CONCEPT OF OWNERSHIP

G.R. No. L-48050 October 10, 1994

FELICIDAD JAVIER, petitioner,
vs.
HON. REGINO T. VERIDIANO II, Presiding Judge, Branch I, Court of First Instance of Zambales
and REINO ROSETE, respondents.

Cesar E. Palma for petitioner.

Saturnino V. Bactad for private respondent.

BELLOSILLO, J.:

Petitioner Felicidad Javier questions before us the order of a regional trial court citing the final
decision of the city court previously dismissing her complaint for forcible entry, and on the basis
thereof, dismissed her petition to quiet title on the ground of res judicata. We summon the time-
honored remedies accion interdictal, accion publiciana and accion reivindicatoria or accion de
reivindicacion to resolve the issues presented in the petition.

It appears that on 25 January 1963, petitioner filed a Miscellaneous Sales Application for Lot No.
1641, Ts-308 of the Olongapo Townsite Subdivision, Lower Kalaklan, Olongapo City, with the District
Land Officer, Bureau of Lands, Olongapo City. Sometime in December 1970, alleging that she was
forcibly dispossessed of a portion of the land by a certain Ben Babol, she instituted a complaint for
forcible entry before the City Court of Olongapo City, docketed as Civil Case No. 926, stating in pars.
2 and 3 therein that —

. . . plaintiff is the true, lawful and in actual, prior physical possession of a certain parcel
of land situated at Lower Kalaklan, City of Olongapo, said lot being designated as Lot
No. 1641, Ts-308 of the Olongapo Townsite Subdivision since 1961 and up to the
present time, until the day and incidents hereinafter narrated. . . . Sometime on
December 12, 1970, the defendant, without express consent of plaintiff and without
lawful authority, through scheme, strategy and stealth, forcibly entered a portion on the
southwestern part of Lot No. 1641, Ts-308, with the assistance of hired helpers, started
construction of riprap along the Kalaklan River perimeter of said portion of land; said
entry was further augmented by removing plaintiff's chain link, fence with galvanized
iron posts embedded in concrete, likewise destroying plants introduced by plaintiff by
removing existing BL (Bureau of Lands) monuments thereon, and by these actions,
defendant started exercising illegal possession of said portion of land which contains an
area of 200 square meters, more or less. 1

On 7 November 1972 the City Court of Olongapo City, Br. 4, 2 dismissed Civil Case No. 926 on the
ground that "it appears to the Court that the Bureau of Lands has considered the area in question to
be outside Lot 1641 of the plaintiff. . . ." 3 The Decision of the City Court of Olongapo City became final
and executory on 30 April 1973 when the then Court of First Instance of Zambales and Olongapo
City, Br. 3,4 dismissed the appeal and affirmed the findings and conclusions of the City Court holding
that appellant (herein petitioner) failed to give sufficient evidence to prove that the area in question
was within the boundaries of Lot No. 1641. 5
Subsequently, on 17 December 1973, petitioner was granted Miscellaneous Sales Patent No. 5548
and issued Original Certificate of Title No. P-3259 covering Lot No. 1641. Meanwhile, Ben Babol who
was the defendant and appellee in the complaint for forcible entry had sold the property he was
occupying, including the portion of about 200 square meters in question, to a certain Reino Rosete.
Thus petitioner demanded the surrender of the same area in dispute from Reino Rosete who
repeatedly refused to comply with the demand.

On 29 June 1977, or after about four (4) years from the finality of the dismissal of Civil Case No. 926,
petitioner instituted a complaint for quieting of title and recovery of possession with damages against
Ben Babol and Reino Rosete before the then Court of First Instance of Zambales and Olongapo City,
docketed as Civil Case No. 2203-0, alleging in pars. 2 and 3 therein that —

. . . plaintiff is the absolute owner in fee simple of a parcel of land identified as Lot No.
1641, Ts-308, Olongapo Townsite Subdivision . . . covered by Original Certificate of
Title No. P-3259, issued by the Register of Deeds for the province of Zambales. . . .
Sometime in December,
1970, and until present, defendants, relying on an application filed on December 23,
1969, with the Bureau of Lands, however have squatted, illegally occupied and
unlawfully possessed the southwestern portion of plaintiff's above-described property of
about 200 square meters, then by defendant BEN BABOL and now by defendant
REINO ROSETE, the former having sold the entirety of his property to the latter,
including the portion in question. . . . 6

Instead of filing a responsive pleading, therein defendant Reino Rosete (private respondent herein)
moved to dismiss the complaint on the ground of res judicata. Defendant Ben Babol did not file any
pleading.

In its Order dated 27 January 1978,7 the then Court of First Instance of Zambales, Br. 1, 8 sustained
the argument of Rosete and granted his motion to dismiss. Thereafter, petitioner's motion for
reconsideration was denied.9 Hence, this petition for review on certiorari.

Petitioner contends that res judicata cannot apply in the instant case since there is no identity of
parties and causes of action between her complaint for forcible entry, which had long become final
and executory, and her subsequent petition for quieting of title. She argues that private respondent
Reino Rosete, who invokes the defense or res judicata, was never impleaded in the forcible entry
case, which is an action in personam; neither was he a purchaser pendente lite who, perhaps, could
have validly invoked the defense of res judicata. With regard to the cause of action, she maintains
that there is no identity of causes of action since the first case was for forcible entry, which is merely
concerned with the possession of the property, whereas the subsequent case was for quieting of title,
which looks into the ownership of the disputed land.

Private respondent however submits that there is identity of parties in the two cases since he is a
successor in interest by title of the defendant in the first case after the commencement of the first
action. On the issue of identity of causes of action, he simply states that neither of the two cases, i.e.,
the complaint for forcible entry and the subsequent petition for quieting of title, alleges a cause of
action. Thus, private respondent continues, both cases have to be dismissed.

Time and again it has been said that for res judicata to bar the institution of a subsequent action the
following requisites must concur: (1) There must be a final judgment or order; (2) The court rendering
the judgment must have jurisdiction over the subject matter; (3) The former judgment is a judgment
on the merits; and, (4) There is between the first and second actions identity of parties, of subject
matter and of causes of action. 10 The presence of the first three requirements and the identity of
subject matter in the fourth requirement are not disputed. Hence, the only issues remaining are
whether as between Civil Case No. 926 and Civil Case No. 2203-0 there is identity of parties and of
causes of action which would bar the institution of Civil Case No. 2203-0.

Petitioner's argument that there is no identity of parties between the two actions is without merit. We
have repeatedly ruled that for res judicata to apply, what is required is not absolute but only
substantial identity of parties. 11 It is fundamental that the application of res judicata may not be
evaded by simply including additional parties in a subsequent litigation. In fact we have said that there
is still identity of parties although in the second action there is one party who was not joined in the first
action, if it appears that such party is not
a necessary party either in the first or second action, 12 or is a mere nominal party. 13 Thus, Sec. 49,
par. (b), Rule 39, Rules of Court, provides that ". . . the judgment or order is, with respect to the
matter directly adjudged or as to any other matter that could have been raised in relation thereto,
conclusive between the parties and their successors in interest by title subsequent to the
commencement of the action or special proceeding, litigating for the same thing and under the same
title and in the same capacity."

In the case at bench, it is evident that private respondent Reino Rosete is a successor in interest of
Ben Babol by title subsequent to the commencement and termination of the first action. Hence, there
is actual, if not substantial, identity of the parties between the two actions. But, there is merit in
petitioner's argument that there is no identity of causes of action between Civil Case
No. 926 and Civil Case No. 2203-0.

Civil Case No. 926 is a complaint for forcible entry, where what is at issue is prior possession,
regardless of who has lawful title over the disputed property. 14 Thus, "[t]he only issue in an action for
forcible entry is the physical or material possession of real property, that is, possession de facto and
not possession de jure. The philosophy underlying this remedy is that irrespective of the actual
condition of the title to the property, the party in peaceable quiet possession shall not be turned out by
strong hand, violence or terror." 15 And, a judgment rendered in a case for recovery of possession is
conclusive only on the question of possession and not on the ownership. It does not in any way bind
the title or affect the ownership of the land or building. 16

On the other hand, Civil Case No. 2203-0 while inaccurately captioned as an action for "Quieting of
Title and Recovery of Possession with Damages" is in reality an action to recover a parcel of land or
an accion reivindicatoria under Art. 434 17 of the Civil Code, and should be distinguished from Civil
Case No. 926, which is an accion interdictal. From the averments of the complaint in Civil Case No.
2203-0, plaintiff therein (petitioner herein) clearly sets up title to herself and prays that respondent
Rosete be ejected from the disputed land and that she be declared the owner and given possession
thereof. Certainly, the allegations partake of the nature of an accion reivindicatoria. 18

The doctrine in Emilia v. Bado, 19, decided more than twenty-five years ago, is still good law and has
preserved the age-old remedies available under existing laws and jurisprudence to recover
possession of real property, namely accion interdictal, which is the summary action for forcible entry
(detentacion) where the defendant's possession of the property is illegal ab initio, or the summary
action for unlawful detainer (desahuico) where the defendant's possession was originally lawful but
ceased to be so by the expiration of his right to possess, both of which must be brought within one
year from the date of actual entry on the land, in case of forcible entry, and from the date of last
demand, in case of unlawful detainer, in the proper municipal trial court or metropolitan trial
court; 20 accion publiciana which is a plenary action for recovery of the right to possess and which
should be brought in the proper regional trial court when the dispossession has lasted for more than
one year; and, accion reivindicatoria or accion de reivindicacion which seeks the recovery of
ownership and includes the jus utendi and the jus fruendi brought in the proper regional trial court.
Accion reivindicatoria or accion de reivindicacion is thus an action whereby plaintiff alleges
ownership over a parcel of land and seeks recovery of its full possession. 21 It is different from accion
interdictal or accion publiciana where plaintiff merely alleges proof of a better right to possess without
claim of title. 22

In Civil Case No. 926 petitioner merely claimed a better right or prior possession over the disputed
area without asserting title thereto. It should be distinguished from Civil Case No. 2203-0 where she
expressly alleged ownership, specifically praying that she be declared the rightful owner and given
possession of the disputed portion. Hence, in Civil Case No. 926 petitioner merely alleged that she
was "the true, lawful (possessor) and in actual, prior physical possession" of the subject parcel of
land, whereas in Civil Case
No. 2203-0 she asserted that she was "the absolute owner in fee simple" of the parcel of land
"covered by Original Transfer Certificate of Title No. P-3259." The complaint in Civil Case No. 2203-0
definitely raises the question of ownership and clearly gives defendants therein notice of plaintiff's
claim of exclusive and absolute ownership, including the right to possess which is an elemental
attribute of such ownership. Thus, this Court has ruled that a judgment in forcible entry or detainer
case disposes of no other issue than possession and declares only who has the right of possession,
but by no means constitutes a bar to an action for determination of who has the right or title of
ownership. 23

And, applying the ruling of the Court En Banc in Quimpo v. De la Victoria, 24 even if we treat Civil
Case No. 2203-0 as a petition to quiet title, as its caption suggests, still it has a cause of action
different from that for ejectment. Consequently, there being no identity of causes of action between
Civil Case No. 926 and Civil Case No. 2203-0, the prior complaint for ejectment cannot bar the
subsequent action for recovery, or petition to quiet title.

WHEREFORE, the petition is GRANTED. The Order dated 27 January 1978 of the then Court of First
Instance of Zambales, Br. I, with station in Olongapo City, dismissing Civil Case No. 2203-0, and its
subsequent Order denying reconsideration of the dismissal are REVERSED and SET ASIDE.

The Clerk of Court is directed to remand the records immediately to the court of a quo and the latter
to proceed with the trial of Civil Case No. 2203-0 with deliberate dispatch. This decision is
immediately executory.

SO ORDERED.
G.R. No. 120784-85        January 24, 2001

SPOUSES WARLITO BUSTOS and HERMINIA REYES-BUSTOS, petitioners,

vs.
COURT OF APPEALS, SPOUSES VENANCIO VIRAY and CECILIA NUNGA-VIRAY, respondents.

PARDO, J.:

The case before the Court is an appeal via certiorari seeking to set aside the Court of
Appeals1 modifying that of the Regional trial Court, Pampanga, Macabebe, Branch 55 2 and the
resolution denying reconsideration. 3

Paulino Fajardo died intestate on April 2, 1957. 4 He had four (4) children, namely: Manuela, Trinidad,
Beatriz and Marcial, all surnamed Fajardo.

On September 30, 1964, the heirs executed an extra-judicial partition 5 of the estate of Paulino
Fajardo. On the same date, Manuela sold her share to Moses 6 G. Mendoza, husband of Beatriz by
deed of absolute sale.7 The description of the property reads as follows:

"A parcel of an irrigated riceland located in the barrio of San Isidro, Masantol, Pampanga.
Bounded on the North, by Paulino Fajardo; on the East, by Paulino Fajardo; on the South, by
Paulino Guinto. Containing an area of 5,253 sq. mts., more or less. Declared under Tax
Declaration No. 3029 in the sum of P710.00."

At the time of the sale, there was no cadastral survey in Masantol, Pampanga. Later, the cadastre
was conducted and the property involved in the partition case were specified as Lots 280, 283, 284,
1000-A and 1000-B. The share of Manuela, which was sold to Moses, includes Lot 284 of the
Masantol Cadastre and Lot 284 was subdivided into Lots 284-A and 284-B.

Trinidad was in physical possession of the land. She refused to surrender the land to her brother-in-
law Moses G. Mendoza, despite several demands.

On September 3, 1971, Moses filed with the Court of First Instance, Pampanga a complaint for
partition claiming the one fourth (1/4) share of Manuela which was sold to him. 8

During the pendency of the case for partition, Trinidad Fajardo died. On December 15, 1984, the
heirs executed an extra-judicial partition of the estate of Trinidad Fajardo. On February 16, 1987,
Lucio Fajardo Ignacio, son of Trinidad sold Lot 284-B to spouses Venancio Viray and Cecilia Nunga-
Viray.

On February 8, 1989, the Regional Trial Court, Pampanga, Macabebe, Branch 55 rendered a
decision in favor of Moses G. Mendoza, the dispositive portion of which provides:
 "WHEREFORE, premises considered, judgment is hereby rendered in favor of the plaintiffs
and against the defendants, and hereby orders.1âwphi1.nêt

"1. The division and partition of the parcel of land identified and described earlier with the aid
and assistance of a qualified surveyor, segregating therefrom an area equivalent to 1/4 portion
to be taken from the vacant right eastern portion which is toward the national road the same to
be determined by one (or the said surveyor) standing on the subject land facing the municipal
road, at the expense of the plaintiffs;

"2. The said 1/4 portion segregated shall be a fixed portion, described by metes and bounds,
and shall be adjudicated and assigned to the plaintiffs;

"3. In case of disagreement as to where the said right eastern portion should be taken, a
commission is hereby constituted, and the OIC-Clerk of Court is hereby appointed chairman,
and the OIC-Branch Clerk of Court of Branches 54 and 55 of this Court are hereby appointed
members, to carry out the orders contained in the foregoing first two paragraphs;

"4. The defendants to pay the plaintiffs the sum of P500.00 as attorney's fees, and to pay the
costs of the proceedings.

"SO ORDERED."9

On September 13, 1991, Moses sold the subject land to spouses Warlito Bustos and Herminia
Reyes-Bustos.

In the meantime, on November 6, 1989, spouses Venancio Viray and Cecilia Nunga-Viray, buyers of
Lucio Ignacio's share of the property, filed with the Municipal Circuit Trial Court, Macabebe-Masantol,
Pampanga an action for unlawful detainer10 against spouses Bustos, the buyers of Moses G.
Mendoza, who were in actual possession as lessees of the husband of Trinidad, Francisco Ignacio, of
the subject land.

The municipal circuit trial court decided the case in favor of spouses Viray. Subsequently, the trial
court issued writs of execution and demolition, but were stayed when spouses Bustos filed with the
regional Trial Court, Pampanga, Macabebe, Branch 55, 11 a petition for certiorari, prohibition and
injunction.

On December 18, 1992, the regional trial court rendered a decision, the dispositive portion of which
reads:

"WHEREFORE, premises considered, this case, is as it is hereby, dismissed. The preliminary

injunction is ordered dissolved and the petitioners and Meridian Assurance Corporation are
hereby ordered jointly and severally, to pay the private respondents the sum of P20,000.00 by
way of litigation expenses and attorney's fees, and to pay the cost of the proceedings." 12

In time, the spouses Bustos appealed the decision to the Court of Appeals. 13

On February 27, 1989, Lucio Fajardo Ignacio also appealed the decision to the Court of Appeals. 14

Upon motion for consolidation of the petitioners, on August 9, 1993, the Court of Appeals resolved to
consolidate CA-G.R. SP No. 30369 and CA-G.R. CV No. 37606. 15
On August 26, 1994, the Court of Appeals promulgated its decision in the two cases, the dispositive
portion of which provides:

"WHEREFORE, in view of all the foregoing, consolidated judgment is hereby rendered for bot
CA-G.R. SP No. 37607 and CA-G.R. SP No. 30369 as follows:

"1. The appeal docketed as CA-G.R. CV No. 37607 is dismissed; Moses Mendoza is declared
as owner of the 1/4 undivided share previously owned by Manuela Fajardo; and the decision of
the Regional Trial Court dated February 8, 1989 in Civil Case No. 83-0005-M is affirmed but
MODIFIED as follows:

"WHEREFORE, premises considered, judgment is hereby rendered in favor of the

plaintiffs and against the defendants, and hereby orders.

"1. A relocation survey to be conducted (at the expense of the plaintiffs) to retrace the
land subject of the deed of sale dated September 30, 1964 between Manuela Fajardo
and Moses Mendoza;

"2. The division and partition of said relocated land by segregating therefrom an area
equivalent to 1/4 portion to be taken from the vacant right eastern portion which is
toward the national road, the same to be determined by one standing on the subject
land facing the municipal road, at the expense of the plaintiff-appellees;

"3. The said 1/4 portion segregated shall be a fixed portion, described by metes and
bounds, and shall be adjudicated and assigned to the plaintiffs-appellees;

"4. In case of disagreement as to where the said right eastern portion should be taken, a
Commission is hereby constituted, with the OIC/present Clerk of Court as Chairman,
and the OIC/present Branch Clerk of Court of Branches 54 and 55 of the Court (RTC)
as members, to carry out and implement the Orders contained in the second and third
paragraphs hereof;

"5. The defendants are ordered to pay the plaintiffs the sum of P500.00 as attorney's
fees, and to pay the costs of the proceedings.

"2. The dismissal of Civil Case No. 92-0421-M is AFFIRMED but the reasons for its dismissal
shall be effective only as to the issue of possession. CA-G.R. SP No. 30369 is DISMISSED.

"3. No. pronouncement as to costs.

"SO ORDERED."16

On September 9, 1994, petitioners filed a motion for reconsideration; 17 however, on June 21, 1995,
the Court of Appeals denied the motion.18

Hence, this petition.19

The issue raised is whether petitioners could be ejected from what is now their own land.

The petition is meritorious.

In this case, the issue of possession is intertwined with the issue of ownership. In the unlawful detailer
case, the Court of Appeals affirmed the decision of the trial court as to possession on the ground that
the decision has become final and executory. This means that the petitioners may be evicted. In
the accion reinvindicatoria, the Court of Appeals affirmed the ownership of petitioners over the
subject land. Hence, the court declared petitioners as the lawful owners of the land.

Admittedly, the decision in the ejectment case is final and executory. However, the ministerial duty of
the court to order execution of a final and executory judgment admits of exceptions. In Lipana vs.
Development Bank of Rizal,20 the Supreme Court reiterated the rule "once a decision becomes final
and executory, it is the ministerial duty of the court to order its execution, admits of certain exceptions
as in cases of special and exceptional nature where it becomes imperative in the higher interest of
justice to direct the suspension of its execution (Vecine v. Geronimo, 59 O. G. 579); whenever it is
necessary to accomplish the aims of justice (Pascual v. Tan 85 Phil. 164); or when certain facts and
circumstances transpired after the judgment became final which could render the execution of the
judgment unjust (Cabrias v. Adil, 135 SCRA 354)."

In the present case, the stay of execution is warranted by the fact that petitioners are now legal
owners of the land in question and are occupants thereof. To execute the judgment by ejecting
petitioners from the land that they owned would certainly result in grave injustice. Besides, the issue
of possession was rendered moot when the court adjudicated ownership to the spouses Bustos by
virtue of a valid deed of sale.

Placing petitioners in possession of the land in question is the necessary and logical consequence of
the decision declaring them as the rightful owners is possession. It follows that as owners of the
subject property, petitioners are entitled to possession of the same. "An owner who cannot exercise
the seven (7) "juses" or attributes of ownership-the right to possess, to use and enjoy, to abuse or
consume, to accessories, to dispose or alienate, to recover or vindicate and to the fruits is a crippled
owner."22

WHEREFORE, we GRANT the petition. We SET ASIDE the decision of the Court of Appeals I Ca

G.R. SP No. 30609 for being moot and academic. We AFFIRM the decision of the Court of Appeals
in CA G.R. CV No. 37606.1âwphi1.nêt

No costs.

SO ORDERED.
G.R. No. 128177            August 15, 2001

HEIRS OF ROMAN SORIANO, petitioners,

vs.
THE HONORABLE COURT OF APPEALS, SPOUSES BRAULIO ABALOS and AQUILINA
ABALOS, respondents.

YNARES-SANTIAGO,J.:

May a winning party in a land registration case effectively eject the possessor thereof, whose security
of tenure rights are still pending determination before the DARAB?

The instant petition for certiorari seeks to set aside the Decision 1 dated September 20, 1996 of the
Court of Appeals in CA-G.R. SP No. 34930 as well as its Resolution 2 dated January 15, 1997,
denying petitioners' Motion for Reconsideration.

We quote the undisputed facts as narrated by the Court of Appeals, to wit —

The property subject of this case is a parcel of land containing an area of 24,550 square
meters, more or less, located in Lingayen, Pangasinan, and particularly described as follows:

A parcel of land (Nipa with an area of 8,410 square meters; fishpond with an area of
14,000 square meters; and residential land with an area of 1,740 square meters, more
or less. Bounded on the N, by river and Filemon Anselmo; on the South by Alejandro
Soriano and Filemon Anselmo; and on the West by Fortunata Soriano.

Originally owned by Adriano Soriano until his death in 1947, the above-described property
passed on to his heirs who leased the same to spouses David de Vera and Consuelo Villasista
for a period of fifteen (15) years beginning July 1, 1967 with Roman Soriano, one of the
children of Adriano Soriano, acting as caretaker of the property during the period of the lease.
After executing an extra judicial settlement among themselves, the heirs of Adriano Soriano
subsequently subdivided the property into two (2) lots, Lot No. 60052 and Lot No. 8459. Lot
No. 60052 was assigned to Lourdes, Candido and the heirs of Dionisia while Lot No. 8459 was
assigned to Francisca, Librada, Elocadio and Roman. In 1971, Lot No. 60052 was sold by
Lourdes, Candido and the heirs of Dionisia to petitioner spouses Braulio and Aquilina Abalos
(hereinafter referred to as petitioners), while, Elocadio, Francisca and Librada sold their three-
fourths shares in Lot No. 8459 also to petitioners.

On March 14, 1968, the de Vera spouses ousted Roman Soriano as caretaker and appointed
Isidro Verzosa and Vidal Verzosa as his substitutes. Thereafter, Roman Soriano filedCAR
Case No. 1724-P-68 for reinstatement and reliquidation against the de Vera spouses. The
agrarian court authorized the ejectment of Roman Soriano but on appeal, the decision was
reversed by the Court of Appeals, which decision became final and executory. However, prior
to the execution of the said decision, the parties entered into a post-decisional agreement
wherein the de Vera spouses allowed Roman Soriano to sub-lease the property until the
termination of the lease in 1982. In an Order dated December 22, 1972, the post-decisional
agreement was approved by the agrarian court.

On August 16, 1976, petitioners filed with the Regional Trial Court of Lingayen, Pangasinan,
Branch 38, an application for registration of title over Lot No. 60052 and three-fourths (3/4)pro-
indiviso of Lot No. 8459, docketed asLRC Case No. N-3405. Said application for registration
was granted by the trial court, acting as a land registration court, per Decision dated June 27,
1983. On appeal, the Court of Appeals affirmed the decision of the land registration court. The
petition for review filed with the Supreme Court by Roman Soriano docketed asG.R. 70842,
was denied for lack of merit and entry of judgment was entered on December 16, 1985.

Meanwhile, it appears that on July 15, 1983, a day after the promulgation of the land
registration court's decision, Roman Soriano, together with Elocadio and Librada Soriano, filed
before the Regional Trial Court of Lingayen, Branch 37, and against petitioners, an action for
annulment of document and/or redemption, ownership and damages, docketed asCivil Case
No. 159568 (sic; should be 15958). Petitioners filed a motion to dismiss on the ground ofres
judicata, pendency of another action, laches, misjoinder of parties and lack of jurisdiction,
which was denied by the trial court.

Thereafter, on August 22, 1984, or eleven (11) years after the approval of the post-decisional
agreement between Roman Soriano and the spouses de Vera inCAR Case No. 1724-P-68 for
reinstatement and reliquidation, petitioners filed with the agrarian court a motion for execution
of said post-decisional agreement which allowed Roman Soriano to sub-lease the property.
The motion prayed that petitioners be placed in possession of the subject property, jointly with
Roman Soriano, and to levy so much of Roman's property to answer for the use and
occupation by Soriano of 6/7 share of the property. On October 25, 1984, Roman Soriano filed
a motion to suspend hearing on the rental demanded by petitioners, which, however, was
denied by the agrarian court. The agrarian court likewise authorized the substitution of the de
Vera spouses by petitioners. Soriano's motion for reconsideration was also denied, prompting
Soriano to file a petition for certiorari with the Court of Appeals.

In the meantime, Roman Soriano died on December 11, 1985. Thus, the complaint inCivil
Case No. 159568 (sic) for annulment of document and/or redemption, ownership and
damages, was amended to substitute Soriano's heirs, herein private respondents, as party-
plaintiffs. The complaint was again amended to include Juanito Ulanday as party-defendant for
having allegedly purchased part of the disputed property from petitioners. On motion of
petitioners, the re-amended complaint was dismissed by the trial court on the ground that the
re-amended complaint altered the cause of action. Upon reconsideration, the dismissal was
set aside and petitioners were ordered to file their Answer, in view of which petitioners filed a
petition for certiorari and prohibition with the Court of Appeals, docketed asC.A. GR SP No.
22149.
On April 25, 1990, the Court of Appeals denied the petition filed by Roman Soriano
(substituted by private respondents) impugning the denial of their motion to suspend hearing
on the rental demanded by petitioners, and authorizing the substitution of the de Vera spouses
by petitioners, on the ground that no grave abuse of discretion was committed by the agrarian
court. Thus, private respondents filed a petition for review on certiorari with the Supreme
Court, docketed asG.R. 93401.

Meanwhile, on December 7, 1990, the Court of Appeals inC.A. GR SP No. 22149, also denied
the petition for certiorari and prohibition filed by petitioners, ruling that the land registration
court committed no error when it refused to adhere to the rule ofres judicata. Petitioners then
filed with the Supreme Court a petition for review on certiorari, docketed asG.R. 99843.

On June 26, 1991, the Supreme Court promulgated its decision inG.R. 93401, and granted the
petition filed by private respondents. Thus, the decision of the Court of Appeals denying the
petition of private respondents was set aside, and the motion for execution filed by petitioners
inCAR Case No. 1724-P-48 was denied.

On June 22, 1993, the Supreme Court, inG.R. 99843, reversed and set aside the denial of the
Court of Appeals inC.A. GR SP No. 22149, and consequently,Civil Case No. 15958 for
annulment of document and/or redemption, ownership and damages, was ordered dismissed.

On October 18, 1993, private respondents filed with the Department of Agrarian Adjudication
Board (sic), a complaint against petitioners for "Security of Tenure with prayer for Status Quo
Order and Preliminary Injunction" docketed asDARAB Case No. 528-P-93.

Meanwhile, it appears that the decision of the land registration court inLRC Case No. N-
3405 was partially executed with the creation of a Committee on Partition per Order dated
March 25, 1987. On July 27, 1988, the land registration court approved the partition of Lot No.
8459, with Lot No. 8459-A assigned to private respondent, and Lot No. 8459-B assigned to
petitioners. For Lot No. 60052, O.C.T. No. 22670 was issued in the name of petitioners; for Lot
No. 8459-B, O.C.T. No. 22687 was issued, also in the name of petitioner; and for Lot No.
8459-A, O.C.T. No. 22686 was issued in the name of Roman Soriano. Dissatisfied with said
partition, private respondents appealed to the Court of Appeals, docketed asCA G.R. SP No.
119497. The appellate court affirmed the partition but reversed the order of the land
registration court directing the issuance of a writ of possession on the ground of pendency
ofCivil Case No. 15958.

On November 15, 1993, the trial court in compliance with the decision of the Supreme Court
inG.R. No. 99843, dismissedCivil Case No. 15958, in view of which, petitioner, on November
25, 1993, inLRC Case No. N-3405, moved for the issuance of an alias writ of execution and/or
writ of possession to place them in possession of Lot No. 60052 and Lot No. 8459-B. Per
Resolution dated January 21, 1994, said motion was held in abeyance by the land registration
court until and afterDARAB Case No. 528-P-93 for security of tenure with prayer forstatus quo,
has been resolved.

Their motion for reconsideration having been denied on April 5, 1984, petitioners interposed an
appeal to the Supreme Court, docketed asG.R. 115073. In a Resolution dated July 27, 1994
issued by the Supreme Court, petitioners' appeal, which was treated as a petition for certiorari,
was referred to this Court [of Appeals] for determination and disposition. 3
The Court of Appeals annulled and set aside the Resolution of the land registration court and ordered
instead the issuance of the corresponding writ of possession in favor of private respondents. With the
denial of their Motion for Reconsideration, petitioners are now before us raising the following grounds:

1. THE DECISION AND RESOLUTION OF THE RESPONDENT COURT OF APPEALS ARE

CONTRARY TO THE PROVISIONS OF THE AGRARIAN REFORM LAWS AND
JURISPRUDENCE ON THE SECURITY OF TENURE OF TENANT-CARETAKER.

2. THE DECISION AND RESOLUTION OF THE RESPONDENT COURT OF APPEALS ARE

VIOLATIVE OF THE PROVISION ON RIGHT TO DUE PROCESS.

3. THE HONORABLE COURT OF APPEALS GRAVELY ABUSED ITS DISCRETION IN

GIVING DUE COURSE TO THE PETITION CONSIDERING THAT PRIVATE RESPONDENTS
HAD EARLIER PERFECTED AN APPEAL OF THE RESOLUTION SUBJECT OF THEIR
PETITION.4

Possession and ownership are distinct legal concepts. There is ownership when a thing pertaining to
one person is completely subjected to his will in a manner not prohibited by law and consistent with
the rights of others. Ownership confers certain rights to the owner, among which are the right to enjoy
the thing owned and the right to exclude other persons from possession thereof. On the other hand,
possession is defined as the holding of a thing or the enjoyment of a right. Literally, to possess means
to actually and physically occupy a thing with or without right. Possession may be had in one of two
ways: possession in the concept of an owner and possession of a holder. 5 A person may be declared
owner but he may not be entitled to possession. The possession may be in the hands of another
either as a lessee or a tenant. A person may have improvements thereon of which he may not be
deprived without due hearing. He may have other valid defenses to resist surrender of possession. A
judgment for ownership, therefore, does not necessarily include possession as a necessary incident. 6

There is no dispute that private respondents' (petitioners below) title over the land under litigation has
been confirmed with finality. As explained above, however, such declaration pertains only to
ownership and does not automatically include possession, especially so in the instant case where
there is a third party occupying the said parcel of land, allegedly in the concept of an agricultural
tenant.

While the issue of ownership of the subject land has been laid to rest in the final judgment of the land
registration court, the right of possession thereof is, as yet, controverted. This is precisely what is put
in issue in the security of tenure case filed by petitioners (private respondents below) before the
DARAB.

It is important to note that although private respondents have been declared titled owners of the
subject land, the exercise of their rights of ownership are subject to limitations that may be imposed
by law.7 The Tenancy Act provides one such limitation. Agricultural lessees are entitled to security of
tenure and they have the right to work on their respective landholdings once the leasehold
relationship is established. Security of tenure is a legal concession to agricultural lessees which they
value as life itself and deprivation of their landholdings is tantamount to deprivation of their only
means of livelihood.8 The exercise of the right of ownership, then, yields to the exercise of the rights
of an agricultural tenant.

However, petitioners' status as tenant has not yet been declared by the DARAB. In keeping with
judicial order, we refrain from ruling on whether petitioners may be dispossessed of the subject
property. As ratiocinated inNona v. Plan9 —
 It is to the credit of respondent Judge that he has shown awareness of the recent Presidential
Decrees which are impressed with an even more solicitous concern for the rights of the
tenants.If, therefore, as he pointed out in his order granting the writ of possession, there is a
pending case between the parties before the Court of Agrarian Relations, ordinary prudence,
let alone the letter of the law, ought to have cautioned him against granting the plea of private
respondents that they be placed in possession of the land in controversy,x x x. At the time the
challenged orders were issued, without any showing of how the tenancy controversy in the
Court of Agrarian Relations was disposed of, respondent Judge could not by himself and with
due observance of the restraints that cabin and confine his jurisdiction pass upon the question
of tenancy. (Emphasis ours)

In its challenged Decision, the Court of Appeals relied heavily on the principle of finality of judgments.
It applied the legal doctrine that once a judgment has become final, the issuance of a writ of
execution becomes ministerial. The appellate court held that petitioner's situation does not fall under
any of the exceptions to this rule since his occupation of the subject land did not transpire after the
land registration court's adjudication became final.

In so ruling, however, the Court of Appeals loses sight of the fact that petitioner's claim of possession
as a tenant of the litigated property, if proven, entitles him to protection against dispossession.

Private respondents argue that petitioners' tenancy claim is barred byres judicata, having been ruled
upon in G.R. Nos. 99843 and 93401. However, not being an issue in the case before us, this question
should properly be resolved in DARAB Case No. 528-P-93. To restate, the only issue before us is
whether or not a winning party in a land registration case can effectively eject the possessor thereof,
whose security of tenure rights are still pending determination before the DARAB.

A judgment in a land registration case cannot be effectively used to oust the possessor of the land,
whose security of tenure rights are still pending determination before the DARAB. Stated differently,
the prevailing party in a land registration case cannot be placed in possession of the area while it is
being occupied by one claiming to be an agricultural tenant, pending a declaration that the latter's
occupancy was unlawful.

WHEREFORE, the instant petition for certiorari is hereby GRANTED. The Decision of respondent
Court of Appeals in CA-G.R. SP No. 34930 dated September 20, 1996, as well as its Resolution
dated January 15, 1997 are SET ASIDE. The Resolution of the Regional Trial Court of Lingayen,
Pangasinan in LRC Case No. N-3405 dated January 21, 1994 is ordered REINSTATED.

SO ORDERED.

JOSE MA. T. GARCIA, petitioner,

vs.
COURT OF APPEALS, SPS. LUISITO & MA. LUISA MAGPAYO AND PHILIPPINE BANK OF
COMMUNICATIONS, respondents.
PUNO, J.:

This is a petition for review under Rule 45 of the Rules of Court to set aside the decision rendered by
the Court of Appeals in CA-G.R. No. 44707 entitled "Jose Ma. T. Garcia, Plaintiff-Appellee versus
Spouses Luisito and Ma. Luisa Magpayo and Sheriff of Makati, Defendants, Philippine Bank of
Communications, Defendant-Appellant".1

The facts are as succinctly summarized by the appellate court, viz.:

Atty. Pedro V. Garcia, in whose name TCT No. S-31269 covering a parcel of land identified as
Lot 17 situated at Bel Air II Village, Makati, was registered, sold with the consent of his wife
Remedios T. Garcia, the same to their daughter Ma. Luisa Magpayo and her husband Luisito
Magpayo (the Magpayos).

On March 5, 1981, the Magpayos mortgaged the land to the Philippine Bank of
Communications (PBCom) to secure a loan, Five Hundred Sixty Four Thousand (P564,000.00)
Pesos according to them, One Million Two Hundred Thousand (P1,200,000.00) Pesos
according to PBCom.1âwphi1.nêt

On March 9, 1981, Atty. Garcia's Title was cancelled and in its stead Transfer Certificate of
Title No. S-108412/545 was issued in the name of the Magpayos.

The Deed of Real Estate Mortgage was registered at the Makati Register of Deeds and
annotated on the Magpayos title.

The Magpayos failed to pay their loan upon its maturity, hence, the mortgage was
extrajudicially foreclosed and at the public auction sale, PBCom which was the highest bidder
bought the land.

The redemption period of the foreclosed mortgage expired without the Magpayos redeeming
the same, hence, title over the land was consolidated in favor of PBCom which cancelled the
Magpayo's title and Transfer Certificate of Title No. 138233 was issued in its name.

On October 4, 1985, the Magpayos filed at the RTC of Makati a complaint seeking the
nullification of the extrajudicial foreclosure of mortgage, public auction sale, and PBCom's title
docketed as Civil Case No. 11891. This complaint was dismissed for failure to prosecute.

On October 15, 1985, PBCom filed at the Regional Trial Court (RTC) of Makati a petition for
the issuance of a writ of possession over the land, docketed as LRC Case No. M-731, which
Branch 148 thereof granted.

Upon service of the writ of possession, Mrs. Magpayo's brother, Jose Ma. T. Garcia (Garcia),
who was in possession of the land, refused to honor it and filed a motion for Intervention in the
above-said PBCom petition, which motion was denied.

Garcia thereupon filed against PBCom, the Magpayos, and the RTC Sheriff the instant suit for
recovery of realty and damages wherein he alleged, inter alia, that he inherited the land as one
of the heirs of his mother Remedios T. Garcia, and that PBCom acquired no right thereover.

In its answer, PBCom averred, inter alia, that Garcia's claim over the land is belied by the fact
that it is not among the properties owned by his mother listed in the Inventory of Real Estate
 filed at the then CFI of Pasay City, Branch 27, in SP Proc. No. 2917-P, "In the Matter of the
Intestate Estate of Remedios T. Garcia Petition for Letters of Administration, Pedro V. Garcia
Petitioner-Administrator.

The Magpayos, on the other hand, asserted that title over the land was transferred to them by
Mrs. Magpayo's parents to enable them (Magpayos) to borrow from PBCom.

Garcia filed a Motion for Summary Judgment praying that judgment be rendered in his favor to
which PBCom counter-motioned that judgment should be rendered in its favor.

The court a quo denied the motion for summary judgment on the ground that PBCom raised in
its answer both factual and legal issues which could only be ventilated in a full-blown trial.

The court a quo, however, later issued a summary judgment.2

In its summary judgment, the lower court held that the mortgage executed by the Magpayo spouses
in favor of PBCom was void. It found that:

. . . [A]t the time that the defendants Magpayo spouses executed the mortgage in favor of the
defendant PBCom on March 5, 1981, the said spouses were not yet the owners of the
property. This finding is evident from the other undisputed fact that a new Torrens title was
issued to the defendants Magpayo spouses only on March 9, 1981 . . . . The Magpayo
spouses could not have acquired the said property merely by the execution of the Deed of
Sale because the property was in the possession of the plaintiff. The vendor, Pedro V. Garcia,
was not in possession and hence could not deliver the property merely by the execution of the
document (MANALILI V. CESAR, 39 PHIL. 134). The conclusion is therefore inescapable that
the said mortgage is null and void for lack of one of the essential elements of a mortgage as
required by Art. 2085 of our Civil Code . . . .3

Thus, it invalidated the foreclosure sale and nullified TCT No. 138233 issued to PBCom. Dissatisfied,
PBCom appealed. In reversing the trial court, the Court of Appeals held:

(P)laintiff-appellee's assertion that ownership over the disputed property was not transmitted to
his sister and her husband-Magpayo spouses at the time of the execution of the Deed of Sale
as he was still in actual and adverse possession thereof does not lie.

For in his complaint, plaintiff-appellee alleged that he entered into possession of the disputed
property only upon the demise of his mother, from whom he alleges to have inherited it but
who was not the registered owner of the property, that is, on October 31, 1980 (Certificate of
Death, p. 17, Records), by which admission he is bound. Since the execution of the deed of
sale by Atty. Pedro V. Garcia in favor of the Magpayos took place earlier or on August 1, 1980,
then contrary to his claim, plaintiff-appellee was not in possession of the property at the time of
the execution of said public instrument.

Furthermore, it appearing that the vendor Atty. Garcia had control of the property which was
registered in his name and that the deed of sale was likewise registered, then the sale was
consummated and the Magpayos were free to exercise the attributes of ownership including
the right to mortgage the land.

When the land is registered in the vendor's name, and the public instrument of sale is also
registered, the sale may be considered consummated and the buyer may exercise the actions
 of an owner (Tolentino, Commentaries and Jurisprudence on the Civil Code of the Philippines,
1992 Ed., p. 55).

That the Magpayos' title, TCT No. S-108412, was issued four (4) days following the execution
of the deed of real estate mortgage is of no moment, for registration under the Torrens system
does not vest ownership but is intended merely to confirm and register the title which one may
already have on the land (Municipality of Victorias v. Court of Appeals, 149 SCRA 32, 44-45
[1987]).

Petitioner Garcia moved for a reconsideration of above decision which was denied. He now comes
before us raising the following errors committed by the Court Appeals:

The respondent Court of Appeals has departed from the accepted and usual course of proceedings
when it decided the appeal subject of this case based on issues which were raised neither in the trial
court nor in the appellant's brief.

II

The Court of Appeals decided the appeal in a manner not in accord with applicable jurisprudence
when it disregarded the admissions of the private respondents and, despite ruling that Summary
Judgment was proper, made its own findings of facts which were contrary to the said admissions.

III

The Decision of the respondent Court of Appeals was not in accord with established jurisprudence
and even contradicts itself, as far as the issue of the propriety of the Summary Judgment is
concerned.

The petition has no merit.

Anent the first assignment of error, petitioner alleged that the Court of Appeals resolved the issues
"ownership" and "possession" though they were not raised by PBCom in its appellant's brief. The
allegation is belied by page 17 of PBCom's appellate brief, viz.:

Due to the wrong cited case, the trial court opined erroneously that "Magpayo Spouses could
not have acquired the property merely by the execution of the deed of sale because the
property was in the possession of the plaintiff" (Order, p. 10).

Again, the trial court could not distinguish ownership from possession. Ownership and
possession are two entirely different legal concepts.

Plaintiff-appellee's possession as found by the trial court, started only "at the time of the filing
of the complaint in this present case up to the present." (page 2, Summary Judgment).

Assuming that to be true, plaintiff-appellee's possession which started only in 1986 could not
ripen into ownership. He has no valid title thereto. His possession in fact was that of an
intruder, one done in bad faith (to defeat PBCom's Writ of Possession). His possession is
certainly not in the concept of an owner. This is so because as early as 1981, title thereto was
registered in the name of the Magpayo Spouses which title was subsequently cancelled when
 the property was purchased by PBCom in a public auction sale resulting in the issuance of title
in favor of the latter in 1985.

Anent the second-assignment of error, petitioner contends that the following facts were admitted by
the parties in the trial court:

1. The petitioner is a compulsory heir of the late spouses Atty. Pedro V. Garcia and Remedios
Tablan Garcia;

2. The property subject of this dispute was previously the conjugal property of the said
spouses;

3. The petitioner and his family have been and are continuously to the present in actual
physical possession of the property. At the time of the alleged sale to the Magpayo spouses,
petitioner was in possession of the property;

4. When his mother Remedios Tablan (sic) Garcia died, sometime in October, 1980, he
became, by operation of law, a co-owner of the property;

5. Atty. Pedro V. Garcia, at the time of the execution of the instrument in favor of the Magpayo
spouses was not in possession of the subject property. 4

We reject the contention of petitioner for a perusal of the records shows that these alleged admitted
facts are his own paraphrased portions of the findings of fact listed by the trial court in the summary
judgment.5 Indeed petitioner did not cite any page number of the records or refer to any documentary
Exhibit to prove how and who admitted the said facts.

Petitioner's third assignment of error that he alone as plaintiff in the trial court is entitled to a summary
judgment merits scant attention. A summary judgment is one granted by the court, upon motion by
either party, for an expeditious settlement of the case, there appearing from the pleadings,
depositions, admissions, and affidavits that no important questions or issues of fact are involved
(except the determination of the amount of damages) and that therefore the moving party is entitled to
a judgment as a matter of law.6 Under Rule 34, either party may move for a summary judgment — the
claimant by virtue of Section 1 and the defending party by virtue of Section 2, viz.:

Sec. 1. Summary judgment for claimant. — A party seeking to recover upon a claim, counter-
claim, or cross-claim or to obtain a declaratory relief may, at any time after the pleading in
answer thereto has been served, move with supporting affidavits for a summary judgment in
his favor upon all or any part thereof.

Sec. 2. Summary judgment for defending party. — A party against whom a claim,
counterclaim, or cross-claim is asserted or a declaratory relief is sought may, at any time,
move with supporting affidavits for a summary judgment in his favor as to all or any part
thereof.

It is true that petitioner made the initial move for summary judgment. Nonetheless, PBCom likewise
moved for a summary judgment with supporting affidavit and documentary exhibits, to wit:

COUNTER-MOTION FOR SUMMARY JUDGMENT

PBCom Is Entitled To A Summary Judgment

 The procedure for summary judgment may be availed of also by the defending parties who
may be the object of unfounded claims as clearly shown in Sections 1 and 2 of Rule 34.

xxx     xxx     xxx

WHEREFORE, it is respectfully prayed of this Honorable Court to render summary judgment in

PBCom's favor by DISMISSING plaintiff's Complaint as well as Sps. Magpayo's Cross-Claim
for being sham and frivolous.7

Needless to state, there was no error on the part of the appellate court in resorting to summary
judgment as prayed for by both parties.

We stress again that possession and ownership are distinct legal concepts. Ownership exists when a
thing pertaining to one person is completely subjected to his will in a manner not prohibited by law
and consistent with the rights of others. 8 Ownership confers certain rights to the owner, one of which
is the right to dispose of the thing by way of sale. 9 Atty. Pedro Garcia and his wife Remedios
exercised their right to dispose of what they owned when they sold the subject property to the
Magpayo spouses. On the other hand, possession is defined as the holding of a thing or the
enjoyment of a right.10 Literally, to possess means to actually and physically occupy a thing with or
without right. Possession may be had in one of two ways: possession in the concept of an owner and
possession of a holder.11 "A possessor in the concept of an owner may be the owner himself or one
who claims to be so."12 On the other hand, "one who possesses as a mere holder acknowledges in
another a superior right which he believes to be ownership, whether his belief be right or
wrong."13 The records show that petitioner occupied the property not in the concept of an owner for
his stay was merely tolerated by his parents. We held in Caniza v. Court of Appeals  14 that an owner's
act of allowing another to occupy his house, rent-free does not create a permanent and indefeasible
right of possession in the latter's favor. Consequently, it is of no moment that petitioner was in
possession of the property at the time of the sale to the Magpayo spouses. It was not a hindrance to
a valid transfer of ownership. On the other hand, petitioner's subsequent claim of ownership as
successor to his mother's share in the conjugal asset is belied by the fact that the property was not
included in the inventory of the estate submitted by his father to the intestate court. This buttresses
the ruling that indeed the property was no longer considered owned by petitioner's parents. We also
uphold the Court of Appeals in holding that the mortgage to PBCom by the Magpayo spouses is valid
notwithstanding that the transfer certificate of title over the property was issued to them after the
mortgage contract was entered into. Registration does not confer ownership, it is merely evidence of
such ownership over a particular property. 15 The deed of sale operates as a formal or symbolic
delivery of the property sold and authorizes the buyer to use the document as proof of
ownership.16 All said, the Magpayo spouses were already the owners when they mortgaged the
property to PBCom.17

IN VIEW WHEREOF, the decision of the Court of Appeals in CA-G.R. No. 44707 is AFFIRMED.
Costs against petitioner.1âwphi1.nêt

SO ORDERED.

[G.R. No. 129609. November 29, 2001.]

RODIL ENTERPRISES, INC., Petitioner, v. COURT OF APPEALS, CARMEN BONDOC,

TERESITA BONDOC-ESTO, DIVISORIA FOOTWEAR and CHUA HUAY SOON, Respondents.

[G.R. No. 135537. November 29, 2001.]

RODIL ENTERPRISES, INC., Petitioner, v. IDES O’RACCA BUILDING TENANTS ASSOCIATION,

INC., Respondent.

DECISION

These twin petitions filed under Rule 45 seek to set aside the Decisions of the Court of Appeals in
CA-G.R. Nos. 39919, 36381 and 37243.

Petitioner Rodil Enterprises Inc. (RODIL) is the lessee of the Ides O’Racca Building (O’RACCA) since
1959. 1 It was a "former alien property" over which the Republic of the Philippines acquired
ownership by virtue of RA 477, as amended. 2

Sometime in 1980 RODIL entered into a sublease contract with respondents Carmen Bondoc,
Teresita Bondoc-Esto, Divisoria Footwear and Chua Huay Soon, 3 members of the Ides O’Racca
Building Tenants Association Inc. (ASSOCIATION).chanrob1es virtual law library

On 4 September 1972 the lease contract between RODIL and the REPUBLIC was renewed for
another fifteen (15) years. 4 At that time the O’RACCA was under the administration of the Building
Services and Real Property Management Office (BSRPMO) then headed by Director Jesus R.
Factora. 5

On 12 September 1982 BP 233 6 was enacted. It authorized the sale of "former alien properties"
classified as commercial and industrial, and the O’RACCA building was classified as commercial
property. 7

On 8 January 1987 RODIL offered to purchase the subject property conformably with BP 233 and the
REPUBLIC responded that its offer to purchase would be acted upon once the Committee on
Appraisal shall have determined the market value of the property. 8

On 22 July 1997 the ASSOCIATION also offered to lease the same building through the Department
of General Services and Real Estate Property Management (DGSREPM). 9

Pending action on the offer of RODIL to purchase the property, Director Factora of the BSRPMO
granted RODIL’s request for another renewal of the lease contract on 23 September 1987 for another
five (5) years from 1 September 1987. 10 The renewal contract was forwarded to then Secretary Jose
de Jesus of DGSREPM for approval.

On 25 September 1987 Undersecretary of DGSREPM Rufino B. Banas recommended to Secretary

De Jesus the suspension of the approval of the renewal contract because the offer of the
ASSOCIATION was more beneficial to the REPUBLIC.
Resultantly, on 30 September 1987 Secretary De Jesus issued another memorandum to Director
Factora disapproving the renewal contract in favor of RODIL, at the same time recalling all papers
signed by him regarding the subject. Secretary De Jesus likewise directed RODIL to pay its realty tax
delinquency and ordered the issuance of a temporary occupancy permit to the ASSOCIATION. 11

On 6 October 1987 RODIL filed an action for specific performance, damages and injunction with
prayer for temporary restraining order before the Regional Trial Court of Manila against the
REPUBLIC, De Jesus, Banas, Factora and the ASSOCIATION. 12 RODIL prayed that a restraining
order be issued enjoining the ASSOCIATION or any person acting under it from collecting rentals
from the occupants or sub-lessees of O’RACCA. On 26 October 1987 the trial court granted the writ
of preliminary injunction. 13 On appeal, the Court of Appeals upheld the issuance of the writ of
preliminary injunction and ordered the deposit of the monthly rentals with the lower court pendente
lite.

On 20 November 1987 the REPUBLIC, De Jesus, Banas and Factora filed their Answer with
Counterclaim for damages. On 21 December 1987 the ASSOCIATION also filed its Answer with
Counterclaim for damages.

De Jesus, Banas and Factora were later substituted by Secretary Fulgencio Factoran of the
Department of Environment and Natural Resources (DENR) in the action for specific performance.
On 31 May 1988 Factoran issued Order No. 1 designating the Land Management Bureau
represented by Director Abelardo Palad, Jr. as custodian of all "former alien properties" owned by the
REPUBLIC.

On 18 May 1992 RODIL signed a renewal contract with Director Palad which was approved by
Secretary Factoran. 14 The renewal contract would extend the lease for ten (10) years from 1
September 1987. A supplement to the renewal contract was subsequently entered into on 25 May
1992 where rentals on the previous lease contract were increased. 15

On 14 August 1972 the action for specific performance was dismissed by the trial court upon joint
motion to dismiss by RODIL and the Solicitor General. The order of dismissal however was appealed
by the ASSOCIATION to the Court of Appeals. 16

On 25 September 1992 the spouses Saturnino Alvarez and Epifania Alvarez, sublessees of RODIL,
filed with the Office of the President a letter-appeal assailing the authority of Factoran to enter into the
renewal contract of 18 May 1992 with RODIL, and claiming the right to purchase the subject property.
17

While the appeal of the ASSOCIATION from the order of dismissal and the letter-appeal of the
spouses Alvarez were pending, the ASSOCIATION instituted Civil Case No. 92-63833 with the
Regional Trial Court of Manila 18 praying for the setting aside of the renewal contract of 18 May 1992
as well as the supplementary contract of 25 May 1992, and further praying for the issuance of a writ
of preliminary injunction. On 3 May 1993 the trial court denied the prayer for preliminary injunction.
On 30 July 1993 RODIL filed an action for unlawful detainer against Divisoria Footwear, 19 and on 4
August 1993, a similar action against Chua Huay Soon. 20

On 10 September 1993 the trial court dismissed the action for declaration of nullity of the lease
contract filed by the ASSOCIATION on the ground of litis pendentia. 21 The Order stated that the
action for declaration of nullity and the action for specific performance filed by RODIL were practically
between the same parties and for the same causes of action. 22 This Order was appealed by the
ASSOCIATION to the Court of Appeals. 23

On 19 January 1994 RODIL filed an action for unlawful detainer against respondent Teresita Bondoc-
Esto, 24 and on 1 February 1994 filed another action against respondent Carmen Bondoc, 25 both
with the Metropolitan Trial Court of Manila.chanrob1es virtua1 1aw 1ibrary

On 8 February 1994 the Office of the President through Executive Secretary Teofisto Guingona Jr.
denied the letter-appeal of the spouses Alvarez, but nullified the renewal contract of 18 May 1992 and
the supplementary contract of 25 May 1992. 26

Meanwhile, the Metropolitan Trial Court of Manila upheld RODIL’s right to eject respondents Bondoc,
Bondoc-Esto, Divisoria Footwear and Chua Huay Soon, 27 as promulgated in separate decisions the
dispositive portions of which read —

IN CIVIL CASE NO. 143301 —

WHEREFORE, IN VIEW OF THE FOREGOING, judgment is hereby rendered in favor of the plaintiff
[RODIL ENTERPRISES, INC.] and against the defendant [CARMEN BONDOC], to wit: 1. Ordering
the defendant and all those claiming title under her to vacate the subleased portion of the O’Racca
Building, corner Folgueras and M. de los Santos Streets, Binondo, Manila; 2. Ordering the defendant
to pay plaintiff the back rentals from October 1987 to August 1992 at the rate of P2,665.00 per month
and from September 1992 at the rate of P2,665.00 per month plus a yearly increase of 20% per
month up to the time that she vacates the premises; 3. Ordering the defendant to pay the amount of
P10,000.00 as attorney’s fees and to pay the cost of suit.

IN CIVIL CASE NO. 143216 —

WHEREFORE, judgment is hereby rendered in favor of the plaintiff [RODIL ENTERPRISES, INC.] as
against the defendant [TERESITA BONDOC ESTO] ordering the defendant and all persons claiming
rights under her to vacate the premises at O’Racca Building located at corner Folgueras and M. de
los Santos Streets, Binondo, Manila, and turn over the possession thereof to plaintiff; ordering the
defendant to pay plaintiff the amount of P29,700.00 as rental in arrears for the period from September
1992 plus legal rate of interest less whatever amount deposited with the Court; ordering defendant to
pay the sum of P3,000.00 as reasonable compensation for the use and occupancy of the premises
from January 1994 until defendant shall have finally vacated the premises minus whatever amount
deposited with the Court as rental; ordering defendant to pay reasonable attorney’s fees in the
amount of P2,000.00 and the costs of suit.
IN CIVIL CASE NO. 142258 —

WHEREFORE, judgment is hereby rendered in favor of plaintiff [RODIL ENTERPRISES, INC.],

ordering defendant [DIVISORIA FOOTWEAR], its representatives, agents, employees and/or assigns
to vacate the leased premises or portion of the Ides O’Racca Building presently occupied by said
defendant and to pay plaintiff the following: a) Rentals in arrears from October 1987 to June 1993 in
the amount of P521,000.00; b) Rentals in the amount of P9,000.00 a month from July, 1993 until
defendant will have vacated the premises; c) Attorney’s fees in the amount of P15,000.00; d) Costs of
suit.

IN CIVIL CASE NO. 142282-CV —

IN VIEW THEREOF, judgment is hereby rendered ordering: 1. defendant CHUA HUAY SOON and all
persons claiming rights through him, to vacate the premises occupied by him at O’RACCA Building,
located at the corner of Folgueras and M. delos Santos Street, Binondo, Manila, and turn over
possession thereof to plaintiff RODIL ENTERPRISES, INC.; 2. defendant to pay rentals in arrears
from October 1987 up to June 1993 at the rate of P6,175.00 a month, representing the rentals in
arrears; 3. defendant to pay P6,175.00 per month from July 1993 until he vacates the premises, as
reasonable compensation for the use of the premises; 4. defendant to pay the sum of P20,000.00 as
attorney’s fees; 5. defendant to pay interests on the amounts mentioned in Nos. 2 and 3 above at ten
(10%) percent per annum from the date of the filing of the complaint until said amounts are fully paid;
and, 6. defendant to pay the costs.

The Regional Trial Court affirmed the Metropolitan Trial Court 28 in all the four (4) decisions above
quoted. Thus, respondents Bondoc, Bondoc-Esto and Divisoria Footwear subsequently filed a
Petition for Review with the Court of Appeals, 29 followed by respondent Chua Huay Soon. 30

While the consolidated appeals from the unlawful detainer cases were pending, the Second Division
of the Court of Appeals promulgated its decision on 12 April 1996 with regard to CA-G.R. No. 39919
declaring the renewal contract between RODIL and the REPUBLIC null and void. 31 RODIL moved
for reconsideration but its motion was denied. 32 Hence, this petition for review on certiorari under
Rule 45. 33

On 29 November 1996 the Special Fourth Division of the Court of Appeals promulgated its Decision
in CA-G.R. No. 36381 and CA-G.R. No. 37243 setting aside the decisions of the Regional Trial Court,
which sustained the Metropolitan Trial Court, and dismissing the action for unlawful detainer filed by
RODIL against its lessees. 34 RODIL moved for reconsideration but the motion was denied. 35
Hence, this petition for review on certiorari. 36

On respondents’ motion, G.R. Nos. 129609 and 135537 were consolidated.

RODIL now contends that the Court of Appeals erred in annulling its renewal contract with the
REPUBLIC and in dismissing its actions for unlawful detainer against respondents Bondoc, Bondoc-
Esto, Divisoria Footwear and Chua. RODIL claims that the assailed contracts are neither void nor
voidable as the facts show they do not fall within the enumerations under Arts. 1305 and 1409, and
an implied new lease still exists by virtue of Art. 1670. As a result, the right to eject respondents
properly belongs to it. 37

With regard to CA-G.R. No. 39919, RODIL argues that the REPUBLIC, the only defendant who is a
real party in interest, signified its assent to having the action dismissed. Assuming arguendo that the
ASSOCIATION was a real party in interest, its counterclaim was nonetheless unmeritorious. 38

On the other hand, respondents Bondoc, Bondoc-Esto, Divisoria Footwear and Chua contend that the
lease contract which the lease contract of 18 May 1992 was to renew, never came into existence.
Therefore, since there was no contract to "renew," the renewal contract had no leg to stand on,
hence, is also void. 39 Respondents then conclude that since there was no lease contract to speak
of, RODIL had no right to relief in its action for unlawful detainer. The ASSOCIATION, for its part,
argues that the counterclaim it filed against RODIL cannot be dismissed because the trial court has
not passed upon it. 40

We rule for RODIL. The owner has the right to enjoy and dispose of a thing, without other limitations
than those established by law. 41 Every owner has the freedom of disposition over his property. It is
an attribute of ownership, and this rule has no exception. The REPUBLIC being the owner of the
disputed property enjoys the prerogative to enter into a lease contract with RODIL in the exercise of
its jus disponendi. Hence, as lessor, the REPUBLIC has the right to eject usurpers of the leased
property where the factual elements required for relief in an action for unlawful detainer are present.

Private respondents claim that the agreements of 23 September 1987, 18 May 1992 and 25 May
1992 did not give rise to valid contracts. 42 This is true only of the Contract of Lease entered into on
23 September 1987 which the REPUBLIC did not approve. RODIL neither alleged nor proved that
such approval was made known to it. The so-called approval of the lease contract was merely stated
in an internal memorandum of Secretary De Jesus addressed to Director Factora. 43 This is evident
from the fact that Secretary De Jesus, in his letter, asked Factora to duly execute a lease contract
and forward it to his office for approval. 44 The consequences of this fact are clear. The Civil Code
provides that no contract shall arise unless acceptance of the contract is communicated to the offeror.
45 Until that moment, there is no real meeting of the minds, no concurrence of offer and acceptance,
hence, no contract. 46

However, the same is not true of the contracts of 18 May 1992 and 25 May 1992. As argued by
RODIL, these contracts are not proscribed by law; neither is there a law prohibiting the execution of a
contract with provisions that are retroactive. Where there is nothing in a contract that is contrary to
law, morals, good customs, public policy or public order, the validity of the contract must be
sustained. 47

The Court of Appeals invalidated the contracts because they were supposedly executed in violation of
a temporary restraining order issued by the Regional Trial Court. 48 The appellate court however
failed to note that the order restrains the REPUBLIC from awarding the lease contract only as regards
respondent ASSOCIATION but not petitioner RODIL. While a temporary restraining order was indeed
issued against RODIL, it was issued only on 25 May 1992 or after the assailed contracts were
entered into. As correctly stated by petitioner, one cannot enjoin an act already fait accompli. 49
Private respondents argue that the "renewal contract" cannot "renew" a void contract. However, they
could cite no legal basis for this assertion. It would seem that respondents consider the renewal
contract to be a novation of the earlier lease contract of 23 September 1987. However, novation is
never presumed. 50 Also, the title of a contract does not determine its nature. On the contrary, it is
the specific provisions of the contract which dictate its nature. 51 Furthermore, where a contract is
susceptible of two (2) interpretations, one that would make it valid and another that would make it
invalid, the latter interpretation is to be adopted. 52 The assailed agreement of 18 May 1992,
"Renewal of Contract of Lease," merely states that the term of the contract would be for ten (10)
years starting 1 September 1987. This is hardly conclusive of the existence of an intention by the
parties to notate the contract of 23 September 1987. Nor can it be argued that there is an implied
novation for the requisite incompatibility between the original contract and the subsequent one is not
present. 53 Based on this factual milieu, the presumption of validity of contract cannot be said to have
been overturned.chanrob1es virtua1 1aw 1ibrary

Respondent ASSOCIATION claims that the Decision of the Office of the President declaring null and
void the lease contracts of 18 May 1992 and 25 May 1992 should be counted in its favor.

