G.R. No. 143958             July 11, 2003 same.
same. After all, he was planning to marry Ederlina and he believed that after
ALFRED FRITZ FRENZEL, petitioner,
vs.
EDERLINA P. CATITO, respondent.
CALLEJO, SR., J.:
Before us is a petition for review of the Decision1 of the Court of Appeals in
CA-G.R. CV No. 53485 which affirmed the Decision2 of the Regional Trial
Court of Davao City, Branch 14, in Civil Case No. 17,817 dismissing the
petitioner's complaint, and the resolution of the Court of Appeals denying his
motion for reconsideration of the said decision.
The Antecedents3
As gleaned from the evidence of the petitioner, the case at bar stemmed
from the following factual backdrop:
Petitioner Alfred Fritz Frenzel is an Australian citizen of German descent. He
is an electrical engineer by profession, but worked as a pilot with the New
Guinea Airlines. He arrived in the Philippines in 1974, started engaging in
business in the country two years thereafter, and married Teresita Santos, a
Filipino citizen. In 1981, Alfred and Teresita separated from bed and board
without obtaining a divorce.
Sometime in February 1983, Alfred arrived in Sydney, Australia for a
vacation. He went to King's Cross, a night spot in Sydney, for a massage
where he met Ederlina Catito, a Filipina and a native of Bajada, Davao City.
Unknown to Alfred, she resided for a time in Germany and was married to
Klaus Muller, a German national. She left Germany and tried her luck in
Sydney, Australia, where she found employment as a masseuse in the King's
Cross nightclub. She was fluent in German, and Alfred enjoyed talking with
her. The two saw each other again; this time Ederlina ended up staying in
Alfred's hotel for three days. Alfred gave Ederlina sums of money for her
services.4
Alfred was so enamored with Ederlina that he persuaded her to stop working
at King's Cross, return to the Philippines, and engage in a wholesome
business of her own. He also proposed that they meet in Manila, to which
she assented. Alfred gave her money for her plane fare to the Philippines.
Within two weeks of Ederlina's arrival in Manila, Alfred joined her. Alfred
reiterated his proposal for Ederlina to stay in the Philippines and engage in
business, even offering to finance her business venture. Ederlina was
delighted at the idea and proposed to put up a beauty parlor. Alfred happily
agreed.
Alfred told Ederlina that he was married but that he was eager to divorce his
wife in Australia. Alfred proposed marriage to Ederlina, but she replied that
they should wait a little bit longer.
Ederlina found a building at No. 444 M.H. del Pilar corner Arquiza Street,
Ermita, Manila, owned by one Atty. Jose Hidalgo who offered to convey his
rights over the property for P18,000.00. Alfred and Ederlina accepted the
offer. Ederlina put up a beauty parlor on the property under the business
name Edorial Beauty Salon, and had it registered with the Department of
Trade and Industry under her name. Alfred paid Atty. Hidalgo P20,000.00 for
his right over the property and gave P300,000.00 to Ederlina for the purchase
of equipment and furniture for the parlor. As Ederlina was going to Germany,
she executed a special power of attorney on December 13, 19835 appointing
her brother, Aser Catito, as her attorney-in-fact in managing the beauty
parlor business. She stated in the said deed that she was married to Klaus
Muller. Alfred went back to Papua New Guinea to resume his work as a pilot.
When Alfred returned to the Philippines, he visited Ederlina in her Manila
residence and found it unsuitable for her. He decided to purchase a house
and lot owned by Victoria Binuya Steckel in San Francisco del Monte, Quezon
City, covered by Transfer Certificate of Title No. 218429 for US$20,000.00.
Since Alfred knew that as an alien he was disqualified from owning lands in
the Philippines, he agreed that only Ederlina's name would appear in the
deed of sale as the buyer of the property, as well as in the title covering the
their marriage, the two of them would jointly own the property. On January
23, 1984, a Contract to Sell was entered into between Victoria Binuya Steckel
as the vendor and Ederlina as the sole vendee. Alfred signed therein as a
witness.6 Victoria received from Alfred, for and in behalf of Ederlina, the
amount of US$10,000.00 as partial payment, for which Victoria issued a
receipt.7 When Victoria executed the deed of absolute sale over the property
on March 6, 1984,8 she received from Alfred, for and in behalf of Ederlina,
the amount of US$10,000.00 as final and full payment. Victoria likewise
issued a receipt for the said amount.9 After Victoria had vacated the
property, Ederlina moved into her new house. When she left for Germany to
visit Klaus, she had her father Narciso Catito and her two sisters occupy the
property.
Alfred decided to stay in the Philippines for good and live with Ederlina. He
returned to Australia and sold his fiber glass pleasure boat to John Reid for
$7,500.00 on May 4, 1984.10 He also sold his television and video business in
Papua New Guinea for K135,000.00 to Tekeraoi Pty. Ltd.11 He had his
personal properties shipped to the Philippines and stored at No. 14
Fernandez Street, San Francisco del Monte, Quezon City. The proceeds of the
sale were deposited in Alfred's account with the Hong Kong Shanghai
Banking Corporation (HSBC), Kowloon Branch under Bank Account No. 018-2-
807016.12 When Alfred was in Papua New Guinea selling his other properties,
the bank sent telegraphic letters updating him of his account.13 Several
checks were credited to his HSBC bank account from Papua New Guinea
Banking Corporation, Westpac Bank of Australia and New Zealand Banking
Group Limited and Westpac Bank-PNG-Limited. Alfred also had a peso
savings account with HSBC, Manila, under Savings Account No. 01-725-183-
01.14
Once, when Alfred and Ederlina were in Hong Kong, they opened another
account with HSBC, Kowloon, this time in the name of Ederlina, under
Savings Account No. 018-0-807950.15 Alfred transferred his deposits in
Savings Account No. 018-2-807016 with the said bank to this new account.
Ederlina also opened a savings account with the Bank of America Kowloon
Main Office under Account No. 30069016.16
On July 28, 1984, while Alfred was in Papua New Guinea, he received a Letter
dated December 7, 1983 from Klaus Muller who was then residing in Berlin,
Germany. Klaus informed Alfred that he and Ederlina had been married on
October 16, 1978 and had a blissful married life until Alfred intruded therein.
Klaus stated that he knew of Alfred and Ederlina's amorous relationship, and
discovered the same sometime in November 1983 when he arrived in
Manila. He also begged Alfred to leave Ederlina alone and to return her to
him, saying that Alfred could not possibly build his future on his (Klaus')
misfortune.17
Alfred had occasion to talk to Sally MacCarron, a close friend of Ederlina. He
inquired if there was any truth to Klaus' statements and Sally confirmed that
Klaus was married to Ederlina. When Alfred confronted Ederlina, she
admitted that she and Klaus were, indeed, married. But she assured Alfred
that she would divorce Klaus. Alfred was appeased. He agreed to continue
the amorous relationship and wait for the outcome of Ederlina's petition for
divorce. After all, he intended to marry her. He retained the services of
Rechtsanwaltin Banzhaf with offices in Berlin, as her counsel who informed
her of the progress of the proceedings.18 Alfred paid for the services of the
lawyer.
In the meantime, Alfred decided to purchase another house and lot, owned
by Rodolfo Morelos covered by TCT No. 92456 located in Peña Street, Bajada,
Davao City.19 Alfred again agreed to have the deed of sale made out in the
name of Ederlina. On September 7, 1984, Rodolfo Morelos executed a deed
of absolute sale over the said property in favor of Ederlina as the sole vendee
for the amount of P80,000.00.20 Alfred paid US$12,500.00 for the property.
Alfred purchased another parcel of land from one Atty. Mardoecheo
Camporedondo, located in Moncado, Babak, Davao, covered by TCT No.
35251. Alfred once more agreed for the name of Ederlina to appear as the
sole vendee in the deed of sale. On December 31, 1984, Atty. Camporedondo
executed a deed of sale over the property for P65,000.00 in favor of Ederlina
as the sole vendee.21 Alfred, through Ederlina, paid the lot at the cost of
P33,682.00 and US$7,000.00, respectively, for which the vendor signed
receipts.22 On August 14, 1985, TCT No. 47246 was issued to Ederlina as the
sole owner of the said property.23
Meanwhile, Ederlina deposited on December 27, 1985, the total amount of
US$250,000 with the HSBC Kowloon under Joint Deposit Account No. 018-
462341-145.24
The couple decided to put up a beach resort on a four-hectare land in
Camudmud, Babak, Davao, owned by spouses Enrique and Rosela Serrano.
Alfred purchased the property from the spouses for P90,000.00, and the
latter issued a receipt therefor.25 A draftsman commissioned by the couple
submitted a sketch of the beach resort.26 Beach houses were forthwith
constructed on a portion of the property and were eventually rented out by
Ederlina's father, Narciso Catito. The rentals were collected by Narciso, while
Ederlina kept the proceeds of the sale of copra from the coconut trees in the
property. By this time, Alfred had already spent P200,000.00 for the
purchase, construction and upkeep of the property.
Ederlina often wrote letters to her family informing them of her life with
Alfred. In a Letter dated January 21, 1985, she wrote about how Alfred had
financed the purchases of some real properties, the establishment of her
beauty parlor business, and her petition to divorce Klaus.27
Because Ederlina was preoccupied with her business in Manila, she executed
on July 8, 1985, two special powers of attorney28 appointing Alfred as
attorney-in-fact to receive in her behalf the title and the deed of sale over
the property sold by the spouses Enrique Serrano.
In the meantime, Ederlina's petition for divorce was denied because Klaus
opposed the same. A second petition filed by her met the same fate. Klaus
wanted half of all the properties owned by Ederlina in the Philippines before
he would agree to a divorce. Worse, Klaus threatened to file a bigamy case
against Ederlina.29
Alfred proposed the creation of a partnership to Ederlina, or as an
alternative, the establishment of a corporation, with Ederlina owning 30% of
the equity thereof. She initially agreed to put up a corporation and contacted
Atty. Armando Dominguez to prepare the necessary documents. Ederlina
changed her mind at the last minute when she was advised to insist on
claiming ownership over the properties acquired by them during their
coverture.
Alfred and Ederlina's relationship started deteriorating. Ederlina had not
been able to secure a divorce from Klaus. The latter could charge her for
bigamy and could even involve Alfred, who himself was still married. To avoid
complications, Alfred decided to live separately from Ederlina and cut off all
contacts with her. In one of her letters to Alfred, Ederlina complained that he
had ruined her life. She admitted that the money used for the purchase of
the properties in Davao were his. She offered to convey the properties
deeded to her by Atty. Mardoecheo Camporedondo and Rodolfo Morelos,
asking Alfred to prepare her affidavit for the said purpose and send it to her
for her signature.30 The last straw for Alfred came on September 2, 1985,
when someone smashed the front and rear windshields of Alfred's car and
damaged the windows. Alfred thereafter executed an affidavit-complaint
charging Ederlina and Sally MacCarron with malicious mischief.31
On October 15, 1985, Alfred wrote to Ederlina's father, complaining that
Ederlina had taken all his life savings and because of this, he was virtually
penniless. He further accused the Catito family of acquiring for themselves
the properties he had purchased with his own money. He demanded the
return of all the amounts that Ederlina and her family had "stolen" and turn
over all the properties acquired by him and Ederlina during their coverture.32
Shortly thereafter, Alfred filed a Complaint33 dated October 28, 1985, against
Ederlina, with the Regional Trial Court of Quezon City, for recovery of real
and personal properties located in Quezon City and Manila. In his complaint,
Alfred alleged, inter alia, that Ederlina, without his knowledge and consent,
managed to transfer funds from their joint account in HSBC Hong Kong, to
her own account with the same bank. Using the said funds, Ederlina was able
to purchase the properties subject of the complaints. He also alleged that the
beauty parlor in Ermita was established with his own funds, and that the
Quezon City property was likewise acquired by him with his personal funds.34
Ederlina failed to file her answer and was declared in default. Alfred adduced
his evidence ex parte.
In the meantime, on November 7, 1985, Alfred also filed a
complaint35 against Ederlina with the Regional Trial Court, Davao City, for
specific performance, declaration of ownership of real and personal
properties, sum of money, and damages. He alleged, inter alia, in his
complaint:
4. That during the period of their common-law relationship, plaintiff
solely through his own efforts and resources acquired in the Philippines real
and personal properties valued more or less at P724,000.00; The defendant's
common-law wife or live-in partner did not contribute anything financially to
the acquisition of the said real and personal properties. These properties are
as follows:
I. Real Properties
a. TCT No. T-92456 located at Bajada, Davao City, consisting of 286 square
meters, (with residential house) registered in the name of the original title
owner Rodolfo M. Morelos but already fully paid by plaintiff. Valued at
P342,000.00;
b. TCT No. T-47246 (with residential house) located at Babak, Samal, Davao,
consisting of 600 square meters, registered in the name of Ederlina Catito,
with the Register of Deeds of Tagum, Davao del Norte valued at P144,000.00;
c. A parcel of agricultural land located at Camudmud, Babak, Samal, Davao
del Norte, consisting of 4.2936 hectares purchased from Enrique Serrano and
Rosela B. Serrano. Already paid in full by plaintiff. Valued at P228,608.32;
II. Personal Properties:
a. Furniture valued at P10,000.00.
...
5. That defendant made no contribution at all to the acquisition, of the
above-mentioned properties as all the monies (sic) used in acquiring said
properties belonged solely to plaintiff;36
Alfred prayed that after hearing, judgment be rendered in his favor:
WHEREFORE, in view of the foregoing premises, it is respectfully prayed that
judgment be rendered in favor of plaintiff and against defendant:
a) Ordering the defendant to execute the corresponding deeds of transfer
and/or conveyances in favor of plaintiff over those real and personal
properties enumerated in Paragraph 4 of this complaint;
b) Ordering the defendant to deliver to the plaintiff all the above real and
personal properties or their money value, which are in defendant's name and
custody because these were acquired solely with plaintiffs money and
resources during the duration of the common-law relationship between
plaintiff and defendant, the description of which are as follows:
(1) TCT No. T-92456 (with residential house) located at Bajada, Davao City,
consisting of 286 square meters, registered in the name of the original title
owner Rodolfo Morelos but already fully paid by plaintiff. Valued at
P342,000.00;
(2) TCT No. T-47246 (with residential house) located at Babak, Samal, Davao,
consisting of 600 square meters, registered in the name of Ederlina Catito,
with the Register of Deeds of Tagum, Davao del Norte, valued at
P144,000.00;
(3) A parcel of agricultural land located at Camudmud, Babak, Samal, Davao
del Norte, consisting of 4.2936 hectares purchased from Enrique Serrano and
Rosela B. Serrano. Already fully paid by plaintiff. Valued at P228,608.32;
c) Declaring the plaintiff to be the sole and absolute owner of the above-
mentioned real and personal properties;
d) Awarding moral damages to plaintiff in an amount deemed reasonable by
the trial court;
e) To reimburse plaintiff the sum of P12,000.00 as attorney's fees for having
compelled the plaintiff to litigate;
f) To reimburse plaintiff the sum of P5,000.00 incurred as litigation expenses
also for having compelled the plaintiff to litigate; and
g) To pay the costs of this suit;
Plaintiff prays other reliefs just and equitable in the premises.37
In her answer, Ederlina denied all the material allegations in the complaint,
insisting that she acquired the said properties with her personal funds, and as
such, Alfred had no right to the same. She alleged that the deeds of sale, the
receipts, and certificates of titles of the subject properties were all made out
in her name.38 By way of special and affirmative defense, she alleged that
Alfred had no cause of action against her. She interposed counterclaims
against the petitioner.39
In the meantime, the petitioner filed a Complaint dated August 25, 1987,
against the HSBC in the Regional Trial Court of Davao City40 for recovery of
bank deposits and damages.41 He prayed that after due proceedings,
judgment be rendered in his favor, thus:
WHEREFORE, plaintiff respectfully prays that the Honorable Court adjudge
defendant bank, upon hearing the evidence that the parties might present,
to pay plaintiff:
1. ONE HUNDRED TWENTY SIX THOUSAND TWO HUNDRED AND THIRTY U.S.
DOLLARS AND NINETY EIGHT CENTS (US$126,230.98) plus legal interests,
either of Hong Kong or of the Philippines, from 20 December 1984 up to the
date of execution or satisfaction of judgment, as actual damages or in
restoration of plaintiffs lost dollar savings;
2. The same amount in (1) above as moral damages;
3. Attorney's fees in the amount equivalent to TWENTY FIVE PER CENT (25%)
of (1) and (2) above;
4. Litigation expenses in the amount equivalent to TEN PER CENT (10%) of
the amount in (1) above; and
5. For such other reliefs as are just and equitable under the circumstances.42
On April 28, 1986, the RTC of Quezon City rendered its decision in Civil Case
No. Q-46350, in favor of Alfred, the decretal portion of which reads as
follows:
WHEREFORE, premises considered, judgment is hereby rendered ordering
the defendant to perform the following:
(1) To execute a document waiving her claim to the house and lot in No. 14
Fernandez St., San Francisco Del Monte, Quezon City in favor of plaintiff or to
return to the plaintiff the acquisition cost of the same in the amount of
$20,000.00, or to sell the said property and turn over the proceeds thereof to
the plaintiff;
(2) To deliver to the plaintiff the rights of ownership and management of the
beauty parlor located at 444 Arquiza St., Ermita, Manila, including the
equipment and fixtures therein;
(3) To account for the earnings of rental of the house and lot in No. 14
Fernandez St., San Francisco Del Monte, Quezon City, as well as the earnings
in the beauty parlor at 444 Arquiza St., Ermita, Manila and turn over one-half
of the net earnings of both properties to the plaintiff;
(4) To surrender or return to the plaintiff the personal properties of the latter
left in the house at San Francisco Del Monte, to wit:
"(1) Mamya automatic camera
(1) 12 inch "Sonny" T.V. set, colored with remote control.
(1) Micro oven
(1) Electric fan (tall, adjustable stand)
(1) Office safe with (2) drawers and safe
(1) Electric Washing Machine
(1) Office desk and chair
(1) Double bed suits
(1) Mirror/dresser
(1) Heavy duty voice/working mechanic
(1) "Sony" Beta-Movie camera
(1) Suitcase with personal belongings
(1) Cardboard box with belongings
(1) Guitar Amplifier
(1) Hanger with men's suit (white)."
To return to the plaintiff, (1) Hi-Fi Stereo equipment left at 444 Arquiza
Street, Ermita, Manila, as well as the Fronte Suzuki car.
(4) To account for the monies (sic) deposited with the joint account of the
plaintiff and defendant (Account No. 018-0-807950); and to restore to the
plaintiff all the monies (sic) spent by the defendant without proper authority;
(5) To pay the amount of P5,000.00 by way of attorney's fees, and the costs
of suit.
SO ORDERED.43
However, after due proceedings in the RTC of Davao City, in Civil Case No.
17,817, the trial court rendered judgment on September 28, 1995 in favor of
Ederlina, the dispositive portion of which reads:
WHEREFORE, the Court cannot give due course to the complaint and hereby
orders its dismissal. The counterclaims of the defendant are likewise
dismissed.
SO ORDERED.44
The trial court ruled that based on documentary evidence, the purchaser of
the three parcels of land subject of the complaint was Ederlina. The court
further stated that even if Alfred was the buyer of the properties; he had no
cause of action against Ederlina for the recovery of the same because as an
alien, he was disqualified from acquiring and owning lands in the Philippines.
The sale of the three parcels of land to the petitioner was null and void ab
initio. Applying the pari delicto doctrine, the petitioner was precluded from
recovering the properties from the respondent.
Alfred appealed the decision to the Court of Appeals45 in which the petitioner
posited the view that although he prayed in his complaint in the court a
quo that he be declared the owner of the three parcels of land, he had no
intention of owning the same permanently. His principal intention therein
was to be declared the transient owner for the purpose of selling the
properties at public auction, ultimately enabling him to recover the money
he had spent for the purchase thereof.
On March 8, 2000, the CA rendered a decision affirming in toto the decision
of the RTC. The appellate court ruled that the petitioner knowingly violated
the Constitution; hence, was barred from recovering the money used in the
purchase of the three parcels of land. It held that to allow the petitioner to
recover the money used for the purchase of the properties would embolden
aliens to violate the Constitution, and defeat, rather than enhance, the public
policy.46
Hence, the petition at bar.
The petitioner assails the decision of the court contending that:
THE HONORABLE COURT OF APPEALS ERRED IN APPLYING THE RULE OF IN
PARI DELICTO IN THE INSTANT CASE BECAUSE BY THE FACTS AS NARRATED IN
THE DECISION IT IS APPARENT THAT THE PARTIES ARE NOT EQUALLY
GUILTY BUT RATHER IT WAS THE RESPONDENT WHO EMPLOYED FRAUD AS
WHEN SHE DID NOT INFORM PETITIONER THAT SHE WAS ALREADY MARRIED
TO ANOTHER GERMAN NATIONAL AND WITHOUT SUCH FRAUDULENT
DESIGN PETITIONER COULD NOT HAVE PARTED WITH HIS MONEY FOR THE
PURCHASE OF THE PROPERTIES.47
and
THE HONORABLE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE
INTENTION OF THE PETITIONER IS NOT TO OWN REAL PROPERTIES IN THE
PHILIPPINES BUT TO SELL THEM AT PUBLIC AUCTION TO BE ABLE TO
RECOVER HIS MONEY USED IN PURCHASING THEM.48
Since the assignment of errors are intertwined with each other, the Court
shall resolve the same simultaneously.
The petitioner contends that he purchased the three parcels of land subject
of his complaint because of his desire to marry the respondent, and not to
violate the Philippine Constitution. He was, however, deceived by the
respondent when the latter failed to disclose her previous marriage to Klaus
Muller. It cannot, thus, be said that he and the respondent are "equally
guilty;" as such, the pari delicto doctrine is not applicable to him. He acted in
good faith, on the advice of the respondent's uncle, Atty. Mardoecheo
Camporedondo. There is no evidence on record that he was aware of the
constitutional prohibition against aliens acquiring real property in the
Philippines when he purchased the real properties subject of his complaint
with his own funds. The transactions were not illegal per se but merely
prohibited, and under Article 1416 of the New Civil Code, he is entitled to
recover the money used for the purchase of the properties. At any rate, the
petitioner avers, he filed his complaint in the court a quo merely for the
purpose of having him declared as the owner of the properties, to enable
him to sell the same at public auction. Applying by analogy Republic Act No.
13349 as amended by Rep. Act No. 4381 and Rep. Act No. 4882, the proceeds
of the sale would be remitted to him, by way of refund for the money he
used to purchase the said properties. To bar the petitioner from recovering
the subject properties, or at the very least, the money used for the purchase
thereof, is to allow the respondent to enrich herself at the expense of the
petitioner in violation of Article 22 of the New Civil Code.
The petition is bereft of merit.
Section 14, Article XIV of the 1973 Constitution provides, as follows:
Save in cases of hereditary succession, no private land shall be transferred or
conveyed except to individuals, corporations, or associations qualified to
acquire or hold lands in the public domain.50
Lands of the public domain, which include private lands, may be transferred
or conveyed only to individuals or entities qualified to acquire or hold private
lands or lands of the public domain. Aliens, whether individuals or
corporations, have been disqualified from acquiring lands of the public
domain. Hence, they have also been disqualified from acquiring private
