G.R. No. 170671, August 19, 2015 after it was assigned to him by Martin Antonio.
y Martin Antonio. 571, as well as criminal complaints2 for
FILADELFA T. LAUSA, LORETA T. TORRES,
PRIMITIVO TUGOT AND ANACLETO T.
CADUHAY, Petitioners, v. MAURICIA
QUILATON, RODRIGO Q. TUGOT,
PURIFICACION T. CODILLA, TEOFRA T.
SADAYA, ESTRELLITA T. GALEOS AND
ROSITA T. LOPEZ, Respondents.
DECISION
BRION, J.:
Before us is a Petition for review
on certiorari assailing the Court of Appeals (CA)
Decision in CA-G.R. CV No. 63248. The CA
reversed the decision of the Regional Trial Court
(RTC) of Cebu City, Branch 15 in Civil Case No.
CEB - 17857, and. upheld the validity of Transfer
Certificate Title (TCT) No. 571.
Factual Antecedents
The main issue in the present case involves the
title to Lot No. 557, a parcel of land situated in V.
Ranudo and D. Jakosalem Streets, Cogon Central,
Cebu City.
The petitioners and the respondents are relatives
residing in Lot No. 557.
Petitioners Filadelfa T. Lausa, Loreta T. Torres,
Primitivo Tugot, and Anacleto T. Caduhay are the
cousins of respondents Rodrigo Tugot,
Purificacion Codilla, Teofra Sadaya, and Estrellita
Galeos; while Mauricia Quilaton is the
respondents' mother and the petitioners' aunt-in-
law.
The respondent Rosita T. Lopez, on the other
hand, acquired the rights of Rodrigo when he
mortgaged Lot No. 557-A, a portion of Lot No.
557, to her. Rodrigo subsequently defaulted on
his loan.
The petitioners and respondents, with the
exception of Mauricia and Rosita, are all
grandchildren of Alejandro Tugot. Alejandro had
possessed Lot No. 557 since September 13, 1915,
falsification and perjury against the respondents.
Lot No. 557 formed part of the Banilad Friar
Estate Lands, which had been bought by the The Regional Trial Court's ruling
government through Act No. 1120 for distribution
to its occupants. Antonio had initially been Lot The RTC found TCT No. 571 to be a forgery, and
No. 557's beneficiary, but subsequently assigned declared it and all titles originating from it to be
his rights over Lot No. 557 to Alejandro. null and void ab initio. The RTC gave the following
reasons as basis for this conclusion:
Since then, Alejandro possessed Lot No. 557 until
ChanRoble svirtual Lawli bra ry
his death; thereafter, his children and First, the RTC noted several discrepancies in TCT
grandchildren continued to reside in the lot. The No. 571 indicating that it is a forgery, viz.:
present controversy arose when the respondents,
ChanRoblesvi rt ualLaw lib rary
claiming to be its registered owners, attempted to
(i) The TCTs issued before and after TCT No. 571,
eject the petitioners from Lot No. 557.
that is, TCT No. 570 and TCT No. 572, both
use a different and more recent form than TCT
On January 1993, Mauricia filed before the RTC of
No. 571. TCT Nos. 570 and 572 use Judicial
Cebu City Branch 17 a petition for the issuance of
Form No. 109, which was issued in June 1945,
a new owner's duplicate of TCT No. 571, which
while TCT No. 571 uses Judicial Form No. 140-
purportedly covers Lot No. 557. Mauricia claimed
D, which was issued in April 1936.
to own TCT No. 571, but lost her owner's
(ii) TCT Nos. 570 and 572 was signed by Martina
duplicate during a strong typhoon sometime in
L. Arnoco as Register of Deeds, while TCT No.
1946. The RTC, after due hearing, granted
571 was signed by Gervasio Lavilles as Acting
Quilaton's petition and directed the issuance of a
Register of Deeds.
new owner's duplicate of TCT No. 571.
(iii)There are distinct differences in Lavilles'
signature as it appears in TCT No. 571 from
On September 27, 1994, Mauricia donated Lot
his signatures in other TCTs, such as TCT Nos.
No. 557 to her children Rodrigo, Purificacion,
525 and 526.
Teofra and Estrellita. Thus, TCT No. 571 was
cancelled, and re-issued as TCT Nos. 130517,
Second, Mauricia's previous acts show that she
130518, 130519, 130520 and 130521 in the
acknowledged Alejandro's ownership over Lot No.
names of Mauricia's children.1
557. Prior to instituting a petition for issuance of
cralawre dnad
a new owner's duplicate in 1993, Mauricia had
Mauricia's children subsequently performed
been paying Alejandro (and subsequently Aurea)
several acts of ownership over Lot 571: first,
contributions for the real estate taxes due on Lot
Rodrigo, on March 23, 1995, mortgaged TCT No.
No. 557.
130517 to Lopez as security for a loan he
obtained from the latter. Rodrigo subsequently
Third, Mauricia exercised acts of full ownership
defaulted on his loan, prompting the foreclosure
over Lot No. 557 only in 1994, after she had filed
of TCT No. 130517. The land covered by TCT No.
a petition for the issuance of a new owner's
130517 was thereafter sold by public auction to
duplicate, even as she claimed to have owned the
Lopez, for which she was issued TCT No. 143511
lot since 1946.
on March 31, 1997.
Fourth, Mauricia failed to present evidence
Second, Mauricia's children filed a complaint for
showing how she acquired title to Lot No. 557. If
ejectment against the petitioners, docketed as
indeed the land was purchased from Martin
Civil Case No. R-35137, on August 4, 1995.
Antonio, she could have secured a copy of its
document of sale from the Archives Office,
In response, the petitioners filed Civil Case No.
Manila.
CEB-17857 for the annulment of TCT No. 571 and
the subsequent titles that originate from TCT No.
Additionally, the RTC held that the petitioners had
1
better title to Lot No. 557 than the respondents.
The RTC found that Lot No. 557 had been in the
possession of Alejandro since September 13,
1915, when the lot's owner, Martin Antonio,
executed a Deed of Assignment in favor of
Alejandro. This conveyance, together with
Alejandro and his heirs' continuous payment of
Lot No. 557's real estate taxes since 1928,
amounts to more than thirty years of adverse
possession, so that ownership over the lot vested
in him.
As Alejandro's heirs, both the petitioners and
respondents are entitled to a share in Lot No.
557.
Lastly, the RTC declared Lopez's TCT No.
143511, which she acquired when she purchased
TCT No. 130517, to be null and void. TCT No.
130517 covers Lot No. 557-A, and had been
annotated with a Notice of Lis Pendens at the
time Lopez purchased it. Thus, Lopez had
knowledge of the dispute over the ownership of
the lot she bought, and could not claim the
defense of a purchaser in good faith. She
acquired no greater title to the lot than Rodrigo,
who mortgaged TCT No. 130517.
The respondents filed a motion for
reconsideration contesting the RTC's decision.
After the RTC denial of the motion, the
respondents appealed to the CA.
The Court of Appeals' ruling
The CA reversed the RTC's decision, and upheld
the validity of TCT No. 571 and all the titles
originating from it.
In upholding the validity of TCT No. 571 (and all
the titles originating from it), the CA emphasized
the existence of a copy of TCT No. 571 in the
custody of the Office of the Register of Deeds of
Cebu City, and noted that it is presumed by law
to have been issued in a regular manner. The
application of this presumption is called for by the
purpose of the Torrens system, which is to
promote the stability and integrity of land titles.
According to the CA, the petitioners have failed to
disprove this presumption of regularity. The
pieces of evidence that the petitioners presented
(i.e., the tax receipts and Antonio's Deed of
Assignment of Lot No. 557 to Alejandro) do not
prove with clear, positive, and convincing
evidence that TCT No. 571 had been fraudulently
issued. The payment of real estate taxes over Lot
No. 557 does not prove ownership. The Deed of
Assignment, on the other hand, had been
subsequently cancelled, as shown by the Friar
Lands Sale Certificate Register on file with the
DENR. It proves that the lot had been earlier
assigned to Alejandro, but because the
assignment was canceled, the ownership of Lot
No. 557 remained with Antonio.
The CA also noted that the lot that Alejandro
appears to have owned was not Lot No. 557 but
Lot No. 357. The description of Lot No. 557 - as
set forth by the petitioners in their original
complaint - substantially varies from the actual
and precise technical description of Lot No. 557.
Additionally, some of the documentary evidence
in the case (such as tax declarations, tax receipts
and notices of tax delinquency) show that what
Alejandro owned was Lot No. 357, not Lot No.
557.
The CA also pointed out that Alejandro could not
have acquired Lot 557 through acquisitive
prescription for two reasons: first, Mauricia had
been in possession of the property since 1946;
and second, a lot registered under the Torrens
system cannot be acquired through acquisitive
prescription. Records show that the lands
comprising the Banilad Friar Lands Estate, of
which Lot No. 557 was a part, had been brought
under the operation of the Torrens system on
September 23, 1913.
The CA found Lopez to be an innocent purchaser
for value. Applying the Court's ruling in Bank of
the Philippine Islands v. Noblejas, the CA held
that Lopez's good faith as a mortgagee extends to
her eventual purchase of the lot during its
foreclosure. Since TCT No. 130517 had no notice
of any adverse claim at the time it was
mortgaged to Lopez, then the subsequent
annotation of Notice of Lis Pendensprior to TCT
No. 130517's foreclosure should not affect her
status as a mortgagee-in-good-faith. The clean
title presented to Lopez at the time TCT No.
130517 was mortgaged to her maintains this
status at the time of its foreclosure, and cannot
2
be prejudiced by the subsequent annotation of a
claim to it before the lot is foreclosed.
Lastly, the CA found that the RTC erred when it
did not immediately dismiss the petitioners'
complaint, as their cause of action had been
barred by prescription and laches. An action for
the annulment of title to land prescribes in ten
years. The petitioners filed their complaint only
on September 20, 1995, almost fifty years after
Mauricia had been issued TCT No. 571 on July 16,
1946. Thus, the petitioners had slept on their
claimed right over Lot 557; consequently, they
are now barred by laches from seeking redress
before the courts.
The petitioners filed a motion for reconsideration
assailing the CA's decision, which motion the CA
denied. The denial opened the way for the
present petition for review on certiorari before
this Court.
The present petition
In their present petition, the petitioners seek the
reversal of the CA's decision through their
assertion that they have acquired ownership over
Lot No. 557 by acquisitive prescription.
The petitioners claim that the CA committed the
following errors:
ChanRob lesvi rtua lLawl ibra ry
First, the CA erred in upholding the validity of
TCT No. 571, which is a fake and fabricated title;
Second, the CA erred in finding that Mauricia
owned and possessed Lot No. 557, as it was
Alejandro who exercised acts of exclusive
ownership and possession over the lot since it
was assigned to him in 1915. The lot Antonio
assigned to Alejandro covered Lot No. 557,
although earlier tax declarations indicated the
areas of the lot to be Lot No. 357. This error was
corrected in subsequent tax declarations by the
City of Cebu Assessor's Office in 1997.
Third, the CA erred in holding that Lopez is an
innocent purchaser in good faith, as she knew
that the portion of Lot No. 557 being mortgaged
to her was in the possession of Filadelfa, and not
Rodrigo. She knew of this possession before she
executed the real estate mortgage contract over
the property with Rodrigo.
Fourth, the CA erred in finding the petitioners'
cause of action barred by prescription and laches,
as they discovered the existence of TCT No. 571
only in August 1995, when Mauricia and her
children instituted ejectment proceedings against
them.
In response, the respondents argue that the
petitioners have no cause of action against them
because Alejandro's tax declarations cover Lot
No. 357, and not Lot No. 557, which is covered by
their TCTs. They also cited the CA's decision, and
argued that the CA committed no error of law in
upholding the validity of their TCTs.
Lopez, on the other hand, asserted that her
status as an innocent purchaser or mortgagor in
good faith had not been included in the
petitioners' amended complaint including her as
an indispensible party, and should thus not have
been considered as an issue in the case. In any
case, Lopez asserts that her title to Lot No. 557-A
is valid because she is an innocent purchaser in
good faith.
Issues:
The issues, having been properly joined, present
to us the following questions: ChanRoblesvi rt ualLaw lib rary
(1)Whether the CA erred in finding that the lot
that the petitioners claim to own covers Lot
No. 357, and not Lot No. 557;
(2)Whether the CA erred in finding that the
respondents, and not the petitioners, are the
owners and possessors of Lot No. 557;
(3)Whether the CA erred in finding Lopez an
innocent purchaser in good faith; and
(4)Whether the CA erred in finding the
petitioners' cause of action to have been
barred by prescription and laches.
The Court's Ruling
We find the petition meritorious.
We note at the outset that the Court is not a trier
of facts, and our jurisdiction in cases brought
before us from the appellate court is limited to
the review of errors of law.
We have, however, recognized several
exceptional situations that call for a re-evaluation
of the CA's factual conclusions, among them, the
situation when the CA's findings are contrary to
that of the trial court, and when the CA
manifestly overlooks relevant facts not disputed
by the parties and which, if properly considered,
would lead to a different conclusion.3
cralawred nad
We find these circumstances in the present case,
prompting us to re-examine the records of the
case and to reverse the CA's decision after due
consideration of the records.
The CA erred in finding that the lot that the
petitioners claim to own is Lot No. 357, and
not Lot No. 557
The CA, in upholding the validity of Mauricia's title
and ownership over Lot No. 557, pointed out that
the lot that Alejandro claimed to own was not Lot
No. 557, but Lot No. 357.
The CA based this conclusion on several tax
documents in the name of Alejandro Tugot, which
indicate that the lot covered is Lot No. 357, and
not Lot No. 557.
In so doing, the CA overlooked several key pieces
of evidence presented before the RTC, which had
led the latter to conclude that the designation of
Lot No. 357 in Alejandro's tax declarations
actually pertained to Lot No. 557. These pieces of
evidence are as follows: ChanRoble svi rtual Lawli bra ry
First, the testimony of Mr. Antonio Abellana of
the City of Cebu Assessor's Office established that
he issued a Certification of Correction to change
Alejandro's tax declarations, which initially
covered Lot No. 357, to Lot No. 557.
According to Abellana, Lot No. 357 is located in a
barangay different from the address found in
Alejandro's tax declaration. The base map of
Cebu locates Lot No. 357 to be in Barangay Day-
as, almost five meters from Sikatuna Street,
while the address in Alejandro's erroneous tax
declaration indicates that Lot No. 357 is located in
3
Jakosalem Street.
Second, records of the Cebu City Assessor's
Office show that Lot No. 357 is covered by
another tax declaration with an address
corresponding to the city's base map. In this tax
declaration, Lot No. 357 is owned by a certain
Antonio Yap.
Third, the deed of donation4 of Lot No. 558,
which adjoins Lot Nos. 557 and 559, recognized
Alejandro Tugot as the owner of Lot No. 557.