We do not agree. The contention does not hold water. It is well-settled that a court’s judgment in a
case shall not adversely affect persons who were not parties thereto.

Respondent ASSOCIATION finally argues that the 18 May 1992 and 25 May 1992 contracts can be
considered rescissible because they concern property under litigation and were entered into without
the knowledge and approval of the litigants or of competent judicial authority. 54 Civil Case No. 87-
42323 involved an action for specific performance and damages filed by RODIL against the
REPUBLIC and the ASSOCIATION. The right to file the action for rescission arises in favor of the
plaintiff when the defendant enters into a contract over the thing under litigation without the
knowledge and approval of the plaintiff or the court. The right of action therefore arose in favor of
petitioner RODIL and not respondent ASSOCIATION.

Having preliminarily dealt with the validity of the lease contracts, we now proceed to resolve the issue
raised by respondent ASSOCIATION with regard to its counterclaim.

The ASSOCIATION argues that its counterclaim should not have been dismissed. On this point, we
agree. The requisites for the application of Rule 17 of the Rules of Civil Procedure are clearly present.
55 The counterclaim is necessarily connected with the transaction that is the subject matter of the
claim. In malicious prosecution, there must be proof that the prosecution was prompted by a sinister
design to vex and humiliate a person, and that it was initiated deliberately by the defendant knowing
that his charge was false and groundless. 56 A determination of whether the charge is groundless
would necessarily involve an analysis of whether the action instituted by RODIL is meritorious. The
counterclaim did not require the presence of third parties over which the court could not acquire
jurisdiction, and that the court had jurisdiction over the subject matter of the counterclaim since the
amount of damages claimed by the ASSOCIATION in its counterclaim amounted to P3,500,000.00,
clearly within the jurisdictional amount for the Regional Trial Court under BP 129.
However, in the interest of making a final adjudication on an issue which has been pending for
fourteen (14) years, we will rule on the issues raised by the ASSOCIATION in its counterclaim, and
accordingly deny the same, dispensing with any discussion regarding the merits of RODIL’s cause of
action which is clearly neither "false" nor "groundless." Therefore, the elements of malicious
prosecution are absent.chanrob1es virtua1 1aw 1ibrary

As regards the action for unlawful detainer, respondents Bondoc, Bondoc-Esto, Divisoria Footwear
and Chua argue that this should not prosper because RODIL is not in actual possession of the
property and because they are not its sublessees. 57 Their arguments do not convince.

In an action for unlawful detainer the plaintiff need not have been in prior physical possession.
Respondents have admitted that they have not entered into any lease contract with the REPUBLIC
and that their continued occupation of the subject property was merely by virtue of acquiescence. 58
The records clearly show this to be the case. The REPUBLIC merely issued a "temporary occupancy
permit" which was not even in the name of the respondents Bondoc, Bondoc-Esto, Divisoria Footwear
or Chua but of respondent ASSOCIATION. Since the occupation of respondents was merely tolerated
by the REPUBLIC, the right of possession of the latter remained uninterrupted. It could therefore
alienate the same to anyone it chose. Unfortunately for respondents, the REPUBLIC chose to
alienate the subject premises to RODIL by virtue of a contract of lease entered into on 18 May 1992.
Resultantly, petitioner had the right to file the action for unlawful detainer against respondents as one
from whom possession of property has been unlawfully withheld.

Respondents finally argue that petitioner failed to comply with the mandatory provisions of Rule 45 so
that its petition must be dismissed. They allege that petitioner failed to state in its petition that a
motion for reconsideration was filed, the date of filing, when the motion was denied, and the date
when the resolution denying the motion was received.

A cursory review of RODIL’s petition belies respondents’ assertion. All dates required under Rule 45,
Sec. 4, are properly indicated except when the motion for reconsideration was filed. Procedural rules
are required to be followed as a general rule, but they may be relaxed to relieve a litigant of an
injustice not commensurate with the degree of his noncompliance with the procedure required.
Dismissal of appeals purely on technical grounds is frowned upon and the rules of procedure ought
not to be applied in a very rigid, technical sense, for they are adopted to help secure, not override,
substantial justice, and thereby defeat their very aims. The rules have been drafted with the primary
objective of enhancing fair trials and expediting the proper dispensation of justice. As a corollary, if
their application and operation tend to subvert and defeat, instead of promote and enhance its
objective, suspension of the rules is justified. 59 Petitioner did not repeat its error in its later petition
filed under G.R. No. 135537. The oversight must be fashioned with leniency.chanrob1es virtua1 1aw
1ibrary

WHEREFORE, the consolidated petitions are GRANTED. The assailed Decisions of the Court of
Appeals in CA-G.R. Nos. 36381, 37243 and 39919 are REVERSED and SET ASIDE. Accordingly,
the Decisions of the Regional Trial Court, Br. 39, in Civil Cases Nos. 94-70776, 94-71122 and 94-
71123 as well as the Decision of the Regional Trial Court, Br. 23, in Civil Case No. 94-72209 affirming
in toto the Decisions of the MeTC — Br. 28 in Civil Case No. 143301, MeTC — Br. 15 in Civil Case
No. 143216, MeTC — Br. 7 in Civil Case No. 142258, and MeTC — Br. 24 in Civil Case No. 142282-
CV, as herein quoted, and the Orders dated 14 August 1992 and 6 November 1992 of the Regional
Trial Court, Br. 8 in Civil Case No. 87-42323, recognizing the validity and legality of the Renewal of
the Lease Contract dated 18 May 1992 and the Supplemental Contract dated 25 May 1992, are
REINSTATED, AFFIRMED and ADOPTED. Costs against private respondents in both cases.

SO ORDERED.

THIRD DIVISION

[G.R. No. 138053. May 31, 2000.]

CORNELIO M. ISAGUIRRE, Petitioner, v. FELICITAS DE LARA, Respondent.

DECISION

GONZAGA-REYES, J.:

In this petition for review on certiorari under Rule 45 of the 1997 Revised Rules of Civil Procedure,
petitioner Cornelio M. Isaguirre assails the October 5, 1998 decision 1 of the Court of Appeals 2 and
its Resolution promulgated on March 5, 1999.chanrobles.com.ph : red

The antecedent facts of the present case are as follows:chanrob1es virtual 1aw library

Alejandro de Lara was the original applicant-claimant for a Miscellaneous Sales Application over a
parcel of land identified as portion of Lot 502, Guianga Cadastre, filed with the Bureau of Lands on
January 17, 1942 and with an area of 2,342 square meters. Upon his death, Alejandro de Lara was
succeeded by his wife — respondent Felicitas de Lara, as claimant. On November 19, 1954, the
Undersecretary of Agriculture and Natural Resources amended the sales application to cover only
1,600 square meters. Then, on November 3, 1961, by virtue of a decision rendered by the Secretary
of Agriculture and Natural Resources dated November 19, 1954, a subdivision survey was made and
the area was further reduced to 1,000 square meters. On this lot stands a two-story residential-
commercial apartment declared for taxation purposes under TD 43927 in the name of respondent’s
sons — Apolonio and Rudolfo, both surnamed de Lara.chanroblesvirtuallawlibrary

Sometime in 1953, respondent obtained several loans from the Philippine National Bank. When she
encountered financial difficulties, respondent approached petitioner Cornelio M. Isaguirre, who was
married to her niece, for assistance. On February 10, 1960, a document denominated as a "Deed of
Sale and Special Cession of Rights and Interests" was executed by respondent and petitioner,
whereby the former sold a 250 square meter portion of Lot No. 502, together with the two-story
commercial and residential structure standing thereon, in favor of petitioner, for and in consideration
of the sum of P5,000.

Sometime in May 1968 Apolonio and Rodolfo de Lara filed a complaint against petitioner for recovery
of ownership and possession of the two-story building. 3 However, the case was dismissed for lack of
jurisdiction.

On August 21, 1969, petitioner filed a sales application over the subject property on the basis of the
deed of sale. His application was approved on January 17, 1984, resulting in the issuance of Original
Certificate of Title No. P-11566 on February 13, 1984, in the name of petitioner. Meanwhile, the sales
application of respondent over the entire 1,000 square meters of subject property (including the 250
square meter portion claimed by petitioner) was also given due course, resulting in the issuance of
Original Certificate of Title No. P-13038 on June 19, 1989, in the name of Respondent. 4

Due to the overlapping of titles, petitioner filed an action for quieting of title and damages with the
Regional Trial Court of Davao City against respondent on May 17, 1990. The case was docketed as
Civil Case No. 20124-90. After trial on the merits, the trial court rendered judgment on October 19,
1992, in favor of petitioner declaring him to be the lawful owner of the disputed property. However,
the Court of Appeals reversed the trial court’s decision, holding that the transaction entered into by
the parties, as evidenced by their contract, was an equitable mortgage, not a sale. 5 The appellate
court’s decision was based on the inadequacy of the consideration agreed upon by the parties, on its
finding that the payment of a large portion of the "purchase price" was made after the execution of the
deed of sale in several installments of minimal amounts; and finally, on the fact that petitioner did not
take steps to confirm his rights or to obtain title over the property for several years after the execution
of the deed of sale. As a consequence of its decision, the appellate court also declared Original
Certificate of Title No. P-11566 issued in favor of petitioner to be null and void. On July 8, 1996, in a
case docketed as G. R. No. 120832, this Court affirmed the decision of the Court of Appeals and on
September 11, 1996, we denied petitioner’s motion for reconsideration.chanrobles virtuallawlibrary

On May 5, 1997. respondent filed a motion for execution with the trial court, praying for the immediate
delivery of possession of the subject property, which motion was granted on August 18, 1997. On
February 3, 1998, respondent moved for a writ of possession, invoking our ruling in G. R. No. 120832
Petitioner opposed the motion, asserting that he had the right of retention over the property until
payment of the loan and the value of the improvements he had introduced on the property. On March
12, 1998, the trial court granted respondent’s motion for writ of possession. Petitioner’s motion for
reconsideration was denied by the trial court on May 21, 1998. Consequently, a writ of possession
dated June 16 1998, together with the Sheriff’s Notice to Vacate dated July 7, 1998, were served
upon petitioner.

Petitioner filed with the Court of Appeals a special civil action for certiorari and prohibition with prayer
for a temporary restraining order or preliminary injunction to annul and set aside the March 12 1998
and May 21, 1998 orders of the trial court, including the writ of possession dated June 16, 1998 and
the sheriff’s notice to vacate dated July 7, 1998. 6

The appellate court summarized the issues involved in the case as follows: (1) whether or not the
mortgagee in an equitable mortgage has the right to retain possession of the property pending actual
payment to him of the amount of indebtedness by the mortgagor; and (b) whether or not petitioner
can be considered a builder in good faith with respect to the improvements he made on the property
before the transaction was declared to be an equitable mortgage.chanrobles.com : law library

The Court of Appeals held that petitioner was not entitled to retain possession of the subject property.
It said that —

. . . the mortgagee merely has to annotate his claim at the back of the certificate of title in order to
protect his rights against third persons and thereby secure the debt. There is therefore no necessity
for him to actually possess the property. Neither should a mortgagee in an equitable mortgage fear
that the contract relied upon is not registered and hence, may not operate as a mortgage to justify its
foreclosure. In Feliza Zubiri v. Lucio Quijano, 74 Phil 47, it was ruled "that when a contract . . . is held
as an equitable mortgage, the same shall be given effect as if it had complied with the formal
requisites of mortgage. . . . by its very nature the lien thereby created ought not to be defeated by
requiring compliance with the formalities necessary to the validity of a voluntary real estate mortgage,
as long as the land remains in the hands of the petitioner (mortgagor) and the rights of innocent
parties are not affected."cralaw virtua1aw library

Proceeding from the foregoing petitioner’s imagined fears that his lien would be lost by surrendering
possession are unfounded.

In the same vein, there is nothing to stop the mortgagor de Lara from acquiring possession of the
property pending actual payment of the indebtedness to petitioner. This does not in anyway endanger
the petitioner’s right to security since, as pointed out by private respondents, the petitioner can always
have the equitable mortgage annotated in the Certificate of Title of private respondent and pursue the
legal remedies for the collection of the alleged debt secured by the mortgage. In this case, the
remedy would be to foreclose the mortgage upon failure to pay the debt within the required
period.chanrobles.com : virtuallawlibrary

It is unfortunate however, that the Court of Appeals, in declaring the transaction to be an equitable
mortgage failed to specify in its Decision the period of time within which the private respondent could
settle her account, since such period serves as the reckoning point by which foreclosure could ensue.
As it is, petitioner is now a dilemma as to how he could enforce his rights as a mortgagee. . . .

Hence, this Court, once and for all resolves the matter by requiring the trial court to determine the
amount of total indebtedness and the period within which payment shall be made.

Petitioner’s claims that he was a builder in good faith and entitled to reimbursement for the
improvements he introduced upon the property were rejected by the Court of Appeals. It held that
petitioner knew, or at least had an inkling, that there was a defect or flaw in his mode of acquisition.
Nevertheless, the appellate court declared petitioner to have the following rights:chanrob1es virtual
1aw library

. . . He is entitled to reimbursement for the necessary expenses which he may have incurred over the
property, in accordance with Art. 526 and Art. 452 of the Civil Code. Moreover, considering that the
transaction was merely an equitable mortgage, then he is entitled to payment of the amount of
indebtedness plus interest, and in the event of non-payment to foreclose the mortgage. Meanwhile,
pending receipt of the total amount of debt, private respondent is entitled to possession over the
disputed property.chanrobles.com : virtuallawlibrary

The case was finally disposed of by the appellate court in the following manner:chanrob1es virtual
1aw library

WHEREFORE, the Petition is hereby DISMISSED, and this case is ordered remanded to the
Regional Trial Court of Davao City for further proceedings, as follows:chanrob1es virtual 1aw library

1) The trial court shall determine —

a) The period within which the mortgagor must pay his total amount of indebtedness

b) The total amount of indebtedness owing the petitioner-mortgagee plus interest computed from the
time when the judgment declaring the contract to be an equitable mortgage become final.

c) The necessary expenses incurred by petitioner over the property. 7

On March 5, 1999, petitioner’s motion for reconsideration was denied by the appellate court. 8 Hence,
the present appeal wherein petitioner makes the following assignment of errors:chanrob1es virtual
1aw library

A. THE HONORABLE COURT OF APPEALS ERRED IN NOT RULING THAT THE RTC ACTED
WITHOUT OR IN EXCESS OF ITS JURISDICTION OR WITH GRAVE ABUSE OF DISCRETION’
AMOUNTING TO LACK OR EXCESS OF JURISDICTION IN ISSUING A WRIT OF POSSESSION IN
FAVOR OF RESPONDENTchanrobles.com.ph:red

A.1 The RTC patently exceeded the scope of its authority and acted with grave abuse of discretion in
ordering the immediate delivery of possession of the Property to respondent as said order exceeded
the parameters of the final and executory decision and constituted a variance thereof.

B. THE HONORABLE COURT OF APPEALS ERRED IN HOLDING, THAT PETITIONER IS NOT

ENTITLED TO THE POSSESSION OF THE PROPERTY PRIOR TO THE PAYMENT OF
RESPONDENT’S MORTGAGE LOAN.

C. THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT PETITIONER WAS NOT A
BUILDER IN GOOD FAITH

D. THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT PETITIONER IS ENTITLED

TO INTEREST COMPUTED ONLY FROM THE TIME WHEN THE JUDGMENT DECLARING THE
CONTRACT TO BE AN EQUITABLE MORTGAGE BECAME FINAL. 9

Basically, petitioner claims that he is entitled to retain possession of the subject property until
payment of the loan and the value of the necessary and useful improvements he made upon such
property. 10 According to petitioner, neither the Court of Appeals’ decision in G.R. CV No. 42065 nor
this Court’s decision in G.R. No. 120832 ordered immediate delivery of possession of the subject
property to Respondent.

The dispositive portion of the March 31, 1995 decision of the Court of Appeals in G.R. CV No. 42065,
which was affirmed by this Court, provides that —

IN VIEW OF ALL THE FOREGOING, the judgment appealed from is REVERSED and SET ASIDE
and a new one entered: (l) dismissing, the complaint; (2) declaring the "Document of Sale and Special
Cession of Rights and Interests" (Exhibit B) dated February 10, 1960, to be an equitable mortgage
not a sale; (3) upholding the validity of OCT No. P-13038 in the name of Felicitas de Lara; and (3)
declaring null and void OCT No. P-11566 in the name of plaintiff Cornelio Isaguirre. All other
counterclaims for damages are likewise dismissed Costs against the appellee. 11chanrobles.com :
virtual law library

Petitioner argues that the abovementioned decision merely settled the following matters: (1) that the
transaction between petitioner and respondent was not a sale but an equitable mortgage; (2) that
OCT No. P-13038 in the name of respondent is valid; and (3) that OCT No. P-11566 in the name of
petitioner is null and void. Since the aforementioned decision did not direct the immediate ouster of
petitioner from the subject property and the delivery thereof to respondent, the issuance of the writ of
possession by the trial court on June 16, 1998 constituted an unwarranted modification or addition to
the final and executory decision of this Court in G.R. No. 120832. 12

We do not agree with petitioner’s contentions. On the contrary, the March 31, 1995 decision of the
appellate court, which was affirmed by this Court on July 8, 1996, served as more than adequate
basis for the issuance of the writ of possession in favor of respondent since these decisions affirmed
respondent’s title over the subject property. As the sole owner, respondent has the right to enjoy her
property, without any other limitations than those established by law. 13 Corollary to such right,
respondent also has the right to exclude from the possession of her property any other person to
whom she has not transmitted such property. 14

It is true that, in some instances, the actual possessor has some valid rights over the property
enforceable even against the owner thereof, such as in the case of a tenant or lessee. 15 Petitioner
anchors his own claim to possession upon his declared status as a mortgagee. In his Memorandum,
he argues that —

4.8 It was respondent who asserted that her transfer of the Property to petitioner was by way of an
equitable mortgage and not by sale. After her assertion was sustained by the Courts, respondent
cannot now ignore or disregard the legal effects of such judicial declaration regarding the nature of
the transaction.

x       x       x

4.13 Having delivered possession of the Property to petitioner as part of the constitution of the
equitable mortgage thereon, respondent is not entitled to the return of the Property unless and until
the mortgage loan is discharged by full payment thereof. Petitioner’s right as mortgagee to retain
possession of the Property so long as the mortgage loan remains unpaid is further supported by the
rule that a mortgage may not be extinguished even though then mortgagor-debtor may have made
partial payments on the mortgage loan:chanrobles.com : virtuallawlibrary

"ARTICLE 2089. A pledge or mortgage is indivisible, even though the debt may be divided among the
successors in interest of the debtor or the creditor.

"Therefore, the debtor’s heir who has paid a part of the debt cannot ask for the proportionate
extinguishment of the pledge or mortgage as long as the debt is not completely satisfied.

"Neither can the creditor’s heir who has received his share of the debt return the pledge or cancel the
mortgage, to the prejudice of the other heirs who have not been paid." (Emphasis supplied.)

x       x       x
4.14 To require petitioner to deliver possession of the Property to respondent prior to the full payment
of the latter’s mortgage loan would be equivalent to the cancellation of the mortgage. Such effective
cancellation would render petitioner’s rights ineffectual and nugatory and would constitute
unwarranted judicial interference.

x       x       x

4.16 The fact of the present case show that respondent delivered possession of the Property to
petitioner upon the execution of the Deed of Absolute Sale and Special Cession of Rights and
Interest dated 10 February 1960. Hence, transfer of possession of the Property to petitioner was an
essential part of whatever agreement the parties entered into, which, in this case, the Supreme Court
affirmed to be an equitable mortgage.

x       x       x

4.19 Petitioner does not have the mistaken notion that the mortgagee must be in actual possession of
the mortgaged property in order to secure the debt. However, in this particular case, the delivery of
possession of the Property was an integral part of the contract between petitioner and Respondent.
After all, it was supposed to be a contract of sale. If delivery was not part of the agreement entered
into by the parties in 1960, why did respondent surrender possession thereof to petitioner in the first
place?chanrobles.com : virtual law library

4.20 Now that the Courts have ruled that the transaction was not a sale but a mortgage, petitioner’s
entitlement to the possession of the Property should be deemed as one of the provisions of the
mortgage, considering that at the time the contract was entered into, possession of the Property was
likewise delivered to petitioner. Thus, until respondent has fully paid her mortgage loan, petitioner
should be allowed to retain possession of the subject property. 16

Petitioner’s position lacks sufficient legal and factual moorings.

A mortgage is a contract entered into in order to secure the fulfillment of a principal obligation. 17 It is
constituted by recording the document in which it appears with the proper Registry of Property,
although, even if it is not recorded, the mortgage is nevertheless binding between the parties. 18
Thus, the only right granted by law in favor of the mortgagee is to demand the execution and the
recording of the document in which the mortgage is formalized. 19 As a general rule, the mortgagor
retains possession of the mortgaged property since a mortgage is merely a lien and title to the
property does not pass to the mortgagee.20 However, even though a mortgagee does not have
possession of the property, there is no impairment of his security since the mortgage directly and
immediately subjects the property upon which it is imposed, whoever the possessor may be, to the
fulfillment of the obligation for whose security it was constituted. 21 If the debtor is unable to pay his
debt, the mortgage creditor may institute an action to foreclose the mortgage, whether judicially or
extrajudicially, whereby the mortgaged property will then be sold at a public auction and the proceeds
therefrom given to the creditor to the extent necessary to discharge the mortgage loan. .Apparently
petitioner’s contention that" [t]o require [him] . . . to deliver possession of the Property to respondent
prior to the full payment of the latter’s mortgage loan would be equivalent to the cancellation of the
mortgage" is without basis. Regardless of its possessor, the mortgaged property may still be sold,
with the prescribed formalities, in the event of the debtor’s default in the payment of his loan
obligation.
Moreover, this Court cannot find any justification in the records to uphold petitioner’s contention that
respondent delivered possession of the subject property upon the execution of the "Deed of Sale and
Special Cession of Rights and Interests" on February 10, 1960 and that the transfer of possession to
petitioner must therefore be considered an essential part of the agreement between the parties. This
self-serving assertion of petitioner was directly contradicted by respondent in her pleadings. 22
Furthermore, nowhere in the Court of Appeals’ decisions promulgated on March 31, 1995 (G.R. CV
No. 42065) and on October 5, 1998 (G.R. SP No. 48310), or in our own decision promulgated on July
8, 1996 (G.R. No. 120832) was it ever established that the mortgaged properties were delivered by
respondent to petitioner.chanrobles.com : virtual law library

In Alvano v. Batoon, 23 this Court held that" [a] simple mortgage does not give the mortgagee a right
to the possession of the property unless the mortgage should contain some special provision to that
effect." Regrettably for petitioner, he has not presented any evidence, other than his own gratuitous
statements, to prove that the real intention of the parties was to allow him to enjoy possession of the
mortgaged property until full payment of the loan.

Therefore, we hold that the trial court correctly issued the writ of possession in favor of Respondent.
Such writ was but a necessary consequence of this Court’s ruling in G.R No. 120832 affirming the
validity of the original certificate of title (OCT No. P-13038) in the name of respondent Felicitas de
Lara, while at the same time nullifying the original certificate of title (OCT No. P-11566) in the name of
petitioner Cornelio Isaguirre Possession is an essential attribute of ownership; thus, it would be
redundant for respondent to go back to court simply to establish her right to possess subject property.
Contrary to petitioner’s claims, the issuance of the writ of possession by the trial court did not
constitute an unwarranted modification of our decision in G.R. No. 120832, but rather, was necessary
complement thereto. 24 It bears stressing that a judgment is not confined to what appears upon the
face of the decision, but also those necessarily included therein or necessary thereto.25cralaw:red

With regard to the improvements made on the mortgaged property, we confirm the Court of Appeals’
characterization of petitioner as a possessor in bad faith. Based on the factual findings of the
appellate court, it is evident that petitioner knew from the very beginning that there was really no sale
and that he held respondent’s property as mere security for the payment of the loan obligation
Therefore, petitioner may claim reimbursement only for necessary expenses; however, he is not
entitled to reimbursement for any useful expenses 26 which he may have incurred. 27

Finally, as correctly pointed out by the Court of Appeals., this case should be remanded to the
Regional Trial Court of Davao City for a determination of the total amount of the loan, the necessary
expenses incurred by petitioner, and the period within which respondent must pay such amount. 28
However, no interest is due on the loan since there has been no express stipulation in writing. 29

WHEREFORE, the assailed Decision of the Court of Appeals dated October 5, 1998 and its
Resolution dated March 5, 1999 are hereby AFFIRMED. Respondent is entitled to delivery of
possession of the subject property. This case is hereby REMANDED to the trial court for
determination of the amount of the loan, the necessary expenses incurred by petitioner and the
period within which the respondent must pay the same.chanroblesvirtual|awlibrary

SO ORDERED.

[G.R. NO. 146082 : July 30, 2004]

MELCHOR CUSTODIO, Petitioner, v. ROSENDO F. CORRADO, Respondent.

DECISION

QUISUMBING, J.:

For review on certiorari is the Decision1 dated July 28, 2000 of the Court of Appeals (CA) in CA-G.R.
SP No. 45764, and its Resolution2 dated November 13, 2000 denying the motion for reconsideration.
The CA affirmed the Decision3 dated September 9, 1997 of the Regional Trial Court (RTC) of
Balayan, Batangas, Branch 9, in RTC Appeal Case No. 3301, which reversed the Decision 4 dated
August 19, 1996 of the Municipal Trial Court (MTC) of Calatagan, Batangas, dismissing respondent
Rosendo F. Corrados Complaint for Recovery of Possession and Ownership with Injunction and
Damages, in Civil Case No. 120.

The facts and antecedent proceedings, as culled from records, are as follows: On July 12, 1993,
respondent Rosendo F. Corrado filed an ejectment 5 case against petitioner Melchor Custodio with the
MTC of Calatagan, Batangas, docketed as Civil Case No. 116. It was dismissed by the MTC on
March 15, 1994 on the grounds that (1) it had no jurisdiction as the complaint is a possessory suit, (2)
there was no barangay conciliation, and (3) the plaintiff failed to prove his case by preponderance of
evidence. Upon appeal, the RTC of Balayan, Batangas affirmed the appealed decision docketed as
RTC Appealed Case No. 3099.6 cralawred

On January 2, 1995, respondent filed with the same MTC another complaint for recovery of
possession and damages against petitioner, docketed as Civil Case No. 120, 7 and which is the core
case subject of the present petition.

The Complaint avers that respondent Rosendo F. Corrado (then plaintiff) is the registered owner of a
residential lot in Barangay Balitoc, Calatagan, Batangas covered by TCT No. T-21342.He claims that
more than a year prior to the institution of the complaint, petitioner Melchor Custodio (then
defendant), under a dubious claim of tenancy relationship with respondents father, Crisanto Corrado
and without his knowledge and consent, demolished his old residential house on the said lot and
constructed a two-bedroom bungalow where petitioner and his family now reside.

In his Answer,8 petitioner Melchor Custodio alleged that he is a legitimate leasehold tenant of

Crisanto Corrado since 1961 up to the present. He further claimed that respondents father consented
to the construction of the bungalow thirty (30) years ago when the subject lot was still owned by
respondents father and before it was transferred to respondent. As affirmative defenses, he
alleged inter alia that: (a) the complaint states no cause of action; (b) the
required barangay conciliation under P.D. 15089 was not complied with; and (c) the present complaint
is now barred on the ground of res judicata and is violative of the rule on forum shopping.

The parties agreed on the following stipulation of facts during the pre-trial conference

1.That Transfer Certificate of Title No. T-21342 covering the lot in question is in the name of plaintiff
Rosendo Corrado; 2.That the defendant has never been a tenant of the plaintiff;

3.That the construction of the two-bedroom bungalow structure on the subject premises was without
the consent of the plaintiff; library

4.That the dismissal of Civil Case No. 116 which involved the same parties was by reason of alleged
non-compliance with Presidential Decree No. 1508;chanroblesvirtuallawlibrary
5.That subject property is located in Barangay Balitoc, Calatagan, and not in Barangay Gulod,
Calatagan;ch

6.That no Barangay Certification is attached to the instant complaint pursuant to Presidential Decree
No. 1508;chanroblesvirtuallawlibrary

7.That the Decision of the Municipal Trial Court was appealed before the Regional Trial Court which
was docketed as RTC Appealed Case No. 3099. 10 cralawred

After trial, the MTC rendered judgment dismissing the Complaint, the dispositive portion of which
reads as follows:ch

WHEREFORE, judgment is hereby rendered DISMISSING the complaint without pronouncement as

to cost.

SO ORDERED.11 c

The MTC initially resolved several issues and ruled inter alia that: (a) It has jurisdiction over the
complaint which is an accion publiciana case although denominated as recovery of possession and
ownership; (b) Prior compliance with barangay conciliation is not required because the parties reside
in non-adjoining barangays of different municipalities with respondent residing
in Barangay Binubusan, Municipality of Lian, Batangas, and petitioner residing in Barangay Balitoc,
Calatagan and the complaint included a prayer for preliminary injunction and TRO; and (c) The filing
of the present Civil Case No. 120 does not constitute forum shopping and the judgment in the
previous ejectment case in Civil Case No. 116 will not amount to res judicata in the present case
because there was no judgment on the merits in Civil Case No. 116. The MTC noted that there was
no adjudication as to the rights of the parties, particularly the determination of their possessory rights
in Civil Case No. 116 as its dismissal was anchored on respondents non-compliance with the
required barangay conciliation under P.D. No. 1508 and on respondents failure to allege the particular
date of deprivation of possession required for the court to determine whether the case was filed within
the one (1) year period.

However, the MTC finds that the petitioners continued stay on respondents property has factual and
legal basis since evidence on record, such as milling tickets, convincingly show that petitioner has
been a tenant of respondents father, Crisanto Corrado, cultivating the latters three (3) -hectare
sugarcane land, including the subject lot, since 1961. It did not give credence to respondents claim of
ignorance to the tenancy relationship between petitioner and his father since the latest milling tickets
showed that petitioner continued working on the subject lot even after it was transferred to
respondents name.

Respondent appealed the MTC decision to the RTC, which set aside and reversed the MTC decision,
the dispositive portion of which reads as follows:c

WHEREFORE, judgment is hereby rendered REVERSING and SETTING ASIDE the decision of the
lower court dated August 12, 1996 and a new one entered declaring the plaintiff as the true and
absolute owner of the residential lot in question; ordering the defendant to deliver the possession
thereof to the plaintiff and to vacate the same, with costs against the defendant-appellee.

SO ORDERED.12 

In reversing the MTC, the RTC found merit in respondents allegation that petitioner cannot claim any
right to possess respondents lot on the premise that he is an alleged tenant of respondents father.
The RTC found it unacceptable for the MTC to rule that respondent is bound by the action of his
father in allowing petitioner to construct a house on the subject lot and occupy the same. The RTC
stressed that the parties had stipulated during the pre-trial that the subject lot is registered under the
name of respondent and that petitioner is not a tenant of respondent. Further, respondent acquired
the said lot in 1970 not from his father but from the government, which was the registered owner
since 1909. Thus, respondents father never acquired any right over the said land, hence, he has no
right to transmit or alienate the land to anyone. The RTC further stated that petitioners alleged
possession, if any, would have been only by tolerance by the government and he would have acted
promptly at the time respondent purchased the lot if he truly believed that he had the legal right over
the lot. Finally, the RTC clarified that contrary to the MTCs ruling, the case is not merely an accion
publiciana, where only physical possession is involved, but one of accion reinvindicatoria because
respondent claimed recovery of full possession as an absolute owner. The RTC concluded that since
respondent is the absolute owner of the property, the MTC cannot bar him from recovering
possession based on spurious authority granted by a third party who is not an owner.

Petitioner filed a Petition for Review in the Court of Appeals which affirmed the RTC decision. The
dispositive portion of the decision reads as follows:c

WHEREFORE, we AFFIRM the RTC decision dated September 9, 1997 in RTC Appeal Case No.
3301.

SO ORDERED.13 cralawred

The CA ruled that the principle of res judicata is inapplicable because there is no identity of causes of
action between Civil Case Nos. 116 and 120. It stressed that the former is an ejectment suit which
was dismissed for failure of respondent to state the date of deprivation of possession while the latter
is for recovery of possession, and not ejectment. It also brushed aside the alleged tenancy
relationship between petitioner and respondent, noting that the milling tickets were issued for
respondents father as the planter and petitioner as the tenant, but without any evidence showing that
they referred to the subject lot and without any indication that petitioner was getting his share from the
subject lot.

Petitioner filed a Motion for Reconsideration, which was denied by the Court of Appeals.

Hence, this petition submitting the following issues for our resolution:

WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT CIVIL
CASE NO. 116 AND CIVIL CASE NO. 120 HAVE TWO (2) SEPARATE CAUSES OF ACTION
DESPITE THE FACT THAT WHAT DETERMINES THE NATURE OR CAUSE OF THE ACTION IS
NOT THE CAPTION OF THE COMPLAINT BUT THE MATERIAL ALLEGATIONS CONTAINED
THEREIN.

II

WHETHER OR NOT THE HONORABLE COURT OF APPEALS ALSO ERRED IN NOT TAKING
INTO CONSIDERATION THE FACT THAT FOR RES JUDICATA TO APPLY, SUBSTANTIAL AND
NOT ABSOLUTE IDENTITY OF CAUSES OF ACTION WILL SUFFICE.

III
WHETHER OR NOT THE PETITIONER HAS AMPLY ESTABLISHED BY A PREPONDERANCE OF
EVIDENCE A TENANCY RELATIONSHIP WITH RESPONDENT AND HIS FATHER, CRISANTO
CORRADO.14 cralawred

In our view, the relevant issues for our resolution are: (a) whether or not the principle of res judicata is
applicable in this case; and (b) whether the alleged tenancy relationship between petitioner with
respondent and the latters father was established by preponderance of evidence.

On the first issue, petitioner insists that the principle of res judicata is applicable in this case since the
material allegations in the complaints of Civil Case Nos. 116 and 120 would clearly reveal an identity
of cause of action.Citing jurisprudence, it argued that what should control in determining the cause of
action are the averments in both complaints seeking recovery of possession of the subject lot with the
ultimate goal of dispossessing and ejecting petitioner from the property and restoring it to respondent
and not the different captions of the two complaints. He argued further that the application of the
principle of res judicata only requires substantial and not absolute identity of causes of action. For his
part, respondent countered that while there may be identity of parties and subject matter, the causes
of action are not identical in Civil Case Nos. 116 and 120 as the former is one for ejectment to
recover material possession while the latter is one for recovery of possession and ownership of the
subject land.

We find petitioners contentions bereft of merit. The principle of res judicata is inapplicable because
Civil Case No. 116 for ejectment was not decided on the merits and its cause of action is different
from Civil Case No. 120 for recovery of possession and ownership.

For res judicata to bar the institution of a subsequent action, the following requisites must concur: (1)
the former judgment must be final; (2) it must have been rendered by a court having jurisdiction of the
subject matter and the parties; (3) it must be a judgment on the merits; and (4) there must be,
between the first and second actions, (a) identity of parties, (b) identity of subject matter, and (c)
identity of cause of action.15 cralawred

In the present case, the judgment in Civil Case No. 116 was not on the merits. A judgment on the
merits is one rendered after argument and investigation, and when there is determination which party
is right, as distinguished from a judgment rendered upon some preliminary or formal or merely
technical point, or by default and without trial. 16 Thus, a judgment on the merits is one wherein there
is an unequivocal determination of the rights and obligations of the parties with respect to the causes
of action and the subject matter of the case. 17 In this case, the MTCs dismissal of Civil Case No. 116
was anchored on its lack of jurisdiction and lack of proof of the date of demand without determining
and resolving who has the right of possession between petitioner and respondent. Verily, the case
was not resolved on the merits but was dismissed on technical points. A judgment dismissing an
action for want of jurisdiction cannot operate as res judicata on the merits.18 cralawred

There is also no identity of causes of action between Civil Case Nos. 116 and 120. We agree with the
findings of the CA which we find no reason to set aside, to wit:chanroblesvirtua1awlibrary

In Civil Case No. 116, the case as found by the MTC is an ejectment suit and for failure of plaintiff-
private respondent to state the date when he was deprived of his possession, the court held that it did
not entitle him to file an ejectment suit against herein defendant-petitioner. In Civil Case No. 120, the
cause of action is for recovery of possession and not ejectment.These are two separate causes of
action and therefore the principle of res judicata does not apply to the present case.19 cralawred

Indeed, an ejectment case such as Civil Case No. 116, involves a different cause of action from
an accion publiciana or accion reinvindicatoria, such as Civil Case No. 120, and the judgment of the
former shall not bar the filing of another case for recovery of possession as an element of ownership.
A judgment in a forcible entry or detainer case disposes of no other issue than possession and
establishes only who has the right of possession, but by no means constitutes a bar to an action for
determination of who has the right or title of ownership. 20 Incidentally, we agree with the findings of
the RTC that Civil Case No. 120 is not an accion publiciana but more of an accion reinvindicatoria as
shown by the respondents allegation in the complaint that he is the registered owner of the subject lot
and that the petitioner had constructed a bungalow thereon and had been continuously occupying the
same since then.

The distinction between a summary action of ejectment and a plenary action for recovery of
possession and/or ownership of the land is well-settled in our jurisprudence. What really distinguishes
an action for unlawful detainer from a possessory action (accion publiciana) and from a
reinvindicatory action (accion reinvindicatoria) is that the first is limited to the question of possession
de facto. An unlawful detainer suit (accion interdictal) together with forcible entry are the two forms of
an ejectment suit that may be filed to recover possession of real property. Aside from the summary
action of ejectment, accion publiciana or the plenary action to recover the right of possession
and accion reinvindicatoria or the action to recover ownership which includes recovery of possession,
make up the three kinds of actions to judicially recover possession. 21 cralawred

Further, it bears stressing that the issue on the applicability of res judicata to the circumstance
obtaining in this case is far from novel and not without precedence. In Vda. de Villanueva v. Court of
Appeals ,22 we held that a judgment in a case for forcible entry which involved only the issue of
physical possession (possession de facto) and not ownership will not bar an action between the same
parties respecting title or ownership, such as an accion reinvindicatoria or a suit to recover
possession of a parcel of land as an element of ownership, because there is no identity of causes of
action between the two.

Anent the second issue, petitioner contends that tenancy relationship between him and respondents
father was amply supported by evidence. It must be stressed that this is a factual issue requiring re-
evaluation and examination of the probative value of evidences presented which is not proper in a
Petition for Review on Certiorari . Besides, this issue had already been squarely resolved by the
Court of Appeals and we find no impelling reason to set it aside. According to the Court of Appeals,
the milling tickets only showed that they were issued to Crisanto Corrado but did not show whether
such tickets referred to the same lot in question. In Petitions for Review on Certiorari , the jurisdiction
of the Supreme Court in cases brought before it from the Court of Appeals is limited to reviewing
questions of law. For a question to be one of law, it must involve no examination of the probative
value of the evidence presented by the litigants. The findings of fact of the appellate court are
generally conclusive on this Court, which is not a trier of facts. 23 cralawred

At any rate, the issue of tenancy relationship had already been settled during the pre-trial stage
where the parties stipulated that the subject lot is registered in the name of respondent and that
petitioner was never a tenant of respondent. Petitioner and respondent are bound by such
stipulations which are deemed settled and need not be proven during the trial. Pre-trial is a
procedural device intended to clarify and limit the basic issues between the parties. It thus paves the
way for a less cluttered trial and resolution of the case. Its main objective is to simplify, abbreviate
and expedite the trial, or totally dispense with it. Prescinding therefrom, it is a basic legal precept that
the parties are bound to honor the stipulations they made during the pre-trial. 24 cralawred

WHEREFORE, the petition is DENIED for lack of merit, and the assailed Decision dated July 28,
2000 and Resolution dated November 13, 2000 of the Court of Appeals in CA-G.R. SP No. 45764 are
AFFIRMED. No pronouncement as to costs.SO ORDERED.
PACENCIO ABEJARON, as represented by his Attorney-in-Fact, ALEJANDRO
ABEJARON, Petitioner, v. FELIX NABASA and the COURT OF APPEALS, Respondents.
DECISION*
PUNO, J.:

With the burgeoning population comes a heightened interest in the limited land resources especially
so if, as in the case at bar, one’s home of many years stands on the land in dispute. It comes as no
surprise therefore that while this case involves a small parcel of land, a 118-square meter portion of
Lot 1, Block 5, Psu-154953 in Silway, General Santos City, the parties have tenaciously litigated over
it for more than twenty years.chanrob1es virtua1 1aw 1ibrary

Petitioner Abejaron filed this petition for review on certiorari to annul the respondent court’s Decision
dated April 26, 1988 and Resolution dated July 12, 1988 reversing the trial court’s decision and
declaring respondent Nabasa the owner of the subject lot.

The following facts spurred the present controversy:chanrob1es virtual 1aw library

Petitioner Abejaron avers that he is the actual and lawful possessor and claimant of a 118-square
meter portion of a 175-square meter residential lot in Silway, General Santos City described as "Block
5, Lot 1, Psu-154953, bounded on the North by Road, on the South by Lot 2 of the same Psu, on the
East by Felix Nabasa, and on the West by Road." 1 In 1945, petitioner Abejaron and his family
started occupying the 118-square meter land. At that time, the land had not yet been surveyed. They
fenced the area and built thereon a family home with nipa roofing and a small store. In 1949,
petitioner improved their abode to become a two-storey house measuring 16 x 18 feet or 87.78
square meters made of round wood and nipa roofing. 2 This house, which stands to this day,
occupies a portion of Lot 1, Block 5, Psu-154953 and a portion of the adjoining Lot 2 of the same Psu.
Lot 2 belongs to petitioner’s daughter, Conchita Abejaron-Abellon. In 1950, the small store was
destroyed and in its stead, petitioner Abejaron built another store which stands up to the present. In
1951, he planted five coconut trees on the property in controversy. Petitioner’s wife, Matilde Abejaron,
harvested coconuts from these trees. 3 Petitioner Abejaron also planted banana and avocado trees.
He also put up a pitcher pump. 4 All this time that the Abejaron’s introduced these improvements on
the land in controversy, respondent Nabasa did not oppose or complain about the improvements.

Knowing that the disputed land was public in character, petitioner declared only his house, and not
the disputed land, for taxation purposes in 1950, 1966, 1976, and 1978. 5 The last two declarations
state that petitioner Abejaron’s house stands on Lots 1 and 2, Block 5, Psu 154953. 6 Abejaron paid
taxes on the house in 1955, 1966, and 1981. 7

Petitioner stated that beginning 1955, respondent Nabasa resided on the remaining 57-square meter
portion of Lot 1, Block 5, Psu-154953. 8 Nabasa built his house about four (4) meters away from
petitioner Abejaron’s house. Beatriz Gusila, a neighbor of the Abejarons and the Nabasas confirmed
that when she arrived in Silway in 1949, Nabasa was not yet residing there while Abejaron was
already living in their house which stands to this day.

Before 1974, employees of the Bureau of Lands surveyed the area in controversy. Abejaron merely
watched them do the survey 9 and did not thereafter apply for title of the land on the belief that he
could not secure title over it as it was government property. 10 Without his (Abejaron) knowledge and
consent, however, Nabasa "clandestinely, willfully, fraudulently, and unlawfully applied for and caused
the titling in his name" of the entire Lot 1, Block 5, Psu-154953, including petitioner Abejaron’s 118-
square meter portion. 11 Petitioner imputes bad faith and fraud on the part of Nabasa because in
applying for and causing the titling in his name of Lot 1, Block 5, Psu-154953, Nabasa represented
himself to be the actual and lawful possessor of the entire Lot 1, Block 5, including petitioner
Abejaron’s 118-square meter portion despite knowledge of Abejaron’s actual occupation and
possession of said portion. 12

On September 24, 1974, Nabasa was issued Original Certificate of Title No. P-4140 pursuant to Free
Patent No. (XI-4) 2877 covering Lot 1, Block 5, Psu-154953. As the title included petitioner Abejaron’s
118-square meter portion of the lot, his son, Alejandro Abejaron, representing Matilde Abejaron
(petitioner Abejaron’s wife), filed a protest with the Bureau of Lands, Koronadal, South Cotabato
against Nabasa’s title and application. The protest was dismissed on November 22, 1979 for failure of
Matilde and Alejandro to attend the hearings. 13 Alejandro claims, however, that they did not receive
notices of the hearings. Alejandro filed a motion for reconsideration dated January 10, 1980.
Alejandro also filed a notice of adverse claim on January 14, 1980. Subsequently, he requested the
Bureau of Lands to treat the motion as an appeal considering that it was filed within the 60-day
reglementary period. The motion for reconsideration was endorsed and forwarded by the District
Land Office XI-3 of the Bureau of Lands in Koronadal, Cotabato to the Director of Lands in Manila on
November 24, 1981. 14 But because the appeal had not been resolved for a prolonged period for
unknown reasons, petitioner Abejaron filed on March 12, 1982 an action for reconveyance with
damages against respondent Nabasa before Branch 22, Regional Trial Court of General Santos City.
15 On May 10, 1982, petitioner filed a notice of lis pendens. 16

Abner Lagsub, geodetic engineer, testified for the petitioner. Lagsub stated that on March 30, 1980,
Alejandro Abejaron hired him to relocate Lot 1, Block 5, Psu-154953, the land in controversy. He
surveyed the lot measuring 175 square meters. Fifty-seven (57) square meters of Lot 1 and a portion
of the adjoining Lot 3 were occupied by Nabasa’s house. This portion was fenced partly by hollow
blocks and partly by bamboo. On the remaining 118 square meters stood a portion of petitioner
Abejaron’s house and two coconut trees near it, and his store. Abejaron’s 118-square meter portion
was separated from Nabasa’s 57-square meter part by Abejaron’s fence made of hollow blocks. Both
Nabasa’s and Abejaron’s houses appeared more than twenty years old while the coconut trees
appeared about 25 years old.

Back in 1971, Lagsub conducted a subdivision survey on Psu-154953. He was then hired by the
Silway Neighborhood Association to conduct the survey for purposes of allocating lots to the
members of the association, among whom were respondent Nabasa and petitioner Abejaron. When
the 1971 survey was conducted, both the Abejarons and Nabasa were already occupying their
respective 118 and 57 square meter portions of Lot 1, Block 5. Nabasa and Matilde Abejaron,
representative of petitioner, were present during the survey. 17

Respondent Nabasa had a different story to tell. He contends that he had been residing on a 12 x 15
meter or 180-square meter public land in Silway, General Santos City since 1945. He admits that
petitioner Abejaron was already residing in Silway when he arrived there. Nabasa constructed a
house which stands to this day and planted five coconut trees on this 180-square meter land, but only
two of the trees survived. Nabasa never harvested coconuts from these trees as petitioner Abejaron
claims to own them and harvests the coconuts. In many parts of respondent Nabasa’s testimony,
however, he declared that he started occupying the 180-square meter area in 1976. 18

Nabasa avers that previously, he and petitioner Abejaron were in possession of portions of Lot 2,
Psu-154953. This lot was subsequently surveyed and divided into smaller lots with the area of
petitioner Abejaron designated as Lot 2, Block 5, Psu-154953 measuring one hundred eighty (180)
square meters, while his was designated as Lot 1, Block 5, Psu-154953 with an area of one hundred
seventy five (175) square meters.

Instead of applying for free patent over his Lot 2, petitioner Abejaron gave this lot to his daughter
Conchita Abejaron-Abellon and allowed her to file the application with the District Land Office XI-4,
Bureau of Lands, Koronadal, South Cotabato. Conchita secured Free Patent No. (XI-4)-3293 over Lot
2. Pursuant to this, she was issued Original Certificate of Title No. P-4420. On April 27, 1981,
Conchita’s title was transcribed in the Registration Book of General Santos City.

Respondent Nabasa, on the other hand, filed an application for Free Patent over Lot 1, Block 5, Psu-
154953 with the District Land Office No. XI-4, Bureau of Lands, Koronadal, South Cotabato. While the
application was pending, petitioner Abejaron forcibly encroached upon the northern and southwestern
portion of Lot 1, Block 5, Psu-159543. Abejaron fenced the disputed 118-square meter portion of Lot
1 and despite Nabasa’s opposition, constructed a store near the road. Petitioner Abejaron then
transferred his old house constructed on Lot 2, Block 5, Psu-154953 to a portion of the disputed 118-
square meter area. Petitioner’s daughter, Conchita, patentee and title holder of Lot 2, constructed her
own house in Lot 2.

Free Patent No. (XI-4)-2877, covering Lot 1, Block 5, was issued to respondent Nabasa on
September 24, 1974. But before the patent could be transcribed on the Registration Book of the
Registrar of Deeds of General Santos City, the District Land Officer of District Land Office No. XI-4
recalled it for investigation of an administrative protest filed by the petitioner. 19 The protest was
given due course, but petitioner Abejaron or his representative failed to appear in the hearings
despite notice.

On November 22, 1979, the administrative protest was dismissed by the District Land Officer for
failure of petitioner Abejaron or his representative to appear in the hearings despite notice. 20
Respondent Nabasa’s Free Patent No. (XI-4)-2877 was then re-transmitted by the District Land
Officer of District Land Office XI-4 to the Register of Deeds, General Santos City, and the same was
transcribed in the Registration Book of the Registry of Property of General Santos City on December
13, 1979. Original Certificate of Title No. P-4140, covering Lot 1, Block 2, Psu-154953, was issued to
respondent Nabasa. 21

On March 12, 1982, petitioner Abejaron filed against respondent Nabasa an action for reconveyance
with damages seeking reconveyance of his 118-square meter portion of Lot 1, Block 5, Psu-154953.

During the trial, respondent Nabasa presented Abundio Guiral, his neighbor who had been living
since 1945 in Lot 3, Block 5, Psu-154953, adjoining Nabasa’s Lot 1. He testified that when he arrived
in Silway, petitioner Abejaron was already living there. Four months after, Nabasa started residing in
the area. Nabasa constructed a house, planted coconut trees, and fenced his 12 x 15 meter area.
Abejaron’s house in 1945 is still the same house he lives in at present, but in 1977, it was jacked up
and transferred from Lot 2 to Lot 1, Block 5. Nabasa tried to prevent the transfer to no avail. The
house was then extended towards Lot 2. 22

On rebuttal, petitioner Abejaron presented two neighbors. One of them, Alejandra Doria, started living
in Silway in 1947. She testified that when she arrived in the neighborhood, Abejaron’s fence as it now
stands between the 57-square meter portion occupied by Nabasa’s house and the 118-square meter
area claimed by petitioner Abejaron was already there. 23 The other neighbor, Pacencia Artigo, also
started living in Silway in 1947. She declared that the house of the Abejarons stands now where it
stood in 1947. She also testified that the Abejarons previously had a store smaller than their present
store. 24

On September 27, 1985, after trial on the merits, the trial court ruled in favor of petitioner Abejaron,
viz:jgc:chanrobles.com.ph

"WHEREFORE, IN VIEW OF ALL THE FOREGOING, this court hereby renders judgment as
follows:chanrob1es virtual 1aw library

1. Declaring the possession and occupancy of Pacencio Abejaron over 118 square meters of Lot No.
1, Block 5, Psu-154953 in good faith and thereby declaring the inclusion of 118 square meters of said
lot in OCT No. P-4140 erroneous and a mistake, and for which, defendant Felix Nabasa is hereby
ordered to reconvey and execute a registerable document in favor of plaintiff Pacencio Abejaron,
Filipino, married and a resident of Silway, General Santos City, his heirs, successors and assigns
over an area of one hundred eighteen (118) square meters of Lot No. 1, Block 5, Psu-154953,
situated at Silway, General Santos City, on the Western portion of said lot as shown in the sketch
plan, Exhibit "R", and the remaining portion of 57 square meters of said lot to be retained by
defendant Felix Nabasa;

2. Should Felix Nabasa fails (sic) to do so, upon the finality of this judgment, the Clerk of Court shall
executed (sic) it in the name of Felix Nabasa, widower, and will have the same effect as if executed
by the latter and the Register of Deeds, General Santos City, is hereby directed to issue New
Transfer Certificate of Title to Alejandro Abejaron over 118 square meters of Lot No. 1, Block 5, Psu-
154953, and New Transfer Certificate of Title over 57 square meters of same Lot No. 1, Block 5, Psu-
154953, in favor of Felix Nabasa, and ultimately to have OCT No. P-4140 of Felix Nabasa cancelled
accordingly."cralaw virtua1aw library

Respondent Nabasa’s motion for reconsideration having been denied, he appealed to the Court of
Appeals. On April 26, 1988, the Court of Appeals rendered a decision in favor of respondent Nabasa,
viz:chanrob1es virtua1 1aw 1ibrary

". . . the only basis for reconveyance is actual fraud. In this case, Abejaron failed to substantiate the
existence of actual fraud. . . There was no proof of irregularity in the issuance of title nor in the
proceedings incident thereto nor was there a claim that fraud intervened in the issuance of the title,
thus, the title has become indefeasible (Frias v. Esquival, 67 SCRA 487). Abejaron was not able to
establish his allegation that Nabasa misrepresented his status of possession in his application for the
title. . . In fact, in Abejaron’s answer to Nabasa’s counterclaim, he said that Nabasa has been
occupying the area since 1950.

Contrary to the finding of the court a quo, the Bureau of Lands conducted an ocular inspection before
the title was issued. This was confirmed by Abejaron himself (tsn, January 19, 1984).

x       x       x

WHEREFORE, premises considered, the decision appealed from is hereby REVERSED and SET
ASIDE and a new one entered declaring Felix Nabasa as the owner of the lot covered by O.C.T. No.
P-4140. Costs against Plaintiff-Appellee.

SO ORDERED."cralaw virtua1aw library

Petitioner Abejaron filed a motion for reconsideration of the Court of Appeals decision. On July 22,
1988, the Court of Appeals rendered a resolution denying the motion for reconsideration for lack of
merit. Hence, this petition for review on certiorari with the following assignment of
errors:jgc:chanrobles.com.ph
"I. THE HONORABLE COURT OF APPEALS ERRED IN NOT FINDING THAT ACTUAL FRAUD
WAS COMMITTED BY THE PRIVATE RESPONDENT AND PROVEN BY THE PETITIONER AND
SUSTAINED BY THE TRIAL COURT WHEN PRIVATE RESPONDENT PROCURED THE TITLE IN
HIS NAME OF THE AREA OF THE LOT IN QUESTION, LOT 1, BLOCK 5, LOCATED AT SILWAY,
DADIANGAS, GENERAL SANTOS CITY.

II. THE HONORABLE COURT OF APPEALS ERRED IN CONCLUDING THAT THE LOT WHICH
BELONGS TO THE PETITIONER IS LOT 2 OF THE SAME BLOCK AND PSU, AND THAT THE
PETITIONER FORCIBLY ENTERED INTO LOT 1 OF THE SAME BLOCK AND PSU, AND
FORCIBLY TRANSFERRED HIS OLD HOUSE FROM LOT 2 TO LOT 1 IS BASED ONLY ON THE
SELF-SERVING ALLEGATIONS OF THE PRIVATE RESPONDENT AND NOT SUPPORTED BY
ANY COMPETENT AND CONVINCING EVIDENCE.

III. THE HONORABLE COURT OF APPEALS ERRED IN DISREGARDING THE FACT THAT
PETITIONER HAS A CLEAR RIGHT OVER THE PROPERTY IN QUESTION BECAUSE HE HAS
BEEN IN ACTUAL AND LAWFUL POSSESSION FOR SO MANY YEARS AND A CLAIMANT OF
THE PROPERTY IN QUESTION."cralaw virtua1aw library

We affirm the decision of the Court of Appeals.

An action for reconveyance of a property is the sole remedy of a landowner whose property has been
wrongfully or erroneously registered in another’s name after one year from the date of the decree so
long as the property has not passed to an innocent purchaser for value. 25 The action does not seek
to reopen the registration proceeding and set aside the decree of registration but only purports to
show that the person who secured the registration of the property in controversy is not the real owner
thereof. 26 Fraud is a ground for reconveyance. For an action for reconveyance based on fraud to
prosper, it is essential for the party seeking reconveyance to prove by clear and convincing evidence
his title to the property and the fact of fraud. 27

Petitioner Abejaron does not claim to own Lot 1, Block 5, Psu-154953. He in fact admits that he
believed the land in dispute was public in character, thus he did not declare it for taxation purposes
despite possession of it for a long time. Neither did he apply for title over it on the mistaken belief that
he could not apply for title of a public land. In his Complaint, he stated that respondent Nabasa’s
fraudulent procurement of Free Patent No. (XI-4)-2877 and OCT No. P-4140 over the disputed land
deprived him not of ownership, but of his "right to file the necessary application thereon with the
authorities concerned" 28 as long-time possessor of the land.

Nonetheless, petitioner contends that an action for reconveyance is proper,

". . . for an action of reconveyance of a parcel of land to prosper, it is not necessary that the
proponent be the absolute owner thereof. It is enough that the proponent has an equitable right
thereon. In the case at bar, the plaintiff had been in lawful, open, continuous and notorious
possession, occupation and control in the concept of an owner of a greater portion of the subject lot
since 1945 and have (sic) thereby acquired an equitable right thereon protected by law. Possession
of public lands once occupation of the same is proven, as the herein plaintiff did, under claim of
ownership constitutes a grant from the state (Republic v. Vera, 120 SCRA 210). A portion of the
public land ceased to be public as soon as its claimant had performed all the conditions essential to a
grant (Republic v. Villanueva, 114 SCRA. 875)." 29

Petitioner’s contention, buttressed by the Vera case and Chief Justice Teehankee’s dissent in the
Villanueva case, is similar to the position taken by the plaintiff in Mesina v. Vda. de Sonza, Et. Al. 30
In that case, plaintiff filed in the Court of First Instance of Nueva Ecija an action for cancellation of the
original certificate of title procured by the defendant by virtue of a homestead patent. The title covered
a public land which she claimed to own through public, open, and peaceful possession for more than
thirty years. The law applicable in that case, which petitioner Abejaron apparently relies on in the
case at bar, is Sec. 48(b) of Commonwealth Act 141 or the Public Land Act, as amended by Republic
Act No. 1942, which took effect on June 22, 1957,

"SECTION 48. The following-described citizens of the Philippines, occupying lands of the public
domain or claiming to own any such lands or an interest therein, but whose titles have not been
perfected or completed, may apply to the Court of First Instance (now Regional Trial Courts) of the
province where the land is located for confirmation of their claims and the issuance of a certificate of
title therefor, under the Land Registration Act (now Property Registration Decree), to wit:chanrob1es

x       x       x

(b) Those who by themselves or through their predecessors in interest have been in open,
continuous, exclusive, and notorious possession and occupation of agricultural lands of the public
domain, under a bona fide claim of acquisition of ownership, for at least thirty years immediately
preceding the filing of the application for confirmation of title except when prevented by war or force
majeure. These shall be conclusively presumed to have performed all the conditions essential to a
Government grant and shall be entitled to a certificate of title under the provisions of this Chapter."
(Emphasis supplied)

Citing Susi v. Razon, 31 the Court interpreted this law,.

