prevail: [23]
x x x x The Courts cannot interfere with the fiscals discretion and control of the criminal prosecution. It is not prudent or even permissible for a Court to compel the fiscal to prosecute a proceeding originally initiated by him on an information, if he finds that the evidence relied upon by him is insufficient for conviction. Neither has the Court any power to order the fiscal to prosecute or file an information within a certain period of time, since this would interfere with the fiscals discretion and control of criminal prosecutions. Thus, a fiscal who asks for the dismissal of the case for insufficiency of evidence has authority to do so, and Courts that grant the same commit no error. The fiscal may re-investigate a case and subsequently move for the dismissal should the re-investigation show either that the defendant is innocent or that his guilt may not be established beyond reasonable doubt. In a clash of views between the judge who did not investigate and the fiscal who did, or between the fiscal and the offended party or the defendant, those of the fiscals should normally prevail. x x x x. Appeal as an Exercise of the Justice Secretarys Power of Control Over Prosecutors Decisions or resolutions of prosecutors are subject to appeal to the secretary of justice who, under the Revised Administrative Code, exercises the power of direct control and supervision over said prosecutors; and who may thus affirm, nullify, reverse or modify their rulings. Section 39, Chapter 8, Book IV in relation to Section 5, 8, and 9, Chapter 2, Title III of the Code gives the secretary of justice supervision and control over the Office of the Chief Prosecutor and the Provincial and City Prosecution Offices. The scope of his power of supervision and control is delineated in Section 38, paragraph 1, Chapter 7, Book IV of the Code: (1) Supervision and Control. Supervision and control shall include authority to act directly whenever a specific function is entrusted by law or regulation to a subordinate; direct the performance of duty; restrain the commission of acts; review, approve, reverse or modify acts and decisions of subordinate officials or units; xxxx. Supplementing the aforequoted provisions are Section 3 of R.A. 3783 and Section 37 of Act 4007, which read: Section 3. x x x x
The Chief State Prosecutor, the Assistant Chief State Prosecutors, the Senior State Prosecutors, and the State Prosecutors shall x x x perform such other duties as may be assigned to them by the Secretary of Justice in the interest of public service. xxx xxx xxx Section 37. The provisions of the existing law to the contrary notwithstanding, whenever a specific power, authority, duty, function, or activity is entrusted to a chief of bureau, office, division or service, the same shall be understood as also conferred upon the proper Department Head who shall have authority to act directly in pursuance thereof, or to review, modify, or revoke any decision or action of said chief of bureau, office, division or service. Supervision and control of a department head over his subordinates have been defined in administrative law as follows: [24]
In administrative law supervision means overseeing or the power or authority of an officer to see that subordinate officers perform their duties. If the latter fail or neglect to fulfill them, the former may take such action or step as prescribed by law to make them perform such duties. Control, on the other hand, means the power of an officer to alter or modify or nullify or set aside what a subordinate officer had done in the performance of his duties and to substitute the judgment of the former for that of the latter. Review as an act of supervision and control by the justice secretary over the fiscals and prosecutors finds basis in the doctrine of exhaustion of administrative remedies which holds that mistakes, abuses or negligence committed in the initial steps of an administrative activity or by an administrative agency should be corrected by higher administrative authorities, and not directly by courts. As a rule, only after administrative remedies are exhausted may judicial recourse be allowed. Appeal to the Secretary of Justice Is Not Foreclosed by the Ruling in Crespo In Marcelo vs. Court of Appeals, [25] the Court clarified that Crespo [26] did not foreclose the power or authority of the secretary of justice to review resolutions of his subordinates in criminal cases. The Court recognized in Crespo that the action of the investigating fiscal or prosecutor in the
preliminary investigation is subject to the approval of the provincial or city fiscal or chief state prosecutor. Thereafter, it may be appealed to the secretary of justice. The justice secretarys power of review may still be availed of despite the filing of an information in court. In his discretion, the secretary may affirm, modify or reverse resolutions of his subordinates pursuant to Republic Act No. 5180, as amended, [27] specifically in Section 1 (d): (d) x x x Provided, finally, That where the resolution of the Provincial or City Fiscal or the Chief State Prosecutor is, upon review, reversed by the Secretary of Justice, the latter may, where he finds that no prima facie case exists, authorize and direct the investigating fiscal concerned or any other fiscal or state prosecutor to cause or move for the dismissal of the case, or, where he finds a prima facie case, to cause the filing of an information in court against the respondent, based on the same sworn statements or evidence submitted without the necessity of conducting another preliminary investigation. Pursuant thereto, the Department of Justice promulgated Circular No. 7 dated January 25, 1990 governing appeals in preliminary investigation. Appeals under Section 2 are limited to resolutions dismissing a criminal complaint. However, Section 4 provides an exception: appeals from resolutions finding probable cause upon a showing of manifest error or grave abuse of discretion are allowed, provided the accused has not been arraigned. In the present case, petitioners appeal to the secretary of justice was given due course on August 26, 1992 pursuant to this Circular. On June 30, 1993, Circular No. 7 was superseded by Department Order No. 223; however, the scope of appealable cases remained unchanged: SECTION 1. What May Be Appealed. -- Only resolutions of the Chief State Prosecutor/Regional State Prosecutor/Provincial or City Prosecutor dismissing a criminal complaint may be the subject of an appeal to the Secretary of Justice except as otherwise provided in Section 4 hereof. Appeals from the resolutions of provincial/city prosecutors where the penalty prescribed for the offense charged does not exceed prisin correccional,regardless of the imposable fine, shall be made to the Regional State Prosecutors who shall resolve the appeals with finality, pursuant to Department Order No. 318 dated August 28, 1991 as amended by D.O. No. 34 dated February 4, 1992, D.O. No. 223 dated August 11, 1992 and D.O. No. 45 dated February 2, 1993. Such appeals shall also be governed by these rules.