We find that these pieces of evidence sufficiently
explain that the lot in Alejandro and Aurea's tax
declarations actually covered Lot No. 557, and its
initial designation as Lot No. 357 was an error.
The Assessor's Office of Cebu City, which had the
responsibility of classifying, appraising, and
assessing real property in Cebu, had
acknowledged this designation to be erroneous,
and subsequently made rectification. This
acknowledgment is not only entitled to the
presumption of regularity; it is also corroborated
by the Deed of Donation of an adjoining lot.
Additionally, we also found other pieces of
evidence supporting the conclusion of the Cebu
City Assessor's Office. The tax declarations in
Alejandro and (subsequently) Aurea's names
indicate that they covered the same address as
the Lot No. 557 described in the Deed of
Assignment that Antonio executed in Alejandro's
favor in 1915. The identity of the addresses in
these two documents show that what the
petitioners intended to pay real property tax for,
was the lot covered in the Deed of Assignment,
which was Lot No. 557. Thus, the tax declarations
that placed Lot No. 357 under Alejandro's name
actually pertained to the lot covered by Lot No.
557; its designation as covered by Lot No. 357
was an error that the Cebu City Assessor's Office
eventually discovered and corrected.
In the same vein, the court-approved subdivision
plan for Lot No. 557 indicated it to be found along
Jakosalem Street, the address of the lot covered
by Alejandro and Aurea's tax declarations. The
plan was commissioned for Alejandro and his
children, including Romualdo (Mauricia's husband
and the father of her children), in 1960. That the
address of Lot No. 557 in the subdivision plan is
identical to the address in Alejandro and Aurea's
tax declarations establishes that what they
actually claim to own is Lot No. 557, and not Lot
No. 357.
With this foundation established, we now resolve
the issue of who among them have the better
right over Lot No. 557.
The CA erred in finding that the petitioners
failed to prove that TCT No. 571 is a
fabricated title
In upholding the validity of Mauricia's TCT No.
571, the CA held that the petitioners failed to
overcome the presumption of regularity that
attended its issuance. The CA emphasized that a
copy of TCT No. 571 is currently with the Register
of Deeds, and that the documents that the
petitioners presented do not prove their
ownership over the lot.
The CA's conclusion, however, overlooked the
evidence that the petitioners presented before the
RTC to prove that TCT No. 571 is a fabricated
title. These pieces of evidence include the TCTs
issued immediately before and after TCT No. 571;
TCT No. 16534 (the TCT from which TCT No. 571
allegedly originated); and several TCTs that
contain the signature of the Acting Register of
Deeds who signed TCT No. 571. Taken together,
all these pieces of evidence sufficiently prove, by
preponderance of evidence, that TCT No. 571 is a
fabricated title.
We cite with approval the RTC's factual
observations and conclusions, viz: ChanRoblesvi rt ual Lawlib rary
First, the text of TCT No. 571 contains glaring
discrepancies with TCT No. 16534, the title
indicated in TCT No. 571 as its precursor.
TCT No. 16534 covered a different area from TCT
No. 571. TCT No. 16534 covered Lot 7005-E-2,
which has an area of 3,311 square meters, while
TCT No. 571 covers Lot No. 557 with an area of
525 square meters. Too, TCT No. 16534 was
issued in September 1957, or almost ten
years after the title it supposedly gave rise to was
issued in 1946.
Second, TCT No. 571 contains discrepancies
when compared with TCT Nos. 570 and 572, the
TCTs that were supposedly issued before and
after TCT No. 571. These discrepancies are as
follows:
ChanRob lesvi rtual Lawli bra ry
(i) TCT Nos. 570 and 572 had both been issued
on February 26, 1947, almost a year after TCT
No. 571 was issued on July 16, 1946. Since
TCT No. 571 was an intervening title between
TCT No. 570 and 572, then it should have also
been issued on February 26, 1947.
(ii) TCT No. 571 used an old form, Judicial Form
No. 140-D, which was revised in June 1945 by
Judicial Form No. 109. Since TCT No. 571
shows that it was issued in 1946, then it
should have used Judicial Form No. 109.
Notably, both TCT Nos. 570 and 572 used the
updated Judicial Form No. 109, as they were
issued in 1947.
(iv)TCT Nos. 570 and 572 were signed by Martina
L. Arnoco as Register of Deeds, while TCT No.
571 was signed by Gervasio Lavilles as Acting
Register of Deeds.
(v) There are distinct differences in Lavilles'
signature as it appears in TCT No. 571,
compared with his signatures in other TCTs,
such as TCT Nos. 525 and 526.
Additionally, we note that Mauricia's claim that
she bought Lot No. 557 from Antonio is
contradicted by the contents of TCT No. 16534.
For a new TCT to be issued, the owner's duplicate
of the seller should have been surrendered to the
Registry of Deeds, along with a copy of the TCT's
Deed of Sale. Thus, the seller's TCT would be
cancelled, and the new TCT of the buyer would
indicate the seller's TCT as its TCT of origin.
The text of TCT No. 571 shows that it originated
from TCT No. 16534. If indeed TCT No. 571 was
issued to Mauricia because the latter bought Lot
No. 557 from Antonio, then TCT No. 16534 should
have reflected this transaction.
However, instead of reflecting Antonio's title to
Lot No. 557, TCT No. 16534 shows that it
pertained to a different lot, and had
been issued ten years after the issuance of
TCT No. 571 to a certain Crispina Lopez.
4
The original certificate of title from which TCT No.
571 and TCT No. 16534 originated are also
different: TCT No. 571 originated from Original
Certificate of Title (OCT) No. 251-253, while TCT
No. 16534 originated fromOCTNo. 11375.
These discrepancies, taken together with its
variations from the other titles issued around the
same time and Mauricia's failure to present proof
of how she acquired the lot from Antonio,
reasonably establish that TCT No. 571 is a
fabricated title.
We now proceed to determine whether Alejandro
was Lot No. 557's rightful owner.
The CA erred in relying on a fabricated title
as basis to deny Alejandro's claim to
acquisitive prescription
The CA, in reversing the RTC's decision
recognizing Alejandro's ownership over Lot No.
571, held that Lot No. 557 could no longer be
acquired through prescription because it had
already been brought under the Torrens system,
in Registry Book No. A-3.
Registry Book No. A-3 refers to the registry book
where OCT No. 251-253 is registered, as
indicated in TCT No. 571. Thus, the CA concluded
that Lot No. 557 has been brought under the
Torrens system because TCT No. 571 is already
covered by the system. But as TCT No. 571 is a
fabricated title, the CA erred in relying on its
contents to conclude that Lot No. 557 has already
been brought under the Torrens system.
Alejandro Tugot did not acquire Lot No. 557
through acquisitive prescription
We agree with the CA's conclusion that Lot No.
557 cannot be acquired through prescription, but
for a different reason.
In the present case, the Deed of Assignment
between Antonio and Alejandro was cancelled
three months after it was executed. The Deed,
executed on September 13, 1915, was inscribed
with the phrase: "Cancelled December 21, 1915.
See letter # 12332."
Both the trial court and the CA found this
inscription to be sufficient proof that the Deed of
Assignment had been cancelled three months
after its execution. As a consequence, the Deed of
Assignment could not have vested Antonio's
rights over Lot No. 557 to Alejandro.
Thus, Lot No. 557 reverted to its original status
after the Deed of Assignment was cancelled. It
remained subject to the conditional sale5 between
the government and Antonio; under the
Certificate of Sale between the Bureau of Lands
and Antonio, the government should transfer title
to Lot No. 557 to Antonio upon full payment of
the lot's purchase price.
The nature of the contract of sale between
Antonio and the government is in line with
Section 15 of Act No. 1120, which provides for
the administration, temporary lease, and sale of
friar lands that the government bought through
sections 63 to 65 of "An Act temporarily to
provide for the administration of the affairs of civil
government in the Philippine Islands, and for
other purposes." These friar lands included the
Banilad Estate Friar Lands, from where Lot No.
557 originated.
Section 15 of Act No. 1120 that applied to Lot No.
557 provides:
c ralawlaw lib rary
Sec. 15. The Government hereby reserves the
title to each and every parcel of land sold
under the provisions of this Act until the full
payment of all installments or purchase
money and interest by the purchaser has
been made, and any sale or encumbrance made
by him shall be invalid as against the Government
of the Philippine Islands and shall be in all
respects subordinate to its prior claim.
xxxx
According to jurisprudence, Section 15 of Act No.
1120 reserves to the government the naked title
to the friar lands, until its beneficiaries have fully
paid their purchase price. Since the intent of Act
No. 1120 was to transfer ownership of the friar
lands to its actual occupants, the equitable and
beneficial title to the land passes to them the
moment the first installment is paid and a
certificate of sale is issued. This right is subject to
the resolutory condition that the sale may be
rescinded if the agreed price shall not be paid in
full.
When the Certificate of Sale was executed,
Antonio obligated himself to pay P9.00 as the
final installment to purchase Lot No. 557. His
previous lease payments to the lot were applied
as initial installments for the payment of the lot's
purchase price of PI5.16. Upon full payment of
the installment and its annual 4% interest, the
government was bound to transfer full ownership
of Lot No. 557 to Antonio under Section 122 of
Act No. 496.
While the records of the case do not show any
documents or paper trail showing the actions of
the parties to the Certificate of Sale after the
Deed of Assignment was cancelled, we can, with
certainty, rule out the possibility that Alejandro
acquired title to it through prescription.
Three scenarios could have happened after the
Deed of Assignment was cancelled - all of which
forego the possibility of acquisitive prescription.
First, Antonio could have completed payment of
the purchase price of Lot No. 557. Upon full
payment, the lot would have then been registered
in Antonio's name.
The Certificate of Sale between Antonio and the
government requires registration under Section
122 of Act No. 496, or the Land Registration Act
of 1902, for the ownership over Lot No. 557 to be
transferred to Antonio. Section 122 of Act No. 496
provides:
c ralawlaw lib rary
Section 122. Whenever public lands in the
Philippine Islands belonging to the Government of
the United States or to the Government of the
Philippine Islands are alienated, granted, or
conveyed to persons or to public or private
corporations, the same shall be brought forthwith
under the operation of this Act and shall become
registered lands. It shall be the duty of the official
issuing the instrument of alienation, grant, or
conveyance in behalf of the Government to cause
such instrument, before its delivery to the
grantee, to be filed with the register of deeds for
the province where the land lies and to be there
5
registered like other deeds and conveyances,
whereupon a certificate shall be entered as in
other cases of registered land, and an owner's
duplicate certificate issued to the grantee. The
deed, grant, or instrument of conveyance
from the Government to the grantee shall
not take effect as a conveyance or bind the
land, but shall operate as a contract
between the Government and the grantee
and as evidence of authority to the clerk or
register of deeds to make registration. The
act of registration shall be the operative act
to convey and affect the lands, and in all
cases under this Act registration shall be
made in the office of the register of deeds
for the province where the land lies. The fees
for registration shall be paid by the grantee. After
due registration and issue of the certificate and
owner's duplicate such land shall be registered
land for all purposes under this Act.
Thus, the government could have registered the
title to Lot No. 557 in Antonio's name only after
he had paid the purchase price in full. Had
Antonio eventually completed the payment of Lot
No. 557's purchase price, it would have been
registered under the Torrens system, through
Section 122 of Act No. 496.
Land registered under the Torrens system cannot
be acquired through prescription. As early as
1902, Section 46 of Act No. 496 categorically
declared that lands registered under the Torrens
system cannot be acquired by prescription, viz: c ralawlawli bra ry
Section 46. No title to registered land in
derogation to that of the registered owner shall
be acquired by prescription or adverse
possession.
Second, Antonio could have failed to complete
payment of Lot No. 557's purchase price; thus,
the naked title to Lot No. 557 remains with the
government.
Under Act No. 1120, the Chief of the Bureau of
Public Lands is required to register title to the
friar lands acquired by the government through
Act No. 496. Section 6 of Act No. 1120, in
particular, provides:
c ralawlawl ibra ry
SECTION 6. The title, deeds and instruments of
conveyance pertaining to the lands in each
province, when executed and delivered by said
grantors to the Government and placed in the
keeping of the Chief of the Bureau of Public
Lands, as above provided, shall be by him
transmitted to the register of deeds of each
province in which any part of said lands lies, for
registration in accordance with law. But before
transmitting the title, deeds, and instruments of
conveyance in this section mentioned to the
register of deeds of each province for registration,
the Chief of the Bureau of Public Lands shall
record all such deeds and instruments at length in
one or more books to be provided by him for that
purpose and retained in the Bureau of Public
Lands, when duly certified by him shall be
received in all courts of the Philippine Islands as
sufficient evidence of the contents of the
instrument so recorded whenever it is not
practicable to produce the originals in court.
The law on land registration at that time was Act
No. 496, which established the Torrens system in
the Philippines. As earlier pointed out, a piece of
land, once registered under the Torrens system,
can no longer be the subject of acquisitive
prescription.
No certificate of title pertaining to the
government's transfer of ownership of Lot No.
557 was ever presented in evidence. Assuming,
however, that the Chief of the Bureau of Public
Lands failed to register Lot No. 557, the lot could
not have been acquired by Alejandro through
prescription, under the rule that prescription does
not lie against the government.
Third, Antonio could have sold his rights to Lot
No. 557 to another person. Assuming he did, only
that person could have stepped into his shoes,
and could have either completed payment of the
purchase price of Lot No. 557 and had it
registered in his name; or, he could have failed to
pay the purchase price in full, in which case the
naked title to the lot remains government
property.
In all three scenarios, Alejandro could not have
acquired ownership over Lot No. 557 through
prescription.
Republic Act No. 9443 and the friar lands
The Court is not unaware of the enactment of
Republic Act No. 9443, which confirms the validity
of titles covering any portion of the Banilad Friar
Lands with Certificates of Sale and Assignment of
Sale that do not contain the signature of the then
Secretary of the Interior and/or Chief of the
Bureau of Public Lands. It does not apply to TCTs
that have been fraudulently issued and
registered.
Republic Act No. 9443, however, does not
validate any of the parties' claims of ownership
over Lot No. 557.
Mauricia's title, as earlier established, is
fabricated; thus, her situation falls within the
exception expressed under Section 1 of RA No.
9443, viz:cra lawlawlib ra ry
This confirmation and declaration of validity shall
in all respects be entitled to like effect and credit
as a decree of registration, binding the land and
quieting the title thereto and shall be' conclusive
upon and against all persons, including the
national government and all branches
thereof; except when, in a given case
involving a certificate of title or a
reconstituted certificate of title, there is a
clear evidence that such certificate of title or
reconstituted certificate of title was
obtained through fraud, in which case the
solicitor general or his duly designated
representative shall institute the necessary
judicial proceeding to cancel the certificate of title
or reconstituted certificate of title as the case
may be, obtained through such fraud.
With respect to Alejandro, his claim to Lot No.
557 rests on the Deed of Assignment executed
between him and Antonio, which had been
cancelled; hence, it cannot be confirmed through
Republic Act No. 9443.