". . . where all the necessary requirements for a grant by the Government are complied with through
actual physical possession openly, continuously, and publicly with a right to a certificate of title to said
land under the provisions of Chapter VIII of Act No. 2874, amending Act No. 926 (carried over as
Chapter VIII of Commonwealth Act No. 141), the possessor is deemed to have already acquired by
operation of law not only a right to a grant, but a grant of the Government, for it is not necessary that
a certificate of title be issued in order that said grant may be sanctioned by the courts — an
application therefor being sufficient under the provisions of Section 47 of Act No. 2874 (reproduced
as Section 50, Commonwealth Act No. 141). If by a legal fiction, Valentin Susi had acquired the land
in question by grant of the State, it had already ceased to be of the public domain and had become
private property, at least by presumption, of Valentin Susi, beyond the control of the Director of
Lands. (Emphasis supplied)"

The Mesina and Susi cases were cited in Herico v. Dar, 32 another action for cancellation of title
issued pursuant to a free patent. Again, the Court ruled that under Section 48(b) of the Public Land
Act, as amended by Rep. Act No. 1942, with the plaintiff’s proof of occupation and cultivation for more
than 30 years since 1914, by himself and by his predecessor-in-interest, title over the land had vested
in him as to segregate the land from the mass of public land. Thenceforth, the land was no longer
disposable under the Public Land Act by free patent. 33 The Court held, viz:jgc:chanrobles.com.ph

"As interpreted in several cases (Susi v. Razon, Et Al., 48 Phil. 424; Mesina v. Pineda Vda. de Sonza,
G.R. No. L-14722, May 25, 1960) when the conditions as specified in the foregoing provision are
complied with, the possessor is deemed to have acquired, by operation of law, a right to a grant, a
government grant, without the necessity of a certificate of title being issued. The land, therefore,
ceases to be of public domain, and beyond the authority of the Director of Lands to dispose of. The
application for confirmation is a mere formality, the lack of which does not affect the legal sufficiency
of the title as would be evidenced by the patent and the Torrens title to be issued upon the strength of
said patent." 34
In citing Republic v. Villanueva, Et Al., 35 petitioner Abejaron relied on the dissenting opinion of Chief
Justice Teehankee. However, the en banc majority opinion in that case and in Manila Electric
Company v. Bartolome, 36 departed from the doctrines enunciated in the Susi, Mesina, and Herico
cases. Citing Uy Un v. Perez, 37 the Court ruled that "the right of an occupant of public agricultural
land to obtain a confirmation of his title under Sec. 48(b) of Com. Act. No. 141, as amended by Rep.
Act No. 1942, is ‘derecho dominical incoativo’ and that before the issuance of the certificate of title the
occupant is not in the juridical sense the true owner of the land since it still pertains to the State." 38

The Court pointed out that the Villanueva and Meralco cases are different from the oft-cited Susi case
as the latter involved a parcel of land possessed by a Filipino citizen since time immemorial, while the
land in dispute in the Villanueva and Meralco cases were sought to be titled by virtue of Sec. 48(b) of
the Public Land Act, as amended. In explaining the nature of land possessed since time immemorial,
the Court quoted Oh Cho v. Director of Lands, 39 viz:jgc:chanrobles.com.ph

"All lands that were not acquired from the Government, either by purchase or by grant, belong to the
public domain. An exception to the rule would be any land that should have been in the possession of
an occupant and of his predecessors-in-interest since time immemorial, for such possession would
justify the presumption that the land had never been part of the public domain or that it had been a
private property even before the Spanish conquest."cralaw virtua1aw library

In 1986, however, in Director of Lands v. Intermediate Appellate Court, Et Al., 40 this Court en banc
recognized the strong dissent registered by Chief Justice Teehankee in the Villanueva case and
abandoned the Villanueva and Meralco ruling to revert to the Susi doctrine. Reiterating the Susi and
Herico cases, the Court ruled:

"Nothing can more clearly demonstrate the logical inevitability of considering possession of public
land which is of character and duration prescribed by statute as the equivalent of express grant from
the State than the dictum of the statute itself [Sec. 48(b)] that the possessor(s) ‘. . . shall be
conclusively presumed to have performed all the conditions essential to a Government grant and
shall be entitled to a certificate of title . . ..’ No proof being admissible to overcome a conclusive
presumption, confirmation proceedings would, in truth be little more than a formality, at the most
limited to ascertaining whether the possession claimed is of the required character and length of time;
and registration thereunder would not confer title, but simply recognize a title already vested. The
proceedings would not originally convert the land from public to private land, but only confirm such a
conversion already effected by operation of law from the moment the required period of possession
became complete." 41 (Emphasis supplied)chanrob1es virtua1 1aw 1ibrary

This is the prevailing rule as reiterated in the more recent case of Rural Bank of Compostela v. Court
of Appeals, a ponencia of now Chief Justice Davide, Jr., 42

"The rule under the latter (Section 48[b] of the Public Land Act, as amended by R.A. No. 1942), is that
when the conditions specified therein are complied with, the possessor is deemed to have acquired,
by operation of law, a right to a government grant, without necessity of a certificate of title being
issued, and the land ceases to be part of the public domain and beyond the authority of the Director
of Lands." 43

The question brought to the fore, therefore, is whether or not petitioner Abejaron has satisfied the
conditions specified in Sec. 48(b) of the Public Land Act, as amended by R.A. No. 1942. Sec. 48(b)
has been further amended by P.D. No. 1073 which took effect on January 25, 1977. Sec. 4 of the
P.D. reads as

"SECTION 4. The provision of Section 48(b) and Section 48(c), Chapter VIII, of the Public Land Act,
are hereby amended in the sense that these provisions shall apply only to alienable and disposable
lands of the public domain which have been in open, continuous, exclusive and notorious possession
and occupation by the applicant himself or thru his predecessor-in-interest, under a bona fide claim of
acquisition of ownership, since June 12, 1945."cralaw virtua1aw library

Sec. 48(b) of the Public Land Act, as further amended by P.D. No. 1073, now
reads:jgc:chanrobles.com.ph

"(b) Those who by themselves or through their predecessors-in-interest have been in open,
continuous, exclusive and notorious possession and occupation of agricultural lands of the public
domain, under a bona fide claim of acquisition or ownership, since June 12, 1945, or earlier,
immediately preceding the filing of the application for confirmation of title, except when prevented by
wars or force majeure. Those shall be conclusively presumed to have performed all the conditions
essential to a Government grant and shall be entitled to a certificate of title under the provisions of
this chapter." (Emphasis ours) 44

However, as petitioner Abejaron’s 30-year period of possession and occupation required by the
Public Land Act, as amended by R.A. 1942 ran from 1945 to 1975, prior to the effectivity of P.D. No.
1073 in 1977, the requirement of said P.D. that occupation and possession should have started on
June 12, 1945 or earlier, does not apply to him. As the Susi doctrine holds that the grant of title by
virtue of Sec. 48(b) takes place by operation of law, then upon Abejaron’s satisfaction of the
requirements of this law, he would have already gained title over the disputed land in 1975. This
follows the doctrine laid down in Director of Lands v. Intermediate Appellate Court, Et Al., 45 that the
law cannot impair vested rights such as a land grant. More clearly stated, "Filipino citizens who by
themselves or their predecessors-in-interest have been, prior to the effectivity of P.D. 1073 on
January 25, 1977, in open, continuous, exclusive and notorious possession and occupation of
agricultural lands of the public domain, under a bona fide claim of acquisition of ownership, for at
least 30 years, or at least since January 24, 1947" may apply for judicial confirmation of their
imperfect or incomplete title under Sec. 48(b) of the Public Land Act. 46

Having laid down the law applicable to the case at bar, i.e., Sec. 48(b) of the Public Land Act, as
amended by R.A. 1942, we now determine whether or not petitioner has acquired title over the
disputed land. In doing so, it is necessary for this Court to wade through the evidence on record to
ascertain whether petitioner has been in open, continuous, exclusive and notorious possession and
occupation of the 118-square meter disputed land for 30 years at least since January 24, 1947. It is
axiomatic that findings of fact by the trial court and the Court of Appeals are final and conclusive on
the parties and upon this Court, which will not be reviewed or disturbed on appeal unless these
findings are not supported by evidence or unless strong and cogent reasons dictate otherwise. 47
One instance when findings of fact of the appellate court may be reviewed by this Court is when, as in
the case at bar, the factual findings of the Court of Appeals and the trial court are contradictory. 48

Petitioner claims that he started occupying the disputed land in 1945. At that time, he built a nipa
house, a small store, and a fence made of wood to delineate his area. This nipa house was improved
in 1949 into a two-storey house. The small store was also made bigger in 1950. The wooden fence
was also changed to a fence made of hollow blocks. The two-storey house, bigger store, and hollow-
block fence all stand to this day. In 1951, petitioner planted coconut trees near his house. While the
petitioner has shown continued existence of these improvements on the disputed land, they were
introduced later than January 24, 1947. He has failed to establish the portion of the disputed land that
his original nipa house, small store and wooden fence actually occupied as of January 24, 1947. In
the absence of this proof, we cannot determine the land he actually possessed and occupied for thirty
years which he may acquire under Sec. 48(b) of the Public Land Act. Worthy of notice is the fact that
the disputed land was surveyed, subdivided into and identified by lots only in the 1970’s. Therefore,
prior to the survey, it would be difficult to determine the metes and bounds of the land petitioner
claims to have occupied since 1947 in the absence of specific and incontrovertible proof.

The neighbors presented by the petitioner, namely Alejandra Doria, Pacencia Artigo, and Beatriz
Gusila, could not also further his cause as both Doria and Artigo stated that they started residing in
Silway in 1947, without specifying whether it was on or prior to January 24, 1947, while Gusila arrived
in the neighborhood in 1949. While Doria testified that there was a fence between Abejaron’s and
Nabasa’s houses in 1947, she did not state that Abejaron’s 118-square meter area was enclosed by
a fence which stands to this day. This is confirmed by Geodetic Engineer Lagsub’s 1984 survey plan
which shows that a fence stands only on one side of the 118-square meter area, the side adjacent to
Nabasa’s 57-square meter portion. Again, this poses the problem of determining the area actually
occupied and possessed by Abejaron at least since January 24, 1947.

Finally, as admitted by the petitioner, he has never declared the disputed land for taxation purposes.
While tax receipts and tax declarations are not incontrovertible evidence of ownership, they become
strong evidence of ownership acquired by prescription when accompanied by proof of actual
possession of the property or supported by other effective proof. 49 Even the tax declarations and
receipts covering his house do not bolster his case as the earliest of these was dated 1950.

Petitioner’s evidence does not constitute the "well-nigh incontrovertible" evidence necessary to
acquire title through possession and occupation of the disputed land at least since January 24, 1947
as required by Sec. 48(b) of the Public Land Act, as amended by R.A. 1942. The basic presumption
is that lands of whatever classification belong to the State and evidence of a land grant must be "well-
nigh incontrovertible." 50 As petitioner Abejaron has not adduced any evidence of title to the land in
controversy, whether by judicial confirmation of title, or homestead, sale, or free patent, he cannot
maintain an action for reconveyance.

In De La Peña v. Court of Appeals and Herodito Tan, 51 the petitioner filed an action for
reconveyance, claiming preferential right to acquire ownership over a 3/4 hectare of land and
imputing fraud and misrepresentation to respondent in securing a free patent and original certificate
of title over the land in controversy. The action for reconveyance was dismissed by the trial court and
the Court of Appeals. This Court affirmed the decision of the Court of Appeals,
viz:jgc:chanrobles.com.ph

"It is well-settled that reconveyance is a remedy granted only to the owner of the property alleged to
be erroneously titled in another’s name. (Tomas v. Court of Appeals, G.R. No. 79328, 21 May 1990,
185 SCRA 627, 633; Esconde v. Barlongay, G.R. No. 67583, 31 July 1987, 152 SCRA 603, 611;
Nebrada v. Heirs of Alivio, Et Al., 104 Phil. 126 [1958]; Director of Lands v. Register of Deeds of
Rizal, 92 Phil. 826 [1953]; Azurin v. Quitoriano, Et Al., 81 Phil. 261 [1948]). In the case at bench,
petitioner does not claim to be the owner of the disputed portion. Admittedly, what he has is only a
"preferential right" to acquire ownership thereof by virtue of his actual possession since January
1947. . . Title to alienable public lands can be established through open, continuous, and exclusive
possession for at least thirty (30) years. . . Not being the owner, petitioner cannot maintain the
present suit.

Persons who have not obtained title to public lands could not question the titles legally issued by the
State. (Reyes v. Rodriguez, 62 Phil. 771, 776 [1936]) In such cases, the real party in interest is the
Republic of the Philippines to whom the property would revert if it is ever established, after
appropriate proceedings, that the free patent issued to the grantee is indeed vulnerable to annulment
on the ground that the grantee failed to comply with the conditions imposed by the law. (See Sec. 101
of C.A. 141 [Public Land Act]; Lucas v. Durian, 102 Phil. 1157, 1158 [1957]; Sumail v. Judge of the
Court of First Instance of Cotabato, Et Al., 96 Phil. 946, 953 [1955]). Not being an applicant, much
less a grantee, petitioner cannot ask for reconveyance." (Emphasis supplied) 52

In the more recent case of Tankiko, Et. Al. v. Cezar, Et Al., 53 plaintiffs filed an action for
reconveyance claiming that they were the actual occupants and residents of a 126,112-square meter
land which was titled to another person. The trial court dismissed the action, but the Court of Appeals
reversed the dismissal. Despite the appellate court’s finding that plaintiffs had no personality to file
the action for reconveyance, the disputed land being part of the public domain, it exercised equity
jurisdiction to avoid leaving unresolved the matter of possession of the land in dispute. On appeal to
this Court, we reinstated the decision of the trial court and dismissed the action for reconveyance,
viz:jgc:chanrobles.com.ph

". . . equity is invoked only when the plaintiff, on the basis of the action filed and relief sought, has a
clear right that he seeks to enforce, or that would obviously be violated if the action filed were to be
dismissed for lack of standing. In the present case, respondents have no clear enforceable right,
since their claim over the land in question is merely inchoate and uncertain. Admitting that they are
only applicants for sales patents on the land, they are not and they do not even claim to be owners
thereof.

Second, it is evident that respondents are not the real parties in interest. Because they admit that
they are not the owners of the land but mere applicants for sales patents thereon, it is daylight clear
that the land is public in character and that it should revert to the State. This being the case, Section
101 of the Public Land Act categorically declares that only the government may institute an action for
reconveyance of ownership of a public land. . .
x       x       x

In the present dispute, only the State can file a suit for reconveyance of a public land. Therefore, not
being the owners of the land but mere applicants for sales patents thereon, respondents have no
personality to file the suit. Neither will they be directly affected by the judgment in such suit.

x       x       x

Clearly, a suit filed by a person who is not a party in interest must be dismissed. Thus, in Lucas v.
Durian, 102 Phil. 1157, September 23, 1957, the Court affirmed the dismissal of a Complaint filed by
a party who alleged that the patent was obtained by fraudulent means and consequently, prayed for
the annulment of said patent and the cancellation of a certificate of title. The Court declared that the
proper party to bring the action was the government, to which the property would revert." 54

Similarly, as petitioner Abejaron has failed to show his title to the disputed land, he is not the proper
party to file an action for reconveyance that would result in the reversion of the land to the
government. It is the Solicitor General, on behalf of the government, who is by law mandated to
institute an action for reversion. 55 He has the specific power and function to "represent the
Government in all land registration and related proceedings" and to "institute actions for the reversion
to the Government of lands of the public domain and improvements thereon as well as lands held in
violation of the Constitution." 56 Since respondent Nabasa’s Free Patent and Original Certificate of
Title originated from a grant by the government, their cancellation is a matter between the grantor and
the grantee. 57

Having resolved that petitioner Abejaron does not have legal standing to sue and is not the real party
in interest, we deem it unnecessary to resolve the question of fraud and the other issues raised in the
petition. These shall be timely for adjudication if a proper suit is filed by the Solicitor General in the
future.chanrob1es virtua1 1aw 1ibrary

WHEREFORE, the petition is DENIED and the impugned decision of the Court of Appeals is
AFFIRMED. The Complaint filed in Civil Case No. 2492 before the Regional Trial Court of South
Cotabato, Branch 1, is DISMISSED. No costs.

SO ORDERED.

HOMER C. JAVIER, represented by his mother and natural guardian, SUSAN G.

CANENCIA, Petitioner,
vs.
SUSAN LUMONTAD, Respondent.

DECISION

PERLAS-BERNABE, J.:

Assailed in this petition for review on certiorari 1 are the Decision2 dated September 29, 2011 and the
Resolution3 dated October 1, 2012 of the Court of Appeals (CA) in CA-G.R. SP No. 113046 which set
aside the Decision4 dated August 20, 2009 and the Order5 dated January 18, 2010 of the Regional
Trial Court of Antipolo City, Branch 74 (RTC) in Sp. Civil Case No. 08-744, finding that the action
instituted by petitioner was not one for forcible entry, but for recovery of ownership and possession,
hence, within the original jurisdiction of the latter. Consequently, the CA ordered the remand of the
case to the R TC for trial on the merits.

The Facts

This case originated from a forcible entry Complaint 6 dated July 3, 2007 filed by petitioner Homer C.
Javier, represented by his mother and natural guardian Susan G. Canencia (petitioner), against
respondent Susan Lumontad (respondent) before the Municipal Trial Court of Taytay, Rizal (MTC),
docketed as Civil Case No. 1929.

In his complaint, petitioner alleged that he is one of the sons of the late Vicente T. Javier (Vicente),
who was the owner of a 360-square meter (sq. m.) parcel of land located at Corner Malaya and
Gonzaga Streets, Barangay Dolores, Taytay Rizal (subject land), 7 covered by Tax Declaration (TD)
No. 00-TY-002-11458.8 Since his birth, petitioner’s family has lived in the residential house erected
thereon.9 Upon Vicente’s death, petitioner, together with his mother, continued their possession over
the same. On March 26, 2007, respondent gained entry into the subject land and started to build a
two (2)-storey building (subject building) on a 150 sq. m. portion thereof, despite petitioner’s vigorous
objections and protests.10 The dispute was submitted to barangay conciliation but no amicable
settlement was reached between the parties.11 Thus, petitioner was constrained to file against
respondent the instant forcible entry complaint, averring, in addition to the foregoing, that reasonable
compensation for the use and occupancy of the above-said portion may be fixed at 5,000.00 per
month.12

In her Answer13 dated July 30, 2007, respondent admitted that during Vicente’s lifetime, he indeed
was the owner and in physical possession of the subject land. 14 Nevertheless, she claimed tobe the
owner of the portion where the subject building was being constructed, as evidenced by TD No. 00-
TY-002-1303115 in her name.16 Hence, she took possession of the said portion not as an illegal
entrant but as its owner.17

The MTC Ruling

In a Judgment18 dated November 11, 2007, the MTC dismissed the complaint for want of cause of
action and lack of jurisdiction.19

It found that Vicente actually subdivided the subject land into two (2) lots: the first lot, with an area of
187.20 sq. m., was given to petitioner, while the second lot, with an area of 172.80 sq. m. and where
the subject building was erected, was given toone Anthony de la Paz Javier (Anthony), son of Vicente
by a previous failed marriage, but was eventually acquired by respondent from the latter through
sale.20 Based on this finding, the MTC concluded that petitioner had no cause of action against
respondent since she was merely exercising her rights asthe owner of the 172.80 sq. m. subdivided
lot.21

Also, the MTC observed that petitioner’s complaint failed to aver the required jurisdictional facts as it
merely contained a general allegation that respondent’s entry into the disputed portion was made by
means of force and intimidation, without specifically stating how, when, and where were such means
employed. With such failure, the MTC intimated that petitioner’s remedy should either be an accion
publiciana or an accion reivindicatoria instituted before the proper forum. 22 Dissatisfied, petitioner
appealed to the RTC.

The RTC Ruling

In a Decision23 dated August 20, 2009, the RTC reversed and set aside the MTC ruling, and
accordingly ordered respondent to vacate the disputed portion and surrender possession thereof to
petitioner. Likewise, it ordered respondent to pay petitioner the amounts of ₱5,000.00 a month from
March 2007, until she vacates said portion, as reasonable compensation for its use and occupation,
and ₱20,000.00 as attorney’s fees, including costs of suit. 24

Preliminarily, the RTC ruled that the facts averred in petitioner’s complaint – namely, that petitioner,
through his late father, owned and possessed the subject land, and that by means of force and
intimidation, respondent gainedentry thereto 25 – show that his cause of action is indeed one of forcible
entry that falls within the jurisdiction of the MTC.26

On the merits, the RTC found that petitioner, being the owner and possessor of the property in
question, has the right to be respected in his possession and that respondent forcibly and unlawfully
deprived him of the same.27

Unconvinced, respondent moved for reconsideration, 28 which was, however, denied in an

Order29 dated January 18, 2010, prompting petitioner to file an appeal before the CA.

The CA Ruling

In a Decision30 dated September 29, 2011, the CA set aside the RTC ruling and remanded the case
to the latter court for trial on the merits.31

It held that the issue of possession of the subject land is intimately intertwined with the issue of
ownership, such that the former issue cannot be determined without ruling on who really owns such
land. Thus, it remanded the case to the RTC for trial on the merits in the exercise of the latter’s
original jurisdiction in an action for recovery of ownership and possession pursuant to Section 8 (2),
Rule 40 of the Rules of Court.32

This notwithstanding, the CA still concluded that respondent had the subject building constructed in
the concept of being the owner of the 172.80 sq. m. portion of the subject land. 33 In this relation, it
was observed that petitioner gave a misleading description of TD No. 00-TY-002-11458, considering
that said tax declaration only covered petitioner’s family house and not the subject land where said
improvement was built, as petitioner alleged in his complaint. 34 In truth, the CA found that the subject
land is separately covered by TD No. 00-TY-002-9660, 35 which was cancelled when the land was
subdivided into two (2) lots, namely: (a) the 187.20 sq. m. lot covered by TD No. 00-TY-002-
1282536 given by Vicente to petitioner; and (b) the 172.80 sq. m. lot covered by TD No. 00-TY-002-
1282437 given by Vicente to Anthony, which the latter sold to respondent, resulting in the issuance of
TD No. 00-TY-002-1303138 in her name. Further, the CA stated that petitioner was not able to
sufficiently establish that respondent employed force and intimidation in entering the 172.80 sq. m.
portion of the subject landas he failed to demonstrate the factual circumstances that occurred during
his dispossession of said property.39

Aggrieved, petitioner filed a motion for reconsideration, 40 which was, however, denied in a
Resolution41 dated October 1, 2012, hence, this petition.

The Issue Before the Court

The main issue for the Court’s resolution is whether or not the CA correctly set aside the RTC Ruling
and ordered the remand of the case to the latter court for trial on the merits in anaction for recovery of
ownership and possession.

The Court’s Ruling

Although the Court finds that the complaint was indeed one for forcible entry, petitioner’s case
nonetheless fails to impress on the merits.

A. Nature of the Case: Forcible Entry.

The Court disagrees with the findings of both the MTC and the CA that the allegations in the
petitioner’s complaint do not make a case for forcible entry but another action cognizable by the
RTC.42

As explicated in the case of Pagadora v. Ilao,43 "[t]he invariable rule is that what determines the
nature of the action, as well as the court which has jurisdiction over the case, are the allegations in
the complaint. In ejectment cases, the complaint should embody such statement of facts as to bring
the party clearly within the class of cases for which [Section 1, Rule 70 of the Rules of Court] provides
a summary remedy, and must show enough on its face to give the court jurisdiction without resort to
parol evidence. Hence, in forcible entry, the complaint must necessarily allege that one in physical
possession of a land or building has been deprived of that possession by another through force,
intimidation, threat, strategy or stealth. It is not essential, however, that the complaint should
expressly employ the language of the law, but it would suffice that facts are set up showing that
dispossession took place under said conditions. In other words, the plaintiff must allege that he, prior
to the defendant’s act of dispossession by force, intimidation, threat, strategy or stealth, had been in
prior physical possession of the property. This requirement is jurisdictional, and as long as the
allegations demonstrate a cause of action for forcible entry, the court acquires jurisdiction over the
subject matter."44
A plain reading of petitioner’s complaint shows that the required jurisdictional averments, so as to
demonstrate a cause of action for forcible entry, have all been complied with. Said pleading alleges
that petitioner, as the original owner’s, i.e., Vicente’s, successor-in-interest, was in prior physical
possession of the subject land but was eventually dispossessed of a 150 sq. m. portion thereof on
March 26, 2007 by respondent who, through force and intimidation, gained entry into the same and,
thereafter, erected a building thereon. Clearly, with these details, the means by which petitioner’s
dispossession was effected cannot be said to have been insufficiently alleged as mistakenly ruled by
the MTC and later affirmed by the CA. The "how" (through unlawful entry and the construction of the
subject building), "when" (March 26, 2007), and "where" (a 150 sq. m. portion of the subject land) of
the dispossession all appear on the face of the complaint. In Arbizo v. Sps. Santillan, 45 the Court held
that the acts of unlawfully entering the disputed premises, erecting a structure thereon, and excluding
therefrom the prior possessor, would necessarily imply the use of force, 46 as what had, in fact, been
alleged in the instant complaint. Hence, it was erroneous to conclude that petitioner only made a
general allegation that respondent’s entry in the premises was made by means of force and
intimidation47 and, consequently, that a forcible entry case was not instituted before the MTC. Given
that a forcible entry complaint had been properly filed before the MTC, the CA thus erred in ordering
the remand of the case to the RTC for trial on the merits in an action for recovery of possession and
ownership, otherwise known as an accion reivindicatoria, 48 pursuant to Paragraph 2, Section 8, Rule
40 of the Rules of Court which reads:

SEC. 8. Appeal from orders dismissing case without trial; lack of jurisdiction.– x x x.

If the case was tried on the merits by the lower court without jurisdiction over the subject matter, the
Regional Trial Court on appeal shall not dismiss the case if it has original jurisdiction thereof, but shall
decide the case in accordance with the preceding section, without prejudice to the admission of
amended pleadings and additional evidence in the interest of justice.

Verily, ejectment cases fall within the original and exclusive jurisdiction of the first level courts by
express provision of Section 33 (2)49 of Batas Pambansa Blg. 129,50 in relation to Section 1,51 Rule
70, of the Rules of Court.52 Even in cases where the issue of possession is closely intertwined with
the issue of ownership, the first level courts maintain exclusive and original jurisdiction over ejectment
cases,53 as they are given the authority to make an initial determination of ownership for the purpose
of settling the issue of possession.54 It must be clarified, however, that such adjudication is merely
provisional and would not bar or prejudice an action between the same parties involving title tothe
property. It is, therefore, not conclusive as to the issue of ownership. 55

B. Merits of the Forcible Entry Complaint.

Notwithstanding petitioner’s proper classification of his action, his forcible entry complaint,
nonetheless, cannot be granted on its merits, considering that he had failed to justify his right to the
de facto possession (physical or material possession) of the disputed premises.1âwphi1As pointed
out by the CA, TD No. 00-TY-002-11458, or the supposed document from which petitioner hinges his
right to the de facto possession of the subject land, only covers his house and not the entire land
itself. Nothing appears on record to show that he has the right to the de facto possession of the
172.80 sq. m. portion which, on the contrary, appears to be consistent with the claim of ownership of
respondent in view of TD No. OOTY-002-13031 covering the same property as registered in her
name. Thus, with no evidence in support of petitioner's stance, and the counter-evidence showing
respondent's right to the de facto possession of the 172.80 sq. m. portion as its ostensible owner, the
forcible complaint must necessarily fail.

WHEREFORE, the petition is DENIED. Accordingly, petitioner's forcible entry complaint in Sp. Civil
Case No. 08-744 is DISMISSED for lack of merit. SO ORDERED.
Principle of Self-Help

G.R. No. 178902               April 21, 2010

MANUEL O. FUENTES and LETICIA L. FUENTES, Petitioners,

vs.
CONRADO G. ROCA, ANNABELLE R. JOSON, ROSE MARIE R. CRISTOBAL and PILAR
MALCAMPO, Respondents.

DECISION

ABAD, J.:

This case is about a husband’s sale of conjugal real property, employing a challenged affidavit of
consent from an estranged wife. The buyers claim valid consent, loss of right to declare nullity of sale,
and prescription.

The Facts and the Case

Sabina Tarroza owned a titled 358-square meter lot in Canelar, Zamboanga City. On October 11,
1982 she sold it to her son, Tarciano T. Roca (Tarciano) under a deed of absolute sale. 1 But Tarciano
did not for the meantime have the registered title transferred to his name.

Six years later in 1988, Tarciano offered to sell the lot to petitioners Manuel and Leticia Fuentes (the
Fuentes spouses). They arranged to meet at the office of Atty. Romulo D. Plagata whom they asked
to prepare the documents of sale. They later signed an agreement to sell that Atty. Plagata
prepared2 dated April 29, 1988, which agreement expressly stated that it was to take effect in six
months.

The agreement required the Fuentes spouses to pay Tarciano a down payment of ₱60,000.00 for the
transfer of the lot’s title to him. And, within six months, Tarciano was to clear the lot of structures and
occupants and secure the consent of his estranged wife, Rosario Gabriel Roca (Rosario), to the sale.
Upon Tarciano’s compliance with these conditions, the Fuentes spouses were to take possession of
the lot and pay him an additional ₱140,000.00 or ₱160,000.00, depending on whether or not he
succeeded in demolishing the house standing on it. If Tarciano was unable to comply with these
conditions, the Fuentes spouses would become owners of the lot without any further formality and
payment.

The parties left their signed agreement with Atty. Plagata who then worked on the other requirements
of the sale. According to the lawyer, he went to see Rosario in one of his trips to Manila and had her
sign an affidavit of consent.3 As soon as Tarciano met the other conditions, Atty. Plagata notarized
Rosario’s affidavit in Zamboanga City. On January 11, 1989 Tarciano executed a deed of absolute
sale4 in favor of the Fuentes spouses. They then paid him the additional ₱140,000.00 mentioned in
their agreement. A new title was issued in the name of the spouses 5 who immediately constructed a
building on the lot. On January 28, 1990 Tarciano passed away, followed by his wife Rosario who
died nine months afterwards.

Eight years later in 1997, the children of Tarciano and Rosario, namely, respondents Conrado G.
Roca, Annabelle R. Joson, and Rose Marie R. Cristobal, together with Tarciano’s sister, Pilar R.
Malcampo, represented by her son, John Paul M. Trinidad (collectively, the Rocas), filed an action for
annulment of sale and reconveyance of the land against the Fuentes spouses before the Regional
Trial Court (RTC) of Zamboanga City in Civil Case 4707. The Rocas claimed that the sale to the
spouses was void since Tarciano’s wife, Rosario, did not give her consent to it. Her signature on the
affidavit of consent had been forged. They thus prayed that the property be reconveyed to them upon
reimbursement of the price that the Fuentes spouses paid Tarciano. 6

The spouses denied the Rocas’ allegations. They presented Atty. Plagata who testified that he
personally saw Rosario sign the affidavit at her residence in Paco, Manila, on September 15, 1988.
He admitted, however, that he notarized the document in Zamboanga City four months later on
January 11, 1989.7 All the same, the Fuentes spouses pointed out that the claim of forgery was
personal to Rosario and she alone could invoke it. Besides, the four-year prescriptive period for
nullifying the sale on ground of fraud had already lapsed.

Both the Rocas and the Fuentes spouses presented handwriting experts at the trial. Comparing
Rosario’s standard signature on the affidavit with those on various documents she signed, the Rocas’
expert testified that the signatures were not written by the same person. Making the same
comparison, the spouses’ expert concluded that they were. 8

On February 1, 2005 the RTC rendered judgment, dismissing the case. It ruled that the action had
already prescribed since the ground cited by the Rocas for annulling the sale, forgery or fraud,
already prescribed under Article 1391 of the Civil Code four years after its discovery. In this case, the
Rocas may be deemed to have notice of the fraud from the date the deed of sale was registered with
the Registry of Deeds and the new title was issued. Here, the Rocas filed their action in 1997, almost
nine years after the title was issued to the Fuentes spouses on January 18, 1989. 9

Moreover, the Rocas failed to present clear and convincing evidence of the fraud. Mere variance in
the signatures of Rosario was not conclusive proof of forgery. 10 The RTC ruled that, although the
Rocas presented a handwriting expert, the trial court could not be bound by his opinion since the
opposing expert witness contradicted the same. Atty. Plagata’s testimony remained technically
unrebutted.11

Finally, the RTC noted that Atty. Plagata’s defective notarization of the affidavit of consent did not
invalidate the sale. The law does not require spousal consent to be on the deed of sale to be valid.
Neither does the irregularity vitiate Rosario’s consent. She personally signed the affidavit in the
presence of Atty. Plagata.12

On appeal, the Court of Appeals (CA) reversed the RTC decision. The CA found sufficient evidence
of forgery and did not give credence to Atty. Plagata’s testimony that he saw Rosario sign the
document in Quezon City. Its jurat said differently. Also, upon comparing the questioned signature
with the specimen signatures, the CA noted significant variance between them. That Tarciano and
Rosario had been living separately for 30 years since 1958 also reinforced the conclusion that her
signature had been forged.

Since Tarciano and Rosario were married in 1950, the CA concluded that their property relations
were governed by the Civil Code under which an action for annulment of sale on the ground of lack of
spousal consent may be brought by the wife during the marriage within 10 years from the transaction.
Consequently, the action that the Rocas, her heirs, brought in 1997 fell within 10 years of the January
11, 1989 sale.

Considering, however, that the sale between the Fuentes spouses and Tarciano was merely
voidable, the CA held that its annulment entitled the spouses to reimbursement of what they paid him
plus legal interest computed from the filing of the complaint until actual payment. Since the Fuentes
spouses were also builders in good faith, they were entitled under Article 448 of the Civil Code to
payment of the value of the improvements they introduced on the lot. The CA did not award damages
in favor of the Rocas and deleted the award of attorney’s fees to the Fuentes spouses. 13

Unsatisfied with the CA decision, the Fuentes spouses came to this court by petition for review. 14

The Issues Presented

The case presents the following issues:

1. Whether or not Rosario’s signature on the document of consent to her husband Tarciano’s
sale of their conjugal land to the Fuentes spouses was forged;

2. Whether or not the Rocas’ action for the declaration of nullity of that sale to the spouses
already prescribed; and

3. Whether or not only Rosario, the wife whose consent was not had, could bring the action to
annul that sale.

The Court’s Rulings

First. The key issue in this case is whether or not Rosario’s signature on the document of consent
had been forged. For, if the signature were genuine, the fact that she gave her consent to her
husband’s sale of the conjugal land would render the other issues merely academic.

The CA found that Rosario’s signature had been forged. The CA observed a marked difference
between her signature on the affidavit of consent 15 and her specimen signatures.16 The CA gave no
weight to Atty. Plagata’s testimony that he saw Rosario sign the document in Manila on September
15, 1988 since this clashed with his declaration in the jurat that Rosario signed the affidavit in
Zamboanga City on January 11, 1989.

The Court agrees with the CA’s observation that Rosario’s signature strokes on the affidavit appears
heavy, deliberate, and forced. Her specimen signatures, on the other hand, are consistently of a
lighter stroke and more fluid. The way the letters "R" and "s" were written is also remarkably different.
The variance is obvious even to the untrained eye.

Significantly, Rosario’s specimen signatures were made at about the time that she signed the
supposed affidavit of consent. They were, therefore, reliable standards for comparison. The Fuentes
spouses presented no evidence that Rosario suffered from any illness or disease that accounted for
the variance in her signature when she signed the affidavit of consent. Notably, Rosario had been
living separately from Tarciano for 30 years since 1958. And she resided so far away in Manila. It
would have been quite tempting for Tarciano to just forge her signature and avoid the risk that she
would not give her consent to the sale or demand a stiff price for it.

What is more, Atty. Plagata admittedly falsified the jurat of the affidavit of consent. That jurat declared
that Rosario swore to the document and signed it in Zamboanga City on January 11, 1989 when, as
Atty. Plagata testified, she supposedly signed it about four months earlier at her residence in Paco,
Manila on September 15, 1988. While a defective notarization will merely strip the document of its
public character and reduce it to a private instrument, that falsified jurat, taken together with the
marks of forgery in the signature, dooms such document as proof of Rosario’s consent to the sale of
the land. That the Fuentes spouses honestly relied on the notarized affidavit as proof of Rosario’s
consent does not matter. The sale is still void without an authentic consent.
Second. Contrary to the ruling of the Court of Appeals, the law that applies to this case is the Family
Code, not the Civil Code. Although Tarciano and Rosario got married in 1950, Tarciano sold the
conjugal property to the Fuentes spouses on January 11, 1989, a few months after the Family Code
took effect on August 3, 1988.

When Tarciano married Rosario, the Civil Code put in place the system of conjugal partnership of
gains on their property relations. While its Article 165 made Tarciano the sole administrator of the
conjugal partnership, Article 16617 prohibited him from selling commonly owned real property without
his wife’s consent. Still, if he sold the same without his wife’s consent, the sale is not void but merely
voidable. Article 173 gave Rosario the right to have the sale annulled during the marriage within ten
years from the date of the sale. Failing in that, she or her heirs may demand, after dissolution of the
marriage, only the value of the property that Tarciano fraudulently sold. Thus:

Art. 173. The wife may, during the marriage, and within ten years from the transaction questioned,
ask the courts for the annulment of any contract of the husband entered into without her consent,
when such consent is required, or any act or contract of the husband which tends to defraud her or
impair her interest in the conjugal partnership property. Should the wife fail to exercise this right, she
or her heirs, after the dissolution of the marriage, may demand the value of property fraudulently
alienated by the husband.

But, as already stated, the Family Code took effect on August 3, 1988. Its Chapter 4 on Conjugal
Partnership of Gains expressly superseded Title VI, Book I of the Civil Code on Property Relations
Between Husband and Wife.18 Further, the Family Code provisions were also made to apply to
already existing conjugal partnerships without prejudice to vested rights. 19 Thus:

Art. 105. x x x The provisions of this Chapter shall also apply to conjugal partnerships of gains
already established between spouses before the effectivity of this Code, without prejudice to vested
rights already acquired in accordance with the Civil Code or other laws, as provided in Article 256. (n)

Consequently, when Tarciano sold the conjugal lot to the Fuentes spouses on January 11, 1989, the
law that governed the disposal of that lot was already the Family Code.

In contrast to Article 173 of the Civil Code, Article 124 of the Family Code does not provide a period
within which the wife who gave no consent may assail her husband’s sale of the real property. It
simply provides that without the other spouse’s written consent or a court order allowing the sale, the
same would be void. Article 124 thus provides:

Art. 124. x x x In the event that one spouse is incapacitated or otherwise unable to participate in the
administration of the conjugal properties, the other spouse may assume sole powers of
administration. These powers do not include the powers of disposition or encumbrance which must
have the authority of the court or the written consent of the other spouse. In the absence of such
authority or consent, the disposition or encumbrance shall be void. x x x

Under the provisions of the Civil Code governing contracts, a void or inexistent contract has no force
and effect from the very beginning. And this rule applies to contracts that are declared void by
positive provision of law,20 as in the case of a sale of conjugal property without the other spouse’s
written consent. A void contract is equivalent to nothing and is absolutely wanting in civil effects. It
cannot be validated either by ratification or prescription. 21

But, although a void contract has no legal effects even if no action is taken to set it aside, when any of
its terms have been performed, an action to declare its inexistence is necessary to allow restitution of
what has been given under it.22 This action, according to Article 1410 of the Civil Code does not
prescribe. Thus:

Art. 1410. The action or defense for the declaration of the inexistence of a contract does not
prescribe.

Here, the Rocas filed an action against the Fuentes spouses in 1997 for annulment of sale and
reconveyance of the real property that Tarciano sold without their mother’s (his wife’s) written
consent. The passage of time did not erode the right to bring such an action.

Besides, even assuming that it is the Civil Code that applies to the transaction as the CA held, Article
173 provides that the wife may bring an action for annulment of sale on the ground of lack of spousal
consent during the marriage within 10 years from the transaction. Consequently, the action that the
Rocas, her heirs, brought in 1997 fell within 10 years of the January 11, 1989 sale. It did not yet
prescribe.

The Fuentes spouses of course argue that the RTC nullified the sale to them based on fraud and that,
therefore, the applicable prescriptive period should be that which applies to fraudulent transactions,
namely, four years from its discovery. Since notice of the sale may be deemed given to the Rocas
when it was registered with the Registry of Deeds in 1989, their right of action already prescribed in
1993.

But, if there had been a victim of fraud in this case, it would be the Fuentes spouses in that they
appeared to have agreed to buy the property upon an honest belief that Rosario’s written consent to
the sale was genuine. They had four years then from the time they learned that her signature had
been forged within which to file an action to annul the sale and get back their money plus damages.
They never exercised the right.

If, on the other hand, Rosario had agreed to sign the document of consent upon a false
representation that the property would go to their children, not to strangers, and it turned out that this
was not the case, then she would have four years from the time she discovered the fraud within which
to file an action to declare the sale void. But that is not the case here. Rosario was not a victim of
fraud or misrepresentation. Her consent was simply not obtained at all. She lost nothing since the
sale without her written consent was void. Ultimately, the Rocas ground for annulment is not forgery
but the lack of written consent of their mother to the sale. The forgery is merely evidence of lack of
consent.

Third. The Fuentes spouses point out that it was to Rosario, whose consent was not obtained, that
the law gave the right to bring an action to declare void her husband’s sale of conjugal land. But here,
Rosario died in 1990, the year after the sale. Does this mean that the right to have the sale declared
void is forever lost?

The answer is no. As stated above, that sale was void from the beginning. Consequently, the land
remained the property of Tarciano and Rosario despite that sale. When the two died, they passed on
the ownership of the property to their heirs, namely, the Rocas. 23 As lawful owners, the Rocas had the
right, under Article 429 of the Civil Code, to exclude any person from its enjoyment and
disposal.1avvphi1

In fairness to the Fuentes spouses, however, they should be entitled, among other things, to recover
from Tarciano’s heirs, the Rocas, the ₱200,000.00 that they paid him, with legal interest until fully
paid, chargeable against his estate.
Further, the Fuentes spouses appear to have acted in good faith in entering the land and building
improvements on it. Atty. Plagata, whom the parties mutually entrusted with closing and documenting
the transaction, represented that he got Rosario’s signature on the affidavit of consent. The Fuentes
spouses had no reason to believe that the lawyer had violated his commission and his oath. They had
no way of knowing that Rosario did not come to Zamboanga to give her consent. There is no
evidence that they had a premonition that the requirement of consent presented some difficulty.
Indeed, they willingly made a 30 percent down payment on the selling price months earlier on the
assurance that it was forthcoming.

Further, the notarized document appears to have comforted the Fuentes spouses that everything was
already in order when Tarciano executed a deed of absolute sale in their favor on January 11, 1989.
In fact, they paid the balance due him. And, acting on the documents submitted to it, the Register of
Deeds of Zamboanga City issued a new title in the names of the Fuentes spouses. It was only after
all these had passed that the spouses entered the property and built on it. He is deemed a possessor
in good faith, said Article 526 of the Civil Code, who is not aware that there exists in his title or mode
of acquisition any flaw which invalidates it.

As possessor in good faith, the Fuentes spouses were under no obligation to pay for their stay on the
property prior to its legal interruption by a final judgment against them. 24 What is more, they are
entitled under Article 448 to indemnity for the improvements they introduced into the property with a
right of retention until the reimbursement is made. Thus:

Art. 448. The owner of the land on which anything has been built, sown or planted in good faith, shall
have the right to appropriate as his own the works, sowing or planting, after payment of the indemnity
provided for in Articles 546 and 548, or to oblige the one who built or planted to pay the price of the
land, and the one who sowed, the proper rent. However, the builder or planter cannot be obliged to
buy the land if its value is considerably more than that of the building or trees. In such case, he shall
pay reasonable rent, if the owner of the land does not choose to appropriate the building or trees after
proper indemnity. The parties shall agree upon the terms of the lease and in case of disagreement,
the court shall fix the terms thereof. (361a)

The Rocas shall of course have the option, pursuant to Article 546 of the Civil Code, 25 of indemnifying
the Fuentes spouses for the costs of the improvements or paying the increase in value which the
property may have acquired by reason of such improvements.

WHEREFORE, the Court DENIES the petition and AFFIRMS WITH MODIFICATION the decision of
the Court of Appeals in CA-G.R. CV 00531 dated February 27, 2007 as follows:

1. The deed of sale dated January 11, 1989 that Tarciano T. Roca executed in favor of Manuel
O. Fuentes, married to Leticia L. Fuentes, as well as the Transfer Certificate of Title T-90,981
that the Register of Deeds of Zamboanga City issued in the names of the latter spouses
pursuant to that deed of sale are DECLARED void;

2. The Register of Deeds of Zamboanga City is DIRECTED to reinstate Transfer Certificate of

Title 3533 in the name of Tarciano T. Roca, married to Rosario Gabriel;

3. Respondents Gonzalo G. Roca, Annabelle R. Joson, Rose Marie R. Cristobal, and Pilar
Malcampo are ORDERED to pay petitioner spouses Manuel and Leticia Fuentes the
₱200,000.00 that the latter paid Tarciano T. Roca, with legal interest from January 11, 1989
until fully paid, chargeable against his estate;
 4. Respondents Gonzalo G. Roca, Annabelle R. Joson, Rose Marie R. Cristobal, and Pilar
Malcampo are further ORDERED, at their option, to indemnify petitioner spouses Manuel and
Leticia Fuentes with their expenses for introducing useful improvements on the subject land or
pay the increase in value which it may have acquired by reason of those improvements, with
the spouses entitled to the right of retention of the land until the indemnity is made; and

5. The RTC of Zamboanga City from which this case originated is DIRECTED to receive
evidence and determine the amount of indemnity to which petitioner spouses Manuel and
Leticia Fuentes are entitled.

SO ORDERED.

ROBERTO A. ABAD
Associate Justice

WE CONCUR:

G.R. No. 215305

MARCELO G. SALUDAY, Petitioner
vs
PEOPLE OF THE PHILIPPINES, Respondent

DECISION

CARPIO, J.:

The Case

Before the Court is a Petition for Review on Certiorari assailing the Decision dated 26 June
2014 1 and the Resolution dated, 15 October 2014 2 of the Court of Appeals in CA-G.R. CR No.
01099. The Court of Appeals affirmed with modification the Sentence dated 15 September
2011 3 rendered by the Regional Trial Court, Branch 11, Davao City in Criminal CaseNo. 65, 734-09,
finding petitioner Marcelo G. Saluday (petitioner) guilty beyond reasonable doubt of illegal possession
of high-powered firearm, ammunition, and explosive under Presidential Decree No. 1866, 4 as
amended (PD 1866).

The Antecedent Facts

On 5 May 2009, Bus No. 66 of Davao Metro Shuttle was flagged down by Task Force Davao of the
Philippine Army at a checkpoint near the Tefasco Wharf in Ilang, Davao City. SCAA Junbert M. Buco
(Buco), a member of the Task Force, requested all male passengers to disembark from the vehicle
while allowing the female passengers to remain inside. He then boarded the bus to check the
presence and intercept the entry of any contraband, illegal firearms or explosives, and suspicious
individuals.

SCAA Buco checked all the baggage and personal effects of the passengers, but a small, gray-black
pack bag on the seat at the rear of the bus caught his attention. He lifted the bag and found it too
heavy for its small size. SCAA Buco then looked at the male passengers lined outside and noticed
that a man in a white shirt (later identified as petitioner) kept peeping through the window towards the
direction of the bag. Afterwards, SCAA Buco asked who the owner of the bag was, to which the bus
conductor answered that petitioner and his brother were the ones seated at the back. SCAA Buco
then requested petitioner to board the bus and open the bag. Petitioner obliged and the bag revealed
the following contents: (1) an improvised .30 caliber carbine bearing serial number 64702; (2) one
magazine with three live ammunitions; (3) one cacao-type hand grenade; and (4) a ten-inch hunting
knife. SCAA Buco then asked petitioner to produce proof of his authority to carry firearms and
explosives. Unable to show any, petitioner was immediately arrested and informed of his rights by
SCAA Buco.

Petitioner was then brought for inquest before the Office of the City Prosecutor for Davao City. In its
Resolution dated 7 May 2009,5 the latter found probable cause to charge him with illegal possession
of high-powered firearm, ammunition, and explosive under PD l 866. The Information dated 8 May
2009 thus reads:

That on or about May 5, 2009, in the City of Davao, Philippines, and within the jurisdiction of this
Honorable Court, the above-mentioned accused, willfully, unlawfully and knowingly, with intent to
possess, had in his possession and under his custody an improvised high powered firearm caliber .30
carbine bearing Serial No. 64702 (made in Spain) with one (1) magazine loaded with three (3) live
ammunitions and one (1) "'cacao" type hand grenade explosive, without first securing the necessary
license to possess the same.

CONTRARY TO LAW.6

When arraigned, petitioner pleaded not guilty.

During the trial, the prosecution presented two witnesses namely, NUP Daniel Tabura (Tabura), a
representative of the Firearms and Explosives Division of the Philippine National Police, and SCAA
Buco. NUP Tabura identified the Certification dated 5 November 2009 7 attesting that petitioner was
"not a licensed/registered holder of any kind and caliber per verification from records." Meanwhile,
SCAA Buco identified petitioner and the items seized from the bag, and testified on the details of the
routine inspection leading to the immediate arrest of petitioner. On cross-examination, SCAA Buco
further elaborated on the search conducted:

Atty. Mamburam

Q And that check point, which was conducted along llang [R)oad,

Davao City, was by virtue of a memorandum?

A Yes, Your Honor.

xxxx

Q Now, you said that at around 5:00 of said date, you were able to intercept a Metro Shuttle
passenger bus and you requested all passengers to alight?
A Yes.

Q passengers were left inside?

A Yes, Your Honor.

Q And, after all passengers were able to alight, you checked all cargoes of the passengers in the
bus?

A Yes.

xxxx

Q And, you testified that one of those things inside the bus was a black gray colored pack bag which
was placed at the back portion of the bus?

A Yes.

Q You said that the hag was heavy?

A Yes.

Q And you picked up or carried also the other belongings or cargo[e]s inside the bus and that was the
only thing or item inside the bus which was heavy. Is that correct?

A There were many bags and they were heavy. When l asked who is the owner of the bag because
it was heavy but the bag was small. when I asked, he said the content of the bag was a cellphone.
But 1 noticed that it was heavy.

xxxx

Q And you said that somebody admitted ownership of the bag. Is that correct?

A Yes.

Q Who admitted ownership of the bag?

A (WITNESS POINTS TO THE ACCUSED)

Q Now, you said that while you are looking at the bag, you noticed that one male passenger you
pointed as the accused kept looking at you'?

A Yes.

Q And, aside from the accused, all the other male passengers were not looking at you?

A The other passengers were on the ground but he was in front of [the] window looking towards his
bag.
xxxx

Q And the accused admitted that he owned the bag, you requested him to open the bag'?

A Not yet. I let him board the bus and asked him if he can open it.

Q And, when he opened it?

A I saw the handle of the firearm. 8 (Emphasis supplied)

On the other hand, the defense presented petitioner as sole witness. On direct examination, petitioner
denied ownership of the bag. However, he also admitted to answering SCAA Buco when asked about
its contents and allowing SCAA Buco to open it after the latter sought for his permission:

ATTY. MAMBURAM

Q x xx After the conductor of the bus told the member of the task force that you and your brother
were seated at the back of the bus. can you please tell us what happened next'?

A The member of the task force asked who is the owner of the bag and what were the contents of the
bag.

Q To whom did the member of the task force address that question?

A To me because I was pointed to by the conductor.

Q And what was your reply to the question of the member of the task force?

A I told him it was only a cellphone.

Q By the way, Mr. Witness, who owned that bag?

A My elder brother.

Q And why did you make a reply to the question of the member of the task force when, in fact, you
were not the owner of the bag?

A Because I was pointed to by the conductor that it was me and my brother who were seated at the
back.

xxxx

Q Now, after you told the member of the task force that probably the content of the bag was
cellphone, what happened next?

A He asked if he can open it.

Q And what was your reply?

A I told him yes, just open it.

xx xx

Q Now, you said that the owner of the bag and the one who carried that bag was your brother, what is
the name of your brother?

A Roger Saluday.

Q Where is your brother Roger now?

A Roger is already dead. He died in September 2009. 9 (Emphasis supplied)

On cross-examination, petitioner clarified that only he was pointed at by the conductor when the latter
was asked who owned the bag. Petitioner also admitted that he never disclosed he was with his
brother when he boarded the bus:

PROS. VELASCO

Q You said that you panicked because they pulled you but as a way of saving yourself considering
you don't own the bag> did you not volunteer to inform them that [the] bag was owned by your
brother?

A I told them I have a companion but I did not tell them that it was my brother because I was also
afraid of my brother.

Q So, in short, Mr. Witness, you did not actually inform them that you had a brother at that time
when you were boarding that bus, correct?

A No, sir, I did not.

xxxx

Q So, you were answering all questions by saying it is not your bag but you confirm now that it was
the conductor of that bus who pointed you as the owner of the bag, correct?

A Yes, sir, the conductor pointed at me as the one who [sic] seated at the back. 10 (Emphasis
supplied)

The defense subsequently rested its case and the prosecution waived the right to present rebuttal
evidence. Upon order from the trial court, the parties submitted their respective memoranda.

The Decision of the Trial Court

Finding the denials of petitioner as self-serving and weak, the trial court declared him to be in actual
or constructive possession of firearm and explosive without authority or license. Consequently, in the
dispositive portion of the Sentence dated 15 September 2011, petitioner was adjudged guilty beyond
reasonable doubt of illegal possession of firearm, ammunition, and explosive under PD 1866:

WHEREFORE, in view of all the foregoing, judgment is hereby rendered finding Marcelo Gigbalen
Saluday GUILTY of illegal possession of high powered firearm, ammunition and explosive. For the
offense of illegal possession of high powered firearm and ammunition, he is hereby sentenced to
suffer an imprisonment of prision mayor in its minimum period. He is likewise ordered to pay a fine of
₱30,000.00. For the offense of illegal possession of explosive, he is hereby sentenced to suffer an
imprisonment of prision mayor in its maximum period to reclusion temporal. He is likewise ordered to
pay a fine of ₱50,000.00.

xxxx

SO ORDERED. 11

On 12 October 2011, petitioner timely filed his Notice of Appeal. 12

The Decision of the Court of Appeals

On appeal, petitioner challenged his conviction raising as grounds the alleged misappreciation of
evidence by the trial court and the supposed illegality of the search. 13 On the other hand, the Office
of the Solicitor General (OSG) argued that the warrantless search was valid being a consented
search, and that the factual findings of the trial court can no longer be disturbed. 14

In its Decision dated 26 June 2014, the Court of Appeals sustained the conviction of petitioner and
affirmed the ruling of the trial court with modification:

WHEREFORE. the instant appeal is DISMISSED. The Sentence dated September 15, 2011 of the
Regional Trial Court, 11th Judicial Region, Branch 11, Davao City, in Criminal Case No. 65, 734-09,
finding Marcelo Gigbalen Saluday guilty beyond reasonable doubt of illegal possession of high
powered firearm, ammunition and explosive is AFFIRMED with the MODIFICATION that:

(1) for the offense of illegal possession of high-powered firearm and ammunition, he is imposed an
indeterminate sentence of four (4) years, eight (8) months and twenty-one (21) days of
prision correccional maximum, as the minimum term, to seven (7) years and one (1) day of prision
mayor minimum, as the maximum term, in addition to the fine of Thirty thousand pesos (₱30,000.00);
and

(2) for the offense of illegal possession of explosive, he is sentenced to suffer the penalty of reclusion
perpetua without eligibility for parole.

SO ORDERED.15

Petitioner then filed a Motion for Reconsideration, 16 to which the OSG filed its Comment. 17 In its
Resolution dated 15 October 2014, 18 the Court of Appeals denied petitioner's Motion for
Reconsideration for being pro forma. Hence, petitioner filed this Petition for Review
on Certiorari under Rule 45 of the Rules of Court.

The Issue

Petitioner assails the appreciation of evidence by the trial court and the Court of Appeals as to
warrant his conviction for the offenses charged.

The Ruling of this Court

We affirm.
Only questions of law may be raised in a petition for review on certiorari under Rule 45 of the Rules of
Court.19 As a result, the Court, on appeal, is not duty-bound to weigh and sift through the evidence
presented during trial. 20 Further, factual findings of the trial court, when affirmed by the Court of
Appeals, are accorded great respect, even finality. 21

Here, petitioner assails his conviction for illegal possession of high-powered firearm and ammunition
under PD 1866, and illegal possession of explosive under the same law. The elements of both
offenses are as follows: (1) existence of the firearm, ammunition or explosive; (2) ownership or
possession of the firearm, ammunition or explosive; and (3) lack of license to own or possess. 22 As
regards the second and third elements, the Corn1: of Appeals concurred with the trial court that
petitioner was in actual or constructive possession of a high-powered firearm, ammunition, and
explosive without the requisite authority. The Decision dated 26 June 2014 reads in pertinent part:

In the present case, the prosecution proved the negative fact that appellant has no license or permit
to own or possess the firearm, ammunition and explosive by presenting NUP Daniel Tab[u]ra
(Tab[u]ra), a representative of the Firearms and Explosives Division (FED) of the PNP. He identified
the Certification issued by the Chief. Records Section. FED of the PNP, stating that appellant "is not a
licensed/registered holder of any kind and caliber per verification from records of this office."

Appellant, however, questions the competence of Tab[u]ra to testify on the veracity or truthfulness of
the Ce1tification. He claims that the officer who issued it should have been the one presented so he
would not be denied the right to confront and cross-examine the witnesses against him.

There is no merit to petitioner's claim. The following is pertinent:

xxxx

The Court on several occasions ruled that either the testimony of a representative of, or a certification
from, the Philippine National Police (PNP) Firearms and Explosive Office attesting that a person is not
a licensee of any firearm would suffice to prove beyond reasonable doubt the second element of
possession of illegal firearms. The prosecution more than complied when it presented both.

xxxx

Also, appellant denies having physical or constructive possession of the firearms, ammunition and
explosive. However, his denial flies in the face of the following testimonies which he himself made:

xxxx

Appellant gave information, albeit misleading, on the contents of the bag. He even allowed the police
officer to open it. Based on his actuations, there could be no doubt that he owned the bag containing
the firearm, ammunition and explosive.

Shifting the blame to his dead brother is very easy for appellant to fabricate. Besides, the allegation
that his brother owned the bag is uncorroborated and self-serving. 23

As above-quoted, the presence of the second and third elements of illegal possession of firearm,
ammunition, and explosive raises questions of fact. Considering further that the Court of Appeals
merely echoed the factual findings of the trial court, the Court finds no reason to disturb them.
As regards the first element, petitioner corroborates the testimony of SCAA Buco on four important
points: one, that petitioner was a passenger of the bus flagged down on 5 May 2009 at a military
checkpoint in Ilang, Davao City; two, that SCAA Buco boarded and searched the bus; three, that the
bus conductor pointed at petitioner as the owner of a small, gray-black pack bag on the back seat of
the bus; and four, that the same bag contained a .30-caliber firearm with one magazine loaded who
three live ammunitions, and a hand grenade. Notably, petitioner does not challenge the chain of
custody over the seized items. Rather, he merely raises a pure question of law and argues that they
are inadmissible on the ground that the search conducted by Task Force Davao was illegal.

The Court disagrees.

Section 2, Article Ill of the Constitution, which was patterned after the Fourth Amendment to the
United States (U.S.) Constitution,24 reads:

SEC. 2. The right of the people to be secure in their persons, houses, papers, and effects against
unreasonable searches and seizures of whatever nature and for any purpose shall be inviolable, and
no search warrant or warrant of arrest shall issue except upon probable cause to be determined
personally by the judge after examination under oath or affirmation of the complainant and the
witnesses he may produce, and particularly describing the place to be searched and the persons or
things to be seized. (Emphasis supplied)

Indeed, the constitutional guarantee is not a blanket prohibition. Rather, it operates against
"unreasonable" searches and seizures only. 25

Conversely, when a search is "reasonable," Section 2, Article HI of the Constitution does not apply.

As to what qualifies as a reasonable search, the pronouncements of the U.S. Supreme Court, which
are doctrinal in this jurisdiction,26 may shed light on the matter.

In the seminal case of Katz v. United States,  27 the U.S. Supreme Court held that the electronic
surveillance of a phone conversation without a warrant violated the Fourth Amendment. According to
the U.S. Supreme Court, what the Fourth Amendment protects are people, not places such that what
a person knowingly exposes to the public, even in his or her own home or office, is not a subject of
Fourth Amendment protection in much the same way that what he or she seeks to preserve as
private, even in an area accessible to the public, may be constitutionally protected, thus:

Because of the misleading way the issues have been formulated, the parties have attached great
significance to the characterization of the telephone booth from which the petitioner placed his calls.
The petitioner has strenuously argued that the booth was a "constitutionally protected area." The
Government has maintained with equal vigor that it was not. But this effo1i to decide whether or not a
given "area,'' viewed in the abstract, is "constitutionally protected" deflects attention from the problem
presented by this case. For the Fourth Amendment protects people, not places. What a person
knowingly exposes to the public, even in his own home or office, is not a subject of Fourth
Amendment protection. See Lewis v. United States, 385 U.S. 206, 210; United States v. Lee, 274
U.S. 559, 563. But what he seeks to preserve as private, even in an area accessible to the public,
may be constitutionally protected. See Rios v. United States, 364 U.S. 253; £:y; parte Jackson, 96
U.S. 727, 733.28 (Emphasis supplied)

Further, Justice John Harlan laid down in his concurring opinion the two-part test that would trigger
the application of the Fourth Amendment. First, a person exhibited an actual (subjective) expectation
of privacy.29 Second, the expectation is one that society is prepared to recognize as reasonable
(objective).30
The prohibition of unreasonable search and seizure ultimately stems from a person's right to privacy.
Hence, only when the State intrudes into a person's expectation of privacy, which society regards as
reasonable, is the Fourth Amendment triggered. Conversely, where a person does not have an
expectation of privacy or one's expectation of privacy is not reasonable to society, the alleged State
intrusion is not a "search" within the protection of the Fourth Amendment.

A survey of Philippine case law would reveal the same jurisprudential reasoning. To illustrate,
in People v. Johnson,31 the Court declared airport searches as outside the protection of the search
and seizure clause due to the lack of an expectation of privacy that society will regard as reasonable:

Persons may lose the protection of the search and seizure clause by exposure of their persons or
property to the public in a manner reflecting a lack of subjective expectation of privacy, which
expectation society is prepared to recognize as reasonable. Such recognition is implicit in airport
security procedures. With increased concern over airplane hijacking and terrorism has come
increased security at the nation's airports. Passengers attempting to board an aircraft routinely pass
through metal detectors; their carry-on baggage as well as checked luggage are routinely subjected
to x-ray scans. Should these procedures suggest the presence of suspicious objects. physical
searches are conducted to determine what the objects are. There is little question that such searches
are reasonable, given their minimal intrusiveness, the gravity of the safety interests involved, and the
reduced privacy expectations associated with airline travel. Indeed, travelers are often notified
through airport public address systems, signs. and notices in their airline tickets that they are subject
to search and, if any prohibited materials or substances are found, such would be subject to seizure.
These announcements place passengers on notice that ordinary constitutional protections against
warrantless searches and seizures do not apply to routine airport procedures. 32 (Citations omitted)

Similarly, in Dela Cruz v. People,33 the Court described seaport searches as reasonable searches on

the ground that the safety of the traveling public overrides a person's right to privacy:

Routine baggage inspections conducted by port authorities, although done without search warrants,
are not unreasonable searches per se. Constitutional provisions protecting privacy should not be so
literally understood so as to deny reasonable safeguards to ensure the safety of the traveling public.

xxxx

Thus, with port security personnel's functions having the color of state-related functions and deemed
agents of government, Marti is inapplicable in the present case. Nevertheless, searches pursuant to
port security measures are not unreasonable per se. The security measures of x-ray scanning and
inspection in domestic ports are akin to routine security procedures in airports.

xxxx

Port authorities were acting within their duties and functions when [they] used x-ray scanning
machines for inspection of passengers' bags. When the results of the x-ray scan revealed the
existence of firearms in the bag, the port authorities had probable cause to conduct u search of
petitioner's bag. Notably, petitioner did not contest the results of the x-ray scan. 34

In People v. Breis,35 the Court also justified a bus search owing to the reduced expectation of privacy
of the riding public:

Unlike the officer in Chan Fook, IO1 Mangili did not exceed his authority in the performance of his
duty. Prior to Breis' resistance, IO1 Mangili laid nary a finger on Breis or Yurnol. Neither did his
presence in the bus constitute an excess of authority. The bus is public transportation, and is open to
the public. The expectation of privacy in relation to the constitutional right against unreasonable
searches in a public bus is not the same as that in a person's dwelling. In fact, at that point in time,
only the bus was being searched, not Yumol, Breis, or their belongings, and the search of moving
vehicles has been upheld.36

Indeed, the reasonableness of a person's expectation of privacy must be determined on a case-to-

case basis since it depends on the factual circumstances surrounding the case. 37 Other factors such
as customs, physical surroundings and practices of a particular activity may diminish this
expectation.38 In Fortune Express, Inc. v. Court of Appeals, 39 a common carrier was held civilly liable
for the death of a passenger due to the hostile acts of armed men who boarded and subsequently
seized the bus. The Could held that "simple precautionary measures to protect the safety of
passengers, such as frisking passengers and inspecting their baggages, preferably with non-intrusive
gadgets such as metal detectors, before allowing them on board could have been employed without
violating the passenger's constitutional rights." 40 In Costabella Corp. v. Court of Appeals,41 a
compulsory right of way was found improper for the failure of the owners of the dominant estate to
allege that the passageway they sought to be re-opened was at a point least prejudicial to the owner
of the servient estate. The Court thus explained, ''[c]onsidering that the petitioner operates a hotel
and beach resort in its property, it must undeniably maintain a strict standard of security within its
premises. Otherwise, the convenience, privacy, and safety of its clients and patrons would be
compromised."42 Similarly, shopping malls install metal detectors and body scanners, and require bag
inspection as a requisite for entry. Needless to say, any security lapse on the part of the mall owner
can compromise public safety.