lands.51
Even if, as claimed by the petitioner, the sales in question were entered into
by him as the real vendee, the said transactions are in violation of the
Constitution; hence, are null and void ab initio.52 A contract that violates the
Constitution and the law, is null and void and vests no rights and creates no
obligations. It produces no legal effect at all.53 The petitioner, being a party to
an illegal contract, cannot come into a court of law and ask to have his illegal
objective carried out. One who loses his money or property by knowingly
engaging in a contract or transaction which involves his own moral turpitude
may not maintain an action for his losses. To him who moves in deliberation
and premeditation, the law is unyielding.54 The law will not aid either party to
an illegal contract or agreement; it leaves the parties where it finds
them.55 Under Article 1412 of the New Civil Code, the petitioner cannot have
the subject properties deeded to him or allow him to recover the money he
had spent for the purchase thereof.56 Equity as a rule will follow the law and
will not permit that to be done indirectly which, because of public policy,
cannot be done directly.57 Where the wrong of one party equals that of the
other, the defendant is in the stronger position . . . it signifies that in such a
situation, neither a court of equity nor a court of law will administer a
remedy.58 The rule is expressed. in the maxims: EX DOLO ORITUR
ACTIO and IN PARI DELICTO POTIOR EST CONDITIO DEFENDENTIS.59
The petitioner cannot feign ignorance of the constitutional proscription, nor
claim that he acted in good faith, let alone assert that he is less guilty than
the respondent. The petitioner is charged with knowledge of the
constitutional prohibition.60 As can be gleaned from the decision of the trial
court, the petitioner was fully aware that he was disqualified from acquiring
and owning lands under Philippine law even before he purchased the
properties in question; and, to skirt the constitutional prohibition, the
petitioner had the deed of sale placed under the respondent's name as the
sole vendee thereof:
Such being the case, the plaintiff is subject to the constitutional restrictions
governing the acquisition of real properties in the Philippines by aliens.
From the plaintiff's complaint before the Regional Trial Court, National
Capital Judicial Region, Branch 84, Quezon City in Civil Case No. Q-46350 he
alleged:
x x x "That on account that foreigners are not allowed by the Philippine laws
to acquire real properties in their name as in the case of my vendor Miss
Victoria Vinuya (sic) although married to a foreigner, we agreed and I
consented in having the title to subject property placed in defendant's name
alone although I paid for the whole price out of my own exclusive funds."
(paragraph IV, Exhibit "W.")
and his testimony before this Court which is hereby quoted:
ATTY. ABARQUEZ:
Q.         In whose name the said house and lot placed, by the way, where is his
house and lot located?
A.         In 14 Fernandez St., San Francisco, del Monte, Manila.
Q.         In whose name was the house placed?
A.         Ederlina Catito because I was informed being not a Filipino, I cannot
own the property. (tsn, p. 11, August 27, 1986).
xxx             xxx             xxx
COURT:
Q.         So you understand that you are a foreigner that you cannot buy land
in the Philippines?
A.         That is correct but as she would eventually be my wife that would be
owned by us later on. (tsn, p. 5, September 3, 1986)
xxx             xxx             xxx
Q.         What happened after that?
A.         She said you foreigner you are using Filipinos to buy property.
Q.         And what did you answer?
A:         I said thank you very much for the property I bought because I gave
you a lot of money (tsn., p. 14, ibid).
It is evident that the plaintiff was fully aware that as a non-citizen of the
Philippines, he was disqualified from validly purchasing any land within the
country.61
The petitioner's claim that he acquired the subject properties because of his
desire to marry the respondent, believing that both of them would thereafter
jointly own the said properties, is belied by his own evidence. It is merely an
afterthought to salvage a lost cause. The petitioner admitted on cross-
examination that he was all along legally married to Teresita Santos Frenzel,
while he was having an amorous relationship with the respondent:
ATTY. YAP:
Q         When you were asked to identify yourself on direct examination you
claimed before this Honorable Court that your status is that of being married,
do you confirm that?
A         Yes, sir.
Q         To whom are you married?
A         To a Filipina, since 1976.
Q         Would you tell us who is that particular person you are married since
1976?
A         Teresita Santos Frenzel.
Q         Where is she now?
A         In Australia.
Q         Is this not the person of Teresita Frenzel who became an Australian
citizen?
A         I am not sure, since 1981 we were separated.
Q         You were only separated, in fact, but not legally separated?
A         Thru my counsel in Australia I filed a separation case.
Q         As of the present you are not legally divorce[d]?
A         I am still legally married.62
The respondent was herself married to Klaus Muller, a German citizen. Thus,
the petitioner and the respondent could not lawfully join in wedlock. The
evidence on record shows that the petitioner in fact knew of the
respondent's marriage to another man, but nonetheless purchased the
subject properties under the name of the respondent and paid the purchase
prices therefor. Even if it is assumed gratia arguendi that the respondent and
the petitioner were capacitated to marry, the petitioner is still disqualified to
own the properties in tandem with the respondent.63
The petitioner cannot find solace in Article 1416 of the New Civil Code which
reads:
Art. 1416. When the agreement is not illegal per se but is merely prohibited,
and the prohibition by the law is designed for the protection of the plaintiff,
he may, if public policy is thereby enhanced, recover what he has paid or
delivered.64
The provision applies only to those contracts which are merely prohibited, in
order to benefit private interests. It does not apply to contracts void ab initio.
The sales of three parcels of land in favor of the petitioner who is a foreigner
is illegal per se. The transactions are void ab initio because they were entered
into in violation of the Constitution. Thus, to allow the petitioner to recover
the properties or the money used in the purchase of the parcels of land
would be subversive of public policy.
Neither may the petitioner find solace in Rep. Act No. 133, as amended by
Rep. Act No. 4882, which reads:
SEC. 1. Any provision of law to the contrary notwithstanding, private real
property may be mortgaged in favor of any individual, corporation, or
association, but the mortgagee or his successor-in-interest, if disqualified to
acquire or hold lands of the public domain in the Philippines, shall not take
possession of the mortgaged property during the existence of the mortgage
and shall not take possession of mortgaged property except after default and
for the sole purpose of foreclosure, receivership, enforcement or other
proceedings and in no case for a period of more than five years from actual
possession and shall not bid or take part in any sale of such real property in
case of foreclosure: Provided, That said mortgagee or successor-in-interest
may take possession of said property after default in accordance with the
prescribed judicial procedures for foreclosure and receivership and in no case
exceeding five years from actual possession.65
From the evidence on record, the three parcels of land subject of the
complaint were not mortgaged to the petitioner by the owners thereof but
were sold to the respondent as the vendee, albeit with the use of the
petitioner's personal funds.
Futile, too, is petitioner's reliance on Article 22 of the New Civil Code which
reads:
Art. 22. Every person who through an act of performance by another, or any
other means, acquires or comes into possession of something at the expense
of the latter without just or legal ground, shall return the same to him.66
The provision is expressed in the maxim: "MEMO CUM ALTERIUS DETER
DETREMENTO PROTEST" (No person should unjustly enrich himself at the
expense of another). An action for recovery of what has been paid without
just cause has been designated as an accion in rem verso.67 This provision
does not apply if, as in this case, the action is proscribed by the Constitution
or by the application of the pari delicto doctrine. 68 It may be unfair and
unjust to bar the petitioner from filing an accion in rem verso over the
subject properties, or from recovering the money he paid for the said
properties, but, as Lord Mansfield stated in the early case of Holman vs.
Johnson:69 "The objection that a contract is immoral or illegal as between the
plaintiff and the defendant, sounds at all times very ill in the mouth of the
defendant. It is not for his sake, however, that the objection is ever allowed;
but it is founded in general principles of policy, which the defendant has the
advantage of, contrary to the real justice, as between him and the plaintiff."
IN LIGHT OF ALL THE FOREGOING, the petition is DISMISSED. The decision of
the Court of Appeals is AFFIRMED in toto.
Costs against the petitioner.
SO ORDERED.
G.R. No. 195975, September 05, 2016
TAINA MANIGQUE-STONE, Petitioner, v. CATTLEYA LAND, INC., AND
SPOUSES TROADIO B. TECSON AND ASUNCION ORTALIZ-
TECSON, Respondents.
DECISION
DEL CASTILLO, J.:
The sale of Philippine land to an alien or foreigner, even if titled in the name
of his Filipino spouse, violates the Constitution and is thus, void.
Assailed in this Petition for Review on Certiorari1 are the August 16, 2010
Decision2 of the Court of Appeals (CA) which dismissed the appeal by Taina
Manigque-Stone (Taina) in CA-G.R. CV No. 02352, and its February 22, 2011
Resolution,3 which denied Taina's motion for reconsideration4 thereon.
Factual Antecedents
Sometime in July 1992, Cattleya Land, Inc. (Cattleya) sent its legal counsel,
Atty. Federico C. Cabilao, Jr. (Atty. Cabilao, Jr.), to Tagbilaran City to
investigate at the Office of the Register of Deeds in that city the status of the
properties of spouses Col. Troadio B. Tecson (Col. Tecson) and Asuncion
Tecson (collectively, Tecson spouses), which Cattleya wanted to purchase.
One of these properties, an 8,805-square meter parcel of land located at
Doljo, Panglao, Bohol, is registered in the name of the Tecson spouses, and
covered by Transfer Certificate of Title (TCT) No. 17655 (henceforth, the
subject property). Atty. Cabilao, Jr. found that no encumbrances or liens on
the subject property had been annotated on the TCT thereof, except for an
attachment issued in connection with Civil Case No. 3399 entitled "Tantrade
Corporation vs. Bohol Resort Hotel, Inc., et al." 5
On November 6, 1992, Cattleya entered into a Contract of Conditional Sale
with the Tecson spouses covering nine parcels of land, including the subject
property. In this transaction the Tecson spouses were represented by Atty.
Salvador S. Pizarras (Atty. Pizarras). The Contract of Conditional Sale was
entered in the Primary Book of the Office of the Register of Deeds of Bohol
that same day, per Entry No. 83422. On August 30, 1993, the parties
executed a Deed of Absolute Sale covering the subject property. This Deed of
Absolute Sale was also entered in the Primary Book on October 4, 1993, per
Entry No. 87549. However, neither the Contract of Conditional Sale nor the
Deed of Absolute Sale could be annotated on the certificate of title covering
the subject property because the then Register of Deeds of Bohol, Atty.
Narciso S. De la Serna (Atty. De la Serna) refused to annotate both deeds.
According to Atty. De la Serna it was improper to do so because of the writ of
attachment that was annotated on the certificate of title of the subject
property, in connection with the said Civil Case No. 3399.6
On December 1, 1993, Atty. Cabilao, Jr. and Atty. Pizarras, in representation
of their respective clients, again requested Atty. De la Serna to annotate the
Deed of Absolute Sale and all other pertinent documents on the original
certificate of title covering the subject property. But Atty. De la Serna refused
anew – this time saying that he would accede to the request only if he was
presented with a court order to that effect. Atty. De la Serna still refused the
request to annotate, even after Atty. Cabilao, Jr. had told him that all that he
(Atty. Cabilao, Jr.) was asking was for the Deed of Absolute Sale to be
annotated on the original certificate of title, and not for Atty. De la Serna to
issue a new transfer of title to the subject property.7
The writ of attachment on the certificate of title to the subject property was,
however, lifted, after the parties in Civil Case No. 3399 reached an amicable
settlement or compromise agreement. Even then, however, Cattleya did not
still succeed in having the aforementioned Deed of Absolute Sale registered,
and in having title to the subject property transferred to its name, because it
could not surrender the owner's copy of TCT No. 17655, which was in
possession of the Tecson spouses. According to Cattleya, the Tecson spouses
could not deliver TCT No. 17655 to it, because according to the Tecson
spouses this certificate of title had been destroyed in a fire which broke out
in Sierra Bullones, Bohol.8
This claim by the Tecson spouses turned out to be false, however, because
Atty. Cabilao, Jr. came to know, while following up the registration of the
August 30, 1993 Deed of Absolute Sale at the Office of the Register of Deeds
of Bohol, that the owner's copy of TCT No. 17655 had in fact been presented
by Taina at the Office of the Register of Deeds of Bohol, along with the Deed
of Sale that was executed by the Tecson spouses, in favor of Taina covering
the subject property.9
It appears that when Taina's then common-law husband, Michael (Mike)
Stone, visited Bohol sometime in December 1985, he fell in love with the
place and decided to buy a portion of the beach lot in Doljo, Panglao, Bohol.
They met with Col. Tecson, and the latter agreed to sell them a portion of the
beach lot for US$8,805.00. Mike and Taina made an initial downpayment of
US$1,750.00 (or equivalent P35,000.00 at that time) for a portion of a beach
lot, but did not ask for a receipt for this initial downpayment. On June 1,
1987, a Deed of Absolute Sale covering the subject portion was executed by
Col. Tecson in Taina's favor. Subsequent payments were made by Mike
totalling P40,000.00, as of August 29, 1986, although another payment of
P5,000.00 was made sometime in August 1987. The last payment in the
amount of P32,000.00, was made in September 1987.10 In 1990, Troadio
Tecson, Jr., the son of Col. Tecson and Taina's brother-in-law, delivered to
Taina the owner's copy of TCT No. 17655.11
In the meantime, in October 1986, Taina and Mike got married.
On April 25, 1994, Taina filed a Notice of Adverse Claim covering the subject
portion, after she learned that Col. Tecson and his lawyer had filed a petition
for the issuance of a second owner's copy over TCT No. 17655.12
On February 8, 1995, Taina sought to have her Deed of Absolute Sale
registered with the Office of the Register of Deeds of Bohol, and on that
occasion presented the owner's copy of TCT No. 17655. Taina also caused a
Memorandum of Encumbrance to be annotated on this certificate of title.
The result was that on February 10, 1995, a new certificate of title, TCT No.
21771, was issued in the name of Taina, in lieu of TCT No. 17655, in the name
of the Tecson spouses.13 The subject property is described in TCT No. 21771
as follows:
A parcel of Land (Lot 5 of the consolidation-subdivision plan Pcs-07-000907,
being a portion of lots I-A and I-B, Psd-07-02-12550, LRC. Rec. No. ___),
situated in the Barrio of Doljo, Municipality of Panglao, Province of Bohol,
Island of Bohol. Bounded on the North, along lines 15-16-1 by Bohol Strait;
on the East and Southeast, along line 1-2 by Lot 4 of the consolidation-
subdividion plan; along line 3-4 by Primitivo Hora; and along line 4-5 by Lot 6
of the consolidation-subdivision plan; on the South and Southwest, along line
5-6-7-8 by Andres Guimalan; along line 8-9 by [Bienvenido] Biosino; along
lines 9-10-11-12-13-14 by Angel Hora; and on the West, along lines 14-15 by
Lot 7 of the consolidation-subdivision plan. Beginning at a point marked "1"
on plan, being S. 83 deg. 08'E., 1045.79 m. from triangulation point TIP,
USCGS, 1908, Doljo, Panglao, Bohol; containing an area of EIGHT THOUSAND
EIGHT HUNDRED AND FIVE (8,805) SQUARE METERS, more or less.14
Whereupon, Cattleya instituted against Taina a civil action for quieting of title
and/or recovery of ownership and cancellation of title with
damages.15 Docketed as Civil Case No. 5782 of the Regional Trial Court (RTC)
of Bohol at Tagbilaran City, Cattleya therein initially impleaded Atty. De la
Serna as party defendant; but as the latter had already retired as Register of
Deeds of Bohol, both parties agreed to drop his name from the case.16
Taina likewise filed a motion for leave to admit a third-party complaint
against the Tecson spouses; this motion was granted by the RTC.17
After due proceedings, the RTC of Bohol gave judgment18 for Cattleya, thus:
WHEREFORE, in view of all the foregoing, judgment is hereby rendered in
favor of the plaintiff and against the defendant in the main case as follows:
1. Quieting the title or ownership of the plaintiff in Lot 5 by declaring the sale
in its favor as valid and enforceable by virtue of a prior registration of the
sale in accordance with the provisions of Presidential Decree No. 1529
otherwise known as the Property Registration Decree;
2. Ordering the cancellation of Transfer Certificate of Title No. 21771 in the
name of defendant TAINA MANIGQUE-STONE and the issuance of a new title
in favor of the plaintiff after payment of the required fees; and
3. Ordering the defendant to desist from claiming ownership and possession
thereof. Without pronouncement as to costs.
As to defendant's third[-]party complaint against spouses x x x Tecson[,] x x x
judgment is hereby rendered as follows:
1. Ordering the return of the total amount of Seventy-seven Thousand
(P77,000.00) Pesos to the third[-]party plaintiff with legal rate of interest
from the time of the filing of the third[-]party complaint on June 28, 2004
until the time the same shall have been fully satisfied; and
2. Ordering the payment of P50,000.00 by way of moral and exemplary
damages and x x x of attorney's fees in the amount of P30,000.00 and to pay
the costs.
SO ORDERED.19
In finding for Cattleya, the RTC held that the sale entered by the Tecson
spouses with Cattleya and with Taina involving one and the same property
was a double sale, and that Cattleya had a superior right to the lot covered
thereby, because Cattleya was the first to register the sale in its favor in good
faith; that although at the time of the sale the TCT covering the subject
property could not yet be issued, and the deed of sale could not be
annotated thereon due to a pending case between the vendors-spouses
(Tecson spouses) and Tantrade, Inc., the evidence convincingly showed
nonetheless that it was Cattleya that was the first to register the sale in its
favor with the Office of the Provincial Registry of Deeds of Bohol on October
4, [1993] as shown in Entry No. 87549.20 Furthermore, the RTC found that
Cattleya had no notice, nor was it aware, of Taina's claim to the subject
property, and that the only impediment it (Cattleya) was aware of was the
pending case (Civil Case No. 3399) between Tantrade Corporation and Bohol
Resort Hotel, Inc.21
On the other hand, the RTC found Taina's position untenable because: First,
the June 1, 1987 sale between Col. Tecson and Mike, Taina's then common-
law husband, was a patent nullity, an absolutely null and void sale, because
under the Philippine Constitution a foreigner or alien cannot acquire real
property in the Philippines. Second, at the time of the sale, Taina was only
Mike's dummy, and their subsequent marriage did not validate or legitimize
the constitutionally proscribed sale earlier made in Mike's favor. And third,
no less than Taina herself admitted that at the time she caused the sale to be
registered and title thereto issued to her, she knew or was otherwise aware
that the very same lot had already been sold to Cattleya, or at least claimed
by the latter – and this is a state of affairs constitutive of bad faith on her
part.22
The RTC likewise held that neither parties in the main case was entitled to
damages, because they failed to substantiate their respective claims
thereto.23
As regards Taina's third-party complaint against the Tecson spouses, the RTC
ordered the return or restitution to her of the sum of P77,000.00, plus legal
interest. Likewise awarded by the RTC in Taina's favor were moral and
exemplary damages in the amount of P50,000.00 and attorney's fees in the
amount of P30,000.00 plus costs.24
Dissatisfied with this judgment, Taina appealed to the CA.
Ruling of the Court of Appeals
On August 16, 2010, the CA handed down the assailed
Decision,25cralawred which contained the following decretal portion:
WHEREFORE, the challenged Decision of the Regional Trial Court dated
[August 10, 2007] is hereby AFFIRMED with MODIFICATIONS; to wit:
1. Quieting the title of ownership of the plaintiff-appellee, CATTLEYA LAND,
INC. in the above-described property by declaring the sale in its favor as valid
and enforceable;
2. Ordering the cancellation of Transfer Certificate of Title No. 21771 in the
name of defendant-appellant TAINA MANIGQUE-STONE;
3. Ordering the registration of the Deed of Absolute Sale involving the
subject property executed in favor of CATTLEYA LAND, INC. and the issuance
x x x of a new title in favor of the plaintiff-appellee CATTLEYA LAND, INC. ate
payment of the required fees; and
4. Ordering the defendant-appellant, TAINA MANIGQUE-STONE to desist
from claiming ownership and possession thereof. Without pronouncement as
to cost.
As to the third-party defendants-appellees, the spouses Troadio B. Tecson
and Asuncion Ortaliz Tecson, judgment is hereby rendered as follows:
1. Ordering third-party defendants-appellees, spouses TROADIO B. TECSON
and ASUNCION ORTALIZ TECSON, [to] return x x x the total amount of
Seventy-seven Thousand (P77,000.00) Pesos to the defendant-appellant,
TAINA MANIGQUE-STONE, with legal rate of interest from the time of filing
of the third[-]party complaint on June 28, 2004 until the time the same shall
have been fully satisfied; and
2. Ordering third-party defendants-appellees, spouses TROADIO B. TECSON
and ASUNCION ORTALIZ TECSON [to pay] P50,000.00 to the defendant-
appellant, TAINA MANIGQUE-STONE by way of moral and exemplary
damages and [to pay] attorney's fees in the amount of P30,000.00 x x x.
No pronouncement as to cost.
SO ORDERED.26
In support of its Decision, the CA ratiocinated —
Article 1498 of the Civil Code provides that, as a rule, the execution of a
notarized deed of sale is equivalent to the delivery of a thing sold. In this
case, the notarization of the deed of sale of TAINA is defective. TAINA
testified that the deed of sale was executed and signed by Col. Troadio
Tecson in Bohol but was notarized in Manila without the vendors appearing
personally before the notary public.
Additionally, Article 1477 of the Civil Code provides that the ownership of the
thing sold is transferred upon the actual or constructive delivery thereof;
however, the delivery of the owner's copy of TCT 17655 to TAINA is dubious.
It was not the owner, Col. Troadio Tecson, himself who delivered the same
but his son who also happens to be TAINA's brother-in-law. Hence, the
foregoing circumstances negate the fact that there was indeed an absolute
delivery or transfer of ownership.
Anent the issue on validity of the sale to Taina Manigque-Stone, the
fundamental law is perspicuous in its prohibition against aliens from holding
title or acquiring private lands, except only by way of legal succession or if
the acquisition was made by a former natural-born citizen.
A scrutiny of the records would show that the trial court aptly held that the
defendant-appellant was only a dummy for Mike Stone who is a foreigner.
Even if the Deed of Absolute Sale is in the name of Taina Manigque-Stone
that does not change the fact that the real buyer was Mike Stone, a
foreigner. The appellant herself had admitted in court that the buyer was
Mike Stone and at the time of the negotiation she was not yet legally married
to Mike Stone. They cannot do indirectly what is prohibited directly by the
law.
To further militate against her stand, the appellant herself testified during
the cross examination:
Q: Now, the Deed of Sale states that the buyer is Taina Manigque-
 Stone?
A: Yes.
Q: And not Mike Stone who according to you was the one who paid the
entire consideration and was the one who negotiated with Colonel
Tecson. Will you kindly tell the Court how come it was your name
who placed [sic] in the Deed of Sale?
A: Because an American, foreign national cannot buy land here.
   