Effects of the nullity of TCT No. 571
After establishing that neither Mauricia nor
Alejandro has title over Lot No. 557, we now
resolve the validity of the TCTs that originated
from TCTNo. 571.
As a general rule, a person transmits only the
rights that he possesses. When innocent third
persons, however, purchase or acquire rights over
6
the property relying on the correctness of its
certificate of title, courts cannot disregard the
rights they acquired and order the cancellation of
the certificate. As the third paragraph of section
53 of Presidential Decree No. 1529, otherwise
known as the Property Registration Decree,
provides:c ralawlaw lib rary
Section 53. xxx
xxxx
In all cases of registration procured by fraud, the
owner may pursue all his legal and equitable
remedies against the parties to such
fraud without prejudice, however, to the
rights of any innocent holder for value of a
certificate of title. After the entry of the decree
of registration on the original petition or
application, any subsequent registration procured
by the presentation of a forged duplicate
certificate of title, or a forged deed or other
instrument, shall be null and void.
Thus, innocent purchasers in good faith may
safely rely on the correctness of the certificate of
title issued therefor, and neither the law nor the
courts can oblige them to go behind the
certificate and investigate again the true condition
of the property. They are only charged with notice
of the liens and encumbrances on the property
that are noted on the certificate.
Jurisprudence defines innocent purchaser for
value as "one who buys the property of
another, without notice that some other
person has a right or interest in such
property and pays a full price for the same,
at the time of such purchase or before he has
notice of the claims or interest of some other
person in the property."
PD 1529 has expanded the definition of an
innocent purchaser for value to include an
innocent lessee, mortgagee, or other
encumbrancer for value.
Neither PD 1529 nor jurisprudence, however, has
included an innocent donee to the definition, and
for good reason. An innocent purchaser for value
pays for the full price of the property, while a
donee receives the property out of the donor's
liberality. Additionally, what the law does not
include, it excludes, and a donee is not included
in the expansion of the term innocent purchaser
for value.
Applying these principles of law in the case at
hand, we hold that the Deed of Donation Mauricia
issued in favor of her children immediately after
getting a copy of TCT No. 571 could not have
transferred ownership over Lot No. 557 to her
children. Since TCT No. 571 is a fabricated title, it
does not indicate ownership over Lot No. 557;
thus, the Deed of Donation involving TCT No. 571
could not have conveyed the ownership of Lot No.
557 to Mauricia's children.
Neither could her children claim the status of an
innocent purchaser in good faith, as they received
the property through donation.
The TCTs issued to Mauricia's children pursuant to
the donation should thus be cancelled, as they do
not signify ownership over Lot No. 557.
We also note several circumstances that cast
doubt over the ignorance of Mauricia's children
regarding the fabricated nature of TCT No.
571, viz: (1) the petitioners are their close
relatives, who have been residing in Lot No. 557
as early as 1928; (2) their father, Romualdo,
signed and recognized a subdivision plan of Lot
No. 557 that would divide the lot among all of
Alejandro's heirs, including the petitioners; (3)
their mother executed the deed of donation as
soon as she acquired a copy of TCT No. 571; (4)
their mother's nonpayment of taxes due Lot No.
557 since 1946; and (5) the payment of real
property taxes only to facilitate the subdivision of
Lot No. 557 among them.
Lopez is not an innocent purchaser for value
of Lot 5 57-A
We now determine Lopez's claim that she is an
innocent purchaser for value of Lot No. 557-A,
and should thus be allowed to keep her title over
it.
The CA, in affirming Lopez's title over Lot No.
557-A, held that she was an innocent mortgagee
for value. According to the CA, TCT No. 130517
had no encumbrances and liens at the time it was
mortgaged to Lopez, and this status extended to
the time that TCT No. 130517 was foreclosed to
answer for Rodrigo's loan.
We cannot agree with the CA's conclusion.
As a general rule, a person dealing with
registered land has a right to rely on the Torrens
certificate of title and to dispense with the need of
further inquiring over the status of the lot.
Jurisprudence has established exceptions to the
protection granted to an innocent purchaser for
value, such as when the purchaser has actual
knowledge of facts and circumstances that would
compel a reasonably cautious man to inquire into
the status of the lot; or of a defect or the lack of
title in his vendor; or of sufficient facts to induce
a reasonably prudent man to inquire into the
status of the title of the property in litigation.
The presence of anything that excites or arouses
suspicion should then prompt the vendee to look
beyond the certificate and investigate the title of
the vendor appearing on the face of the
certificate. One who falls within the exception can
neither be denominated as innocent purchaser for
value nor a purchaser in good faith, and hence
does not merit the protection of the law.
In particular, the Court has consistently held that
that a buyer of a piece of land that is in the actual
possession of persons other than the seller must
be wary and should investigate the rights of those
in possession. Without such inquiry, the buyer
can hardly be regarded as a buyer in good faith.
We find that Lopez knew of circumstances that
should have prodded her to further investigate
the Lot No. 557-A's status before she executed a
mortgage contract over it with Rodrigo.
In the pre-trial brief she submitted before the trial
court, Lopez made the following admissions: cra lawlawlib rary
xxx Only after these checking did an actual
inspection of the properties took (sic) place, but
on this occasion, unfortunately, none of the
plaintiffs, especially plaintiff Filadelfa T. Lausa,
who is found lately to be residing nearby,
furnished her the information of the present
claims.
7
She likewise made the same admission in an
affidavit, viz:
cralawlaw lib rary
6. The properties which were mortgaged were
checked and no one at that time, even plaintiff
Filadelfa T. Lausa who is just residing nearby,
disputed that the absolute owners thereof were
the spouses Rodrigo and Ligaya Tugot.
While these admissions pertain to the petitioners'
act of not telling Lopez of the status of Lot No.
557-A, it implies that she had inspected the
property, and accordingly found that Rodrigo did
not reside in Lot No. 557-A.
Records of the case show that Filadelfa resided in
Lot No. 557-A at the time Lopez executed the real
estate mortgage with Rodrigo. In August 1995,
Rodrigo and his siblings filed an ejectment case
against the petitioners Filadelfa Lausa and
Anacleto Caduhay - Filadelfa resides in Lot No.
557-A while Anacleto's in Lot 557-B. Notably, this
ejectment case was filed five months after Lopez
had entered into the real estate mortgage
contract. Thus, at the time Lopez inspected Lot
No. 557, she would have found Filadelfa residing
in it, and not Rodrigo.
That Filadelfa - and not Rodrigo - resided in Lot
No. 557-A should have prompted Lopez to make
further inquiries over its status. Further inquiries
with the lot owners of surrounding property could
have informed her of its actual status. Instead,
she contented herself with checking the copy of
the title to Lot No. 557-A against the copy in the
Registry of Deeds of Cebu, which she had done
prior to the actual inspection of Lot No. 557-A.
The law cannot protect Lopez's rights to Lot 557-
A given her complacency.
Further, the status of an innocent-purchaser for
value or innocent mortgagor for value is
established by the person claiming it, an onus
probandi that Lopez failed to meet.
In her memorandum, Lopez urged the Court to
acknowledge her rights over Lot No. 557-A,
arguing that the declaration of her status as an
innocent-purchaser and innocent mortgagor is a
non-issue because it was never pleaded in her co-
respondents' amended complaint. She also
pointed out that a valid title can emerge from a
fabricated title, and essentially invoked the
innocent purchaser for value doctrine.
The amended complaint alleges that Lopez's
status as current owner of Lot 557-A prejudices
the rights of the petitioners, who are its true
owners. The circumstances regarding how Lopez
acquired ownership over Lot No. 557-A had also
been pleaded therein.
Verily, the amended complaint does not need to
allege Lopez's status as an innocent purchaser or
mortgagor in good faith precisely because it was
incumbent upon her to allege and prove this to
defend her title to Lot No. 557-A. It merely
needed to allege a cause of action against Lopez,
(which it did by alleging the circumstances
surrounding Lopez's ownership of Lot No. 557-A)
and that it prejudices the petitioners' rights as its
true owners.
Further, Lopez chose to ignore in her
Memorandum the petitioners' contention that she
knew that Filadelfa Lausa, and not Rodrigo,
resided in Lot No. 557-A. To reiterate, Lopez has
the burden of proving her status as an innocent
purchaser for value in order to invoke its
application. Failing in this, she cannot avail of the
protection the law grants to innocent purchasers
for value.
The CA erred in finding that the petitioners'
claim of ownership over Lot No. 557 had
been barred by prescription and laches
The outcome of the present case dispenses with
the need for a discussion regarding extinctive
prescription and laches.
We note, however, that the CA erred in applying
the principle of prescription and laches to the
petitioners' cause of action involving Lot No. 557.
An action for annulment of title or reconveyance
based on fraud is imprescriptible where the
plaintiff is in possession of the property subject of
the fraudulent acts. One who is in actual
possession of a piece of land on a claim of
ownership thereof may wait until his possession is
disturbed or his title is attacked before taking
steps to vindicate his right.
The records of the case show that the petitioners
resided in the property at the time they learned
about TCT No. 571. Being in possession of Lot No.
557, their claim for annulment of title had not
expired. Their ownership of Lot No. 571, however,
is a different matter.
Effects of the Court's decision
Our decision in the present case does not settle
the ownership of Lot No. 557. To recapitulate, our
examination of the records and the evidence
presented by the petitioners and the respondents
lead us to conclude that neither of them own Lot
No. 557.
Despite the intent of Act No. 1120 and Republic
Act No. 9443 to transfer ownership of the Banilad
Friar Estate Lands to its occupants, we cannot
settle the ownership of Lot No. 557 in the present
case.
Indeed, the petitioners and the respondents are
the actual occupants of Lot No. 557, and they and
their families (with the exception of Rosita Lopez)
have resided in the lot since 1915.
However, as we have discussed above, neither
party had been able to establish their right of
ownership, much less possession, of Lot No. 557.
The petitioners anchor their claim on acquisitive
prescription, which does not lie against registered
land or the government. The respondents, on the
8
other hand, presented spurious TCTs. Thus, no
amount of liberal interpretation of Act No. 1120 or
Republic Act No. 9443 could give either party the
right over the lot.
Neither can we ignore the evidence showing that
none of them could rightfully own Lot No. 557.
The petitioners' cancelled deed of assignment and
tax declarations cannot establish their ownership
over Lot No. 557; especially since the operation
of pertinent laws prevented the possibility of
acquisitive prescription. The respondents' TCT No.
571, on the other hand, had several discrepancies
indicating that it was a fake.
The exercise of the Court's judicial power settles
actual controversies between parties, through
which the Court establishes their legally
enforceable and demandable rights. We
determine the parties' rights based on the
application of the law to the facts established
through the pieces of evidence submitted by the
parties. The application of the law on the facts of
the present case establishes that neither party
has a legally enforceable right over Lot No. 557.
Given this situation, we direct that the records of
the case be transmitted to the Land Management
Bureau6 for further investigation and appropriate
action over Lot No. 557 of the Banilad Friar Estate
Lands.
Additionally, we direct that a copy of the records
of the case be transmitted to the Ombudsman,
for further investigation regarding how the fake
TCTs covering Lot No. 557 ended up in the
Registry of Deeds of Cebu City, and for the
criminal and administrative investigation of
government officials liable for them.
WHEREFORE, premises considered, the instant
Petition for Review on Certiorari is PARTIALLY
GRANTED. The Court of Appeals Decision in CA-
G.R. CV No. 63248 is MODIFIED, and the
following titles are declared null and void: (1) TCT
No. 571 issued to Mauricia Quilaton; (2) TCT No.
130517 issued to Rodrigo Tugot; (3) TCT No.
130518 issued to Purificacion Codilla; (4) TCT No.
130519 issued to Teofra Sadaya; (5) TCT No.
130520 issued to Estrellita Galeos; (5) TCT No.
130521 issued to Rodrigo Tugot; and (6) TCT No.
143511 issued to Rosita Lopez.
The claim of the petitioners Filadelfa T. Lausa,
Loreta T. Torres, Primitivo Tugot and Anacleto T.
]Caduhay for recognition of their ownership over
Lot No. 557 is DENIED.
We DIRECT that a copy of the records of the
case be transmitted to the Land Management
Bureau and the Ombudsman for further
investigation and appropriate action.
SO ORDERED.
chanrobles virtuallawlibrary
[G.R. No. 116111. January 21, 1999.]
REPUBLIC OF THE PHILIPPINES,
(Represented by the Acting Commissioner of
Land Registration), Petitioner, v. COURT OF
APPEALS, Spouses CATALINO SANTOS and
THELMA BARRERO SANTOS, ST. JUDE’S
ENTERPRISES, INC., Spouses DOMINGO
CALAGUIAN and FELICIDAD CALAGUIAN,
VIRGINIA DELA FUENTE and LUCY
MADAYA, Respondents.
DECISION
PANGANIBAN, J.:
Is the immunity of the government from laches
and estoppel absolute? May it still recover the
ownership of lots sold in good faith by a private
developer to innocent purchasers for value,
notwithstanding its approval of the subdivision
plan and its issuance of separate individual
certificates of title thereto?
The Case
These are the main questions raised in the
Petition for Review before us, seeking to set aside
the November 29, 1993 Decision 1 of the Court of
Appeals 2 in CA-GR CV No. 34647. The assailed
Decision affirmed the ruling 3 of the Regional Trial
Court of Caloocan City, Branch 125, in Civil Case
No. C-111708, which dismissed petitioner’s
Complaint for the cancellation of Transfer
Certificates of Title (TCTs) to several lots in
Caloocan City, issued in the name of private
respondents.
chanroblesv irt uallawl ibra ry
In a Resolution 4 dated July 7, 1994, the Court of
Appeals denied the Republic’s motion for
reconsideration.
The Facts
The facts of the case are not disputed. The trial
court’s summary, which was adopted by the Court
of Appeals, is reproduced below:
"Defendant St. Jude’s Enterprises, Inc. is the
registered owner of a parcel of land known as Lot
865-B-1 of the subdivision plan (LRC) PSD-
52368, being a portion of Lot 865-B located in
Caloocan City containing an area of 40,623
square meters. For Lot 865-B-1 defendant St.
Jude’s Enterprises, Inc. was issued TCT No.
22660 on July 25, 1966.
"Sometime in March 1966 defendant St. Jude’s
Enterprises, Inc. subdivided Lot No. 865-B-1
under subdivision plan (LRC) PSD-55643 and as a
result thereof the Register of Deeds of Caloocan
City cancelled TCT No. 22660 and in lieu thereof
issued Certificates of Title Nos. 23967 up to
24068 inclusive, all in the name of defendant St.
Jude’s Enterprises, Inc. The subdivision of lot
865-B-1 [which was] covered [by] TCT No. 22660
was later found to have expanded and enlarged
from its original area of 40,523 square meters to
42,044 square meters or an increase of 1,421
square meters. This expansion or increase in area
was confirmed by the Land Registration
Commission [to have been made] on the northern
portion of Lot 865-B-1.