Concededly, a bus, a hotel and beach resort, and a shopping mall are all private property whose
owners have every right to exclude anyone from entering. At the same time, however, because these
private premises are accessible to the public, the State, much like the owner, can impose non-
intrusive security measures and filter those going in. The only difference in the imposition of security
measures by an owner and the State is, the former emanates from the attributes of ownership under
Article 429 of the Civil Code, while the latter stems from the exercise of police power for the
promotion of public safety. Necessad1y, a person's expectation of privacy is diminished whenever he
or she enters private premises that arc accessible to the public.

In view of the foregoing, the bus inspection conducted by Task Force Davao at a military checkpoint
constitutes a reasonable search. Bus No. 66 of Davao Metro Shuttle was a vehicle of public
transportation where passengers have a reduced expectation of privacy. Further, SCAA Buco merely
lifted petitioner's bag. This visual and minimally intrusive inspection was even less than the standard
x-ray and physical inspections done at the airport and seaport terminals where passengers may
further be required to open their bags and luggages. Considering the reasonableness of the bus
search, Section 2, Article III of the Constitution finds no application, thereby precluding the necessity
for a warrant.

As regards the warrantless inspection of petitioner's bag, the OSG argues that petitioner consented to
the search) thereby making the seized items admissible in evidence. 43 Petitioner contends otherwise
and insists that his failure to object cannot be construed as an implied waiver.

Petitioner is wrong.

Doubtless, the constitutional immunity against unreasonable searches and seizures is a personal
right, which may be waived.44 However, to be valid, the consent must be voluntary such that it is
unequivocal, specific, and intelligently given, uncontaminated by any duress or coercion. 45 Relevant
to this determination of voluntariness are the following characteristics of the person giving consent
and the environment in which consent is given: (a) the age of the consenting party; (b) whether he or
she was in a public or secluded location; (c) whether he or she objected to the search or passively
looked on;46 (d) his or her education and intelligence; (e) the presence of coercive police procedures;
(f) the belief that no incriminating evidence will be found; 47 (g) the nature of the police questioning; (h)
the environment in which the questioning took place; and (i) the possibly vulnerable subjective state
of the person consenting.48

In Asuncion v. Court of Appeals,49the apprehending officers sought the permission of petitioner to

search the car, to which the latter agreed. According to the Court, petitioner himself freely gave his
consent to the search. In People v. Montilla,  50 the Court found the accused to have spontaneously
performed affirmative acts of volition by opening the bag without being forced or intimidated to do so,
which acts amounted to a clear waiver of his right. In People v. Omaweng,51 the police officers asked
the accused if they could see the contents of his bag, to which the accused said "you can see the
contents but those are only clothings." The policemen then asked if they could open and see it, and
the accused answered "you can see it." The Court held there was a valid consented search.

Similarly in this case, petitioner consented to the baggage inspection done by SCAA Buco. When
SCAA Buco asked if he could open petitioner's bag, petitioner answered ''yes, just open if' based on
petitioner's own testimony. This is clear consent by petitioner to the search of the contents of his bag.
In its Decision dated 26 June 2014, the Court of Appeals aptly held:

A waiver was found in People v. Omaweng. There, the police officers asked the accused if they could
see the contents of his bag and he answered "you can see the contents but those are only clothings.''
When asked if they could open and see it, he said "you can see it." In the present case, accused-
appellant told the member of the task force that "it was only a cellphone" when asked who owns the
bag and what are its contents. When asked by the member of the task force if he could open it,
accused-appellant told him "yes, just open it." Hence, as in Omaweng, there was a waiver of
accused-appellants right against warrantless search. 52

To emphasize, a reasonable search, on the one hand, and a warrantless search, on the other, are
mutually exclusive. While both State intrusions are valid even without a warrant, the underlying
reasons for the absence of a warrant are different. A reasonable search arises from a reduced
expectation of privacy, for which reason Section 2, Article III of the Constitution finds no application.
Examples include searches done at airports, seaports, bus terminals, malls, and similar public
·places. In contrast, a warrantless search is presumably an "unreasonable search," but for reasons of
practicality, a search warrant can be dispensed with. Examples include search incidental to a lawful
arrest, search of evidence in plain view, consented search, and extensive search of a private moving
vehicle.

Further, in the conduct of bus searches, the Court Jays down the following guidelines.1âwphi1 Prior
to entry, passengers and their bags and luggages can be subjected to a routine inspection akin to
airport and seaport security protocol. In this regard, metal detectors and x-ray scanning machines can
be installed at bus terminals. Passengers can also be frisked. In lieu of electronic scanners,
passengers can be required instead to open their bags and luggages for inspection, which inspection
must be made in the passenger's presence. Should the passenger object, he or she can validly be
refused entry into the terminal.

While in transit, a bus can still be searched by government agents or the security personnel of the
bus owner in the following three instances. First, upon receipt of information that a passenger carries
contraband or illegal articles, the bus where the passenger is aboard can be stopped en route to
allow for an inspection of the person and his or her effects. This is no different from an airplane that is
forced to land upon receipt of information about the contraband or illegal articles carried by a
passenger onboard. Second, whenever a bus picks passengers en route, the prospective passenger
can be frisked and his or her bag or luggage be subjected to the same routine inspection by
government agents or private security personnel as though the person boarded the bus at the
terminal. This is because unlike an airplane, a bus is able to stop and pick passengers along the way,
making it possible for these passengers to evade the routine search at the bus terminal. Third, a bus
can be flagged down at designated military or police checkpoints where State agents can board the
vehicle for a routine inspection of the passengers and their bags or luggages.

In both situations, the inspection of passengers and their effects prior to entry at the bus terminal and
the search of the bus while in transit must also satisfy the following conditions to qualify as a valid
reasonable search. First, as to the manner of the search, it must be the least intrusive and must
uphold the dignity of the person or persons being searched, minimizing, if not altogether eradicating,
any cause for public embarrassment, humiliation or ridicule. Second, neither can the search result
from any discriminatory motive such as insidious profiling, stereotyping and other similar motives. In
all instances, the fundamental rights of vulnerable identities, persons with disabilities, children and
other similar groups should be protected. Third, as to the purpose of the search, it must be confined
to ensuring public safety. Fourth, as to the evidence seized from the reasonable search, courts must
be convinced that precautionary measures were in place to ensure that no evidence was planted
against the accused.

The search of persons in a public place is valid because the safety of others may be put at risk. Given
the present circumstances, the Court takes judicial notice that public transport buses and their
terminals, just like passenger ships and seaports, are in that category.

Aside from public transport buses, any moving vehicle that similarly accepts passengers at the
terminal and along its route is likewise covered by these guidelines. Hence, whenever compliant with
these guidelines, a routine inspection at the terminal or of the vehicle itself while in transit constitutes
a reasonable search. Otherwise, the intrusion becomes unreasonable, thereby triggering the
constitutional guarantee under Section 2, Article III of the Constitution.

To emphasize, the guidelines do not apply to privately-owned cars. Neither are they applicable to
moving vehicles dedicated for private or personal use, as in the case of taxis, which are hired by only
one or a group of passengers such that the vehicle can no longer be flagged down by any other
person unti1 the passengers on board alight from the vehicle.

WHEREFORE, the petition is DENIED. The Decision dated 26 June 2014 and the Resolution dated
15 October 2014 of the Court of Appeals in CA-G.R. CR No. 01099 are AFFIRMED.

SO ORDERED.
Use Injuring Rights of Third Persons

G.R. No. 74761 November 6, 1990

NATIVIDAD V. ANDAMO and EMMANUEL R. ANDAMO, petitioners,

vs.
INTERMEDIATE APPELLATE COURT (First Civil Cases Division) and MISSIONARIES OF OUR
LADY OF LA SALETTE, INC., respondents.

Lope E. Adriano for petitioners.

Padilla Law Office for private respondent.

FERNAN, C.J.:

The pivotal issue in this petition for certiorari, prohibition and mandamus is whether a corporation,
which has built through its agents, waterpaths, water conductors and contrivances within its land,
thereby causing inundation and damage to an adjacent land, can be held civilly liable for damages
under Articles 2176 and 2177 of the Civil Code on quasi-delicts such that the resulting civil case can
proceed independently of the criminal case.

The antecedent facts are as follows:

Petitioner spouses Emmanuel and Natividad Andamo are the owners of a parcel of land situated in
Biga (Biluso) Silang, Cavite which is adjacent to that of private respondent, Missionaries of Our Lady
of La Salette, Inc., a religious corporation.

Within the land of respondent corporation, waterpaths and contrivances, including an artificial lake,
were constructed, which allegedly inundated and eroded petitioners' land, caused a young man to
drown, damaged petitioners' crops and plants, washed away costly fences, endangered the lives of
petitioners and their laborers during rainy and stormy seasons, and exposed plants and other
improvements to destruction.

In July 1982, petitioners instituted a criminal action, docketed as Criminal Case No. TG-907-82,
before the Regional Trial Court of Cavite, Branch 4 (Tagaytay City), against Efren Musngi, Orlando
Sapuay and Rutillo Mallillin, officers and directors of herein respondent corporation, for destruction by
means of inundation under Article 324 of the Revised Penal Code.
Subsequently, on February 22, 1983, petitioners filed another action against respondent corporation,
this time a civil case, docketed as Civil Case No. TG-748, for damages with prayer for the issuance of
a writ of preliminary injunction before the same court. 1

On March 11, 1983, respondent corporation filed its answer to the complaint and opposition to the
issuance of a writ of preliminary injunction. Hearings were conducted including ocular inspections on
the land. However, on April 26, 1984, the trial court, acting on respondent corporation's motion to
dismiss or suspend the civil action, issued an order suspending further hearings in Civil Case No, TG-
748 until after judgment in the related Criminal Case No. TG-907-82.

Resolving respondent corporation's motion to dismiss filed on June 22, 1984, the trial court issued on
August 27, 1984 the disputed order dismissing Civil Case No. TG-748 for lack of jurisdiction, as the
criminal case which was instituted ahead of the civil case was still unresolved. Said order was
anchored on the provision of Section 3 (a), Rule III of the Rules of Court which provides that "criminal
and civil actions arising from the same offense may be instituted separately, but after the criminal
action has been commenced the civil action cannot be instituted until final judgment has been
rendered in the criminal action." 2

Petitioners appealed from that order to the Intermediate Appellate Court. 3

On February 17, 1986, respondent Appellate Court, First Civil Cases Division, promulgated a
decision 4 affirming the questioned order of the trial court. 5 A motion for reconsideration filed by
petitioners was denied by the Appellate Court in its resolution dated May 19, 1986. 6

Directly at issue is the propriety of the dismissal of Civil Case No. TG-748 in accordance with Section
3 (a) of Rule 111 of the Rules of Court. Petitioners contend that the trial court and the Appellate Court
erred in dismissing Civil Case No. TG-748 since it is predicated on a quasi-delict. Petitioners have
raised a valid point.

It is axiomatic that the nature of an action filed in court is determined by the facts alleged in the
complaint as constituting the cause of action. 7 The purpose of an action or suit and the law to govern
it, including the period of prescription, is to be determined not by the claim of the party filing the
action, made in his argument or brief, but rather by the complaint itself, its allegations and prayer for
relief. 8 The nature of an action is not necessarily determined or controlled by its title or heading but
the body of the pleading or complaint itself. To avoid possible denial of substantial justice due to legal
technicalities, pleadings as well as remedial laws should be liberally construed so that the litigants
may have ample opportunity to prove their respective claims. 9

Quoted hereunder are the pertinent portions of petitioners' complaint in Civil Case No. TG-748:

4) That within defendant's land, likewise located at Biga (Biluso), Silang, Cavite,
adjacent on the right side of the aforesaid land of plaintiffs, defendant constructed
waterpaths starting from the middle-right portion thereof leading to a big hole or
opening, also constructed by defendant, thru the lower portion of its concrete hollow-
blocks fence situated on the right side of its cemented gate fronting the provincial
highway, and connected by defendant to a man height inter-connected cement culverts
which were also constructed and lain by defendant cross-wise beneath the tip of the
said cemented gate, the left-end of the said inter-connected culverts again connected
by defendant to a big hole or opening thru the lower portion of the same concrete
hollowblocks fence on the left side of the said cemented gate, which hole or opening is
likewise connected by defendant to the cemented mouth of a big canal, also
constructed by defendant, which runs northward towards a big hole or opening which
 was also built by defendant thru the lower portion of its concrete hollow-blocks fence
which separates the land of plaintiffs from that of defendant (and which serves as the
exit-point of the floodwater coming from the land of defendant, and at the same time,
the entrance-point of the same floodwater to the land of plaintiffs, year after year, during
rainy or stormy seasons.

5) That moreover, on the middle-left portion of its land just beside the land of plaintiffs,
defendant also constructed an artificial lake, the base of which is soil, which utilizes the
water being channeled thereto from its water system thru inter-connected galvanized
iron pipes (No. 2) and complimented by rain water during rainy or stormy seasons, so
much so that the water below it seeps into, and the excess water above it inundates,
portions of the adjoining land of plaintiffs.

6) That as a result of the inundation brought about by defendant's aforementioned water

conductors, contrivances and manipulators, a young man was drowned to death, while
herein plaintiffs suffered and will continue to suffer, as follows:

a) Portions of the land of plaintiffs were eroded and converted to deep,

wide and long canals, such that the same can no longer be planted to any
crop or plant.

b) Costly fences constructed by plaintiffs were, on several occasions,

washed away.

c) During rainy and stormy seasons the lives of plaintiffs and their laborers
are always in danger.

d) Plants and other improvements on other portions of the land of plaintiffs

are exposed to destruction. ... 10

A careful examination of the aforequoted complaint shows that the civil action is one under Articles
2176 and 2177 of the Civil Code on quasi-delicts. All the elements of a quasi-delict are present, to wit:
(a) damages suffered by the plaintiff, (b) fault or negligence of the defendant, or some other person
for whose acts he must respond; and (c) the connection of cause and effect between the fault or
negligence of the defendant and the damages incurred by the plaintiff. 11

Clearly, from petitioner's complaint, the waterpaths and contrivances built by respondent corporation
are alleged to have inundated the land of petitioners. There is therefore, an assertion of a causal
connection between the act of building these waterpaths and the damage sustained by petitioners.
Such action if proven constitutes fault or negligence which may be the basis for the recovery of
damages.

In the case of Samson vs. Dionisio, 12 the Court applied Article 1902, now Article 2176 of the Civil
Code and held that "any person who without due authority constructs a bank or dike, stopping the
flow or communication between a creek or a lake and a river, thereby causing loss and damages to a
third party who, like the rest of the residents, is entitled to the use and enjoyment of the stream or
lake, shall be liable to the payment of an indemnity for loss and damages to the injured party.

While the property involved in the cited case belonged to the public domain and the property subject
of the instant case is privately owned, the fact remains that petitioners' complaint sufficiently alleges
that petitioners have sustained and will continue to sustain damage due to the waterpaths and
contrivances built by respondent corporation. Indeed, the recitals of the complaint, the alleged
presence of damage to the petitioners, the act or omission of respondent corporation supposedly
constituting fault or negligence, and the causal connection between the act and the damage, with no
pre-existing contractual obligation between the parties make a clear case of a quasi delict or culpa
aquiliana.

It must be stressed that the use of one's property is not without limitations. Article 431 of the Civil
Code provides that "the owner of a thing cannot make use thereof in such a manner as to injure the
rights of a third person." SIC UTERE TUO UT ALIENUM NON LAEDAS. Moreover, adjoining
landowners have mutual and reciprocal duties which require that each must use his own land in a
reasonable manner so as not to infringe upon the rights and interests of others. Although we
recognize the right of an owner to build structures on his land, such structures must be so constructed
and maintained using all reasonable care so that they cannot be dangerous to adjoining landowners
and can withstand the usual and expected forces of nature. If the structures cause injury or damage
to an adjoining landowner or a third person, the latter can claim indemnification for the injury or
damage suffered.

Article 2176 of the Civil Code imposes a civil liability on a person for damage caused by his act or
omission constituting fault or negligence, thus:

Article 2176. Whoever by act or omission causes damage to another, there being fault
or negligence, is obliged to pay for the damage done. Such fault or negligence, if there
is no pre-existing contractual relation between the parties, is called a quasi-delict and is
governed by the provisions of this chapter.

Article 2176, whenever it refers to "fault or negligence", covers not only acts "not punishable by law"
but also acts criminal in character, whether intentional and voluntary or negligent. Consequently, a
separate civil action lies against the offender in a criminal act, whether or not he is criminally
prosecuted and found guilty or acquitted, provided that the offended party is not allowed, (if the
tortfeasor is actually charged also criminally), to recover damages on both scores, and would be
entitled in such eventuality only to the bigger award of the two, assuming the awards made in the two
cases vary. 13

The distinctness of quasi-delicta is shown in Article 2177 of the Civil Code, which states:

Article 2177. Responsibility for fault or negligence under the preceding article is entirely
separate and distinct from the civil liability arising from negligence under the Penal
Code. But the plaintiff cannot recover damages twice for the same act or omission of
the defendant.

According to the Report of the Code Commission "the foregoing provision though at first sight
startling, is not so novel or extraordinary when we consider the exact nature of criminal and civil
negligence. The former is a violation of the criminal law, while the latter is a distinct and independent
negligence, which is a "culpa aquiliana" or quasi-delict, of ancient origin, having always had its own
foundation and individuality, separate from criminal negligence. Such distinction between criminal
negligence and "culpa extra-contractual" or "cuasi-delito" has been sustained by decisions of the
Supreme Court of Spain ... 14

In the case of Castillo vs. Court of Appeals, 15 this Court held that a quasi-delict or culpa aquiliana is a
separate legal institution under the Civil Code with a substantivity all its own, and individuality that is
entirely apart and independent from a delict or crime — a distinction exists between the civil liability
arising from a crime and the responsibility for quasi-delicts or culpa extra-contractual. The same
negligence causing damages may produce civil liability arising from a crime under the Penal Code, or
create an action for quasi-delicts or culpa extra-contractual under the Civil Code. Therefore, the
acquittal or conviction in the criminal case is entirely irrelevant in the civil case, unless, of course, in
the event of an acquittal where the court has declared that the fact from which the civil action arose
did not exist, in which case the extinction of the criminal liability would carry with it the extinction of
the civil liability.

In Azucena vs. Potenciano, 16 the Court declared that in quasi-delicts, "(t)he civil action is entirely
independent of the criminal case according to Articles 33 and 2177 of the Civil Code. There can be no
logical conclusion than this, for to subordinate the civil action contemplated in the said articles to the
result of the criminal prosecution — whether it be conviction or acquittal — would render meaningless
the independent character of the civil action and the clear injunction in Article 31, that his action may
proceed independently of the criminal proceedings and regardless of the result of the latter."

WHEREFORE, the assailed decision dated February 17, 1986 of the then Intermediate Appellate
Court affirming the order of dismissal of the Regional Trial Court of Cavite, Branch 18 (Tagaytay City)
dated August 17, 1984 is hereby REVERSED and SET ASIDE. The trial court is ordered to reinstate
Civil Case No. TG-748 entitled "Natividad V. Andamo and Emmanuel R. Andamo vs. Missionaries of
Our Lady of La Salette Inc." and to proceed with the hearing of the case with dispatch. This decision
is immediately executory. Costs against respondent corporation.

SO ORDERED.

LEGAL REMEDIES TO RECOVER ONE’S POSSESSION

G.R. No. L-1748  June 1, 1906

THE BISHOP OF CEBU, REPRESENTING THE ROMAN CATHOLIC CHURCH, Plaintiff-Appellee,

vs. MARIANO MANGARON,Defendant-Appellant.

L.D. Hargis, for appellant.

Hartigan, Marple, Solignac and Gutierrez, for appellee.

PER CURIAM: chanrobles virtual law library

The plaintiff in this case relates to a tract of land in the district of Ermita of this city, it is alleged is at
present occupied by the defendant. The object of the original complaint was to recover the
possession of the said land, while in the amended complaint the plaintiff prays that the said land be
declared to be the property of the Catholic Church and that it be restored to the latter. Counsel for
appellant admits in his brief that the object of the action is the recovery of possession when he refers
to the judgment of the court below as being "in favor of the plaintiff in an action to recover the
possession of certain real estate." (Record, p. 1.)chanrobles virtual law library

Neither party has exhibited any title papers to the land in question nor pay other documentary proof.
They have only offered certain parol evidence as to the former possession of the land and as to
certain acts of ownership exercised by the parties over the
same.chanroblesvirtualawlibrary chanrobles virtual law library

The court below found ( a) "that the defendant's parents and brothers had been in possession of the
land in question until about the year 1887;" ( b) "that it had not been clearly shown in what capacity
they had occupied the lands;" ( c) "that about the year 1887 the defendant and his relatives vacated
the land by the virtue of an order from the municipality, which declared that the land was included
within the zone of materiales fuertes (fire zone) and the houses in which they lived upon the said land
without objection;" ( d)"that after the land was vacated the parish priest of the Ermita Church fenced
the land and cleaned the same without any objection whatsoever on the part of anyone; that the
plaintiff claimed that this property had belonged to the Catholic Church from the time immemorial, the
defendant, his parents and brothers having occupied a part thereof by the mere tolerance of the
Catholic Church," ( e) "that in the year 1898 the defendant, without the consent of anyone, entered
upon the land in question and built thereon a nipa house and continued to live thereon without the
consent of the parish priest of the Ermita Church or the plaintiff in third case." (Bill of exceptions, p.
11.) The court then ordered "that the defendants vacate the land described in the complaint and pay
the costs of this action" (p. 12).chanroblesvirtualawlibrary chanrobles virtual law library

Counsel appellant says in his brief "that the defendant claims to be owner of the land by inheritance."
(Brief, p. 8.) It is not necessary for this court to apply to the present case the well-settled doctrine that
it is not sufficient to allege a universal title of inheritance without showing the manner and form in
which such title was converted into a singular title in favor of the person invoking the same,
particularly where, as in the present, case, the question involved does not relate to the ownership of
the property but rather to who has the better right to the possession of the same. But the court below
suggest that there are several brothers of the defendant who might also claim the same right to
occupy the land but who, however, had not done so. The court says "from the evidence introduced at
the trial and from the fact that the defendant's brothers do not claim any right to the land in question, it
seems that the claim of the plaintiff is the more credible." (Bill of exceptions, p. 11.)chanrobles virtual
law library

We lay down as a conclusion that if the plaintiff, when he was deprived in October, 1898, of the
possession which he had enjoyed quietly and peacefully for twenty years, more or less, had within a
year instituted the accion interdictal, or summary action for possession, he would have been,
necessarily and undoubtedly, restored to the possession of the land. It would have availed the
defendant nothing to allege, as he now alleges, that he had merely recovered the possession which
he improperly lost in 1877, when he dispossessed the plaintiff as he did. Any tribunal, in the same
arbitrary manner in which the defendant dispossessed the party in possession, would have
condemned the said defendant to return the possession to that
party.chanroblesvirtualawlibrary chanrobles virtual law library

But a year elapsed and the plaintiff brought this summary action for possession, and we also lay
down as a conclusion that such summary action for possession could not be maintained, either under
the old Code of Civil Procedure or under the new Code of Procedure in Civil Actions. (Laws 1 and 2,
title 34 of the Novisima Recopilacion; art. 1635 of the Spanish Code of Civil Procedure and sec. 80 of
the present Code of Procedure in Civil Actions.) chanrobles virtual law library

This quiet and peaceful possession of twenty years, more or less, thus lost in a moment, could not be
recovered in a summary action for possession after the expiration of one year, but possession could
still be recovered through the accion publiciana, which involved the right to possess. This latter action
would be then based upon the fact that he, having been in possession for twenty years, could not
lose the same until he had been given an opportunity to be heard and had been defeated in an action
in court by another with a better right. (The same laws.) This fact of itself would have been sufficient
to recover the possession, not in summary, but in a plenary action, in which it would likewise have
availed the defendant nothing to allege that all that he did was to recover a possession improperly
lost in 1877. In one way or the other the plaintiff would have recovered such possession, in the first
case the physical possession and in the second case the right to possess, which is not lost by the
mere occupation of a third person, whether such occupation was effected violently, secretly, or
arbitrarily.chanroblesvirtualawlibrary chanrobles virtual law library

But the doubt which now exists is whether, after the promulgation of the Civil Code, the accion
publiciana continued to exist.chanroblesvirtualawlibrary chanrobles virtual law library

The doubt arises from the provisions of article 460 of the Civil Code, which reads as
follows: chanrobles virtual law library

The possessor may lose his possession -

1. By the abandonment of the thing.chanroblesvirtualawlibrary chanrobles virtual law library

2. By transfer to another for a good or valuable consideration.chanroblesvirtualawlibrary chanrobles

virtual law library

3. By the destruction or total loss of the thing or by the thing becoming

unmarketable.chanroblesvirtualawlibrary chanrobles virtual law library

4. By the possession of another, over against the will of the former possessor, if the new possession
has lasted more than one year.

The last provision of this article has given rise to the doubt whether possession which is lost by the
occupation of another against the will of the former possessor is merely possession de facto or
possession de jure.chanroblesvirtualawlibrary chanrobles virtual law library

The most powerful reason why it is thought that it refers to possession both de facto and de jure is
that, whereas the two are equally lost in the manner indicated in the first three provisions of this
article, it would be rather strange that the fourth provision should only refer to possession de
facto.chanroblesvirtualawlibrary chanrobles virtual law library

This, however, is not convincing because not only can the right of possession of any kind be lost in
the aforesaid three ways, but the right of ownership as well. It could not be inferred from this,
however, that the right of ownership can be lost in the fourth manner indicated. The legislation and
the jurisprudence of all countries will allow a party after he has lost possession to bring an action to
recover the ownership of the property - that is to say, to recover what belongs to him - except where
he is barred by the statute of limitations. There is no law fixing one year and one day as the period of
prescription of such actions.chanroblesvirtualawlibrary chanrobles virtual law library

Manresa expressly propounds this question and says:

Meditation upon the nature of possession, being convinced as we are of the fact that possession
constitutes a right, a right in rem, whenever it is exercised over real property or property rights, has
merely served to strengthen as far as possible our conviction of the existence of the accion
publiciana. We confess, willing to rely only upon a sound basis, that a doubt has occurred to us as to
whether or not such action should be exercised by the possessor, as we find nothing definite upon
which to place such reliance, although we have noticed that most of the authors admit that he should,
and we know that where there is a right there is a cause of
action.chanroblesvirtualawlibrary chanrobles virtual law library

We have later seen this question raised and the proposition advanced that, although, as an exception
to the general rule, such action is based upon equity, but as equity is not sufficient to allow the
exercise of such action, it would be necessary to have a legal provision, an article in the code,
establishing the same, a provision and an article which do not exist, and their nonexistence shows
that there is no such thing as the accion publiciana.chanroblesvirtualawlibrary chanrobles virtual law
library

That we have no knowledge of the existence of any legal text or recent provisions which expressly
relate to such action, is true. The same thing is true in France. However, the majority of the authors
admit its existence. Among us it existence is also generally admitted by the authorities on civil and
procedural law. But we do not desire to base our conclusions upon the arguments of the authorities,
particularly when we note that Sanchez Roman is the only one who has attempted to support in any
way his conclusions. It is sufficient, says this author, that the right existing, there should be an action
to protect it. There is no necessity of any special declaration in the Civil
Code.chanroblesvirtualawlibrary chanrobles virtual law library

We are of the same opinion as the author in question, but certainly not because we believe that if the
possessor is deprived of the accion publiciana his right ceases to be a right in rem. In regard to this
matter we refer to what we have already said in our preliminary consideration of the question of
possession.chanroblesvirtualawlibrary chanrobles virtual law library

In regard to this matter the idea is present in the code that possession should be considered as an
actual right and it is so stated in various articles of that code, as for instance in article 438. It would be
impossible to admit that a mere physical act would confer all the rights which a possessor ordinarily
enjoys.chanroblesvirtualawlibrary chanrobles virtual law library

Article 445 presupposes that possession may be considered either as de facto or de jure, for when it
refers to controversies arising from the possession de facto, it clearly indicates that other
controversies may arise which would not relate to the possession de facto. Further it can not be
conceived that had its intent been different it should have preferred actual possession to any other
possession. The article in question ends with the following significant words: "The thing shall be
placed in deposit or judicial keeping until the possession or ownership thereof is decided in the
proper manner." That is to say, the question of fact can not be determined until the question of
law has been decided either in regard to the ownership or in regard to the possession (pp. 220-
221).chanroblesvirtualawlibrary chanrobles virtual law library

Further, let us take another subject, for instance, the subject for easements. It was generally believed
that the accion confesoria existed. Vain delusion! We have carefully examined all the provisions of
the code relating to easements and we find absolutely nothing in regard to such an action. Then
the accion confesoria is another error. It does not really exist. Then, if the owner of the dominant
estate is denied the use of the easement, it would not be because he has not a right to such use of it.
The only thing that he has not is the action.chanroblesvirtualawlibrary chanrobles virtual law library

No; such an absurdity can not be admitted. It is impossible to conceive that a person has a right
which need not be respected by others, and such respect can not be exacted unless the law provides
an adequate remedy for its enforcement. If a person has aright over any kind of property, such right
would not be complete unless it could be enforced as against the whole world. The action is the
recognition of the right; it is the weapon for its protection; the right certainly does not arise from the
action, but on the contrary the action arises from the right. There is a right recognized by the code -
then this is sufficient! That right necessarily carries with it the action to enforce it, the life-giving force.
The action is, under this aspect, the actual enforcement of the right, and these two things are so
closely allied that if the action is denied the right is also virtually and actually denied. the accion
publiciana, therefore, exists, not for the sake of equity, but because it must necessarily exist if the
right to possession exists or can exist as provided in article 445, and as is inferred from the other
articles of the code dealing with this subject.chanroblesvirtualawlibrary chanrobles virtual law library

There are not, in reality, any practical difficulties, for the courts consider as owners many who are
simply possessors, and actions for title are maintained upon evidence which appears to be proof of
ownership, but which in reality is not, for the reason that the title under which such ownership is
claimed is not always in question, but merely its superiority over the claim of title of another. In a
word, it is necessary to state the nature of the action but not the name by which it is known, and the
claim being a just one, it is allowed in an action for title which in a multitude of cases would be nothing
but an accion publiciana (plenary action for possession). Do not give the name of the action because
it is not necessary; merely ask that the right be enforced. Who can reject the claim ? (Pages 223-
224.)

Paragraph 4 of article 460 is not an innovation in the Civil Code, nor does it mean the modification or
reformation of the old law. Law 17, title 30 of the third Partida contains the same provision: "One who
holds property can not lose the possession thereof except in one of the following manners: (1) If he is
ejected from it by force; (2) if another person occupies in while he is absent and upon his return
refuses him admission. . . . But although he may lose the possession in either of the aforesaid
manners, he can, however, recover the same, and even the title thereto by an action in court." There
is no doubt that paragraph 4 of article 460 is nothing but a repetition of the law in force prior to the
Civil Code. He who loses possession in either of these ways may demand the return of the same in
an action in court, as well as the ownership of the property, the glossator in expanding the
word juizio which appears in the law, saying, "by means of an action, unde vi, namely, that of
recovery, or by any such restorative means." So that the possession thus lost may be recovered not
only in an action unde vi but some other restorative means, such as the accion publiciana or a penal
action; this aside from an action for title. virtual law library

Law 2, title 34, book 11 of the "Novisima Recopilacion" contains in its title the following prohibitive
provision: "No one shall be deprived of his possession until he has had an opportunity to be heard
and his right is defeated in accordance with the law." chanrobles virtual law library

As a legal precedent to paragraph 4 of article 460 we have law 3, title 8, of the same book 11, which
says: "The laws of some cities provide that he who has been in possession of a building, vineyard, or
other land for one year and one day, peacefully and adversely to the person claiming to be entitled to
such possession who travels in and out of the village, shall not be held responsible therefor. There
being doubt as to whether such possession for the period of one year and one day requires title in
good faith, we, to dispell this doubt, do hereby order that he who holds such possession for the period
of one year and one day shall not be exempt from liability therefor while in possession unless such
possession of one year and one day was accompanied by title in good faith." chanrobles virtual law
library

If the whole provision of article 460, paragraph 4, was contained in the old law and such was the
meaning and efficacy that possession of one year and one day had under the said old law, the courts
must give some satisfactory and convincing explanation why the meaning and efficacy of such
possession of one year and one day referred to in the code should be different. We are unable to give
such explanation, because in the act which was the basis of the present code nothing new was
provided upon this subject, nor was any rule or procedure specified by which the various sections of
the new law should be governed. Therefore the provisions of the code should be construed, as to the
possession of one year and one day, as they were construed in the prior legislation, unless it appears
that the intention of the legislature was otherwise - that is to say, unless it appears that the said
legislature intended exactly the contrary of what had been established preceding the enactment of the
code.

The right acquired by the person who has been in possession for one year and one day is the right
that the former possessor lost by allowing the year and one day to expire. The right is lost by the
prescription of the action. And the action which prescribes upon the expiration of the year is "the
action to recover or to retain possession; " that is to say, the interdictory action. (Art. 1968, par. 1.)
then the only right that can be acquired now, as before, by the person who was in possession for one
year and one day is that he can not be made to answer in an interdictory action, but this is not so in a
plenary action unless he had some title in good faith. The former possessor who had been in
possession for twenty years, more or less, was considered as owner, and unless he was given an
opportunity to be heard, and was defeated in law, he could not be deprived of such possession; and
notwithstanding all this, and in spite of such prohibition, the maintenance of a possession wrongfully
taken from the former possessor by a willful act of the actual possessor had to be sustained.ch

The lessee, the depositary, the pledgee, the intruder, the usurper, the thief himself, after the
expiration of a year would not be responsible for the possession of which the lawful possessor was
wrongfully deprived, and if the latter could produce no evidence of his right of ownership - the only
thing that he could do according to the contrary theory - it would be impossible for him to recover
such possession thus lost by any other means.chanroblesvirtualawlibrary chanrobles virtual law
library

If, in addition to the fact of possession, the action for the enforcement of which prescribes after the
expiration of one year and one day, there exists without any doubt whatsoever the right to possess
(or more properly speaking in the case at bar, to continue to possess, which said right of possession
would be a right in rem, such possession would not be on a less favorable footing than a mere
possession de facto; and, if in the latter case the interdictory action lies, the action which existed prior
to the enactment of the code, to wit, the accion publiciana, should continue to lie in the former case.
The code establishes rights and the Law of civil Procedure prescribes actions for the protection of
such rights, and we can not look to the code to find any provision defining the action which every civil
right carries with it This is the reason why as a title of chapter 3 of the code in which article 460 is
included, and a sanction of the whole of title 5, book 2, which deals with possession, article 446
provides that every possessor has a right to be respected in his possession, and should he be
disturbed therein, he must be protected or possession must be restored to him by the
means established in the laws of procedure.chanroblesvirtualawlibrary chanrobles virtual law library

The code refers to the laws of procedure enacted in Spain in 1881 and extended to the Philippines in
1888. Article 1635 of the old Code of Civil Procedure makes provision for summary proceedings to
retain or to recover, to protect or to restore, possession, provided the action is brought within a year,
but after the expiration of this period the party may bring such action as may be proper. This latter
action, as has been explained before, may be either the plenary action for possession referred to or
an action for title. This assumed, and reading article 1635 of the old Code of Civil Procedure
immediately before article 446 of the Civil Code, we are unable to conceive how that could be
successfully denied after the 8th of December, 1889, when the Civil code went into effect, which
could not be denied prior to that date, to wit, the existence of the accion publiciana to recover the
right of possession, to enforce the right to possess, which although it could not be brought within the
year as a mere interdictory action for the protection of the mere physical possession, there can be no
valid reason why it could not be brought after the expiration of the year in order to protect the right
and not the mere physical possession.chanroblesvirtualawlibrary chanrobles virtual law library
Article 1635 of the old Code of Civil Procedure not having been repealed by the Civil Code, if
the accion publiciana existed prior to its enactment, it must necessarily exist after such enactment.
We consequently conclude that the action brought by the plaintiff in this case to recover the
possession of which he was unlawfully deprived by the defendant can be properly maintained under
the provisions of the present Civil Code considered as a substantive law, without prejudice to any
right which he may have to the ownership of the property, which ownership he must necessarily
establish in order to overcome the presumption of title which exist in favor of the lawful possessor, the
plaintiff in this case, who had been in the quiet and peaceful possession of the land for twenty years,
more or less, at the time he was wrongfully dispossessed by the defendant. ch

Having reached this conclusion, the judgment of the court below is accordingly affirmed, with the cost
of this action against the appellant. So ordered

G.R.No. 203880, August 10, 2016

VICTORIA ECHANES, Petitioner, v. SPOUSES PATRICIO HAILAR AND ADORACION

HAILAR, Respondents.

DECISION

PERALTA, J.:

Before us is a Petition for Review on Certiorari1 under Rule 45 of the Rules of Court which seeks the
reversal of the Decision2 dated March 23, 2012, and Resolution3 dated October 9, 2012 of the Court
of Appeals in CA-G.R. SP No. 115688. The CA reversed the Decision 4 of the Regional Trial Court,
Branch 23, of Candon City, Ilocos Sur in Civil Case No. 1146-C, and reinstated the Decision of the
Municipal Circuit Trial Court (MCTC) of Sta. Cruz-Sta. Lucia, Ilocos Sur5 in Civil Case No. 552
dismissing the Complaint for Ejectment with Damages filed by petitioner.

The factual antecedents are as follows:

chanRoblesvirtualLawlibraryThe late Eduardo Cuenta was the owner of an unregistered parcel of

land with an area of 1,447 square meters, more or less, located at Poblacion Anquileng (now
Burgos), Sta. Lucia, Ilocos Sur designated as Lot No. 2297 of the Cadastral Survey of Sta. Lucia,
Ilocos, Sur. As the owner of the said property, he was issued Tax Declaration No. 7622-
C.6chanrobleslaw

On July 8, 1996, the heirs of Eduardo Cuenta executed an Extrajudicial Settlement 7 dividing and
adjudicating unto themselves the parcel of land left by Eduardo Cuenta.

A portion of Lot No. 2297 denominated as Lot No. 2297-A comprising 495 square meters was
adjudicated to petitioner who is one of the heirs (granddaughter) of Eduardo Cuenta. Thereafter,
petitioner applied for a free patent over Lot No. 2997-A. Accordingly, an Original Certificate of Title
No. P-43056 was issued in her name by the Register of Deeds of Ilocos Sur on October 15,
1996.8chanrobleslaw

A portion of Lot No. 2291-A with an area of more or less 80 square meters is currently occupied by
respondents. Since petitioner's children are in need of the area currently occupied by respondents,
petitioner sent respondents a Notice to Vacate 9 dated March 12,2009. The demand letter was
received by the respondents on March 13, 2009. Despite receipt of said demand letter, respondents
refused to vacate the premises.10chanrobleslaw

On April 14, 2009, petitioner filed a Complaint for Ejectment with Damages before the Municipal
Circuit Trial Court (MCTC) of Sta. Cruz-Sta. Lucia, Ilocos Sur.11chanrobleslaw

Petitioner averred in her complaint that during the lifetime of her parents, respondents asked her
parents that they be allowed to build their nipa house on the subject lot. The request by respondents
was allegedly made in the presence of the petitioner. The request was granted by petitioner's parents
on the condition that respondents would voluntarily vacate the land when the petitioner's family would
need the same. Thus, according to petitioner, respondents' continued possession and occupation of
the subject lot is out of tolerance and permission granted to them by petitioner and her
parents.12chanrobleslaw

In their Answer, respondents countered that the late Domingo Joven (who died in 1967). 13 the father
of respondent Adoracion Joven Hailar, purchased the subject lot from the late Eduardo Cuenta after
World War II as evidenced by Tax Declaration No. 12141-C14 in the name of Domingo Joven issued
in 1959. From then on, respondent Adoracion Joven Hailar and her siblings occupied and exercised
acts of dominion, and have been in possession of the land exclusively, publicly, continuously for more
than 40 years as evidenced by tax declarations and realty tax payments made by them. They built
their family house thereon, and later, a house made of concrete materials was built valued at not less
than P50,000.00.15chanrobleslaw

On April 19, 2010, the MCTC of Sta. Cruz - Sta. Lucia, Ilocos Sur, rendered a Decision, the decretal
portion16 of which states:ChanRoblesVirtualawlibrary

WHEREFORE, premises considered, the instant Complaint is hereby DISMISSED without prejudice
on the part of the plaintiff in filing an accion publiciana or accion reivincicatoria, before the proper
court. There being no proof of evident bad faith against the plaintiff in filing the instant case, no award
of fees or damages may be granted.

SO ORDERED.
Thereafter, petitioner elevated the case before the Regional Trial Court (RTC), Branch 23, of Candon
City Ilocos Sur. On August 17, 2010, the RTC reversed and set aside the Decision of the MCTC. The
dispositive portion of the decision states:ChanRoblesVirtualawlibrary
IN VIEW OF THE FOREGOING, the Decision of the 11th Municipal Circuit Trial Court of Sta. Cruz-
Sta. Lucia, dated April 19, 2010, is hereby REVERSED AND SET ASIDE. Judgment is hereby
rendered in favor of the plaintiff-appellant, Victoria Echanes, and against the defendants-appellees,
Spouses Patricio Hailar and Adoracion Hailar. The Court further orders:

1. The Spouses Patricio Hailar and Adoracion Hailar, and any person claiming title under them, to
vacate the property-in-dispute, including the area where they builttheir house and to surrender
the land in litigation to Victoria Echanes;

2. The Spouses Patricio Hailar and Adoracion Hailar, and any person claiming title under them to
pay to Victoria Echanes the amount of P2,000.00 per month  as compensation for the use and
occupation of the property-in-dispute, from March 28, 2009 and every month thereafter until
they shall have finally vacated the premises;

3. The Spouses Patricio Hailar and Adoracion Hailar to pay attorney's fees in th&amount of
P30,000.00 which is just and reasonable under the circumstances;
4. The Spouses Patricio Hailar and Adoracion Hailar to pay the costs of the proceedings.

SO ORDERED.17
Aggrieved, respondents filed a petition for review before the Court of Appeals (CA). In a Decision
dated March 23, 2012, the CA reversed and set aside the decision of the RTC and reinstated and
affirmed the decision of the MCTC. Thefallo 18 states:ChanRoblesVirtualawlibrary
WHEREFORE, the appeal is GRANTED. The Decision dated August 17, 2010 of the Regional Trial
Court, Branch 23 of Candon City, Ilocos Sur is REVERSED AND SET ASIDE. The decision dated
April 19, 2010 of the Municipal Circuit Trial Court of Sta. Cruz, Ilocos Sur is REINSTATED AND
AFFIRMED.

SO ORDERED.
A motion for reconsideration was filed by petitioner but the same was denied by the CA on October 9,
2010.19chanrobleslaw

Hence, this petition, raising the following issues for resolution:

1.  The CA erred in holding that petitioner failed to prove tolerance, by preponderance of

evidence with respect to the possession of the respondents over the subject lot;
2. The CA erred in holding that petitioner has failed to discharge her burden of proving her
ejectment complaint by preponderance of evidence; and
3. The CA erred when it reversed and set aside the decision of the RTC.

To begin with, the only question that the courts must resolve in an unlawful detainer case is who
between the parties is entitled to the physical or material possession of the property in dispute. 20 The
main issue is possession de facto, independently of any claim of ownership or possession de jure that
either party may set forth in his pleading. 21 The plaintiff must prove that it was in prior physical
possession of the premises until it was deprived thereof by the defendant. 22 The principal issue must
be possession de facto, or actual possession, and ownership is merely ancillary to such issue.

However, where the parties to an ejectment case raise the issue of ownership, the courts may pass
upon that issue to determine who between the parties has a better right to possess the property. 23 In
this regard, Section 16, Rule 70 of the Rules of Court allows the courts to provisionally determine the
issue of ownership for the sole purpose of resolving the issue of physical possession. Otherwise
stated, when the question of possession cannot be resolved without deciding the issue of ownership,
the issue of ownership is to be resolved only to determine the issue of possession. 24chanrobleslaw
In the case at bar, the petitioner derived her alleged right to possess the subject land from Original
Certificate of Title No. P-43056 issued in her name by the Register of Deeds of Ilocos Sur on October
15, 1996. Petitioner contends that the issuance of said title presupposes her having been in
possession of the property at one time or another.

On the other hand, the respondents' alleged right to possess the disputed property is based on
having acquired the subject lot by Domingo Joven through purchase from Eduardo Cuenta. Tax
Declaration No. 7622-C covering Lot No. 2207 was issued in 1952 in the name of Eduardo Cuenta.
While Tax Declaration No. 12141-C, which is derived from and partly cancels Tax Declaration No.
7622-C, was issued in 1959 in the name of Domingo Joven. The land covered by Tax Declaration No.
12141-C has an area of 231 square meters.

The RTC opined that Eduardo Cuenta could have not sold the subject property after World War II, or
on 1946, because he died in 1941 as alleged in the Extrajudicial Settlement. It noted that the tax
declaration of respondents, dated 1959, does not indicate any mode of conveyance such that "no
other conclusion can be arrived at other than that Eduardo Cuenta retained the ownership and
possession of the entire residential land under Tax Declaration No, 7622-C, and that upon his death
in 1941, his rights over the property were transmitted by operation of law to his surviving heirs,
including the plaintiff-appellant (petitioner).  25cralawred Therefore, according to the RTC, the
allegation of petitioner that respondents occupied the disputed property by mere tolerance of the
parents of petitioner is easier to believe. 26chanrobleslaw

In their Comments, respondents submit that the issuance of Tax Declaration No. 7622-C in 1952,
covering Lot No. 2207 in the name of Eduardo Cuenta, disproves the finding of the RTC that Eduardo
Cuenta died on May 15, 1941 as stated in the Deed of Extrajudicial Settlement. They argued that the
purchase of the property took place between the year 1946 (the end of World War II) and 1952 (when
the tax declaration was issued in the name of Domingo Joven).

It bears to reiterate that settled is the rule that the only question that the courts resolve in ejectment
proceedings is: who is entitled to the physical possession of the premises, that is, to the
possession de facto and not to the possession  de jure.  27 It does not even matter if a party's title to
the property is questionable.28 In an unlawful detainer case, the sole issue for resolution is the
physical or material possession of the property involved, independent of any claim of ownership by
any of the party litigants.29 Where the issue of ownership is raised by any of the parties, the courts
may pass upon the same in order to determine who has the right to possess the property. The
adjudication is, however, merely provisional and would not bar or prejudice an action between the
same parties involving title to the property.30chanrobleslaw

Therefore, since the issue of ownership is raised in this unlawful detainer case, its resolution boils
down to which of the parties' respective evidence deserves more weight. 31chanrobleslaw

At the outset, respondents stated in their Comment 32 that the issue on tolerance is a question of fact
and is an improper subject of a petition for review under Rule 45, and that the finding of the CA on the
absence of tolerance on the part of petitioner is supported by substantial evidence and is conclusive
and binding on the parties and on this Court.

The Court notes that the arguments raised here necessarily require a re-evaluation of the parties'
submissions and the CA's factual findings. Ordinarily, this course of action is proscribed in a petition
for review on certiorari; that is, a Rule 45 petition resolves only questions of law, not questions of fact.
Moreover, factual findings of the CA are generally conclusive on the parties, and therefore, not
reviewable by this Court provided they are supported by evidence on record or substantial
evidence.33 By way of exception, however, the Court resolves factual issues when the findings of the
MTCC and the RTC differ from those of the CA, as in this case. 34chanrobleslaw

To prove the allegation of tolerance on the part of petitioner, she presented, among others, a portion
of Transcript of Stenographic Notes (TSN)35 dated September 11, 2003 taken during the hearing in
the case for Quieting of Title36 and Annulment of Title37 filed against petitioner before the same
MTC,38 and argued why the same was not considered by the MTC in the resolution of the issue. 39 A
perusal of the said TSN would show that Filomena Carbonell (sister of petitioner) 40 testified that after
World War II, Domingo Joven approached her aunt and begged that he be allowed to build a house
on the disputed property. This lone statement of said witness in another case revealed somehow that
it was not the parents of petitioner who allegedly tolerated the occupation of respondents contrary to
the allegation of petitioner in her complaint. 41chanrobleslaw

In the case of Quijano v. Amante,  42 it was held that the acts of tolerance must be proved showing the
overt acts as to when and how the respondents entered the properties and who specifically allowed
them to occupy the same. There should be any supporting evidence on record that would show when
the respondents entered the properties or who had granted them to enter the same and how the entry
was effected.43 Without these allegations and evidence, the bare claim regarding "tolerance" cannot
be upheld.

As to the claim of respondents, it appears that the Deed of Extrajudicial Settlement was executed by
the grandchildren (including petitioner) of Eduardo Cuenta. Since it cannot be ascertained from the
deed as to when the children of Eduardo Cuenta died, or whether all the children of Eduardo Cuenta
predeceased him, it is, therefore, not certain to say that the grandchildren inherited the subject
property in 1941 when Eduardo Cuenta allegedly died. Assuming the children of Eduardo Cuenta
(including the parent of petitioner) did not predecease Eduardo Cuenta, petitioner would then inherit
the property only after the death of her parent, which date is not revealed in the deed. It is, therefore,
an error on the part of the RTC to state that petitioner inherited the subject property in 1941, ahead of
the alleged sale to respondents which took place after the World War, or sometime in 1946, or
thereafter.

In an action for forcible entry and detainer, if plaintiff can prove prior physical possession in himself,
he may recover such possession even from the owner, but, on the other hand, if he cannot prove
such prior physical possession, he has no right of action for forcible entry and detainer even if he
should be the owner of the property. 44chanrobleslaw

There is no dispute that the respondents had continuously and openly occupied and possessed, in
the concept of an owner, the subject property from the time they purchased it from Eduardo Cuenta.
They segregated and declared for taxation purposes as early as 1959 the portion of Lot No. 2297-A
consisting of 231 square meters. The property was consistently declared for taxation purposes until
2007. While tax declarations and realty tax payments are not conclusive proofs of possession, they
are good indicia of possession in the concept of an owner based on the presumption that no one in
his right mind would be paying taxes for a property that is not his actual or constructive
possession.45 At the very least, they constitute proof that the holder has a claim of title over the
property.

As correctly stated by the CA, the fact that respondents' documents traverse several decades, from
1959 to 2007, is an indication that respondents never abandoned their right to the property and have
continuously exercised rights of ownership over the same. Their bona fide claim of acquisition of
ownership was especially strengthened by their actual possession of property; in fact, respondents
built a concrete house thereon. This adverse possession by the respondents belies the allegation of
occupation by tolerance espoused by petitioner.
We agree with the ruling of the MTC that, compared to the bare assertion of petitioner that her
parents merely tolerated respondents' possession, the version of the respondents that they are
occupying the property by virtue of the conveyance in their favor through purchase many years ago is
more credible.46chanrobleslaw

This ruling was affirmed by the CA, thus:

In emphasis, the petitioners very much placed in issue the alleged tolerance of the respondent's
parents. In the law of evidence, allegations are not proofs, no more so when, as here the other party
very much denied those allegations. The fatal error committed by the RTC is that it mistook
allegations as proofs, ignoring the fact that those allegations were denied by petitioners.

In the akin case of Florentino Go, Jr., et al v. Court of Appeals, it was ruled that:
xxx

It is settled that the one whose stay is merely tolerated becomes a deforciant illegally occupying the
land the moment he is required to leave. It is essential in unlawful detainer cases of this kind, that the
plaintiff's supposed acts of tolerance, must have been present right from the start of the possession
which is later sought to be recovered. This is where the petitioners' cause of action fails. The
appellate court in full agreement with the MTC, made the conclusion that the alleged tolerance by
their mother and after her death, by them, was unsubstantiated."
We agree with the MCTC that respondent failed to present evidence to support her claim that the
occupation of the petitioners (respondents herein) was by mere tolerance. No weight should be given
to the bare allegation of the respondent that petitioners' possession of the subject property was
merely by virtue of her parents' tolerance because "bare allegations unsubstantiated by evidence, are
not equivalent to proof under our Rules." 47
The summary character of the proceedings in an action for forcible entry or unlawful detainer is
designed to quicken the determination of possession de facto in the interest of preserving the peace
of the community, but the summary proceedings may not be proper to resolve ownership of the
property. Consequently, any issue on ownership arising in forcible entry or unlawful detainer is
resolved only provisionally for the purpose of determining the principal issue of possession. 48 On the
other hand, regardless of the actual condition of the title to the property and whatever may be the
character of the plaintiffs prior possession, if it has in its favor priority in time, it has the security that
entitles it to remain on the property until it is lawfully ejected through an accion publiciana or accion
reivindicatoria by another having a better right.49chanrobleslaw

Thus, the unlawful detainer and forcible entry suits, under Rule 70 of the Rules of Court, are designed
to summarily restore physical possession of a piece of land or building to one who has been illegally
or forcibly deprived thereof, without prejudice to the settlement of the parties' opposing claims of
juridical possession in appropriate proceedings. These actions are intended to avoid disruption of
public order by those who would take the law in their hands purportedly to enforce their claimed right
of possession. In these cases, the issue is pure physical or de facto possession, and
pronouncements made on questions of ownership are provisional in nature. The provisional
determination of ownership in the ejectment case cannot be clothed with finality. 50chanrobleslaw

In fact, Section 18, Rule 70 of the Rules of Court expressly provides that "a judgment rendered in an
action for forcible entry or unlawful detainer shall be conclusive with respect to the possession only
and shall in no wise bind the title or affect the ownership of the land."

Hence, We need to stress that the ruling in this case is limited only to the determination as to who
between the parties has a better right to possession. It will not bar any of the parties from filing an
action with the proper court to resolve conclusively the issue of ownership.
WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals dated March 23, 2012,
and its Resolution dated October 9, 2012, in CA-G.R. SPNo. 115688 are AFFIRMED.

SO ORDERED.chanRoblesvirtualLawlibrary

Surface Rights (Art. 437)

United States v. Causby

328 U.S. 256

CERTIORARI TO THE COURT OF CLAIMS

Syllabus

Respondents owned a dwelling and a chicken farm near a municipal airport. The safe path of glide to
one of the runways of the airport passed directly over respondents' property at 83 feet, which was 67
feet above the house, 63 feet above the barn and 18 feet above the highest tree. It was used 4% of
the time in taking off and 7% of the time in landing. The Government leased the use of the airport for
a term of one month commencing June 1, 1942, with a provision for renewals until June 30, 1967, or
six months after the end of the national emergency, whichever was earlier. Various military aircraft of
the United States used the airport. They frequently came so close to respondents' property that they
barely missed the tops of trees, the noise was startling, and the glare from their landing lights lighted
the place up brightly at night. This destroyed the use of the property as a chicken farm and caused
loss of sleep, nervousness, and fright on the part of respondents. They sued in the Court of Claims to
recover for an alleged taking of their property and for damages to their poultry business. The Court of
Claims found that the Government had taken an easement over respondents' property, and that the
value of the property destroyed and the easement taken was $2,000; but it made no finding as to the
precise nature or duration of the easement.

Held:

1. A servitude has been imposed upon the land for which respondents are entitled to compensation
under the Fifth Amendment. Pp. 328 U. S. 260-267.

(a) The common law doctrine that ownership of land extends to the periphery of the universe has no
place in the modern world. Pp. 328 U. S. 260-261.

(b) The air above the minimum safe altitude of flight prescribed by the Civil Aeronautics Authority is a
public highway and part of the public domain, as declared by Congress in the Air Commerce Act of
1926, as amended by the Civil Aeronautics Act of 1938. Pp. 328 U. S. 260-261, 328 U. S. 266.

(c) Flights below that altitude are not within the navigable air space which Congress placed within the
public domain, even though they are within the path of glide approved by the Civil Aeronautics
Authority. Pp. 328 U.S. 263-264.
 (d) Flights of aircraft over private land which are so low and frequent as to be a direct and immediate
interference with the enjoyment and use of the land are as much an appropriation of the use of the
land as a more conventional entry upon it. Pp. 328 U. S. 261-262, 328 U. S. 264-267.

2. Since there was a taking of private property for public use, the claim was "founded upon the
Constitution," within the meaning of § 141(1) of the Judicial Code, and the Court of Claims had
jurisdiction to hear and determine it. P. 328 U. S. 267.

3. Since the court's findings of fact contain no precise description of the nature or duration of the
easement taken, the judgment is reversed, and the cause is remanded to the Court of Claims so that
it may make the necessary findings. Pp. 328 U. S. 267-268.

(a) An accurate description of the easement taken is essential, since that interest vests in the United
States. P. 328 U. S. 267.

(b) Findings of fact on every "material issue" are a statutory requirement, and a deficiency in the
findings cannot be rectified by statements in the opinion. Pp. 328 U. S. 267-268.

(c) A conjecture in lieu of a conclusion from evidence would not be a proper foundation for liability of
the United States. P. 328 U. S. 268.

104 Ct.Cls. 342, 60 F. Supp. 751, reversed and remanded.

The Court of Claims granted respondents a judgment for the value of property destroyed and damage
to their property resulting from the taking of an easement over their property by low-flying military
aircraft of the United States, but failed to include in its findings of fact a specific description of the
nature or duration of the easement. 104 Ct.Cls. 342, 60 F. Supp. 751. This Court granted certiorari.
327 U.S. 775. Reversed and remanded, p. 328 U. S. 268. MR. JUSTICE DOUGLAS delivered the
opinion of the Court.

This is a case of first impression. The problem presented is whether respondents' property was taken
within the meaning of the Fifth Amendment by frequent and regular flights of army and navy aircraft
over respondents' land at low altitudes. The Court of Claims held that there was a taking, and entered
judgment for respondent, one judge dissenting. 60 F. Supp. 751. The case is here on a petition for a
writ of certiorari which we granted because of the importance of the question presented.

Respondents own 2.8 acres near an airport outside of Greensboro, North Carolina. It has on it a
dwelling house, and also various outbuildings which were mainly used for raising chickens. The end
of the airport's northwest-southeast runway is 2,220 feet from respondents' barn and 2,275 feet from
their house. The path of glide to this runway passes directly over the property -- which is 100 feet
wide and 1,200 feet long. The 30 to 1 safe glide angle [Footnote 1] approved by the Civil Aeronautics
Authority [Footnote 2] passes over this property at 83 feet, which is 67 feet above the house, 63 feet
above the barn and 18 feet above the highest tree. [Footnote 3] The use by the United States of this
airport is pursuant to a lease executed in May, 1942, for a term commencing June 1, 1942 and
ending June 30, 1942, with a provision for renewals until June 30, 1967, or six months after the end
of the national emergency, whichever is the earlier.

Various aircraft of the United States use this airport -- bombers, transports, and fighters. The direction
of the prevailing wind determines when a particular runway is used. The northwest-southeast runway
in question is used about four percent of the time in taking off and about seven percent of the time in
landing. Since the United States began operations in May, 1942, its four-motored heavy bombers,
other planes of the heavier type, and its fighter planes have frequently passed over respondents' land
buildings in considerable numbers and rather close together. They come close enough at times to
appear barely to miss the tops of the trees, and at times so close to the tops of the trees as to blow
the old leaves off. The noise is startling. And, at night, the glare from the planes brightly lights up the
place. As a result of the noise, respondents had to give up their chicken business. As many as six to
ten of their chickens were killed in one day by flying into the walls from fright. The total chickens lost
in that manner was about 150. Production also fell off. The result was the destruction of the use of the
property as a commercial chicken farm. Respondents are frequently deprived of their sleep, and the
family has become nervous and frightened. Although there have been no airplane accidents on
respondents' property, there have been several accidents near the airport and close to respondents'
place. These are the essential facts found by the Court of Claims. On the basis of these facts, it found
that respondents' property had depreciated in value. It held that the United States had taken an
easement over the property on June 1, 1942, and that the value of the property destroyed and the
easement taken was $2,000.I. The United States relies on the Air Commerce Act of 1926, 44 Stat.
568, 49 U.S.C. § 171 et seq., as amended by the Civil Aeronautics Act of 1938, 52 Stat. 973, 49
U.S.C. § 401 et seq. Under those statutes, the United States has "complete and exclusive national
sovereignty in the air space" over this country. 49 U.S.C. § 176(a). They grant any citizen of the
United States "a public right of freedom of transit in air commerce [Footnote 4] through the navigable
air space of the United States." 49 U.S.C. § 403. And "navigable air space" is defined as "airspace
above the minimum safe altitudes of flight prescribed by the Civil Aeronautics Authority." 49 U.S.C. §
180. And it is provided that "such navigable airspace shall be subject to a public right of freedom of
interstate and foreign air navigation." Id. It is therefore argued that, since these flights were within the
minimum safe altitudes of flight which had been prescribed, they were an exercise of the declared
right of travel through the airspace. The United States concludes that, when flights are made within
the navigable airspace without any physical invasion of the property of the landowners, there has
been no taking of property. It says that, at most, there was merely incidental damage occurring as a
consequence of authorized air navigation. It also argues that the landowner does not own
superadjacent airspace which he has not subjected to possession by the erection of structures or
other occupancy. Moreover, it is argued that, even if the United States took airspace owned by
respondents, no compensable damage was shown. Any damages are said to be merely
consequential for which no compensation may be obtained under the Fifth Amendment.