Q: Yes because an American national, foreigner cannot own land here.
A: Yes.
   
Q: And so the Deed of Sale was placed in your name, correct?
A: Yes.
The above testimony is a clear admission against interest. An admission
against interest is the best evidence which affords the greatest certainty of
the facts in dispute. The rationale for the rule is based on the presumption
that no man would declare anything against himself unless such declaration
is true. Accordingly, it is rational to presume that the testimony corresponds
with the truth, and she bears the burden if it does not.
Moreover, TAINA asserts in the brief that 'ownership of the lot covered by
TCT 21771 is held by her, a Filipino. As long as the lot is registered in the
name of a Filipino, the trial court is barred from inquiring [into] its legality.'
Such assertion is bereft of merit.
The Honorable Supreme Court, in identifying the true ownership of a
property registered in the name of a Filipina who was married to a foreign
national, pronounced in Borromeo vs. Descallar that:
'It is settled that registration is not a mode of acquiring ownership. It is only a
means of confirming the fact of its existence with notice to the world at
large. Certificates of title are not a source of right. The mere possession of a
title does not make one the true owner of the property. Thus, the mere fact
that respondent has the titles of the disputed properties in her name does not
necessarily, conclusively and absolutely make her the owner [thereof]. The
rule on indefeasibility of title likewise does not apply to respondent. A
certificate of title implies that the title is quiet, and that it is perfect, absolute
and indefeasible. However, there are well-defined exceptions to this rule, as
when the transferee is not a holder in good faith and did not acquire the
subject properties for a valuable consideration. This is the situation in the
instant case. Respondent did not contribute a single centavo in the
acquisition of the properties. She had no income of her own at that time, nor
did she have any savings. x x x'27
Taina moved for reconsideration28 of the CA's Decision, but the CA thumbed
down this motion in its February 22, 2011 Resolution.29 Hence, the present
Petition.
Issues
Before this Court, petitioner puts forward the following questions of law for
resolution:
1. Whether the assailed Decision is legally correct in holding that petitioner is
a mere dummy of Mike.
2. Whether the assailed Decision is legally correct in considering that the
verbal contract of sale between spouses Tecson and Mike transferred
ownership to a foreigner, which falls within the constitutional ban on sales of
land to foreigners.
3. Whether the assailed Decision is legally correct in not considering that,
assuming that the sale of land to Mike violated the Constitution, the same
has been cured by the subsequent marriage of petitioner to Mike and by the
registration of the land in the name of petitioner, a Filipino citizen.
4. Whether the assailed Decision is legally correct in not applying the rules on
double sale, which clearly favor petitioner Taina.30
In amplification thereof, petitioner advances these arguments:
I
The trial court and the Court of Appeals departed from the clear provisions of
the law and established jurisprudence when it failed to consider that the
Filipino wife of Mike Stone, petitioner Taina Manigque-Stone[,] has the legal
capacity and the conjugal partnership interests to enter into a contract of
deed of absolute sale with respondent Sps. Troadio B. Tecson and Asuncion
Ortaliz Tecson.
II
The trial court and the Court of Appeals departed from the provisions of the
law and established jurisprudence when it failed to consider that the verbal
contract of sale of land to Mike Stone was unenforceable and did not
transfer ownership to him, to fall within the constitutional ban on foreigners
owning lands in the Philippines.
III
The trial court and the Court of Appeals departed from established
jurisprudence, when it failed to consider that, assuming arguendo that the
sale of land to Mike Stone violated the Constitutional ban on foreign
ownership of lands, the same has been cured by the subsequent marriage of
petitioner and Mike Stone, and [the subsequent issuance of title] in the name
of petitioner.
IV
The Court of Appeals gravely erred and departed from established rules of
evidence when it ruled that the delivery of the owner's copy of TCT 17655 to
petitioner Taina is dubious.
V
The trial court and the Court of Appeals gravely erred when it departed from
provisions of the law and established jurisprudence when it did not apply the
rules on double sale which clearly favor petitioner Taina.31
The fundamental issue for resolution in the case at bench is whether the sale
of land by the Tecson spouses to Michael Stone a.k.a. Mike, a foreigner or
alien, although ostensibly made in Taina's name, was valid, despite the
constitutional prohibition against the sale of lands in the Philippines to
foreigners or aliens. A collateral or secondary issue is whether Article 1544 of
the Civil Code, the article which governs double sales, controls this case.
Petitioner's Arguments
In praying that the CA Decision be overturned Taina posits that while Mike's
legal capacity (to own or acquire real property in the Philippines) was not
entirely unassailable, there was nevertheless no actual violation of the
constitutional prohibition against the acquisition or purchase by aliens or
foreigners of lands in the Philippines, because in this case no real transfer of
ownership had been effected in favor of Mike, from Col. Tecson;32 that all
payments made by Mike to Col. Tecson must be presumed to have come
from the community property he had with Taina, because Mike had been her
(Taina's) common-law-husband from 1982 up to the day they were married,
in 1986; hence, in this context, she (Taina) was not exactly Mike's dummy at
all, but his active partner;33 that it is of no consequence that she (Taina) had
knowledge that Cattleya had likewise purchased or acquired the subject lot
because the deed of sale in favor of Cattleya was executed subsequent to the
deed of sale that she and Mike had entered into with the Tecson spouses,
thus, she was the first to acquire ownership of the subject lot in good
faith;34 that assuming for argument's sake that neither she nor Cattleya was a
purchaser in good faith, still she was the first one to acquire constructive
possession of the subject lot pursuant to Article 1544 3rd paragraph of the
Civil Code, and for this reason she had acquired lawful title thereto.35
Respondent Cattleya Land's arguments
Cattleya counters that there could not have been a double sale in the instant
case because the earlier sale between Col. Tecson and Mike was absolutely
null and void, as this was a flagrant violation of the constitutional provision
barring or prohibiting aliens or foreigners from acquiring or purchasing land
in the Philippines; hence, there was only one valid sale in this case, and that
was the sale between Col. Tecson and Cattleya.36
Court's Resolution with respect to Respondents-Spouses Tecson
This Court's Resolution dated June 20, 2012 noted, amongst others, the
Manifestation filed by Cattleya, which inter alia stated: (1) that Col. Tecson
died on December 7, 2004; (2) that Taina instituted a third-party complaint
against the Tecson spouses; (3) that in this third-party complaint the Tecson
spouses were declared in default by the trial court; (4) that this default order
was not appealed by the Tecson spouses; (5) that the present appeal by
Taina from the CA Decision will in no way affect or prejudice the Tecson
spouses, given the fact that these spouses did not appeal from the default
order, and (6) that the instant Petition be submitted for resolution without
the Comment of the Tecson spouses.37 In the Resolution of February 26,
2014, this Court noted that since Asuncion Tecson had failed to submit to this
Court the name of the legal representative of her deceased husband Col.
Tecson within the period which expired on October 3, 2013, this Court was
dispensing with the Comment of the Tecson spouses in the instant Petition.38
Our Ruling
This Petition is bereft of merit.
Section 7, Article XII of the 1987 Constitution states that:
Save in cases of hereditary succession, no private lands shall be transferred
or conveyed except to individuals, corporations, or associations qualified to
acquire or hold lands of the public domain.
Given the plain and explicit language of this constitutional mandate, it has
been held that "[a]liens, whether individuals or corporations,
are disqualified from acquiring lands of the public domain. Hence, they are
also disqualified from acquiring private lands. The primary purpose of the
constitutional provision is the conservation of the national patrimony."39
In the case at bench, Taina herself admitted that it was really Mike who paid
with his own funds the subject lot; hence, Mike was its real purchaser or
buyer. More than that, it bears stressing that if the deed of sale at all
proclaimed that she (Taina) was the purchaser or buyer of the subject
property and this subject property was placed under her name, it was simply
because she and Mike wanted to skirt or circumvent the constitutional
prohibition barring or outlawing foreigners or aliens from acquiring or
purchasing lands in the Philippines. Indeed, both the CA and the RTC exposed
and laid bare Taina's posturing and pretense for what these really are: that in
the transaction in question, she was a mere dummy, a spurious stand-in, for
her erstwhile common-law husband, who was not a Filipino then, and never
attempted to become a naturalized Filipino citizen thereafter. The CA put
things in correct perspective, thus —
A scrutiny of the records would show that the trial court aptly held that the
defendant-appellant was only a dummy for Mike Stone who is a foreigner.
Even if the Deed of Absolute Sale is in the name of Taina Manigque-Stone
that does not change the fact that the real buyer was Mike Stone,
a foreigner. The appellant herself had admitted in court that the buyer was
Mike Stone and at the time of the negotiation she was not yet legally married
to Mike Stone. They cannot do indirectly what is prohibited directly by the
law.40 (Emphasis supplied)
Citing the RTC's proceedings of December 7, 2004, the CA adverted to the
following testimony by the petitioner during her cross-examination thus –
(Atty. Monteclar)
Now, the Deed of Sale states that the buyer is Taina Manigque-
Q:
Stone?
A: Yes.
Q: And not Mike Stone who according to you was the one who paid the
entire consideration and was the one who negotiated with Colonel
Tecson. Will you kindly tell the Court how come it was your name
who placed [sic] in the Deed of Sale?
A: Because an American, foreign national cannot buy land here.
   
Q: Yes because an American national, foreigner cannot own land here.
A: Yes.
Q: And so the Deed of Sale was placed in your name, correct?
A: Yes.41 (Emphasis supplied)
It is axiomatic, of course, that this Court is not a trier of facts. Subject to well-
known exceptions, none of which obtains in the instant case, this Court is
bound by the factual findings of the CA, especially where such factual
findings, as in this case, accorded in the main with the RTC's own findings.42
Given the fact that the sale by the Tecson spouses to Taina as Mike's dummy
was totally abhorrent and repugnant to the Philippine Constitution, and is
thus, void ab initio, it stands to reason that there can be no double sale to
speak of here. In the case of Fudot v. Cattleya Land, Inc.,43 which fortuitously
also involved the Tecson spouses and Cattleya, we held thus —
The petition is bereft of merit.
Petitioner's arguments, which rest on the assumption that there was a
double sale, must fail.
In the first place, there is no double sale to speak of. Art. 1544 of the Civil
Code, which provides the rule on double sale, applies only to a situation
where the same property is validly sold to different vendees. In this case,
there is only one sale to advert to, that between the spouses Tecson and
respondent.
In Remalante v. Tibe, this Court ruled that the Civil Law provision on double
sale is not applicable where there is only one valid sale, the previous sale
having been found to be fraudulent. Likewise, in Espiritu and Apostol v.
Valerio, where the same parcel of land was purportedly sold to two different
parties, the Court held that despite the fact that one deed of sale was
registered ahead of the other, Art. 1544 of the Civil Code will not apply created in his favor; no reimbursement for his expenses can be allowed;
where said deed is found to be a forgery, the result of this being that the and no declaration can be made that the subject property was part of the
right of the other vendee should prevail. conjugal/community property of the spouses. In any event, he had and has
no capacity or personality to question the subsequent lease of the Boracay
The trial court declared that the sale between the spouses Tecson and property by his wife on the theory that in so doing, he was merely exercising
petitioner is invalid, as it bears the forged signature of Asuncion. x x the prerogative of a husband in respect [to] conjugal property. To sustain
x44 (Citations omitted; Emphasis supplied) such a theory would countenance indirect controversion of the
constitutional prohibition. If the property were to be declared conjugal, this
In view of the fact that the sale in the case at bench is worse off (because it
would accord the alien husband a substantial interest and right over the
is constitutionally infirm) than the sale in the Fudot case, which merely
land, as he would then have a decisive vote as to its transfer or disposition.
involves a violation of the pertinent provisions of the Civil Code, this Court
This is a right that the Constitution does not permit him to have. (Citation
must affirm, as it hereby affirms the CA's ruling that, "there is only one sale
omitted; emphasis and underscoring supplied)50
to reckon with, that is, the sale to Cattleya.45
The other points raised by petitioner in the present Petition for Review are
Again, our holding in Muller v. Muller,46 which is almost on all fours with the
collateral or side issues and need not detain this Court any further. Suffice it
case at bench, can only strengthen and reinforce our present stance.
to say that the chief or main constitutional issue that has been addressed
In Muller, it appears that German national Helmut Muller (Helmut), alien or
and resolved in the present Petition has effectively subsumed or relegated to
foreigner husband of the Filipina Elena Buenaventura Muller (Elena), bought
inconsequence the other collateral or side issues raised herein.
with his capital funds a parcel of land in Antipolo City and also paid for the
construction of a house thereon. This Antipolo property was registered under WHEREFORE, the Petition is DENIED. The Decision of the Court of Appeals
the name of Elena under TCT No. 219438. Subsequently, Helmut instituted a dated August 16, 2010 and its Resolution dated February 22, 2011 in CA-G.R.
petition for separation of properties with the RTC of Quezon City. After due CV No. 02352 being in conformity with the law and with this Court's
proceedings, the RTC of Quezon City rendered judgment terminating the jurisprudential teachings, are hereby AFFIRMED in toto.
regime of absolute community of property between Helmut and Elena. The
RTC also decreed the separation of properties between the spouses. With SO ORDERED.
respect to the Antipolo property, the RTC held that although it was acquired
with the use of Helmut's capital funds, nevertheless the latter could not
recover his investment because the property was purchased in violation of
Section 7, Article XII of the Constitution. Dissatisfied with the RTC's judgment,
Helmut appealed to the CA which upheld his appeal. The CA ruled that: (1)
Helmut merely prayed for reimbursement of the purchase price of the
Antipolo property, and not that he be declared the owner thereof; (2) Elena's
ownership over this property was considered as ownership-in-trust for
Helmut; (3) there is nothing in the Constitution which prohibits Helmut from
acquiring ownership of the house.

However, on a Petition for Review on Certiorari, this Court reversed the CA

and reinstated the RTC's ruling. In sustaining the RTC, this Court once again
stressed the absolute character of the constitutional prohibition against
ownership of lands in this country by foreigners or aliens:

The Court of Appeals erred in holding that an implied trust was created and
resulted by operation of law in view of petitioner's marriage to respondent.
Save for the exception provided in cases of hereditary succession,
respondent's disqualification from owning lands in the Philippines
is absolute. Not even an ownership in trust is allowed. Besides, where the
purchase is made in violation of an existing statute and in evasion of its
express provision, no trust can result in favor of the party who is guilty of the
fraud. To hold otherwise would allow circumvention of the constitutional
prohibition.47 (Citation omitted; Emphasis supplied)