SEC. 4. Non-Appealable Cases; Exceptions.--No appeal may be taken from a resolution of the Chief State Prosecutor/Regional State Prosecutor/Provincial or City Prosecutor finding probable cause except upon showing of manifest error or grave abuse of discretion. Notwithstanding the showing of manifest error or grave abuse of discretion, no appeal shall be entertained where the appellant had already been arraigned. If the appellant (is) arraigned during the pendency of the appeal, x x x appeal shall be dismissed motu proprio by the Secretary of Justice. An appeal/motion for reinvestigation from a resolution finding probable cause, however, shall not hold the filing of the information in court. Apart from the foregoing statutory and administrative issuances, the power of review of the secretary of justice is recognized also by Section 4 of Rule 112 of the Rules of Court: SEC. 4. Duty of investigating fiscal.--x x x x xxx xxx xxx If upon petition by a proper party, the Secretary of Justice reverses the resolution of the provincial or city fiscal or chief state prosecutor, he shall direct the fiscal concerned to file the corresponding information without conducting another preliminary investigation or to dismiss or move for dismissal of the complaint or information. This appeal rests upon the sound discretion of the secretary of justice arising from his power of supervision and control over the prosecuting arm of the government, not on a substantial right on the part of the accused as claimed by petitioner. Appeal Did Not Divest the Trial Court of Jurisdiction Where the secretary of justice exercises his power of review only after an information has been filed, trial courts should defer or suspend arraignment and further proceedings until the appeal is resolved. Such deferment or suspension, however, does not signify that the trial court is ipso facto bound by the resolution of the secretary of justice. Jurisdiction, once acquired by the trial court, is not lost despite a resolution by the secretary of justice to withdraw the information or to dismiss the case.
Judicial Review of the Resolution of the Secretary of Justice Judicial power is defined under the 1987 Constitution as the duty of courts to settle actual controversies involving rights which are legally demandable and enforceable. Such power includes the determination of whether there has been a grave abuse of discretion amounting to lack or excess of jurisdiction on the part of any branch or instrumentality of the government. [28] Under this definition, a court is without power to directly decide matters over which full discretionary authority has been delegated to the legislative or executive branch of the government. It is not empowered to substitute its judgment for that of Congress or of the President. It may, however, look into the question of whether such exercise has been made in grave abuse of discretion. Judicial review of the acts of other departments is not an assertion of superiority over them or a derogation of their functions. In the words of Justice Laurel in Angara vs. Electoral Commission: [29]
x x x [W]hen the judiciary mediates to allocate constitutional boundaries, it does not in reality nullify or invalidate an act of the legislature, but only asserts the solemn and sacred obligation assigned to it by the Constitution to determine conflicting claims of authority under the Constitution and to establish for the parties in an actual controversy the rights which that instrument sources and guarantees to them. This is in truth all that is involved in what is termed judicial supremacy which properly is the power of the judicial review under the Constitution. x x x. It is not the purpose of this Court to decrease or limit the discretion of the secretary of justice to review the decisions of the government prosecutors under him. In Crespo, the secretary was merely advised to restrict such review to exceptionally meritorious cases. Rule 112, Section 4 of the Rules of Court, which recognizes such power, does not, however, allow the trial court to automatically dismiss the case or grant the withdrawal of the information upon the resolution of the secretary of justice. This is precisely the import of Crespo, Marcelo, Martinez vs. Court of Appeals [30] and the recent case of Roberts, Jr. vs. Court of Appeals, which all required the trial court to make its own evaluation of the merits of the case, because granting the motion to dismiss or to withdraw the information is equivalent to effecting a disposition of the case itself.