It is ancient doctrine that at common law ownership of the land extended to the periphery of the
universe – cujus est solum ejus est usque and coelum. [Footnote 5] But that doctrine has no place in
the modern world. The air is a public highway, as Congress has declared. Were that not true, every
transcontinental flight would subject the operator to countless trespass suits. Common sense revolts
at the idea. To recognize such private claims to the airspace would clog these highways, seriously
interfere with their control and development in the public interest, and transfer into private ownership
that to which only the public has a just claim.

But that general principle does not control the present case. For the United States conceded on oral
argument that, if the flights over respondents' property rendered it uninhabitable, there would be a
taking compensable under the Fifth Amendment. It is the owner's loss, not the taker's gain, which is
the measure of the value of the property taken. United States v. Miller, 317 U. S. 369. Market value
fairly determined is the normal measure of the recovery. Id. And that value may reflect the use to
which the land could readily be converted, as well as the existing use. United States v. Powelson, 319
U. S. 266, 319 U. S. 275, and cases cited. If, by reason of the frequency and altitude of the flights,
respondents could not use this land for any purpose, their loss would be complete. [Footnote 6] It
would be as complete as if the United States had entered upon the surface of the land and taken
exclusive possession of it.

We agree that, in those circumstances, there would be a taking. Though it would be only an
easement of flight which was taken, that easement, if permanent and not merely temporary, normally
would be the equivalent of a fee interest. It would be a definite exercise of complete dominion and
control over the surface of the land. The fact that the planes never touched the surface would be as
irrelevant as the absence in this day of the feudal livery of seisin on the transfer of real estate. The
owner's right to possess and exploit the land -- that is to say, his beneficial ownership of it -- would be
destroyed. It would not be a case of incidental damages arising from a legalized nuisance, such as
was involved in Richards v. Washington Terminal Co., 233 U. S. 546. In that case, property owners
whose lands adjoined a railroad line were denied recovery for damages resulting from the noise,
vibrations, smoke, and the like, incidental to the operations of the trains. In the supposed case, the
line of flight is over the land. And the land is appropriated as directly and completely as if it were used
for the runways themselves.

There is no material difference between the supposed case and the present one, except that, here,
enjoyment and use of the land are not completely destroyed. But that does not seem to us to be
controlling. The path of glide for airplanes might reduce a valuable factory site to grazing land, an
orchard to a vegetable patch, a residential section to a wheat field. Some value would remain. But the
use of the airspace immediately above the land would limit the utility of the land and cause a
diminution in its value. [Footnote 7] That was the philosophy of Portsmouth Harbor Land & Hotel Co.
v. United States, 260 U. S. 327. In that case, the petition alleged that the United States erected a fort
on nearby land, established a battery and a fire control station there, and fired guns over petitioner's
land. The Court, speaking through Mr. Justice Holmes, reversed the Court of Claims which dismissed
the petition on a demurrer, holding that "the specific facts set forth would warrant a finding that a
servitude has been imposed." [Footnote 8] 260 U.S. at 260 U. S. 330. And see Delta Air Corp. v.
Kersey, 193 Ga. 862, 20 S.E.2d 245. Cf. United States v. 357.25 Acres of Land, 55 F. Supp. 461.

The fact that the path of glide taken by the planes was that approved by the Civil Aeronautics
Authority does not change the result. The navigable airspace which Congress has placed in the
public domain is "airspace above the minimum safe altitudes of flight prescribed by the Civil
Aeronautics Authority." 49 U.S.C. § 180. If that agency prescribed 83 feet as the minimum safe
altitude, then we would have presented the question of the validity of the regulation. But nothing of
the sort has been done. The path of glide governs the method of operating -- of landing or taking off.
The altitude required for that operation is not the minimum safe altitude of flight which is the
downward reach of the navigable airspace. The minimum prescribed by the authority is 500 feet
during the day and 1000 feet at night for air carriers (Civil Air Regulations, Pt. 61, §§ 61.7400,
61.7401, Code Fed.Reg.Cum.Supp., Tit. 14, ch. 1) and from 300 to 1000 feet for other aircraft
depending on the type of plane and the character of the terrain. Id., Pt. 60, §§ 60.350-60.3505,
Fed.Reg.Cum.Supp., supra. Hence, the flights in question were not within the navigable airspace
which Congress placed within the public domain. If any airspace needed for landing or taking off were
included, flights which were so close to the land as to render it uninhabitable would be immune. But
the United States concedes, as we have said, that, in that event, there would be a taking. Thus, it is
apparent that the path of glide is not the minimum safe altitude of flight within the meaning of the
statute. The Civil Aeronautics Authority has, of course, the power to prescribe air traffic rules. But
Congress has defined navigable airspace only in terms of one of them -- the minimum safe altitudes
of flight.

We have said that the airspace is a public highway. Yet it is obvious that, if the landowner is to have
full enjoyment of the land, he must have exclusive control of the immediate reaches of the enveloping
atmosphere. Otherwise buildings could not be erected, trees could not be planted, and even fences
could not be run. The principle is recognized when the law gives a remedy in case overhanging
structures are erected on adjoining land. [Footnote 9] The landowner owns at least as much of the
space above the ground as the can occupy or use in connection with the land. See Hinman v. Pacific
Air Transport, 84 F.2d 755. The fact that he does not occupy it in a physical sense -- by the erection
of buildings and the like -- is not material. As we have said, the flight of airplanes, which skim the
surface but do not touch it, is as much an appropriation of the use of the land as a more conventional
entry upon it. We would not doubt that, if the United States erected an elevated railway over
respondents' land at the precise altitude where its planes now fly, there would be a partial taking,
even though none of the supports of the structure rested on the land. [Footnote 10] The reason is that
there would be an intrusion so immediate and direct as to subtract from the owner's full enjoyment of
the property and to limit his exploitation of it. While the owner does not in any physical manner
occupy that stratum of airspace or make use of it in the conventional sense, he does use it in
somewhat the same sense that space left between buildings for the purpose of light and air is used.
The superadjacent airspace at this low altitude is so close to the land that continuous invasions of it
affect the use of the surface of the land itself. We think that the landowner, as an incident to his
ownership, has a claim to it, and that invasions of it are in the same category as invasions of the
surface. [Footnote 11]

In this case, as in Portsmouth Harbor Land & Hotel Co. v. United States, supra, the damages were
not merely consequential. They were the product of a direct invasion of respondents' domain.

As stated in United States v. Cress, 243 U. S. 316, 243 U. S. 328,

". . . it is the character of the invasion, not the amount of damage resulting from it, so long as the
damage is substantial, that determines the question whether it is a taking."

We said in United States v. Powelson, supra, p. 319 U. S. 279, that, while the meaning of "property"
as used in the Fifth Amendment was a federal question, "it will normally obtain its content by
reference to local law." If we look to North Carolina law, we reach the same result. Sovereignty in the
airspace rests in the State "except where granted to and assumed by the United States."
Gen.Stats.1943, § 63-11. The flight of aircraft is lawful

"unless at such a low altitude as to interfere with the then existing use to which the land or water, or
the space over the land or water, is put by the owner, or unless so conducted as to be imminently
dangerous to persons or property lawfully on the land or water beneath."

Id., § 63-13. Subject to that right of flight, "ownership of the space above the lands and waters of this
State is declared to be vested in the several owners of the surface beneath." Id., § 63-12. Our holding
that there was an invasion of respondents' property is thus not inconsistent with the local law
governing a landowner's claim to the immediate reaches of the superadjacent airspace.

The airplane is part of the modern environment of life, and the inconveniences which it causes are
normally not compensable under the Fifth Amendment. The airspace, apart from the immediate
reaches above the land, is part of the public domain. We need not determine at this time what those
precise limits are. Flights over private land are not a taking, unless they are so low and so frequent as
to be a direct and immediate interference with the enjoyment and use of the land. We need not
speculate on that phase of the present case. For the findings of the Court of Claims plainly establish
that there was a diminution in value of the property, and that the frequent, low-level flights were the
direct and immediate cause. We agree with the Court of Claims that a servitude has been imposed
upon the land.

II. By § 145(1) of the Judicial Code, 28 U.S.C. § 250(1), the Court of Claims has jurisdiction to hear
and determine

"All claims (except for pensions) founded upon the Constitution of the United States or . . . upon any
contract, express or implied, with the Government of the United States."
We need not decide whether repeated trespasses might give rise to an implied contract. Cf.
Portsmouth Harbor Land & Hotel Co. v. United States, supra. If there is a taking, the claim is "founded
upon the Constitution," and within the jurisdiction of the Court of Claims to hear and determine. See
Hollister v. Benedict & Burnham Mfg. Co., 113 U. S. 59, 113 U. S. 67; Hurley v. Kincaid, 285 U. S.
95, 285 U. S. 104; Yearsley v. W. A. Ross Construction Co., 309 U. S. 18, 309 U. S. 21. Thus, the
jurisdiction of the Court of Claims in this case is clear.

III. The Court of Claims held, as we have noted, that an easement was taken. But the findings of fact
contain no precise description as to its nature. It is not described in terms of frequency of flight,
permissible altitude, or type of airplane. Nor is there a finding as to whether the easement taken was
temporary or permanent. Yet an accurate description of the property taken is essential, since that
interest vests in the United States. United States v. Cress, supra, 243 U. S. 328-329, and cases cited.
It is true that the Court of Claims stated in its opinion that the easement taken was permanent. But
the deficiency in findings cannot be rectified by statements in the opinion. United States v. Esnault-
Pelterie, 299 U. S. 201, 299 U. S. 205-206; United States v. Seminole Nation, 299 U. S. 417, 299 U.
S. 422. Findings of fact on every "material issue" are a statutory requirement. 53 Stat. 752, 28 U.S.C.
§ 288. The importance of findings of fact based on evidence is emphasized here by the Court of
Claims' treatment of the nature of the easement. It stated in its opinion that the easement was
permanent because the United States "no doubt intended to make some sort of arrangement
whereby it could use the airport for its military planes whenever it had occasion to do so." That
sounds more like conjecture, rather than a conclusion from evidence, and if so, it would not be a
proper foundation for liability of the United States. We do not stop to examine the evidence to
determine whether it would support such a finding, if made. For that is not our function. United States
v. Esnault-Pelterie, supra, p. 299 U. S. 206.

Since on this record it is not clear whether the easement taken is a permanent or a temporary one, it
would be premature for us to consider whether the amount of the award made by the Court of Claims
was proper.

The judgment is reversed, and the cause is remanded to the Court of Claims so that it may make the
necessary findings in conformity with this opinion.

Reversed.

MR. JUSTICE JACKSON took no part in the consideration or decision of this case.

REPUBLIC OF THE PHILIPPINES, represented by the NATIONAL IRRIGATION

ADMINISTRATION (NIA), Petitioner,
vs.
RURAL BANK OF KABACAN, INC., LITTIE SARAH A. AGDEPPA, LEOSA NANETTE AGDEPPA
and MARCELINO VIERNES, MARGARITA TABOADA, PORTIA CHARISMA RUTH ORTIZ,
represented by LINA ERLINDA A. ORTIZ and MARIO ORTIZ, JUAN MAMAC and GLORIA
MATAS, Respondents.

DECISION
SERENO, J.:

Before the Court is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, seeking
the reversal of the 12 August 2008 Court of Appeals (CA) Decision and 22 October 2008 Resolution
in CA-G.R. CV No. 65196.

The assailed issuances affirmed with modification the 31 August 1999 "Judgment" promulgated by
the Regional Trial Court (RTC), Branch 22, Judicial Region, Kabacan, Cotabato. The RTC had fixed
the just compensation for the value of the land and improvements thereon that were expropriated by
petitioner, but excluded the value of the excavated soil. Petitioner Republic of the Philippines is
represented in this case by the National Irrigation Authority (NIA).

The Facts

NIA is a government-owned-and-controlled corporation created under Republic Act No. (R.A.) 3601
on 22 June 1963. It is primarily responsible for irrigation development and management in the
country. Its charter was amended by Presidential Decree (P.D.) 552 on 11 September 1974 and P.D.
1702 on 17 July 1980. To carry out its purpose, NIA was specifically authorized under P.D. 552 to
exercise the power of eminent domain. 1

NIA needed some parcels of land for the purpose of constructing the Malitubog-Marigadao Irrigation
Project. On 08 September 1994, it filed with the RTC of Kabacan, Cotabato a Complaint for the
expropriation of a portion of three (3) parcels of land covering a total of 14,497.91 square
meters.2 The case was docketed as Special Civil Case No. 61 and was assigned to RTC-Branch 22.
The affected parcels of land were the following:

1) Lot No. 3080 – covered by Transfer Certificate of Title (TCT) No. T-61963 and registered
under the Rural Bank of Kabacan

2) Lot No. 455 – covered by TCT No. T-74516 and registered under the names of RG May,
Ronald and Rolando, all surnamed Lao

3) Lot No. 3039 – registered under the name of Littie Sarah Agdeppa 3

On 11 July 1995, NIA filed an Amended Complaint to include Leosa Nanette A. Agdeppa and
Marcelino Viernes as registered owners of Lot No. 3039. 4

On 25 September 1995, NIA filed a Second Amended Complaint to allege properly the area sought to
be expropriated, the exact address of the expropriated properties and the owners thereof. NIA further
prayed that it be authorized to take immediate possession of the properties after depositing with the
Philippine National Bank the amount of ₱ 19,246.58 representing the provisional value thereof. 5

On 31 October 1995, respondents filed their Answer with Affirmative and Special Defenses and
Counterclaim.6 They alleged, inter alia, that NIA had no authority to expropriate portions of their land,
because it was not a sovereign political entity; that it was not necessary to expropriate their
properties, because there was an abandoned government property adjacent to theirs, where the
project could pass through; that Lot No. 3080 was no longer owned by the Rural Bank of Kabacan;
that NIA’s valuation of their expropriated properties was inaccurate because of the improvements on
the land that should have placed its value at ₱ 5 million; and that NIA never negotiated with the
landowners before taking their properties for the project, causing permanent and irreparable damages
to their properties valued at ₱ 250,000. 7
On 11 September 1996, the RTC issued an Order forming a committee tasked to determine the fair
market value of the expropriated properties to establish the just compensation to be paid to the
owners. The committee was composed of the Clerk of Court of RTC Branch 22 as chairperson and
two (2) members of the parties to the case. 8

On 20 September 1996, in response to the expropriation Complaint, respondents-intervenors

Margarita Tabaoda, Portia Charisma Ruth Ortiz, Lina Erlinda Ortiz, Mario Ortiz, Juan Mamac and
Gloria Matas filed their Answer-in-Intervention with Affirmative and Special Defenses and Counter-
Claim. They essentially adopted the allegations in the Answer of the other respondents and pointed
out that Margarita Tabaoda and Portia Charisma Ruth Ortiz were the new owners of Lot No. 3080,
which the two acquired from the Rural Bank of Kabacan. They further alleged that the four other
respondents-intervenors were joint tenants-cultivators of Lot Nos. 3080 and 3039. 9

On 10 October 1996, the lower court issued an Order stating it would issue a writ of possession in
favor of NIA upon the determination of the fair market value of the properties, subject of the
expropriation proceedings.10 The lower court later amended its ruling and, on 21 October 1996, issued
a Writ of Possession in favor of NIA.11

On 15 October 1996, the committee submitted a Commissioners’ Report 12 to the RTC stating the
following observations:

In the process of ocular inspection, the following were jointly observed:

1) The area that was already occupied is 6x200 meters which is equivalent to 1,200 square
meters;

2) The area which is to be occupied is 18,930 square meters, more or less;

3) That the area to be occupied is fully planted by gmelina trees with a spacing of 1x1 meters;

4) That the gmelina tress found in the area already occupied and used for [the] road is planted
with gmelina with spacing of 2x2 and more or less one (1) year old;

5) That the gmelina trees found in the area to be occupied are already four (4) years old;

6) That the number of banana clumps (is) two hundred twenty (220);

7) That the number of coco trees found (is) fifteen (15). 13

The report, however, stated that the committee members could not agree on the market value of the
subject properties and recommended the appointment of new independent commissioners to replace
the ones coming from the parties only.14 On 22 October 1996, the RTC issued an Order15 revoking the
appointments of Atty. Agdeppa and Engr. Mabang as members of the committee and, in their stead,
appointed Renato Sambrano, Assistant Provincial Assessor of the Province of Cotabato; and Jack
Tumacmol, Division Chief of the Land Bank of the Philippines–Kidapawan Branch. 16

On 25 November 1996, the new committee submitted its Commissioners’ Report to the lower court.
The committee had agreed that the fair market value of the land to be expropriated should be ₱ 65
per square meter based on the zonal valuation of the Bureau of Internal Revenue (BIR). As regards
the improvement on the properties, the report recommended the following compensation:
 a. ₱ 200 for each gmelina tree that are more than four (4) years old

b. ₱ 150 for each gmelina tree that are more than one (1) year old

c. ₱ 164 for each coco tree

d. ₱ 270 for each banana clump17

On 03 December 1997, the committee submitted to the RTC another report, which had adopted the
first Committee Report, as well as the former’s 25 November 1996 report. However, the committee
added to its computation the value of the earthfill excavated from portions of Lot Nos. 3039 and
3080.18 Petitioner objected to the inclusion of the value of the excavated soil in the computation of the
value of the land.19

The Ruling of the Trial Court

On 31 August 1999, the RTC promulgated its "Judgment," 20 the dispositive portion of which reads:

WHEREFORE, IN VIEW of all the foregoing considerations, the court finds and so holds that the
commissioners have arrived at and were able to determine the fair market value of the properties.
The court adopts their findings, and orders:

1. That 18,930 square meters of the lands owned by the defendants is hereby expropriated in
favor of the Republic of the Philippines through the National Irrigation Administration;

2. That the NIA shall pay to the defendants the amount of ₱ 1,230,450 for the 18,930 square
meters expropriated in proportion to the areas so expropriated;

3. That the NIA shall pay to the defendant-intervenors, owners of Lot No. 3080, the sum of ₱
5,128,375.50, representing removed earthfill;

4. That the NIA shall pay to the defendants, owners of Lot No. 3039, the sum of P1,929,611.30
representing earthfill;

5. To pay to the defendants the sum of ₱ 60,000 for the destroyed G-melina trees (1 year old);

6. To pay to the defendants the sum of ₱ 3,786,000.00 for the 4-year old G-melina trees;

7. That NIA shall pay to the defendants the sum of ₱ 2,460.00 for the coconut trees;

8. That all payments intended for the defendant Rural Bank of Kabacan shall be given to the
defendants and intervenors who have already acquired ownership over the land titled in the
name of the Bank.21

NIA, through the Office of the Solicitor General (OSG), appealed the Decision of the RTC to the CA,
which docketed the case as CA-G.R. CV No. 65196. NIA assailed the trial court’s adoption of the
Commissioners’ Report, which had determined the just compensation to be awarded to the owners of
the lands expropriated. NIA also impugned as error the RTC’s inclusion for compensation of the
excavated soil from the expropriated properties. Finally, it disputed the trial court’s Order to deliver
the payment intended for the Rural Bank of Kabacan to defendants-intervenors, who allegedly
acquired ownership of the land still titled in the name of the said rural bank. 22
The Ruling of the Court of Appeals

On 12 August 2008, the CA through its Twenty-First (21st) Division, promulgated a

Decision23 affirming with modification the RTC Decision. It ruled that the committee tasked to
determine the fair market value of the properties and improvements for the purpose of arriving at the
just compensation, properly performed its function. The appellate court noted that the committee
members had conducted ocular inspections of the area surrounding the expropriated properties and
made their recommendations based on official documents from the BIR with regard to the zonal
valuations of the affected properties.24 The CA observed that, as far as the valuation of the
improvements on the properties was concerned, the committee members took into consideration the
provincial assessor’s appraisal of the age of the trees, their productivity and the inputs made. 25 The
appellate court further noted that despite the Manifestation of NIA that it be allowed to present
evidence to rebut the recommendation of the committee on the valuations of the expropriated
properties, NIA failed to do so.26

The assailed CA Decision, however, deleted the inclusion of the value of the soil excavated from the
properties in the just compensation. It ruled that the property owner was entitled to compensation only
for the value of the property at the time of the taking. 27 In the construction of irrigation projects,
excavations are necessary to build the canals, and the excavated soil cannot be valued separately
from the land expropriated. Thus, it concluded that NIA, as the new owner of the affected properties,
had the right to enjoy and make use of the property, including the excavated soil, pursuant to the
latter’s objectives.28

Finally, the CA affirmed the trial court’s ruling that recognized defendants-intervenors Margarita
Tabaoda and Portia Charisma Ruth Ortiz as the new owners of Lot No. 3080 and held that they were
thus entitled to just compensation. The appellate court based its conclusion on the non-participation
by the Rural Bank of Kabacan in the expropriation proceedings and the latter’s Manifestation that it no
longer owned Lot No. 3080.29

On 11 September 2008, the NIA through the OSG filed a Motion for Reconsideration of the 12 August
2008 Decision, but that motion was denied.30

Aggrieved by the appellate court’s Decision, NIA now comes to this Court via a Petition for Review on
Certiorari under Rule 45.

The Issues

The following are the issues proffered by petitioner:

The Court of appeals seriously erred in affirming the trial court’s finding of just compensation of the
land and the improvements thereon based on the report of the commissioners.

The court of appeals erred in ruling that the payment of just compensation for lot no. 3080 should be
made to respondents margarita taboada and Portia charisma ruth Ortiz. 31

The Court’s Ruling

On the first issue, the Petition is not meritorious.

In expropriation proceedings, just compensation is defined as the full and fair equivalent of the
property taken from its owner by the expropriator. The measure is not the taker's gain, but the
owner's loss. The word "just" is used to intensify the meaning of the word "compensation" and to
convey thereby the idea that the equivalent to be rendered for the property to be taken shall be real,
substantial, full and ample.32 The constitutional limitation of "just compensation" is considered to be a
sum equivalent to the market value of the property, broadly defined as the price fixed by the seller in
open market in the usual and ordinary course of legal action and competition; or the fair value of the
property; as between one who receives and one who desires to sell it, fixed at the time of the actual
taking by the government.33

In the instant case, we affirm the appellate court’s ruling that the commissioners properly determined
the just compensation to be awarded to the landowners whose properties were expropriated by
petitioner.

The records show that the trial court dutifully followed the procedure under Rule 67 of the 1997 Rules
of Civil Procedure when it formed a committee that was tasked to determine the just compensation for
the expropriated properties. The first set of committee members made an ocular inspection of the
properties, subject of the expropriation. They also determined the exact areas affected, as well as the
kinds and the number of improvements on the properties. 34 When the members were unable to agree
on the valuation of the land and the improvements thereon, the trial court selected another batch of
disinterested members to carry out the task of determining the value of the land and the
improvements.

The new committee members even made a second ocular inspection of the expropriated areas. They
also obtained data from the BIR to determine the zonal valuation of the expropriated properties,
interviewed the adjacent property owners, and considered other factors such as distance from the
highway and the nearby town center.35 Further, the committee members also considered Provincial
Ordinance No. 173, which was promulgated by the Province of Cotabato on 15 June 1999, and which
provide for the value of the properties and the improvements for taxation purposes. 36

We can readily deduce from these established facts that the committee members endeavored a
rigorous process to determine the just compensation to be awarded to the owners of the expropriated
properties. We cannot, as petitioner would want us to, oversimplify the process undertaken by the
committee in arriving at its recommendations, because these were not based on mere conjectures
and unreliable data.

In National Power Corporation v. Diato-Bernal,37 this Court emphasized that the "just"-ness of the
compensation could only be attained by using reliable and actual data as bases for fixing the value of
the condemned property. The reliable and actual data we referred to in that case were the sworn
declarations of realtors in the area, as well as tax declarations and zonal valuation from the BIR. In
disregarding the Committee Report assailed by the National Power Corporation in the said case, we
ruled thus:

It is evident that the above conclusions are highly speculative and devoid of any actual and reliable
basis. First, the market values of the subject property’s neighboring lots were mere estimates and
unsupported by any corroborative documents, such as sworn declarations of realtors in the area
concerned, tax declarations or zonal valuation from the Bureau of Internal Revenue for the
contiguous residential dwellings and commercial establishments. The report also failed to elaborate
on how and by how much the community centers and convenience facilities enhanced the value of
respondent’s property. Finally, the market sales data and price listings alluded to in the report were
not even appended thereto.

As correctly invoked by NAPOCOR, a commissioners’ report of land prices which is not based on any
documentary evidence is manifestly hearsay and should be disregarded by the court.
The trial court adopted the flawed findings of the commissioners hook, line, and sinker. It did not even
bother to require the submission of the alleged "market sales data" and "price listings." Further, the
RTC overlooked the fact that the recommended just compensation was gauged as of September 10,
1999 or more than two years after the complaint was filed on January 8, 1997. It is settled that just
compensation is to be ascertained as of the time of the taking, which usually coincides with the
commencement of the expropriation proceedings. Where the institution of the action precedes entry
into the property, the just compensation is to be ascertained as of the time of the filing of the
complaint. Clearly, the recommended just compensation in the commissioners’ report is
unacceptable.38

In the instant case, the committee members based their recommendations on reliable data and, as
aptly noted by the appellate court, considered various factors that affected the value of the land and
the improvements.39

Petitioner, however, strongly objects to the CA’s affirmation of the trial court’s adoption of Provincial
Ordinance No. 173. The OSG, on behalf of petitioner, strongly argues that the recommendations of
the committee formed by the trial court were inaccurate. The OSG contends that the ordinance
reflects the 1999 market values of real properties in the Province of Cotabato, while the actual taking
was made in 1996.40

We are not persuaded.

We note that petitioner had ample opportunity to rebut the testimonial, as well as documentary
evidence presented by respondents when the case was still on trial. It failed to do so, however. The
issue raised by petitioner was adequately addresses by the CA’s assailed Decision in this wise:

A thorough scrutiny of the records reveals that the second set of Commissioners, with Atty.
Marasigan still being the Chairperson and Mr. Zambrano and Mr. Tomacmol as members, was not
arbitrary and capricious in performing the task assigned to them. We note that these Commissioners
were competent and disinterested persons who were handpicked by the court a quo due to their
expertise in appraising the value of the land and the improvements thereon in the province of
Cotabato. They made a careful study of the area affected by the expropriation, mindful of the fact that
the value of the land and its may be affected by many factors. The duly appointed Commissioners
made a second ocular inspection of the subject area on 4 September 1997; went to the BIR office in
order to get the BIR zonal valuation of the properties located in Carmen, Cotabato; interviewed
adjacent property owners; and took into consideration various factors such as the location of the land
which is just less than a kilometer away from the Poblacion and half a kilometer away from the
highway and the fact that it is near a military reservation. With regard to the improvements, the
Commissioners took into consideration the valuation of the Provincial Assessor, the age of the trees,
and the inputs and their productivity.

Thus, it could not be said that the schedule of market values in Ordinance No. 173 was the sole basis
of the Commissioners in arriving at their valuation. Said ordinance merely gave credence to their
valuation which is comparable to the current price at that time. Besides, Mr. Zambrano testified that
the date used as bases for Ordinance No. 173 were taken from 1995 to 1996. 41

Moreover, factual findings of the CA are generally binding on this Court. The rule admits of
exceptions, though, such as when the factual findings of the appellate court and the trial court are
contradictory, or when the findings are not supported by the evidence on record. 42 These exceptions,
however, are not present in the instant case.
Thus, in the absence of contrary evidence, we affirm the findings of the CA, which sustained the trial
court’s Decision adopting the committee’s recommendations on the just compensation to be awarded
to herein respondents.

We also uphold the CA ruling, which deleted the inclusion of the value of the excavated soil in the
payment for just compensation. There is no legal basis to separate the value of the excavated soil
from that of the expropriated properties, contrary to what the trial court did. In the context of
expropriation proceedings, the soil has no value separate from that of the expropriated land. Just
compensation ordinarily refers to the value of the land to compensate for what the owner actually
loses. Such value could only be that which prevailed at the time of the taking.

In National Power Corporation v. Ibrahim, et al.,43 we held that rights over lands are indivisible, viz:

[C]onsequently, the CA’s findings which upheld those of the trial court that respondents owned and
possessed the property and that its substrata was possessed by petitioner since 1978 for the
underground tunnels, cannot be disturbed. Moreover, the Court sustains the finding of the lower
courts that the sub-terrain portion of the property similarly belongs to respondents. This conclusion is
drawn from Article 437 of the Civil Code which provides:

ART. 437. The owner of a parcel of land is the owner of its surface and of everything under it, and he
can construct thereon any works or make any plantations and excavations which he may deem
proper, without detriment to servitudes and subject to special laws and ordinances. He cannot
complain of the reasonable requirements of aerial navigation.

Thus, the ownership of land extends to the surface as well as to the subsoil under it.

x x x           x x x          x x x

Registered landowners may even be ousted of ownership and possession of their properties in the
event the latter are reclassified as mineral lands because real properties are characteristically
indivisible. For the loss sustained by such owners, they are entitled to just compensation under the
Mining Laws or in appropriate expropriation proceedings.

Moreover, petitioner’s argument that the landowners’ right extends to the sub-soil insofar as
necessary for their practical interests serves only to further weaken its case. The theory would limit
the right to the sub-soil upon the economic utility which such area offers to the surface owners.
Presumably, the landowners’ right extends to such height or depth where it is possible for them to
obtain some benefit or enjoyment, and it is extinguished beyond such limit as there would be no more
interest protected by law.

Hence, the CA correctly modified the trial court’s Decision when it ruled thus:

We agree with the OSG that NIA, in the construction of irrigation projects, must necessarily make
excavations in order to build the canals. Indeed it is preposterous that NIA will be made to pay not
only for the value of the land but also for the soil excavated from such land when such excavation is a
necessary phase in the building of irrigation projects. That NIA will make use of the excavated soil is
of no moment and is of no concern to the landowner who has been paid the fair market value of his
land. As pointed out by the OSG, the law does not limit the use of the expropriated land to the surface
area only. Further, NIA, now being the owner of the expropriated property, has the right to enjoy and
make use of the property in accordance with its mandate and objectives as provided by law. To
sanction the payment of the excavated soil is to allow the landowners to recover more than the value
of the land at the time when it was taken, which is the true measure of the damages, or just
compensation, and would discourage the construction of important public improvements. 44

On the second issue, the Petition is meritorious.

The CA affirmed the ruling of the trial court, which had awarded the payment of just compensation –
intended for Lot No. 3080 registered in the name of the Rural Bank of Kabacan – to the defendants-
intervenors on the basis of the non-participation of the rural bank in the proceedings and the latter’s
subsequent Manifestation that it was no longer the owner of that lot. The appellate court erred on this
matter.

It should be noted that eminent domain cases involve the expenditure of public funds. 45 In this kind of
proceeding, we require trial courts to be more circumspect in their evaluation of the just compensation
to be awarded to the owner of the expropriated property. 46 Thus, it was imprudent for the appellate
court to rely on the Rural Bank of Kabacan’s mere declaration of non-ownership and non-participation
in the expropriation proceeding to validate defendants-intervenors’ claim of entitlement to that
payment.

The law imposes certain legal requirements in order for a conveyance of real property to be
valid.1âwphi1 It should be noted that Lot No. 3080 is a registered parcel of land covered by TCT No.
T-61963. In order for the reconveyance of real property to be valid, the conveyance must be
embodied in a public document47 and registered in the office of the Register of Deeds where the
property is situated.48

We have scrupulously examined the records of the case and found no proof of conveyance or
evidence of transfer of ownership of Lot No. 3080 from its registered owner, the Rural Bank of
Kabacan, to defendants-intervenors. As it is, the TCT is still registered in the name of the said rural
bank. It is not disputed that the bank did not participate in the expropriation proceedings, and that it
manifested that it no longer owned Lot No. 3080. The trial court should have nevertheless required
the rural bank and the defendants-intervenors to show proof or evidence pertaining to the
conveyance of the subject lot. The court cannot rely on mere inference, considering that the payment
of just compensation is intended to be awarded solely owner based on the latter’s proof of ownership.

The trial court should have been guided by Rule 67, Section 9 of the 1997 Rules of Court, which
provides thus:

SEC. 9. Uncertain ownership; conflicting claims. — If the ownership of the property taken is uncertain,
or there are conflicting claims to any part thereof, the court may order any sum or sums awarded as
compensation for the property to be paid to the court for the benefit of the person adjudged in the
same proceeding to be entitled thereto. But the judgment shall require the payment of the sum or
sums awarded to either the defendant or the court before the plaintiff can enter upon the property, or
retain it for the public use or purpose if entry has already been made.

Hence, the appellate court erred in affirming the trial court’s Order to award payment of just
compensation to the defendants-intervenors. There is doubt as to the real owner of Lot No. 3080.
Despite the fact that the lot was covered by TCT No. T-61963 and was registered under its name, the
Rural Bank of Kabacan manifested that the owner of the lot was no longer the bank, but the
defendants-intervenors; however, it presented no proof as to the conveyance thereof. In this regard,
we deem it proper to remand this case to the trial court for the reception of evidence to establish the
present owner of Lot No. 3080 who will be entitled to receive the payment of just compensation.
WHEREFORE, the Petition is PARTLY GRANTED. The 12 August 2008 CA Decision in CA-G.R. CV
No. 65196, awarding just compensation to the defendants as owners of the expropriated properties
and deleting the inclusion of the value of the excavated soil, is hereby AFFIRMED with
MODIFICATION. The case is hereby REMANDED to the trial court for the reception of evidence to
establish the present owner of Lot No. 3080. No pronouncements as to cost.

SO ORDERED.

Hidden Treasure (Arts. 438-439)

Right of Accession

G.R. No. 206534, October 05, 2016

JULIA LIM ROSARIO, MERCEDES LIM CUSTODIO AS REPRESENTED BY DONNO CUSTODIO,

NORMA LICARDO, AND LEILA ESPIRITU, Petitioners, v. ALFONSO LIM, Respondent.

DECISION

PERALTA, J.:

This a Petition for Review on Certiorari under Rule 45 seeking to annul and set aside the Court of
Appeals (CA) Resolution1 dated March 11, 2013 and its Decision2 dated September 11, 2012 in CA-
G.R. CV No. 95703 which reversed the Decision 3 of the Regional Trial Court (RTC) of Baguio City,
Branch 61, dated May 17, 2010 in Civil Case No. 6599-R.

The pertinent facts of the case are as follows:

chanRoblesvirtualLawlibrarySometime in 1973, Brigida Aquino Lim acquired a leasehold right over a

government-owned lot in Hilltop-Kayang, Baguio City, pursuant to City Council Resolution No. 102-
74. Later, Brigida and his son, respondent Alfonso Lim, allegedly entered into an agreement on
March 10, 1973 for the construction of a building on said property, which would be fully financed by
the latter. Alfonso thus administered the construction of a commercial building. Sometime in the late
1980s, Brigida and Alfonso once again agreed on the construction of three (3) more floors on the
already existing two (2)-storey commercial building. On March 23, 1992, Brigida executed an Affidavit
of Waiver of Rights, categorically waiving, renouncing, and transferring all her rights and interests
over the leased lot in Alfonso's favor. On November 29, 1995, Brigida executed a Deed of Waiver of
Rights reiterating her waiver of rights over the leased lot and the erected building in favor of her son.

However, on March 23, 1996, Brigida executed another affidavit assailing the validity of the previously
executed documents and stating that she and her husband, Luis, were the real owners of the property
and that Alfonso never caused and paid for the construction of the subject building.

On February 8, 2001, Brigida died intestate. Subsequently, Alfonso and his sisters, petitioners Julia
Lim Rosario, Mercedes Lim Custodio, Norma Licardo, and Leila Espiritu executed a Deed of
Extrajudicial Settlement for the estates of their parents without including the disputed property.
However, after six (6) years, or on November 20, 2007, petitioners filed a Complaint for Judicial
Partition of Real Estate, Accounting with Damages and Writ of Preliminary Injunction.

On May 17, 2010, the RTC ruled that the parties are co-owners of the disputed property and ordered
its partition among them in equal shares, thus:

chanRoblesvirtualLawlibrary

WHEREFORE, this Court renders judgment for the plaintiffs and against the defendants, as
follows:ChanRoblesVirtualawlibrary

1. The properties subject of this case are hereby ordered to be partitioned in five (5) equal
shares and in case of disagreement in the partition, this Court shall appoint three (3)
competent and disinterested individuals as commissioners to make the partition;

2. The defendant is hereby ordered to make an accounting of all the rentals of the subject
properties from the date of judicial demand or filing of this complaint and to deliver to
the plaintiffs their corresponding shares as well as their share in the subsequent rentals
until the partition of the properties is effected; and cralawlawlibrary

3. The defendant is hereby ordered to pay the plaintiffs the amount of P50,000 as
attorney's fees.

SO ORDERED.4chanroblesvirtuallawlibrary

Aggrieved, Alfonso elevated the case to the CA. On September 11, 2012, the CA rendered a
Decision granting the petition, the dispositive portion of which reads:

chanRoblesvirtualLawlibrary
WHEREFORE, premises considered, the appeal is GRANTED. The assailed Decision dated May 17,
2010 of the Regional Trial Court of Baguio City, Branch 61, in Civil Case No. 6599-R, is REVERSED
and SET ASIDE. Accordingly, the case is REMANDED to the court of origin for further proceedings
to determine the facts and introduction of evidence essential to the proper application of Articles 448
and 546 of the Civil Code, specifically in accordance with the following matters and
parameters:ChanRoblesVirtualawlibrary

a. Co-owners' (plaintiffs-appellees including defendant appellant) option to appropriate - as their

own - the improvements on the lots, after paying the indemnity, as provided under Article 546
in relation to Article 448 of the Civil Code; or in requiring defendant-appellant Alfonso Lim to
pay for the value of the lot unless it is considerably more than that of the improvements in
which case defendant-appellant shall pay reasonable rent based upon the terms provided
under the Civil Code;

b. The value of the necessary and/or useful expenses incurred by defendant-appellant in the
construction of the improvements on the lot;
 c. The increase in value acquired by the lot by reason of the construction of the building/useful
improvements;

d. Type of indemnity to be paid (whether b or c above); [and]

e. Whether the value of the lot is considerably more than that of the improvements built thereon.

No costs.

SO ORDERED.5chanroblesvirtuallawlibrary

Hence, petitioners come before the Court for relief. The petition is meritorious.

The appellate court found that the main issue of the instant case is whether the property in question
should be included in Brigida's estate and be divided in equal shares among her children.

Upon a close examination of the available records of the case at bar, the Court affirms the findings of
the courts below that, indeed, Brigida acquired the disputed property during the subsistence of her
marriage to Luis. It likewise appears that the title to said property remains in Brigida's name. The CA
gave credence to Brigida's Affidavit dated March 23, 1996 which provides:

chanRoblesvirtualLawlibrary
xxxx

3. That sometime in the year 1973, when my husband Luis Lim was still alive, we caused the
construction of a two (2)-storey commercial building on the aforesaid lot using from our joint income
and also the proceeds of a mortgage loan we obtained from the bank using as collateral for the
purpose, my real property located at Rizal Street, Poblacion, Mangaldan, Pangasinan;

4. That after about four (4) years of profitable operation of said building, I caused the construction of
additional 3rd and 4th storey building, plus a penthouse, using funds derived from the earnings of the
said building and also my bank deposits and other savings;

5. That sometime in 1988, my eldest child and only son, Alfonso Lim revealed his greedy intention to
own for himself alone the said entire building at the exclusion of all his aforenamed sisters. And
towards this end, with use of threats and intimidation, my said son Alfonso Lim, forced me to sign an
affidavit dated May 27, 1988 stating therein, among others, that it was my said son Alfonso Lim who
financed the construction of the first two (2) storeys and who entered into a building contract with a
certain Romeo F. Laigo. It is also stated therein that it was my said son who financed the construction
of the 3rd and fourth floors, plus the penthouse of the same building sometime in 1977. All these
matters are absolutely false because all the expenses therefor are my own money as stated earlier
and none carne from my said son Alfonso Lim because the latter was jobless that time up to the
present and gets his money from me. When the building was already completed, my said son got all
the rentals therefrom at the exclusion of his sisters, although, there were rare occasions that my said
son gave me minimal amount from said rentals;

6. That I am executing this affidavit freely and voluntarily for the purpose of establishing the truth that
the construction of said commercial building in Baguio City was financed with money that came from
the sources mentioned above and certainly not from the money of my said son Alfonso Lim; likewise,
for the purpose of declaring that [the] subject property belongs to me and my late husband and that if
ever I die, it is my sincerest desire that the same be divided equally by all my children, including the
rentals collected thereform;
7. That I am also executing this affidavit freely and voluntarily for the purpose of declaring that my
said affidavit dated May 27, 1988 is null and void and has no legal effect whatsoever and for
whatever legal purpose that this affidavit may serve.

x x x6chanroblesvirtuallawlibrary

The appellate court went further by saying that clearly, it was never Brigida's intention to give the
exclusive ownership of the contested lot to Alfonso, and the title to the same was never transferred in
anybody else's name.

The CA concluded that Alfonso was the owner of the building simply based on the assailed
agreement dated March 10, 1973 between Alfonso and Brigida, building contract with a certain
contractor, Romeo Laigo, tax declarations, and various acknowledgment receipts and commercial
invoices for construction materials. But while the CA utilized said affidavit to uphold Brigida's
ownership of the lot, it ignored the other portions which categorically declared that the money used
for, the development of the building had actually come from Brigida and Luis and not from Alfonso,
who was jobless and had no sufficient source of income at that time to finance the construction of a
building. Said affidavit indubitably exposes the fact that Brigida never intended to transfer the sole
ownership of the contested property to her only son, but wanted it to benefit all of her children, and
that whatever document she may have had executed in the past was fraudulently acquired and not
obtained with her valid consent.

Further, Alfonso failed to present any proof that the money used for the erection of the building in
question actually came from him and that he indeed possessed sufficient financial capacity to cause
the construction of the structure. The trial court also found that Brigida wrote a letter in Pangasinan
dialect, dated October 18, 1987, to Alfonso. The letter was translated to reveal that Brigida even
admonished Alfonso not to meddle with the status of the properties. Also, Laigo executed an affidavit
stating that the building actually belonged to the spouses Luis and Brigida Lim, and not to Alfonso.

The abovementioned findings of fact of the trial court must be accorded respect and great weight. It is
a hornbook doctrine that the trial court's factual findings, especially when affirmed by the CA, are
entitled to great weight on appeal and should not be disturbed except for strong and valid reasons
since it is in a better position to examine the demeanor of the witnesses while testifying. Generally, it
is no longer the Court's function to analyze and weigh evidence by the parties all over again. 7 The trial
court's findings of fact should not be disturbed on appeal, unless these are facts of weight and
substance that were overlooked or misinterpreted and that would materially affect the disposition of
the case.8 After a careful scrutiny of the records, the Court finds no reason to deviate from the RTC's
findings. Although the CA reversed the RTC's decision when it held that Alfonso is the exclusive
owner of the disputed building, it essentially sustained the lower court's findings of fact as it even
relied on Brigida's affidavit the same evidence which the RTC used in deciding the controversy- to
arrive at its conclusion that Brigida indeed owned the subject lot. There is no indication that the RTC
of Baguio City had overlooked, misunderstood or misapplied the surrounding facts and circumstances
of the case. Hence, the Court must defer to the trial court on the findings of facts as it was in the best
position to assess and determine the credibility of the witnesses presented by both
parties.9chanrobleslaw

Neither can Alfonso lean on the supposed tax declarations in his name as these are not conclusive
evidence of ownership unlike a certificate of title which indicates true and legal ownership by the
registered owners.10 Thus, Articles 44811 and 54612 of the Civil Code find no application in this case,
but the doctrine that the accessory follows the principal, that is, the ownership of the property gives
the right by accession to everything which is produced thereby, or which is incorporated or attached
thereto, either naturally or artificially.13 Verily, the RTC aptly held that preponderance of evidence
must shift in favor of petitioners and the contested properties should necessarily form part of Brigida's
estate.

WHEREFORE, the petition is GRANTED. The Court REVERSES and SETS ASIDE the Decision of

the Court of Appeals, dated September 11, 2012, and its Resolution dated March 11, 2013 in CA-
G.R. CV No. 95703, and REINSTATES the Decision of the Regional Trial Court of Baguio City,
Branch 61, dated May 17, 2010 in Civil Case No. 6599-R ordering the partition of the disputed
properties among the parties.

SO ORDERED.chanRoblesvirtualLawlibrary

Accession with respect to Immovable Property

a. Accession Discreta
REX DACLISON, Petitioner,
vs.
EDUARDO BAYTION, Respondent.

DECISION

MENDOZA, J.:

Assailed in this petition for review 1 are the February 5, 2015 Decision2 and the August 3, 2015
Resolution3 of the Court of Appeals (CA) in CA-G.R. CV No. 99627, which affirmed in toto the April
27, 2012 Decision 4 rendered by the Regional Trial Court, Branch 224, Quezon City (RTC) in Civil
Case No. Q-09-66145, a case for forcible entry.

The Antecedents

On January 27, 2009, respondent Eduardo Baytion (Baytion) filed a Complaint5 for Forcible Entry and
Damages with Prayer for Issuance of Preliminary Mandatory Injunction with the Metropolitan Trial
Court, Branch 43, Quezon City (MeTC) against petitioner Rex Daclison (Daclison), which was
docketed as Civil Case No. 39225.

In the complaint, Baytion alleged that he was a co-owner of a parcel of land consisting of 1,500
square meters, covered by Transfer Certificate Title (TCT) No. 221507. The said property was
inherited by him and his siblings from their parents and, as agreed upon, was being administered by
him. As administrator, he leased portions of the property to third persons.

Erected on the said property was a one-storey building which was divided into seven units or stalls.
One of the stalls was leased to a certain Leonida Dela Cruz (Leonida) who used it for her business of
selling rocks, pebbles and similar construction materials.

When the lease of Nida expired sometime in May 2008, Daclison and other persons acting under her
took possession of the portion leased and occupied by Leonida without the prior knowledge and
consent of Baytion. Since then, Daclison had been occupying the contested portion and using it for
his business of selling marble and other finishing materials without paying anything to Baytion.

Upon learning of Daclison’s unauthorized entry into the subject portion of the property, sometime in
June 2008, Baytion demanded that he vacate it. Despite oral and written demands to vacate,
Daclison refused to do so. This prompted Baytion to file the complaint for forcible entry and damages.

Daclison, in his answer, averred that sometime in 1978, Baytion leased the subject portion to Antonio
dela Cruz (Antonio) where the latter started a business; that ten or fifteen years later, a stone walling,
called a riprap, was erected at the creek lying beside Baytion’s property, leaving a deep down-sloping
area; that Antonio negotiated with a certain engineer so he could be in possession of the said down-
slope; that Antonio had the down-slope filled up until it was leveled with the leased portion; that
Antonio paid for the right to possess the same; that in 2000, Antonio’s business was taken over by
Leonida, who suffered a stroke in December 2007; that after her death, the business was taken over
by Ernanie Dela Cruz (Ernanie); that in February 2008, he (Daclison) entered into a business venture
with Ernanie in the same leased property and he took over the management of the business; that he
received a letter from Baytion addressed to Ernanie requesting the latter to vacate the subject
premises; that Baytion and Ernanie came to an agreement that the latter would continue the lease of
the property; that he issued a check in the amount of ₱100,000.00 as payment for the rental arrears;
that two weeks thereafter, Baytion returned the check and demanded that Ernanie vacate the
property; that Baytion promised that he would no longer bother them if they would just transfer to the
filled-up and plane-leveled property; that on account of the said promise, he and Ernanie vacated the
leased area and transferred their business to the filled-up portion; that despite the fact that they
already vacated the leased portion of the property, Baytion still filed a complaint with the barangay
claiming that the filled-up portion was part of his property; that the executive officer of the barangay
who conducted the investigation made a report indicating that a mojon was placed by him (Daclison)
which showed the boundary of Baytion’s property; that Baytion acknowledged the said report and
agreed to put an end to the controversy; and that despite Baytion’s agreement to put an end to the
dispute, he still sent a demand letter to vacate.6
On August 25, 2009, the MeTC dismissed the case on the ground that Baytion failed to include his
siblings or his co-owners, as plaintiffs in the case. The dismissal, however, was without prejudice.

Baytion appealed the case to the RTC, which ruled that the MeTC lacked jurisdiction to decide the
case because the allegations in the complaint failed to constitute a case of forcible entry. Pursuant to
Section 8, Rule 40 of the Rules of Court, however, the RTC did not dismiss the case and, instead,
exercised its original jurisdiction over the same.

The RTC then decided that Baytion had a better right of possession over the property. The dispositive
portion of its decision reads:

WHEREFORE, premises considered, judgment is hereby rendered ordering:

1) The defendant and other persons claiming under him to vacate and to turn over the
possession of the subject property to the plaintiff; and,

2) The defendant to pay plaintiff the amount of ₱20,000.00/monthly for the use of the premises
commencing from May 2008 until the subject premises is vacated.

SO ORDERED.7

Aggrieved, Daclison filed an appeal with the CA.

The CA tackled two issues, namely: a) whether the RTC committed a reversible error when it
exercised original jurisdiction of the case and decided the same on its merits pursuant to Section 8,
Rule 40 of the Rules of Court; and, b) who, between Baytion and Daclison, had a better right to
possess the subject property.

The CA ruled that the MeTC had no jurisdiction to hear and decide the case in a summary proceeding
for forcible entry because Baytion failed to allege that he was in prior physical possession of the
property and that he was deprived of his possession under Section 1, Rule 70 of the Revised Rules of
Court. It was of the view that the present action for forcible entry had actually ripened into one for
recovery of the right to possess or accion publiciana, which was an action in an ordinary civil
proceeding in the Regional Trial Court. The action was aimed at determining who among the parties
had a better right of possession of realty independent of the issue of ownership or title. It was an
ejectment suit filed after the expiration of one year from the accrual of the cause of action or from the
unlawful withholding of possession of the realty. 8 Thus, it agreed with the RTC when the latter
correctly assumed jurisdiction over the case following the mandate of Section 8, Rule 40 of the
Revised Rules of Court.9

As to the issue of possession, the CA concluded that Baytion, as co-owner of the subject property,
had a better right to possess. It wrote:

Xxx, it is clear that Antonio, Leonida and Ernanie were all lessees of the subject property and its
improvements owned by the plaintiff. Ernanie, who is a sub-lessee of the subject property, again sub-
leased the same to appellant, without authority or consent from appellee. Thus, since appellant have
been possessing the subject property in his capacity as a mere sub-lessee, he cannot own the
subject property and its improvements through open, continuous and adverse possession of the
property. It follows then that appellee has the right to repossess the subject property. 10

On February 5, 2015, the CA rendered the assailed decision, disposing in this wise:
WHEREFORE, the instant appeal is hereby DISMISSED for lack of merit, and the Decision 27 April
2012 rendered by Branch 224 of the RTC of Quezon City in Civil Case No. Q-09-66145
is AFFIRMED in toto.

SO ORDERED.11

Daclison filed a motion for reconsideration but it was denied by the CA in the assailed resolution.

Hence, the present petition for review raising the following

ISSUES

I.

THE HONORABLE COURT A QUO GRAVELY ERRED WHEN IT HELD THAT THE INSTANT
CASE IS AN ACCION PUBLICIANA, MORE SIGNIFICANTLY [WITH] RESPECT TO THE LAND
OUTSIDE TCT NO. 221507; THAT, EFFECTIVELY, THE RESPONDENT HAS PRIOR
POSSESSION OF THE PROPERTY OUTSIDE TCT NO. 221507.

II.

THE HONORABLE COURT A QUO GRAVELY ERRED UNDER THE LAW WHEN IT RULED THAT
THE PETITIONER WAS A LESSEE OF THE SECOND PROPERTY

III.

THE HONORABLE COURT A QUO GRAVELY ERRED UNDER THE LAW WHEN IT RULED THAT
THE SECOND PROPERTY OR LAND WAS AN UMPROVEMENT ON THE PROPERTY OF THE
RESPONDENT.

IV.

THE HONORABLE COURT A QUO GRAVELY ERRED UNDER THE LAW WHEN IT RULED THAT
THE RESPONDENT HAS LEGAL CAPACITY TO SUE.

V.

THE HONORABLE COURT A QUO GRAVELY ERRED UNDER THE LAW WHEN IT RULED THAT
THE PETITIONER SHOULD PAY THE [RESPONDENT] THE AMOUNT OF ₱20,000 MONTHLY
FOR THE USE OF THE PREMISES.12

Daclison insists that what is really in dispute in the present controversy is the filled-up portion
between the riprap constructed by the government and the property of Baytion and, 13 therefore,
outside of the land co-owned by Baytion. Accordingly, the RTC and the CA should have dismissed
the case because the leased property was already surrendered to its owner, thereby, mooting the
complaint.14

Daclison insists that Antonio, from whom he derived his right over the contested portion, made an
open, continuous and adverse possession and use of the property when the latter extended his place
of business to the filled-up portion.15 He claims that the filled-up portion is not an improvement on the
leased property as found by the RTC and the court a quo. It is a property separate and distinct from
the leased property.16

The Respondent’s Position

Baytion basically posits that although the disputed portion is outside the description of the property
covered by TCT No. 221507, it forms an integral part of the latter because it is an accretion,
construction, or improvement on the property and, under the law, any accretion or anything built
thereon belongs to him and his co-owners.17

The Court’s Ruling

At the outset, it was clear that the disputed property was the filled-up portion between
the riprap constructed by the government and the property covered by TCT No. 221507. According to
Daclison, the property covered by TCT No. 221507 had already been surrendered to Baytion which
the latter never disputed. As such, the Court is now confronted with the question as to who between
the parties has a better right over this contested portion between the land co-owned by Baytion and
the constructed riprap.

Baytion does not have a better

right over the contested portion

The RTC and the CA erred in holding that Baytion has a better right to possess the contested portion.

Baytion’s contention that he owns that portion by reason of accretion is misplaced. Article 457 of the
New Civil Code provides:

To the owners of lands adjoining the banks of rivers belongs the accretion which they gradually
receive from the effects of the current of the waters.

In other words, the following requisites must concur in order for an accretion to be considered,
namely:

(1) that the deposit be gradual and imperceptible;

(2) that it be made through the effects of the current of the water; and,

(3) that the land where accretion takes place is adjacent to the banks of rivers. 18

In the case at bench, this contested portion cannot be considered an accretion. To begin with, the
land came about not by reason of a gradual and imperceptible deposit.1âwphi1 The deposits were
artificial and man-made and not the exclusive result of the current from the creek adjacent to his
property. Baytion failed to prove the attendance of the indispensable requirement that the deposit was
due to the effect of the current of the river or creek. Alluvion must be the exclusive work of nature and
not a result of human intervention.19

Furthermore, the disputed property cannot also be considered an improvement or accession. Article
445 of the Civil Code provides:
Art. 445. Whatever is built, planted or sown on the land of another and the improvements or
repairs made thereon, belong to the owner of the land, subject to the provisions of the following
articles.

[Emphases supplied]

It must be noted that Article 445 uses the adverb "thereon" which is simply defined as "on the thing
that has been mentioned."20 In other words, the supposed improvement must be made, constructed
or introduced within or on the property and not outside so as to qualify as an improvement
contemplated 'by law. Otherwise, it would just be very convenient for land owners to expand or widen
their properties in the guise of improvements.

In view of all the foregoing, it is the opinion of this Court that Baytion, not being the owner of the
contested portion, does not have a better right to possess the same.1âwphi1 In fact, in his initiatory
pleading, he never claimed to have been in prior possession of this piece of property. His claim of
ownership is without basis. As earlier pointed out, the portion is neither an accretion nor an
accession. That being said, it is safe to conclude that he does not have any cause of action to eject
Daclison.

WHEREFORE, the petition is GRANTED. The February 5, 2015 Decision and the August 3, 2015
Resolution of the Court of Appeals in CA-G.R. CV No. 99627 are REVERSED and SET ASIDE. The
complaint for possession is hereby ordered DISMISSED.

SO ORDERED.

G.R. No. 166884               June 13, 2012

LAND BANK OF THE PHILIPPINES, Petitioner,

vs.
LAMBERTO C. PEREZ, NESTOR C. KUN, MA. ESTELITA P. ANGELES-PANLILIO, and
NAPOLEON O. GARCIA, Respondents.

DECISION

BRION, J.:

Before this Court is a petition for review on certiorari, 1 under Rule 45 of the Rules of Court, assailing
the decision2 dated January 20, 2005 of the Court of Appeals in CA-G.R. SP No. 76588. In the
assailed decision, the Court of Appeals dismissed the criminal complaint for estafa against the
respondents, Lamberto C. Perez, Nestor C. Kun, Ma. Estelita P. Angeles-Panlilio and Napoleon
Garcia, who allegedly violated Article 315, paragraph 1(b) of the Revised Penal Code, in relation with
Section 13 of Presidential Decree No. (P.D.) 115 – the "Trust Receipts Law."

Petitioner Land Bank of the Philippines (LBP) is a government financial institution and the official
depository of the Philippines.3 Respondents are the officers and representatives of Asian Construction
and Development Corporation (ACDC), a corporation incorporated under Philippine law and engaged
in the construction business.4
On June 7, 1999, LBP filed a complaint for estafa or violation of Article 315, paragraph 1(b) of the
Revised Penal Code, in relation to P.D. 115, against the respondents before the City Prosecutor’s
Office in Makati City. In the affidavit-complaint 5 of June 7, 1999, the LBP’s Account Officer for the
Account Management Development, Edna L. Juan, stated that LBP extended a credit
accommodation to ACDC through the execution of an Omnibus Credit Line Agreement
(Agreement)6 between LBP and ACDC on October 29, 1996. In various instances, ACDC used the
Letters of Credit/Trust Receipts Facility of the Agreement to buy construction materials. The
respondents, as officers and representatives of ACDC, executed trust receipts 7 in connection with the
construction materials, with a total principal amount of ₱52,344,096.32. The trust receipts matured,
but ACDC failed to return to LBP the proceeds of the construction projects or the construction
materials subject of the trust receipts. LBP sent ACDC a demand letter, 8 dated May 4, 1999, for the
payment of its debts, including those under the Trust Receipts Facility in the amount of
₱66,425,924.39. When ACDC failed to comply with the demand letter, LBP filed the affidavit-
complaint.

The respondents filed a joint affidavit9 wherein they stated that they signed the trust receipt
documents on or about the same time LBP and ACDC executed the loan documents; their signatures
were required by LBP for the release of the loans. The trust receipts in this case do not contain (1) a
description of the goods placed in trust, (2) their invoice values, and (3) their maturity dates, in
violation of Section 5(a) of P.D. 115. Moreover, they alleged that ACDC acted as a subcontractor for
government projects such as the Metro Rail Transit, the Clark Centennial Exposition and the Quezon
Power Plant in Mauban, Quezon. Its clients for the construction projects, which were the general
contractors of these projects, have not yet paid them; thus, ACDC had yet to receive the proceeds of
the materials that were the subject of the trust receipts and were allegedly used for these
constructions. As there were no proceeds received from these clients, no misappropriation thereof
could have taken place.

On September 30, 1999, Makati Assistant City Prosecutor Amador Y. Pineda issued a
Resolution10 dismissing the complaint. He pointed out that the evidence presented by LBP failed to
state the date when the goods described in the letters of credit were actually released to the
possession of the respondents. Section 4 of P.D. 115 requires that the goods covered by trust
receipts be released to the possession of the entrustee after the latter’s execution and delivery to the
entruster of a signed trust receipt. He adds that LBP’s evidence also fails to show the date when the
trust receipts were executed since all the trust receipts are undated. Its dispositive portion reads:

WHEREFORE, premises considered, and for insufficiency of evidence, it is respectfully

recommended that the instant complaints be dismissed, as upon approval, the same are hereby
dismissed.11

LBP filed a motion for reconsideration which the Makati Assistant City Prosecutor denied in his order
of January 7, 2000.12

On appeal, the Secretary of Justice reversed the Resolution of the Assistant City Prosecutor. In his
resolution of August 1, 2002,13 the Secretary of Justice pointed out that there was no question that the
goods covered by the trust receipts were received by ACDC. He likewise adopted LBP’s argument
that while the subjects of the trust receipts were not mentioned in the trust receipts, they were listed in
the letters of credit referred to in the trust receipts. He also noted that the trust receipts contained
maturity dates and clearly set out their stipulations. He further rejected the respondents’ defense that
ACDC failed to remit the payments to LBP due to the failure of the clients of ACDC to pay them. The
dispositive portion of the resolution reads:
WHEREFORE, the assailed resolution is REVERSED and SET ASIDE. The City Prosecutor of Makati
City is hereby directed to file an information for estafa under Art. 315 (1) (b) of the Revised Penal
Code in relation to Section 13, Presidential Decree No. 115 against respondents Lamberto C. Perez,
Nestor C. Kun, [Ma. Estelita P. Angeles-Panlilio] and Napoleon O. Garcia and to report the action
taken within ten (10) days from receipt hereof. 14

The respondents filed a motion for reconsideration of the resolution dated August 1, 2002, which the
Secretary of Justice denied.15 He rejected the respondents’ submission that Colinares v. Court of
Appeals16 does not apply to the case. He explained that in Colinares, the building materials were
delivered to the accused before they applied to the bank for a loan to pay for the merchandise; thus,
the ownership of the merchandise had already been transferred to the entrustees before the trust
receipts agreements were entered into. In the present case, the parties have already entered into the
Agreement before the construction materials were delivered to ACDC.

Subsequently, the respondents filed a petition for review before the Court of Appeals.