"Subsequently, defendant St. Jude’s Enterprises,
9
Inc. sold the lots covered by TCT Nos. 24013 and
24014 to defendant Sps. Catalino Santos and
Thelma Barreto Santos[;] TCT No. 24019 to
defendant Sps. Domingo Calaguian and Felicidad
de Jesus[;] TCT No. 24022 to defendant Virginia
dela Fuente[;] and TCT No. 2402[3] to defendant
Lucy Madaya. Accordingly, these titles were
cancelled and said defendants were issued the
following: TCT No. C-43319 issued in the name of
Sps. Santos containing an area of 344 square
meters[;] TCT No. 55513 issued in the name of
defendants Sps. Calaguian containing an area of
344 square meters[;] TCT No. 13309 issued in
the name of Sps. Santos[;] TCT No. 24069 issued
in the name of Virgina dela Fuente containing an
area of 350 square meters[;] and TCT No. C-
46648 issued in the name of defendant Lucy
Madaya with an area of 350 square meters." 5
" [On January 29, 1985, then Solicitor General
Estelito Mendoza filed] an action seeking . . . the
annulment and cancellation of Transfer
Certificates of Title (TCT) Nos. 24015, 24017,
jgc:cha nrob les.co m.ph
24018, 24020, 24021, 24024, 24025 and 24068
issued in the name of defendant St. Jude’s
Enterprises, Inc.[;] Transfer Certificates of Title
Nos. 13309 and C-43319 both registered in the
name of Sps. Catalino Santos and Thelma B.
Santos[;] TCT No. 55513 registered in the name
of Sps. Domingo Calaguian and Felicidad de
Jesus[;] TCT No. 24069 registered in the name of
Virginia dela Fuente[;] and TCT No. C-46648
registered in the name of Lucy Madaya,
principally on the ground that said Certificates of
Title were issued on the strength of [a] null and
void subdivision plan (LRC) PSD-55643 which
expanded the original area of TCT No. 22660 in
the name of St. Jude’s Enterprises, Inc. from
40,623 square meters to 42,044 square meters
upon its subdivision.
"Defendants Virgina dela Fuente and Lucy Madaya
were declared in default for failure to file their
respective answers within the reglementary
period.
"Defendants Sps. Catalino Santos and Thelma
Barreto Santos, St. Jude’s Enterprises, Inc. and
Sps. Domingo Calaguian and Felicidad Calaguian
filed separate answers to the complaint.
Defendants Sps. Domingo Calaguian and Sps.
Catalino Santos interposed defenses, among
others, that they acquired the lots in question in
good faith from their former owner, defendant St.
Judes Enterprises, Inc. and for value and that the
titles issued to the said defendants were rendered
incontrovertible, conclusive and indefeasible after
one year from the date of the issuance of the
titles by the Register of Deeds of Caloocan
City.
chanroble svi rtual|awl ibra ry
"On the other hand, defendant St. Jude’s
Enterprises, Inc. interposed defenses, among
others, that the cause of action of plaintiff is
barred by prior judgment; that the subdivision
plan submitted having been approved by the LRC,
the government is now in estoppel to question the
approved subdivision plan; and the plaintiff’s
allegation that the area of the subdivision
increased by 1,421 square meters is without any
basis in fact and in law." 6
Ruling of the Trial Court
On April 30, 1991, the trial court dismissed the
Complaint. 7 While the plaintiff sufficiently proved
the enlargement or expansion of the area of the
disputed property, it presented no proof that
Respondent St. Jude Enterprises, Inc. ("St. Jude")
had committed fraud when it submitted the
subdivision plan to the Land Registration
Commission (LRC) for approval. Because the plan
was presumed to have been subjected to
investigation, study and verification by the LRC,
there was no one to blame for the increase in the
area "but the plaintiff[,] for having allowed and
approved the subdivision plan." Thus, the court
concluded, the government was already "in
estoppel to question the approved subdivision
plan." cralaw virt ua1aw lib rary
The trial court also took into account the "absence
of complaints from adjoining owners whose
supposed lost [were] encroached upon by the
defendants,’’ as well as the fact that an adjoining
owner had categorically stated that there was no
such encroachment. Finding that Spouses Santos,
Spouses Calaguian, Dela Fuente and Madaya had
bought their respective lots from St. Jude for
value and in good faith, the court held that their
titles could no longer be questioned, because
under the Torrens system, such titles had become
absolute and irrevocable. As regards the
Republic’s allegation that it had filed the case to
protect the integrity of the said system, the court
said:jgc:chan roble s.com.p h
". . . [S]ustaining the position taken by the
government would certainly lead to disastrous
consequences. Buyers in good faith would lose
their titles. Adjoining owners who were deprived
of a portion of their lot would be forced to accept
the portion of the property allegedly encroached
upon. Actions for recovery will be filed right and
left[;] thus instead of preserving the integrity of
the Torrens System it would certainly cause chaos
rather than stability. Finally, if only to strengthen
the Torrens System and in the interest of justice,
the boundaries of the affected properties of the
defendants should not be disturbed and the
status quo should be maintained." 8
The solicitor general appealed the trial court’s
Decision to the Court of Appeals.
Ruling of the Appellate Court
Citing several cases 9 upholding the
indefeasibility of titles issued under the Torrens
system, the appellate court affirmed the trial
court. It berated petitioner for bringing the suit
only after nineteen (19) years had passed since
the issuance of St. Jude’s title and the approval of
the subdivision plan. The pertinent portion of the
assailed Decision reads: 10
". . . Rather than make the Torrens system
reliable and stable, [its] act of filing the instant
suit rocks the system, as it gives the impression
to Torrens title holders, like appellees, that their
titles to properties can be questioned by the same
authority who had approved the same even after
a long period of time. In that case, no Torrens
title holder shall be at peace with the ownership
and possession of his land, for the Commission of
Land Registration can question his title any time it
makes a finding unfavorable to said Torrens title
holder." cralaw vi rtua 1aw lib rary
Undaunted, petitioner seeks a review by this
Court. 11
The Issues
In this petition, the Republic raises the following
10
issues for our resolution: 12
"1. Whether or not the government is estopped
from questioning the approved subdivision plan
which expanded the areas covered by the transfer
certificates of title in question;
"2. Whether or not the Court of Appeals erred
when it did not consider the Torrens System as
merely a means of registering title to land;
"3. Whether or not the Court of Appeals erred
when it failed to consider that petitioner’s
complaint before the lower court was filed to
preserve the integrity of the Torrens System." cralaw virt ua1aw li bra ry
We shall discuss the second and third questions
together. Hence, the issues shall be (1) the
applicability of estoppel against the State and (2)
the Torrens system. chanroble svirtual lawlib rary
The Court’s Ruling
The petition is bereft of merit.
First Issue: chanrob1es vi rt ual 1aw li bra ry
Estoppel Against the Government
The general rule is that the State cannot be put in
estoppel by the mistakes or errors of its officials
or agents. 13 However, like all general rules, this
is also subject to exceptions, viz.: 14
"Estoppel against the public are little favored.
They should not be invoked except in rare and
unusual circumstances and may not be invoked
where they would operate to defeat the effective
operation of a policy adopted to protect the
public. They must be applied with circumspection
and should be applied only in those special cases
where the interests of justice clearly require it.
Nevertheless, the government must not be
allowed to deal dishonorably or capriciously with
its citizens, and must not play an ignoble part or
do a shabby thing; and subject to limitations . . .,
the doctrine of equitable estoppel may be invoked
against public authorities as well as against
private individuals." cralaw virtua1aw l ibra ry
In Republic v. Sandiganbayan, 15 the
government, in its effort to recover ill-gotten
wealth, tried to skirt the application of estoppel
against it by invoking a specific constitutional
provision. 16 The Court countered: 17
"We agree with the statement that the State is
immune from estoppel, but this concept is
understood to refer to acts and mistakes of its
officials especially those which are irregular
(Sharp International Marketing v. Court of
Appeals, 201 SCRA 299; 306 [1991]; Republic v.
Aquino, 120 SCRA 186 [1983]), which peculiar
circumstances are absent in the case at bar.
Although the State’s right of action to recover ill-
gotten wealth is not vulnerable to estoppel[;] it is
non sequitur to suggest that a contract, freely
and in good faith executed between the parties
thereto is susceptible to disturbance ad infinitum.
A different interpretation will lead to the absurd
scenario of permitting a party to unilaterally
jettison a compromise agreement which is
supposed to have the authority of res judicata
(Article 2037, New Civil Code), and like any other
contract, has the force of law between parties
thereto (Article 1159, New Civil Code; Hernaez v.
Kao, 17 SCRA 296 [1966]; 6 Padilla, Civil Code
Annotated, 7th ed., 1987, p. 711; 3 Aquino, Civil
Code, 1990 ed., p. 463) . . ."cralaw virtua1aw li bra ry
The Court further declared that" (t)he real office
of the equitable norm of estoppel is limited to
supply[ing] deficiency in the law, but it should not
supplant positive law." 18
In the case at bar, for nearly twenty years
(starting from the issuance of St. Jude’s titles in
1966 up to the filing of the Complaint in 1985),
petitioner failed to correct and recover the alleged
increase in the land area of St. Jude. Its
prolonged inaction strongly militates against its
cause, as it is tantamount to laches, which means
"the failure or neglect, for an unreasonable and
unexplained length of time, to do that which by
exercising due diligence could or should have
been done earlier; it is negligence or omission to
assert a right within a reasonable time,
warranting a presumption that the party entitled
to assert it either has abandoned it or declined to
assert it." 19
The Court notes private respondents’ argument
that, prior to the subdivision, the surveyors erred
in the original survey of the whole tract of land
covered by TCT No. 22660, so that less than the
actual land area was indicated on the title.
Otherwise, the adjoining owners would have
complained upon the partition of the land in
accordance with the LRC-approved subdivision
plan. As it is, Florencio Quintos, the owner of the
9,146 square-meter Quintos Village adjoining the
northern portion of St. Jude’s property (the
portion allegedly "expanded"), even attested on
August 16, 1973 that "there [was] no overlapping
of boundaries as per my approved plan (LRC) PSD
147766 dated September 8, 1971." 20 None of
the other neighboring owners ever complained
against St. Jude or the purchasers of its property.
It is clear, therefore, that there was no actual
damage to third persons caused by the resurvey
and the subdivision. chanrobles vi rt ual lawli bra ry
Significantly, the other private respondents —
Spouses Santos, Spouses Calaguian, Dela Fuente
and Madaya — bought such "expanded" lots in
good faith, relying on the clean certificates of St.
Jude, which had no notice of any flaw in them
either. It is only fair and reasonable to apply the
equitable principle of estoppel by laches against
the government to avoid an injustice 21 to the
innocent purchasers for value.
Likewise time-settled is the doctrine that where
innocent third persons, relying on the correctness
of the certificate of title, acquire rights over the
property, courts cannot disregard such rights and
order the cancellation of the certificate. Such
cancellation would impair public confidence in the
certificate of title, for everyone dealing with
property registered under the Torrens system
would have to inquire in every instance whether
the title has been regularly issued or not. This
would be contrary to the very purpose of the law,
which is to stabilize land titles. Verily, all persons
dealing with registered land may safely rely on
the correctness of the certificate of title issued
therefor, and the law or the courts do not oblige
them to go behind the certificate in order to
investigate again the true condition of the
property. They are only charged with notice of the
liens and encumbrances on the property that are
noted on the certificate. 22
When private respondents-purchasers bought
their lots from St. Jude, they did not have to go
11
behind the titles thereto to verify their contents or
search for hidden defects or inchoate rights that
could defeat their rights to said lots. Although
they were bound by liens and encumbrances
annotated on the titles, private respondents-
purchasers could not have had notice of defects
that only an inquiry beyond the face of the titles
could have satisfied. 23 The rationale for this
presumption has been stated thus: 24
"The main purpose of the Torrens System is to
avoid possible conflicts of title to real estate and
to facilitate transactions relative thereto by giving
the public the right to rely upon the face of a
Torrens Certificate of Title and to dispense with
the need of inquiring further, except when the
party concerned had actual knowledge of facts
and circumstances that should impel a reasonably
cautious man to make such further inquiry
(Pascua v. Capuyoc, 77 SCRA 78). Thus, where
innocent third persons relying on the correctness
of the certificate thus issued, acquire rights over
the property, the court cannot disregard such
rights (Director of Land v. Abache, Et Al., 73 Phil.
606)."cralaw virtua1aw li bra ry
In another case, 25 this Court further said: jgc:chan roble s.com. ph
"The Torrens System was adopted in this country
because it was believed to be the most effective
measure to guarantee the integrity of land titles
and to protect their indefeasibility once the claim
of ownership is established and recognized. If a
person purchases a piece of land on the
assurance that the seller’s title thereto is valid, he
should not run the risk of being told later that his
acquisition was ineffectual after all. This would
not only be unfair to him. What is worse is that if
this were permitted, public confidence in the
system would be eroded and land transactions
would have to be attended by complicated and
not necessarily conclusive investigations and
proof of ownership. The further consequence
would be that land conflicts could be even more
abrasive, if not even violent. The Government,
recognizing the worthy purposes of the Torrens
System, should be the first to accept the validity
of titles issued thereunder once the conditions
laid down by the law are satisfied." [Emphasis
supplied.]
Petitioner never presented proof that the private
respondents who had bought their lots from St.
Jude were buyers in bad faith. Consequently,
their claim of good faith prevails. 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 an interest in such
property; and who pays a full and fair price for
the same at the time of such purchase or before
he or she has notice of the claims or interest of
some other person. 26 Good faith is the honest
intention to abstain from taking any
unconscientious advantage of another. 27
Furthermore, it should be stressed that the total
area of forty thousand six hundred twenty-three
(40,623) square meters indicated on St. Jude’s
original title (TCT No. 22660) was not an exact
area. Such figure was followed by the phrase
"more or less." This plainly means that the land
area indicated was not precise. Atty. Antonio H.