The Marcelo and Martinez Cases Are Consistent In Marcelo vs. Court of Appeals, [31] this Court ruled that, although it is more prudent to wait for a final resolution of a motion for review or reinvestigation from the secretary of justice before acting on a motion to dismiss or a motion to withdraw an information, a trial court nonetheless should make its own study and evaluation of said motion and not rely merely on the awaited action of the secretary. The trial court has the option to grant or deny the motion to dismiss the case filed by the fiscal, whether before or after the arraignment of the accused, and whether after a reinvestigation or upon instructions of the secretary who reviewed the records of the investigation; provided that such grant or denial is made from its own assessment and evaluation of the merits of the motion. In Martinez vs. Court of Appeals, [32] this Court overruled the grant of the motion to dismiss filed by the prosecuting fiscal upon the recommendation of the secretary of justice because such grant was based upon considerations other than the judges own assessment of the matter. Relying solely on the conclusion of the prosecution to the effect that there was no sufficient evidence against the accused to sustain the allegation in the information, the trial judge did not perform his function of making an independent evaluation or assessment of the merits of the case. Despite the pronouncement in Marcelo that a final resolution of the appeal to the Department of Justice is necessary, both decisions followed the rule in Crespo vs. Mogul: Once a complaint or information is filed in court, any disposition of the case such as its dismissal or its continuation rests on the sound discretion of the court. Trial judges are thus required to make their own assessment of whether the secretary of justice committed grave abuse of discretion in granting or denying the appeal, separately and independently of the prosecutions or the secretarys evaluation that such evidence is insufficient or that no probable cause to hold the accused for trial exists. They should embody such assessment in their written order disposing of the motion. The above-mentioned cases depict two extreme cases in complying with this rule. In Marcelo, the dismissal of the criminal action upon the favorable recommendation of the Review Committee, Office of the City Prosecutor, was precipitate in view of the pendency of private complainants appeal to the secretary of justice. In effect, the secretarys opinion was totally disregarded
by the trial court. In contrast, inMartinez the dismissal of the criminal action was an erroneous exercise of judicial discretion as the trial court relied hook, line and sinker on the resolution of the secretary, without making its own independent determination of the merits of the said resolution. No Grave Abuse of Discretion in theResolution of the Secretary of J ustice In the light of recent holdings in Marcelo and Martinez; and considering that the issue of the correctness of the justice secretarys resolution has been amply threshed out in petitioners letter, the information, the resolution of the secretary of justice, the motion to dismiss, and even the exhaustive discussion in the motion for reconsideration all of which were submitted to the court -- the trial judge committed grave abuse of discretion when it denied the motion to withdraw the information, based solely on his bare and ambiguous reliance onCrespo. The trial courts order is inconsistent with our repetitive calls for an independent and competent assessment of the issue(s) presented in the motion to dismiss. The trial judge was tasked to evaluate the secretarys recommendation finding the absence of probable cause to hold petitioner criminally liable for libel. He failed to do so. He merely ruled to proceed with the trial without stating his reasons for disregarding the secretarys recommendation. Had he complied with his judicial obligation, he would have discovered that there was, in fact, sufficient ground to grant the motion to withdraw the information. The documents before the trial court judge clearly showed that there was no probable cause to warrant a criminal prosecution for libel. Under the established scheme of things in criminal prosecutions, this Court would normally remand the case to the trial judge for his or her independent assessment of the motion to withdraw the information. However, in order not to delay the disposition of this case and to afford the parties complete relief, we have decided to make directly the independent assessment the trial court should have done. The petitioner has attached as annexes to the present petition for review the information, which contains a complete and faithful reproduction of the subject letter, the resolution of the secretary of justice, the prosecutions motion for reconsideration of the trial courts Order of February 22, 1993, and even the private complainants opposition to said motion. The records below have been reproduced and