The same absolute constitutional proscription was reiterated anew in the

comparatively recent case of Matthews v. Taylor,48 erroneously invoked by
Taina. Taina claims that this case supports her position in the case at bench
allegedly because, like her case, the alien or foreigner husband in
the Matthews case (Benjamin A. Taylor, a British subject) likewise provided G.R. No. 186014, June 26, 2013
the funds for the purchase of real property by his Filipino wife (Joselyn C.
ALI AKANG, Petitioner, v. MUNICIPALITY OF ISULAN, SULTAN KUDARAT
Taylor) and this Court allegedly sustained said wife's ownership over the
PROVINCE, REPRESENTED BY ITS MUNICIPAL MAYOR AND MUNICIPAL VICE
property.49 That Taina's claim is a clear misapprehension of the thrust and
MAYOR AND MUNICIPAL COUNCILORS/KAGAWADS, Respondent.
purport of the ruling enunciated in the Matthews case is put to rest by what
this Court said there —
DECISION
In light of the foregoing jurisprudence, we find and so hold that Benjamin has
REYES, J.:
no right to nullify the Agreement of Lease between Joselyn and
petitioner. Benjamin, being an alien, is absolutely prohibited from acquiring This case was originally filed as a petition for certiorari under Rule 65 of the
private and public lands in the Philippines. Considering that Joselyn Rules of Court.  In the Court’s Resolution dated March 9, 2009, however, the
appeared to be the designated 'vendee' in the Deed of Sale of said property, petition was treated as one for review under Rule 45.1  Assailed is the
she acquired sole ownership there[of]. This is true even if we sustain Decision2 dated April 25, 2008 and Resolution3 dated October 29, 2008 of the
Benjamin's claim that he provided the funds for such acquisition. By Court of Appeals Mindanao Station (CA) in CA-G.R. CV No. 00156, which
entering into such contract knowing that it was illegal, no implied trust was reversed the Judgment4 dated January 14, 2004 of the Regional Trial Court
(RTC) of Isulan, Sultan Kudarat, Branch 19 in Civil Case No. 1007 for Recovery
of Possession of Subject Property and/or Quieting of Title thereon and
Damages.
The Facts
Ali Akang (petitioner) is a member of the national and cultural community
belonging to the Maguindanaon tribe of Isulan, Province of Sultan Kudarat
and the registered owner of Lot 5-B-2-B-14-F (LRC) Psd 1100183 located at
Kalawag III, Isulan, Sultan Kudarat, covered by Transfer Certificate of Title
(TCT) No. T-3653,5 with an area of 20,030 square meters.6
Sometime in 1962, a two-hectare portion of the property was sold by the
petitioner to the Municipality of Isulan, Province of Sultan Kudarat
(respondent) through then Isulan Mayor Datu Ampatuan under a Deed of
Sale executed on July 18, 1962, which states:cralavvonlinelawlibrary
“That for and in consideration of the sum of THREE  THOUSAND PESOS
([P]3,000.00), Philippine Currency, value to be paid and deliver to me, and of
which receipt of which shall be acknowledged by me to my full satisfaction by
the MUNICIPAL GOVERNMENT OF ISULAN, represented by the Municipal
Mayor, Datu Sama Ampatuan, hereinafter referred to as the VENDEE, I
hereby sell, transfer, cede, convey and assign as by these presents do have
sold, transferred, ceded, conveyed and assigned, an area of TWO (2)
hectares, more or less, to and in favor of the MUNICIPAL GOVERNMENT OF
ISULAN, her (sic) heirs, assigns and administrators to have and to hold
forevery (sic) and definitely, which portion shall be utilized purposely and
exclusively as a GOVERNMENT CENTER SITE x x x[.]”7
The respondent immediately took possession of the property and began
construction of the municipal building.8
Thirty-nine (39) years later or on October 26, 2001, the petitioner, together
with his wife, Patao Talipasan, filed a civil action for Recovery of Possession
of Subject Property and/or Quieting of Title thereon and Damages against
the respondent, represented by its Municipal Mayor, et al.9  In his complaint,
the petitioner alleged, among others, that the agreement was one to sell,
which was not consummated as the purchase price was not paid.10
In its answer, the respondent denied the petitioner’s allegations, claiming,
among others: that the petitioner’s cause of action was already barred by
laches; that the Deed of Sale was valid; and that it has been in open,
continuous and exclusive possession of the property for forty (40) years.11
After trial, the RTC rendered judgment in favor of the petitioner.  The RTC
construed the Deed of Sale as a contract to sell, based on the wording of the
contract, which allegedly showed that the consideration was still to be paid
and delivered on some future date – a characteristic of a contract to sell.12  In
addition, the RTC observed that the Deed of Sale was not determinate as to
its object since it merely indicated two (2) hectares of the 97,163 sq m lot,
which is an undivided portion of the entire property owned by the
petitioner.  The RTC found that segregation must first be made to identify the
parcel of land indicated in the Deed of Sale and it is only then that the
petitioner could execute a final deed of absolute sale in favor of the
respondent.13
As regards the payment of the purchase price, the RTC found the same to
have not been made by the respondent.  According to the RTC, the Municipal
Voucher is not a competent documentary proof of payment but is merely
evidence of admission by the respondent that on the date of the execution of
the Deed of Sale, the consideration stipulated therein had not yet been paid.  By virtue of said RTC decision, proceedings for the Cancellation of Certificate
The RTC also ruled that the Municipal Voucher’s validity and evidentiary
value is in question as it suffers infirmities, that is, it was neither duly
recorded, numbered, signed by the Municipal Treasurer nor was it pre-
audited.14
The RTC also ruled that the Deed of Sale was not approved pursuant to
Section 145 of the Administrative Code for Mindanao and Sulu or Section 120
of the Public Land Act (PLA), as amended.  Resolution No. 70,15 which was
issued by the respondent, appropriating the amount of P3,000.00 as
payment for the property, and Resolution No. 644 of the Provincial Board of
Cotabato, which approved Resolution No. 70, cannot be considered proof of
the sale as said Deed of Sale was not presented for examination and approval
of the Provincial Board.16  Further, since the respondent’s possession of the
property was not in the concept of an owner, laches cannot be a valid
defense for claiming ownership of the property, which has been registered in
the petitioner’s name under the Torrens System.17
The dispositive portion of the RTC Decision18 dated January 14, 2004
reads:cralavvonlinelawlibrary
WHEREFORE, upon all the foregoing considerations, judgment is hereby
rendered:cralavvonlinelawlibrary
a. Declaring the contract entered into between the plaintiffs and the
defendant, Municipal Government of Isulan, Cotabato (now
Sultan Kudarat), represented by its former Mayor, Datu Suma
Ampatuan, dated July 18, 1962, as a contract to sell, without its
stipulated consideration having been paid; and for having been
entered into between plaintiff Ali Akang, an illiterate non-
Christian, and the defendant, Municipal Government of Isulan, in
violation of Section 120 of C.A. No. 141, said contract/agreement
is hereby declared null and void;chanroblesvirtualawlibrary
b. Declaring the Deed of Sale (Exh. “1”-“E”) dated July 18, 1962, null
and void [ab] initio, for having been executed in violation of
Section 145 of the Administrative Code of Mindanao and Sulu,
and of Section 120 of the Public Land Law, as amended by R.A.
No. 3872;chanroblesvirtualawlibrary
c. Ordering the defendants to pay plaintiffs, the value of the lot in
question, Lot No. 5-B-2-B-14-F (LRC) Psd 110183, containing an
area of 20,030 Square Meters, at the prevailing market value, as
may [be] reflected in its Tax Declaration, or in the alternative, to
agree on the payment of monthly back rentals, retroactive to
1996, until defendants should decide to buy and pay the value of
said lot as aforestated, with legal interest in both
cases;chanroblesvirtualawlibrary
d. Ordering the defendant, Municipal Government of Isulan, Sultan
Kudarat, to pay plaintiffs, by way of attorney’s fee, the equivalent
of 30% of the value that defendants would pay the plaintiffs for
the lot in question; and to pay plaintiffs the further sum of
[P]100,000.00, by way of moral and exemplary
damages;chanroblesvirtualawlibrary
e. Ordering the defendants, members of the Sangguniang Bayan of
Isulan, Sultan Kudarat, to pass a resolution/ordinance for the
appropriation of funds for the payment of the value of plaintiffs’
Lot 5-B-2-B-14-F (LRC) Psd-110183, and of the damages herein
awarded to the plaintiffs; and
f. Ordering the defendants to pay the costs of suit.
For lack of merit, the counterclaims of the defendants should be, as it is
hereby, dismissed.
IT IS SO ORDERED.19
of Title No. T-49349 registered under the name of the respondent was
instituted by the petitioner under Miscellaneous Case No. 866 and as a
result, the respondent’s title over the property was cancelled and a new one
issued in the name of the petitioner.
The respondent appealed the RTC Decision dated January 14, 2004 and in the
Decision20 dated April 25, 2008, the CA reversed the ruling of the RTC and
upheld the validity of the sale. The dispositive portion of the CA Decision
provides:cralavvonlinelawlibrary
WHEREFORE, the assailed decision dated January 14, 2004 is hereby
REVERSED and a new one entered, upholding the contract of sale executed
on July 18, 1962 between the parties.
SO ORDERED.21
The CA sustained the respondent’s arguments and ruled that the petitioner is
not entitled to recover ownership and possession of the property as the
Deed of Sale already transferred ownership thereof to the respondent.  The
CA held that the doctrines of estoppel and laches must apply against the
petitioner for the reasons that: (1) the petitioner adopted inconsistent
positions when, on one hand, he invoked the interpretation of the Deed of
Sale as a contract to sell but still demanded payment, and called for the
application of Sections 145 and 146 of the Administrative Code for Mindanao
and Sulu, on the other; and (2) the petitioner did not raise at the earliest
opportunity the nullity of the sale and remained passive for 39 years, as it
was raised only in 2001.22
The CA also ruled that the Deed of Sale is not a mere contract to sell but a
perfected contract of sale.  There was no express reservation of ownership of
title by the petitioner and the fact that there was yet no payment at the time
of the sale does not affect the validity or prevent the perfection of the sale.23
As regards the issue of whether payment of the price was made, the CA ruled
that there was actual payment, as evidenced by the Municipal Voucher,
which the petitioner himself prepared and signed despite the lack of
approval of the Municipal Treasurer.  Even if he was not paid the
consideration, it does not affect the validity of the contract of sale for it is not
the fact of payment of the price that determines its validity.24
In addition, the CA noted that there was an erroneous cancellation of the
certificate of title in the name of the respondent and the registration of the
same property in the name of the petitioner in Miscellaneous Case No. 866.  By the contract of sale, one of the contracting parties obligates himself to
According to the CA, this does not affect in any way the ownership of the
respondent over the subject property because registration or issuance of a
certificate of title is not one of the modes of acquiring ownership.25
The petitioner sought reconsideration of the CA Decision, which was denied
by the CA in its Resolution26 dated October 29, 2008.
Hence, this petition.
Issue
WHETHER THE PETITIONER IS ENTITLED TO RECOVER OWNERSHIP AND
POSSESSION OF THE PROPERTY IN DISPUTE.
Resolution of the above follows determination of these questions: (1)
whether the Deed of Sale dated July 18, 1962 is a valid and perfected
contract of sale; (2) whether there was payment of consideration by the
respondent; and (3) whether the petitioner’s claim is barred by laches.
The petitioner claims that the acquisition of the respondent was null and void
because: (1) he is an illiterate non-Christian who only knows how to sign his
name in Arabic and knows how to read the Quran but can neither read nor
write in both Arabic and English; (2) the respondent has not paid the price for
the property; (3) the Municipal Voucher is not admissible in evidence as
proof of payment; (4) the Deed of Sale was not duly approved in accordance
with Sections 145 and 146 of the Administrative Code of Mindanao and Sulu,
and Section 120 of the PLA, as amended; and (4) the property is a registered
land covered by a TCT and cannot be acquired by prescription or adverse
possession.27  The petitioner also explained that the delayed filing of the civil
action with the RTC was due to Martial Law and the Ilaga-Blackshirt Troubles
in the then Province of Cotabato.28
The respondent, however, counters that: (1) the petitioner is not an illiterate
non-Christian and he, in fact, was able to execute, sign in Arabic, and
understand the terms and conditions of the Special Power of Attorney dated
July 23, 1996 issued in favor of Baikong Akang (Baikong); (2) the Deed of Sale
is valid as its terms and conditions were reviewed by the Municipal Council of
Isulan and the Provincial Board of Cotabato; and (3) the Deed of Sale is a
contract of sale and not a contract to sell.29
Ruling of the Court
The Court finds the petition devoid of merit.
Issue Raised for the First Time on Appeal is Barred by Estoppel
The petitioner asserts that the Deed of Sale was notarized by Atty. Gualberto
B. Baclig who was not authorized to administer the same, hence, null and
void.  This argument must be rejected as it is being raised for the first time
only in this petition.  In his arguments before the RTC and the CA, the
petitioner focused mainly on the validity and the nature of the Deed of Sale,
and whether there was payment of the purchase price.  The rule is settled
that issues raised for the first time on appeal and not raised in the
proceedings in the lower court are barred by estoppel.  To consider the
alleged facts and arguments raised belatedly would amount to trampling on
the basic principles of fair play, justice, and due process.30  Accordingly, the
petitioner’s attack on the validity of the Deed of Sale vis-à-vis its compliance
with the 2004 New Notarial Law must be disregarded.31
The Deed of Sale is a Valid Contract of Sale
The petitioner alleges that the Deed of Sale is merely an agreement to sell,
which was not perfected due to non-payment of the stipulated
consideration.32  The respondent, meanwhile, claims that the Deed of Sale is
a valid and perfected contract of absolute sale.33
A contract of sale is defined under Article 1458 of the Civil Code:
transfer the ownership of and to deliver a determinate thing, and the other
to pay therefore a price certain in money or its equivalent.
The elements of a contract of sale are: (a) consent or meeting of the minds,
that is, consent to transfer ownership in exchange for the price; (b)
determinate subject matter; and (c) price certain in money or its equivalent.34
A contract to sell, on the other hand, is defined by Article 1479 of the Civil
Code:
[A] bilateral contract whereby the prospective seller, while expressly
reserving the ownership of the subject property despite delivery thereof to
the prospective buyer, binds himself to sell the said property exclusively to
the prospective buyer upon fulfillment of the condition agreed upon, that is,
full payment of the purchase price.
In a contract of sale, the title to the property passes to the buyer upon the
delivery of the thing sold, whereas in a contract to sell, the ownership is, by
agreement, retained by the seller and is not to pass to the vendee until full
payment of the purchase price.35
The Deed of Sale executed by the petitioner and the respondent is a
perfected contract of sale, all its elements being present.  There was mutual
agreement between them to enter into the sale, as shown by their free and
voluntary signing of the contract.  There was also an absolute transfer of
ownership of the property by the petitioner to the respondent as shown in
the stipulation: “x x x I [petitioner] hereby sell, transfer, cede, convey and
assign as by these presents do have sold, transferred, ceded, conveyed and
assigned, x x x.”36  There was also a determinate subject matter, that is, the
two-hectare parcel of land as described in the Deed of Sale.  Lastly, the price
or consideration is at Three Thousand Pesos (P3,000.00), which was to be
paid after the execution of the contract.  The fact that no express reservation
of ownership or title to the property can be found in the Deed of Sale
bolsters the absence of such intent, and the contract, therefore, could not be
one to sell.  Had the intention of the petitioner been otherwise, he could
have: (1) immediately sought judicial recourse to prevent further
construction of the municipal building; or (2) taken legal action to contest the
agreement.37  The petitioner did not opt to undertake any of such recourses.
Payment of consideration or purchase price
The petitioner’s allegation of non-payment is of no consequence taking into
account the Municipal Voucher presented before the RTC, which proves
payment by the respondent of Three Thousand Pesos (P3,000.00).  The
petitioner, notwithstanding the lack of the Municipal Treasurer’s approval,
admitted that the signature appearing on the Municipal Voucher was his and
he is now estopped from disclaiming payment.
Even assuming, arguendo, that the petitioner was not paid, such non
payment is immaterial and has no effect on the validity of the contract of
sale.  A contract of sale is a consensual contract and what is required is the
meeting of the minds on the object and the price for its perfection and
validity.38  In this case, the contract was perfected the moment the petitioner
and the respondent agreed on the object of the sale – the two-hectare parcel
of land, and the price – Three Thousand Pesos (P3,000.00).  Non-payment of
the purchase price merely gave rise to a right in favor of the petitioner to
either demand specific performance or rescission of the contract of sale.39
Sections 145 and 146 of the Administrative Code of Mindanao and Sulu, and
Section 120 of the PLA, as amended, are not applicable
The petitioner relies on the foregoing laws in assailing the validity of the
Deed of Sale, claiming that the contract lacks executive approval and that he
is an illiterate non-Christian to whom the benefits of Sections 145 and 146 of
the Administrative Code of Mindanao and Sulu should apply.
Section 145 of the Administrative Code of Mindanao and Sulu essentially
provides for the requisites of the contracts entered into by a person with any
Moro or other non-Christian inhabitants.40  Section 146,41 meanwhile,
provides that contracts entered into in violation of Section 145 are void. 
These provisions aim to safeguard the patrimony of the less developed
ethnic groups in the Philippines by shielding them against imposition and
fraud when they enter into agreements dealing with realty.42
Section 120 of the PLA (Commonwealth Act No. 141) affords the same
protection.43  R.A. No. No. 387244 likewise provides that conveyances and
encumbrances made by illiterate non-Christian or literate non-Christians
where the instrument of conveyance or encumbrance is in a language not
understood by said literate non-Christians shall not be valid unless duly
approved by the Chairman of the Commission on National Integration.
In Jandoc-Gatdula v. Dimalanta,45 however, the Court categorically stated
that while the purpose of Sections 145 and 146 of the Administrative Code of
Mindanao and Sulu in requiring executive approval of contracts entered into
by cultural minorities is indeed to protect them, the Court cannot blindly
apply that law without considering how the parties exercised their rights and
obligations.  In this case, Municipality Resolution No. 70, which approved the
appropriation of P3,000.00, was, in fact, accepted by the Provincial Board of
Cotabato. In approving the appropriation of P3,000.00, the Municipal Council
of Isulan and the Provincial Board of Cotabato, necessarily, scrutinized the
Deed of Sale containing the terms and conditions of the sale.  Moreover,
there is nothing on record that proves that the petitioner was duped into
signing the contract, that he was taken advantage of by the respondent and
that his rights were not protected.
The court’s duty to protect the native vendor, however, should not be
carried out to such an extent as to deny justice to the vendee when truth and
justice happen to be on the latter’s side.  The law cannot be used to shield
the enrichment of one at the expense of another.  More important, the law
will not be applied so stringently as to render ineffective a contract that is
otherwise valid, except for want of approval by the CNI.  This principle holds,
especially when the evils sought to be avoided are not obtaining.46
The Court must also reject the petitioner’s claim that he did not understand
the import of the agreement.  He alleged that he signed in Arabic the Deed of
Sale, the Joint Affidavit and the Municipal Voucher, which were all in English,
and that he was not able to comprehend its contents.  Records show the
contrary.  The petitioner, in fact, was able to execute in favor of Baikong a
Special Power of Attorney (SPA) dated July 23, 1996, which was written in
English albeit signed by the petitioner in Arabic.  Said SPA authorized
Baikong, the petitioner’s sister, to follow-up the payment of the purchase
price.  This raises doubt on the veracity of the petitioner’s allegation that he
does not understand the language as he would not have been able to
execute the SPA or he would have prevented its enforcement.
The Petitioner’s Claim for Recovery of Possession and Ownership is Barred by
Laches
Laches has been defined as the failure or neglect, for an unreasonable and
unexplained length of time, to do that which, by exercising due diligence
could or should have been done earlier.47  It should be stressed that laches is
not concerned only with the mere lapse of time.48
As a general rule, an action to recover registered land covered by the Torrens
System may not be barred by laches.49  Neither can laches be set up to resist
the enforcement of an imprescriptible legal right.50  In exceptional cases,
however, the Court allowed laches as a bar to recover a titled property. 
Thus, in Romero v. Natividad,51 the Court ruled that laches will bar recovery
of the property even if the mode of transfer was invalid.  Likewise, in Vda. de
Cabrera v. CA,52 the Court ruled:cralavvonlinelawlibrary
In our jurisdiction, it is an enshrined rule that even a registered owners of
property may be barred from recovering possession of property by virtue of
laches.  Under the Land Registration Act (now the Property Registration
Decree), no title to registered land in derogation to that of the registered
owner shall be acquired by prescription or adverse possession.  The same is
not true with regard to laches. x x x.53 (Citation omitted and emphasis
supplied)
More particularly, laches will bar recovery of a property, even if the mode of
transfer used by an alleged member of a cultural minority lacks executive
approval.54  Thus, in Heirs of Dicman v. Cariño,55 the Court upheld the Deed of
Conveyance of Part Rights and Interests in Agricultural Land executed by
Ting-el Dicman in favor of Sioco Cariño despite lack of executive approval. 
The Court stated that “despite the judicial pronouncement that the sale of
real property by illiterate ethnic minorities is null and void for lack of
approval of competent authorities, the right to recover possession has
nonetheless been barred through the operation of the equitable doctrine of
laches.”56  Similarly in this case, while the respondent may not be considered
as having acquired ownership by virtue of its long and continued possession,
nevertheless, the petitioner’s right to recover has been converted into a stale
demand due to the respondent’s long period of possession and by the
petitioner’s own inaction and neglect.57  The Court cannot accept the
petitioner’s explanation that his delayed filing and assertion of rights was due
to Martial Law and the Cotabato Ilaga-Black Shirt Troubles.  The Martial Law
regime was from 1972 to 1986, while the Ilaga-Black Shirt Troubles were
from the 1970s to the 1980s.  The petitioner could have sought judicial relief,
or at the very least made his demands to the respondent, as early as the
third quarter of 1962 after the execution of the Deed of Sale and before the
advent of these events.  Moreover, even if, as the petitioner claims, access to
courts were restricted during these times, he could have immediately filed
his claim after Martial Law and after the Cotabato conflict has ended.  The
petitioner’s reliance on the Court’s treatment of Martial Law as force
majeure that suspended the running of prescription in Development Bank of
the Philippines v. Pundogar58 is inapplicable because the Court’s ruling
therein pertained to prescription and not laches.  Consequently, the
petitioner’s lengthy inaction sufficiently warrants the conclusion that he
acquiesced or conformed to the sale.

Vigilantibus sed non dormientibus jura subverniunt.  The law aids the vigilant,
not those who sleep on their rights.  This legal percept finds application in
the petitioner’s case.

WHEREFORE, the appeal is DENIED.  The Decision dated April 25, 2008 and
Resolution dated October 29, 2008 of the Court of Appeals Mindanao Station
in CA-G.R. CV No. 00156 are AFFIRMED.

SO ORDERED.

. No. L-26278             August 4, 1927

LEON SIBAL , plaintiff-appellant,

vs.
EMILIANO J. VALDEZ ET AL., defendants.
EMILIANO J. VALDEZ, appellee.

J. E. Blanco for appellant.

Felix B. Bautista and Santos and Benitez for appellee.

JOHNSON, J.:

The action was commenced in the Court of First Instance of the Province of
Tarlac on the 14th day of December 1924. The facts are about as conflicting
as it is possible for facts to be, in the trial causes.