After both parties submitted their respective Memoranda, the Court of Appeals promulgated the
assailed decision of January 20, 2005.17 Applying the doctrine in Colinares, it ruled that this case did
not involve a trust receipt transaction, but a mere loan. It emphasized that construction materials, the
subject of the trust receipt transaction, were delivered to ACDC even before the trust receipts were
executed. It noted that LBP did not offer proof that the goods were received by ACDC, and that the
trust receipts did not contain a description of the goods, their invoice value, the amount of the draft to
be paid, and their maturity dates. It also adopted ACDC’s argument that since no payment for the
construction projects had been received by ACDC, its officers could not have been guilty of
misappropriating any payment. The dispositive portion reads:

WHEREFORE, in view of the foregoing, the Petition is GIVEN DUE COURSE. The assailed
Resolutions of the respondent Secretary of Justice dated August 1, 2002 and February 17, 2003,
respectively in I.S. No. 99-F-9218-28 are hereby REVERSED and SET ASIDE. 18

LBP now files this petition for review on certiorari, dated March 15, 2005, raising the following error:

THE COURT OF APPEALS GRAVELY ERRED WHEN IT REVERSED AND SET ASIDE THE
RESOLUTIONS OF THE HONORABLE SECRETARY OF JUSTICE BY APPLYING THE RULING IN
THE CASE OF COLINARES V. COURT OF APPEALS, 339 SCRA 609, WHICH IS NOT
APPLICABLE IN THE CASE AT BAR.19

On April 8, 2010, while the case was pending before this Court, the respondents filed a motion to
dismiss.20 They informed the Court that LBP had already assigned to Philippine Opportunities for
Growth and Income, Inc. all of its rights, title and interests in the loans subject of this case in a Deed
of Absolute Sale dated June 23, 2005 (attached as Annex "C" of the motion). The respondents also
stated that Avent Holdings Corporation, in behalf of ACDC, had already settled ACDC’s obligation to
LBP on October 8, 2009. Included as Annex "A" in this motion was a certification 21 issued by the
Philippine Opportunities for Growth and Income, Inc., stating that it was LBP’s successor-in-interest
insofar as the trust receipts in this case are concerned and that Avent Holdings Corporation had
already settled the claims of LBP or obligations of ACDC arising from these trust receipts.

We deny this petition.

The disputed transactions are not trust receipts.

Section 4 of P.D. 115 defines a trust receipt transaction in this manner:

Section 4. What constitutes a trust receipt transaction. A trust receipt transaction, within the meaning
of this Decree, is any transaction by and between a person referred to in this Decree as the entruster,
and another person referred to in this Decree as entrustee, whereby the entruster, who owns or holds
absolute title or security interests over certain specified goods, documents or instruments, releases
the same to the possession of the entrustee upon the latter's execution and delivery to the entruster
of a signed document called a "trust receipt" wherein the entrustee binds himself to hold the
designated goods, documents or instruments in trust for the entruster and to sell or otherwise dispose
of the goods, documents or instruments with the obligation to turn over to the entruster the proceeds
thereof to the extent of the amount owing to the entruster or as appears in the trust receipt or the
goods, documents or instruments themselves if they are unsold or not otherwise disposed of, in
accordance with the terms and conditions specified in the trust receipt, or for other purposes
substantially equivalent to any of the following:

1. In the case of goods or documents, (a) to sell the goods or procure their sale; or (b) to manufacture
or process the goods with the purpose of ultimate sale: Provided, That, in the case of goods delivered
under trust receipt for the purpose of manufacturing or processing before its ultimate sale, the
entruster shall retain its title over the goods whether in its original or processed form until the
entrustee has complied fully with his obligation under the trust receipt; or (c) to load, unload, ship or
tranship or otherwise deal with them in a manner preliminary or necessary to their sale[.]

There are two obligations in a trust receipt transaction. The first is covered by the provision that refers
to money under the obligation to deliver it (entregarla) to the owner of the merchandise sold. The
second is covered by the provision referring to merchandise received under the obligation to return it
(devolvera) to the owner. Thus, under the Trust Receipts Law, 22 intent to defraud is presumed when
(1) the entrustee fails to turn over the proceeds of the sale of goods covered by the trust receipt to the
entruster; or (2) when the entrustee fails to return the goods under trust, if they are not disposed of in
accordance with the terms of the trust receipts.23

In all trust receipt transactions, both obligations on the part of the trustee exist in the alternative – the
return of the proceeds of the sale or the return or recovery of the goods, whether raw or
processed.24 When both parties enter into an agreement knowing that the return of the goods subject
of the trust receipt is not possible even without any fault on the part of the trustee, it is not a trust
receipt transaction penalized under Section 13 of P.D. 115; the only obligation actually agreed upon
by the parties would be the return of the proceeds of the sale transaction. This transaction becomes a
mere loan,25 where the borrower is obligated to pay the bank the amount spent for the purchase of the
goods.

Article 1371 of the Civil Code provides that "[i]n order to judge the intention of the contracting parties,
their contemporaneous and subsequent acts shall be principally considered." Under this provision, we
can examine the contemporaneous actions of the parties rather than rely purely on the trust receipts
that they signed in order to understand the transaction through their intent.

We note in this regard that at the onset of these transactions, LBP knew that ACDC was in the
construction business and that the materials that it sought to buy under the letters of credit were to be
used for the following projects: the Metro Rail Transit Project and the Clark Centennial Exposition
Project.26 LBP had in fact authorized the delivery of the materials on the construction sites for these
projects, as seen in the letters of credit it attached to its complaint. 27 Clearly, they were aware of the
fact that there was no way they could recover the buildings or constructions for which the materials
subject of the alleged trust receipts had been used. Notably, despite the allegations in the affidavit-
complaint wherein LBP sought the return of the construction materials, 28 its demand letter dated May
4, 1999 sought the payment of the balance but failed to ask, as an alternative, for the return of the
construction materials or the buildings where these materials had been used. 29
The fact that LBP had knowingly authorized the delivery of construction materials to a construction
site of two government projects, as well as unspecified construction sites, repudiates the idea that
LBP intended to be the owner of those construction materials. As a government financial institution,
LBP should have been aware that the materials were to be used for the construction of an immovable
property, as well as a property of the public domain. As an immovable property, the ownership of
whatever was constructed with those materials would presumably belong to the owner of the land,
under Article 445 of the Civil Code which provides:

Article 445. Whatever is built, planted or sown on the land of another and the improvements or repairs
made thereon, belong to the owner of the land, subject to the provisions of the following articles.

Even if we consider the vague possibility that the materials, consisting of cement, bolts and
reinforcing steel bars, would be used for the construction of a movable property, the ownership of
these properties would still pertain to the government and not remain with the bank as they would be
classified as property of the public domain, which is defined by the Civil Code as:

Article 420. The following things are property of public dominion:

(1) Those intended for public use, such as roads, canals, rivers, torrents, ports and bridges
constructed by the State, banks, shores, roadsteads, and others of similar character;

(2) Those which belong to the State, without being for public use, and are intended for some
public service or for the development of the national wealth.

In contrast with the present situation, it is fundamental in a trust receipt transaction that the person
who advanced payment for the merchandise becomes the absolute owner of said merchandise and
continues as owner until he or she is paid in full, or if the goods had already been sold, the proceeds
should be turned over to him or to her.30

Thus, in concluding that the transaction was a loan and not a trust receipt, we noted in Colinares that
the industry or line of work that the borrowers were engaged in was construction. We pointed out that
the borrowers were not importers acquiring goods for resale. 31 Indeed, goods sold in retail are often
within the custody or control of the trustee until they are purchased. In the case of materials used in
the manufacture of finished products, these finished products – if not the raw materials or their
components – similarly remain in the possession of the trustee until they are sold. But the goods and
the materials that are used for a construction project are often placed under the control and custody
of the clients employing the contractor, who can only be compelled to return the materials if they fail
to pay the contractor and often only after the requisite legal proceedings. The contractor’s difficulty
and uncertainty in claiming these materials (or the buildings and structures which they become part
of), as soon as the bank demands them, disqualify them from being covered by trust receipt
agreements.

Based on these premises, we cannot consider the agreements between the parties in this case to be
trust receipt transactions because (1) from the start, the parties were aware that ACDC could not
possibly be obligated to reconvey to LBP the materials or the end product for which they were used;
and (2) from the moment the materials were used for the government projects, they became public,
not LBP’s, property.

Since these transactions are not trust receipts, an action for estafa should not be brought against the
respondents, who are liable only for a loan. In passing, it is useful to note that this is the threat held
against borrowers that Retired Justice Claudio Teehankee emphatically opposed in his dissent in
People v. Cuevo,32 restated in Ong v. CA, et al.:33
The very definition of trust receipt x x x sustains the lower court’s rationale in dismissing the
information that the contract covered by a trust receipt is merely a secured loan. The goods imported
by the small importer and retail dealer through the bank’s financing remain of their own property and
risk and the old capitalist orientation of putting them in jail for estafa for non-payment of the secured
loan (granted after they had been fully investigated by the bank as good credit risks) through the
fiction of the trust receipt device should no longer be permitted in this day and age.

As the law stands today, violations of Trust Receipts Law are criminally punishable, but no criminal
complaint for violation of Article 315, paragraph 1(b) of the Revised Penal Code, in relation with P.D.
115, should prosper against a borrower who was not part of a genuine trust receipt transaction.

Misappropriation or abuse of confidence is absent in this case.

Even if we assume that the transactions were trust receipts, the complaint against the respondents
still should have been dismissed. The Trust Receipts Law punishes the dishonesty and abuse of
confidence in the handling of money or goods to the prejudice of another, regardless of whether the
latter is the owner or not. The law does not singularly seek to enforce payment of the loan, as "there
can be no violation of [the] right against imprisonment for non-payment of a debt." 34

In order that the respondents "may be validly prosecuted for estafa under Article 315, paragraph 1(b)
of the Revised Penal Code,35 in relation with Section 13 of the Trust Receipts Law, the following
elements must be established: (a) they received the subject goods in trust or under the obligation to
sell the same and to remit the proceeds thereof to [the trustor], or to return the goods if not sold; (b)
they misappropriated or converted the goods and/or the proceeds of the sale; (c) they performed
such acts with abuse of confidence to the damage and prejudice of Metrobank; and (d) demand was
made on them by [the trustor] for the remittance of the proceeds or the return of the unsold goods." 36

In this case, no dishonesty or abuse of confidence existed in the handling of the construction
materials.

In this case, the misappropriation could be committed should the entrustee fail to turn over the
proceeds of the sale of the goods covered by the trust receipt transaction or fail to return the goods
themselves. The respondents could not have failed to return the proceeds since their allegations that
the clients of ACDC had not paid for the projects it had undertaken with them at the time the case
was filed had never been questioned or denied by LBP. What can only be attributed to the
respondents would be the failure to return the goods subject of the trust receipts.

We do not likewise see any allegation in the complaint that ACDC had used the construction
materials in a manner that LBP had not authorized. As earlier pointed out, LBP had authorized the
delivery of these materials to these project sites for which they were used. When it had done so, LBP
should have been aware that it could not possibly recover the processed materials as they would
become part of government projects, two of which (the Metro Rail Transit Project and the Quezon
Power Plant Project) had even become part of the operations of public utilities vital to public service.
It clearly had no intention of getting these materials back; if it had, as a primary government lending
institution, it would be guilty of extreme negligence and incompetence in not foreseeing the legal
complications and public inconvenience that would arise should it decide to claim the materials.
ACDC’s failure to return these materials or their end product at the time these "trust receipts" expired
could not be attributed to its volition. No bad faith, malice, negligence or breach of contract has been
attributed to ACDC, its officers or representatives. Therefore, absent any abuse of confidence or
misappropriation on the part of the respondents, the criminal proceedings against them for estafa
should not prosper.
In Metropolitan Bank,37 we affirmed the city prosecutor’s dismissal of a complaint for violation of the
Trust Receipts Law. In dismissing the complaint, we took note of the Court of Appeals’ finding that the
bank was interested only in collecting its money and not in the return of the goods. Apart from the
bare allegation that demand was made for the return of the goods (raw materials that were
manufactured into textiles), the bank had not accompanied its complaint with a demand letter. In
addition, there was no evidence offered that the respondents therein had misappropriated or misused
the goods in question.

The petition should be dismissed because the OSG did not file it and the civil liabilities have already
been settled.

The proceedings before us, regarding the criminal aspect of this case, should be dismissed as it does
not appear from the records that the complaint was filed with the participation or consent of the Office
of the Solicitor General (OSG). Section 35, Chapter 12, Title III, Book IV of the Administrative Code of
1987 provides that:

Section 35. Powers and Functions. — The Office of the Solicitor General shall represent the
Government of the Philippines, its agencies and instrumentalities and its officials and agents in any
litigation, proceedings, investigation or matter requiring the services of lawyers. x x x It shall have the
following specific powers and functions:

(1) Represent the Government in the Supreme Court and the Court of Appeals in all criminal
proceedings; represent the Government and its officers in the Supreme Court, the Court of Appeals
and all other courts or tribunals in all civil actions and special proceedings in which the Government
or any officer thereof in his official capacity is a party. (Emphasis provided.)

In Heirs of Federico C. Delgado v. Gonzalez, 38 we ruled that the preliminary investigation is part of a
criminal proceeding. As all criminal proceedings before the Supreme Court and the Court of Appeals
may be brought and defended by only the Solicitor General in behalf of the Republic of the
Philippines, a criminal action brought to us by a private party alone suffers from a fatal defect. The
present petition was brought in behalf of LBP by the Government Corporate Counsel to protect its
private interests. Since the representative of the "People of the Philippines" had not taken any part of
the case, it should be dismissed.1âwphi1

On the other hand, if we look at the mandate given to the Office of the Government Corporate
Counsel, we find that it is limited to the civil liabilities arising from the crime, and is subject to the
control and supervision of the public prosecutor. Section 2, Rule 8 of the Rules Governing the
Exercise by the Office of the Government Corporate Counsel of its Authority, Duties and Powers as
Principal Law Office of All Government Owned or Controlled Corporations, filed before the Office of
the National Administration Register on September 5, 2011, reads:

Section 2. Extent of legal assistance – The OGCC shall represent the complaining GOCC in all
stages of the criminal proceedings. The legal assistance extended is not limited to the preparation of
appropriate sworn statements but shall include all aspects of an effective private prosecution
including recovery of civil liability arising from the crime, subject to the control and supervision of the
public prosecutor.

Based on jurisprudence, there are two exceptions when a private party complainant or offended party
in a criminal case may file a petition with this Court, without the intervention of the OSG: (1) when
there is denial of due process of law to the prosecution, and the State or its agents refuse to act on
the case to the prejudice of the State and the private offended party; 39 and (2) when the private
offended party questions the civil aspect of a decision of the lower court. 40
In this petition, LBP fails to allege any inaction or refusal to act on the part of the OSG, tantamount to
a denial of due process. No explanation appears as to why the OSG was not a party to the case.
Neither can LBP now question the civil aspect of this decision as it had already assigned ACDC’s
debts to a third person, Philippine Opportunities for Growth and Income, Inc., and the civil liabilities
appear to have already been settled by Avent Holdings Corporation, in behalf of ACDC. These facts
have not been disputed by LBP. Therefore, we can reasonably conclude that LBP no longer has any
claims against ACDC, as regards the subject matter of this case, that would entitle it to file a civil or
criminal action.

WHEREFORE, we DENY the petition and AFFIRM the January 20, 2005 decision of the Court of
Appeals in CA-G.R. SP No. 76588. No costs.

SO ORDERED.

b. Accession Continua

- Accession Industrial

• Art.448

DAMIAN IGNACIO, FRANCISCO IGNACIO and LUIS IGNACIO, petitioners,

vs.
ELIAS HILARIO and his wife DIONISIA DRES, and FELIPE NATIVIDAD, Judge of First Instance
of Pangasinan, respondents.

Leoncio R. Esliza for petitioners.

Mauricio M. Monta for respondents.

MORAN, C.J.:

This is a petition for certiorari arising from a case in the Court of First Instance of Pangasinan
between the herein respondents Elias Hilario and his wife Dionisia Dres as plaintiffs, and the herein
petitioners Damian, Francisco and Luis, surnamed Ignacio, as defendants, concerning the ownership
of a parcel of land, partly rice-land and partly residential. After the trial of the case, the lower court,
presided over by Hon. Alfonso Felix, rendered judgment holding plaintiffs as the legal owners of the
whole property but conceding to defendants the ownership of the houses and granaries built by them
on the residential portion with the rights of a possessor in good faith, in accordance with article 361 of
the Civil Code. The dispositive part of the decision, hub of this controversy, follows:

Wherefore, judgment is hereby rendered declaring:

 (1) That the plaintiffs are the owners of the whole property described in transfer certificate of
title No. 12872 (Exhibit A) issued in their name, and entitled to the possession of the same;

(2) That the defendants are entitled to hold the position of the residential lot until after they are
paid the actual market value of their houses and granaries erected thereon, unless the
plaintiffs prefer to sell them said residential lot, in which case defendants shall pay the plaintiffs
the proportionate value of said residential lot taking as a basis the price paid for the whole land
according to Exhibit B; and

(3) That upon defendant's failure to purchase the residential lot in question, said defendants
shall remove their houses and granaries after this decision becomes final and within the period
of sixty (60) days from the date that the court is informed in writing of the attitude of the parties
in this respect.

No pronouncement is made as to damages and costs.

Once this decision becomes final, the plaintiffs and defendants may appear again before this
court for the purpose of determining their respective rights under article 361 of the Civil Code,
if they cannot come to an extra-judicial settlement with regard to said rights.

Subsequently, in a motion filed in the same Court of First Instance but now presided over by the
herein respondent Judge Hon. Felipe Natividad, the plaintiffs prayed for an order of execution alleging
that since they chose neither to pay defendants for the buildings nor to sell to them the residential lot,
said defendants should be ordered to remove the structure at their own expense and to restore
plaintiffs in the possession of said lot. Defendants objected to this motion which, after hearing, was
granted by Judge Natividad. Hence, this petition by defendants praying for (a) a restraint and
annulment of the order of execution issued by Judge Natividad; (b) an order to compel plaintiffs to
pay them the sum of P2,000 for the buildings, or sell to them the residential lot for P45; or (c), a
rehearing of the case for a determination of the rights of the parties upon failure of extra-judicial
settlement.

The judgment rendered by Judge Felix is founded on articles 361 and 453 of the Civil Code which are
as follows:

ART. 361. The owner of land on which anything has been built, sown or planted in good faith,
shall have the right to appropriate as his own the work, sowing or planting, after the payment of
the indemnity stated in articles 453 and 454, or to oblige the one who built or planted to pay
the price of the land, and the one who sowed, the proper rent.

ART. 453. Necessary expenses shall be refunded to every possessor; but only the possessor
in good faith may retain the thing until such expenses are made good to him.

Useful expenses shall be refunded to the possessor in good faith with the same right of
retention, the person who has defeated him in the possession having the option of refunding
the amount of the expenses or paying the increase in value which the thing may have acquired
in consequence thereof.

The owner of the building erected in good faith on a land owned by another, is entitled to retain the
possession of the land until he is paid the value of his building, under article 453. The owner of the
land, upon the other hand, has the option, under article 361, either to pay for the building or to sell his
land to the owner of the building. But he cannot, as respondents here did, refuse both to pay for the
building and to sell the land and compel the owner of the building to remove it from the land where it
is erected. He is entitled to such remotion only when, after having chosen to sell his land, the other
party fails to pay for the same. But this is not the case before us.

We hold, therefore, that the order of Judge Natividad compelling defendants-petitioners to remove
their buildings from the land belonging to plaintiffs-respondents only because the latter chose neither
to pay for such buildings not to sell the land, is null and void, for it amends substantially the judgment
sought to be executed and is, furthermore, offensive to articles 361 and 453 of the Civil Code.

There is, however, in the decision of Judge Felix a question of procedure which calls for the
clarification, to avoid uncertainty and delay in the disposition of cases. In that decision, the rights of
both parties are well defined under articles 361 and 453 of the Civil Code, but it fails to determine the
value of the buildings and of the lot where they are erected as well as the periods of time within which
the option may be exercised and payment should be made, these particulars having been left for
determination apparently after the judgment has become final. This procedure is erroneous, for after
the judgment has become final, no additions can be made thereto and nothing can be done therewith
except its execution. And execution cannot be had, the sheriff being ignorant as to how, for how
much, and within what time may the option be exercised, and certainly no authority is vested in him to
settle these matters which involve exercise of judicial discretion. Thus the judgment rendered by
Judge Felix has never become final, it having left matters to be settled for its completion in a
subsequent proceeding, matters which remained unsettled up to the time the petition is filed in the
instant case. For all the foregoing, the writ of execution issued by Judge Natividad is hereby set aside
and the lower court ordered to hold a hearing in the principal case wherein it must determine the
prices of the buildings and of the residential lot where they are erected, as well as the period of time
within which the plaintiffs-respondents may exercise their option either to pay for the buildings or to
sell their land, and, in the last instance, the period of time within which the defendants-petitioners may
pay for the land, all these periods to be counted from the date the judgment becomes executory or
unappealable. After such hearing, the court shall render a final judgment according to the evidence
presented by the parties. The costs shall be paid by plaintiffs-respondents.

Spouses ISMAEL and TERESITA MACASAET, Petitioners, v. Spouses VICENTE and ROSARIO

MACASAET, Respondents.

DECISION

PANGANIBAN, J.:

The present case involves a dispute between parents and children. The children were invited by the
parents to occupy the latter's two lots, out of parental love and a desire to foster family solidarity.
Unfortunately, an unresolved conflict terminated this situation. Out of pique, the parents asked them
to vacate the premises. Thus, the children lost their right to remain on the property. They have the
right, however, to be indemnified for the useful improvements that they constructed thereon in good
faith and with the consent of the parents. In short, Article 448 of the Civil Code applies.

The Case

Before us is a Petition for Review1 under Rule 45 of the Rules of Court, assailing the March 22, 2002
Decision2 and the June 26, 2002 Resolution3 of the Court of Appeals (CA) in CA-GR SP Nos. 56205
& 56467. The challenged Decision disposed as follows:

"WHEREFORE, the assailed Decision is AFFIRMED with the following MODIFICATIONS:

'1. Vicente and Rosario should reimburse Ismael and Teresita one-half of the value of the useful
improvements introduced in the premises prior to demand, which is equivalent to P475,000.00. In
case the former refuse to reimburse the said amount, the latter may remove the improvements, even
though the land may suffer damage thereby. They shall not, however, cause any more impairment
upon the property leased than is necessary.

'2. The award of attorney's fees is DELETED.

'3. The records of these consolidated cases are REMANDED to the Court of origin for further
proceedings to determine the option to be taken by Vicente and Rosario and to implement the same
with dispatch."4

The assailed Resolution denied petitioners' Motion for Reconsideration.

The Facts

Petitioners Ismael and Teresita5 Macasaet and Respondents Vicente and Rosario Macasaet are first-
degree relatives. Ismael is the son of respondents, and Teresita is his wife. 6

On December 10, 1997, the parents filed with the Municipal Trial Court in Cities (MTCC) of Lipa City
an ejectment suit against the children.7 Respondents alleged that they were the owners of two (2)
parcels of land covered by Transfer Certificate of Title (TCT) Nos. T-78521 and T-103141, situated at
Banay-banay, Lipa City; that by way of a verbal lease agreement, Ismael and Teresita occupied these
lots in March 1992 and used them as their residence and the situs of their construction business; and
that despite repeated demands, petitioners failed to pay the agreed rental of P500 per week.8

Ismael and Teresita denied the existence of any verbal lease agreement. They claimed that
respondents had invited them to construct their residence and business on the subject lots in order
that they could all live near one other, employ Marivic (the sister of Ismael), and help in resolving the
problems of the family.9 They added that it was the policy of respondents to allot the land they owned
as an advance grant of inheritance in favor of their children. Thus, they contended that the lot covered
by TCT No. T-103141 had been allotted to Ismael as advance inheritance. On the other hand, the lot
covered by TCT No. T-78521 was allegedly given to petitioners as payment for construction materials
used in the renovation of respondents' house.10

The MTCC11 ruled in favor of respondents and ordered petitioners to vacate the premises. It opined
that Ismael and Teresita had occupied the lots, not by virtue of a verbal lease agreement, but by
tolerance of Vicente and Rosario.12 As their stay was by mere tolerance, petitioners were necessarily
bound by an implied promise to vacate the lots upon demand. 13 The MTCC dismissed their contention
that one lot had been allotted as an advance inheritance, on the ground that successional rights were
inchoate. Moreover, it disbelieved petitioners' allegation that the other parcel had been given as
payment for construction materials.14

On appeal, the regional trial court15 (RTC) upheld the findings of the MTCC. However, the RTC
allowed respondents to appropriate the building and other improvements introduced by petitioners,
after payment of the indemnity provided for by Article 448 in relation to Articles 546 and 548 of the
Civil Code.16 It added that respondents could oblige petitioners to purchase the land, unless its value
was considerably more than the building. In the latter situation, petitioners should pay rent if
respondents would not choose to appropriate the building. 17

Upon denial of their individual Motions for Reconsideration, the parties filed with the CA separate
Petitions for Review, which were later consolidated. 18
Ruling of the Court of Appeals

The CA sustained the finding of the two lower courts that Ismael and Teresita had been occupying
the subject lots only by the tolerance of Vicente and Rosario. 19 Thus, possession of the subject lots by
petitioners became illegal upon their receipt of respondents' letter to vacate it. 20

Citing Calubayan v. Pascual,21 the CA further ruled that petitioners' status was analogous to that of a
lessee or a tenant whose term of lease had expired, but whose occupancy continued by tolerance of
the owner.22 Consequently, in ascertaining the right of petitioners to be reimbursed for the
improvements they had introduced on respondents' properties, 23 the appellate court applied the Civil
Code's provisions on lease. The CA modified the RTC Decision by declaring that Article 448 of the
Civil Code was inapplicable. The CA opined that under Article 1678 of the same Code, Ismael and
Teresita had the right to be reimbursed for one half of the value of the improvements made. 24

Not satisfied with the CA's ruling, petitioners brought this recourse to this Court. 25

The Issues

Petitioners raise the following issues for our consideration:

"1. a) Whether or not Section 17[,] Rule 70 of the Rules of Court on Judgment should apply in the
rendition of the decision in this case;

b) Whether or not the Complaint should have been dismissed;

c) Whether or not damages including attorney's fees should have been awarded to herein petitioners;

"2. a) Whether or not the rule on appearance of parties during the Pretrial should apply on
appearance of parties during Preliminary Conference in an unlawful detainer suit;

b) Whether or not the case of Philippine Pryce Assurance Corporation v. Court of Appeals (230
SCRA 164) is applicable to appearance of parties in an unlawful detainer suit;

"3. Whether or not Article 1678 of the Civil Code should apply to the case on the matters of
improvements, or is it Article 447 of the Civil Code in relation to the Article 453 and 454 thereof that
should apply, if ever to apply the Civil Code;

"4. Whether or not the [D]ecision of the Court of Appeals is supported by evidence, appropriate laws,
rules and jurisprudence;

"5. Whether or not Assisting Judge Norberto Mercado of the MTCC Lipa City should be held
accountable in rendering the MTCC [D]ecision;

"6. Whether or not Atty. Glenn Mendoza and Atty. Andrew Linatoc of the same [l]aw office should be
held accountable for pursuing the [e]jectment case[.]" 26

The Court's Ruling

The Petition is partly meritorious.

First Issue:
Ejectment

Who is entitled to the physical or material possession of the premises? At the outset, we stress that
this is the main issue in ejectment proceedings. 27 In the present case, petitioners failed to justify their
right to retain possession of the subject lots, which respondents own. Since possession is one of the
attributes of ownership,28 respondents clearly are entitled to physical or material possession.

Allegations of the Complaint

Petitioners allege that they cannot be ejected from the lots, because respondents based their
Complaint regarding the nonpayment of rentals on a verbal lease agreement, which the latter failed to
prove.29 Petitioners contend that the lower courts erred in using another ground (tolerance of
possession) to eject them.

In actions for unlawful detainer, possession that was originally lawful becomes unlawful upon the
expiration or termination of the defendant's right to possess, arising from an express or implied
contract.30 In other words, the plaintiff's cause of action comes from the expiration or termination of
the defendant's right to continue possession. 31 The case resulting therefrom must be filed within one
year from the date of the last demand.

To show a cause of action in an unlawful detainer, an allegation that the defendant is illegally
withholding possession from the plaintiff is sufficient. The complaint may lie even if it does not employ
the terminology of the law, provided the said pleading is couched in a language adequately stating
that the withholding of possession or the refusal to vacate has become unlawful. 32 It is equally settled
that the jurisdiction of the court, as well as the nature of the action, is determined from the averments
of the complaint.33

In the present case, the Complaint alleged that despite demands, petitioners "refused to pay the
accrued rentals and [to] vacate the leased premises." 34 It prayed that judgment be rendered
"[o]rdering [petitioners] and all those claiming rights under them to vacate the properties x x x and
remove the structures x x x constructed thereon." 35 Effectively then, respondents averred that
petitioners' original lawful occupation of the subject lots had become unlawful.

The MTCC found sufficient cause to eject petitioners. While it disbelieved the existence of a verbal
lease agreement, it nevertheless concluded that petitioners' occupation of the subject lots was by
mere tolerance of respondents. Basing its conclusion on the fact that the parties were close relatives,
the MTCC ruled thus:

"x x x [T]he parties herein are first degree relatives. Because of this relationship, this Court takes
judicial notice of the love, care, concern and protection imbued upon the parents towards their
[children], i.e., in the instant case, the love, care, concern and protection of the [respondents] to the
[petitioners]. With this in mind, this Court is inclined to believe the position of the [petitioners] that
there was no such verbal lease agreement between the parties herein that took place in 1992. x x x.

"From the allegations of the [petitioners], this Court is convinced that their stay and occupancy of the
subject premises was by mere tolerance of the [respondents], and not by virtue of a verbal lease
agreement between them."36

Having found a cause of action for unlawful detainer, the MTCC (as well as the RTC and the CA) did
not err in ordering the ejectment of petitioners as prayed for by respondents. There was no violation
of Section 17 of Rule 7037 of the Rules of Court. As earlier explained, unlawful detainer was
sufficiently alleged in the Complaint and duly proven during the trial. Significantly, the issue of
whether there was enough ground to eject petitioners was raised during the preliminary conference. 38

Not Merely Tolerated

Possession

Petitioners dispute the lower courts' finding that they occupied the subject lots on the basis of mere
tolerance. They argue that their occupation was not under such condition, since respondents had
invited, offered and persuaded them to use those properties. 39

This Court has consistently held that those who occupy the land of another at the latter's tolerance or
permission, without any contract between them, are necessarily bound by an implied promise that the
occupants will vacate the property upon demand. 40 A summary action for ejectment is the proper
remedy to enforce this implied obligation. 41 The unlawful deprivation or withholding of possession is to
be counted from the date of the demand to vacate. 42

Toleration is defined as "the act or practice of permitting or enduring something not wholly approved
of."43 Sarona v. Villegas44 described what tolerated acts means, in this language:

"Professor Arturo M. Tolentino states that acts merely tolerated are 'those which by reason of
neighborliness or familiarity, the owner of property allows his neighbor or another person to do on the
property; they are generally those particular services or benefits which one's property can give to
another without material injury or prejudice to the owner, who permits them out of friendship or
courtesy.' x x x. And, Tolentino continues, even though 'this is continued for a long time, no right will
be acquired by prescription." x x x. Further expounding on the concept, Tolentino writes: 'There is
tacit consent of the possessor to the acts which are merely tolerated. Thus, not every case of
knowledge and silence on the part of the possessor can be considered mere tolerance. By virtue of
tolerance that is considered as an authorization, permission or license, acts of possession are
realized or performed. The question reduces itself to the existence or non-existence of the
permission."45

We hold that the facts of the present case rule out the finding of possession by mere tolerance.
Petitioners were able to establish that respondents had invited them to occupy the subject lots in
order that they could all live near one other and help in resolving family problems. 46 By occupying
those lots, petitioners demonstrated their acceptance of the invitation. Hence, there was a meeting of
minds, and an agreement regarding possession of the lots impliedly arose between the parties.

The occupancy of the subject lots by petitioners was not merely "something not wholly approved of"
by respondents. Neither did it arise from what Tolentino refers to as "neighborliness or familiarity." In
point of fact, their possession was upon the invitation of and with the complete approval of
respondents, who desired that their children would occupy the premises. It arose from familial love
and a desire for family solidarity, which are basic Filipino traits.

Right to Use the Lots Terminated

That Ismael and Teresita had a right to occupy the lots is therefore clear. The issue is the duration of
possession. In the absence of a stipulation on this point, Article 1197 of the Civil Code allows the
courts to fix the duration or the period.

"Article 1197. If the obligation does not fix a period, but from its nature and the circumstances it can
be inferred that a period was intended, the courts may fix the duration thereof.
"The courts shall also fix the duration of the period when it depends upon the will of the debtor.

"In every case the courts shall determine such period as may under the circumstances have been
probably contemplated by the parties. Once fixed by the courts, the period cannot be changed by
them."

Article 1197, however, applies to a situation in which the parties intended a period. Such qualification
cannot be inferred from the facts of the present case.

To repeat, when Vicente and Rosario invited their children to use the lots, they did so out of parental
love and a desire for solidarity expected from Filipino parents. No period was intended by the parties.
Their mere failure to fix the duration of their agreement does not necessarily justify or authorize the
courts to do so.47

Based on respondents' reasons for gratuitously allowing petitioners to use the lots, it can be safely
concluded that the agreement subsisted as long as the parents and the children mutually benefited
from the arrangement. Effectively, there is a resolutory condition in such an agreement. 48 Thus, when
a change in the condition existing between the parties occurs - - like a change of ownership,
necessity, death of either party or unresolved conflict or animosity - - the agreement may be deemed
terminated. Having been based on parental love, the agreement would end upon the dissipation of
the affection.

When persistent conflict and animosity overtook the love and solidarity between the parents and the
children, the purpose of the agreement ceased. 49 Thus, petitioners no longer had any cause for
continued possession of the lots. Their right to use the properties became untenable. It ceased upon
their receipt of the notice to vacate. And because they refused to heed the demand, ejectment was
the proper remedy against them. Their possession, which was originally lawful, became unlawful
when the reason therefor - - love and solidarity - - ceased to exist between them.

No Right to Retain

Possession

Petitioners have not given this Court adequate reasons to reverse the lower courts' dismissal of their
contention that Lots T-78521 and T-103141, respectively, were allegedly allotted to them as part of
their inheritance and given in consideration for past debts.

The right of petitioners to inherit from their parents is merely inchoate and is vested only upon the
latters' demise. Indisputably, rights of succession are transmitted only from the moment of death of
the decedent.50 Assuming that there was an "allotment" of inheritance, ownership nonetheless
remained with respondents. Moreover, an intention to confer title to certain persons in the future is not
inconsistent with the owners' taking back possession in the meantime for any reason deemed
sufficient.51 Other than their self-serving testimonies and their affidavits, petitioners offered no credible
evidence to support their outlandish claim of inheritance "allocation."

We also agree with the lower courts that petitioners failed to prove the allegation that, through a
dation in payment, Lot T-78521 had been transferred to the latter as payment for respondents'
debts.52 The evidence presented by petitioners related only to the alleged indebtedness of the parents
arising from the latter's purported purchases and advances. 53 There was no sufficient proof that
respondents had entered into a contract of dation to settle the alleged debt. Petitioners even stated
that there was a disagreement in the accounting of the purported debt, 54 a fact that disproves a
meeting of the minds with the parents.
Petitioners also admitted that a portion of the alleged debt is the subject matter of a collection case
against respondents (Civil Case No. 0594-96).55 Thus, the former's allegation that the indebtedness
has been paid through a dation cannot be given credence, inconsistent as it is with their action to
recover the same debt.

Despite their protestations, petitioners recognized the right of the parents to recover the premises
when they admitted in their Position Paper filed with the MTCC that respondents had a title to the lots.

"The [respondents] want to get their property because the title is theirs, the [petitioners] do not object
but what is due the [petitioners] including the reparation for the tarnish of their dignity and honor must
be given the [petitioners] for the benefits of their children before the premises will be turned over." 56

As a rule, the right of ownership carries with it the right of possession.

Second Issue:

Appearance at the Preliminary Conference

Section 8 of Rule 70 of the Rules of Court requires the appearance of the plaintiff and the defendant
during the preliminary conference. On the basis of this provision, petitioners claim that the MTCC
should have dismissed the case upon the failure of respondents to attend the conference. However,
petitioners do not dispute that an attorney-in-fact with a written authorization from respondents
appeared during the preliminary conference. 57 The issue then is whether the rules on ejectment allow
a representative to substitute for a party's personal appearance.

Unless inconsistent with Rule 70, the provisions of Rule 18 on pretrial applies to the preliminary
conference.58 Under Section 4 of this Rule, the nonappearance of a party may be excused by the
showing of a valid cause; or by the appearance of a representative, who has been fully authorized in
writing to enter into an amicable settlement, to submit to alternative modes of dispute resolution, and
to enter into stipulations or admissions of facts and of documents. 59

Section 4 of Rule 18 may supplement Section 8 of Rule 70. Thus, the spirit behind the exception to
personal appearance under the rules on pretrial is applicable to the preliminary conference. If there
are valid reasons or if a representative has a "special authority," a party's appearance may be
waived. As petitioners are challenging only the applicability of the rules on pretrial to the rule on
preliminary conference, the written authorization from respondents can indeed be readily considered
as a "special authorization."

Third Issue:

Rights of a Builder in Good Faith

As applied to the present case, accession refers to the right of the owner to everything that is
incorporated or attached to the property. 60 Accession industrial - - building, planting and sowing on an
immovable - - is governed by Articles 445 to 456 of the Civil Code.

Articles 447 and 1678 of the

Civil Code Inapplicable

To buttress their claim of reimbursement for the improvements introduced on the property, petitioners
cite Article 447.61 They allege that the CA erred in applying Article 1678, since they had no lease
agreement with respondents.

We clarify. Article 447 is not applicable, because it relates to the rules that apply when the owner of
the property uses the materials of another. It does not refer to the instance when a possessor builds
on the property of another, which is the factual milieu here.

In view of the unique factual setting of the instant case, the contention of petitioners regarding the
inapplicability of Article 1678 deserves attention. The CA applied the provisions on lease, because it
found their possession by mere tolerance comparable with that of a lessee, per the pronouncement in
Calubayan v. Pascual,62 from which we quote:

"x x x. It has been held that a person who occupies the land of another at the latter's tolerance or
permission, without any contract between them, is necessarily bound by an implied promise that he
will vacate upon demand, failing which a summary action for ejectment is the proper remedy against
them. The status of defendant is analogous to that of a lessee or tenant whose term of lease has
expired but whose occupancy continued by tolerance of the owner. In such a case, the unlawful
deprivation or withholding of possession is to be counted from the date of the demand to
vacate."63 (Emphasis in the original.)

As explained earlier, Ismael and Teresita's possession of the two lots was not by mere tolerance, a
circumstance that negates the applicability of Calubayan.

Article 448 Applicable

On the other hand, when a person builds in good faith on the land of another, the applicable provision
is Article 448, which reads:64

"Article 448. The owner of the land on which anything has been built, sown or planted in good faith,
shall have the right to appropriate as his own the works, sowing or planting, after payment of the
indemnity provided for in Articles 546 and 548, or to oblige the one who built or planted to pay the
price of the land, and the one who sowed, the proper rent. However, the builder or planter cannot be
obliged to buy the land if its value is considerably more than that of the building or trees. In such
case, he shall pay reasonable rent, if the owner of the land does not choose to appropriate the
building or trees after proper indemnity. The parties shall agree upon the terms of the lease and in
case of disagreement, the court shall fix the terms thereof."

This Court has ruled that this provision covers only cases in which the builders, sowers or planters
believe themselves to be owners of the land or, at least, to have a claim of title thereto. 65 It does not
apply when the interest is merely that of a holder, such as a mere tenant, agent or
usufructuary.66 From these pronouncements, good faith is identified by the belief that the land is
owned; or that - - by some title - - one has the right to build, plant, or sow thereon. 67

However, in some special cases, this Court has used Article 448 by recognizing good faith beyond
this limited definition. Thus, in Del Campo v. Abesia, 68 this provision was applied to one whose house
- - despite having been built at the time he was still co-owner - - overlapped with the land of
another.69 This article was also applied to cases wherein a builder had constructed improvements
with the consent of the owner. The Court ruled that the law deemed the builder to be in good
faith.70 In Sarmiento v. Agana,71 the builders were found to be in good faith despite their reliance on
the consent of another, whom they had mistakenly believed to be the owner of the land. 72
Based on the aforecited special cases, Article 448 applies to the present factual milieu. The
established facts of this case show that respondents fully consented to the improvements introduced
by petitioners. In fact, because the children occupied the lots upon their invitation, the parents
certainly knew and approved of the construction of the improvements introduced thereon. 73 Thus,
petitioners may be deemed to have been in good faith when they built the structures on those lots.

The instant case is factually similar to Javier v. Javier.74 In that case, this Court deemed the son to be
in good faith for building the improvement (the house) with the knowledge and consent of his father,
to whom belonged the land upon which it was built. Thus, Article 448 75 was applied.

Rule on Useful Expenses

The structures built by petitioners were "useful" improvements, because they augmented the value or
income of the bare lots.76 Thus, the indemnity to be paid by respondents under Article 448 is provided
for by Article 546, which we quote:

"Art. 546. Necessary expenses shall be refunded to every possessor; but only the possessor in good
faith may retain the thing until he has been reimbursed therefor.

"Useful expenses shall be refunded only to the possessor in good faith with the same right of
retention, the person who has defeated him in the possession having the option of refunding the
amount of the expenses or of paying the increase in value which the thing may have acquired by
reason thereof."

Consequently, respondents have the right to appropriate - - as their own - - the building and other
improvements on the subject lots, but only after (1) refunding the expenses of petitioners or (2)
paying the increase in value acquired by the properties by reason thereof. They have the option to
oblige petitioners to pay the price of the land, unless its value is considerably more than that of the
structures - - in which case, petitioners shall pay reasonable rent.

In accordance with Depra v. Dumlao,77 this case must be remanded to the trial court to determine
matters necessary for the proper application of Article 448 in relation to Article 546. Such matters
include the option that respondents would take and the amount of indemnity that they would pay,
should they decide to appropriate the improvements on the lots. We disagree with the CA's
computation of useful expenses, which were based only on petitioners' bare allegations in their
Answer.78

Ruling on Improvement Justified

While, ordinarily, the jurisdiction of the MTCC on ejectment proceedings is limited to the issue of
physical or material possession of the property in question, this Court finds it necessary to abbreviate
the issue on the improvements in relation to Article 448. First, the determination of the parties' right to
those improvements is intimately connected with the MTCC proceedings in the light of the ejectment
of petitioners. Second, there is no dispute that while they constructed the improvements, respondents
owned the land. Third, both parties raised no objection when the RTC and the CA ruled accordingly
on this matter.

Equitable considerations compel us to settle this point immediately, pro hoc vice, to avoid needless
delay. Both parties have already been heard on this issue; to dillydally or equivocate would not serve
the cause of substantial justice.

Other Issues Raised

Given the foregoing rulings, it is no longer necessary to address petitioners' allegation that the MTCC
judge and respondents' lawyers should be respectively held personally accountable for the Decision
and for filing the case.79 The insinuation of petitioners that the lawyers manipulated the issuance of a
false barangay certification is unavailing.80 Their contention that respondents did not attend the
barangay conciliation proceedings was based solely on hearsay, which has little or no probative
value.81

WHEREFORE, the assailed Decision and Resolution of the Court of Appeals are AFFIRMED with the
following MODIFICATIONS:

1. The portion requiring Spouses Vicente and Rosario Macasaet to reimburse one half of the value of
the useful improvements, amounting to P475,000, and the right of Spouses Ismael and Rosita
Macasaet to remove those improvements (if the former refuses to reimburse) is DELETED.

2. The case is REMANDED to the court of origin for further proceedings to determine the facts
essential to the proper application of Articles 448 and 546 of the Civil Code, specifically to the
following matters:

A. Spouses Vicente and Rosario Macasaet's option to appropriate - - as their own - - the
improvements on the lots, after paying the indemnity, as provided under Article 546 in relation to
Article 448 of the Civil Code; or in requiring Spouses Ismael and Rosita Macasaet to pay for the value
of the lots, unless it is considerably more than that of the improvements, in which case petitioners
shall pay reasonable rent based upon the terms provided under the Civil Code

b. The value of the useful expenses incurred by Spouses Ismael and Rosita Macasaet in the
construction of the improvements on the lots

c. The increase in value acquired by the lots by reason of the useful improvements

d. Spouses Vicente and Rosario Macasaet's choice of type of indemnity to be paid (whether b or c)

e. Whether the value of the lots is considerably more than that of the improvements built thereon

No pronouncement as to costs.

SO ORDERED.

SPOUSES MARCOS R. ESMAQUEL and VICTORIA SORDEVILLA, Petitioners,

vs.
MARIA COPRADA, Respondent.
DECISION

PERALTA, J.:

Before this Court is a petition for review on certiorari under Rule 45 of the Rules of Court seeking to
set aside the Decision1 and the Resolution2 of the Court of Appeals, dated April 6, 2001 and February
15, 2002, respectively, (CA) in CA-G.R. SP No. 49994.

The antecedents are as follows:

On February 24, 1997, petitioners, spouses Marcos Esmaquel and Victoria Sordevilla (Victoria) filed
an ejectment case3 against respondent Maria V. Coprada before the 2nd Municipal Circuit Trial Court
(MCTC) of Magdalena, Liliw and Majayjay Laguna. Petitioners claimed that they are the registered
owners of a parcel of land situated in M.H. Del Pilar St., Barangay San Miguel, Majayjay, Laguna,
containing an area of Two Hundred Fifty-Three (253) square meters and covered by Transfer
Certificate of Title (TCT) No. T-93542. In 1945, respondent was able to persuade the petitioners to
allow her and her family to use and occupy the land for their residence, under the condition that they
will vacate the premises should petitioners need to use the same. Respondent and her family were
allowed to construct their residential house. Since then, the petitioners never made an attempt to
drive them away out of pity, knowing that respondent and her eight children have no other place to
live in. Also, respondent and her family have been occupying the subject premises free of rent,
including payment of realty taxes. Respondent's present circumstances have completely improved,
i.e., some of her children are already working; they are regularly sending her financial assistance; and
she has acquired her own residential house at Barangay Panglan, Majayjay, Laguna. Because of this,
petitioners verbally demanded that respondent vacate the subject land, but the latter refused. Thus,
petitioners were forced to send a demand letter dated August 22, 1996, giving respondent until
November 30, 1996 to vacate the subject premises. However, respondent still ignored said demand,
which prompted petitioners to bring a complaint before the barangay authorities. No settlement was
reached, hence, a certification to file action in Court was issued. Petitioners were, therefore,
constrained to lodge an ejectment case against the respondent before the MCTC.

Respondent admitted that petitioners are the registered owners of the subject land. However, she
averred that in 1945, it was Emiliana Coprada (petitioner Victoria Sordevilla's mother and original
owner of the subject land) and not the petitioners who gave permission to her late husband Brigido
Coprada to use the subject lot. Emiliana allowed her nephew Brigido and his family to occupy the lot
as their permanent abode, because of her love and affection for her nephew, and also, due to the fact
that the said lot is virtually a wasteland. Thereafter, Brigido and his family cleared the area and built
therein a nipa hut to dwell in. When Emiliana died, the ownership of the property was inherited by her
only child, petitioner Victoria Sordevilla. Respondent alleged that sometime in the early 1960's,
petitioner Victoria offered the said lot for sale for ₱2,000.00 to respondent, who readily agreed. The
purchase price was paid in installments and was fully paid in 1962. Due to their close relationship, the
agreement was never reduced to writing. Respondent further maintained that since the execution of
the oral sale of the subject lot, she has been the one paying the realty taxes due on the property.
After the sale, respondent built on the subject land a semi-concrete structure. Respondent stated that
petitioners' claim is barred by laches. Even granting, without admitting, that respondent's claim of
ownership over the property is improper because petitioners are the registered owners thereof,
respondent argued that she is a builder in good faith, because she was able to build the structure on
the subject lot with the prior permission of the owner.

In its Decision4 dated September 11, 1997, the MCTC rendered judgment dismissing the complaint. It
held that laches had already set in which prevented petitioners from questioning the validity of the
purported sale between Victoria and Maria.
On appeal, the Regional Trial Court (RTC) reversed the MCTC’s judgment. The RTC ruled that
respondent's occupation of the subject property was by virtue of petitioners' tolerance and
permission. Hence, respondent is bound by an implied promise that she will vacate the property upon
demand. Thus, her possession over the subject property became unlawful after the petitioners
demanded her to vacate the property. The RTC found that respondent failed to prove the alleged oral
sale and that petitioners have adequately proven that they are entitled to the possession of the
subject land as registered owners thereof. The RTC ordered the respondent and all other persons
claiming rights under her to vacate and surrender the possession of the subject land to the petitioners
and to remove any and all improvements she introduced on the parcel of land. 5

Respondent filed a Motion for Reconsideration, which was denied by the RTC in an Order 6 dated
November 24, 1998. Obviously dissatisfied by the Decision, respondent filed with the CA a petition for
review with prayer for temporary restraining order and preliminary injunction. 7

In its Decision dated April 6, 2001, the CA granted respondent's petition, reversed the Decision of the
RTC and affirmed in toto the Decision of the MCTC. Petitioners filed a Motion for Reconsideration,
which was denied by the CA in a Resolution8 dated February 15, 2002. Hence, the instant petition
raising the following grounds:

THE RIGHT OF THE REGISTERED OWNERS TO RECOVER POSSESSION IS NEVER BARRED

BY LACHES AND/OR THE PERSON WHO HAS A TORRENS TITLE OVER A PARCEL OF LAND IS
ENTITLED TO THE POSSESSION THEREOF.

II

THE OWNERSHIP AND RIGHT OF PETITIONERS TO RECOVER POSSESSION OF THE

SUBJECT PROPERTY CANNOT BE DEFEATED BY UNPROVEN ORAL SALE.

III

LACHES HAD SET IN AGAINST [RESPONDENT].

IV

THE CERTIFICATE OF TITLE IS NOT SUBJECT TO COLLATERAL ATTACK. 9

The petition is meritorious.

The pertinent point of inquiry in this case is whether or not petitioners have a valid ground to evict
respondent from the subject property.

An action for forcible entry or unlawful detainer is governed by Section 1, Rule 70 of the Rules of
Court, which provides:

SECTION 1. Who may institute proceedings, and when. - Subject to the provisions of the next
succeeding section, a person deprived of the possession of any land or building by force, intimidation,
threat, strategy, or stealth, or a lessor, vendor, vendee, or other person against whom the possession
of any land or building is unlawfully withheld after the expiration or termination of the right to hold
possession by virtue of any contract, express or implied, or the legal representatives or assigns of
any such lessor, vendor, vendee, or other person, may, at any time within one (1) year after such
unlawful deprivation or withholding of possession, bring an action in the proper Municipal Trial Court
against the person or persons unlawfully withholding or depriving of possession, or any person or
persons claiming under them, for the restitution of such possession, together with damages and
costs.

In unlawful detainer cases, the possession of the defendant was originally legal, as his possession
was permitted by the plaintiff on account of an express or implied contract between them. However,
defendant's possession became illegal when the plaintiff demanded that defendant vacate the subject
property due to the expiration or termination of the right to possess under their contract, and
defendant refused to heed such demand.10

The sole issue for resolution in an unlawful detainer case is physical or material possession of the
property involved, independent of any claim of ownership by any of the parties. Where the issue of
ownership is raised by any of the parties, the courts may pass upon the same in order to determine
who has the right to possess the property. The adjudication is, however, merely provisional and would
not bar or prejudice an action between the same parties involving title to the property. 11 Since the
issue of ownership was raised in the unlawful detainer case, its resolution boils down to which of the
parties' respective evidence deserves more weight.

In the case at bar, petitioners' cause of action for unlawful detainer is based on their ownership of the
land covered by TCT No. T-93542 and on their claim that they merely tolerated respondent's stay
thereat. Respondent's possession, as well as those persons claiming right under her, became
unlawful upon her refusal to vacate the premises. Petitioners contend that since they are the
registered owners of the subject land, they are entitled to the possession thereof and their right to
recover possession over it is never barred by laches. They maintain that respondent's claim of
ownership is based on an unproven oral sale, which does not exist. Further, respondent cannot rely
on the Tax Declarations as she was paying taxes in the petitioners' name, as the declared owners of
the property. Moreover, she started paying the taxes only in 1984 despite her claim that the property
was sold to her in 1962. Even assuming that the sale took place in 1962, respondent is guilty of
laches as she failed to take any positive action for the delivery and conveyance to her of the portion
of the property she is occupying. Finally, respondent cannot collaterally attack the title of the
petitioners to the subject land.

On her part, respondent, although admitting that the property is registered in petitioners' name,
claimed that the 100-square-meters portion of the property, where her house was erected, was
already sold to her by petitioner Victoria. Thus, by virtue of the sale, she and her family have the right
to possess the said property. The non-presentation of receipt and deed of sale, non-delivery of the
owner's certificate of title, and her payment of the real property taxes in the name of the petitioners
were due to the close relationship between the parties and the existing practice of palabra de honor in
their day to day transactions. Respondent further alleged that she is not guilty of laches; rather, it is
the registered owners' right to recover possession of their property which is barred by laches.

In the present case, respondent failed to present evidence to substantiate her allegation that a portion
of the land was sold to her in 1962. In fact, when petitioners sent a letter 12 to the respondent,
demanding her to vacate the subject property, the respondent, in reply 13 to the said letter, never
mentioned that she purchased the subject land in 1962. If the sale really took place, the respondent
should have immediately and categorically claimed that in her letter response. Clearly therefore,
respondent's submission that there was an oral sale is a mere afterthought.

On the other hand, it is undisputed that the subject property is covered by Transfer Certificate of Title
No. T-93542, registered in the name of the petitioners. As against the respondent's unproven claim
that she acquired a portion of the property from the petitioners by virtue of an oral sale, the Torrens
title of petitioners must prevail. Petitioners' title over the subject property is evidence of their
ownership thereof. It is a fundamental principle in land registration that the certificate of title serves as
evidence of an indefeasible and incontrovertible title to the property in favor of the person whose
name appears therein. Moreover, the age-old rule is that the person who has a Torrens title over a
land is entitled to possession thereof. 14

Further, respondent's argument that petitioners are no longer the owners of a portion of the subject
land because of the sale in her favor is a collateral attack on the title of the petitioners, which is not
allowed. The validity of petitioners' certificate of title cannot be attacked by respondent in this case for
ejectment. Under Section 48 of Presidential Decree No. 1529, a certificate of title shall not be subject
to collateral attack. It cannot be altered, modified or canceled, except in a direct proceeding for that
purpose in accordance with law. The issue of the validity of the title of the petitioners can only be
assailed in an action expressly instituted for that purpose. Whether or not the respondent has the
right to claim ownership over the property is beyond the power of the trial court to determine in an
action for unlawful detainer.15

In Rodriguez v. Rodriguez,16 citing the case of Co v. Militar,17 the Court held that:

[T]he Torrens System was adopted in this country because it was believed to be the most effective
measure to guarantee the integrity of land titles and to protect their indefeasibility once the claim of
ownership is established and recognized.

It is settled that a Torrens Certificate of title is indefeasible and binding upon the whole world unless
and until it has been nullified by a court of competent jurisdiction. Under existing statutory and
decisional law, the power to pass upon the validity of such certificate of title at the first instance
properly belongs to the Regional Trial Courts in a direct proceeding for cancellation of title.

As the registered owner, petitioner had a right to the possession of the property, which is one of the
attributes of ownership. x x x

Anent the issue on laches, the CA's ruling that petitioners' long inaction to assert their rights over the
subject land bars them from recovering the same is without basis. Also, the doctrine invoked by the
appellate court that a registered owner may loose his right to recover its possession by reason of
laches is not applicable here.

Laches is the failure or neglect, for an unreasonable and unexplained length of time, to do that which,
by exercising due diligence, could or should have been done earlier; it is negligence or omission to
assert a right within a reasonable time, warranting the presumption that the party entitled to assert it
either has abandoned or declined to assert it.18 There is no absolute rule as to what constitutes
laches or staleness of demand; each case is to be determined according to its particular
circumstances, with the question of laches addressed to the sound discretion of the court. Because
laches is an equitable doctrine, its application is controlled by equitable considerations and should not
be used to defeat justice or to perpetuate fraud or injustice. 19

Respondent first acquired possession of the subject lot by mere tolerance. From 1945 until the filing
of the complaint for ejectment in 1997, the nature of that possession has never changed. Petitioners
allowed the respondent to possess the property with the knowledge that the respondent will vacate
the same upon demand. Hence, until such demand to vacate was communicated by the petitioners to
the respondent, petitioners are not required to do any act to recover the subject land, precisely
because they knew of the nature of the respondent's possession, i.e., possession by mere tolerance.
Thus, it cannot be said that petitioners are guilty of failure or neglect to assert a right within a
reasonable time. Further, after the petitioners gave a demand letter to the respondent giving the latter
until November 30, 1996 to vacate the subject premises, which respondent failed to heed, they
immediately filed a complaint before the barangay authorities and, thereafter, lodged an ejectment
case before the MCTC on February 24, 1997. In sum, We find that petitioners are not guilty of laches
as would bar their claim to the property in question.

In contrast, respondent, who is claiming that a portion of the property was sold to her in 1962, has
herself failed within a long period of time to have that portion transferred in her name. Respondent
had to wait for almost 35 years since 1962, and were it not for the filing of the ejectment suit in 1997,
she would not have bothered to assert her rights under the alleged sale. Respondent's failure to
assert that right only goes to prove that no sale ever transpired between the parties.

Moreover, as the registered owners, petitioners' right to eject any person illegally occupying their
property is not barred by laches. In Gaudencio Labrador, represented by Lulu Labrador Uson, as
Attorney-in-Fact v. Spouses Ildefonso Perlas and Pacencia Perlas and Spouse Rogelio Pobre and
Melinda Fogata Pobre,20 the Court held that:

x x x As a registered owner, petitioner has a right to eject any person illegally occupying his
property. This right is imprescriptible and can never be barred by laches. In Bishop v. Court of
Appeals, we held, thus:

As registered owners of the lots in question, the private respondents have a right to eject any person
illegally occupying their property. This right is imprescriptible. Even if it be supposed that they were
aware of the petitioners' occupation of the property, and regardless of the length of that possession,
the lawful owners have a right to demand the return of their property at any time as long as the
possession was unauthorized or merely tolerated, if at all. This right is never barred by laches.

Since respondent's occupation of the subject lot is by mere tolerance or permission of the petitioners,
without any contract between them, respondent is bound by an implied promise that she will vacate
the same upon demand, failing which a summary action for ejectment is the proper remedy against
her.21

In respondent's Answer filed before the MCTC, she claimed that since she was able to build a
structure on the subject lot with the prior permission from the owner, she is a builder in good faith and
thus entitled to be reimbursed the necessary and useful expenses under Articles 546 and 548 of the
Civil Code of the Philippines. Without such reimbursement, she has the right of retention over the
property and she cannot just be ejected from the premises.

Respondent's argument does not hold water. Since respondent's occupation of the subject property
was by mere tolerance, she has no right to retain its possession under Article 448 of the Civil Code.
She is aware that her tolerated possession may be terminated any time and she cannot be
considered as builder in good faith. 22 It is well settled that both Article 44823 and Article 54624 of the
New Civil Code, which allow full reimbursement of useful improvements and retention of the premises
until reimbursement is made, apply only to a possessor in good faith, i.e., one who builds on land with
the belief that he is the owner thereof. Verily, persons whose occupation of a realty is by sheer
tolerance of its owners are not possessors in good faith. 25 At the time respondent built the
improvements on the premises in 1945, she knew that her possession was by mere permission and
tolerance of the petitioners; hence, she cannot be said to be a person who builds on land with the
belief that she is the owner thereof.

Respondent's reliance on her payment of realty taxes on the property is unavailing. She started
paying taxes only in 1984 despite her claim that she bought the property in 1962. Further, aside from
the rule that tax declarations and corresponding tax receipts cannot be used to prove title to or
ownership of a real property inasmuch as they are not conclusive evidence of the same, 26 the RTC
found that although the payment for said taxes were received from respondent, the declared owner
was petitioner Victoria.

It must be stressed, however, that the court's adjudication of ownership in an ejectment case is
merely provisional, and affirmance of the RTC's decision would not bar or prejudice an action
between the same parties involving title to the property, if and when such action is brought
seasonably before the proper forum.27

WHEREFORE, the petition is GRANTED. The Decision and the Resolution of the Court of Appeals,
dated April 6, 2001 and February 15, 2002, respectively, in CA-G.R. SP No. 49994, affirming the
Decision of the 2nd Municipal Circuit Trial Court in Civil Case No. 1875, are REVERSED and SET
ASIDE. The Decision of the Regional Trial Court of Santa Cruz, Laguna, Branch 26, in Civil Case No.
SC-3580, is REINSTATED.

SO ORDERED.

G.R. No. 182754               June 29, 2015

SPOUSES CRISPIN AQUINO and TERESA V. AQUINO, herein represented by their Attorney-in-
Fact, AMADOR D. LEDESMA, Petitioners,
vs.
SPOUSES EUSEBIO AGUILAR and JOSEFINA V. AGUILAR, Respondents.