Noblejas, who became the counsel of St. Jude
subsequent to his tenure as Land Registration
Commissioner, offers a sensible explanation. In
his letter 28 to the LRC dated November 8, 1982,
he gave the following information: jgc:chan robles. com.ph
"a. Records show that our client owned a large
tract of land situated in an area cutting the
boundary of Quezon City and Caloocan City, then
known as Lot 865-B, Psd-60608, and described in
T.C.T. No. 100412, containing an area of 96,931
sq. meters, more or less.
b. It will be noted that on the northern portion of
this Lot 865-B, Psd-60608, is . . . Lot 865-A, Psd-
60608, which means that at a previous point of
time, these 2 lots composed one whole tract of
land.
c. On December 23, 1965, Lot 865-B, Psd-60608,
was subdivided into 2 lots, denominated as Lot
865-B-1, with an area of 40,622 sq. meters, more
or less, on the Caloocan side, and Lot 865-B-2,
with an area of 56,308 sq. meters, more or less,
on the Quezon City side, under Plan (LRC) Psd-
52368.
d. On March 1-10, 1966, Lot 865-B-1, Psd-52368,
then covered by T.C.T. No. N-22660, was
subdivided into residential lots under Plan (LRC)
Psd-55643, with a total area of 42,044 sq.
meters, more or less.
e. It will be noted that Lot 865-B, Psd-60608,
covered by T.C.T. No. 100412, contained an area
of 96,931 sq. meters, more or less, but when
subdivided under Plan (LRC) Psd-52368, into 2
lots, its total area shrank by 1 sq. meter, to wit:
virtua l 1aw lib rary
chanro b1es
Lot 865-B-1, Psd-52368 40,622 sq. meters
Lot 865-B-2, Psd-52368 56,308"
––––––
96,930 sq. meters
––––––
f. There is no allegation whatever in the Perez
report that there was error in laying out the
metes and bounds of Lot 865-B-1 in Plan (LRC)
Psd-55643, as specified in the Technical
Description of the said lot set forth in T.C.T. No.
N-22660 covering the same. There is likewise no
allegation, on the contrary there is confirmation
from the boundary owner on the northern side,
Mr. Florencio Quintos, that there is no overlapping
of boundaries on the northern side of Lot 865-B-
1, Psd-55643. chanrob lesvi rtua l|awlibra ry
g. We respectfully submit that the area of 42,044
sq. meters stated in Plan (LRC) Psd-55643 as the
size of Lot 865-B-a, is the more accurate area,
confirmed by the Perez report ‘as per surveyor[’]s
findings on the ground’, which rectifies previous
surveyor’s error in computing its area as 40,622
sq. meters in Plan (LRC) Psd-52368, which is
about 3.5% tolerable error (1,422 divided by
40,622 = .035).
[h.] It is well settled that in the identification of a
parcel of land covered by a certificate of title,
what is controlling are the metes and bounds as
set forth in its Technical Description and not the
area stated therein, which is merely an
approximation as indicated in the ‘more or less’
phrase placed after the number of square meters.
i. There is thus no unauthorized expansion of the
survey occasioned by the subdivision of Lot 865-
B-1 under Plan (LRC) Psd-55643; consequently,
LRC Circular No. 167, Series of 1967, finds no
application thereto, as to bar the processing and
12
registration in due course of transactions
involving the subdivision lots of our client, subject
hereof. This is apart from the fact that LRC
Circular No. 167 has not been implemented by
the Register of Deeds of Caloocan City or any
proper government authority since its issuance in
1967, and that, in the interest of justice and
equity, its restrictive and oppressive effect on
transactions over certificates of titles of
subdivisions that allegedly expanded on re-
surveys, cannot be allowed to continue
indefinitely." (Emphasis supplied.)
The discrepancy in the figures could have been
caused by the inadvertence or the negligence of
the surveyors. There is no proof, though, that the
land area indicated was intentionally and
fraudulently increased. The property originally
registered was the same property that was
subdivided. It is well-settled that what defines a
piece of titled property is not the numerical data
indicated as the area of the land, but the
boundaries or "metes and bounds" of the property
specified in its technical description as enclosing it
and showing its limits. 29
Petitioner miserably failed to prove any fraud,
either on the part of Private Respondent St. Jude
or on the part of land registration officials who
had approved the subdivision plan and issued the
questioned TCTs. Other than its peremptory
statement in the Complaint that the "expansion"
of the area was "motivated by bad faith with
intent to defraud, to the damage and prejudice of
the government and of public interest," petitioner
did not allege specifically how fraud was
perpetrated to cause an increase in the actual
land size indicated. Nor was any evidence
proffered to substantiate the allegation. That the
land registration authorities supposedly erred or
committed an irregularity was merely a
conclusion drawn from the "table survey" showing
that the aggregate area of the subdivision lots
exceeded the area indicated on the title of the
property before its subdivision. Fraud cannot be
presumed, and the failure of petitioner to prove it
defeats its own cause. chanrobles lawl ibra ry : chan rob les.com
Second Issue: chanrob1e s virtual 1aw l ibra ry
The Torrens System
True, the Torrens system is not a means of
acquiring titles to lands; it is merely a system of
registration of titles to lands. 30 Consequently,
land erroneously included in a Torrens certificate
of title is not necessarily acquired by the holder of
such certificate. 31
But in the interest of justice and equity, neither
may the titleholder be made to bear the
unfavorable effect of the mistake or negligence of
the State’s agents, in the absence of proof of his
complicity in a fraud or of manifest damage to
third persons. First, the real purpose of the
Torrens system is to quiet title to land to put a
stop forever to any question as to the legality of
the title, except claims that were noted in the
certificate at the time of the registration or that
may arise subsequent thereto. 32 Second, as we
discussed earlier, estoppel by laches now bars
petitioner from questioning private respondents’
titles to the subdivision lots. Third, it was never
proven that Private Respondent St. Jude was a
party to the fraud that led to the increase in the
area of the property after its subdivision. Finally,
because petitioner even failed to give sufficient
proof of any error that might have been
committed by its agents who had surveyed the
property, the presumption of regularity in the
performance of their functions must be respected.
Otherwise, the integrity of the Torrens system,
which petitioner purportedly aims to protect by
filing this case, shall forever be sullied by the
ineptitude and inefficiency of land registration
officials, who are ordinarily presumed to have
regularly performed their duties. 33
We cannot, therefore, adhere to the petitioner’s
submission that, in filing this suit, it seeks to
preserve the integrity of the Torrens system. To
the contrary, it is rather evident from our
foregoing discussion that petitioner’s action
derogates the very integrity of the system. Time
and again, we have said that a Torrens certificate
is evidence of an indefeasible title to property in
favor of the person whose name appears thereon.
WHEREFORE, the petition is hereby DENIED and
the assailed Decision is AFFIRMED.
chanroblesv irt ual|awlib ra ry
SO ORDERED.
G.R. No. 201405, August 24, 2015 subject property to the nearest public road and
vice versa. They thus prayed for a right-of-way
LIWAYWAY ANDRES, RONNIE ANDRES, AND within Binangonan Metropolis East in order for
PABLO B. FRANCISCO, Petitioners, v. STA. them to have access to Col. Guido Street, a public
LUCIA REALTY & DEVELOPMENT, road.
INCORPORATED, Respondent.
In its Answer,5 respondent denied knowledge of
any property adjoining its subdivision owned by
DECISION petitioners and Liza. At any rate, it pointed out
that petitioners and Liza failed to sufficiently
DEL CASTILLO, J.: allege in their complaint the existence of the
requisites for the grant of an easement of right-
of-way.
Not all may demand for an easement of right-of-
way. Under the law, an easement of right-of-way
During trial, Pablo testified that he bought a
may only be demanded by the owner of an
4,000-square meter-portion of the subject
immovable property or by any person who by
property from Carlos Andres (Carlos), the
virtue of a real right may cultivate or use the
husband of Liwayway and father of Ronnie and
same.
Liza.6 According to Pablo, he and his co-plaintiffs
are still in possession of the subject property as
This Petition for Review on Certiorari assails the
evidenced by an April 13, 1998
November 17, 2011 Decision1 of the Court of
Certification7 issued by the Barangay Chairman of
Appeals in CA-G.R. CV No. 87715, which reversed
Pag-asa.8 Further, Pablo clarified that the
and set aside the May 22, 2006 Decision2 of the
easement of right-of-way that they are asking
Regional Trial Court (RTC), Binangonan, Rizal,
from respondent would traverse the latter's
Branch 68 granting petitioners Pablo B. Francisco
subdivision for about 50 meters from the subject
(Pablo), Liwayway Andres (Liwayway), Ronnie
property all the way to another subdivision that
Andres (Ronnie) and their co-plaintiff Liza Andres
he co-owns, Victoria Village, which in turn, leads
(Liza) a 50-square meter right-of-way within the
to Col. Guido Street.9 He claimed that the
subdivision of respondent Sta. Lucia Realty and
prevailing market value of lands in the area is
Development, Incorporated (respondent).
about P600.00 per square meter. Pablo also
explained that the subject property is still not
Likewise assailed is the March 27, 2012 CA
registered under the Land Registration Act since
Resolution3 which denied petitioners and Liza's
no tax declaration over the same has been issued
Motion for Reconsideration thereto.
to them despite application with the Municipal
Assessor of Binangonan.10 When required by the
Factual Antecedents
court to submit documents regarding the said
application,11 Pablo attached in his
Petitioners and Liza filed a Complaint4 for
Compliance,12 among others, Carlos' letter13 of
Easement of Right-of-Way against respondent
Maty 18, 1998 to the Municipal Assessor of
before the RTC on November 28,2000. They
Binangonan requesting for the issuance of a tax
alleged that they are co-owners and possessors
declaration and the reply thereto dated August 5,
for more than 50 years of three parcels of
199814 of the Provincial Assessor of Rizal. In the
unregistered agricultural land in Pag-asa,
aforesaid reply, the Provincial Assessor denied the
Binangonan, Rizal with a total area of more or
request on the ground that the subject property
less 10,500 square meters (subject property). A
was already declared for taxation purposes under
few years back, however, respondent acquired
the name of Juan Diaz and later, in the name of
the lands surrounding the subject property,
Juanito15Blanco, et al. (the Blancos).
developed the same into a residential subdivision
known as the Binangonan Metropolis East, and
Liwayway testified next. According to her, she
built a concrete perimeter fence around it such
and her children Ronnie and Liza are the surviving
that petitioners and Liza were denied access from
heirs of the late Carlos who owned the subject
13
property.16 Carlos acquired ownership over the
same after he had been in continuous, public and
peaceful possession thereof for 50 years,17 the
circumstances of which he narrated in
a Sinumpaang Salaysay18 that he executed while
he was still alive. Carlos stated therein that even
before he was born in 1939, his father was
already in possession and working on the subject
property; that in 1948, he started to help his
father in tilling the land; that when his father
property; (2) the area and location of the right-
of-way sought; (3) the value of the land on which
the right-of-way is to be constituted which was
P600.00 per square meter; and (4) petitioners
and Liza's possession of the subject property up
to the present time.
In the ultimate, said court concluded that
petitioners and Liza are entitled to an easement
of right-of-way, thus: cralawlawlib rary
2006 Decision of the Regional Trial Court of
Binangonan, Rizal, Branch 68 is REVERSED and
SET ASIDE. Civil Case No. 00-037-B is ordered
DISMISSED.
SO ORDERED.30
Petitioners and Liza's Motion for
Reconsideration31 was denied in the CA
Resolution32 dated March 27, 2012.

became weak and eventually died, he took over
the land; and, that he already sought to register
his ownership of the property with the
Department of Environment and Natural
Resources (DENR) and to declare the same for
taxation purposes.
For its part, respondent presented as a lone
witness the then Municipal Assessor of
Binangonan, Virgilio Flordeliza (Flordeliza).
Flordeliza confirmed that Carlos wrote him a
letter-request for the issuance of a tax
declaration.19 He, however, referred the matter to
the Provincial Assessor of Rizal since the property
for which the tax declaration was being applied
for was already declared for taxation purposes in
the name of one Juan Diaz.20 Later, the tax
declaration of Juan Diaz was cancelled and in lieu
thereof, a tax declaration in the name of the
Blancos was issued.21 For this reason, the
Provincial Assessor of Rizal denied Carlos'
application for issuance of tax declaration.22
cralawred nad
WHEREFORE, judgment is hereby rendered giving
the plaintiffs a right of way of 50 square meters
to reach Victoria Village towards Col. Guido
Street. Defendant Sta. Lucia is hereby ordered to
grant the right of way to the plaintiffs as
previously described upon payment of an
indemnity equivalent to the market value of the
[50-square meter right of way].
SO ORDERED.26
Respondent filed a Notice of Appeal which was
given due course by the RTC in an Order28 dated
June 27, 2006.
Ruling of the Court of Appeals
On appeal, respondent argued mat petitioners
and Liza were neither able to prove that they
were owners nor that they have any real right
over the subject property intended to be the
Hence, petitioners seek recourse to this Court
through this Petition for Review on Certiorari.
Issue
Whether petitioners are entitled to demand an
easement of right-of-way from respondent.
Our Ruling
The Petition has no merit.
27
Under Article 649 of the Civil Code, an easement
of right-of-way may be demanded by the owner
of an immovable or by any person who by virtue
of a real right may cultivate or use the same.
Here, petitioners argue that they are entitled to
demand an easement of right-of-way from
respondent because they are the owners of the
subject property intended to be the dominant

estate. They contend that they have already

Ruling of the Regional Trial Court
The RTC rendered its Decision23 on May 22, 2006.
It observed that petitioners and Liza's allegation
in their Complaint that they were in possession of
the subject property for more than 50 years was
not denied by respondent in its Answer. Thus, the
same is deemed to have been impliedly admitted
by the latter. It then ratiocinated that based on
Article 113724 of the Civil Code, petitioners and
Liza are considered owners of the subject
property through extraordinary prescription.
Having real right over the same, therefore, they
are entitled to demand an easement of right-of-
way under Article 64925 of the Civil Code.
cra lawred
dominant estate. Hence, they are not entitled to
acquired ownership of the subject property
demand an easement of right-of-way. At any
through ordinary acquisitive prescription.33 This is
rate, they likewise failed to establish that the only
considering that their possession became adverse
route available from their property to Col. Guido
as against the Blancos (under whose names the
Street is through respondent's subdivision.
subject property is declared for taxation) when
Carlos formally registered his claim of ownership
In a Decision29 dated November 17, 2011, the CA
with the DENR and sought to declare the subject
held that the evidence adduced by petitioners and
property for taxation purposes in 1998. And since
Liza failed to sufficiently establish their asserted
more than 10 years34 had lapsed from that time
ownership and possession of the subject property.
without the Blancos doing anything to contest
Moreover, it held that contrary to the RTC's
their continued possession of the subject
observation, respondent in fact denied in its
property, petitioners aver that ordinary
Answer the allegation of petitioners and Liza that
acquisitive prescription had already set in their
they have been in possession of subject property
favor and against the Blancos.
for more than 50 years. In view of these, the CA
concluded that petitioners and Liza have no right

In the alternative, petitioners assert that they

The RTC further held that Pablo's testimony
to demand an easement of right-of-way from
have already become owners of the subject
respondent, thus:
property through extraordinary acquisitive
cralawlawli bra ry

sufficiently established: (1) that the subject WHEREFORE, in view of the foregoing, the appeal
prescription since (1) they have been in open,
property was surrounded by respondent's is hereby GRANTED. Accordingly, the May 22,

14
continuous and peaceful possession thereof for
more than 50 years; (2) the subject property, as
depicted in the Survey Plan they caused to be
prepared is alienable and disposable; (3) Carlos
filed a claim of ownership over the property with
the DENR, the agency charged with the
administration of alienable public land; and (4)
Carlos' manifestation of willingness to declare the
property for taxation purposes not only had the
effect of giving notice of his adverse claim on the
property but also strengthened his bona
fide claim of ownership over the same.