As a first cause of action the plaintiff alleged that the defendant Vitaliano
Mamawal, deputy sheriff of the Province of Tarlac, by virtue of a writ of
execution issued by the Court of First Instance of Pampanga, attached and
sold to the defendant Emiliano J. Valdez the sugar cane planted by the
plaintiff and his tenants on seven parcels of land described in the complaint
in the third paragraph of the first cause of action; that within one year from
the date of the attachment and sale the plaintiff offered to redeem said sugar
cane and tendered to the defendant Valdez the amount sufficient to cover
the price paid by the latter, the interest thereon and any assessments or
taxes which he may have paid thereon after the purchase, and the interest
corresponding thereto and that Valdez refused to accept the money and to
return the sugar cane to the plaintiff.
As a second cause of action, the plaintiff alleged that the defendant Emiliano
J. Valdez was attempting to harvest the palay planted in four of the seven
parcels mentioned in the first cause of action; that he had harvested and
taken possession of the palay in one of said seven parcels and in another
parcel described in the second cause of action, amounting to 300 cavans; and
that all of said palay belonged to the plaintiff.
Plaintiff prayed that a writ of preliminary injunction be issued against the
defendant Emiliano J. Valdez his attorneys and agents, restraining them (1)
from distributing him in the possession of the parcels of land described in the
complaint; (2) from taking possession of, or harvesting the sugar cane in
question; and (3) from taking possession, or harvesting the palay in said
parcels of land. Plaintiff also prayed that a judgment be rendered in his favor
and against the defendants ordering them to consent to the redemption of
the sugar cane in question, and that the defendant Valdez be condemned to
pay to the plaintiff the sum of P1,056 the value of palay harvested by him in
the two parcels above-mentioned ,with interest and costs.
On December 27, 1924, the court, after hearing both parties and upon
approval of the bond for P6,000 filed by the plaintiff, issued the writ of
preliminary injunction prayed for in the complaint.
The defendant Emiliano J. Valdez, in his amended answer, denied generally
and specifically each and every allegation of the complaint and step up the
following defenses:
(a) That the sugar cane in question had the nature of personal property and
was not, therefore, subject to redemption;
(b) That he was the owner of parcels 1, 2 and 7 described in the first cause of
action of the complaint;
(c) That he was the owner of the palay in parcels 1, 2 and 7; and
(d) That he never attempted to harvest the palay in parcels 4 and 5.
The defendant Emiliano J. Valdez by way of counterclaim, alleged that by
reason of the preliminary injunction he was unable to gather the sugar cane,
sugar-cane shoots (puntas de cana dulce) palay in said parcels of land,
representing a loss to him of P8,375.20 and that, in addition thereto, he
suffered damages amounting to P3,458.56. He prayed, for a judgment (1)
absolving him from all liability under the complaint; (2) declaring him to be
the absolute owner of the sugar cane in question and of the palay in parcels
1, 2 and 7; and (3) ordering the plaintiff to pay to him the sum of P11,833.76,
representing the value of the sugar cane and palay in question, including
damages.
Upon the issues thus presented by the pleadings the cause was brought on
for trial. After hearing the evidence, and on April 28, 1926, the Honorable
Cayetano Lukban, judge, rendered a judgment against the plaintiff and in
favor of the defendants —
(1) Holding that the sugar cane in question was personal property and, as
such, was not subject to redemption;
(2) Absolving the defendants from all liability under the complaint; and
(3) Condemning the plaintiff and his sureties Cenon de la Cruz, Juan
Sangalang and Marcos Sibal to jointly and severally pay to the defendant
Emiliano J. Valdez the sum of P9,439.08 as follows:
(a) P6,757.40, the value of the sugar cane;
(b) 1,435.68, the value of the sugar-cane shoots;
(c) 646.00, the value of palay harvested by plaintiff;
(d) 600.00, the value of 150 cavans of palay which the defendant was not
able to raise by reason of the injunction, at P4 cavan. 9,439.08 From that
judgment the plaintiff appealed and in his assignments of error contends that
the lower court erred: (1) In holding that the sugar cane in question was
personal property and, therefore, not subject to redemption;
(2) In holding that parcels 1 and 2 of the complaint belonged to Valdez, as
well as parcels 7 and 8, and that the palay therein was planted by Valdez;
(3) In holding that Valdez, by reason of the preliminary injunction failed to
realized P6,757.40 from the sugar cane and P1,435.68 from sugar-cane
shoots (puntas de cana dulce);
(4) In holding that, for failure of plaintiff to gather the sugar cane on time,
the defendant was unable to raise palay on the land, which would have
netted him the sum of P600; and.
(5) In condemning the plaintiff and his sureties to pay to the defendant the
sum of P9,439.08.
It appears from the record:
(1) That on May 11, 1923, the deputy sheriff of the Province of Tarlac, by
virtue of writ of execution in civil case No. 20203 of the Court of First
Instance of Manila (Macondray & Co., Inc. vs. Leon Sibal),levied an
attachment on eight parcels of land belonging to said Leon Sibal, situated in
the Province of Tarlac, designated in the second of attachment as parcels 1,
2, 3, 4, 5, 6, 7 and 8 (Exhibit B, Exhibit 2-A).
(2) That on July 30, 1923, Macondray & Co., Inc., bought said eight parcels of
land, at the auction held by the sheriff of the Province of Tarlac, for the sum
to P4,273.93, having paid for the said parcels separately as follows (Exhibit C,
and 2-A):
Parcel
1 ............................................................
P1.00
.........
2 ............................................................
2,000.00
.........
3 ............................................................
120.93
.........
4 ............................................................
1,000.00
.........
5 ............................................................
1.00
.........
6 ............................................................
1.00
.........
7 with the house
150.00
thereon ..........................
8 ............................................................
 1,000.00
......... =========
=
4,273.93
(3) That within one year from the sale of said parcel of land, and on the 24th
day of September, 1923, the judgment debtor, Leon Sibal, paid P2,000 to
Macondray & Co., Inc., for the account of the redemption price of said
parcels of land, without specifying the particular parcels to which said
amount was to applied. The redemption price said eight parcels was reduced,
by virtue of said transaction, to P2,579.97 including interest (Exhibit C and 2).
The record further shows:
(1) That on April 29, 1924, the defendant Vitaliano Mamawal, deputy sheriff
of the Province of Tarlac, by virtue of a writ of execution in civil case No.
1301 of the Province of Pampanga (Emiliano J. Valdez vs. Leon Sibal 1.º —
the same parties in the present case), attached the personal property of said
Leon Sibal located in Tarlac, among which was included the sugar cane now
in question in the seven parcels of land described in the complaint (Exhibit
A).
(2) That on May 9 and 10, 1924, said deputy sheriff sold at public auction said
personal properties of Leon Sibal, including the sugar cane in question to
Emilio J. Valdez, who paid therefor the sum of P1,550, of which P600 was for
the sugar cane (Exhibit A).
(3) That on April 29,1924, said deputy sheriff, by virtue of said writ of
execution, also attached the real property of said Leon Sibal in Tarlac,
including all of his rights, interest and participation therein, which real
property consisted of eleven parcels of land and a house and camarin
situated in one of said parcels (Exhibit A).
(4) That on June 25, 1924, eight of said eleven parcels, including the house
and the camarin, were bought by Emilio J. Valdez at the auction held by the
sheriff for the sum of P12,200. Said eight parcels were designated in the
certificate of sale as parcels 1, 3, 4, 5, 6, 7, 10 and 11. The house and camarin
were situated on parcel 7 (Exhibit A).
(5) That the remaining three parcels, indicated in the certificate of the sheriff
as parcels 2, 12, and 13, were released from the attachment by virtue of
claims presented by Agustin Cuyugan and Domiciano Tizon (Exhibit A).
(6) That on the same date, June 25, 1924, Macondray & Co. sold and
conveyed to Emilio J. Valdez for P2,579.97 all of its rights and interest in the
eight parcels of land acquired by it at public auction held by the deputy
sheriff of Tarlac in connection with civil case No. 20203 of the Court of First
Instance of Manila, as stated above. Said amount represented the unpaid
balance of the redemption price of said eight parcels, after payment by Leon
Sibal of P2,000 on September 24, 1923, fro the account of the redemption
price, as stated above. (Exhibit C and 2).
The foregoing statement of facts shows:
(1) The Emilio J. Valdez bought the sugar cane in question, located in the
seven parcels of land described in the first cause of action of the complaint at
public auction on May 9 and 10, 1924, for P600.
(2) That on July 30, 1923, Macondray & Co. became the owner of eight
parcels of land situated in the Province of Tarlac belonging to Leon Sibal and
that on September 24, 1923, Leon Sibal paid to Macondray & Co. P2,000 for
the account of the redemption price of said parcels.
(3) That on June 25, 1924, Emilio J. Valdez acquired from Macondray & Co. all
of its rights and interest in the said eight parcels of land.
(4) That on June 25, 1924, Emilio J. Valdez also acquired all of the rights and
interest which Leon Sibal had or might have had on said eight parcels by
virtue of the P2,000 paid by the latter to Macondray.
(5) That Emilio J. Valdez became the absolute owner of said eight parcels of
land.
The first question raised by the appeal is, whether the sugar cane in question
is personal or real property. It is contended that sugar cane comes under the
classification of real property as "ungathered products" in paragraph 2 of
article 334 of the Civil Code. Said paragraph 2 of article 334 enumerates as
real property the following: Trees, plants, and ungathered products, while
they are annexed to the land or form an integral part of any immovable
property." That article, however, has received in recent years an
interpretation by the Tribunal Supremo de España, which holds that, under
certain conditions, growing crops may be considered as personal property.
(Decision of March 18, 1904, vol. 97, Civil Jurisprudence of Spain.)
Manresa, the eminent commentator of the Spanish Civil Code, in discussing
section 334 of the Civil Code, in view of the recent decisions of the supreme
Court of Spain, admits that growing crops are sometimes considered and
treated as personal property. He says:
No creemos, sin embargo, que esto excluya la excepcionque muchos autores
hacen tocante a la venta de toda cosecha o de parte de ella cuando aun no
esta cogida (cosa frecuente con la uvay y la naranja), y a la de lenas,
considerando ambas como muebles. El Tribunal Supremo, en sentencia de 18
de marzo de 1904, al entender sobre un contrato de arrendamiento de un
predio rustico, resuelve que su terminacion por desahucio no extingue los
derechos del arrendario, para recolectar o percibir los frutos
correspondientes al año agricola, dentro del que nacieron aquellos derechos,
cuando el arrendor ha percibido a su vez el importe de la renta integra
correspondiente, aun cuando lo haya sido por precepto legal durante el
curso del juicio, fundandose para ello, no solo en que de otra suerte se daria
al desahucio un alcance que no tiene, sino en que, y esto es lo interesante a
nuestro proposito, la consideracion de inmuebles que el articulo 334 del
Codigo Civil atribuge a los frutos pendientes, no les priva del caracter de
productos pertenecientes, como tales, a quienes a ellos tenga derecho,
Ilegado el momento de su recoleccion.
xxx     xxx     xxx
Mas actualmente y por virtud de la nueva edicion de la Ley Hipotecaria,
publicada en 16 de diciembre de 1909, con las reformas introducidas por la
de 21 de abril anterior, la hipoteca, salvo pacto expreso que disponga lo
contrario, y cualquiera que sea la naturaleza y forma de la obligacion que
garantice, no comprende los frutos cualquiera que sea la situacion en que se
encuentre. (3 Manresa, 5. edicion, pags. 22, 23.)
From the foregoing it appears (1) that, under Spanish authorities, pending
fruits and ungathered products may be sold and transferred as personal
property; (2) that the Supreme Court of Spain, in a case of ejectment of a
lessee of an agricultural land, held that the lessee was entitled to gather the
products corresponding to the agricultural year, because said fruits did not
go with the land but belonged separately to the lessee; and (3) that under
the Spanish Mortgage Law of 1909, as amended, the mortgage of a piece of
land does not include the fruits and products existing thereon, unless the
contract expressly provides otherwise.
An examination of the decisions of the Supreme Court of Louisiana may give
us some light on the question which we are discussing. Article 465 of the Civil
Code of Louisiana, which corresponds to paragraph 2 of article 334 of our
Civil Code, provides: "Standing crops and the fruits of trees not gathered, and
trees before they are cut down, are likewise immovable, and are considered
as part of the land to which they are attached."
The Supreme Court of Louisiana having occasion to interpret that provision,
held that in some cases "standing crops" may be considered and dealt with
as personal property. In the case of Lumber Co. vs. Sheriff and Tax
Collector (106 La., 418) the Supreme Court said: "True, by article 465 of the
Civil Code it is provided that 'standing crops and the fruits of trees not
gathered and trees before they are cut down . . . are considered as part of
the land to which they are attached, but the immovability provided for is only
one in abstracto and without reference to rights on or to the crop acquired
by others than the owners of the property to which the crop is attached. . . .
The existence of a right on the growing crop is a mobilization by anticipation,
a gathering as it were in advance, rendering the crop movable quoad the
right acquired therein. Our jurisprudence recognizes the possible
mobilization of the growing crop." (Citizens' Bank vs. Wiltz, 31 La. Ann., 244;
Porche vs. Bodin, 28 La., Ann., 761; Sandel vs. Douglass, 27 La. Ann., 629;
Lewis vs. Klotz, 39 La. Ann., 267.)
"It is true," as the Supreme Court of Louisiana said in the case of Porche vs.
Bodin (28 La. An., 761) that "article 465 of the Revised Code says that
standing crops are considered as immovable and as part of the land to which
they are attached, and article 466 declares that the fruits of an immovable
gathered or produced while it is under seizure are considered as making part
thereof, and incurred to the benefit of the person making the seizure. But
the evident meaning of these articles, is where the crops belong to the
owner of the plantation they form part of the immovable, and where it is
seized, the fruits gathered or produced inure to the benefit of the seizing
creditor.
A crop raised on leased premises in no sense forms part of the immovable. It
belongs to the lessee, and may be sold by him, whether it be gathered or not,
and it may be sold by his judgment creditors. If it necessarily forms part of
the leased premises the result would be that it could not be sold under
execution separate and apart from the land. If a lessee obtain supplies to
make his crop, the factor's lien would not attach to the crop as a separate
thing belonging to his debtor, but the land belonging to the lessor would be
affected with the recorded privilege. The law cannot be construed so as to
result in such absurd consequences.
In the case of Citizen's Bank vs. Wiltz (31 La. Ann., 244)the court said:
If the crop quoad the pledge thereof under the act of 1874 was an
immovable, it would be destructive of the very objects of the act, it would
render the pledge of the crop objects of the act, it would render the pledge
of the crop impossible, for if the crop was an inseparable part of the realty
possession of the latter would be necessary to that of the former; but such is
not the case. True, by article 465 C. C. it is provided that "standing crops and
the fruits of trees not gathered and trees before they are cut down are
likewise immovable and are considered as part of the land to which they are
attached;" but the immovability provided for is only one in abstracto and
without reference to rights on or to the crop acquired by other than the
owners of the property to which the crop was attached. The immovability of
a growing crop is in the order of things temporary, for the crop passes from
the state of a growing to that of a gathered one, from an immovable to a
movable. The existence of a right on the growing crop is a mobilization by
anticipation, a gathering as it were in advance, rendering the crop
movable quoad the right acquired thereon. The provision of our Code is
identical with the Napoleon Code 520, and we may therefore obtain light by
an examination of the jurisprudence of France.
The rule above announced, not only by the Tribunal Supremo de España but
by the Supreme Court of Louisiana, is followed in practically every state of
the Union.
From an examination of the reports and codes of the State of California and
other states we find that the settle doctrine followed in said states in
connection with the attachment of property and execution of judgment is,
that growing crops raised by yearly labor and cultivation are considered
personal property. (6 Corpuz Juris, p. 197; 17 Corpus Juris, p. 379; 23 Corpus
Juris, p. 329: Raventas vs. Green, 57 Cal., 254; Norris vs. Watson, 55 Am.
Dec., 161; Whipple vs. Foot, 3 Am. Dec., 442; 1 Benjamin on Sales, sec. 126;
McKenzie vs. Lampley, 31 Ala., 526; Crine vs. Tifts and Co., 65 Ga., 644;
Gillitt vs. Truax, 27 Minn., 528; Preston vs. Ryan, 45 Mich., 174; Freeman on
Execution, vol. 1, p. 438; Drake on Attachment, sec. 249; Mechem on Sales,
sec. 200 and 763.)
Mr. Mechem says that a valid sale may be made of a thing, which though not
yet actually in existence, is reasonably certain to come into existence as the
natural increment or usual incident of something already in existence, and
then belonging to the vendor, and then title will vest in the buyer the
moment the thing comes into existence. (Emerson vs. European Railway Co.,
67 Me., 387; Cutting vs. Packers Exchange, 21 Am. St. Rep., 63.) Things of this
nature are said to have a potential existence. A man may sell property of
which he is potentially and not actually possessed. He may make a valid sale
of the wine that a vineyard is expected to produce; or the gain a field may
grow in a given time; or the milk a cow may yield during the coming year; or
the wool that shall thereafter grow upon sheep; or what may be taken at the
next cast of a fisherman's net; or fruits to grow; or young animals not yet in
existence; or the good will of a trade and the like. The thing sold, however,
must be specific and identified. They must be also owned at the time by the
vendor. (Hull vs. Hull, 48 Conn., 250 [40 Am. Rep., 165].)
It is contended on the part of the appellee that paragraph 2 of article 334 of
the Civil Code has been modified by section 450 of the Code of Civil
Procedure as well as by Act No. 1508, the Chattel Mortgage Law. Said section
450 enumerates the property of a judgment debtor which may be subjected
to execution. The pertinent portion of said section reads as follows: "All
goods, chattels, moneys, and other property, both real and personal, * * *
shall be liable to execution. Said section 450 and most of the other sections
of the Code of Civil Procedure relating to the execution of judgment were
taken from the Code of Civil Procedure of California. The Supreme Court of
California, under section 688 of the Code of Civil Procedure of that state
(Pomeroy, p. 424) has held, without variation, that growing crops were
personal property and subject to execution.
Act No. 1508, the Chattel Mortgage Law, fully recognized that growing crops
are personal property. Section 2 of said Act provides: "All personal property
shall be subject to mortgage, agreeably to the provisions of this Act, and a
mortgage executed in pursuance thereof shall be termed a chattel
mortgage." Section 7 in part provides: "If growing crops be mortgaged the
mortgage may contain an agreement stipulating that the mortgagor binds
himself properly to tend, care for and protect the crop while growing.
It is clear from the foregoing provisions that Act No. 1508 was enacted on the
assumption that "growing crops" are personal property. This consideration
tends to support the conclusion hereinbefore stated, that paragraph 2 of
article 334 of the Civil Code has been modified by section 450 of Act No. 190
and by Act No. 1508 in the sense that "ungathered products" as mentioned
in said article of the Civil Code have the nature of personal property. In other
words, the phrase "personal property" should be understood to include
"ungathered products."
At common law, and generally in the United States, all annual crops which
are raised by yearly manurance and labor, and essentially owe their annual
existence to cultivation by man, . may be levied on as personal property." (23
C. J., p. 329.) On this question Freeman, in his treatise on the Law of
Executions, says: "Crops, whether growing or standing in the field ready to be
harvested, are, when produced by annual cultivation, no part of the realty.
They are, therefore, liable to voluntary transfer as chattels. It is equally well
settled that they may be seized and sold under execution. (Freeman on
Executions, vol. p. 438.)
We may, therefore, conclude that paragraph 2 of article 334 of the Civil Code
has been modified by section 450 of the Code of Civil Procedure and by Act
No. 1508, in the sense that, for the purpose of attachment and execution,
and for the purposes of the Chattel Mortgage Law, "ungathered products"
have the nature of personal property. The lower court, therefore, committed
no error in holding that the sugar cane in question was personal property
and, as such, was not subject to redemption.
All the other assignments of error made by the appellant, as above stated,
relate to questions of fact only. Before entering upon a discussion of said
assignments of error, we deem it opportune to take special notice of the
failure of the plaintiff to appear at the trial during the presentation of
evidence by the defendant. His absence from the trial and his failure to cross-
examine the defendant have lent considerable weight to the evidence then
presented for the defense.
Coming not to the ownership of parcels 1 and 2 described in the first cause of
action of the complaint, the plaintiff made a futile attempt to show that said
two parcels belonged to Agustin Cuyugan and were the identical parcel 2
which was excluded from the attachment and sale of real property of Sibal to
Valdez on June 25, 1924, as stated above. A comparison of the description of
parcel 2 in the certificate of sale by the sheriff (Exhibit A) and the description
of parcels 1 and 2 of the complaint will readily show that they are not the
same.
The description of the parcels in the complaint is as follows:
1. La caña dulce sembrada por los inquilinos del ejecutado Leon Sibal 1.º en
una parcela de terreno de la pertenencia del citado ejecutado, situada en
Libutad, Culubasa, Bamban, Tarlac, de unas dos hectareas poco mas o menos
de superficie.
2. La caña dulce sembrada por el inquilino del ejecutado Leon Sibal 1.º,
Ilamado Alejandro Policarpio, en una parcela de terreno de la pertenencia
del ejecutado, situada en Dalayap, Culubasa, Bamban, Tarlac de unas dos
hectareas de superficie poco mas o menos." The description of parcel 2 given
in the certificate of sale (Exhibit A) is as follows:
2a. Terreno palayero situado en Culubasa, Bamban, Tarlac, de 177,090
metros cuadrados de superficie, linda al N. con Canuto Sibal, Esteban Lazatin
and Alejandro Dayrit; al E. con Francisco Dizon, Felipe Mañu and others; al S.
con Alejandro Dayrit, Isidro Santos and Melecio Mañu; y al O. con Alejandro
Dayrit and Paulino Vergara. Tax No. 2854, vador amillarado P4,200 pesos.
On the other hand the evidence for the defendant purported to show that
parcels 1 and 2 of the complaint were included among the parcels bought by
Valdez from Macondray on June 25, 1924, and corresponded to parcel 4 in
the deed of sale (Exhibit B and 2), and were also included among the parcels
bought by Valdez at the auction of the real property of Leon Sibal on June 25,
1924, and corresponded to parcel 3 in the certificate of sale made by the
sheriff (Exhibit A). The description of parcel 4 (Exhibit 2) and parcel 3 (Exhibit
A) is as follows:
Parcels No. 4. — Terreno palayero, ubicado en el barrio de Culubasa,Bamban,
Tarlac, I. F. de 145,000 metros cuadrados de superficie, lindante al Norte con
Road of the barrio of Culubasa that goes to Concepcion; al Este con Juan
Dizon; al Sur con Lucio Maño y Canuto Sibal y al Oeste con Esteban Lazatin,
su valor amillarado asciende a la suma de P2,990. Tax No. 2856.
As will be noticed, there is hardly any relation between parcels 1 and 2 of the
complaint and parcel 4 (Exhibit 2 and B) and parcel 3 (Exhibit A). But,
inasmuch as the plaintiff did not care to appear at the trial when the
defendant offered his evidence, we are inclined to give more weight to the
evidence adduced by him that to the evidence adduced by the plaintiff, with
respect to the ownership of parcels 1 and 2 of the compliant. We, therefore,
conclude that parcels 1 and 2 of the complaint belong to the defendant,
having acquired the same from Macondray & Co. on June 25, 1924, and from
the plaintiff Leon Sibal on the same date.
It appears, however, that the plaintiff planted the palay in said parcels and
harvested therefrom 190 cavans. There being no evidence of bad faith on his
part, he is therefore entitled to one-half of the crop, or 95 cavans. He should
therefore be condemned to pay to the defendant for 95 cavans only, at P3.40
a cavan, or the sum of P323, and not for the total of 190 cavans as held by
the lower court.
As to the ownership of parcel 7 of the complaint, the evidence shows that
said parcel corresponds to parcel 1 of the deed of sale of Macondray & Co, to
Valdez (Exhibit B and 2), and to parcel 4 in the certificate of sale to Valdez of
real property belonging to Sibal, executed by the sheriff as above stated
(Exhibit A). Valdez is therefore the absolute owner of said parcel, having
acquired the interest of both Macondray and Sibal in said parcel.
With reference to the parcel of land in Pacalcal, Tarlac, described in
paragraph 3 of the second cause of action, it appears from the testimony of
the plaintiff himself that said parcel corresponds to parcel 8 of the deed of
sale of Macondray to Valdez (Exhibit B and 2) and to parcel 10 in the deed of
sale executed by the sheriff in favor of Valdez (Exhibit A). Valdez is therefore
the absolute owner of said parcel, having acquired the interest of both
Macondray and Sibal therein.
In this connection the following facts are worthy of mention:
Execution in favor of Macondray & Co., May 11, 1923. Eight parcels of land
were attached under said execution. Said parcels of land were sold to
Macondray & Co. on the 30th day of July, 1923. Rice paid P4,273.93. On
September 24, 1923, Leon Sibal paid to Macondray & Co. P2,000 on the
redemption of said parcels of land. (See Exhibits B and C ).
Attachment, April 29, 1924, in favor of Valdez. Personal property of Sibal was
attached, including the sugar cane in question. (Exhibit A) The said personal
property so attached, sold at public auction May 9 and 10, 1924. April 29,
1924, the real property was attached under the execution in favor of Valdez
(Exhibit A). June 25, 1924, said real property was sold and purchased by
Valdez (Exhibit A).
June 25, 1924, Macondray & Co. sold all of the land which they had
purchased at public auction on the 30th day of July, 1923, to Valdez.
As to the loss of the defendant in sugar cane by reason of the injunction, the
evidence shows that the sugar cane in question covered an area of 22
hectares and 60 ares (Exhibits 8, 8-b and 8-c); that said area would have
yielded an average crop of 1039 picos and 60 cates; that one-half of the
quantity, or 519 picos and 80 cates would have corresponded to the
defendant, as owner; that during the season the sugar was selling at P13 a
pico (Exhibit 5 and 5-A). Therefore, the defendant, as owner, would have
netted P 6,757.40 from the sugar cane in question. The evidence also shows
that the defendant could have taken from the sugar cane 1,017,000 sugar-
cane shoots (puntas de cana) and not 1,170,000 as computed by the lower
court. During the season the shoots were selling at P1.20 a thousand
(Exhibits 6 and 7). The defendant therefore would have netted P1,220.40
from sugar-cane shoots and not P1,435.68 as allowed by the lower court.
As to the palay harvested by the plaintiff in parcels 1 and 2 of the complaint,
amounting to 190 cavans, one-half of said quantity should belong to the
plaintiff, as stated above, and the other half to the defendant. The court
erred in awarding the whole crop to the defendant. The plaintiff should
therefore pay the defendant for 95 cavans only, at P3.40 a cavan, or P323
instead of P646 as allowed by the lower court.
The evidence also shows that the defendant was prevented by the acts of the
plaintiff from cultivating about 10 hectares of the land involved in the
litigation. He expected to have raised about 600 cavans of palay, 300 cavans
of which would have corresponded to him as owner. The lower court has
wisely reduced his share to 150 cavans only. At P4 a cavan, the palay would
have netted him P600.
In view of the foregoing, the judgment appealed from is hereby modified.
The plaintiff and his sureties Cenon de la Cruz, Juan Sangalang and Marcos
Sibal are hereby ordered to pay to the defendant jointly and severally the
sum of P8,900.80, instead of P9,439.08 allowed by the lower court, as
follows:
P6,757.40 for the sugar cane;
1,220.40 for the sugar cane shoots;
for the palay harvested by plaintiff in parcels 1
323.00
and 2;
for the palay which defendant could have
600.00
raised.
 8,900.80
============

In all other respects, the judgment appealed from is hereby affirmed, with
costs. So ordered.

G.R. No. L-36902 January 30, 1982

LUIS PICHEL, petitioner,
vs.
PRUDENCIO ALONZO, respondent.

GUERRERO, J.:

This is a petition to review on certiorari the decision of the Court of First

Instance of Basilan City dated January 5, 1973 in Civil Case No. 820 entitled
"Prudencio Alonzo, plaintiff, vs. Luis Pichel, defendant."