DECISION

SERENO, CJ:

In this Petition for Review on Certiorari1 filed under Rule 45 of the Rules of Court, Petitioner spouses
Crispin and Teresa Aquino (petitioners) assail the Court of Appeals (CA) Decision dated 25 April
20082 in CA-GR SP No. 92778. The CA modified the Decisions of both the Metropolitan Trial Court
(MeTC) and the Regional Trial Court (RTC). The CA ruled that although respondent spouses Eusebio
and Josefina Aguilar (respondents) cannot be considered builders in good faith, they should still be
reimbursed for the improvements they have introduced on petitioners' property. 3

THE FACTS

Teresa Vela Aquino (Teresa) and her husband, Crispin Aquino, are the owners of a house and lot
located at No. 6948, Rosal Street, Guadalupe

Since 1981, this property has been occupied by Teresa's sister, Josefina Vela Aguilar; Josefina's
spouse Eusebio; and their family.5 It appears from the record that respondents stayed on the property
with the consent and approval of petitioners, who were then residing in the United States. 6
While respondents were in possession of the property, the house previously constructed therein was
demolished, and a three-storey building built in its place. 7 Respondents occupied half of the third floor
of this new building)for the next 20 years without payment of rental. 8

On 22 September 2003, petitioners sent a letter to respondents informing them that an immediate
family member needed to use the premises and demanding the surrender of the property within 10
days from notice.9 Respondents failed to heed this demand, prompting petitioners to file a Complaint
for ejectment against them before the office of the barangay captain of Guadalupe Viejo. 10 The parties
attempted to reach an amicable settlement in accordance with Section 412 of the Local Government
Code, but these efforts proved unsuccessful.11

On 19 November 2003, petitioner spouses Aquino filed a Complaint 12 with the MeTC of Makati City
praying that respondents be ordered to (a) vacate the portion of the building they were then
occupying; and (b) pay petitioner a reasonable amount for the use and enjoyment of the premises
from the time the formal demand to vacate was made. 13

In their Answer with Counterclaim,14 respondents claimed that they had contributed to the
improvement of the property and the construction of the building, both in terms of money and
management/supervision services. Petitioners purportedly agreed to let them contribute to the costs
of construction in exchange for the exclusive use of a portion of the building. Respondents averred:

2.3 That the construction of the three (3) storey building was also at the uncompensated
supervision of defendant Eusebio Aguilar, of which only r 2 Million was spent by plaintiffs while
defendants spent around r 1 Million as contribution to the construction cost. It was defendants
who introduced improvements on subject lot because at the time plaintiffs bought the property
it was marshy which was filled up by defendants (sic) truck load with builders, adobe and
scumbro that elevated the ground;

2.4 The original agreement was for my client to contribute his share so that they will have the
portion of the subject building for their own exclusive use. It turned out later that the agreement
they had was disowned by plaintiffs when they saw the totality of the building constructed
thereon coupled by the fact, that the value of the lot has tremendously appreciated due to the
commercialization of the vicinity which will command higher price and windfall profits should
plaintiffs sell the property which they are now contemplating on (sic);

2.5 The portion which plaintiffs want defendants to vacate is a portion which the latter built with
their own money upon your clients agreement and consent whom they built in good faith
knowing and hoping that later on the same will be theirs exclusively. It was never an act of
generosity, liberality and tolerance. Conversely, it was one of the implied co-ownership or
partnership, because aside from the fact that defendants, who were then peacefully residing in
Laguna, made unquantifiable contributions in terms of money and services arising from his
uncompensated management and supervision over the entire subject property while plaintiffs
are abroad. By legal implications he is an industrial partner responsible for the development
and improvements of the subject property. His contribution was never without the consent of
plaintiffs. Whatever contribution defendants introduced over the said property was made and
built in good faith;15

Since they were allegedly co-owners of the building and builders in good faith, respondents claimed
that they had the right to be compensated for the current value of their contribution. 16 Accordingly,
they prayed for the dismissal of the Complaint and the award of ₱5 million as compensation for their
contributions to the construction of the building, as well as moral damages, attorney's fees and costs
of litigation.17
THE RULING OF THE METC

In a Decision18 dated 12 November 2004, the MeTC ruled in favor of petitioners, stating that they had
the right to enjoy possession of the property as the registered owners thereof. 19 Since the case was
merely one for ejectment, the court held that it was no longer proper to resolve respondents' claim of
co-ownership over the building.20

The MeTC also declared that respondents were builders in bad faith who were not entitled to recover
their purported expenses for the construction of the building. 21 It emphasized that their occupation of
the property was by mere tolerance of petitioners and, as such, could be terminated at any
time.22 The court further noted that in a letter dated 15 July 1983, petitioners had already asked
respondents to refrain from constructing improvements on the property because it was intended to be
sold.23

The dispositive portion of the MeTC Decision, which ordered respondents to vacate the property,
reads:

WHEREFORE, premises considered, judgment is hereby rendered ordering defendants Eusebio &
Josefina Aguilar and all persons claiming rights under them to immediately vacate the subject
property, and deliver peaceful possession thereof to the plaintiffs. Defendants are likewise ordered to
pay plaintiffs ₱7,000.00 monthly rental commencing 22 October 2003 until such time that defendant
finally vacate the premises, ₱10,000.00 as and by way of attorney's fees, and the cost of suit. 24

On 14 September 2005, respondents appealed the MeTC's Decision to the RTC. 25

THE RULING OF THE RTC

In their Memorandum on Appeal26 before the R TC, respondents assailed the MeTC's finding that
petitioners, as the registered owners of the land, were also the owners of the improvement
constructed thereon.27 Respondents asserted that they were co-owners of the building since they built
a portion thereof using their own funds, as evidenced by various receipts they presented before the
MeTC.28

Respondents also maintained that they were builders in good faith. They pointed out that petitioners
never objected to the construction of the improvement on their property. 29 According to respondents,
petitioners' letter dated 15 July 1983 was written at a time when an old dilapidated house was still
standing on the property.30 Subsequently however, the house was demolished and the new building
was constructed thereon by respondents, with petitioners' knowledge and consent. 31

In a Decision32 dated 3 January 2006, the RTC denied the appeal and affirmed the MeTC's Decision.
According to the court, respondents did not become co-owners of the property although they may
have contributed to the construction of the building thereon. 33 Hence, their stay in the premises
remained to be by mere tolerance of the petitioners. 34

The RTC also ruled that respondents cannot be considered builders in good faith. 35 The court found
that as early as 1983, petitioners had informed respondents of the intention to eventually dispose of
the property.36 The RTC concluded that petitioners never consented to the construction of any form of
structure on the property.37 Since respondents participated in the construction of the building even
after they had been notified that their occupation may be terminated anytime, the R TC ruled that they
did not build the structures in good faith. 38 The RTC likewise noted that "the improvements in question
as well as other personal belongings of the appellants were removed from the premises through a
writ of demolition, and these properties are now in their possession." 39
THE RULING OF THE CA

Aggrieved by the RTC Decision, respondents elevated the matter to the CA. They reiterated that they
owned one-half of the third floor of the building on the property, having spent their own funds for the
construction thereof. Respondents also asserted that because they built that portion in good faith,
with no objection from petitioners, they were entitled to reimbursement of all necessary and useful
expenses incurred in the construction.

On 25 April 2008, the CA affirmed the conclusion of the lower courts that respondents could not be
considered co-owners of the property or builders in good faith. 40 According to the appellate court,
respondents were aware that their right to possess the property had a limitation, because they were
not the owners thereof. They knew that their occupation of the building was by mere tolerance or
permission of petitioners, who were the registered owners of the property. The CA likewise noted that
respondents failed to prove the alleged agreement between the parties with respect to the ownership
of one-half of the third floor of the improvement. There being no contract between them, respondents
are necessarily bound to vacate the property upon demand. 41 The CA ruled:

The Supreme Court has consistently held that those who occupy the land of another at the latter's
tolerance or permission, without any contract between them, are necessarily bound by an implied
promise that the occupants will vacate the property upon demand. Based on the principles
enunciated in Calubayan v. Pascual, the status of petitioners is analogous to that of a lessee or a
tenant whose term of lease has expired but whose occupancy continued by tolerance of the owner. In
such a case, the unlawful deprivation or withholding of possession is to be reckoned from the date of
the demand to vacate.42 (Citations omitted)

Nevertheless, the CA declared that respondents should be reimbursed for the necessary and useful
expenses they had introduced on petitioners' property, pursuant to Articles 1678 and 548 of the Civil
Code.43 The dispositive portion of the CA Decision dated 25 April 2008 44 reads:

WHEREFORE, the assailed Decision is AFFIRMED with the following MODIFICATIONS:

1. The case is REMANDED to the court of origin for further proceedings to determine the facts
essential to the application of Article 1678 and Article 546 of the Civil Code, specifically on the
following matters:

a) To determine the cost of necessary expenses incurred by petitioners during their

period of possession.

b) To determine the cost of useful improvements introduced by petitioners in the

construction of the building.

2. After said amounts shall have been determined by competent evidence:

a) Respondents Aquino are ordered to pay petitioners the costs of necessary

improvements incurred during the period of their occupation.

b) Petitioners Aguilar are to be reimbursed one half (1/2) of the amount they expended
on the construction of the building should respondents decided to appropriate the same.
Should respondents refuse to reimburse the costs of the improvements, petitioners may
remove the improvements even though the principal thing may suffer damage thereby.
 c) In both instances, petitioners shall have no right of retention over the subject
premises.

d) In any event, petitioners shall pay respondents the amount of Php7,000.00 as

monthly rental commencing 22 October 2003 until such time that petitioners finally
vacate the premises. No pronouncement as to costs.

SO ORDERED.45

Respondents no longer appealed the Decision of the CA. This time, petitioners elevated the matter to
this Court through the instant Petition for Review 46 under Rule 45 of the Rules of Court.

PROCEEDINGS BEFORE THIS COURT

In their Petition, petitioners allege that the CA seriously erred in remanding the case to the court of
origin for the purpose of ascertaining the right of respondents to be reimbursed for the improvements
introduced on the property.47 They emphasize that respondents were builders in bad faith, and, as
such, are not entitled to reimbursement under Articles 449, 450 and 451 of the Civil Code.

In their Comment,48 respondents assert that the CA correctly ruled that their status is akin to that of a
lessee or tenant whose term of lease has expired, but whose occupancy continues by virtue of the
tolerance of the owner. They aver that the CA properly upheld their entitlement to reimbursement
pursuant to Articles 167849 and 54650 of the Civil Code.51

In their Reply,52 petitioners argue against supposed improvements constructed by respondents from

1999 to 2003 amounting to ₱995,995.94. Petitioners say this claim is highly ridiculous and
unbelievable.53

OUR RULING

Since respondents no longer appealed the Decision of the CA, 54 they are considered bound by its
findings and conclusions. These include its affirmation of the earlier findings of the MeTC and the
RTC that respondents cannot be considered builders in good faith:

Both the MeTC and the RTC have rejected the idea that petitioners are builders in good faith. We
agree. The resolution of the issues at bar calls for the application of the rules on accession under the
Civil Code. The term "builder in good faith" as used in reference to Article 448 of the Civil Code,
refers to one who, not being the owner of the land, builds on that land believing himself to be its
owner and unaware of the land, builds on that land, believing himself to be its owner and unaware of
the defect in h is title or mode of acquisition. The essence of good faith lies in an honest belief in the
validity of one's right, ignorance of a superior claim, and absence of intention to overreach another.

In the instant case, the Spouses Aguilar cannot be considered as builders in good faith on account of
their admission that the subject lot belonged to the Spouses Aquino when they constructed the
building. At the onset, petitioners were aware of a flaw in their title and a limit to their right to possess
the property. By law, one is considered in good faith if he is not aware that there exists in his title or
mode of acquisition any flaw which invalidates it.55

Respondents are deemed to have acquiesced to the foregoing findings when they failed to appeal the
CA Decision. A party who does not appeal from a judgment can no longer seek the modification or
reversal thereof.56 Accordingly, the only issue left for this Court to determine is that which is now
raised by petitioners - whether the CA erred in remanding this case to the court of origin for the
determination of the necessary and useful expenses to be reimbursed to respondents pursuant to
Articles 1678 and 546 of the Civil Code.

We resolve to PARTLY GRANT the Petition and modify the ruling of the CA.

Article 1678 is not applicable to this case.

In its Decision, the CA found that respondents were occupants of the property by mere tolerance or
generosity of petitioners and were bound by an implied promise to vacate the premises upon
demand.57

Based on this finding, the CA held that "the status of petitioners is analogous to that of a lessee or a
tenant whose term of lease has expired but whose occupancy continued by tolerance of
owner"58 pursuant to this Court's ruling in Calubayan v. Pascual, 59 As a result, the CA concluded that
Articles 1678 and 546 of the Civil Code must be applied to allow respondents to be reimbursed for
their necessary and useful expenses.

We disagree. By its express provision, Article 1678 of the Civil Code applies only to lessees who build
useful improvements on the leased property. It does not apply to those who possess property by
mere tolerance of the owners, without a contractual right.

A careful reading of the statement made by this Court in Calubayan would show that it did not, as it
could not, modify the express provision in Article 1678, but only noted an "analogous" situation.
According to the Court, the analogy between a tenant whose term of lease has expired and a person
who occupies the land of another at the latter's tolerance lies in their implied obligation to vacate the
premises upon demand of the owner. The Court stated:

To begin with, it would appear that although the defendant is regarded by the plaintiffs as a "squatter"
his occupancy of the questioned premises had been permitted or tolerated even before the Philippine
Realty Corporation sold the lots to the plaintiffs. Otherwise, the latter would not have found him on the
premises. It may be true that upon their acquisition of the parcels of land in 1957, plaintiffs notified
and .requested defendant to see them, but despite defendant's failure to heed these requests,
plaintiffs did not choose to bring an action in court but suffered the defendant instead to remain in the
premises for almost six years. Only on February 2, 1963, did the plaintiffs for the first time notify the
defendant that "they now need the two parcels of land in question" and requested him to vacate the
same. In allowing several years to pass without requiring the occupant to vacate the premises nor
filing an action to eject him, plaintiffs have acquiesced to defendant's possession and use of the
premises. It has been held that a person who occupies the land of another at the latter's tolerance or
permission, without any contract between them, is necessarily bound by an implied promise that he
will vacate upon demand, failing which a summary action for ejectment is the proper remedy against
them. The status of defendant is analogous to that of a lessee or tenant whose term of lease has
expired but whose occupancy continued by tolerance of the owner. In such a case, the unlawful
deprivation or withholding of possession is to be counted from the date of the demand to
vacate.60 (Emphasis in the original)

It is clear from the above that Calubayan is not sufficient basis to confer the status and rights of a
lessee on those who occupy property by mere tolerance of the owner.

In this case, there is absolutely no evidence of any lease contract between the parties. In fact,
respondents themselves never alleged that they were lessees of the lot or the building in question.
Quite the opposite, they insisted that they were co-owners of the building and builders in good faith
under Article 448 of the Civil Code. For that reason, respondents argue that it was erroneous for the
CA to consider them as lessees and to determine their rights in accordance with Article 1678.

As builders in bad faith, respondents are

not entitled to reimbursement of useful expenses.

Furthermore, even if we were to subscribe to the CA' s theory that the situation of respondents is
"analogous to that of a lessee or tenant whose term of lease has expired but whose occupancy
continued by tolerance," the absence of good faith on their part prevents them from invoking the
provisions of Article 1678.

As discussed above, the MeTC, the RTC and the CA all rejected the claims of respondents that they
were builders in good faith. This pronouncement is considered conclusive upon this Court, in view of
respondents' failure to appeal from the CA decision. This rule bars the application of Article 1678 as
well as Articles 448 and 576 of the Civil Code and all other provisions requiring good faith on the part
of the builder.

We are aware that in some instances, this Court has allowed the application of Article 448 to a builder
who has constructed improvements on the land of another with the consent of the owner. 61 In those
cases, the Court found that the owners knew and approved of the construction of improvements on
the property. Hence, we ruled therein that the structures were built in good faith, even though the
builders knew that they were constructing the improvement on land owned by another.

Although the factual circumstances in the instant case are somewhat similar, there is one crucial
factor that warrants a departure from the above-described rulings: the presence of evidence that
petitioners prohibited respondents from building their own structure on a portion of the property.
Based on the findings of fact of the MeTC and the RTC, petitioners had already warned respondents
not to build a structure on the property as early as 1983. The MeTC explained: Likewise, in a letter
dated 15 July 1983 sent by plaintiffs to the defendants marked as Exhibit "2" of defendants' Position
Paper, Teresa Aquino made known to the defendants not to construct on the premises as she
planned to sell the same when the value of the property shall increase (sic). Defendants are
undoubtedly builders in bad faith for despite the prohibition made upon them, they continued their
construction activities upon respondents' property. 62

This ruling was affirmed by the R TC in its Decision dated 3 January 2006, which reads:

An examination of appellants' Exhibit "2" which is a letter dated July 15, 1983, sent to appellant
Josefina Aguilar, the sister of appellee Teresa Aquino, abundantly shows that their occupancy of the
premises in question is by tolerance of the appellees. Thus, the letter expressly states that the
appellants are advised not to put up a shop, as the appellees had plan (sic) then of disposing the
property (the land) in question for a reasonable profit after a period of three or four years, thereby
placing on notice them (appellants) that their possession of the said property is temporary in nature
and by mere generosity of the appellees, they being sisters.

The letter likewise advised them to apply for a housing project so that by the time the property in
question is sold, they have a place to transfer to. All these undisputed antecedents which can be
considered as judicially admitted by the appellants being their own evidence marked as Exhibit "2",
coupled with the fact that since the time they occupied the premises in 1983 up to the time when the
complaint was filed, they were not asked to pay any monthly rental for the use, enjoyment and
occupancy of the said property, ineluctably established the fact that their possession of the said
property is by mere tolerance of the appellees. 63
xxxx

Their contention that pursuant to Article 453 of the Civil Code, they should be considered builders in
good faith even if they have acted in bad faith, since their act of introducing improvements to one-half
of the third floor of the three storey building was with knowledge and without opposition on the part of
the appellants, cannot be sustained, principally on the ground that as stated earlier, their Exhibit "2" is
very limpid on the act that they were already forewarned as early as 1983 not to introduce any
improvements thereon as the property is slated to be sold as it was only bought for investment
purposes. The fact that the appellees did not thereafter remind them of this, is of no moment, as this
letter was not likewise withdrawn by a subsequent one or modified by the appellees. 64

We find no reason to depart from the conclusions of the trial courts. Respondents were evidently
prohibited by petitioners from building improvements on the land because the latter had every
intention of selling it. That this sale did not materialize is irrelevant. What is crucial is that petitioners
left respondents clear instructions not to build on the land.

We also agree with the RTC's ruling that the lack of constant reminders from petitioners about the
"prohibition" expressed in the 1983 letter was immaterial. The prohibition is considered extant and
continuing since there is no evidence that this letter was ever withdrawn or modified. Moreover, no
evidence was presented to show that petitioners were aware of what was happening: that
respondents were constructing a portion of the building with their own funds and for their exclusive
use and ownership. Neither were respondents able to present evidence that petitioners had agreed to
share the expenses with them, or that the former had given consent to the latter's contribution, if any.

In view of the foregoing, this Court's previous rulings on Article 448 cannot be applied to this case.
Hence, we hold that petitioners, as the owners of the land, have the right to appropriate what has
been built on the property, without any obligation to pay indemnity therefor; 65 and that respondents
have no right to a refund of any improvement built therein, 66 pursuant to Articles 449 and 450 of the
Civil Code:

Art. 449. He who builds, plants or sows in bad faith on the land of another, loses what is built, planted
or sown without right of indemnity.

Art. 450. The owner of the land on which anything has been built, planted or sown in bad faith may
demand the demolition of the work, or that the planting or sowing be removed, in order to replace
things in their former condition at the expense of the person who built, planted or sowed; or he may
compel the builder or planter to pay the price of the land, and the sower the proper rent.

Art. 451. In the cases of the two preceding articles, the landowner is entitled to damages from the
builder, planter or sower.

Respondents may recover the

necessary expenses incurred for the
preservation of the property but
without the right of retention.

Pursuant to Article 452 of the Civil Code, a builder in bad faith is entitled to recoup the necessary
expenses incurred for the preservation of the land. 67 The CA correctly ruled that respondents in this
case are similarly entitled to this reimbursement. However, being builders in bad faith, they do not
have the right of retention over the premises.68
While the evidence before this Court does not establish the amount of necessary expenses incurred
by respondents during their stay in the property, we note that even petitioners do not deny that such
expenses were incurred. In fact, in a letter dated 15 July 1983, petitioners acknowledged that
respondents had spent personal money for the maintenance of the property. Petitioners even
promised to reimburse them for those expenses.69 In this light, we find it proper to order the remand
of this case to the court a quo for the purpose of determining the amount of necessary expenses to
be reimbursed to respondents.

With respect to the award of actual damages to petitioners, we find no reason to reverse or modify
the ruling of the CA.1âwphi1 This Court has consistently held that those who occupy the land of
another at the latter's tolerance or permission, even without any contract between them, are
necessarily bound by an implied promise that the occupants would vacate the property upon
demand.70 Failure to comply with this demand renders the possession unlawful and actual damages
may be awarded to the owner from the date of the demand to vacate 71 until the actual surrender of
the property.

Accordingly, we affirm the CA's award of actual damages to petitioners in the amount of ₱7 ,000 per
month from the date of demand (22 October 2003) until the subject properties are vacated. This
amount represents a reasonable compensation for the use and occupation of respondents'
property72 as determined by the RTC and the MeTC.

As to petitioners' prayer for attorney's fees, we find no cogent basis for the award. WHEREFORE, the
Petition is PARTLY GRANTED.

The Court of Appeals Decision dated 25 April 2008 is REVERSED insofar as it ordered: (a) the
reimbursement of the useful expenses incurred by respondents while in possession of the property;
and (b) the determination of the cost of these useful improvements by the court of origin. The rest of
the Decision of the Court of Appeals is hereby AFFIRMED.

Accordingly, this case is REMANDED to the court of origin for the determination of the necessary
expenses of preservation of the land, if any, incurred by respondent spouses Eusebio and Josefina
Aguilar while they were in possession of the property, which expenses shall be reimbursed to them by
petitioner spouses Crispin and Teresa Aquino.

On the other hand, respondents and all persons claiming rights under them are ordered, upon finality
of this Decision without awaiting the resolution of the matter of necessary expenses by the trial court,
to immediately VACATE the subject property and DELIVER its peaceful possession to petitioners.
Respondents are likewise ordered to PAY petitioners ₱7 ,000 as monthly rental plus interest thereon
at the rate of 6% per annum, to be computed from 22 October 2003 until the finality of this Decision.

No pronouncement as to costs.

SO ORDERED.
Article 448 and 447 applied by analogy

SPOUSES CONCEPCION FERNANDEZ DEL CAMPO and ESTANISLAO DEL CANTO, plaintiffs-

appellees,
vs.
BERNARDA FERNANDEZ ABESIA, defendant-appellant.

Geronimo Creer, Jr. for plaintiffs-appellees.

Benedicto G. Cobarde for defendant, defendant-appellant

GANCAYCO, J.:

In this appeal from the decision of the Court of First Instance (CFI) of Cebu, certified to this Court by
the Court of Appeals on account of the question of law involved, the sole issue is the applicability of
the provisions of Article 448 of the Civil Code relating to a builder in good faith when the property
involved is owned in common.

This case involves a parcel of land, Lot No. 1161 of the Cadastral Survey of Cebu, with an area of
only about 45 square meters, situated at the corner of F. Flores and Cavan Streets, Cebu City
covered by TCT No. 61850. An action for partition was filed by plaintiffs in the CFI of Cebu. Plaintiffs
and defendants are co-owners pro indiviso of this lot in the proportion of and 1/3 share each,
respectively. The trial court appointed a commissioner in accordance with the agreement of the
parties. ,the Id commissioner conducted a survey, prepared a sketch plan and submitted a report to
the trial court on May 29, 1976, recommending that the property be divided into two lots: Lot 1161-A
with an area of 30 square meters for plaintiffs and Lot No. 1161-B with an area of 15 square meters
for the defendants. The houses of plaintiffs and defendants were surveyed and shown on the sketch
plan. The house of defendants occupied the portion with an area of 5 square meters of Lot 1161-A of
plaintiffs. The parties manifested their conformity to the report and asked the trial court to finally settle
and adjudicate who among the parties should take possession of the 5 square meters of the land in
question.

In solving the issue the trial court held as follows:

The Court believed that the plaintiffs cannot be obliged to pay for the value of the
portion of the defendants' house which has encroached an area of five (5) sq. meters of
the land alloted to them. The defendants cannot also be obliged to pay for the price of
the said five (5) square meters. The rights of a builder in good faith under Article 448 of
the New Civil Code does (sic) not apply to a case where one co-owner has built, planted
or sown on the land owned in common. "Manresa agreeing with Sanchez Roman, says
that as a general rule this article is not applicable because the matter should be
governed more by the provisions on co-ownership than on accession. Planiol and Ripert
are also of the opinion that this article is not applicable to a co-owner who constructs,
plants or sows on the community property, even if the land where the construction,
 planting or sowing is made is a third person under the circumstances, and the situation
is governed by the rules of co-ownership. Our Court of Appeals has held that this article
cannot be invoked by one co-owner against another who builds, plants or sows upon
their land, since the latter does not do so on land not belonging to him. (C.A.), O.G.
Supp., Aug. 30, 194, p. 126). In the light of the foregoing authorities and considering
that the defendants have expressed their conformity to the partition that was made by
the commissioner as shown in the sketch plan attached to the commissioner's report,
said defendants have no other alternative except to remove and demolish part of their
house that has encroached an area of five (5) sq. meters of the land allotted to the
plaintiffs.

WHEREFORE, judgment is hereby rendered assigning Lot 1161-A with an area of thirty
(30) sq. meters to the plaintiffs spouses Concepcion Fernandez Abesia, Lourdes
Fernandez Rodil, Genaro Fernandez and Dominga A. Fernandez, in the respective
metes and bounds as shown in the subdivision sketch plan attached to the
Commissioner's Report dated may 29, 1976 prepared by the Commissioner, Geodetic
Engineer Espiritu Bunagan. Further, the defendants are hereby ordered at their
expense to remove and demolish part of their house which has encroached an area of
five (5) square meters from Lot 1161-A of the plaintiffs; within sixty (60) days from date
hereof and to deliver the possession of the same to the plaintiffs. For the
Commissioner's fee of P400.00, the defendants are ordered to pay, jointly and
severally, the sum of P133.33 and the balance thereof to be paid by the plaintiffs. The
costs of suit shall be paid by the plaintiffs and the defendants in the proportion of two-
thirds (2/3) and one-third (1/3) shares respectively. A certified copy of this judgment
shall be recorded in the office of the Register of Deeds of the City of Cebu and the
expense of such recording shall be taxed as a part of the costs of the action.

Hence, this appeal interposed by the defendants with the following assignments of errors:

THE TRIAL COURT ERRED IN NOT APPLYING THE RIGHTS OF A BUILDER IN

GOOD FAITH UNDER ART. 448 OF THE NEW CIVIL CODE TO DEFENDANTS-
APPELLANTS WITH RESPECT TO THAT PART OF THEIR HOUSE OCCUPYING A
PROTION OF THE LOT ASSIGNED TO PLAINTIFFS-APPELLEES.

II

THE TRIAL COURT ERRED IN ORDERING DEFENDANTS-APPELLANTS TO

REMOVE AND DEMOLISH AT THEIR EXPENSE, THAT PART OF THEIR HOUSE
WHICH HAS ENCROACHED ON AN AREA OF FIVE SQUARE METERS OF LOT
1161-A OF PLAINTIFFS-APPELLEES.

Article 448 of the New Civil Code provides as follows:

Art. 448. The owner of the land on which anything has been built, sown, or planted in
good faith, shall have the right to appropriate as his own the works, sowing or planting,
after payment of the indemnity provided for in articles 546 and 548, or to oblige the one
who built or planted to pay the price of the land, and the one who sowed, the proper
rent. However, the builder or planter cannot be obliged to buy the land if its value is
considerably more than that of the building or trees. In such case, he shall pay
reasonable rent, if the owner of the land does not choose to appropriate the building or
 trees after proper indemnity. The parties shall agree upon the terms of the lease and in
case of disagreement, the court shall fix the terms thereof.

The court a quo correctly held that Article 448 of the Civil Code cannot apply where a co-owner
builds, plants or sows on the land owned in common for then he did not build, plant or sow upon land
that exclusively belongs to another but of which he is a co-owner. The co-owner is not a third person
under the circumstances, and the situation is governed by the rules of co-ownership. 1

However, when, as in this case, the co-ownership is terminated by the partition and it appears that
the house of defendants overlaps or occupies a portion of 5 square meters of the land pertaining to
plaintiffs which the defendants obviously built in good faith, then the provisions of Article 448 of the
new Civil Code should apply. Manresa and Navarro Amandi agree that the said provision of the Civil
Code may apply even when there was co-ownership if good faith has been established. 2

Applying the aforesaid provision of the Civil Code, the plaintiffs have the right to appropriate said
portion of the house of defendants upon payment of indemnity to defendants as provided for in Article
546 of the Civil Code. Otherwise, the plaintiffs may oblige the defendants to pay the price of the land
occupied by their house. However, if the price asked for is considerably much more than the value of
the portion of the house of defendants built thereon, then the latter cannot be obliged to buy the land.
The defendants shall then pay the reasonable rent to the plaintiff upon such terms and conditions that
they may agree. In case of disagreement, the trial court shall fix the terms thereof. Of course,
defendants may demolish or remove the said portion of their house, at their own expense, if they so
decide.

WHEREFORE, the decision appealed from is hereby MODIFIED by ordering plaintiff to indemnify
defendants for the value of the Id portion of the house of defendants in accordance with Article 546 of
the Civil Code, if plaintiffs elect to appropriate the same. Otherwise, the defendants shall pay the
value of the 5 square meters of land occupied by their house at such price as may be agreed upon
with plaintiffs and if its value exceeds the portion of the house that defendants built thereon, the
defendants may choose not to buy the land but defendants must pay a reasonable rental for the use
of the portion of the land of plaintiffs As may be agreed upon between the parties. In case of
disagreement, the rate of rental shall be determined by the trial court. Otherwise, defendants may
remove or demolish at their own expense the said portion of their house. No costs.

SO ORDERED.

PEDRO P. PECSON, petitioner,
vs.
COURT OF APPEALS, SPOUSES JUAN NUGUID and ERLINDA NUGUID, respondents.

DAVIDE, JR., J.:
This petition for review on certiorari seeks to set aside the decision1 of the Court of Appeals in CA-
G.R. SP No. 32679 affirming in part the order 2 of the Regional Trial Court (RTC) of Quezon City,
Branch 101, in Civil Case No. Q-41470.

The factual and procedural antecedents of this case as gathered from the record are as follows:

Petitioner Pedro P. Pecson was the owner of a commercial lot located in Kamias Street, Quezon City,
on which he built a four-door two-storey apartment building. For his failure to pay realty taxes
amounting to twelve thousand pesos (P12,000.00), the lot was sold at public auction by the city
Treasurer of Quezon City to Mamerto Nepomuceno who in turn sold it on 12 October 1983 to the
private respondents, the spouses Juan Nuguid and Erlinda Tan-Nuguid, for one hundred three
thousand pesos (P103,000.00).

The petitioner challenged the validity of the auction sale in Civil Case No. Q-41470 before the RTC of
Quezon City. In its decision of 8 February 1989, the RTC dismissed the complaint, but as to the
private respondents' claim that the sale included the apartment building, it held that the issue
concerning it was "not a subject of the . . . litigation." In resolving the private respondents' motion to
reconsider this issue, the trial court held that there was no legal basis for the contention that the
apartment building was included in the sale. 3

Both parties then appealed the decision to the Court of Appeals. The case was docketed as CA-G.R.
CV No. 2931. In its decision of 30 April 1992,4 the Court of Appeals affirmed in toto the assailed
decision. It also agreed with the trial court that the apartment building was not included in the auction
sale of the commercial lot. Thus:

Indeed, examining the record we are fully convinced that it was only the land — without
the apartment building — which was sold at the auction sale, for plaintiff's failure to pay
the taxes due thereon. Thus, in the Certificate of Sale of Delinquent Property To
Purchaser (Exh. K, p. 352, Record) the property subject of the auction sale at which
Mamerto Nepomuceno was the purchaser is referred to as Lot No. 21-A, Block No. K-
34, at Kamias, Barangay Piñahan, with an area of 256.3 sq. m., with no mention
whatsoever, of the building thereon. The same description of the subject property
appears in the Final Notice To Exercise The Right of Redemption (over subject
property) dated September 14, 1981 (Exh. L, p. 353, Record) and in the Final Bill of
Sale over the same property dated April 19, 1982 (Exh. P, p. 357, Record). Needless to
say, as it was only the land without any building which Nepomuceno had acquired at the
auction sale, it was also only that land without any building which he could have legally
sold to the Nuguids. Verily, in the Deed of Absolute Sale of Registered Land executed
by Mamerto Nepomuceno in favor of the Nuguids on October 25, 1983 (Exh. U, p. 366,
Record) it clearly appears that the property subject of the sale for P103,000.00 was only
the parcel of land, Lot 21-A, Blk. K-34 containing an area of 256.3 sq. meters, without
any mention of any improvement, much less any building thereon. (emphases supplied)

The petition to review the said decision was subsequently denied by this Court. 5 Entry of judgment
was made on 23 June 1993.6

On November 1993, the private respondents filed with the trial court a motion for delivery of
possession of the lot and the apartment building, citing article 546 of the Civil Code. 7 Acting thereon,
the trial court issued on 15 November 1993 the challenged order 8 which reads as follows:

Submitted for resolution before this Court is an uncontroverted [sic] for the Delivery of
Possession filed by defendants Erlinda Tan, Juan Nuguid, et al. considering that despite
 personal service of the Order for plaintiff to file within five (5) days his opposition to said
motion, he did not file any.

In support of defendant's motion, movant cites the law in point as Article 546 of the Civil
Code . . .

Movant agrees to comply with the provisions of the law considering that plaintiff is a
builder in good faith and he has in fact, opted to pay the cost of the construction spent
by plaintiff. From the complaint itself the plaintiff stated that the construction cost of the
apartment is much more than the lot, which apartment he constructed at a cost of
P53,000.00 in 1965 (par. 8 complaint). This amount of P53,000.00 is what the movant is
supposed to pay under the law before a writ of possession placing him in possession of
both the lot and apartment would be issued.

However, the complaint alleges in paragraph 9 that three doors of the apartment are
being leased. This is further confirmed by the affidavit of the movant presented in
support of the motion that said three doors are being leased at a rental of P7,000.00 a
month each. The movant further alleges in his said affidavit that the present commercial
value of the lot is P10,000.00 per square meter or P2,500,000.00 and the reasonable
rental value of said lot is no less than P21,000.00 per month.

The decision having become final as per Entry of Judgment dated June 23, 1993 and
from this date on, being the uncontested owner of the property, the rents should be paid
to him instead of the plaintiff collecting them. From June 23, 1993, the rents collected by
plaintiff amounting to more than P53,000.00 from tenants should be offset from the
rents due to the lot which according to movant's affidavit is more than P21,000.00 a
month.

WHEREFORE, finding merit in the Motion, the Court hereby grants the following prayer
that:

1. The movant shall reimburse plaintiff the construction cost of

P53,000.00.

2. The payment of P53,000.00 as reimbursement for the construction cost,

movant Juan Nuguid is hereby entitled to immediate issuance of a writ of
possession over the Lot and improvements thereon.

3. The movant having been declared as the uncontested owner of the Lot
in question as per Entry of Judgment of the Supreme Court dated June
23, 1993, the plaintiff should pay rent to the movant of no less than
P21,000.00 per month from said date as this is the very same amount
paid monthly by the tenants occupying the lot.

4. The amount of P53,000.00 due from the movant is hereby offset against
the amount of rents collected by the plaintiff from June 23, 1993, to
September 23, 1993.

SO ORDERED.

The petitioner moved for the reconsideration of the order but it was not acted upon by the trial court.
Instead, on 18 November 1993, it issued a writ of possession directing the deputy sheriff "to place
said movant Juan Nuguid in possession of subject property located at No. 79 Kamias Road, Quezon
City, with all the improvements thereon and to eject therefrom all occupants therein, their agents,
assignees, heirs and representatives."9

The petitioner then filed with the Court of Appeals a special civil action for certiorari and prohibition
assailing the order of 15 November 1993, which was docketed as CA-G.R. SP No. 32679. 10 In its
decision of 7 June 1994, the Court of Appeals affirmed in part the order of the trial court citing Article
448 of the Civil Code. In disposing of the issues, it stated:

As earlier pointed out, private respondent opted to appropriate the improvement

introduced by petitioner on the subject lot, giving rise to the right of petitioner to be
reimbursed of the cost of constructing said apartment building, in accordance with
Article 546 of the . . . Civil Code, and of the right to retain the improvements until he is
reimbursed of the cost of the improvements, because, basically, the right to retain the
improvement while the corresponding indemnity is not paid implies the tenancy or
possession in fact of the land on which they are built . . . [2 TOLENTINO, CIVIL CODE
OF THE PHILIPPINES (1992) p. 112]. With the facts extant and the settled principle as
guides, we agree with petitioner that respondent judge erred in ordering that "the
movant having been declared as the uncontested owner of the lot in question as per
Entry of Judgment of the Supreme Court dated June 23, 1993, the plaintiff should pay
rent to the movant of no less than P21,000 per month from said date as this is the very
same amount paid monthly by the tenants occupying the lot.

We, however, agree with the finding of respondent judge that the amount of P53,000.00
earlier admitted as the cost of constructing the apartment building can be offset from the
amount of rents collected by petitioner from June 23, 1993 up to September 23, 1993
which was fixed at P7,000.00 per month for each of the three doors. Our underlying
reason is that during the period of retention, petitioner as such possessor and receiving
the fruits from the property, is obliged to account for such fruits, so that the amount
thereof may be deducted from the amount of indemnity to be paid to him by the owner
of the land, in line with Mendoza vs. De Guzman, 52 Phil. 164 . . . .

The Court of Appeals then ruled as follows:

WHEREFORE, while it appears that private respondents have not yet indemnified
petitioner with the cost of the improvements, since Annex I shows that the Deputy
Sheriff has enforced the Writ of Possession and the premises have been turned over to
the possession of private respondents, the quest of petitioner that he be restored in
possession of the premises is rendered moot and academic, although it is but fair and
just that private respondents pay petitioner the construction cost of P53,000.00; and that
petitioner be ordered to account for any and all fruits of the improvements received by
him starting on June 23, 1993, with the amount of P53,000.00 to be offset therefrom.

IT IS SO ORDERED.11

Aggrieved by the Court of Appeals' decision, the petitioner filed the instant petition.

The parties agree that the petitioner was a builder in good faith of the apartment building on the
theory that he constructed it at the time when he was still the owner of the lot, and that the key issue
in this case is the application of Articles 448 and 456 of the Civil Code.
The trial court and the Court of Appeals, as well as the parties, concerned themselves with the
application of Articles 448 and 546 of the Civil Code. These articles read as follows:

Art. 448. The owner of the land on which anything has been built, sown or planted in
good faith, shall have the right to appropriate as his own the works, sowing or planting,
after payment of the indemnity provided for in articles 546 and 548, or to oblige the one
who built or planted to pay the price of the land, and the one who sowed, the proper
rent. However, the builder or planter cannot be obliged to buy the land if its value is
considerably more than that of the building or trees. In such case, he shall pay
reasonable rent, if the owner of the land does not choose to appropriate the building or
trees after proper indemnity. The parties shall agree upon the terms of the lease and in
case of disagreement, the court shall fix the terms thereof. (361a)

xxx xxx xxx

Art. 546. Necessary expenses shall be refunded to every possessor; but only the
possessor in good faith may retain the thing until he has been reimbursed therefor.

Useful expenses shall be refunded only to the possessor in good faith with the same
right of retention, the person who has defeated him in the possession having the option
of refunding the amount of the expenses or of paying the increase in value which the
thing may have acquired by reason thereof. (453a)

By its clear language, Article 448 refers to a land whose ownership is claimed by two or more parties,
one of whom has built some works, or sown or planted something. The building, sowing or planting
may have been made in good faith or in bad faith. The rule on good faith laid down in Article 526 of
the Civil Code shall be applied in determining whether a builder, sower or planter had acted in good
faith. 12

Article 448 does not apply to a case where the owner of the land is the builder, sower, or planter who
then later loses ownership of the land by sale or donation. This Court said so in Coleongco
vs. Regalado: 13

Article 361 of the old Civil Code is not applicable in this case, for Regalado constructed
the house on his own land before he sold said land to Coleongco. Article 361 applies
only in cases where a person constructs a building on the land of another in good or in
bad faith, as the case may be. It does not apply to a case where a person constructs a
building on his own land, for then there can be no question as to good or bad faith on
the part of the builder.

Elsewise stated, where the true owner himself is the builder of works on his own land, the issue of
good faith or bad faith is entirely irrelevant.

Thus in strict point of law, Article 448 is not apposite to the case at bar. Nevertheless, we believe that
the provision therein on indemnity may be applied by analogy considering that the primary intent of
Article 448 is to avoid a state of forced co-ownership and that the parties, including the two courts
below, in the main agree that Articles 448 and 546 of the Civil Code are applicable and indemnity for
the improvements may be paid although they differ as to the basis of the indemnity.

Article 546 does not specifically state how the value of the useful improvements should be
determined. The respondent court and the private respondents espouse the belief that the cost of
construction of the apartment building in 1965, and not its current market value, is sufficient
reimbursement for necessary and useful improvements made by the petitioner. This position is,
however, not in consonance with previous rulings of this Court in similar cases. In Javier
vs. Concepcion, Jr., 14 this Court pegged the value of the useful improvements consisting of various
fruits, bamboos, a house and camarin made of strong material based on the market value of the said
improvements. In Sarmiento vs. Agana, 15 despite the finding that the useful improvement, a
residential house, was built in 1967 at a cost of between eight thousand pesos (P8,000.00) to ten
thousand pesos(P10,000.00), the landowner was ordered to reimburse the builder in the amount of
forty thousand pesos (P40,000.00), the value of the house at the time of the trial. In the same way,
the landowner was required to pay the "present value" of the house, a useful improvement, in the
case of De Guzman vs. De la Fuente, 16 cited by the petitioner.

The objective of Article 546 of the Civil Code is to administer justice between the parties involved. In
this regard, this Court had long ago stated in Rivera vs. Roman Catholic Archbishop of Manila 17 that
the said provision was formulated in trying to adjust the rights of the owner and possessor in good
faith of a piece of land, to administer complete justice to both of them in such a way as neither one
nor the other may enrich himself of that which does not belong to him. Guided by this precept, it is
therefore the current market value of the improvements which should be made the basis of
reimbursement. A contrary ruling would unjustly enrich the private respondents who would otherwise
be allowed to acquire a highly valued income-yielding four-unit apartment building for a measly
amount. Consequently, the parties should therefore be allowed to adduce evidence on the present
market value of the apartment building upon which the trial court should base its finding as to the
amount of reimbursement to be paid by the landowner.

The trial court also erred in ordering the petitioner to pay monthly rentals equal to the aggregate
rentals paid by the lessees of the apartment building. Since the private respondents have opted to
appropriate the apartment building, the petitioner is thus entitled to the possession and enjoyment of
the apartment building, until he is paid the proper indemnity, as well as of the portion of the lot where
the building has been constructed. This is so because the right to retain the improvements while the
corresponding indemnity is not paid implies the tenancy or possession in fact of the land on which it is
built, planted or sown. 18 The petitioner not having been so paid, he was entitled to retain ownership
of the building and, necessarily, the income therefrom.

It follows, too, that the Court of Appeals erred not only in upholding the trial court's determination of
the indemnity, but also in ordering the petitioner to account for the rentals of the apartment building
from 23 June 1993 to 23 September 1993.

WHEREFORE, the decision of the Court of Appeals in CA-G.R. SP No. 32679 and the Order of 15
November 1993 of the Regional Trial Court, Branch 101, Quezon City in Civil Case No. Q-41470 are
hereby SET ASIDE.

The case is hereby remanded to the trial court for it to determine the current market value of the
apartment building on the lot. For this purpose, the parties shall be allowed to adduce evidence on
the current market value of the apartment building. The value so determined shall be forthwith paid by
the private respondents to the petitioner otherwise the petitioner shall be restored to the possession
of the apartment building until payment of the required indemnity.

No costs.
Good Faith

G.R. No. 197743, March 12, 2018

HEIRS OF JOSE MARIANO AND HELEN S. MARIANO, REPRESENTED BY DANILO DAVID S.

MARIANO, MARY THERESE IRENE S. MARIANO, MA. CATALINA SOPHIA S. MARIANO, JOSE
MARIO S. MARIANO, MA. LENOR S. MARIANO, MACARIO S. MARIANO AND HEIRS OF
ERLINDA MARIANO-VILLANUEVA, REPRESENTED IN THIS ACT BY IRENE LOURDES M.
VILLANUEVA THROUGH HER ATTORNEY-IN-FACT EDITHA S. SANTUYO AND BENJAMIN B.
SANTUYO, Petitioners, v. CITY OF NAGA, Respondent.

DECISION

TIJAM, J.:

This is a Petition for Review on Certiorari, filed under Rule 45 of the Rules of Court, assailing the July
20, 2011 Amended Decision1 rendered by the Court of Appeals (CA) in CA-G.R. SP No. 90547 which
reconsidered its March 7, 2011 Decision,2 annulling the June 20, 2005 Decision3 of the Regional Trial
Court (RTC), Branch 26 of Naga City in Civil Case No. RTC 2005-0030, and reinstating the February
14, 2005 Decision4 of the Municipal Trial Court (MTC), Branch 1 of Naga City in Civil Case No. 12334
dismissing the ejectment case instituted by petitioners.

The Facts

As culled by the CA from the records, the facts of the case are as follows:

On July 3, 1954, Eusebio M. Lopez, Sr., Soledad L. Dolor, Jose A. Gimenez and Eusebio Lopez, Jr.
(Lopez Jr.), as the President, Secretary, Treasurer and General Manager of the City Heights
Subdivision (Subdivision), respectively, wrote to the mayor of the City of Naga (City), offering to
construct the Naga City Hall within the premises of the Subdivision. Their letter indicated that the City
Hall would be built on an area of not less than two hectares within the Subdivision, which would be
designated as the open space reserved for a public purpose. The letter, which also indicated the
terms of the construction contract, provided that the City would be free to accept another party's offer
to construct the City Hall if it found the same to be more favorable. 5

The City's Municipal Board subsequently passed Resolution No. 75, dated July 12, 1954, asking the
Subdivision for a bigger area on which the City Hall would stand. Consequently, on July 30, 1954, the
Subdivision amended its offer and agreed to donate five hectares to the City. The area is a portion of
the land registered in the names of Macario Mariano (Macario) and Jose A. Gimenez (Gimenez)
under Transfer Certificate of Title (TCT) No. 671 of the Registry of Deeds for Naga City, measuring a
total of 22.9301 hectares. Along with its amended offer to construct the City Hall, the Subdivision
specified the terms of its proposal to finance the construction. 6

The amended offer was signed by Macario and Gimenez to indicate their "(c)onforme," and by their
respective spouses, Irene P. Mariano (Irene) and Rose Fitzgerald De Gimenez (through one Josie A.
Gimenez), to indicate their marital consent. 7
On August 11, 1954, the Municipal Board adopted Resolution No. 89 accepting the Subdivision's
offer of donation and its proposed contract. The Resolution also authorized the City Mayor to execute
the deed of donation on the City's behalf.8

The parties submitted divergent accounts on what happened after Resolution No. 89 was passed.

According to the City, the City Mayor of Naga, Monico Imperial (Mayor Imperial), and the registered
landowners, Macario and Gimenez, executed a Deed of Donation 9 on August 16, 1954, whereby the
latter donated five hectares of land (subject property), two hectares of which to be. used as the City
Hall site, another two hectares for the public plaza, and the remaining hectare for the public market.
By virtue of said Deed, the City entered the property and began construction of the government
center. It also declared the five-hectare property in its name for tax purposes. 10 Thereafter, the Land
Transportation Office (LTO), the National Bureau of Investigation (NBI), the Department of Labor and
Employment (DOLE), the Philippine Postal Corporation (PPC), the Fire Department and other
government agencies and instrumentalities entered the same property and built their offices
thereon.11

In contrast, petitioners averred that the landowners' plan to donate five hectares to the City did not
materialize as the contract to build the City Hall was not awarded to the Subdivision. As early as
August 23, 1954, Lopez Jr., the Subdivision's General Manager, supposedly wrote to Macario telling
him to suspend the signing of the deed of donation as the Municipal Board could not agree on the
specific site where the City Hall would be built. Petitioners alleged that the construction contract was
eventually awarded by the Bureau of Public Works (BPW) to a local contractor, Francisco O. Sabaria
(Sabaria), who won in a public bidding. Mayor Imperial opposed the award, arguing that he and not
the BPW had the authority to initiate the public bidding for the project. The BPW, however, asserted
its authority to bid out and award the contract on the ground that national funds would be used for the
project. Mayor Imperial and Sabaria litigated the issue, with the former losing before the trial court
and subsequently withdrawing his appeal before the CA. Afterwards, the Municipal Board adopted
Resolution No. 11 dated January 20, 1959 authorizing the City Mayor to enter into a contract with
Sabaria for the construction of the City Hall.12

Petitioners claimed that on February 5, 1959, Macario and officers of the Subdivision met with Mayor
Imperial to demand the return of the five-hectare lot as the condition for the donation was not
complied with. Mayor Imperial purportedly assured them that the City would buy the property from
them. The purchase, however, did not materialize. Petitioners alleged that ten years later, or on May
14, 1968, Macario wrote to Lopez Jr., instructing him to make a follow-up on the City's payment for
the subject lot. On December 2, 1971, Macario died without receiving payment from the City. 13

In 1976, a certain Tirso Mariano filed an action for partition of Macario's estate. The action was
opposed by Macario's widow, Irene, and their adopted children, Jose (Jose) and Erlinda (Erlinda)
Mariano. As an offshoot of this action, a petition to annul Jose and Erlinda's adoption was instituted. 14

Irene died in 1988. Jose died the following year which was also when his and Erlinda's adoption was
declared valid and legal by the appellate court. In 1994, Irene's marriage to one Rolando Reluccio
(Reluccio) was declared bigamous and void ab initio. And after a protracted litigation, Jose, then
represented by his heirs, and Erlinda were declared as Irene's heirs to the exclusion of Reluccio who
was also declared to be without right to represent Irene in Macario's estate. 15

On March 11, 1997, the probate court issued letters of administration to one of the petitioners herein,
Danilo David S. Mariano (Danilo), for the administration of Irene's estate. In September 2003, Danilo
demanded upon then City Mayor of Naga, Jesse M. Robredo, to vacate and return the subject
property. When the City did not comply, petitioners, as heirs of Jose and Erlinda, filed a
Complaint16 for unlawful detainer against the City, docketed as Civil Case No. 12334. 17

The Unlawful Detainer Case

In their Complaint, filed on February 12, 2004, 18 petitioners asked the MTC to order the City and all
agencies, instrumentalities or offices claiming rights under it, including the LTO, NBI, DOLE, PPC and
the Fire. Department, to vacate the subject property, shown in the Sketch Plan as Blocks 25 and 26
(LRC) Psd-9674, and to return possession thereof to them. In addition to attorney's fees, they asked
the City to pay them a monthly rental of P2.5 million from the date it received the demand to vacate
until it surrendered possession, as reasonable compensation for the use of the property. 19

Arguing that the issue involved is one of ownership, the City moved to dismiss the complaint for lack
of jurisdiction.20 After the MTC denied the motion on March 22, 2004, 21 the City filed its Answer.22 The
parties subsequently submitted their respective Position Papers 23 and evidence.24

Petitioners averred that there was no donation of the subject property to the City as the obligation to
donate on the part of Macario and Gimenez, conditioned on the Subdivision undertaking the
construction of the City Hall therein, was abrogated when the City eventually awarded the
construction contract to Sabaria. Petitioners further alleged that Macario thereafter demanded the
return of the property but was assured by Mayor Imperial that the City would buy the same. The
purchase, however, never materialized despite Macario's supposed reminder to Mayor Imperial of his
assurance. Petitioners, thus, argued that the City's possession of the subject property was by mere
tolerance which ceased when they required its return. 25

The City countered that the donation actually took place, as evidenced by a Deed of Donation dated
August 16, 1954, making the City the owner and lawful possessor of the subject property. This was
supposedly why the subject property had long been declared in the City's name for tax purposes.
Granting there was no donation, the City stressed that ownership of the premises automatically
vested in it when they were designated as open spaces of the subdivision-project, donation thereof
being a mere formality. The City also argued that since the property was already occupied by several
government offices for about 50 years, recovery thereof was no longer feasible and the landowners
may simply demand just compensation from the City. The City further contended that the complaint
was dismissible on the grounds of laches and prescription. In any case, the City averred that it could
not be ejected from the premises as it possessed the rights of a builder in good faith. 26

Petitioners in turn denied that laches had set in because Macario supposedly made a demand for the
City to return the property, and subsequently, to abide by Mayor Imperial's commitment to purchase
the same. Furthermore, as heirs of Macario and Irene, they themselves sought to recover the subject
property after learning of their rights thereto through Danilo who collated Irene's properties following
his appointment as administrator of her estate. 27

Petitioners also argued that title to the property, which remained registered in the names of Macario
and Gimenez, was indefeasible and could not be lost by prescription or be defeated by tax
declarations. They further asserted that the requirement of open space in the subdivision for public
use was already satisfied with the landowners' donation of road lots, measuring 120,280 square
meters, to the City as annotated on TCT No. 671. They posited that Presidential Decree (PD) No.
95728, enacted in 1976, as amended by PD No. 1216 29, which defined "open space," should not be
applied because it was not yet in effect when the subdivision plan was approved in 1962. 30

Petitioners contended that the City was a builder in bad faith because it continued to construct the
City Hall and allowed other government agencies to build their offices on the subject property,
knowing that the donation had been aborted when the condition therefor was not fulfilled and that its
avowed purchase of the property was not forthcoming. 31

The MTC's Ruling

In its February 15, 2005 Decision, the MTC gave weight to the Deed of Donation. 32 Nonetheless, it
dismissed the complaint on the ground of lack of jurisdiction. It reasoned that the City's defense,
which involved a claim of ownership, removed the issue from the case of unlawful detainer. 33

The RTC's Ruling

On the City's appeal, the RTC set aside the MTC's dismissal. The dispositive portion of the RTC's
June 20, 2005 Decision reads as follows:
WHEREFORE, premises considered [petitioners] having proved and convinced this Court by
preponderance of evidence that the lower court committed a serious and reversible error in rendering
the herein assailed decision, accordingly, the DECISION dated February 14, 2005 of the Court a quo
is hereby REVERSED and SET ASIDE. Consequently, decision is hereby rendered in favor of
[petitioners] and against [respondent] ORDERING the latter of the following:

(1) For the [respondent] City Government of Naga, including all other government instrumentalities,
agencies and offices claiming right of possession through and under it which are but not limited to
Land Transportation Office, National Bureau of Investigation, Department of Labor and Employment,
Philippine Postal Corporation, Fire Department and all other offices and buildings which are all
claiming rights under [respondent] to immediately vacate the subject properties, Blocks 25 and 26
(LRC) Psd-9674 forming part of TCT No. 671 in the name of Macario A. Mariano and Jose A.
Gimenez, and to peacefully surrender and deliver its physical possession to the [petitioners],
including all the improvements and structures erected thereon which were built in bad faith as they
are now forfeited in favor of plaintiffs-appellants;

(2) For the [respondent] to pay [petitioners] the amount of P2,500,000.00 per month by way of
reasonable compensation for the use and occupancy of the property in question reckoned from
November 30, 2003 until such time that the [respondent] shall have actually vacated the subject
property;

(3) For the [respondent] to pay [petitioners] Attorney's fees in the amount of P587,159.60; and

(4) For the [respondent] to pay the cost of the suit.

SO ORDERED.34
The RTC held that the MTC could have resolved the issue of ownership if only to resolve the issue of
possession. It ruled against the existence of the Deed of Donation, purportedly acknowledged before
a notary public for Manila, finding that the award of the construction contract to Sabaria released
Macario and Gimenez from the obligation to execute said deed. Furthermore, the fact that the subject
property remained registered in Macario and Gimenez's names and no annotation of the purported
donation was ever inscribed on the title proved that the City recognized that its possession was by
mere tolerance of the landowners. This finding, said the RTC, was bolstered by the
Certification35 issued on August 27, 2003 by the Records Management Archive Office of the National
Archives that it had no record of such Deed, and a similar Certification 36 from the Office of the Clerk of
Court of the Manila RTC as repository of notarial reports of notaries public for Manila. The RTC also
noted that the purported Deed of Donation was unsigned by the donors and indicated merely the
letters "SGD" opposite their names.37
The RTC explained that since the subject land was titled under the Torrens system in the name of
Macario and Gimenez, the tax declaration in the City's name could not prevail, and the property could
not be subject of acquisitive prescription. It also held that petitioners were not guilty of laches, noting
the several cases they had to file to establish their right to inherit from, and to recover or preserve the
estate of, Macario and Irene, as well as Danilo's discovery of the subject property as part of the
latter's estate following the issuance to him of letters of administration over Irene's estate in 1997.
Finally, the RTC agreed with petitioners that the road lots donated to the City in 1963 satisfied the
requirement of open space in the subdivision at that time, and that the City was a builder in bad
faith.38

The City moved for the Presiding Judge's inhibition on the ground of bias. Subsequently, it also filed a
motion for reconsideration of the June 20, 2005 Decision with a motion for new trial based on newly
discovered evidence39 consisting of additional documents purportedly showing that the subject
property was already donated to the City.40 On July 15, 2005, the RTC issued an Order denying said
motions.41

The CA's March 7, 2011 Decision

Partly granting the City's appeal, the CA inter alia directed the City to pay only half of the monthly
rental, which it reduced to P500,000, because the subject property was co-owned by Macario and
Gimenez. The dispositive portion of the CA's Decision reads:
IN VIEW OF ALL THE FOREGOING, the instant petition for review is PARTIALLY GRANTED.

The assailed Decision dated June 20, 2005 rendered by the Regional Trial Court (RTC) of Naga City
(Branch 26), in Civil Case No. RTC 2005-0030 (For: Ejectment) is hereby MODIFIED in that:

(1) The City of Naga is hereby ORDERED to pay to the respondents as heirs of Don Macario Mariano
half of the adjudged monthly rental for the use and enjoyment of the questioned property, or in the
amount of Two Hundred Fifty Thousand Pesos (Php250,000.00), for the period November 3, 2003
until the City of Naga finally vacates that portion it has been occupying, or until such time when the
City expropriates the same private property;

(2) The portion of the assailed Decision where all the other government instrumentalities and
agencies, including but not limited to the Land Transportation Office, National Bureau of Investigation,
Department of Labor and Employment, Philippine Postal Corporation, Fire Department, Municipal
Trial Court, Regional Trial Court, which office buildings are standing on the lot in question, are
ordered to immediately vacate therefrom as well as to deliver the physical possession of the
improvements and structures they have introduced thereat to the Heirs of Don Macario Mariano,
is DELETED because these other government instrumentalities and agencies are not parties to the
case in the court below; and

(3) The award of attorney's fees in favor of the Heirs of Don Macario Mariano is reduced to Two
Hundred Thousand Pesos (Php200,000.00) on equitable grounds.

All other aspects of the assailed Decision dated June 20, 2005 and Order dated July 15, 2005 are
hereby affirmed.

SO ORDERED.42
In reaching this decision, the CA ratiocinated that:
[T]here could be no donation of the subject five (5) hectares of land by the landowners, DON
MACARIO and Jose Gimenez (or GIMENEZ) to the City of Naga because the donee failed to present
the original deed of donation before the trial court, and did not give a satisfactory explanation of the
loss of the same. As against the Letter dated May 14, 1968 written by DON MACARIO instructing
Eusebio Lopez, Sr., then City Heights Subdivision President, to do a follow-up of the City's proposal
to buy the five (5) hectare-lot, We held the latter document to be a conclusive proof that the donation
that DON MACARIO and the City of Naga intended was not consummated. 43
The CA's July 20, 2011 Amended Decision

Both parties moved for reconsideration of the CA's March 7, 2011 Decision. 44 After a re-examination
of the case records and the evidence adduced by the parties, the CA, on My 20, 2011, rendered an
Amended Decision, the dispositive portion of which reads:
WHEREFORE, premises considered, the Motion for Reconsideration filed by the City of Naga
is GRANTED.

Our Decision promulgated on March 7, 2011 is RECONSIDERED. Accordingly, the Decision dated
June 20, 2005 of the Regional Trial Court (RTC) of Naga City (Branch 26), in Civil Case No. RTC
2005-0030 {For: Ejectment), is ANNULLED and SET ASIDE, and the Decision dated February 14,
2005 rendered by the Municipal Trial Court (MTC) of Naga City (Branch 1), in Civil Case No. 12334,
is hereby REINSTATED without prejudice to the filing by either party of an action regarding the
ownership of the property involved.

On the other hand, the Motion for Reconsideration filed by the Heirs of Don Macario Mariano of Our
Decision dated March 7, 2011 is DENIED.

SO ORDERED.45
In so ruling, the CA held that pursuant to the best evidence rule under Section 3, Rule 130 of the
Rules of Court, the photocopy of the letter dated May 14, 1968 was inadmissible and without
probative value in the absence of a clear showing that the original writing was lost or destroyed. As
an exception to the best evidence rule, the CA excused the City's failure to present the original Deed
of Donation on the basis of the June 11, 2004 Certification issued by the Office of the Clerk of Court
of the RTC-Manila that the Deed could not be found in its records as the Notarial Reports of Atty.
Vicente M. Magpoc, before whom the instrument was acknowledged, for the period January 12, 1953
to December 31, 1954, could not be located and must have been destroyed by water spillage during
the fire that razed, their office on November 18, 1981. According to the CA, secondary evidence of
the Deed could be admitted because it had been satisfactorily shown, through the Certification, that
the Deed was lost due to force majeure, thus, without bad faith on the part of the offeror.