It must be stressed at the outset that contrary to
petitioners' allegations, there is no showing that
Carlos filed a claim of ownership over the subject
property with the DENR. His April 13, 1998
letter35 to the said office which petitioners assert
to be an application for the registration of such
claim is actually just a request for the issuance of
certain documents and nothing more. Moreover,
while Carlos indeed attempted to declare the
subject property for taxation purposes, his
application, as previously mentioned, was denied
because a tax declaration was already issued to
the Blancos.
Anent petitioners' invocation of ordinary
acquisitive prescription, the Court notes that the
same was raised for the first time on appeal.
Before the RTC, petitioners based their claim of
ownership on extraordinary acquisitive
prescription under Article 1137 of the Civil
Code36 such that the said court declared them
owners of the subject property by virtue thereof
in its May 22, 2006 Decision.37 Also with the CA,
petitioners initially asserted ownership through
extraordinary acquisitive prescription.38 It was
only later in their Motion for
Reconsideration39 therein that they averred that
their ownership could also be based on ordinary
acquisitive prescription.40 "Settled is the rule that
points of law, theories, issues and arguments not
brought to the attention of the lower court need
not be considered by a reviewing court, as they
cannot be raised for the first time at that late
stage. Basic considerations of fairness and due
process impel this rule."41cra lawredna d
Even if timely raised, such argument of
petitioners, as well as with respect to
extraordinary acquisitive prescription, fails.
"Prescription is one of the modes of acquiring
ownership under the Civil Code."42 There are two
modes of prescription through which immovables
may be acquired - ordinary acquisitive
prescription which requires possession in good
faith and just title for 10 years and, extraordinary
prescription wherein ownership and other real
rights over immovable property are acquired
through uninterrupted adverse possession for 30
years without need of title or of good
faith.43 However, it was clarified in the Heirs of
Mario Malabanan v. Republic of the
Philippines,44 that only lands of the public domain
subsequently classified or declared as no longer
intended for public use or for the development of
national wealth, or removed from the sphere of
public dominion and are considered converted
into patrimonial lands or lands of private
ownership, may be alienated or disposed through
any of the modes of acquiring ownership under
the Civil Code.45 And if the mode of acquisition is
prescription, whether ordinary or extraordinary, it
must first be shown that the land has already
been converted to private ownership prior to the
requisite acquisitive prescriptive period.
Otherwise, Article 1113 of the Civil Code, which
provides that property of the State not
patrimonial in character shall not be the subject
of prescription, applies.46
c ralawred nad
Sifting through petitioners' allegations, it appears
that the subject property is an unregistered public
agricultural land. Thus, being a land of the public
domain, petitioners, in order to validly claim
acquisition thereof through prescription, must
first be able to show that the State has -
expressly declared through either a law enacted
by Congress or a proclamation issued by the
President that the subject [property] is no longer
retained for public service or the development of
the national wealth or that the property has been
converted into patrimonial. Consequently, without
an express declaration by the State, the land
remains to be a property of public dominion and
hence, not susceptible to acquisition by virtue of
prescription.47
In the absence of such proof of declaration in this
case, petitioners' claim of ownership over the
subject property based on prescription necessarily
crumbles. Conversely, they cannot demand an
easement of right-of-way from respondent for
lack of personality.
15
All told, the Court finds no error on the part of the
CA in reversing and setting aside the May 22,
2006 Decision of the RTC and in ordering the
dismissal of petitioners' Complaint for Easement
of Right-of-Way against respondent.
WHEREFORE, the Petition is DENIED. The
November 17, 2011 Decision and March 27, 2014
Resolution of the Court of Appeals in CA-G.R. CV
No. 87715 are AFFIRMED.
SO ORDERED. chanrobles virtuallawlibrary
G.R. No. 213014, October 14, 2015
MAYBANK PHILIPPINES, INC. (FORMERLY
PNB-REPUBLIC
BANK1), Petitioner, v. SPOUSES OSCAR AND
NENITA TARROSA, Respondents.
DECISION
PERLAS-BERNABE, J.:
Assailed in this petition for review
on certiorari2 are the Decision3 dated November
29, 2013 and the Resolution4 dated May 13, 2014
of the Court of Appeals (CA) in CA-G.R. CV No.
02211, which affirmed the Decision5 dated June
16, 2005 of the Regional Trial Court of Bacolod
City, Branch 41 (RTC) in Civil Case No. 98-10451
declaring the extrajudicial foreclosure sale of the
property covered by Transfer Certificate of Title
(TCT) No. T-5649 as null and void for being
barred by prescription.
The Facts
On December 15, 1980, respondents-spouses
Oscar and Nenita Tarrosa (Sps. Tarrosa) obtained
from then PNB-Republic Bank, now petitioner
Maybank Philippines, Inc. (Maybank), a loan in
the amount of P91,000.00. The loan was secured
by a Real Estate Mortgage6 dated January 5, 1981
(real estate mortgage) over a 500-square meter
parcel of land situated in San Carlos City, Negros
Occidental (subject property), covered by TCT No.
T-5649,7 and the improvements thereon.8
After paying the said loan, or sometime in March
1983, Sps. Tarrosa obtained another loan from
Maybank in the amount of P60,000.00 (second
loan),9 payable on March 11, 1984.10 However,
Sps. Tarrosa failed to settle the second loan upon
maturity.11
Sometime in April 1998, Sps. Tarrosa received a
Final Demand Letter12 dated March 4, 1998 (final
demand letter) from Maybank requiring them to
settle their outstanding loan in the aggregate
amount of P564,579.91, inclusive of principal,
interests, and penalty charges.13 They offered to
pay a lesser amount, which Maybank
refused.14 Thereafter, or on June 25, 1998,
Maybank commenced extrajudicial foreclosure
proceedings15 before the office of Ex-Officio
Provincial Sheriff Ildefonso Villanueva, Jr. (Sheriff
Villanueva). The subject property was eventually
sold in a public auction sale held on July 29,
199816 for a total bid price of P600,000.00, to the
highest bidder, Philmay Property, Inc. (PPI),
which was thereafter issued a Certificate of
Sale17 dated July 30, 1998.18
On September 7, 1998, Sps. Tarrosa filed a
complaint19 for declaration of nullity and invalidity
of the foreclosure of real estate and of public
auction sale proceedings and damages with
prayer for preliminary injunction against
Maybank, PPI, Sheriff Villanueva, and the Registry
of Deeds of San Carlos City, Negros Occidental
(RD-San Carlos), before the RTC, docketed as
Civil Case No. 98-10451. They averred, inter
alia, that: (a) the second loan was a clean or
unsecured loan; (b) after receiving the final
demand letter, they tried to pay the second loan,
including the agreed interests and charges, but
Maybank unjustly refused their offers of payment;
and (c) Maybank's right to foreclose had
prescribed or is barred by laches.20
On the other hand, Maybank and PPI
countered21 that: (a) the second loan was secured
by the same real estate mortgage under a
continuing security provision therein; (b) when
the loan became past due, Sps. Tarrosa promised
to pay and negotiated for a restructuring of their
loan, but failed to pay despite demands; and (c)
Sps. Tarrosa's positive acknowledgment and
admission of their indebtedness controverts the
defense of prescription.
The RTC Ruling
In a Decision23 dated June 16, 2005, the RTC held
that the second loan was subject to the
continuing security provision in the real estate
mortgage.24 However, it ruled that Maybank's
right to foreclose, reckoned from the time the
mortgage indebtedness became due and payable
on March 11, 1984, had already prescribed,
considering the lack of any timely judicial action,
written extrajudicial demand or written
acknowledgment by the debtor of his debt that
could interrupt the prescriptive
period.25Accordingly, it declared the extrajudicial
foreclosure proceedings affecting the subject
property as null and void, and ordered Maybank
to pay Sps. Tarrosa moral and exemplary
damages, as well as attorney's fees and litigation
expenses.26
Maybank filed a motion for
reconsideration27 which was, however, denied in
an Order28 dated December 9, 2005, prompting it
to appeal29 to the CA.
The CA Ruling
In a Decision30 dated November 29, 2013, the CA
affirmed the RTC ruling that Maybank's right to
foreclose the real estate mortgage over the
subject property is already barred by prescription.
It held that the prescriptive period should be
reckoned from March 11, 1984 when the second
loan had become past due and remained unpaid
since demand was not a condition sine qua
non for the accrual of the latter's right to
foreclose under paragraph 5 of the real estate
mortgage. It observed that Maybank failed to
present evidence of any timely written
extrajudicial demand or written acknowledgment
by the debtors of their debt that could have
effectively interrupted the running of the
prescriptive period.31
Undaunted, Maybank moved for
reconsideration,32 which was denied in a
Resolution33 dated May 13, 2014; hence this
petition.
The Issues Before the Court
16
The essential issue for the Court's resolution is
whether or not the CA committed reversible error
in finding that Maybank's right to foreclose the
real estate mortgage over the subject property
was barred by prescription. cha nro bles law
The Court's Ruling
The petition is meritorious.
An action to enforce a right arising from a
mortgage should be enforced within ten (10)
years from the time the right of action
accrues, i.e., when the mortgagor defaults in
the payment of his obligation to the
mortgagee; otherwise, it will be barred by
prescription and the mortgagee will lose his
rights under the mortgage.34 However, mere
delinquency in payment does not necessarily
mean delay in the legal concept. To be in default
is different from mere delay in the grammatical
sense, because it involves the beginning of a
special condition or status which has its own
peculiar effects or results.35
In order that the debtor may be in default, it is
necessary that: (a) the obligation be demandable
and already liquidated; (b) the debtor delays
performance; and (c) the creditor requires the
performance judicially or extrajudicially,36unless
demand is not necessary - i.e., when there is an
express stipulation to that effect; where the law
so provides; when the period is the controlling
motive or the principal inducement for the
creation of the obligation; and where demand
would be useless. Moreover, it is not sufficient
that the law or obligation fixes a date for
performance; it must further state expressly that
after the period lapses, default will commence.
Thus, it is only when demand to pay is
unnecessary in case of the aforementioned
circumstances, or when required, such
demand is made and subsequently refused
that the mortgagor can be considered in
default and the mortgagee obtains the right
to file an action to collect the debt or
foreclose the mortgage.38
In the present case, both the CA and the RTC
reckoned the accrual of Maybank's cause of action
to foreclose the real estate mortgage over the
subject property from the maturity of the second
loan on May 11, 1984. The CA further held that
demand was unnecessary for the accrual of the
cause of action in light of paragraph 5 of the real
estate mortgage, which pertinently provides:
5. In the event that the Mortgagor herein should
fail or refuse to pay any of the sums of money
secured by this mortgage, or any part thereof, in
accordance with the terms and conditions herein
set forth, or should he/it fail to perform any of the
conditions stipulated herein, then and in any such
case, the Mortgagee shall have the right, at its
election to foreclose this mortgage, [x x x].39
However, this provision merely articulated
Maybank's right to elect foreclosure upon Sps.
Tarrosa's failure or refusal to comply with the
obligation secured, which is one of the rights duly
accorded to mortgagees in a similar situation.40 In
no way did it affect the general parameters of
default, particularly the need of prior demand
under Article 116941 of the Civil Code, considering
that it did not expressly declare: (a) that demand
shall not be necessary in order that the
mortgagor may be in default; or (b) that default
shall commence upon mere failure to pay on the
maturity date of the loan. Hence, the CA erred in
construing the above provision as one through
which the parties had dispensed with demand as
a condition sine qua non for the accrual of
Maybank's right to foreclose the real estate
mortgage over the subject property, and thereby,
mistakenly reckoned such right from the maturity
date of the loan on March 11, 1984. In the
absence of showing that demand is unnecessary
for the loan obligation to become due and
demandable, Maybank's right to foreclose the real
estate mortgage accrued only after the lapse of
the period indicated in its final demand letter for
Sps. Tarrosa to pay, i.e., after the lapse of five
(5) days from receipt of the final demand letter
dated March 4, 1998.42 Consequently, both the
CA and the RTC committed reversible error in
declaring that Maybank's right to foreclose the
real estate mortgage had already prescribed.
Thus, considering that the existence of the loan
had been admitted, the default on the part of the
debtors-mortgagors had been duly established,
and the foreclosure proceedings had been
initiated within the prescriptive period as afore-
discussed, the Court finds no reason to nullify the
extrajudicial foreclosure sale of the subject
property.
WHEREFORE, the petition is GRANTED. The
Decision dated
November 29, 2013 and the Resolution dated May
13, 2014 of the Court of Appeals in CA-G.R. CV
No. 02211 are hereby REVERSED AND SET
ASIDE. The complaint in Civil Case No. 98-10451
is DISMISSED.
SO ORDERED.
G.R. No. 169442, October 14, 2015
REPUBLIC OF THE PHILIPPINES,
REPRESENTED BY THE PRIVATIZATION AND
MANAGEMENT OFFICE
(PMO), Petitioner, v. ANTONIO V. BAÑEZ,
LUISITA BAÑEZ VALERA, NENA BAÑEZ
HOJILLA, AND EDGARDO B. HOJILLA,
JR., Respondents.
DECISION
PEREZ, J.:
Assailed and sought to be annulled in this Petition
for Review on Certiorari under Rule 45 of the
1997 Rules of Civil Procedure is the Decision1 of
the Court of Appeals dated 23 August 2005 in CA-
G.R. CV No. 70137, entitled "Cellophil Resources
Corporation v. Antonio V. Bañez, Luisita Bañez
Valera, Nena Bañez Hojilla and Edgar do B.
Hojilla, Jr.," which affirmed the Order2 of the
Regional Trial Court (RTC), Branch 1, Bangued,
Abra, dated 16 August 2000, that dismissed the
complaint of petitioner Republic of the Philippines,
represented by Privatization and Management
Office (PMO), for specific performance, recovery
of possession, and damages against respondents
Antonio V. Bañez, Luisita Bañez Valera, Nena
Bañez Hojilla and Edgardo B. Hojilla, Jr., docketed
as Civil Case No. 1853.
The facts as culled from the records are as
follows:
17
In 1976, Antonio V. Bañez, Luisita Bañez Valera,
and Nena Bañez Hojilla (collectively, respondents)
offered for sale a parcel of land (subject
property), with an area of 20,000 sq m in
Barangay Calaba, Bangued, Abra to Cellophil
Resources Corporation (CRC). Pursuant to the
offer to sell on 7 December 1981, respondents
executed a Letter Agreement irrevocably giving
CRC the option to purchase the subject property,
which CRC accepted. The pertinent portion of the
Letter Agreement (hereinafter referred to as
Contract), to wit:
1. The purchase price shall be Twenty Pesos xxx
per square meter or a total amount of Four
Hundred Thousand Pesos (P400,000.00).