This case originated in the lower Court as an action for the annulment of a
"Deed of Sale" dated August 14, 1968 and executed by Prudencio Alonzo, as
vendor, in favor of Luis Pichel, as vendee, involving property awarded to the
former by the Philippine Government under Republic Act No. 477. Pertinent
portions of the document sued upon read as follows:

That the VENDOR for and in consideration of the sum of FOUR THOUSAND
TWO HUNDRED PESOS (P4,200.00), Philippine Currency, in hand paid by the
VENDEE to the entire satisfaction of the VENDOR, the VENDOR hereby sells
transfers, and conveys, by way of absolute sale, all the coconut fruits of his
coconut land, designated as Lot No. 21 - Subdivision Plan No. Psd- 32465,
situated at Balactasan Plantation, Lamitan, Basilan City, Philippines;

That for the herein sale of the coconut fruits are for all the fruits on the
aforementioned parcel of land presently found therein as well as for future
fruits to be produced on the said parcel of land during the years period;
which shag commence to run as of SEPTEMBER 15,1968; up to JANUARY 1,
1976 (sic);
That the delivery of the subject matter of the Deed of Sale shall be from time
to time and at the expense of the VENDEE who shall do the harvesting and
gathering of the fruits;
That the Vendor's right, title, interest and participation herein conveyed is of
his own exclusive and absolute property, free from any liens and
encumbrances and he warrants to the Vendee good title thereto and to
defend the same against any and all claims of all persons whomsoever. 1
After the pre-trial conference, the Court a quo issued an Order dated
November 9, 1972 which in part read thus:
The following facts are admitted by the parties:
Plaintiff Prudencio Alonzo was awarded by the Government that parcel of
land designated as Lot No. 21 of Subdivision Plan Psd 32465 of Balactasan,
Lamitan, Basilan City in accordance with Republic Act No. 477. The award
was cancelled by the Board of Liquidators on January 27, 1965 on the ground
that, previous thereto, plaintiff was proved to have alienated the land to
another, in violation of law. In 197 2, plaintiff's rights to the land were
reinstated.
On August 14, 1968, plaintiff and his wife sold to defendant an the fruits of
the coconut trees which may be harvested in the land in question for the
period, September 15, 1968 to January 1, 1976, in consideration of
P4,200.00. Even as of the date of sale, however, the land was still under lease
to one, Ramon Sua, and it was the agreement that part of the consideration
of the sale, in the sum of P3,650.00, was to be paid by defendant directly to
Ramon Sua so as to release the land from the clutches of the latter. Pending
said payment plaintiff refused to snow the defendant to make any harvest.
In July 1972, defendant for the first time since the execution of the deed of
sale in his favor, caused the harvest of the fruit of the coconut trees in the
land.
xxx xxx xxx
Considering the foregoing, two issues appear posed by the complaint and the
answer which must needs be tested in the crucible of a trial on the merits,
and they are:
First.— Whether or nor defendant actually paid to plaintiff the full sum of
P4,200.00 upon execution of the deed of sale.
Second.— Is the deed of sale, Exhibit 'A', the prohibited encumbrance
contemplated in Section 8 of Republic Act No. 477? 2
Anent the first issue, counsel for plaintiff Alonzo subsequently 'stipulated and
agreed that his client ... admits fun payment thereof by defendant. 3 The
remaining issue being one of law, the Court below considered the case
submitted for summary judgment on the basis of the pleadings of the parties,
and the admission of facts and documentary evidence presented at the pre-
trial conference.
The lower court rendered its decision now under review, holding that
although the agreement in question is denominated by the parties as a deed
of sale of fruits of the coconut trees found in the vendor's land, it actually is,
for all legal intents and purposes, a contract of lease of the land itself.
According to the Court:
... the sale aforestated has given defendant complete control and enjoyment
of the improvements of the land. That the contract is consensual; that its
purpose is to allow the enjoyment or use of a thing; that it is onerous
because rent or price certain is stipulated; and that the enjoyment or use of
the thing certain is stipulated to be for a certain and definite period of time,
are characteristics which admit of no other conclusion. ... The provisions of
the contract itself and its characteristics govern its nature. 4
The Court, therefore, concluded that the deed of sale in question is an
encumbrance prohibited by Republic Act No. 477 which provides thus:
Sec. 8. Except in favor of the Government or any of its branches, units, or
institutions, land acquired under the provisions of this Act or any permanent
improvements thereon shall not be thereon and for a term of ten years from
and after the date of issuance of the certificate of title, nor shall they become
liable to the satisfaction of any debt contracted prior to the expiration of
such period.
Any occupant or applicant of lands under this Act who transfers whatever
rights he has acquired on said lands and/or on the improvements thereon
before the date of the award or signature of the contract of sale, shall not be
entitled to apply for another piece of agricultural land or urban, homesite or
residential lot, as the case may be, from the National Abaca and Other Fibers
Corporation; and such transfer shall be considered null and void. 5
The dispositive portion of the lower Court's decision states:
WHEREFORE, it is the judgment of this Court that the deed of sale, Exhibit 'A',
should be, as it is, hereby declared nun and void; that plaintiff be, as he is,
ordered to pay back to defendant the consideration of the sale in the sum of
P4,200.00 the same to bear legal interest from the date of the filing of the
complaint until paid; that defendant shall pay to the plaintiff the sum of
P500.00 as attorney's fees.
Costs against the defendant. 6
Before going into the issues raised by the instant Petition, the matter of
whether, under the admitted facts of this case, the respondent had the right
or authority to execute the "Deed of Sale" in 1968, his award over Lot No. 21
having been cancelled previously by the Board of Liquidators on January 27,
1965, must be clarified. The case in point is Ras vs. Sua  7 wherein it was
categorically stated by this Court that a cancellation of an award granted
pursuant to the provisions of Republic Act No. 477 does not automatically
divest the awardee of his rights to the land. Such cancellation does not result
in the immediate reversion of the property subject of the award, to the
State. Speaking through Mr. Justice J.B.L. Reyes, this Court ruled that "until
and unless an appropriate proceeding for reversion is instituted by the State,
and its reacquisition of the ownership and possession of the land decreed by
a competent court, the grantee cannot be said to have been divested of
whatever right that he may have over the same property." 8
There is nothing in the record to show that at any time after the supposed
cancellation of herein respondent's award on January 27, 1965, reversion
proceedings against Lot No. 21 were instituted by the State. Instead, the
admitted fact is that the award was reinstated in 1972. Applying the doctrine
announced in the above-cited Ras case, therefore, herein respondent is not
deemed to have lost any of his rights as grantee of Lot No. 21 under Republic
Act No. 477 during the period material to the case at bar, i.e., from the
cancellation of the award in 1965 to its reinstatement in 1972. Within said
period, respondent could exercise all the rights pertaining to a grantee with
respect to Lot No. 21.
This brings Us to the issues raised by the instant Petition. In his Brief,
petitioner contends that the lower Court erred:
1. In resorting to construction and interpretation of the deed of sale in
question where the terms thereof are clear and unambiguous and leave no
doubt as to the intention of the parties;
2. In declaring — granting without admitting that an interpretation is
necessary — the deed of sale in question to be a contract of lease over the
land itself where the respondent himself waived and abandoned his claim
that said deed did not express the true agreement of the parties, and on the
contrary, respondent admitted at the pre-trial that his agreement with
petitioner was one of sale of the fruits of the coconut trees on the land;
3. In deciding a question which was not in issue when it declared the deed of
sale in question to be a contract of lease over Lot 21;
4. In declaring furthermore the deed of sale in question to be a contract of
lease over the land itself on the basis of facts which were not proved in
evidence;
5. In not holding that the deed of sale, Exhibit "A" and "2", expresses a valid
contract of sale;
6. In not deciding squarely and to the point the issue as to whether or not the
deed of sale in question is an encumbrance on the land and its improvements
prohibited by Section 8 of Republic Act 477; and
7. In awarding respondent attorney's fees even granting, without admitting,
that the deed of sale in question is violative of Section 8 of Republic Act 477.
The first five assigned errors are interrelated, hence, We shall consider them
together. To begin with, We agree with petitioner that construction or
interpretation of the document in question is not called for. A perusal of the
deed fails to disclose any ambiguity or obscurity in its provisions, nor is there
doubt as to the real intention of the contracting parties. The terms of the
agreement are clear and unequivocal, hence the literal and plain meaning
thereof should be observed. Such is the mandate of the Civil Code of the
Philippines which provides that:
Art. 1370. If the terms of a contract are clear and leave no doubt upon the
intention of the contracting parties, the literal meaning of its stipulation shall
control ... .
Pursuant to the afore-quoted legal provision, the first and fundamental duty
of the courts is the application of the contract according to its express terms,
interpretation being resorted to only when such literal application is
impossible. 9
Simply and directly stated, the "Deed of Sale dated August 14, 1968 is
precisely what it purports to be. It is a document evidencing the agreement
of herein parties for the sale of coconut fruits of Lot No. 21, and not for
the lease of the land itself as found by the lower Court. In clear and express
terms, the document defines the object of the contract thus: "the herein sale
of the coconut fruits are for an the fruits on the aforementioned parcel of
land during the years ...(from) SEPTEMBER 15, 1968; up to JANUARY 1,
1976." Moreover, as petitioner correctly asserts, the document in question
expresses a valid contract of sale. It has the essential elements of a contract
of sale as defined under Article 1485 of the New Civil Code which provides
thus:
Art. 1458. By the contract of sale one of the contracting parties obligates
himself to transfer the ownership of and to deliver a determinate thing, and
the other to pay therefor a price certain in money or its equivalent.
A contract of sale may be absolute or conditional.
The subject matter of the contract of sale in question are the fruits of the
coconut trees on the land during the years from September 15, 1968 up to
January 1, 1976, which subject matter is a determinate thing. Under Article
1461 of the New Civil Code, things having a potential existence may be the
object of the contract of sale. And in Sibal vs. Valdez, 50 Phil. 512, pending
crops which have potential existence may be the subject matter of the sale.
Here, the Supreme Court, citing Mechem on Sales and American cases said
which have potential existence may be the subject matter of sale. Here, the
Supreme Court, citing Mechem on Sales and American cases said:
Mr. Mechem says that a valid sale may be made of a thing, which though not
yet actually in existence, is reasonably certain to come into existence as the
natural increment or usual incident of something already in existence, and
then belonging to the vendor, and the title will vest in the buyer the moment
the thing comes into existence. (Emerson vs. European Railway Co., 67 Me.,
387; Cutting vs. Packers Exchange, 21 Am. St. Rep. 63) Things of this nature
are said to have a potential existence. A man may sell property of which he is
potentially and not actually possess. He may make a valid sale of the wine
that a vineyard is expected to produce; or the grain a field may grow in a
given time; or the milk a cow may yield during the coming year; or the wool
that shall thereafter grow upon sheep; or what may be taken at the next case
of a fisherman's net; or fruits to grow; or young animals not yet in existence;
or the goodwill of a trade and the like. The thing sold, however, must be
specific and Identified. They must be also owned at the time by the vendor.
(Hull vs. Hull 48 Conn. 250 (40 Am. Rep., 165) (pp. 522-523).
We do not agree with the trial court that the contract executed by and
between the parties is "actually a contract of lease of the land and the
coconut trees there." (CFI Decision, p. 62, Records). The Court's holding that
the contract in question fits the definition of a lease of things wherein one of
the parties binds himself to give to another the enjoyment or use of a thing
for a price certain and for a period which may be definite or indefinite (Art.
1643, Civil Code of the Philippines) is erroneous. The essential difference
between a contract of sale and a lease of things is that the delivery of the
thing sold transfers ownership, while in lease no such transfer of ownership
results as the rights of the lessee are limited to the use and enjoyment of the
thing leased.
In Rodriguez vs. Borromeo, 43 Phil. 479, 490, the Supreme Court held:
Since according to article 1543 of the same Code the contract of lease is
defined as the giving or the concession of the enjoyment or use of a thing for
a specified time and fixed price, and since such contract is a form of
enjoyment of the property, it is evident that it must be regarded as one of
the means of enjoyment referred to in said article 398, inasmuch as the
terms enjoyment, use, and benefit involve the same and analogous meaning
relative to the general utility of which a given thing is capable. (104
Jurisprudencia Civil, 443)
In concluding that the possession and enjoyment of the coconut trees can
therefore be said to be the possession and enjoyment of the land itself
because the defendant-lessee in order to enjoy his right under the contract,
he actually takes possession of the land, at least during harvest time, gather
all of the fruits of the coconut trees in the land, and gain exclusive use
thereof without the interference or intervention of the plaintiff-lessor such
that said plaintiff-lessor is excluded in fact from the land during the period
aforesaid, the trial court erred. The contract was clearly a "sale of the
coconut fruits." The vendor sold, transferred and conveyed "by way of
absolute sale, all the coconut fruits of his land," thereby divesting himself of
all ownership or dominion over the fruits during the seven-year period. The
possession and enjoyment of the coconut trees cannot be said to be the
possession and enjoyment of the land itself because these rights are distinct
and separate from each other, the first pertaining to the accessory or
improvements (coconut trees) while the second, to the principal (the land). A
transfer of the accessory or improvement is not a transfer of the principal. It
is the other way around, the accessory follows the principal. Hence, the sale
of the nuts cannot be interpreted nor construed to be a lease of the trees,
much less extended further to include the lease of the land itself.
The real and pivotal issue of this case which is taken up in petitioner's sixth
assignment of error and as already stated above, refers to the validity of the
"Deed of Sale", as such contract of sale, vis-a-vis the provisions of Sec. 8, R.A.
No. 477. The lower Court did not rule on this question, having reached the
conclusion that the contract at bar was one of lease. It was from the context
of a lease contract that the Court below determined the applicability of Sec.
8, R.A. No. 477, to the instant case.
Resolving now this principal issue, We find after a close and careful
examination of the terms of the first paragraph of Section 8 hereinabove
quoted, that the grantee of a parcel of land under R.A. No. 477 is not
prohibited from alienating or disposing of the natural and/or industrial fruits
of the land awarded to him. What the law expressly disallows is the
encumbrance or alienation of the land itself or any of the permanent
improvements thereon. Permanent improvements on a parcel of land are
things incorporated or attached to the property in a fixed manner, naturally
or artificially. They include whatever is built, planted or sown on the land
which is characterized by fixity, immutability or immovability. Houses,
buildings, machinery, animal houses, trees and plants would fall under the
category of permanent improvements, the alienation or encumbrance of
which is prohibited by R.A. No. 477. While coconut trees are permanent
improvements of a land, their nuts are natural or industrial fruits which are
meant to be gathered or severed from the trees, to be used, enjoyed, sold or (8) In actions for indemnity under workmen's compensation and employer's
otherwise disposed of by the owner of the land. Herein respondents, as the liability laws;
grantee of Lot No. 21 from the Government, had the right and prerogative to
sell the coconut fruits of the trees growing on the property. (9) In a separate civil action to recover civil liability arising from a crime;

By virtue of R.A. No. 477, bona fide occupants, veterans, members of guerilla (10) When at least double judicial costs are awarded;
organizations and other qualified persons were given the opportunity to
(11) In any other case where the court deems it just and equitable that
acquire government lands by purchase, taking into account their limited
attorney's fees and expenses of litigation should be recovered.
means. It was intended for these persons to make good and productive use
of the lands awarded to them, not only to enable them to improve their In all cases, the attorney's fees and expenses of litigation must be
standard of living, but likewise to help provide for the annual payments to reasonable.
the Government of the purchase price of the lots awarded to them. Section 8
was included, as stated by the Court a quo, to protect the grantees from We find that none of the legal grounds enumerated above exists to justify or
themselves and the incursions of opportunists who prey on their misery and warrant the grant of attorney's fees to herein respondent.
poverty." It is there to insure that the grantees themselves benefit from their
respective lots, to the exclusion of other persons. IN VIEW OF THE FOREGOING, the judgment of the lower Court is hereby set
aside and another one is entered dismissing the Complaint. Without costs.
The purpose of the law is not violated when a grantee sells the produce or
fruits of his land. On the contrary, the aim of the law is thereby achieved, for SO ORDERED.
the grantee is encouraged and induced to be more industrious and
productive, thus making it possible for him and his family to be economically
self-sufficient and to lead a respectable life. At the same time, the
Government is assured of payment on the annual installments on the land.
We agree with herein petitioner that it could not have been the intention of
the legislature to prohibit the grantee from selling the natural and industrial
fruits of his land, for otherwise, it would lead to an absurd situation wherein
the grantee would not be able to receive and enjoy the fruits of the property
in the real and complete sense.

Respondent through counsel, in his Answer to the Petition contends that

even granting arguendo that he executed a deed of sale of the coconut fruits,
he has the "privilege to change his mind and claim it as (an) implied lease,"
and he has the "legitimate right" to file an action for annulment "which no
law can stop." He claims it is his "sole construction of the meaning of the
transaction that should prevail and not petitioner. (sic). 10 Respondent's
counsel either misapplies the law or is trying too hard and going too far to
defend his client's hopeless cause. Suffice it to say that respondent-grantee,
after having received the consideration for the sale of his coconut fruits,
cannot be allowed to impugn the validity of the contracts he entered into, to
the prejudice of petitioner who contracted in good faith and for a G.R. No. 104482             January 22, 1996
consideration.
BELINDA TAÑEDO, for herself and in representation of her brothers and
The issue raised by the seventh assignment of error as to the propriety of the sisters, and TEOFILA CORPUZ TAÑEDO, representing her minor daughter
award of attorney's fees made by the lower Court need not be passed upon, VERNA TAÑEDO, petitioners,
such award having been apparently based on the erroneous finding and vs.
conclusion that the contract at bar is one of lease. We shall limit Ourselves to THE COURT OF APPEALS, SPOUSES RICARDO M. TAÑEDO AND TERESITA
the question of whether or not in accordance with Our ruling in this case, BARERA TAÑEDO, respondents.
respondent is entitled to an award of attorney's fees. The Civil Code provides
that: DECISION

Art. 2208. In the absence of stipulation, attorney's fees and expenses of
litigation, other than judicial costs, cannot be recovered, except:
(1) When exemplary damages are awarded;
(2) When the defendant's act or omission has compelled the plaintiff to
litigate with third persons or to incur expenses to protect his interest;
(3) In criminal cases of malicious prosecution against the plaintiff;
(4) In case of a clearly unfounded civil action or proceeding against the
plaintiff;
(5) Where the defendant acted in gross and evident bad faith in refusing to
satisfy the plaintiff's plainly valid, just and demandable claim;
(6) In actions for legal support;
(7) In actions for the recovery of wages of household helpers, laborers and
skilled workers;
PANGANIBAN, J.:
Is a sale of future inheritance valid? In multiple sales of the same real
property, who has preference in ownership? What is the probative value of
the lower court's finding of good faith in registration of such sales in the
registry of property? These are the main questions raised in this Petition for
review on certiorari under Rule 45 of the Rules of Court to set aside and
reverse the Decision1 of the Court of Appeals2 in CA-G.R. CV NO. 24987
promulgated on September 26, 1991 affirming the decision of the Regional
Trial Court, Branch 63, Third Judicial Region, Tarlac, Tarlac in Civil Case No.
6328, and its Resolution denying reconsideration thereof, promulgated on
May 27, 1992.
By the Court's Resolution on October 25, 1995, this case (along with several
others) was transferred from the First to the Third Division and after due
deliberation, the Court assigned it to the undersigned ponente for the writing
of this Decision.
The Facts
On October 20, 1962, Lazardo Tañedo executed a notarized deed of absolute
sale in favor of his eldest brother, Ricardo Tañedo, and the latter's wife,
Teresita Barera, private respondents herein, whereby he conveyed to the
latter in consideration of P1,500.00, "one hectare of whatever share I shall
have over Lot No. 191 of the cadastral survey of Gerona, Province of Tarlac
and covered by Title T-13829 of the Register of Deeds of Tarlac", the said
property being his "future inheritance" from his parents (Exh. 1). Upon the
death of his father Matias, Lazaro executed an "Affidavit of Conformity"
dated February 28, 1980 (Exh. 3) to "re-affirm, respect, acknowledge and
validate the sale I made in 1962." On January 13, 1981, Lazaro executed
another notarized deed of sale in favor of private respondents covering his
"undivided ONE TWELVE (1/12) of a parcel of land known as Lot 191 . . . "
(Exh. 4). He acknowledged therein his receipt of P10,000.00 as consideration
therefor. In February 1981, Ricardo learned that Lazaro sold the same
property to his children, petitioners herein, through a deed of sale dated
December 29, 1980 (Exh. E). On June 7, 1982, private respondents recorded
the Deed of Sale (Exh. 4) in their favor in the Registry of Deeds and the
corresponding entry was made in Transfer Certificate of Title No. 166451
(Exh. 5).
Petitioners on July 16, 1982 filed a complaint for rescission (plus damages) of
the deeds of sale executed by Lazaro in favor of private respondents covering
the property inherited by Lazaro from his father.
Petitioners claimed that their father, Lazaro, executed an "Absolute Deed of
Sale" dated December 29, 1980 (Exit. E). Conveying to his ten children his
allotted portion tinder the extrajudicial partition executed by the heirs of
Matias, which deed included the land in litigation (Lot 191).
Petitioners also presented in evidence: (1) a private writing purportedly
prepared and signed by Matias dated December 28, 1978, stating that it was
his desire that whatever inheritance Lazaro would receive from him should
be given to his (Lazaro's) children (Exh. A); (2) a typewritten document dated
March 10, 1979 signed by Lazaro in the presence of two witnesses, wherein
he confirmed that he would voluntarily abide by the wishes of his father,
Matias, to give to his (Lazaro's) children all the property he would inherit
from the latter (Exh. B); and (3) a letter dated January 1, 1980 of Lazaro to his
daughter, Carmela, stating that his share in the extrajudicial settlement of
the estate of his father was intended for his children, petitioners herein (Exh.
C).
Private respondents, however presented in evidence a "Deed of Revocation
of a Deed of Sale" dated March 12, 1981 (Exh. 6), wherein Lazaro revoked
the sale in favor of petitioners for the reason that it was "simulated or
fictitious without any consideration whatsoever".
Shortly after the case a quo was filed, Lazaro executed a sworn statement
(Exh. G) which virtually repudiated the contents of the Deed of Revocation of
a Deed of Sale (Exh. 6) and the Deed of Sale (Exh. 4) in favor of private
respondents. However, Lazaro testified that he sold the property to Ricardo,
and that it was a lawyer who induced him to execute a deed of sale in favor
of his children after giving him five pesos (P5.00) to buy a "drink" (TSN
September 18, 1985, pp. 204-205).
The trial court decided in favor of private respondents, holding that
petitioners failed "to adduce a proponderance of evidence to support (their)
claim." On appeal, the Court of Appeals affirmed the decision of the trial
court, ruling that the Deed of Sale dated January 13, 1981 (Exh. 9) was valid
and that its registration in good faith vested title in said respondents.
The Issues
Petitioners raised the following "errors" in the respondent Court, which they
also now allege in the instant Petition:
I. The trial court erred in concluding that the Contract of Sale of October 20,
1962 (Exhibit 7, Answer) is merely voidable or annulable and not void ab
initio pursuant to paragraph 2 of Article 1347 of the New Civil Code involving
as it does a "future inheritance".
II. The trial court erred in holding that defendants-appellees acted in good
faith in registering the deed of sale of January 13, 1981 (Exhibit 9) with the
Register of Deeds of Tarlac and therefore ownership of the land in question
passed on to defendants-appellees.
III. The trial court erred in ignoring and failing to consider the testimonial and
documentary evidence of plaintiffs-appellants which clearly established by
preponderance of evidence that they are indeed the legitimate and lawful
owners of the property in question.
IV. The decision is contrary to law and the facts of the case and the
conclusions drawn from the established facts are illogical and off-tangent.
From the foregoing, the issues may be restated as follows:
1. Is the sale of a future inheritance valid?
2. Was the subsequent execution on January 13, 1981 (and registration with
the Registry of Property) of a deed of sale covering the same property to the
same buyers valid?
3. May this Court review the findings of the respondent Court (a) holding that
the buyers acted in good faith in registering the said subsequent deed of sale
and (b) in "failing to consider petitioners' evidence"? Are the conclusions of
the respondent Court "illogical and off-tangent"?
The Court's Ruling
At the outset, let it be clear that the "errors" which are reviewable by this
Court in this petition for review on certiorari are only those allegedly
committed by the respondent Court of Appeals and not directly those of the
trial court, which is not a party here. The "assignment of errors" in the
petition quoted above are therefore totally misplaced, and for that reason,
the petition should be dismissed. But in order to give the parties substantial
justice we have decided to delve into the issues as above re-stated. The
errors attributed by petitioners to the latter (trial) court will be discussed
only insofar as they are relevant to the appellate court's assailed Decision
and Resolution.
The sale made in 1962 involving future inheritance is not really at issue here.
In context, the assailed Decision conceded "it may be legally correct that a
contract of sale of anticipated future inheritance is null and void."3
But to remove all doubts, we hereby categorically rule that, pursuant to
Article 1347 of the Civil Code, "(n)o contract may be entered into upon a
future inheritance except in cases expressly authorized by law."
Consequently, said contract made in 1962 is not valid and cannot be the
source of any right nor the creator of any obligation between the parties.
Hence, the "affidavit of conformity" dated February 28, 1980, insofar as it
sought to validate or ratify the 1962 sale, is also useless and, in the words of
the respondent Court, "suffers from the same infirmity." Even private
respondents in their memorandum4 concede this.
However, the documents that are critical to the resolution of this case are:
(a) the deed of sale of January 13, 1981 in favor of private respondents
covering Lazaro's undivided inheritance of one-twelfth (1/12) share in Lot No.
191, which was subsequently registered on June 7, 1982; and (b) the deed of
sale dated December 29, 1980 in favor of petitioners covering the same
property. These two documents were executed after the death of Matias
(and his spouse) and after a deed of extra-judicial settlement of his (Matias')
estate was executed, thus vesting in Lazaro actual title over said property. In
other words, these dispositions, though conflicting, were no longer infected
with the infirmities of the 1962 sale.
Petitioners contend that what was sold on January 13, 1981 was only one-
half hectare out of Lot No. 191, citing as authority the trial court's decision.
As earlier pointed out, what is on review in these proceedings by this Court is
the Court of Appeals' decision — which correctly identified the subject
matter of the January 13, 1981 sale to be the entire undivided 1/12 share of
Lazaro in Lot No. 191 and which is the same property disposed of on
December 29, 1980 in favor of petitioners.
Critical in determining which of these two deeds should be given effect is the
registration of the sale in favor of private respondents with the register of
deeds on June 7, 1982.
Article 1544 of the Civil Code governs the preferential rights of vendees in
cases of multiple sales, as follows:
Art. 1544. If the same thing should have been sold to different vendees, the
ownership shall be transferred to the person who may have first taken
possession thereof in good faith, if it should be movable property.
Should it be immovable property, the ownership shall belong to the person
acquiring it who in good faith first recorded it in the Registry of Property.
Should there be no inscription, the ownership shall pertain to the person
who in good faith was first in the possession; and, in the absence thereof, to
the person who presents the oldest title, provided there is good faith.
The property in question is land, an immovable, and following the above-
quoted law, ownership shall belong to the buyer who in good faith registers
it first in the registry of property. Thus, although the deed of sale in favor of
private respondents was later than the one in favor of petitioners, ownership
would vest in the former because of the undisputed fact of registration. On
the other hand, petitioners have not registered the sale to them at all.
Petitioners contend that they were in possession of the property and that
private respondents never took possession thereof. As between two
purchasers, the one who registered the sale in his favor has a preferred right
over the other who has not registered his title, even if the latter is in actual
possession of the immovable property.5
As to third issue, while petitioners conceded the fact of registration, they
nevertheless contended that it was done in bad faith. On this issue, the
respondent Court ruled;
Under the second assignment of error, plaintiffs-appellants contend that
defendants-appellees acted in bad faith when they registered the Deed of
Sale in their favor as appellee Ricardo already knew of the execution of the
deed of sale in favor of the plaintiffs; appellants cite the testimony of plaintiff
Belinda Tañedo to the effect that defendant Ricardo Tañedo called her up on
January 4 or 5, 1981 to tell her that he was already the owner of the land in
question "but the contract of sale between our father and us were (sic)
already consumated" (pp. 9-10, tsn, January 6, 1984). This testimony is
obviously self-serving, and because it was a telephone conversation, the
deed of sale dated December 29, 1980 was not shown; Belinda merely told
her uncle that there was already a document showing that plaintiffs are the
owners (p. 80). Ricardo Tañedo controverted this and testified that he
learned for the first time of the deed of sale executed by Lazaro in favor of
his children "about a month or sometime in February 1981" (p. 111, tsn, Nov.
28, 1984). . . .6
The respondent Court, reviewing the trial court's findings, refused to
overturn the latter's assessment of the testimonial evidence, as follows;
We are not prepared to set aside the finding of the lower court upholding
Ricardo Tañedo's testimony, as it involves a matter of credibility of witnesses
which the trial judge, who presided at the hearing, was in a better position to
resolve. (Court of Appeals' Decision, p. 6.)
In this connection, we note the tenacious allegations made by petitioners,
both in their basic petition and in their memorandum, as follows:
1. The respondent Court allegedly ignored the claimed fact that respondent
Ricardo "by fraud and deceit and with foreknowledge" that the property in
question had already been sold to petitioners, made Lazaro execute the deed
of January 13, 1981;
2. There is allegedly adequate evidence to show that only 1/2 of the
purchase price of P10,000.00 was paid at the time of the execution of the
deed of sale, contrary to the written acknowledgment, thus showing bad
faith;
3. There is allegedly sufficient evidence showing that the deed of revocation
of the sale in favor of petitioners "was tainted with fraud or deceit."
4. There is allegedly enough evidence to show that private respondents "took
undue advantage over the weakness and unschooled and pitiful situation of
Lazaro Tañedo . . ." and that respondent Ricardo Tañedo "exercised moral
ascendancy over his younger brother he being the eldest brother and who
reached fourth year college of law and at one time a former Vice-Governor of
Tarlac, while his younger brother only attained first year high school . . . ;
5. The respondent Court erred in not giving credence to petitioners'
evidence, especially Lazaro Tañedo's Sinumpaang Salaysay dated July 27,
1982 stating that Ricardo Tañedo deceived the former in executing the deed
of sale in favor of private respondents.
To be sure, there are indeed many conflicting documents and testimonies as
well as arguments over their probative value and significance. Suffice it to
say, however, that all the above contentions involve questions of fact,
appreciation of evidence and credibility of witnesses, which are not proper in
this review. It is well-settled that the Supreme Court is not a trier of facts. In
petitions for review under Rule 45 of the Revised Rules of Court, only
questions of law may be raised and passed upon. Absent any whimsical or
capricious exercise of judgment, and unless the lack of any basis for the
conclusions made by the lower courts be amply demonstrated, the Supreme
Court will not disturb their findings. At most, it appears that petitioners have
shown that their evidence was not believed by both the trial and the
appellate courts, and that the said courts tended to give more credence to
the evidence presented by private respondents. But this in itself is not a
reason for setting aside such findings. We are far from convinced that both
courts gravely abused their respective authorities and judicial prerogatives.
As held in the recent case of Chua Tiong Tay vs. Court of Appeals and
Goldrock Construction and Development Corp.7
The Court has consistently held that the factual findings of the trial court, as
well as the Court of Appeals, are final and conclusive and may not be
reviewed on appeal. Among the exceptional circumstances where a
reassessment of facts found by the lower courts is allowed are when the
conclusion is a finding grounded entirely on speculation, surmises or
conjectures; when the inference made is manifestly absurd, mistaken or
impossible; when there is grave abuse of discretion in the appreciation of
facts; when the judgment is premised on a misapprehension of facts; when
the findings went beyond the issues of the case and the same are contrary to
the admissions of both appellant and appellee. After a careful study of the
case at bench, we find none of the above grounds present to justify the re-
evaluation of the findings of fact made by the courts below.
In the same vein, the ruling in the recent case of South Sea Surety and
Insurance Company, Inc. vs. Hon. Court of Appeals, et al.8 is equally
applicable to the present case:
We see no valid reason to discard the factual conclusions of the appellate
court. . . . (I)t is not the function of this Court to assess and evaluate all over
again the evidence, testimonial and documentary, adduced by the parties,
particularly where, such as here, the findings of both the trial court and the
appellate court on the matter coincide. (emphasis supplied)
WHEREFORE, the petition is DENIED and the assailed Decision of the Court of
Appeals is AFFIRMED. No Costs.
SO ORDERED.
G.R. No. 176474             November 27, 2008