submitted to this Court for its appreciation. Thus, a remand to the trial court serves no purpose and will only clog the dockets. We thus proceed to examine the substance of the resolution of the secretary of justice. The secretary reversed the finding of probable cause on the grounds that (1) the subject letter was privileged in nature and (2) the complaint was merely a countercharge. In every case for libel, the following requisites must concur: (a) it must be defamatory; (b) it must be malicious; (c) it must be given publicity; and (d) the victim must be identifiable. At the preliminary investigation stage, these requisites must show prima facie a well-founded belief that a crime has been committed and that the accused probably committed it. A cursory reading of the information immediately demonstrates a failure on the part of the complainant to establish the foregoing elements of libel. Every defamatory imputation, even if true, is presumed malicious, if no good intention or justifiable motive for making it is shown. There is malice when the author of the imputation is prompted by personal ill will or spite and speaks not in response to duty but merely to injure the reputation of the person who claims to have been defamed. [33] In this case however, petitioners letter was written to seek redress of proper grievance against the inaccurate distribution and payment of professional fees and against unfair treatment in the Nuclear Medicine Department of the Philippine Heart Center. It is a qualified privileged communication under Article 354(1) of the Revised Penal Code which provides: ART. 354. Requirement of publicity. -- Every defamatory imputation is presumed to be malicious, even if it be true, if no good intention and justifiable motive for making it is shown, except in the following cases: 1. A private communication made by any person to another in the performance of any legal, moral or social duty; and
xxx xxx xxx The rule on privileged communication is that a communication made in good faith on any subject matter in which the communicator has an interest, or concerning which he has a duty, is privileged if made to a person having a corresponding interest or duty, although it contains incriminatory matter which, without the privilege, would be libelous and actionable. Petitioners letter was a private communication made in the performance of a moral duty on her part. Her intention was not to inflict an unjustifiable harm on the private complainant, but to present her grievance to her superior. The privileged nature of her letter overcomes the presumption of malice. There is no malice when justifiable motive exists; and in the absence of malice, there is no libel. We note that the information itself failed to allege the existence of malice. Thus, we agree with the ruling of the secretary of justice: [34]
x x x (T)he subject letter was written to bring to the attention of the Director of the Philippine Heart Center for Asia and other responsible authorities the unjust and unfair treatment that Dr. Ledesma was getting from government employees, and the subject letter is a complaint x x x on a subject matter in which respondent has an interest and in reference to which she has a duty to question the same is definitely privileged (US vs. Bustos, 37 Phil. 131). Moreover, in Ang vs. Castro, 136 SCRA 455, the Supreme Court, citing Santiago vs. Calvo, 48 Phil. 922, ruled that a communication made in good faith upon any subject matter in which the party making the communication has an interest or concerning which he has a duty is privileged although it contains incriminatory or derogatory matter which, without the privilege, would be libelous and actionable. The follow-up letter sent by respondent to the director of the PHCA, is a direct evidence of respondents righteous disposition of following the rule of law and is a clear indication that her purpose was to seek relief from the proper higher authority xxx. The same interpretation should be accorded the civil and administrative complaints which respondent filed against complainants. They are mere manifestations of her earnest desire to pursue proper relief for the alleged injustice she got from complainants. If she was motivated by malice and ill-will in sending the subject communication to the Director of the PHCA, she would not have sent the second letter and filed the administrative and civil cases against complainants.
In Alonzo, the settled rule is that, when a public officer, in the discharge of his or her official duties, sends a communication to another officer or to a body of officers, who have a duty to perform with respect to the subject matter of the communication, such communication does not amount to publication within the meaning of the law on defamation. [35] Publication in libel means making the defamatory matter, after it has been written, known to someone other than the person to whom it has been written. [36] The reason for such rule is that a communication of the defamatory matter to the person defamed cannot injure his reputation though it may wound his self-esteem. A mans reputation is not the good opinion he has of himself, but the estimation in which others hold him. [37] In this case, petitioner submitted the letter to the director of said hospital; she did not disseminate the letter and its contents to third persons. Hence, there was no publicity and the matter is clearly covered by paragraph 1 of Article 354 of the Penal Code. Further, we note that the information against petitioner was filed only on July 27, 1992 or one year after June 27, 1991, the date the letter was sent. It is obviously nothing more than a countercharge to give Complainant Torres a leverage against petitioners administrative action against him. Ineluctably, Judge Asuncions denial of the motion to withdraw the information and the reconsideration thereof was not only precipitate but manifestly erroneous. This is further compounded by the fact that he did not explain his grounds for his denial inasmuch as he did not make an independent assessment of the motion or the arguments in the resolution of the secretary of justice. All in all, such rash action did not do justice to the sound ruling in Crespo vs. Mogul upon which, ironically, he supposedly rested his action, or to the directive in Marceloand Martinez where this Court required trial courts to make an independent assessment of the merits of the motion. WHEREFORE, the assailed Decision is hereby REVERSED and SET ASIDE. The Motion to Withdraw the Information dated February 17, 1993 filed before the trial court is GRANTED. No costs. SO ORDERED.