2. The co-owners shall take all necessary
steps to cause the CRC Portion to be brought
under the operation of Republic Act No. 496,
as amended, and to cause the issuance in
their name of the corresponding original
certificate of title, all of the foregoing to be
accomplished within a reasonable time from
date hereof. xxx
xxxx
7. The co-owners hereby confirm their agreement
and permission to CRC's entry into, construction
of building[s] and improvements, and occupancy
of, any portion of the Property, and xxx waive
any right of action they may have against CRC
respecting such entry, construction, or occupancy
by the latter of any Portion of the Property.
8. An absolute deed of sale containing the
above provisions and standard warranties
on conveyances of real property shall be
executed by the co-owners in favor of CRC
or its assignee/s and the same delivered to the
latter together with the original certificate of title
upon payment of the purchase price less the
advances made by CRC in accordance with
Paragraphs 2 and 3 above; provided, that
payment shall be made by CRC only upon
presentation by the co-owners to CRC of
certificate/s and/or clearances, with
corresponding receipts, issued by the
appropriate government office/s or
agency/ies to the effect that capital gains
tax, real estate taxes on the Property and
local transfer tax and other taxes, fees or
charges due on the transaction and/or on
the Property have been paid.
9. This option shall be effective from [the] date of
your acceptance as indicated by your conformity
below and for a period of one (1) month from and
after CRC shall have been notified in writing by
the co-owners that an original certificate of title
has been issued in their names and that they are
ready to execute the xxx deed of sale.3
Respondents asked for several cash advances
which reached the total amount of, more or less,
Two Hundred Seventeen Thousand Pesos
(P217,000.00), to be deducted from the purchase
price of Four Hundred Thousand Pesos
(P400,000.00). After paying cash advances to
respondents, CRC constructed staff houses and
introduced improvements on the subject
property. As respondents would be staying
abroad for a time, they executed a Special Power
of Attorney (SPA) in favor of Edgardo B. Hojilla
(Hojilla). The SPA authorized Hojilla to perform
the following:
1. To take all steps necessary to cause a portion
of the lot covered by Tax Declaration No. 40185
in the name of Urbano Bañez which is the subject
of our "Offer to Sell" to Cellophil Resources
Corporation containing an area xxx to be brought
under the operation of Republic Act No. 496, as
amended, and to cause the issuance in our name
of the corresponding original certificate of title.
2. To do all acts and things and to execute all
papers and documents of whatever nature or kind
required for the accomplishments of the aforesaid
purpose.
HEREBY GRANTING AND GIVING unto our said
attorney full power and authority whatsoever
requisite or necessary or proper to be done in or
about the premises as fully to all intents and
purposes as we might or could lawfully do if
personally present (with power of substitution and
revocation), and hereby ratifying and confirming
all that our said attorney shall do or cause to be
done under and by virtue of these presents.4
ChanRobles Vi rtua lawlib rary
However, CRC stopped its operation. The
Development Bank of the Philippines and National
Development Company took over CRC's operation
and turned over CRC's equity to Asset
Privatization Trust (APT), which is a government
agency created by virtue of Proclamation No. 50,
as amended. The APT's function is to take title to
and possession of, provisionally manage and
dispose of nonperforming assets of government
financial institutions. Upon the expiration of APT's
term on 31 December 2000, the government
issued Executive Order (E.O.) No. 323, which
created the Privatization and Management Office
(PMO). By virtue of E.O. No. 323, the powers,
functions, and duties of APT were transferred to
the PMO. Thus, the original party, CRC, is now
represented by the Republic of the Philippines
through the PMO (hereinafter referred to as
petitioner), the successor of the defunct APT.
As alleged by petitioner, respondents declared
afterwards the subject property as Urbano Bañez
property, rented out to third parties the staff
houses petitioner constructed, and ordered its
guards to prohibit the petitioner from entering the
compound, which impelled petitioner to file a
complaint for specific performance, recovery of
possession, and damages against respondents,
including Hojilla, on 10 April 2000. Among others,
the complaint prayed for respondents to
surrender and deliver the title of the subject
property, and execute a deed of absolute sale in
favor of petitioner upon full payment. It
mentioned three letters sent to respondents on
29 May 1991, 24 October 1991, and 6 July 1999.
In the Complaint, it was alleged that:
"[t]here is no justification, legal or otherwise for
the [respondents] to dispossess (sic) the
[petitioner] from the subject property.
[Petitioner] is more than willing and able to pay
the [respondents] the balance of the purchase
price of the subject parcel of land but its inability
to do so was due to the [respondents'] failure to
produce the original certificate of title of the
subject parcel of land and to execute the
pertinent deed of sale, as well as the unjustified
occupation by the [respondents] of the property
and [of] the staff houses built by [petitioner and
that] such actions of the [respondents] are
contrary to their undertaking under condition no.
7 of the subject letter agreement, that is, for
18
[respondents] to permit [petitioner's] entry into
and occupancy of any portion of the subject
property and their waiver of any right of action
they may have against [petitioner] respecting
such entry and occupancy of any portion of the
property. And despite repeated demands made by
[petitioner] upon the [respondents] for them to
vacate and turnover the subject parcel of land
and the staff houses to [petitioner], the last of
which was in a letter dated July 6, 1999, the said
[respondents] have failed and neglected and still
fail and neglect to do so up to the present
time."5
ChanRobles Virtualawl ibra ry
Ruling of the RTC
On 23 June 2000, Hojilla filed a Motion to Dismiss
on the grounds that he was not a real party-in-
interest and that the action was barred by the
Statute of Limitations, which Motion the RTC
granted in an Order dated 16 August 2000 based
on Article 1144(1) of the Civil Code, which bars
actions filed beyond ten (10) years upon the
execution of the written contract. According to
the RTC, the letters petitioner sent to
respondents were not demands for respondents
to comply with their obligation to deliver the title
as to interrupt the running of the prescriptive
period. The pertinent portion of the RTC Order
reads:
In the instant case, the defendants were given
[enough] time from December 7, 1981 to comply
with their obligation, hence, after a reasonable
period of time, the plaintiff should have
demanded compliance of defendants'
undertakings or initiated any other action to
protect its interest without waiting for the statute
of limitations to bar their claim.6
The RTC resolved that because the written
contract was executed on 7 December 1981, then
the complaint that was filed more than eighteen
(18) years since the contract was executed was
beyond the 10-year prescriptive period. Within
that 18-year period, there was no act on the part
of petitioner, whether judicial or extrajudicial, to
interrupt prescription.
While petitioner paid cash advances to
respondents for the processing of the registration
of the title, "which totaled to more or less
P217,000.00 as of September 7, 1984 xxx to the
filing of this suit, [petitioner] has not demanded
compliance by [respondents] of their obligation,
that is, the execution of the absolute deed of sale
and the delivery of the Original Certificate of Title
to the property to [petitioner] upon payment of
the purchase price stipulated. There were letters
addressed to [respondents] but these were not
demands for compliance of [respondents']
obligation and which is not sufficient under the
law to interrupt the prescriptive period."7
The RTC further stated that:
"[t]he parties could not have contemplated that
the delivery of the property and the payment
thereof could be made indefinitely and render
uncertain the status of the land. The failure of
either [of the] parties to demand performance of
the obligation of the other for an unreasonable
length of time renders the contract ineffective."8
The motion for reconsideration was likewise
denied in an Order dated 5 January 2001.
On appeal, petitioner argued that the RTC erred
when it dismissed the complaint. Petitioner
averred that: (1) its claim was not yet barred by
prescription; (2) the period of prescription had
been interrupted by extrajudicial demand; (3) the
Statute of Limitation did not run against the
State; (4) petitioner's claim not having
prescribed, laches could not have set in; (5) the
laches of one nullified the laches of the other; and
(6) laches cannot be used to defeat justice or to
perpetuate fraud and injustice.
chanro bleslaw
Ruling of the Court of Appeals
The Court of Appeals affirmed the ruling of the
RTC in a Decision dated 23 August 2005 on the
ground that the complaint was barred by the
Statute of Limitations. Contrary to petitioner's
arguments, the Court of Appeals found that the
extrajudicial demand to respondents did not serve
to toll the running of the prescriptive period. The
Court of Appeals ruled that the record is bereft of
evidence that would attest that written
extrajudicial demands were sent to respondents.
While petitioner sent demand letters dated 29
May 1991 and 24 October 1991, these demand
letters were not considered as demand letters
because the letters simply called the attention of
Hojilla to return the properties and unlock the
gates. As regards the letter dated 6 July 1999,
the Court of Appeals ruled that because the letter
was addressed to Hojilla, who was only an
attorney-in-fact authorized to register the
property, it was not binding upon the
respondents. The Court of Appeals also gave no
probative value to the 6 July 1999 letter for
having no proof of service.
With regard to the issue of running of prescriptive
period against the State, the Court of Appeals
opined that because the subject property is a
patrimonial property of the State when APT
became the controlling stockholder of CRC,
prescription may run against the State. Thus, the
reasonable period within which to register the
property is three (3) years. According to the
Court of Appeals, the cause of action of petitioner
accrued three (3) years from the time the
Contract was executed on 7 December 1981 or,
to say the least, on 15 August 1984 when Hojilla
sent the acknowledgment letter dated 15 August
1984, at which time it became clear that
respondents could no longer fulfill their obligation.
Hence, petitioner is before us raising the following
arguments:
A. The Court of Appeals erred in ruling that
the running of the prescriptive period was
not interrupted when respondents
acknowledged their still unfulfilled
obligation to initiate proceedings for the
registration of title of the subject
property and at the same time committed
that they will only claim the full payment
of the property upon presentation of a
clean title and execution of a Deed of
Sale signed by the heirs as stated in the
letter dated August 15, 1984.
B. The Court of Appeals erred in affirming
the outright dismissal of petitioner's suit
for specific performance, recovery of
possession and damages on the basis of
prescription even as it is evident that
there is a need to fix a period considering
that the performance of the condition or
19
obligation is dependent upon the will of
respondents.
C. The Court of Appeals erred in ignoring
certain manifest equitable considerations
which militate against a resort to a purely
mathematical computation of the
prescriptive period and in disregarding
the provision of the irrevocable offer that
the option remains effective for a period
of one month from and after notice that a
certificate of title has been issued.9
The main issue is whether or not the complaint
for specific performance was filed beyond the
prescriptive period.
chan roble slaw
Petitioner's Arguments
The petitioner argues that although there is a 10-
year limitation within which to file a case based
on a written contract, the period was interrupted
due to a written acknowledgment of respondents'
obligation and demand by petitioner. The
argument is based on Article 1155 of the Civil
Code, which provides that the running of the
prescriptive period is interrupted when there is a
written extrajudicial demand by the creditors, and
when there is any written acknowledgment of the
debt by the debtor.
The petitioner referred to the letter sent by Hojilla
to the former dated 15 August 1984, and letters
given by petitioner to Hojilla dated 29 May 1991,
24 October 1991, and 6 July 1999. In the letter
dated 15 August 1984, respondents affirmed their
undertaking that they will claim full payment of
the property upon presentation of a clean title
and the execution of the Absolute Deed of Sale,
which reads, "[t]he Bañez heirs will only claim for
the full payment of the property upon
presentation of a clean title and execution of a
Deed of Sale signed by the heirs."10
Based on Hojilla's representation as stated in the
letter dated 15 August 1984, petitioner argues
that Hojilla is estopped by his own acts and for
misleading petitioner because "respondents not
only failed to comply with their commitment to
deliver a certificate of title but where [sic] they
also [misled] petitioner into believing that they
were working on the title of subject property even
as they had[,] at the back of their mind[s], the
running of the statute of limitations as an arsenal
once petitioner demands the fulfillment of their
obligation."11
The petitioner further added that because there
was no period fixed for the fulfillment or
performance of the obligation to deliver the title,
the least the court should have done was to fix
the period pursuant to Article 1197 of the Civil
Code.
Finally, the petitioner posits that pursuant to
paragraph 9 of the Contract, its obligation is
conditioned upon respondents' obligation, which
is to deliver the title. Thus, because the
respondents failed to deliver such, the obligation
of petitioner never ripened.chan roble slaw
Respondents' Arguments
The arguments of respondents, which are aligned
with the reasons of the lower courts, rely on
Article 1144 of the Civil Code, which provides that
actions upon a written contract must be brought
within ten (10) years from execution. Because the
complaint was filed beyond the 10-year
prescriptive period, the action was already barred
by the Statute of Limitations. Further, during such
period, petitioner failed to act either judicially or
extrajudicially to effectively interrupt the running
of the prescriptive period. Thus, the complaint
must be dismissed for having been extinguished
by the Statute of Limitations. chanrob leslaw
Our Ruling
We rule in favor of the petitioner.
We deem material, for the resolution of the issues
in this case, the letters that were exchanged by
the parties.
We shall discuss each letter in seriatim.
Hojilla 's letter dated 15 August 1984
In Hojilla's letter to petitioner dated 15 August
1984, Hojilla updated petitioner of the status of
the subject property's title, in this wise:
The preparation of the advance survey plan,
technical description and Engineer's Certificate
pursuant to Land Administrative Order No. 10-4
has been submitted to the Regional Land Office,
and approved by the Regional Director.
Atty. Valera is now in the process of preparing the
petition papers of the Calaba property for
submission to the local court.12
There is no other logical conclusion but that the
15 August 1984 letter is an acknowledgment of
respondents' commitment under the Contract.
The letter served to update petitioner of the
status of the subject property's title, an obligation
agreed upon by the parties in the Contract. It
would be specious to argue that respondents did
not acknowledge the existence of the Contract
and yet, send correspondence to petitioner
updating it of the status of the application for title
on the subject property. Therefore, the letter
dated 15 August 1984 served as a written
acknowledgment of debt or obligation of
respondents.
In Philippine National Railways v. NLRC,13 it was
stated that a written acknowledgment of debt or
obligation effectively interrupts the running of the
prescriptive period and sets the same running
anew.14Hence, because Hojilla's letter dated 15
August 1984 served as a written
acknowledgement of the respondents' debt or
obligation, it interrupted the running of the
prescriptive period and set the same running
anew with a new expiry period of 15 August
1994.