HEIRS OF ARTURO REYES, represented by Evelyn R. San

Buenaventura, petitioners,
vs.
ELENA SOCCO-BELTRAN, respondent.

DECISION

CHICO-NAZARIO, J.:

This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court,

assailing the Decision1 dated 31 January 2006 rendered by the Court of
Appeals in CA-G.R. SP No. 87066, which affirmed the Decision2 dated 30 June
2003 of the Office of the President, in O.P. Case No. 02-A-007, approving the
application of respondent Elena Socco-Beltran to purchase the subject
property.

The subject property in this case is a parcel of land originally identified as Lot
No. 6-B, situated in Zamora Street, Dinalupihan, Bataan, with a total area of
360 square meters. It was originally part of a larger parcel of land, measuring
1,022 square meters, allocated to the Spouses Marcelo Laquian and
Constancia Socco (Spouses Laquian), who paid for the same with Japanese
money. When Marcelo died, the property was left to his wife Constancia.
Upon Constancia’s subsequent death, she left the original parcel of land,
along with her other property, with her heirs – her siblings, namely: Filomena
Eliza Socco, Isabel Socco de Hipolito, Miguel R. Socco, and Elena Socco-
Beltran.3 Pursuant to an unnotarized document entitled "Extrajudicial
Settlement of the Estate of the Deceased Constancia R. Socco," executed by
Constancia’s heirs sometime in 1965, the parcel of land was partitioned into
three lots–Lot No. 6-A, Lot No. 6-B, and Lot No. 6-C.4 The subject property,
Lot No. 6-B, was adjudicated to respondent, but no title had been issued in
her name.
On 25 June 1998, respondent Elena Socco-Beltran filed an application for the
purchase of Lot No. 6-B before the Department of Agrarian Reform (DAR),
alleging that it was adjudicated in her favor in the extra-judicial settlement of
Constancia Socco’s estate.5
Petitioners herein, the heirs of the late Arturo Reyes, filed their protest to
respondent’s petition before the DAR on the ground that the subject
property was sold by respondent’s brother, Miguel R. Socco, in favor of their
father, Arturo Reyes, as evidenced by the Contract to Sell, dated 5
September 1954, stipulating that:6
That I am one of the co-heirs of the Estate of the deceased Constancia Socco;
and that I am to inherit as such a portion of her lot consisting of Four
Hundred Square Meters (400) more or less located on the (sic) Zamora St.,
Municipality of Dinalupihan, Province of Bataan, bounded as follows:
xxxx
That for or in consideration of the sum of FIVE PESOS (P5.00) per square
meter, hereby sell, convey and transfer by way of this conditional sale the
said 400 sq.m. more or less unto Atty. Arturo C. Reyes, his heirs,
administrator and assigns x x x. (Emphasis supplied.)
Petitioners averred that they took physical possession of the subject property
in 1954 and had been uninterrupted in their possession of the said property
since then.
Legal Officer Brigida Pinlac of the DAR Bataan Provincial Agrarian Reform
Office conducted an investigation, the results of which were contained in her
Report/ Recommendation dated 15 April 1999. Other than recounting the
afore-mentioned facts, Legal Officer Pinlac also made the following findings
in her Report/Recommendation:7
Further investigation was conducted by the undersigned and based on the
documentary evidence presented by both parties, the following facts were
gathered: that the house of [the] Reyes family is adjacent to the landholding
in question and portion of the subject property consisting of about 15 meters
[were] occupied by the heirs of Arturo Reyes were a kitchen and bathroom
[were] constructed therein; on the remaining portion a skeletal form made of
hollow block[s] is erected and according to the heirs of late Arturo Reyes, this
was constructed since the year (sic) 70’s at their expense; that construction
of the said skeletal building was not continued and left unfinished which
according to the affidavit of Patricia Hipolito the Reyes family where (sic)
prevented by Elena Socco in their attempt of occupancy of the subject
landholding; (affidavit of Patricia Hipolito is hereto attached as Annex "F");
that Elena Socco cannot physically and personally occupy the subject
property because of the skeletal building made by the Reyes family who have
been requesting that they be paid for the cost of the construction and the
same be demolished at the expense of Elena Socco; that according to Elena
Socco, [she] is willing to waive her right on the portion where [the] kitchen
and bathroom is (sic) constructed but not the whole of Lot [No.] 6-B
adjudicated to her; that the Reyes family included the subject property to the
sworn statement of value of real properties filed before the municipality of
Dinalupihan, Bataan, copies of the documents are hereto attached as
Annexes "G" and "H"; that likewise Elena Socco has been continuously and
religiously paying the realty tax due on the said property.
In the end, Legal Officer Pinlac recommended the approval of respondent’s
petition for issuance of title over the subject property, ruling that respondent
was qualified to own the subject property pursuant to Article 1091 of the
New Civil Code.8 Provincial Agrarian Reform Officer (PARO) Raynor Taroy
concurred in the said recommendation in his Indorsement dated 22 April
1999.9
In an Order dated 15 September 1999, DAR Regional Director Nestor R.
Acosta, however, dismissed respondent’s petition for issuance of title over
the subject property on the ground that respondent was not an actual tiller
and had abandoned the said property for 40 years; hence, she had already
renounced her right to recover the same.10 The dispositive part of the Order
reads:
1. DISMISSING the claims of Elena Socco-Beltran, duly represented by Myrna
Socco for lack of merit;
2. ALLOCATING Lot No. 6-B under Psd-003-008565 with an area of 360
square meters, more or less, situated Zamora Street, Dinalupihan, Bataan, in
favor of the heirs of Arturo Reyes.
3. ORDERING the complainant to refrain from any act tending to disturb the
peaceful possession of herein respondents.
4. DIRECTING the MARO of Dinalupihan, Bataan to process the pertinent
documents for the issuance of CLOA in favor of the heirs of Arturo Reyes.11
Respondent filed a Motion for Reconsideration of the foregoing Order, which
was denied by DAR Regional Director Acosta in another Order dated 15
September 1999.12
Respondent then appealed to the Office of the DAR Secretary. In an Order,
dated 9 November 2001, the DAR Secretary reversed the Decision of DAR
Regional Director Acosta after finding that neither petitioners’ predecessor-
in-interest, Arturo Reyes, nor respondent was an actual occupant of the
subject property. However, since it was respondent who applied to purchase
the subject property, she was better qualified to own said property as
opposed to petitioners, who did not at all apply to purchase the same.
Petitioners were further disqualified from purchasing the subject property
because they were not landless. Finally, during the investigation of Legal
Officer Pinlac, petitioners requested that respondent pay them the cost of
the construction of the skeletal house they built on the subject property. This
was construed by the DAR Secretary as a waiver by petitioners of their right
over the subject property.13 In the said Order, the DAR Secretary ordered
that:
WHEREFORE, premises considered, the September 15, 1999 Order is hereby
SET ASIDE and a new Order is hereby issued APPROVING the application to
purchase Lot [No.] 6-B of Elena Socco-Beltran.14
Petitioners sought remedy from the Office of the President by appealing the
9 November 2001 Decision of the DAR Secretary. Their appeal was docketed
as O.P. Case No. 02-A-007. On 30 June 2003, the Office of the President
rendered its Decision denying petitioners’ appeal and affirming the DAR
Secretary’s Decision.15 The fallo of the Decision reads:
WHEREFORE, premises considered, judgment appealed from
is AFFIRMED and the instant appeal DISMISSED.16
Petitioners’ Motion for Reconsideration was likewise denied by the Office of
the President in a Resolution dated 30 September 2004.17 In the said
Resolution, the Office of the President noted that petitioners failed to allege
in their motion the date when they received the Decision dated 30 June
2003. Such date was material considering that the petitioners’ Motion for
Reconsideration was filed only on 14 April 2004, or almost nine months after
the promulgation of the decision sought to be reconsidered. Thus, it ruled
that petitioners’ Motion for Reconsideration, filed beyond fifteen days from
receipt of the decision to be reconsidered, rendered the said decision final
and executory.
Consequently, petitioners filed an appeal before the Court of Appeals,
docketed as CA-G.R. SP No. 87066. Pending the resolution of this case, the
DAR already issued on 8 July 2005 a Certificate of Land Ownership Award
(CLOA) over the subject property in favor of the respondent’s niece and
representative, Myrna Socco-Beltran.18 Respondent passed away on 21
March 2001,19 but the records do not ascertain the identity of her legal heirs
and her legatees.
Acting on CA-G.R. SP No. 87066, the Court of Appeals subsequently
promulgated its Decision, dated 31 January 2006, affirming the Decision
dated 30 June 2003 of the Office of the President. It held that petitioners
could not have been actual occupants of the subject property, since actual
occupancy requires the positive act of occupying and tilling the land, not just
the introduction of an unfinished skeletal structure thereon. The Contract to
Sell on which petitioners based their claim over the subject property was
executed by Miguel Socco, who was not the owner of the said property and,
therefore, had no right to transfer the same. Accordingly, the Court of
Appeals affirmed respondent’s right over the subject property, which was
derived form the original allocatees thereof.20 The fallo of the said Decision
reads:
WHEREFORE, premises considered, the instant PETITION FOR
REVIEW is DISMISSED. Accordingly, the Decision dated 30 June 2003 and the
Resolution dated 30 December 2004 both issued by the Office of the
President are hereby AFFIRMED in toto.21
The Court of Appeals denied petitioners’ Motion for Reconsideration of its
Decision in a Resolution dated 16 August 2006.22
Hence, the present Petition, wherein petitioners raise the following issues:
I
WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN
AFFIRMING THE FINDINGS OF THE OFFICE OF THE PRESIDENT THAT THE
SUBJECT LOT IS VACANT AND THAT PETITIONERS ARE NOT ACTUAL
OCCUPANTS THEREOF BY DENYING THE LATTER’S CLAIM THAT THEY HAVE
BEEN IN OPEN, CONTINUOUS, EXCLUSIVE, NOTORIOUS AND AVDERSE
POSSESSION THEREOF SINCE 1954 OR FOR MORE THAN THIRTY (30) YEARS.
II
WHETHER OR NOT THE COURT OF APPEALS ERRED WHEN IT HELD THAT
PETITIONERS "CANNOT LEGALLY ACQUIRE THE SUBJECT PROPERTY AS THEY
ARE NOT CONSIDERED LANDLESS AS EVIDENCED BY A TAX DECLARATION."
III
WHETHER OR NOT THE COURT OF APPEALS ERRED IN HOLDING THAT "…
WHATEVER RESERVATION WE HAVE OVER THE RIGHT OF MYRNA SOCCO TO
SUCCEED WAS ALREADY SETTLED WHEN NO LESS THAN MIGUEL SOCCO
(PREDECESSOR-IN INTEREST OF HEREIN PETITIONERS) EXECUTED HIS WAIVER
OF RIGHT DATED APRIL 19, 2005 OVER THE SUBJECT PROPERTY IN FAVOR OF
MYRNA SOCCO.
IV
WHETHER OR NOT THE COURT OF APPEALS ERRED WHEN IT DENIED
PETITIONERS MOTION FOR NEW TRIAL THEREBY BRUSHING ASIDE THE FACT
THAT MYRNA V. SOCCO-ARIZO GROSSLY MISREPRESENTED IN HER
INFORMATION SHEET OF BENEFICIARIES AND APPLICATION TO PURCHASE
LOT IN LANDED ESTATES THAT SHE IS A FILIPINO CITIZEN, WHEN IN TRUTH
AND IN FACT, SHE IS ALREADY AN AMERICAN NATIONAL.23
The main issue in this case is whether or not petitioners have a better right to
the subject property over the respondent. Petitioner’s claim over the subject
property is anchored on the Contract to Sell executed between Miguel Socco
and Arturo Reyes on 5 September 1954. Petitioners additionally allege that
they and their predecessor-in-interest, Arturo Reyes, have been in
possession of the subject lot since 1954 for an uninterrupted period of more
than 40 years.
The Court is unconvinced.
Petitioners cannot derive title to the subject property by virtue of the
Contract to Sell. It was unmistakably stated in the Contract and made clear to
both parties thereto that the vendor, Miguel R. Socco, was not yet the owner
of the subject property and was merely expecting to inherit the same as his
share as a co-heir of Constancia’s estate.24 It was also declared in the
Contract itself that Miguel R. Socco’s conveyance of the subject to the buyer,
Arturo Reyes, was a conditional sale. It is, therefore, apparent that the sale of
the subject property in favor of Arturo Reyes was conditioned upon the
event that Miguel Socco would actually inherit and become the owner of the
said property. Absent such occurrence, Miguel R. Socco never acquired
ownership of the subject property which he could validly transfer to Arturo
Reyes.
Under Article 1459 of the Civil Code on contracts of sale, "The thing must be
licit and the vendor must have a right to transfer ownership thereof at the
time it is delivered." The law specifically requires that the vendor must have
ownership of the property at the time it is delivered. Petitioners claim that
the property was constructively delivered to them in 1954 by virtue of the
Contract to Sell. However, as already pointed out by this Court, it was explicit
in the Contract itself that, at the time it was executed, Miguel R. Socco was
not yet the owner of the property and was only expecting to inherit it.
Hence, there was no valid sale from which ownership of the subject property
could have transferred from Miguel Socco to Arturo Reyes. Without acquiring
ownership of the subject property, Arturo Reyes also could not have
conveyed the same to his heirs, herein petitioners.
Petitioners, nevertheless, insist that they physically occupied the subject lot
for more than 30 years and, thus, they gained ownership of the property
through acquisitive prescription, citing Sandoval v. Insular
Government 25 and San Miguel Corporation v. Court of Appeals. 26
In Sandoval, petitioners therein sought the enforcement of Section 54,
paragraph 6 of Act No. 926, otherwise known as the Land Registration Act,
which required -- for the issuance of a certificate of title to agricultural public
lands -- the open, continuous, exclusive, and notorious possession and
occupation of the same in good faith and under claim of ownership for more
than ten years. After evaluating the evidence presented, consisting of the
testimonies of several witnesses and proof that fences were constructed
around the property, the Court in the afore-stated case denied the petition
on the ground that petitioners failed to prove that they exercised acts of
ownership or were in open, continuous, and peaceful possession of the
whole land, and had caused it to be enclosed to the exclusion of other
persons. It further decreed that whoever claims such possession shall
exercise acts of dominion and ownership which cannot be mistaken for the
momentary and accidental enjoyment of the property. 27
In San Miguel Corporation, the Court reiterated the rule that the open,
exclusive, and undisputed possession of alienable public land for the period
prescribed by law creates the legal fiction whereby land ceases to be public
land and is, therefore, private property. It stressed, however, that the
occupation of the land for 30 years must be conclusively established. Thus,
the evidence offered by petitioner therein – tax declarations, receipts, and
the sole testimony of the applicant for registration, petitioner’s predecessor-
in-interest who claimed to have occupied the land before selling it to the
petitioner – were considered insufficient to satisfy the quantum of proof
required to establish the claim of possession required for acquiring alienable
public land.28
As in the two aforecited cases, petitioners herein were unable to prove
actual possession of the subject property for the period required by law. It
was underscored in San Miguel Corporation that the open, continuous,
exclusive, and notorious occupation of property for more than 30 years must
be no less than conclusive, such quantum of proof being necessary to avoid
the erroneous validation of actual fictitious claims of possession over the
property that is being claimed.29
In the present case, the evidence presented by the petitioners falls short of
being conclusive. Apart from their self-serving statement that they took
possession of the subject property, the only proof offered to support their
claim was a general statement made in the letter30 dated 4 February 2002
of Barangay Captain Carlos Gapero, certifying that Arturo Reyes was the
occupant of the subject property "since peace time and at present." The
statement is rendered doubtful by the fact that as early as 1997, when
respondent filed her petition for issuance of title before the DAR, Arturo
Reyes had already died and was already represented by his heirs, petitioners
herein.
Moreover, the certification given by Barangay Captain Gapero that Arturo
Reyes occupied the premises for an unspecified period of time, i.e., since
peace time until the present, cannot prevail over Legal Officer Pinlac’s more IN VIEW OF THE FOREGOING, the instant Petition is DENIED. The assailed
particular findings in her Report/Recommendation. Legal Officer Pinlac Decision of the Court of Appeals in CA-G.R. SP No. 87066, promulgated on 31
reported that petitioners admitted that it was only in the 1970s that they January 2006, is AFFIRMED with MODIFICATION. This Court withholds the
built the skeletal structure found on the subject property. She also referred confirmation of the validity of title over the subject property in the name of
to the averments made by Patricia Hipolito in an Affidavit,31 dated 26 Myrna Socco-Arizo pending determination of respondent’s legal heirs in
February 1999, that the structure was left unfinished because respondent appropriate proceedings. No costs.
prevented petitioners from occupying the subject property. Such findings
disprove petitioners’ claims that their predecessor-in-interest, Arturo Reyes, SO ORDERED.
had been in open, exclusive, and continuous possession of the property since
1954. The adverted findings were the result of Legal Officer Pinlac’s
investigation in the course of her official duties, of matters within her
expertise which were later affirmed by the DAR Secretary, the Office of the
President, and the Court of Appeals. The factual findings of such
administrative officer, if supported by evidence, are entitled to great
respect.32