Petitioner's letters dated 29 May
1991 and 24 October 1991
With regard to the letters petitioner sent to Hojilla
dated 29 May 1991 and 24 October 1991, the
RTC ruled that these letters were insufficient
under the law to interrupt the prescriptive period
because these were not demand letters. We lift
the pertinent portion from the letter dated 29 May
1991, which demanded respondents to return the
properties and to unlock the gates:
20
Under the agreement to purchase the lot, APT-
CRC shall pay the whole of the purchase price
thereof when the certificate of title and other
documents enumerated therein are presented to
it. Clearly, the consummation of the sale is within
your control, x x x
In view of the foregoing, demand is hereby
made upon you and your principals, the
heirs of Urbano Bañez, to return the
properties withdrawn and to unlock the
gates leading to the staffhouses (sic), within
fifteen (15) days from receipt thereof,
otherwise we will be constrained to institute
the necessary action to protect the interest
of APT-CRC.15 (Emphasis and underscoring ours)
In the same vein, the letter dated 24 October
1991 demanded respondents to discontinue the
construction, repair, demolition, and occupancy of
several staff houses. A pertinent portion of the 24
October 1991 letter reads:
Considering that these action (sic) are
unauthorized, they constitute violations of the
irrevocable option to purchase dated December 7,
1981, which remains valid, binding and effective
to this day. Demand is hereby made upon you
to discontinue such unauthorized acts and
vacate the premises within fifteen (15) days
from receipt hereof.16 x x x (Emphasis and
underscoring ours)
We do not agree with the lower courts. Clearly,
the 29 May 1991 and 24 October 1991 letters
demanded respondents to return the properties,
discontinue the construction, repair, demolition
and occupancy of several staff houses, and unlock
the gates, which is to enforce respondents'
obligations pursuant to paragraph 7 of the
Contract which reads:
7. The co-owners hereby confirm their agreement
and permission to CRC's entry into, construction
of building and improvements, and occupancy of,
any portion of the Property, and hereby
accordingly waive any right of action they may
have against CRC respecting such entry,
construction, or occupancy by the latter of any
Portion of the Property.17

The letters dated 29 May 1991 and 24 October
1991 are deemed demand letters as
contemplated under Article 1155. They are
demand letters to enforce respondents' obligation
under the Contract, which is to cede possession
to petitioner. The letters interrupted the running
of the prescriptive period which commenced to
run anew.
Petitioner's letter dated 6 July 1999
Compared to the letters dated 29 May and 24
October 1991, which demanded Hojilla to
surrender possession of the subject property, this
time, in petitioner's letter to Hojilla dated 6 July
1999, petitioner demanded Hojilla to produce the
title of the subject property. However, despite the
fact that the letter was a clear demand of the
nature contemplated by law that would interrupt
the prescriptive period, the Court of Appeals
found that (1) the letter did not effectively
interrupt the prescriptive period because the
complaint had long prescribed; (2) the letter was
addressed to the wrong party; and, finally, (3)
the letter did not bear any proof of service or
receipt.
We do not agree.
Hojilla's SPA
We refer to the SPA, which granted the authority
of Hojilla.
When respondents went abroad pending the
performance of their obligations in the Contract,
they authorized Hojilla to register the subject
property— a single obligation in the whole range
of obligations in the Contract. The SPA appeared
to have left no representative to fulfill
respondents' obligations in the Contract on their
behalf except for Hojilla's authority to register the
subject property. The pertinent portion of the SPA
reads:
1. To take all steps necessary to cause a
portion of the lot covered by Tax Declaration
No. 40185 in the name of Urbano Baflez
which is the subject of our "Offer to Sell" to
Cellophil Resources Corporation containing
an area xxx to be brought under the
operation of Republic Act No. 496, as
amended, and to cause the issuance in our
name of the corresponding original
certificate of title.
2. To do all acts and things and to execute all
papers and documents of whatever nature or kind
required for the accomplishments of the aforesaid
purpose.
HEREBY GRANTING AND GIVING unto our said
attorney full power and authority whatsoever
requisite or necessary or proper to be done in or
about the premises as fully to all intents and
purposes as we might or could lawfully do if
personally present (with power of substitution and
revocation), and hereby ratifying and confirming
all that our said attorney shall do or cause to be
done under and by virtue of these
presents.18 (Emphasis and underscoring ours)
This was read simply by the lower courts as
limiting Hojilla's authority to the registration of
the subject property under the name of his
principal, and all the necessary acts for such
purpose. It observed that nowhere in the SPA was
Hojilla authorized as administrator or agent of
respondents with respect to the execution of the
Contract.
In the case at bar, the reliefs prayed for by
petitioner include the execution of the Contract
such as delivery of the subject title, recovery of
possession of the subject property, execution of
the deed of sale or transfer of absolute ownership
upon full payment of the balance, and damages
for alleged violation of respondents of the
Contract for non-delivery of the title and refusal
to vacate the subject property. Indeed, following
the reading of the lower courts of the scope of
Hojilla's authority, Hojilla is neither the proper
party to execute the Contract nor the proper
party to receive the demand letters on behalf of
respondents.
This strict construction of the tenor of the SPA will
render the obligatory force of the Contract
ineffective. Construction is not a tool to prejudice
or commit fraud or to obstruct, but to attain
justice. Ea Est Accipienda Interpretatio Quae Vitio
Caret. To favor the lower court's interpretation of
the scope of Hojilla's power is to defeat the
21
juridical tie of the Contract—the vinculum juris of
the parties. As no one was authorized to
represent respondents in the Contract, then
petitioner cannot enforce the Contract, as it were.
This is an absurd interpretation of the SPA. It
renders the Contract ineffective for lack of a party
to execute the Contract.
Contrary to the findings of the lower court, the
present case is a case of an express agency,
where, Hojilla, the agent, binds himself to
represent another, the principal, who are herein
respondents, with the latter's express consent or
authority.19 In a contract of agency, the agent
acts for and in behalf of the principal on matters
within the scope of the authority conferred upon
him, such that, the acts of the agent have the
same legal effect as if they were personally done
by the principal.20 Because there is an express
authority granted upon Hojilla to represent the
respondents as evidenced by the SPA, Hojilla's
actions bind the respondents.
As agent, the representations and guarantees of
Hojilla are considered representations and
guarantees of the principal. This is the principle of
agency by promissory estoppel. We refer to the
evidence on record. It was Hojilla who
administered and/or managed the subject
property.21 Based on Hojilla's letter dated 15
August 1984 to petitioner, Hojilla made the
representation that besides being the attorney-in-
fact of the respondents with limited authority to
register the property, he was also their agent with
regard to respondents' other obligations related
to the Contract. The pertinent portion of the 15
August 1984 letter of Hojilla to petitioner reads:
Regarding our loan with the National
Electrification Administration (NEA), Hon. Mel
Mathay who is helping the Bafiez heirs has
initiated negotiations with NEA for Abreco to
purchase our lot in front of the Provincial Jail to
offset our loan with NEA.22
Also, one glaring fact that cannot escape us is
Hojilla's representation and guarantee that
petitioner's obligation will only arise upon
presentation of a clean title and execution of a
Deed of Sale signed by the respondents' heirs,
which reads, "[t]he Bañez heirs will only claim
for the full payment of the property upon
presentation of a clean title and execution of
a Deed of Sale signed by the heirs."23
If Hojilla knew that he had no authority to
execute the Contract and receive the letters on
behalf of respondents, he should have opposed
petitioner's demand letters. However, having
received the several demand letters from
petitioner, Hojilla continuously represented
himself as the duly authorized agent of
respondents, authorized not only to administer
and/or manage the subject property, but also
authorized to register the subject property and
represent the respondents with regard to the
latter's obligations in the Contract. Hojilla also
assured petitioner that petitioner's obligation to
pay will arise only upon presentation of the title.
Clearly, the respondents are estopped by the acts
and representations of their agent. Falling
squarely in the case at bar is our pronouncement
in Philippine National Bank v. IAC (First Civil
Cases Div.),24 "[h]aving given that assurance,
[Hojilla] may not turn around and do the exact
opposite of what [he] said [he] would do. One
may not take inconsistent positions. A party may
not go back on his own acts and representations
to the prejudice of the other party who relied
upon them."25 cralawred
Assuming further that Hojilla exceeded his
authority, the respondents are still solidarity
liable because they allowed Hojilla to act as
though he had full powers by impliedly ratifying
Hojilia's actions—through action by
omission.26 This is the import of the principle of
agency by estoppel or the doctrine of apparent
authority.
In an agency by estoppel or apparent authority,
"[t]he principal is bound by the acts of his agent
with the apparent authority which he knowingly
permits the agent to assume, or which he holds
the agent out to the public as possessing."27
The respondents' acquiescence of Hojilla's acts
was made when they failed to repudiate the
latter's acts. They knowingly permitted Hojilla to
represent them and petitioners were clearly
misled into believing Hojilla's authority. Thus, the
respondents are now estopped from repudiating
Hojilla's authority, and Hojilla's actions are
binding upon the respondents.
Receipt of the Letters
Time and time again, this Court has reiterated it
is not a trier of facts and parties may raise only
questions of law. The jurisdiction of the Court is
limited to reviewing errors of law and findings of
fact of the Court of Appeals are conclusive
because it is not the Court's function to review,
examine, and evaluate or weigh the evidence all
over again.28 The rule, however, is not without
exceptions, viz.:
(1) [W]hen the [conclusion is a finding] grounded
entirely on speculations, surmises [and]
conjectures; cra lawlawlib rary
(2) [W]hen the inference made is manifestly
mistaken, absurd or impossible;
(3) [W]hen there is grave abuse of discretion;
(4) [W]hen the judgment is based on a
misapprehension of facts;
(5) [W]hen the findings of fact are
conflicting;
(6) [W]hen xxx the Court of Appeals[, in making
its findings,] went beyond the issues of the case
[and the same is] contrary to the admissions of
both the appellant and the appellee;
(7) [W]hen the findings are contrary to
[those] of the trial court;
(8) [W]hen the findings [of fact] are conclusions
without citation of specific evidence on which they
are based; cralawlawl ibra ry
(9) [W]hen the facts set forth in the petition as
well as in the petitioner's main and reply briefs
are not disputed by the respondents;
(10) [w]hen the findings of fact [of the Court
of Appeals] are premised on the supposed
absence of evidence and contradicted by the
evidence on record and
(11) [When] the Court of Appeals manifestly
overlooked certain irrelevant facts not disputed by
22
the parties, which, if properly considered, would
justify a different conclusion.29
In the case at bar, the findings of the RTC and
the Court of Appeals are contradictory: the RTC
did not make any finding on the receipt of the
demand letters by Hojilla, while the Court of
Appeals resolved that assuming arguendo that
the letters were demand letters contemplated
under Article 1155 of the Civil Code, the same are
unavailing because the letters do not bear any
proof of service of receipt by respondents.
A perusal of the records reveals that only the 24
October 1991 letter has no proof of receipt.30 The
demand letters dated 29 May 199131 and 6 July
199932 contain proofs of receipt.
Thus, the core issue of whether or not the action
c ralawlawl ibra ry
has prescribed.
c ralawlawl ibra ry
An action based on a written contract must be
brought within ten (10) years from the time the
right of action accrued. Accordingly, a cause of
cralawlaw lib rary
action on a written contract accrues only when an
actual breach or violation thereof occurs.33 A
cause of action has three elements, to wit: (1) a
right in favor of the plaintiff by whatever means
and under whatever law it arises or is created;
(2) an obligation on the part of the named
defendant to respect or not to violate such right;
and (3) an act or omission on the part of such
c ralawlawl ibra ry
defendant violative of the right of the plaintiff or
constituting a breach of the obligation of the
defendant to the plaintiff.34
By the contract between the herein parties, the
cause of action accrued at the point when the
reasonable time within which to present the title
lapsed. The parties did not determine the date
when the respondents must present the title and
other documents to the petitioner. The parties
only agreed that the respondents must present
cralawlawl ibra ry
the same within a "reasonable time." Reasonable
time means "so much time as is necessary under
the circumstances for a reasonably prudent and
diligent man to do, conveniently, what the
contract or duty requires that should be done,
having a regard for the rights and possibility of
loss, if any, to the other party."35 Such
reasonable time was determined by the
respondents through the letter dated 15 August
1984. The respondents acknowledged their
obligation to deliver the title and asked for a new
period to do so. It states:
The preparation of the advance survey plan,
technical description and Engineer's Certificate
The Contract and True Intent of the Parties
Based on the stipulation in the Contract, the
parties agreed that payment shall be made only
upon presentation of the title and other
Counterclaim of the petitioner for further trial on
the merits. The respondents are further ordered
to return possession of the subject property to
petitioner. No pronouncement as to costs.
SO ORDERED. chanroblesvi rtua llawli bra ry

pursuant to Land Administrative Order No. 10-4
has been submitted to the Regional Land Office,
and approved by the Regional Director.
Arty. Valera is now in the process of preparing the
petition papers of the Calaba property for
submission to the local court.
xxxx
The Bañez heirs will only claim for the full
payment of the property upon presentation of a
clean title and execution of a Deed of Sale signed
by the heirs.36
The accrual of the cause of action to demand the
titling of the land cannot be earlier than 15
August 1984. So that, the petitioner can sue on
the contract until 15 August 1994. Prior to the
expiration of the aforesaid period, the petitioner
sent a demand letter to Hojilla dated 29 May
1991. A few months thereafter, petitioner sent
another demand letter to Hojilla dated 24 October
1991.37 The prescriptive period was interrupted
on 29 May 1991.
The consequence is stated in Article 1155 of the
Civil Code. It states, "[t]he prescription of actions
is interrupted when they are filed before the
court, when there is a written extrajudicial
demand by the creditors, and when there is any
written acknowledgment of the debt by the
debtor."
Following the law, the new ten-year period for the
filing of a case by the petitioner should be
counted from 29 May 1991, ending on 29 May
2001. The complaint at bar was filed on 10 April
2000, well within the required period.
Notably, before the expiration of the new
prescriptive period, the petitioner again sent a
new demand letter on 6 July 1999, which again
caused the same to run anew, which will expire
on 6 July 2009. The complaint filed on 10 April
2000 was timely.
documents of the subject property to petitioner.
Paragraph 8 of the Contract reads:
8. An absolute deed of sale containing the above
provisions and standard warranties on
conveyances of real property shall be executed by
the co-owners in favor of CRC or its assignee/s
and the same delivered to the latter together with
the original certificate of title upon payment of
the purchase price less the advances made by
CRC in accordance with Paragraphs 2 and 3
above; provided, that payment shall be made
by CRC only upon presentation by the co-
owners to CRC of certificate/s and/or
clearances, with corresponding receipts,
issued by the appropriate government
office/s or agency/ies to the effect that
capital gains tax, real estate taxes on the
Property and local transfer tax and other
taxes, fees or charges due on the
transaction and/or on the Property have
been paid.38 (Emphasis and underscoring ours)
The true intent of the parties is further enunciated
in Hojilla's letter to petitioner dated 15 August
1984, which stated, "[t]he Bañez heirs will
only claim for the full payment of the
property upon presentation of a clean title
and execution of a Deed of Sale signed by
the heirs."39
To rule in favor of respondents despite their
failure to perform their obligations is the height of
injustice. Respondents cannot benefit from their
own inaction and failure to comply with their
obligations in the Contract and let the petitioner
suffer from respondents' own default.
WHEREFORE, the petition is GRANTED. The
Decision of the Court of Appeals dated 23 August
2005 in CA-G.R. CV No. 70137, affirming the
Order of the Regional Trial Court, which ruled that
the action has prescribed, is reversed and set
aside. Let the records of this case
be REMANDED to the court of origin, which
is DIRECTED to admit the Answer with
23