In contrast, respondent’s claim over the subject property is backed by

sufficient evidence. Her predecessors-in-interest, the spouses Laquian, have
been identified as the original allocatees who have fully paid for the subject
property. The subject property was allocated to respondent in the
extrajudicial settlement by the heirs of Constancia’s estate. The document
entitled "Extra-judicial Settlement of the Estate of the Deceased Constancia
Socco" was not notarized and, as a private document, can only bind the
parties thereto. However, its authenticity was never put into question, nor
was its legality impugned. Moreover, executed in 1965 by the heirs of
Constancia Socco, or more than 30 years ago, it is an ancient document
which appears to be genuine on its face and therefore its authenticity must
be upheld.33 Respondent has continuously paid for the realty tax due on the
subject property, a fact which, though not conclusive, served to strengthen
her claim over the property.34

From the foregoing, it is only proper that respondent’s claim over the subject
property be upheld. This Court must, however, note that the Order of the
DAR Secretary, dated 9 November 2001, which granted the petitioner’s right
to purchase the property, is flawed and may be assailed in the proper
proceedings. Records show that the DAR affirmed that respondent’s
G.R. No. L-31271 April 29, 1974
predecessors-in-interest, Marcelo Laquian and Constancia Socco, having
been identified as the original allocatee, have fully paid for the subject ROMEO MARTINEZ and LEONOR SUAREZ, spouses, petitioners-appellants,
property as provided under an agreement to sell. By the nature of a contract vs.
or agreement to sell, the title over the subject property is transferred to the HON. COURT OF APPEALS, SECRETARY and UNDERSECRETARY OF PUBLIC
vendee upon the full payment of the stipulated consideration. Upon the full WORKS & COMMUNICATIONS, respondents-appellees.
payment of the purchase price, and absent any showing that the allocatee
violated the conditions of the agreement, ownership of the subject land Flores Macapagal, Ocampo and Balbastro for petitioners-appellants.
should be conferred upon the allocatee.35 Since the extrajudicial partition
transferring Constancia Socco’s interest in the subject land to the respondent Office of the Solicitor General Felix Q. Antonio, Acting Assistant Solicitor
is valid, there is clearly no need for the respondent to purchase the subject General Dominador L. Quiroz and Solicitor Concepcion T. Agapinan for
property, despite the application for the purchase of the property respondents-appellees.
erroneously filed by respondent. The only act which remains to be performed
is the issuance of a title in the name of her legal heirs, now that she is
deceased. ESGUERRA, J.:p

Moreover, the Court notes that the records have not clearly established the
right of respondent’s representative, Myrna Socco-Arizo, over the subject
property. Thus, it is not clear to this Court why the DAR issued on 8 July 2005
a CLOA36 over the subject property in favor of Myrna Socco-Arizo.
Respondent’s death does not automatically transmit her rights to the
property to Myrna Socco-Beltran. Respondent only authorized Myrna Socco-
Arizo, through a Special Power of Attorney37 dated 10 March 1999, to
represent her in the present case and to administer the subject property for
her benefit. There is nothing in the Special Power of Attorney to the effect
that Myrna Socco-Arizo can take over the subject property as owner thereof
upon respondent’s death. That Miguel V. Socco, respondent’s only nephew,
the son of the late Miguel R. Socco, and Myrna Socco-Arizo’s brother,
executed a waiver of his right to inherit from respondent, does not
automatically mean that the subject property will go to Myrna Socco-Arizo,
absent any proof that there is no other qualified heir to respondent’s estate.
Thus, this Decision does not in any way confirm the issuance of the CLOA in
favor of Myrna Socco-Arizo, which may be assailed in appropriate
proceedings.
Petition for review by certiorari of the judgment of the Court of Appeals
dated November 17, 1969 in its CA-G.R. 27655-R which reverses the
judgment of the Court of First Instance of Pampanga in favor of petitioners-
appellants against the Secretary and Undersecretary of Public Works &
Communications in the case instituted to annul the order of November 25,
1958 of respondent Secretary of Public Works & Communications directing
the removal by the petitioners of the dikes they had constructed on Lot No.
15856 of the Register of Deeds of Pampanga, which order was issued
pursuant to the provisions of Republic Act No. 2056. The dispositive portion
of the judgment of reversal of the Court of Appeals reads as follows:
IN VIEW OF THE FOREGOING CONSIDERATIONS, the judgment appealed from
is hereby reversed, and another entered: [1] upholding the validity of the
decision reached by the respondent officials in the administrative case; [2]
dissolving the injunction issued by the Court below; and [3] cancelling the
registration of Lot No. 2, the disputed area, and ordering its reconveyance to
the public domain. No costs in this instance.
The background facts are stated by the Court of Appeals as follows:
The spouses Romeo Martinez and Leonor Suarez, now petitioners-appellees,
are the registered owners of two (2) parcels of land located in Lubao,
Pampanga, covered by transfer certificate of title No. 15856 of the Register
of Deeds of the said province. Both parcels of land are fishponds. The
property involved in the instant case is the second parcel mentioned in the
above-named transfer certificate of title.
The disputed property was originally owned by one Paulino Montemayor,
who secured a "titulo real" over it way back in 1883. After the death of
Paulino Montemayor the said property passed to his successors-in-interest,
Maria Montemayor and Donata Montemayor, who in turn, sold it, as well as
the first parcel, to a certain Potenciano Garcia.
Because Potenciano Garcia was prevented by the then municipal president of
Lubao, Pedro Beltran, from restoring the dikes constructed on the contested
property, the former, on June 22, 1914, filed Civil Case No. 1407 with the
Court of First Instance against the said Pedro Beltran to restrain the latter in
his official capacity from molesting him in the possession of said second
parcel, and on even date, applied for a writ of preliminary injunction, which
was issued against said municipal president. The Court, by decision
promulgated June 12, 1916, declared permanent the preliminary injunction,
which, decision, on appeal, was affirmed by the Supreme Court on August 21,
1918. From June 22, 1914, the dikes around the property in question
remained closed until a portion thereof was again opened just before the
outbreak of the Pacific War.
On April 17, 1925. Potenciano Garcia applied for the registration of both
parcels of land in his name, and the Court of First Instance of Pampanga,
sitting as land registration court, granted the registration over and against
the opposition of the Attorney-General and the Director of Forestry.
Pursuant to the Court's decision, original certificate of title No. 14318,
covering said parcels 1 and 2 was issued to the spouses Potenciano Garcia
and Lorenza Sioson.
These parcels of land were subsequently bought by Emilio Cruz de Dios in
whose name transfer certificate of title No. 1421 was first issued on
November 9, 1925.
Thereafter, the ownership of these properties changed hands until eventually
they were acquired by the herein appellee spouses who hold them by virtue
of transfer certificate of title No. 15856.
To avoid any untoward incident, the disputants agreed to refer the matter to
the Committee on Rivers and Streams, by then composed of the Honorable
Pedro Tuason, at that time Secretary of Justice, as chairman, and the
Honorable Salvador Araneta and Vicente Orosa, Secretary of Agriculture and
National Resources and Secretary of Public Works and Communications,
respectively, as members. This committee thereafter appointed a Sub-
Committee to investigate the case and to conduct an ocular inspection of the
contested property, and on March 11, 1954, said Sub-Committee submitted
its report to the Committee on Rivers and Streams to the effect that Parcel
No. 2 of transfer certificate of title No. 15856 was not a public river but a
private fishpond owned by the herein spouses.
On July 7, 1954, the Committee on Rivers and Streams rendered its decision
the dispositive part of which reads:
"In view of the foregoing considerations, the spouses Romeo Martinez and
Leonor Suarez should be restored to the exclusive possession, use and
enjoyment of the creek in question which forms part of their registered
property and the decision of the courts on the matter be given full force and
effect."
The municipal officials of Lubao, led by Acting Mayor Mariano Zagad,
apparently refused to recognize the above decision, because on September
1, 1954, the spouses Romeo Martinez and Leonor Suarez instituted Civil Case
No. 751 before the Court of First Instance of Pampanga against said Mayor
Zagad, praying that the latter be enjoined from molesting them in their
possession of their property and in the construction of the dikes therein. The
writ of preliminary injunction applied for was issued against the respondent
municipal Mayor, who immediately elevated the injunction suit for review to
the Supreme Court, which dismissed Mayor Zagad's petition on September 7,
1953. With this dismissal order herein appellee spouses proceeded to
construct the dikes in the disputed parcel of land.
Some four (4) years later, and while Civil Case No. 751 was still pending the
Honorable Florencio Moreno, then Secretary of Public Works and
Communications, ordered another investigation of the said parcel of land,
directing the appellees herein to remove the dikes they had constructed, on
the strength of the authority vested in him by Republic Act No. 2056,
approved on June 13, 1958, entitled "An Act To Prohibit, Remove and/or
Demolish the Construction of Dams. Dikes, Or Any Other Walls In Public
Navigable Waters, Or Waterways and In Communal Fishing Grounds, To
Regulate Works in Such Waters or Waterways And In Communal Fishing
Grounds, And To Provide Penalties For Its Violation, And For Other Purposes.
1 The said order which gave rise to the instant proceedings, embodied a
threat that the dikes would be demolished should the herein appellees fail to
comply therewith within thirty (30) days.
The spouses Martinez replied to the order by commencing on January 2,
1959 the present case, which was decided in their favor by the lower Court in
a decision dated August 10, 1959, the dispositive part of which reads:
"WHEREFORE, in view of the foregoing considerations, the Court hereby
declares the decision, Exhibit S, rendered by the Undersecretary of Public
Works and Communications null and void; declares the preliminary
injunction, hereto for issued, permanent, and forever enjoining both
respondents from molesting the spouses Romeo Martinez and Leonor Suarez
in their possession, use and enjoyment of their property described in Plan
Psu-9992 and referred to in their petition."
"Without pronouncement as to costs."
"SO ORDERED."
As against this judgment respondent officials of the Department of Public
Works and Communications took the instant appeal, contending that the
lower Court erred:
1. In holding that then Senator Rogelio de la Rosa, complainant in the
administrative case, is not an interested party and his letter-complaint dated
August 15, 1958 did not confer jurisdiction upon the respondent
Undersecretary of Public Works and Communications to investigate the said
administrative case;
2. In holding that the duty to investigate encroachments upon public rivers
conferred upon the respondent Secretary under Republic Act No. 7056
cannot be lawfully delegated by him to his subordinates;
3. In holding that the investigation ordered by the respondent Secretary in
this case is illegal on the ground that the said respondent Secretary has
arrogated unto himself the power, which he does not possess, of reversing,
making nugatory, and setting aside the two lawful decisions of the Court
Exhibits K and I, and even annulling thereby, the one rendered by the highest
Tribunal of the land;
4. In not sustaining respondent's claim that petitioners have no cause of
action because the property in dispute is a public river and in holding that the
said claim has no basis in fact and in law;
5. In not passing upon and disposing of respondent's counterclaim;
6. In not sustaining respondent's claim that the petition should not have
been entertained on the ground that the petitioners have not exhausted
administrative remedies; and
7. In holding that the decision of the respondents is illegal on the ground that
it violates the principles that laws shall have no retroactive effect unless the
contrary is provided and in holding that the said Republic Act No. 2056 is
unconstitutional on the ground that respondents' threat of prosecuting
petitioners under Section 3 thereof for acts done four years before its
enactment renders the said law ex post facto.
The Court of Appeals sustained the above-mentioned assignment of errors
committed by the Court of First Instance of Pampanga and, as previously
stated, reversed the judgment of the latter court. From this reversal this
appeal by certiorari was taken, and before this Court, petitioners-appellants
assigned the following errors allegedly committed by the Court of Appeals:
1. THE COURT OF APPEALS ERRED IN DECLARING IN THE INSTANT CASE THAT
PARCEL NO. 2 OF TRANSFER CERTIFICATE OF TITLE NO. 15856 IS A PUBLIC
RIVER AND ORDERING THE CANCELLATION OF ITS REGISTRATION BECAUSE
THIS CONSTITUTES A COLLATERAL ATTACK ON A TORRENS TITLE IN
VIOLATION OF THE LAW AND THE WELL-SETTLED JURISPRUDENCE ON THE
MATTER.
2. THE COURT OF APPEALS ERRED IN REOPENING AND RE-LITIGATING THE
ISSUE AS TO WHETHER OR NOT LOT NO. 2 OF TRANSFER CERTIFICATE OF
TITLE NO. 15856 REGISTER OF DEEDS OF PAMPANGA, IS A PUBLIC RIVER
NOTWITHSTANDING THE FACT THAT THIS ISSUE HAS BEEN LONG RESOLVED
AND SETTLED BY THE LAND REGISTRATION COURT OF PAMPANGA IN LAND
REGISTRATION PROCEEDING NO. 692 AND IS NOW RES JUDICATA.
3. THE COURT OF APPEALS ERRED IN ORDERING THE CANCELLATION OF THE
REGISTRATION OF LOT NO. 2 OF TRANSFER CERTIFICATE OF TITLE NO. 15856
NOTWITHSTANDING THE FACT THAT THE TORRENS TITLE COVERING IT HAS
BEEN VESTED IN THE PETITIONERS WHO ARE THE SEVENTH OF THE
SUCCESSIVE INNOCENT PURCHASERS THEREOF AND WHO IN PURCHASING
THE SAME RELIED ON THE PRINCIPLE THAT THE PERSONS DEALING WITH
REGISTERED LAND NEED NOT GO BEHIND THE REGISTER TO DETERMINE THE
CONDITION OF THE PROPERTY.
The 1st and 2nd assignment of errors, being closely related, will be taken up
together.
The ruling of the Court of Appeals that Lot No. 2 covered by Transfer
Certificate of Title No. 15856 of the petitioners-appellants is a public stream
and that said title should be cancelled and the river covered reverted to
public domain, is assailed by the petitioners-appellants as being a collateral
attack on the indefeasibility of the torrens title originally issued in 1925 in
favor of the petitioners-appellants' predecessor-in-interest, Potenciano
Garcia, which is violative of the rule of res judicata. It is argued that as the
decree of registration issued by the Land Registration Court was not re-
opened through a petition for review filed within one (1) year from the entry
of the decree of title, the certificate of title issued pursuant thereto in favor
of the appellants for the land covered thereby is no longer open to attack
under Section 38 of the Land Registration Act (Act 496) and the jurisprudence
on the matter established by this Tribunal. Section 38 of the Land
Registration Act cited by appellants expressly makes a decree of registration,
which ordinarily makes the title absolute and indefeasible, subject to the
exemption stated in Section 39 of the said Act among which are: "liens,
claims or rights arising or existing under the laws or Constitution of the
United States or of the Philippine Islands which the statute of the Philippine
Islands cannot require to appear of record in the registry."
At the time of the enactment of Section 496, one right recognized or existing
under the law is that provided for in Article 339 of the old Civil Code which
reads as follows:
Property of public ownership is:
1. That destined to the public use, such as roads, canals, rivers, torrents,
ports, and bridges constructed by the State, and banks shores, roadsteads,
and that of a similar character. (Par. 1)
The above-mentioned properties are parts of the public domain intended for
public use, are outside the commerce of men and, therefore, not subject to
private appropriation. ( 3 Manresa, 6th ed. 101-104.)
In Ledesma v. Municipality of Iloilo, 49 Phil. 769, this Court held:
A simple possession of a certificate of title under the Torrens system does
not necessarily make the possessor a true owner of all the property
described therein. If a person obtains title under the Torrens system which
includes by mistake or oversight, lands which cannot be registered under the
Torrens system, he does not by virtue of said certificate alone become the
owner of the land illegally included.
In Mercado v. Municipal President of Macabebe, 59 Phil. 592, it was also said:
It is useless for the appellant now to allege that she has obtained certificate
of title No. 329 in her favor because the said certificate does not confer upon
her any right to the creek in question, inasmuch as the said creek, being of
the public domain, is included among the various exceptions enumerated in
Section 39 of Act 496 to which the said certificate is subject by express
provision of the law.
The same ruling was laid down in Director of Lands v. Roman Catholic Bishop
of Zamboanga, 61 Phil. 644, as regards public plaza.
In Dizon, et al. v. Rodriguez, et al., G.R. No. L-20300-01 and G.R. No. L-20355-
56, April 30, 1965, 20 SCRA 704, it was held that the incontestable and
indefeasible character of a Torrens certificate of title does not operate when
the land covered thereby is not capable of registration.
It is, therefore, clear that the authorities cited by the appellants as to the
conclusiveness and incontestability of a Torrens certificate of title do not
apply here. The Land Registration Court has no jurisdiction over non-
registerable properties, such as public navigable rivers which are parts of the
public domain, and cannot validly adjudge the registration of title in favor of
a private applicant. Hence, the judgment of the Court of First Instance of
Pampanga as regards the Lot No. 2 of Certificate of Title No. 15856 in the
name of petitioners-appellants may be attacked at any time, either directly
or collaterally, by the State which is not bound by any prescriptive period
provided for by the Statute of Limitations (Article 1108, par. 4, new Civil
Code). The right of reversion or reconveyance to the State of the public
properties fraudulently registered and which are not capable of private
appropriation or private acquisition does not prescribe. (Republic v. Ramona
Ruiz, et al., G.R. No. L-23712, April 29, 1968, 23 SCRA 348; Republic v. Ramos,
G.R. No.
L-15484, January 31, 1963, 7 SCRA 47.)
When it comes to registered properties, the jurisdiction of the Secretary of
Public Works & Communications under Republic Act 2056 to order the
removal or obstruction to navigation along a public and navigable creek or
river included therein, has been definitely settled and is no longer open to
question (Lovina v. Moreno, G.R. No L-17821, November 29, 1963, 9 SCRA
557; Taleon v. Secretary of Public Works & Communications G.R. No. L-
24281, May 16, 1961, 20 SCRA 69, 74).
The evidence submitted before the trial court which was passed upon by the
respondent Court of Appeals shows that Lot No. 2 (Plan Psu 992) of Transfer
Certificate of Title No. 15856, is a river of the public domain. The technical
description of both Lots Nos. 1 and 2 appearing in Original Certificate of Title
No. 14318 of the Register of Deeds of Pampanga, from which the present
Transfer Certificate of Title No. 15856 was derived, confirms the fact that Lot
No. 2 embraced in said title is bounded practically on all sides by rivers. As
held by the Court of First Instance of Pampanga in Civil Case No. 1247 for
injunction filed by the petitioners' predecessors-in-interest against the
Municipal Mayor of Lubao and decided in 1916 (Exh. "L"), Lot No. 2 is a
branch of the main river that has been covered with water since time
immemorial and, therefore, part of the public domain. This finding having
been affirmed by the Supreme Court, there is no longer any doubt that Lot
No. 2 of Transfer Certificate of Title No. 15856 of petitioners is a river which
is not capable of private appropriation or acquisition by prescription.
(Palanca v. Com. of the Philippines, 69 Phil. 449; Meneses v. Com. of the
Philippines, 69 Phil. 647). Consequently, appellants' title does not include
said river.
II
As regards the 3rd assignment of error, there is no weight in the appellants'
argument that, being a purchaser for value and in good faith of Lot No. 2, the
nullification of its registration would be contrary to the law and to the
applicable decisions of the Supreme Court as it would destroy the stability of
the title which is the core of the system of registration. Appellants cannot be
deemed purchasers for value and in good faith as in the deed of absolute
conveyance executed in their favor, the following appears:

6. Que la segunda parcela arriba descrita y mencionada esta actualmente

abierta, sin malecones y excluida de la primera parcela en virtud de la Orden
Administrative No. 103, tal como fue enmendada, del pasado regimen o
Gobierno.

7. Que los citados compradores Romeo Martinez y Leonor Suarez se

encargan de gestionar de las autoridades correspondientes para que la citada
segunda parcela pueda ser convertida de nuevo en pesqueria, corriendo a
cuenta y cargo de los mismos todos los gastos.

8. Que en el caso de que dichos compradores no pudiesen conseguir sus

propositos de convertir de nuevo en pesquera la citada segunda parcela, los
aqui vendedores no devolveran ninguna cantidad de dinero a los referidos
compradores; este es, no se disminuiriat el precio de esta venta. (Exh. 13-a,
p. 52, respondents record of exhibits)

These stipulations were accepted by the petitioners-appellants in the same

conveyance in the following terms:

Romeo Martinez y Leonor Suarez, mayores de edad, filipinos y residentes en

al Barrio de Julo Municipio de Malabon, Provincia de Rizal, por la presente,
declaran que estan enterados del contenido de este documento y lo aceptan
en los precisos terminos en que arriba uedan consignados. (Exh. 13-a, ibid)

Before purchasing a parcel of land, it cannot be contended that the

appellants who were the vendees did not know exactly the condition of the
land that they were buying and the obstacles or restrictions thereon that
may be put up by the government in connection with their project of
converting Lot No. 2 in question into a fishpond. Nevertheless, they willfully
and voluntarily assumed the risks attendant to the sale of said lot. One who
buys something with knowledge of defect or lack of title in his vendor cannot
claim that he acquired it in good faith (Leung Lee v. Strong Machinery Co., et
al., 37 Phil. 664).

The ruling that a purchaser of a registered property cannot go beyond the

record to make inquiries as to the legality of the title of the registered owner,
but may rely on the registry to determine if there is no lien or encumbrances
over the same, cannot be availed of as against the law and the accepted
principle that rivers are parts of the public domain for public use and not
capable of private appropriation or acquisition by prescription.

FOR ALL THE FOREGOING, the judgment of the Court of Appeals appealed
from is in accordance with law, and the same is hereby affirmed with costs
against the petitioners-appellants.