The CA further held that "the following secondary documents on record sufficiently confirmed the
existence, execution and contents of the subject deed of donation," to wit:
(a) Letter dated July 3, 1954 of the President, Secretary, Treasurer and General Manager of the City
Heights Subdivision (in the persons of Eusebio M. Lopez, Sr., Soledad L. Dolor, Jose A. Gimenez
and Eusebio Lopez, Jr.) to the mayor of Naga expressing their offer to construct the Naga City Hall
within the premises of not less than two (2) hectares of the Subdivision (Exhibit "1");

(b) Resolution No. 75 dated July 12, 1954 issued by the Municipal Board of Naga (then a
municipality) requesting for a bigger area of land where the City Hall would stand, from the
Subdivision (Exhibit "2");

(c) Letter dated July 30, 1954 of the Subdivision to the City amending its original offer and agreeing to
donate a portion of five (5) hectares. Also, in this Letter, the Subdivision elaborated on its offer to
finance the construction of the same building and specified the terms of such financing contract
(Exhibit "3");

(d) Resolution No. 89 dated August 11, 1954 where the then Municipal Board resolved to accept the
Subdivision's offer of donation and of the financing contract to construct the government center, and
at the same time, to authorize the Mayor to enter into a final deed of donation in behalf of the then
municipality (Exhibit "4");

(e) Letter dated November 26, 1955 of the then City Mayor of Naga, Hon. Monico Imperial, to the
Naga City Planning Board indicating the fact of donation of the same parcel of land by the Subdivision
to the City (Exhibit "30");

(f) Letter dated March 6, 1968 of DON MACARIO referring to the open spaces of the Subdivision
having been donated to the City of Naga (Exhibit "18");

(g) Letter dated September 6, 1970 of Hon. Virginia F. Perez, Vice-Mayor and Presiding Officer,
indicating the existence of a Deed of Donation and the fact of Donation (Exhibit "6"). 46
The CA thus concluded that the existence and due execution of the Deed of Donation had been duly
established, warranting the dismissal of the ejectment case. The CA also found that petitioners' claim
was barred by laches, noting that the City had been in open, public and adverse possession of the
subject property for 49 years at the time the ejectment case was filed.

The appellate court, however, emphasized that the case being one for unlawful detainer, its judgment
was conclusive only as to possession, and its disquisition on the claim of ownership was merely
provisional and without prejudice to a separate and independent action respecting title to the land.

Dissatisfied with the CA's Amended Decision, petitioners filed the instant petition for review.

Petitioners pray for the reinstatement of the RTC's Decision, asserting that in admitting secondary
evidence of the Deed of Donation, the CA misapplied Section 5, Rule 130 and Section 19, Rule 132
of the Rules, Article 749 of the Civil Code, and Sections 245, 246 and 247 of the Notarial Law.
Petitioners fault the CA for allegedly disregarding their evidence which received no objection from the
City. Finally, petitioners impugn the CA's finding that they were guilty of laches, insisting that the
City's possession was by mere tolerance. 47

The Court's Ruling

Petitions for review under Rule 45 should cover only questions of law 48 as this Court is not a trier of
facts.49 However, the incongruent factual conclusions of the MTC and the CA on the one hand, and
the RTC on the other, compel us to revisit the factual circumstances of the case for the proper
dispensation of justice.50

The sole issue for resolution in an unlawful detainer case is physical or material possession of the
property involved, independent of any claim of ownership by any of the parties - possession de
facto and not possession de jure.51 When the defendant, however, raises the defense of ownership in
his pleadings and the question of possession cannot be resolved without deciding the issue of
ownership, the issue of ownership shall be resolved only to determine the issue of possession, 52 or
more particularly, to determine who between the parties has the better right to possess the
property.53 Nonetheless, the adjudication is merely provisional and would not bar or prejudice an
action between the same parties involving title to the property. 54

In this case, the City, as the defendant in the unlawful detainer case, asserted ownership over the
subject property by virtue of an alleged donation made in 1954 by the landowners in its favor. In
support of this claim, the City proffered a copy of a Deed of Donation dated August 16, 1954.

Purported donation lacked the formalities required for validity

Generally, contracts are obligatory in whatever form they may have been entered into, provided all
the essential requisites for their validity are present. However, when the law requires that a contract
be in some form to be valid, such requirement is absolute and indispensable; its non-observance
renders the contract void and of no effect. 55 One such law is Article 749 of the Civil Code of the
Philippines which requires that:
Art. 749. In order that the donation of an immovable may be valid, it must be made in a public
document, specifying therein the property donated and the value of the charges which the donee
must satisfy.

The acceptance may be made in the same deed of donation or in a separate public document, but it
shall not take effect unless it is done during the lifetime of the donor.

If the acceptance is made in a separate instrument, the donor shall be notified thereof in an authentic
form, and this step shall be noted in both instruments. (Emphasis ours)
Thus, donation of real property, which is a solemn contract, is void without the formalities specified in
the foregoing provision.56

Article 749 of the Civil Code requires that donation of real property must be made in a public
instrument to be valid. In Department of Education, Culture and Sports (DECS) v. Del Rosario,57 We
stated:
A deed of donation acknowledged before a notary public is a public document. The notary
public shall certify that he knows the person acknowledging the instrument and that such
person is the same person who executed the instrument, acknowledging that the instrument
is his free act and deed. The acceptance may be made in the same deed of donation or in a
separate instrument. An acceptance made in a separate instrument must also be in a public
document. If the acceptance is in a separate public instrument, the donor shall be notified in writing of
such fact. Both instruments must state the fact of such notification. 58 (Emphasis ours)
The purported Deed of Donation submitted by the City cannot be considered a public document.
While it contains an Acknowledgment before a notary public, the same is manifestly defective as it
was made neither by the alleged donors (Macario and Gimenez) and their respective spouses, or by
the donee (the City, through Mayor Imperial), but only by Eusebio M.Lopez, Faustino Dolor, Soledad
Lirio Dolor and Lopez, Jr., as the Subdivision's President, Vice President, Secretary and General
Manager, respectively. The Acknowledgment thus reads:
REPUBLIC OF THE PHILIPPINES)
IN THE CITY OF MANILA          ) s.s.

x--------------------------------------------x

BEFORE ME, this 16th day of August, 1954, in the City of Manila, Philippines, personally
appeared EUSEBIO M. LOPEZ, with Res. Cert. No. A-0232064, issued at Manila, on Feb. 24,
1954; FAUSTINO DOLOR, with Res. Cert. No. A-0295133, issued at Manila on Feb. 7,
1954; SOLEDAD LIRIO DOLOR, with Res. Cert. No. A-4782271, issued at Pasay City on July 27,
1954; and EUSEBIO LOPEZ, JR., with Res. Cert. No. A-476353, issued at Naga City on July 8,
1954, all known to me and to me known to be the same persons who executed the foregoing
instrument and they acknowledged to me that the same is their free act and voluntary deed.

This instrument relating to a Deed of Donation consist two pages only, including this page on which
this acknowledgement is written and have been signed by the parties on each and every page
thereof.

WITNESS MY HAND AND SEAL, the day, year, and place first above written.
 Doc. No. 201; Page No. 70;   (SGD) VICENTE M. MAGPOC
Book No. VI; Series of 1954   Notary Public
    Until December 31, 195458
     
    (Emphasis ours)
Said Deed also shows that Mayor Imperial affixed his signature thereon on August 21, 1954, or four
days after it was notarized, thus he could not have acknowledged the same before the notary public
on August 16, 1954. Verily, the notary public could not have certified to knowing the parties to the
donation, or to their execution of the instrument, or to the voluntariness of their act. This glaring defect
is fatal to the validity of the alleged donation. It is settled that a defective notarization will strip the
document of its public character and reduce it to a private instrument. 59

Not being a public document, the purported Deed of Donation is void. 60 A void or inexistent contract
has no force and effect from the very beginning,61 as if it had never been entered into. 62 It is
equivalent to nothing and is absolutely wanting in civil effects. It cannot be validated either by
ratification or prescription.63

Void contracts may not be invoked as a valid action or defense in any court proceeding, including an
ejectment suit.64 Thus:
In Spouses Alcantara v. Nido, which involves an action for unlawful detainer, the petitioners therein
raised a defense that the subject land was already sold to them by the agent of the owner. The Court
rejected their defense and held that the contract of sale was void because the agent did not have the
written authority of the owner to sell the subject land.

Similarly, in Roberts v. Papio, a case of unlawful detainer, the Court declared that the defense of
ownership by the respondent therein was untenable. The contract of sale invoked by the latter was
void because the agent did not have the written authority of the owner. A void contract produces no
effect either against or in favor of anyone.

In Ballesteros v. Abion, which also involves an action for unlawful detainer, the Court disallowed the
defense of ownership of the respondent therein because the seller in their contract of sale was not
the owner of the subject property. For lacking an object, the said contract of sale was void ab initio.65
Since void contracts cannot be the source of rights, the City has no possessory right over the subject
property.66 In this light, to resolve whether to admit the copy of the purported Deed of Donation as
secondary evidence will be futile as the instrument in any case produces no legal effect.

Circumstances controverting the City's right of possession based on the alleged donation

Other cogent facts and circumstances of substance engender veritable doubts as to whether the City
has a better right of possession over the subject property than petitioners, as heirs of Mariano and
Irene, based on the purported Deed of Donation. 67

The City has, for more than 50 years since the donation supposedly took place on August 16, 1954,
failed to secure title over the subject property in its name. If the City had acquired ownership of the
premises, it is incredible that it would fail to register the donation and have the property titled in its
name. That it would remain passive for such length of time is confounding and does not serve to
bolster its proprietary or possessory claim to the property. 68

At the very least, the City should have caused the annotation of the alleged Deed on TCT No. 671
immediately after August 16, 1954 or shortly thereafter. Such inscription would have been binding on
petitioners, as Macario and Irene's successors-in-interest, as well as on third parties. 69

Petitioners, as heirs of a registered owner of the subject property, have the preferred or better
right of possession

Indeed, title to the subject property remains registered in the names of Macario and Gimenez. The
alleged Deed of Donation does not appear to have been registered and TCT No. 671 does not bear
any inscription of said Deed.

The Court has consistently upheld the registered owners' superior right to possess the property in
unlawful detainer cases.70 A fundamental principle in land registration is that the certificate of title
serves as evidence of an indefeasible and incontrovertible title to the property in favor of the. person
whose name appears therein. It is conclusive evidence as regards ownership of the land therein
described, and the titleholder is entitled to all the attributes of ownership of the property, including
possession.71 Thus, the Court has time and again reiterated the age-old rule that the person who has
a Torrens title over a parcel of land is entitled to possession thereof. 72

It has likewise been constantly emphasized that when the property is registered under the Torrens
system, the registered owner's title to the property is presumed legal and cannot be collaterally
attacked, especially in a mere action for unlawful detainer. 73 It has even been held that it does not
even matter if the party's title to the property is questionable. 74

Furthermore, it has been held that a certificate of title has a superior probative value as against that of
an unregistered deed of conveyance in ejectment cases. 75Spouses Pascual v. Spouses
Coronel,76 involving an unlawful detainer case, is on point; it instructs:
In any case, [W]e sustain the appellate court's finding that the respondents have the better right to
possess the subject property. As opposed to the unregistered deeds of sale, the certificate of title
certainly deserves more probative value. Indeed, a Torrens Certificate is evidence of indefeasible title
of property in favor of the person in whose name appears therein—such holder is entitled to the
possession of the property until his title is nullified.

xxxx

Even if [W]e sustain the petitioners' arguments and rule that the deeds of sale are valid contracts, it
would still not bolster the petitioners' case. In a number of cases, the Court had upheld the registered
owners' superior right to possess the property. In Co v. Militar, the Court was confronted with a similar
issue of which between the certificate of title and an unregistered deed of sale should be given more
probative weight in resolving the issue of who has the better right to possess. There, the Court held
that the court a quo correctly relied on the transfer certificate of title in the name of petitioner, as
opposed to the unregistered deeds of sale of the respondents. The Court stressed therein that the
Torrens System was adopted in this country because it was believed to be the most effective
measure to guarantee the integrity of land titles and to protect their indefeasibility once the claim of
ownership is established and recognized.

Likewise, in the recent case of Umpoc v. Mercado, the Court declared that the trial court did not err
in giving more probative weight to the TCT in the name of the decedent vis-a-vis the contested
unregistered Deed of Sale. Later in Arambulo v. Gungab, the Court held that the registered owner
is preferred to possess the property subject of the unlawful detainer case. The age-old rule is
that the person who has a Torrens Title over a land is entitled to possession thereof. 78 (Emphasis
ours and citations omitted.)
Accordingly, as against the City's unregistered claim, the Torrens title in the name of Macario and
Gimenez must prevail, conferring upon the registered owners the better right of possession. This
superior or preferred right of possession applies to petitioners as Macario's hereditary
successors79 who have stepped into said decedent's shoes by operation of law. 80

No automatic acquisition of ownership of open space in the subdivision

On the strength of the Court's ruling in White Plains Association, Inc. v. Judge Legaspi,81 the City
asserted that because the subject property had been designated as the open space of the City
Heights Subdivision, intended for public use, ownership thereof automatically vested in the City, its
donation being a mere formality. It disputed petitioners' claim that the road lots already donated to the
City satisfied the open space requirement for subdivisions prior to the enactment of PD 957 dated
July 12, 1976, as amended by PD 1216 dated October 14, 1977. It argued that the Subdivision
Regulations then in effect expressly required a public open space of at least five percent (5%) of the
gross area of the subdivision.

Several reasons impel us to reject the City's stance.

We start with the 1948 Subdivision Regulations 81 invoked by the City. As amended,82 it required:
Sec. 14. Areas for Community Use.

a. Public open space

Subdivisions of one hectare or more shall be provided with suitable areas for parks, playgrounds,
playlots and/or other recreational purposes to be dedicated for public use which area or areas
shall comprise at least 5 per cent of the gross area of the subdivision. Open spaces so dedicated for
public use shall be consolidated as much as possible for maximum utility and not broken into small or
odd-shaped parcels of land.83 (Emphasis ours)
The Subdivision Regulations required a public open space in the subdivision, suitable for parks,
playgrounds, playlots and/or other recreational purposes. The term "open space" necessarily signifies
the absence of buildings or edifices. The enumeration of parks, playgrounds and playlots as the
specified usage for such space buttresses the view that the area should be non-buildable. The phrase
"other recreational purposes" should be read in conjunction with this enumeration and should thus be
construed as usage akin to parks, playgrounds and playlots which have clear and open space as their
common feature. This is consistent with the principle of ejusdem generis which provides that "where a
general word or phrase follows an enumeration of particular or specific words of the same class or
where the latter follow the former, the general word or phrase is to be construed to include, or to be
restricted to persons, things or cases akin to, resembling, or of the same kind or class as those
specifically mentioned."84 The requirement under Section 14 (a) of the Subdivision Regulations,
therefore, is an open, non-buildable space. Notably, this construction is consistent with the restriction
under Section 2 of PD 1216 which requires that areas in a subdivision reserved for "parks,
playgrounds and recreational use" shall be "non-buildable." The only exception, as provided in
Section 14 (b) of the same Regulations, is the use of the open space as a school site in the absence
of barrio, central or elementary schools in the vicinity of a proposed residential subdivision.

It appears from the records, however, that the subject property - Blocks 25 and 26 in the Subdivision
Plan - had been designated not as an open space, but as the sites for the City Hall and market,
respectively. Thus, TCT No. 671 contains the following inscription:
Entry 3296 - ORDER

Existence of approved subdivision Plan LRC Psd-9671 with technical descriptions for Block 4 with 19
lots, Block 10 with 28 lots; Block 11 with 40 lots; Block 12 with 19 lots; Block 13 with 3 lots; Block 14
with 3 lots; Block 15 with 5 lots; Block 16 with 25 lots; Block 17 with 18 lots; Block 18 with 38 lots
Block 19 with 44 lots; Block 20 with 45 lots; Block 21 with 11 lots, Block 22 with 9 lots; Block 23 with
18 lots; Block 24 with 17 lots; Block 25 City Hall Site and Block 26 Market Site; Road lots No. 10 to
30 cannot be disposed without prior approval of the court. Date of order Aug. 23, 1962. Inscribed
September 13, 1962 10:35 a.m.

  (Sgd) ROLANDO G. ALBERTO

    Reg. of Deeds, Naga City85
    (Emphasis ours)
The City had represented to the CA that the Subdivision Plan had been approved by the National
Planning Commission and the then Court of First Instance. 86 No evidence has been adduced to show
that as so approved, the Subdivision Plan indicated areas within Blocks 25 and 26 for use as parks,
playgrounds or other recreational purposes.

There is likewise no debate that the subject property is in fact used as the site of the City Hall and
other government offices. During the pre-trial conference, the parties stipulated that four hectares of
the subject property are occupied by the City Hall and other government agencies. 87 While one
hectare of the subject property is admittedly occupied by the Naga Civic Center, 88 it has not been
established that it comprises public open space as contemplated in the Subdivision Regulations.

In any event, the City cannot successfully invoke the Subdivision Regulations as basis to demand
vested proprietary rights over the subject property. Contrary to its position that roads as well as open
space in subdivisions instantly belong to the government without need of compensation or any overt
act of donation, the Subdivision Regulations indicate that local governments did not automatically
become the owner of roads and open space in subdivisions within their jurisdiction and a positive act
of conveyance or dedication was necessary to vest ownership in the city or municipality, thus:
Sec. 17. Improvements.

xxxx

h. Utilities in general. - Unless street areas are conveyed to the city or municipality, the approval
of a subdivision plan binds the subdivider and his successors to permit all public utilities to use the
streets for furnishing services to the subdivision, in accordance with existing municipal or city
regulations.90

Sec. 19. Approval.

xxxx

h. Dedication of streets, highways and ways — The approval of the Final Plan by the
Commission shall not be deemed to constitute or effect an acceptance by the government of
the dedication of any street, or other proposed public way or space shown on the Plat. The
subdivider may, if he so desires, offer to dedicate all streets, highways, and other ways shown in
the approved Final Plat for public use, but the government may, at its discretion, or upon the
recommendation of the National Urban Planning Commission, accept only such streets, highways
and other ways as it deems necessary for public purposes. It shall be the duty of the subdivider
to improve, repair and maintain all streets, highways and other ways in the subdivision until their
dedication to public use is accepted by the government.91 (Emphasis ours)
Parenthetically, even under PD 957, specifically Section 31, 92 it was optional on the part of the owner
or developer of the subdivision to donate the roads and open space found therein. Furthermore,
under PD 1216, "(t)he-transfer of ownership from the subdivision owner-developer to the local
government is not automatic but requires a positive act from the owner-developer before the city or
municipality can acquire dominion over the subdivision roads," such that "until and unless the roads
are donated, ownership remains with the owner-developer." 93

The City's reliance on the 1991 White Plains case is misplaced. The case involved Road Lot 1 in the
White Plains Subdivision, which had been set aside for the proposed Highway 38 of Quezon City.
The Court held therein that said road was thus withdrawn from the commerce of man as the open
space required by law to be devoted for public use, and its ownership was automatically vested in the
Quezon City Government and/or the Republic of the Philippines without need of compensating the
developer, the donation thereof being a mere formality. However, as explained by this Court Albon v.
Mayor Fernando:94
The ruling in the 1991 White Plains Association decision relied on by both the trial and appellate
courts was modified by this Court in 1998 in White Plains Association v. Court of Appeals.
Citing Young v. City of Manila, this Court held in its 1998 decision that subdivision streets belonged to
the owner until donated to the government or until expropriated upon payment of just compensation. 95
Furthermore, in Woodridge School, Inc. v. ARB Construction Co., Inc.,96 where the 1991 White
Plains case was similarly applied by the trial court in holding that a subdivision road automatically
belonged to the government, the Court ruled:
In the case of Abellana, Sr. v. Court of Appeals, the Court held that the road lots in a private
subdivision are private property, hence, the local government should first acquire them by donation,
purchase, or expropriation, if they are to be utilized as a public road. Otherwise, they remain to be
private properties of the owner-developer.

Contrary to the position of petitioners, the use of the subdivision roads by the general public does not
strip it of its private character. The road is not converted into public property by mere tolerance of the
subdivision owner of the public's passage through it. To repeat, the local government should first
acquire them by donation, purchase, or expropriation, if they are to be utilized as a public road. 97
Petitioners cannot simply demand just compensation in lieu of recovering possession as
there was no expropriation

Invoking the case of Alfonso v. Pasay City,97 as cited in Republic v. Court of Appeals,98 the City
argued that recovering possession of the subject property is no longer feasible because it is now
occupied and used by the City Hall and other government offices, so that petitioners' remedy is
merely to demand payment of just compensation.

The Court's exact pronouncement in Alfonso states:

As registered owner, (Alfonso) could bring an action to recover possession at any time because
possession is one of the attributes of ownership of land. However, said restoration of possession by
the City of Pasay is neither convenient nor feasible because it is now and has been used for road
purposes. So, the only relief available is for the City of Pasay to make due compensation, which it
could and should have done years ago since 1925. 99
It will be noted, however, that in the cases thus invoked, and in other' cases where the Court made a
similar ruling,100 the government took the property in the exercise of its power of eminent domain. This
case clearly involves a different factual milieu as the subject property was not expropriated by the
government. It had been offered by its owners-developers, under certain terms, for donation to the
City as the City Hall and market sites within the subdivision, which offer the City clearly had the option
to refuse. In fact, the Subdivision's General Manager, Lopez Jr., appeared to have written to Macario
essentially asking him to defer the donation because while the Municipal Board accepted their offer,
they had considered "other and better alternative sites near the National Highway." 101

The "power of eminent domain" has been defined thus:

The right of eminent domain is "the ultimate right of the sovereign power to appropriate, not only the
public but the private property of all citizens within the territorial sovereignty, to public
purpose."102 (Emphasis ours)

[E]minent domain, also often referred to as expropriation and, with less frequency, as condemnation,
is, like police power and taxation, an inherent power of sovereignty. It need not be clothed with any
constitutional gear to exist; instead, provisions in our Constitution on the subject are meant more to
regulate, rather than to grant, the exercise of the power. Eminent domain is generally so described as
"the highest and most exact idea of property remaining in the government" that may be acquired for
some public purpose through a method in the nature of a forced purchase by the
State.103 (Emphasis ours)
In the instant case, there was no such appropriation or condemnation or forced purchase to speak of.
The City was not propelled by an imperative need to take the subject property for a public purpose.
The City, in taking possession of the subject property, was not exercising a sovereign function-as
expropriator. In this light, the Alfonso ruling cannot be applied to petitioners.

The City is not entitled to the rights of a builder in good faith

By law, one is considered in good faith if he is not aware that there exists in his title or mode of
acquisition any flaw which invalidates it.104 The essence of good faith lies in an honest belief in the
validity of one's right, ignorance of a superior claim, and absence of intention to overreach another. 105

By these standards, the City cannot be deemed a builder in good faith.

The evidence shows that the contract for the construction of the City Hall by the Subdivision was an
integral component of the latter's offer of donation, constituting an essential condition for the intended
conveyance. Thus, by their July 30, 1954 letter 106 to the Naga City Mayor, the Subdivision and the
registered owners of the subject property submitted their "amended offer to construct the City Hall for
Naga City within the premises of the subdivision." The letter stated that the City Hall would be erected
on not less than two hectares of the five-hectare land to be donated by Macario and Gimenez to the
City. It also proposed a financing scheme for the construction of the City Hall, the construction cost
not to exceed P150,000. It is, thus, readily apparent that the construction contract was the impetus for
the offer of donation, and that such offer was made to persuade the City to award the contract to the
Subdivision.

On August 11, 1954, the Municipal Board adopted Resolution No. 89 107 accepting the Subdivision's
July 30, 1954 offer as amended by Lopez Jr.'s oral representations in the Board's open session as
regards the financing aspect of the transaction. Consequently, Macario and Gimenez delivered
possession of the subject property to the City government of Naga. 108

However, on January 20, 1959, the Municipal Board issued Resolution No. 11 109 authorizing the City
Mayor to enter into a contract with Sabaria for the construction of the City Hall.

That the Subdivision would, by its July 30, 1954 proposal, undertake the construction is evident from
Lopez Jr.'s letter110 of August 23, 1954 informing Macario that he would defer the "making of the plans
of the building" until the location of the City Hall was settled. That the construction contract was the
condition for the proposed donation finds support in Macario's September 17, 1959 letter 111 to Mayor
Imperial and May 14, 1968112 letter to Lopez Jr. which indicated that in February 1959, or the month
after the construction contract was awarded to Sabaria, Mayor Imperial proposed for the Naga City
government to "buy instead" the subject property.

Macario's September 17, 1959 letter to Mayor Imperial reads:

Joe and I would like to know from you the status of your proposal you have intimated to us during our
meeting last February at my residence regarding your offer for the city government of Naga to buy
instead the parcels of land which we contemplated to donate to the city as city hall and market site.

It has been long since then our last conversation regarding your proposal and have not heard any
positive development from you.

Please advice [sic] us soonest and hope this be given preferential action by your Office. 113
His May 14, 1968 letter to Lopez Jr. in turn reads:
Please be advised to disregard all my previous letters and instructions to you regarding the donation
of the city hall and market sites to the City of Naga. Kindly make immediate representation to the City
Mayor and insist on the previous proposal made by Mayor Monico Imperial for the city to buy the land
we offered to them.

Considering the lapse of time and until now, no clear actions have been made by the city, I suggest
you take whatever appropriate actions on this matter the soonest possible time. 114
The foregoing circumstances ineluctably show that the City knew of a substantial flaw in its claim over
the subject property. The proposed donation was conditioned on the award of the construction
contract to the Subdivision. By its Resolution No. 89, the City accepted the proposal with all its
conditions. Thus, the City could not have been unaware that by awarding the same construction
contract to Sabaria, it no longer had any cause to continue occupying the subject property as the
condition for the proposed donation had not been satisfied. Accordingly, it should have vacated the
subject property. However, it stayed on and allowed Sabaria to undertake the construction.

Furthermore, Macario's September 17, 1959 and May 14, 1968 letters showed that Mayor Imperial
had proposed that the Naga City government would just buy the subject property from him and
Gimenez. Said letters also indicated that Macario had long been waiting for the City to act on this
proposal but the latter had not taken any action. The City, in the meantime, continued to enjoy
possession of the subject property and subsequently allowed other government agencies to build
their offices in the premises. The proposal, however, was never brought to fruition by the City.

It cannot, thus, be said that the City was of an honest belief that it had a valid right to the subject
property or that its actions had not overreached the landowners. Accordingly, it cannot be considered
to have acted in good faith.

Articles 449 and 450 of the Civil Code provide:

Art. 449. He who builds, plants or sows in bad faith on the land of another, loses what is built, planted
or sown without right of indemnity.

Art. 450. The owner of the land on which anything has been built, planted or sown in bad faith may
demand the demolition of the work, or that the planting or sowing be removed, in order to replace
things in their former condition at the expense of the person who built, planted or sowed; or he may
compel the builder or planter to pay the price of the land, and the sower the proper rent.
Thus, petitioners, as hereditary successors of the registered owners of the subject property, have the
right to appropriate what has been built on the property, without any obligation to pay indemnity
therefor, and the City has no right to a refund of any improvement built therein. 116

The CA ruled that Macario's May 14, 1968 letter was a mere photocopy and could not thus be
received as secondary evidence absent a clear showing that its original had been lost or destroyed.
The Court notes, however, that this letter, along with Macario's September 17, 1959 missive, were
offered by petitioners and admitted by the MTC 117 without any objection from the City either as to their
admissibility or the purposes for which they were submitted.
It is well-settled that evidence not objected to is deemed admitted and may be validly considered by
the court in arriving at its judgment.118 This is true even if by its nature the evidence is inadmissible
and would have surely been rejected if it had been challenged at the proper time. 119 Once admitted
without objection, even though not admissible under an objection, We are not inclined now to reject
it.120 Consequently, the evidence that was not objected to became property of the case, and all parties
to the case are considered amenable to any favorable or unfavorable effects resulting from the said
evidence.121

Neither laches nor prescription had set in

It is settled that:
Laches is the failure or neglect, for an unreasonable and unexplained length of time, to do that which,
by exercising due diligence, could or should have been done earlier; it is negligence or omission to
assert a right within a reasonable time, warranting the presumption that the party entitled to assert it
either has abandoned or declined to assert it. There is no absolute rule as to what constitutes laches
or staleness of demand; each case is to be determined according to its particular circumstances, with
the question of laches addressed to the sound discretion of the court. Because laches is an equitable
doctrine, its application is controlled by equitable considerations and should not be used to defeat
justice or to perpetuate fraud or injustice.122
By his September 17, 1959 and May 14, 1968 letters, Macario has been shown to have taken steps
to have the City act on Mayor Imperial's proposal to "buy instead" the subject property. His efforts
were overtaken, by his death three years later in 1971. Furthermore, as the RTC found, petitioners
had been engaged in litigation to establish their right to inherit from Macario and Irene, and it was
Danilo's discovery of the subject property, following the issuance to him of letters of administration
over Irene's estate in 1997, that prompted them to issue a demand for the City to vacate the
premises.

Given these circumstances, the Court is not disposed to conclude that there was an unreasonable or
unexplained delay that will render petitioners' claim stale.

In contrast, the City, despite its claim of having acquired the subject property by donation in 1954, has
itself failed to have the same transferred in its name for a long period of time. Indeed, the subject
property remains registered in the name of petitioners' predecessor-in-interest as co-owner.

The rule is that an action to recover possession of a registered land never prescribes in view of the
provision of Section 44 of Act No. 496 to the effect that no title to registered land in derogation of that
of a registered owner shall be acquired by prescription or adverse possession. It follows that a
registered owner's action to recover a real property registered under the Torrens System does not
prescribe.122

Thus, it has been consistently held that registered owners have the right to evict any person
unlawfully occupying their property, and this right is imprescriptible and can never be barred by
laches.123 Even if it be supposed that they were aware of the occupant's possession of the property,
and regardless of the length of that possession, the lawful owners have a right to demand the return
of their property at any time as long as the possession was unauthorized or merely tolerated, if at
all.124

Moreover, it is well settled that the rule on imprescriptibility of registered lands not only applies to the
registered owner but extends to the heirs of the registered owner as well. As explained in Mateo v.
Diaz,125 prescription is unavailing not only against the registered owner, but also against his hereditary
successors because the latter step into the shoes of the decedent by operation of law and are the
continuation of the personality of their predecessor-in-interest. 126 Consequently, petitioners, as heirs
of registered landowner Macario, cannot be barred by prescription from claiming possession of the
property.

Restitution of premises, reasonable rent and attorney's fees

Section 17, Rule 70 of the Rules of Court provides:

Sec. 17. Judgment. - If after trial the court finds that the allegations of the complaint are true, it shall
render judgment in favor of the plaintiff for the restitution of the premises, the sum justly due as
arrears of rent or as reasonable compensation for the use and occupation of the premises, attorney's
fees and costs. x x x
Thus, the rightful possessor in an unlawful detainer case is entitled to the return of the property and to
recover damages, which refer to "rents" or "the reasonable compensation for the use and occupation
of the premises," or the "fair rental value of the property" and attorney's fees and costs. More
specifically, recoverable damages are "those which the plaintiff could have sustained as a mere
possessor, or those caused by the loss of the use and occupation of the property." 127

The RTC granted petitioners' prayer for a monthly rental of P2.5 million (or P50.00 per square meter)
as reasonable compensation for the City's use and occupation of the subject property from November
30, 2003 until the premises are actually vacated. However, in its March 7, 2011 Decision, the CA
reduced the monthly rental to P500,000.00 (or P10.00 per square meter), holding that:
The very reason why the monthly rental of the premises surrounding the City Hall is as high as that
pegged by the lower appellate court (at Php 50.00 per square meter or Php 2,500,000.00 for the
50,000 square meters), is the presence of the local government at the site. It should not, therefore, be
burdened too much in the computation of the monthly rental when it has contributed in a major way in
making the area an upscale one. Thus, the Court submits that the monthly rental of Php 500,000.00
is just equitable under the circumstances. 128
There is logic in the CA's ratiocination that the presence of the local government in the subject
property enhanced the value of real estate in its vicinity. The Court, however, cannot lose sight of the
fact that the City's occupation of the subject property has been blighted by bad faith. The benefit to
the real estate values had been at the expense of the rights of Macario and Gimenez and their
successors-in-interest.

Furthermore, it has been held that the reasonable compensation contemplated in Section 17, Rule 70
"partakes of the nature of actual damages." While the court may fix the reasonable amount of rent, it
must base its action on the evidence adduced by the parties. The Court has defined "fair rental value"
as the amount at which a willing lessee would pay and a willing lessor would receive for the use of a
certain property, neither being under compulsion and both parties having a reasonable knowledge of
all facts, such as the extent, character and utility of the property, sales and holding prices of similar
land and the highest and best use of the property. 129

Petitioners based their prayer for a P50.00 rental rate on the P110.00 monthly rent per square meter
under a 2004 lease contract over another property situated near the subject premises. 130 The burden
of proof to show that the rental demanded is unconscionable or exorbitant rests upon the City. 131 The
City, however, has not adduced controverting evidence as to the. fair rental value of the
premises.132 All things considered, the Court finds petitioners' prayer for compensation at less than
half the rate indicated in said lease contract to be reasonable. 133

The fair rental value is to be reckoned from the time of the demand to vacate. 134 The City received two
demand letters from petitioners; the second "extend(ed)" its stay in the subject property for another
two months from the 30th day of the month when it received the initial demand letter on September
10, 2003.135 Thus, the reasonable rent was due not from November 3, 2003 as the CA declared in its
March 7, 2011 Decision, but from November 30, 2003, and should be paid until the subject property is
vacated.

The Court agrees with the CA's holding in its March 7, 2011 Decision that the amount due to
petitioners shall only be half of the reasonable rent as the subject property was co-owned by Macario
with Gimenez. Absent proof to the contrary, the portions belonging to the co-owners in the co-
ownership shall be presumed equal. 136

As regards attorney's fees, the RTC awarded the same in the amount of P587,159.60 or 10% of the
property's market value based on the tax declarations. In its March 7, 2011 Decision, the CA reduced
the award to P200,000.00 on equitable grounds, considering the extent of legal services rendered by
petitioners' counsel.137

The Court finds either award to be excessive. Indubitably, petitioners were constrained to litigate to
protect their interest.138 However, considering the circumstances of the case, including the
summary139 nature of an unlawful detainer proceeding, the Court holds that an award of P75,000.00
as attorney's fees is fair and reasonable.

Decision is binding on privies or parties deriving possession from the City

In its March 7, 2011 Decision, the CA held that the government offices occupying the subject
property, other than the City government of Naga, could not be ordered to vacate the same because
they were not parties to the case.

Jurisprudence, however, instructs that:

A judgment directing a party to deliver possession of a property to another is in personam. x x x Any
judgment therein is binding only upon the parties properly impleaded and duly heard or given an
opportunity to be heard. However, this rule admits of the exception, such that even a non-party
may be bound by the judgment in an ejectment suit where he is any of the following: (a)
trespasser, squatter or agent of the defendant fraudulently occupying the property to frustrate the
judgment; (b) guest or occupant of the premises with the permission of the defendant; (c)
transferee pendente lite; (d) sublessee; (e) co-lessee; or (f) member of the family, relative or privy of
the defendant.140 (Emphasis ours)
Exceptions (b) and (f) are clearly applicable. There is no dispute that the government offices were
allowed by the City to occupy the subject property. Deriving their possession from the City, they are
unmistakably the City's privies in the occupation of the premises. 141 Thus, they too are bound by the
judgment in this case.

Determination of ownership is not conclusive

It must be stressed that the ruling in this case is limited only to the determination of who between the
parties has a better right to possession. This adjudication is not a final determination on the issue of
ownership and, thus, will not bar or prejudice an action between the same parties involving title to the
property, if and when such action is brought seasonably before the proper forum. 143

WHEREFORE, the petition is GRANTED. The Court of Appeals' Amended Decision dated July 20,
2011 is SET ASIDE. The Decision dated June 20, 2005 of the Regional Trial Court, Branch 26 of
Naga City in Civil Case No. RTC 2005-0030 is REINSTATED with MODIFICATION in that: (a)
petitioners shall be paid only half of the adjudged monthly rental of P2,500,000; and (b) the award of
attorney's fees is reduced to P75,000.

SO ORDERED.
G.R. No. 199353, April 04, 2018

LEVISTE MANAGEMENT SYSTEM, INC., Petitioner, v. LEGASPI TOWERS 200, INC., AND VIVIAN

Y. LOCSIN AND PITONG MARCORDE, RESPONDENTS.
ENGR. NELSON Q. IRASGA, IN HIS CAPACITY AS MUNICIPAL BUILDING OFFICIAL OF
MAKATI, METRO MANILA AND HON. JOSE P. DE JESUS, IN HIS CAPACITY AS SECRETARY
OF THE DEPT. OF PUBLIC WORKS AND HIGHWAYS, THIRD PARTY, Respondents.

G.R. NO. 199389, April 04, 2018

LEGASPI TOWERS 200, INC., Petitioner, v. LEVISTE MANAGEMENT SYSTEM, INC., ENGR.

NELSON Q. IRASGA, IN HIS CAPACITY AS MUNICIPAL BLDG. OFFICIAL OF MAKATI, METRO
MANILA, AND HON. JOSE P. DE JESUS, IN HIS CAPACITY AS SECRETARY OF THE
DEPARTMENT OF PUBLIC WORKS AND HIGHWAYS, Respondents.

DECISION

LEONARDO-DE CASTRO, J.:**

The Civil Code provisions on builders in good faith presuppose that the owner of the land and
the builder are two distinct persons who are not bound either by specific legislation on the subject
property or by contract. Properties recorded in accordance with Section 4 1 of Republic Act No.
47262 (otherwise known as the Condominium Act) are governed by said Act; while the Master Deed
and the By Laws of the condominium corporation establish the contractual relations between said
condominium corporation and the unit owners.

These are consolidated petitions under Rule 45 filed by Leviste Management System, Inc. (LEMANS)
and Legaspi Towers 200, Inc. (Legaspi Towers), both assailing the Decision 3 dated May 26, 2011 of
the Court of Appeals in CA-G.R. CV No. 88082. The assailed Decision 4 affirmed the October 25,
2005 Decision of the Regional Trial Court (RTC), Branch 135 of Makati City in Civil Case No. 91-634.

The facts, as culled by the Court of Appeals from the records, follow:

Legaspi Towers is a condominium building located at Paseo de Roxas, Makati City. It consists of
seven (7) floors, with a unit on the roof deck and two levels above said unit called Concession 2
and Concession 3. The use and occupancy of the condominium building is governed by the Master
Deed with Declaration of Restrictions of Legaspi Towers (hereafter "Master Deed") annotated on the
transfer certificate of title of the developer, Legaspi Towers Development Corporation.

Concession 3 was originally owned by Leon Antonio Mercado. On 9 March 1989, Lemans, through
Mr. Conrad Leviste, bought Concession 3 from Mercado.

Sometime in 1989, Lemans decided to build another unit (hereafter "Concession 4") on the roof deck
of Concession 3. Lemans was able to secure the building permit for the construction of Concession 4
and commenced the construction thereof on October 1990.
Despite Legaspi Corporation's notice that the construction of Concession 4 was illegal, Lemans
refused to stop its construction. Due to this, Legaspi Corporation forbade the entry of Lemans'
construction materials to be used in Concession 4 in the condominium. Legaspi Corporation similarly
wrote letters to the Building Official Nelson Irasga ("hereafter Irasga"), asking that the [building] permit
of Lemans for Concession 4 be cancelled. Irasga, however, denied the requested cancellation,
stating that the applicant complied with the requirements for a building permit and that the application
was signed by the then president of Legaspi Corporation.

Lemans filed the Complaint dated February 20, 1991 with the RTC, praying among others that a writ
of mandatory injunction be issued to allow the completion of the construction of Concession 4. On 3
April 1991, the RTC issued the writ prayed for by Lemans.

Later, Legaspi Corporation filed the Third Party Complaint dated October 7, 1991. This was against
Irasga, as the Municipal Building Official of Makati, and Jose de Jesus (herafter "De Jesus"), as the
Secretary of Public Works and Highways (collectively referred to as the "third-party defendants-
appellees") so as to nullify the building permit issued in favor of Lemans for the construction of
Concession 4.

After the parties had presented and formally offered their respective pieces of evidence, but before
the rendition of a judgment on the main case, the RTC, in its Order dated May 24, 2002, found the
application of Article 448 of the Civil Code and the ruling in the Depra vs. Dumlao [case]
(hereafter "Depra Case") to be proper.

Lemans moved for the reconsideration o[f] the aforementioned order. The RTC denied this and
further ruled:

The main issue in this case is whether or not [LEMANS] owns the air space above its condominium
unit. As owner of the said air space, [LEMANS] contends that its construction of another floor was in
the exercise of its rights.

It is the [finding] of the Court that [LEMANS] is not the owner of the air space above its unit.
[LEMANS'] claim of ownership is without basis in fact and in law. The air space which [LEMANS]
claims is not on top of its unit but also on top of the condominium itself, owned and operated by
defendant Legaspi Towers.

Since it appears that both plaintiff and defendant Legaspi Towers were in good faith, the Court finds
the applicability of the ruling in Depra vs. Dumlao, 136 SCRA 475.

From the foregoing, Lemans filed the Petition for Certiorari dated November 13, 2002 with the [Court
of Appeals], docketed as CA G.R. SP. No. 73621, which was denied in the Decision promulgated on
March 4, 2004. The Court did not find grave abuse of discretion, amounting to lack or excess of
jurisdiction, on the RTC's part in issuing the above orders. Lemans sought reconsideration of this
decision but failed.

Meanwhile, Lemans adduced evidence before the RTC to establish that the actual cost for the
construction of Concession 4 was Eight Hundred Thousand Eight Hundred Ninety-seven and 96/100
Pesos (PhP800,897.96) and that the fair market value of Concession 4 was Six Million Pesos
(PhP6,000,000.00). Afterwards, the RTC rendered the Assailed Decision. 5
Reiterating its previous ruling regarding the applicability of Article 448 of the Civil Code to the case,
the RTC in its October 25, 2005 Decision disposed of the dispute in this wise:

WHEREFORE, judgment is hereby rendered ordering defendant Legaspi Towers 200, Inc. to
exercise its option to appropriate the additional structure constructed on top of the penthouse owned
by plaintiff Leviste Management Systems, Inc. within sixty [60] days from the time the Decision
becomes final and executory. Should defendant Legaspi Towers 200, Inc. choose not to appropriate
the additional structure after proper indemnity, the parties shall agree upon the terms of the lease and
in case of disagreement, the Court shall fix the terms thereof.

For lack of merit, the third party complaint and the counterclaims are hereby dismissed.

Costs against the plaintiff.6

When the parties' respective motions for reconsideration were denied by the trial court, both elevated
the matter to the Court of Appeals.

On May 26, 2011, the Court of Appeals, acting on the consolidated appeals of LEMANS and Legaspi
Towers, rendered its Decision affirming the decision of the RTC of Makati City.

The Court of Appeals held that the appeal of LEMANS should be dismissed for failure to comply with
Section 13, Rule 44 in relation to Section 1(f), Rule 50 of the Rules of Court, as the subject index of
LEMANS' brief did not contain a digest of its arguments and a list of textbooks and statutes it
cited.7 For this reason, the appellate court no longer passed upon the sole issue raised by
LEMANS, i.e., whether its construction of Concession 4 should be valued at its actual cost or its
market value.

As regards the appeal of Legaspi Towers, the Court of Appeals held that while Concession 4 is
indeed a nuisance, LEMANS has been declared a builder in good faith, and noted that Legaspi
Towers failed to contest this declaration. Since Concession 4 was built in good faith, it cannot be
demolished. The Court of Appeals likewise affirmed the validity of the building permit for Concession
4, holding that if the application and the plans appear to be in conformity with the requirements of
governmental regulation, the issuance of the permit may be considered a ministerial duty of the
building official.8

The Motion for Partial Reconsideration of Legaspi Towers and the Motion for Reconsideration of
LEMANS were denied for lack of merit in the appellate court's Resolution 9 dated November 17, 2011.

Consequently, LEMANS and Legaspi Towers filed separate Petitions for Review on Certiorari with
this Court based on the following grounds:

[LEMANS PETITION:]

THE COURT OF APPEALS ERRED WHEN IT FAILED TO APPLY THE DEPRA VS.

DUMLAO DOCTRINE WHEN IT REFUSED TO RULE ON THE PROPER VALUATION OF THE
SUBJECT PROPERTY FOR THE PURPOSE OF DETERMINING THE PURCHASE PRICE IN THE
EVENT THAT RESPONDENT LEGASPI TOWERS EXERCISES ITS OPTION TO PURCHASE THE
PROPERTY
II

THE COURT OF APPEALS ERRED WHEN, REFUSING TO RULE ON THE VALUATION OF THE
SUBJECT PROPERTY, IT DISREGARDED THE EVIDENCE ALREADY SUBMITTED AND PART
OF THE RECORDS.10

[LEGASPI TOWERS PETITION:]

I. THE COURT OF APPEALS ERRED IN NOT HOLDING THAT [LEGASPI TOWERS] HAS THE
RIGHT TO DEMOLISH CONCESSION 4 FOR BEING AN ILLEGAL CONSTRUCTION.

II. THE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE BUILDING PERMIT OF
CONCESSION 4 IS NOT VALIDLY ISSUED.11 

At the crux of the present controversy is the legal issue whether Article 448 of the Civil Code and our
ruling in Depra v. Dumlao12 are applicable to the parties' situation.

Prior to answering this key question, we dispose of a procedural matter. LEMANS has taken the
position that in light of the finality of the trial court's Order dated May 24, 2002 holding that Article 448
of the Civil Code and the Depra case should be applied in this case, Legaspi Towers is now bound by
same and may no longer question the former's status as a builder in good faith. The Court of Appeals
in its assailed Decision appears to subscribe to the same view when it ruled that, despite the fact that
Concession 4 was a nuisance, the previous declaration that LEMANS is a builder in good faith limits
Legaspi Towers' options to those provided in Article 448.

The Court does not agree with LEMANS and the Court of Appeals.

At the outset, it must be pointed out that the May 24, 2002 RTC Order is an interlocutory order that
did not finally dispose of the case and, on the contrary, set the case for hearing for reception of
evidence on the amount of expenses spent by LEMANS in the construction of Concession 4. For this
reason, it is apropos to discuss here the remedies available to a party aggrieved by interlocutory
orders of the trial court.

Section 1, Rule 41 of the Rules of Court pertinently states:

RULE 41
Appeal from the Regional Trial Courts

SECTION 1. Subject of appeal. — An appeal may be taken from a judgment or final order that
completely disposes of the case, or of a particular matter therein when declared by these Rules to be
appealable.

No appeal may be taken from:

(a) An order denying a motion for new trial or reconsideration;

(b) An order denying a petition for relief or any similar motion seeking relief from judgment;
(c) An interlocutory order;
(d) An order disallowing or dismissing an appeal;
(e) An order denying a motion to set aside a judgment by consent, confession or compromise on the
ground of fraud, mistake or duress, or any other ground vitiating consent;
(f) An order of execution;
(g) A judgment or final order for or against one or more of several parties or in separate claims,
counterclaims, cross-claims and third-party complaints, while the main case is pending, unless
the court allows an appeal therefrom; and
(h) An order dismissing an action without prejudice.

In all the above instances where the judgment or final order is not appealable, the aggrieved party
may file an appropriate special civil action under Rule 65. (Emphases supplied.)

Hence, we explained in Crispino v. Tansay13 that:

The remedy against an interlocutory order is not appeal but a special civil action for certiorari under
Rule 65 of the Rules of Court. The reason for the prohibition is to prevent multiple appeals in a single
action that would unnecessarily cause delay during trial. In Rudecon v. Singson:

The rule is founded on considerations of orderly procedure, to forestall useless appeals and avoid
undue inconvenience to the appealing party by having to assail orders as they are promulgated by
the court, when all such orders may be contested in a single appeal.

Faced with an interlocutory order, parties may instantly avail of the special civil action of
certiorari. This would entail compliance with the strict requirements under Rule 65 of the
Rules of Court. Aggrieved parties would have to prove that the order was issued without or in excess
of jurisdiction or with grave abuse of discretion amounting to lack or excess of jurisdiction and that
there is neither appeal nor any plain, speedy, and adequate remedy in the ordinary course of law.

This notwithstanding, a special civil action for certiorari is not the only remedy that aggrieved
parties may take against an interlocutory order, since an interlocutory order may be appealed
in an appeal of the judgment itself. In Investments, Inc. v. Court of Appeals it was held:

Unlike a "final" judgment or order, which is appealable, as above pointed out, an "interlocutory"
order may not be questioned on appeal except only as part of an appeal that may eventually
be taken from the final judgment rendered in the case. (Emphases supplied; citations omitted.)

From the foregoing disquisition in Crispino, a party who wishes to assail an interlocutory order may
(a) immediately file a petition for certiorari if appropriate and compliant with the stringent
requirements of Rule 65 or (b) await judgment and question the interlocutory order in the appeal of
the main decision. Notably, in the case at bar, LEMANS filed a petition for certiorari against the RTC's
May 24, 200214 and August 19, 200215 Orders while Legaspi Towers chose to simply appeal the main
decision.

This Court is not bound by the interlocutory orders of the trial court nor by the Court of Appeals'
Decision dated March 4, 2004 in CA-G.R. SP No. 73621, i.e., LEMANS' petition for certiorari of said
interlocutory orders.

To begin with, the Court of Appeals' decision in CA-G.R. SP No. 73621 was never evelated to this
Court. Secondly, in resolving LEMANS' petition for certiorari, the Court of Appeals itself ruled, among
others, that:

It is noteworthy to state that the petitioner imputes grave abuse of discretion on the part of the
respondent judge in ruling that Article 448 and the case of Depra v. Dumlao (136 SCRA 475) are
applicable in the case at bar. At most, these are considered mere errors of judgment, which are not
proper for resolution in a petition for certiorari under Rule 65.

The error is not jurisdictional, and certiorari is not available to correct errors in judgment or
conclusions of law and fact not amounting to excess or lack of jurisdiction. In the extraordinary
writ of certiorari, neither questions of fact nor even of law are entertained, but only questions of lack
or excess of jurisdiction or grave abuse of discretion. 16 (Emphases supplied.)

We are not so constrained in these consolidated petitions under Rule 45 for as we observed in E.I.
Dupont De Nemours and Co. v. Francisco17:

The special civil action of certiorari under Rule 65 is intended to correct errors of jurisdiction. Courts
lose competence in relation to an order if it acts in grave abuse of discretion amounting to lack or
excess of jurisdiction. A petition for review under Rule 45, on the other hand, is a mode of
appeal intended to correct errors of judgment.Errors of judgment are errors committed by a court
within its jurisdiction. This includes a review of the conclusions of law of the lower court and, in
appropriate cases, evaluation of the admissibility, weight, and inference from the evidence
presented. (Emphases supplied; citations omitted.)

In all, there is no procedural bar for this Court to pass upon the previous interlocutory orders of the
court a quo and examine the legal conclusions therein in the present consolidated appeals of the trial
court's decision. We are compelled to undertake such a review in light of the novelty of the main issue
presented in these petitions. The Court, after all, is the final arbiter of all legal questions properly
brought before it.18

We proceed to the merits of these consolidated cases.

First, we find no cogent reason to disturb the finding of the lower courts that it is Legaspi Towers
which owns the air space above Concession 3 as the same is in keeping with the facts and the
applicable law. We quote with approval the following discussion from the Court of Appeals Decision
dated March 4, 2004 in CA-G.R. SP No. 73621:

As correctly pointed out by the private respondent Legaspi, the air space wherein Concession 4 was
built is not only above Concession 3, but above the entire condominium building. The petitioner's
[LEMANS'] ownership of Concession 3 does not necessarily extend to the area above the same,
which is actually the "air space" of the entire condominium building. The ownership of the air space
above Concession 3 is not a necessary incident of the ownership of Concession 3.

It may be well to state here the following provisions of Republic Act No. 4726, otherwise known as
The Condominium Act:

Section 2. A condominium is an interest in real property consisting of a separate interest in a unit in a

residential, industrial or commercial building and an undivided interest in common directly or
indirectly, in the land on which it is located and in other common areas of the building. A
condominium may include, in addition, a separated interest on other portions of such real property.
Title to the common areas, including the land, or the appurtenant interests in such areas, may be held
by a corporation specially formed for the purpose (hereinafter known as the "condominium
corporation") in which the holders of separate interests shall automatically be members or
shareholders, to the exclusion of others, in proportion to the appurtenant interest of their respective
units in the common areas. (RA 4726, The Condominium Act)

Section 3 (d). "Common areas" means the entire project excepting all units separately granted or held
or reserved.

Section 6. Unless otherwise expressly provided in the enabling or master deed or the declaration of
restrictions, the incidents of the condominium grant are as follows:

(a) The boundary of the unit granted are the interior surfaces of the perimeter walls, ceilings,
windows and doors thereof. The following are not part of the unit – bearing walls, columns, walls,
roofs, foundations and other common structural elements of the building x x x.

Evidently, what a unit includes is only the four walls, ceilings, windows and doors thereof. It certainly
does not include the roof or the areas above it.

In a condominium, common areas and facilities are "portions of the condominium property not
included in the units," whereas, a unit is "a part of the condominium property which is to be subject to
private ownership." Inversely, that which is not considered a unit should fall under common areas and
facilities.

Inasmuch as the air space or the area above Concession 3 is not considered as part of the unit, it
logically forms part of the common areas.

The petitioner's efforts to establish that Concession 3 and the open area in the roof deck are reserved
and separately granted from the condominium project are futile, inasmuch as even if the same is
established, it would not prove that the area above it is not part of the common area. Admittedly,
there is nothing in the Master Deed which prohibits the construction of an additional unit on top of
Concession 3, however, there is also nothing which allows the same. The more logical inference is
that the unit is limited to that stated in the Condominium Act, considering that the Master Deed with
Declaration of Restrictions does not expressly declare otherwise.

To allow the petitioner's claim over the air space would not prevent the petitioner from further
constructing another unit on top of Concession 4 and so on. This would clearly open the door to
further "impairment of the structural integrity of the condominium building" which is explicitly
proscribed in the Master Deed.19

Significantly, the parties are no longer questioning before us the past rulings regarding Legaspi
Towers' ownership of the air space above Concession 3 which is the air space above the
condominium building itself. The principal bones of contention here are the legal consequences of
such ownership and the applicability of Article 448 of the Civil Code and our ruling in Depra v.
Dumlao20 on the factual antecedents of these cases.

The ruling of this Court in Depra v. Dumlao extensively cited by both parties pertains to the
application of Articles 448 and 546 of the Civil Code, which respectively provide:

Art. 448. The owner of the land on which anything has been built, sown or planted in good faith, shall
have the right to appropriate as his own the works, sowing or planting, after payment of the
indemnity provided for in Articles 546 and 548, or to oblige the one who built or planted to pay
the price of the land, and the one who sowed, the proper rent. However, the builder or planter
cannot be obliged to buy the land if its value is considerably more than that of the building or trees. In
such case, he shall pay reasonable rent, if the owner of the land does not choose to appropriate the
building or trees after proper indemnity. The parties shall agree upon the terms of the lease and in
case of disagreement, the court shall fix the terms thereof.

Art. 546. Necessary expenses shall be refunded to every possessor; but only the possessor in good
faith may retain the thing until he has been reimbursed therefor.

Useful expenses shall be refunded only to the possessor in good faith with the same right of
retention, the person who has defeated him in the possession having the option of refunding the
amount of the expenses or of paying the increase in value which the thing may have acquired by
reason thereof.

To recap, the defendant in Depra constructed his house on his lot but, in good faith, encroached on
an area of 34 square meters of the property of plaintiff on which defendant's kitchen was built. The
Court ruled that pursuant to Article 448 of the Civil Code, plaintiff, as the owner of the land, has the
option either to pay for the encroaching part of the kitchen, or to sell the encroached 34 square
meters of his lot to the defendant, the builder in good faith. The owner of the land cannot refuse to
pay for the encroaching part of the building and to sell the encroached part of the land. Pursuant to
Articles 448 and 546 of the Civil Code, the Court remanded the case to the RTC to determine the
following:

(1) the present fair price of the 34-square meter encroached area of the land;
(2) the amount of expenses spent in building the kitchen;
(3) the increase in value the area may have acquired by reason of the building; and
(4) whether the value of the 34-square meter area is considerably more than that of the kitchen built
thereon.

After the RTC has determined the four items above, the RTC shall grant the owner a period of 15
days to exercise his option whether (a) to appropriate the kitchen by paying the amount of expenses
spent for building the same or the increase of such area's value by reason of the building or (b) to
oblige the builder in good faith to pay the price of said area. The Court thereafter provided for further
contingencies based on the RTC finding in the fourth item.

In the case at bar, LEMANS prays that, pursuant to Depra, the Court should determine the value of
Concession 4, and find such value to be Six Million Eight Hundred Thousand Eight Hundred Ninety-
Seven and 96/100 Pesos (P6,800,897.96) plus legal interest. Legaspi Towers, on the other hand,
prays for the extrajudicial abatement of Concession 4, on the ground that the applicable provision of
the Civil Code is Article 699, which provides:

Article 699. The remedies against a public nuisance are:

(1) A prosecution under the Penal code or any local ordinance; or

(2) A civil action; or
 (3) Abatement, without judicial proceedings.

Legaspi Towers also argues that Concession 4 is an illegal construction, for being in violation of the
Condominium Act and the By Laws of Legaspi Towers. Legaspi Towers stresses that LEMANS failed
to comply with the Condominium Act, which requires the consent of the registered owners of the
condominium project for the amendment of the Master Deed.

Indeed, the last paragraph of Section 4 of the Condominium Act provides:

The enabling or master deed may be amended or revoked upon registration of an instrument
executed by the registered owner or owners of the property and consented to by all registered
holders of any lien or encumbrance on the land or building or portion thereof. The term "registered
owner" shall include the registered owners of condominiums in the project. Until registration of a
revocation, the provisions of this Act shall continue to apply to such property.

The Master Deed of Legaspi Towers21 states the number of stories and basements, and the number
of units and accessories, and contains as an attachment a diagrammatic floor plan of the building as
required by Section 4(b)22 of the Condominium Act. Section 2 of the Master Deed states:

Section 2. The Building and the Units. The building included in the condominium project is a
commercial building constructed of reinforced concrete and consisting of seven (7) storeys with a
basement, a ground floor, a deck roof, and two levels above the deck roof, x x x. 23

The construction by LEMANS of Concession 4 contravenes the Master Deed by adding a third level
above the roof deck. As pointed out by Legaspi Towers and shown in the records, the Master Deed
was never amended to reflect the building of Concession 4. Furthermore, LEMANS failed to procure
the consent of the registered owners of the condominium project as required in the last paragraph of
Section 4 of the Condominium Act.

The By-Laws of Legaspi Towers24 specifically provides that extraordinary improvements or additions

must be approved by the members in a regular or special meeting called for the purpose prior to the
construction:

ARTICLE V
IMPROVEMENTS AND ADDITIONS

xxxx

Section 2. Extraordinary Improvements. Improvements or additions to the common areas which shall
cost more than P100,000.00 or which involve structural construction or modification must be
approved by the members in a regular or special meeting called for the purpose before such
improvements or additions are made, x x x.25

Said By-Laws also provides for the process by which violations of the Master Deed are redressed,
and the same coincides with the prayer of Legaspi Towers:
ARTICLE VII
ABATEMENT OF VIOLATIONS

Section 1. Power to Abate Violations. In the event that any member or his tenant or lessee fails or
refuses to comply with any limitation, restriction, covenant or condition of the Master Deed with
Declaration of Restrictions, or with the rules and regulations on the use, enjoyment and occupancy of
office/units or other property in the project, within the time fixed in the notice given him by the Board
of Directors, the latter or its duly authorized representative shall have the right to enjoin, abate or
remedy the continuance of such breach or violation by appropriate legal proceedings.

The Board shall assess all expenses incurred in abatement of the violation, including interest, costs
and attorney's fees, against the defaulting member. 26

Instead of procuring the required consent by the registered owners of the condominium project
pursuant to the Condominium Act, or having Concession 4 approved by the members in a regular or
special meeting called for the purpose pursuant to the By-Laws, LEMANS merely had an internal
arrangement with the then president of Legaspi Towers. The same, however, cannot bind
corporations, which includes condominium corporations such as Legaspi Towers, as they can act
only through their Board of Directors. 27

Unperturbed, LEMANS argues that the internal arrangement shows its good faith in the construction
of Concession 4, and claims the application of the aforementioned Articles 448 and 546 of the Civil
Code. For reference, Article 448 provides:

Art. 448. The owner of the land on which anything has been built, sown or planted in good faith, shall
have the right to appropriate as his own the works, sowing or planting, after payment of the indemnity
provided for in Articles 546 and 548, or to oblige the one who built or planted to pay the price of the
land, and the one who sowed, the proper rent. However, the builder or planter cannot be obliged to
buy the land if its value is considerably more than that of the building or trees. In such case, he shall
pay reasonable rent, if the owner of the land does not choose to appropriate the building or trees after
proper indemnity. The parties shall agree upon the terms of the lease and in case of disagreement,
the court shall fix the terms thereof.

Firstly, it is recognized in jurisprudence that, as a general rule, Article 448 on builders in good faith
does not apply where there is a contractual relation between the parties. 28

Morever, in several cases, this Court has explained that the raison d'etre for Article 448 of the Civil
Code is to prevent the impracticability of creating a state of forced co-ownership:

The rule that the choice under Article 448 of the Civil Code belongs to the owner of the land is in
accord with the principle of accession, i.e., that the accessory follows the principal and not the other
way around. Even as the option lies with the landowner, the grant to him, nevertheless, is preclusive.
The landowner cannot refuse to exercise either option and compel instead the owner of the building
to remove it from the land.

The raison d'etre for this provision has been enunciated thus: Where the builder, planter or sower has
acted in good faith, a conflict of rights arises between the owners, and it becomes necessary to
protect the owner of the improvements without causing injustice to the owner of the land. In view of
the impracticability of creating a state of forced co-ownership, the law has provided a just solution by
giving the owner of the land the option to acquire the improvements after payment of the proper
indemnity, or to oblige the builder or planter to pay for the land and the sower the proper rent. He
cannot refuse to exercise either option. It is the owner of the land who is authorized to exercise the
option, because his right is older, and because, by the principle of accession, he is entitled to the
ownership of the accessory thing.29

In the case at bar, however, the land belongs to a condominium corporation, wherein the builder, as a
unit owner, is considered a stockholder or member in accordance with Section 10 of the
Condominium Act, which provides:

SECTION 10. Whenever the common areas in a condominium project are held by a condominium
corporation, such corporation shall constitute the management body of the project. The corporate
purposes of such a corporation shall be limited to the holding of the common areas, either in
ownership or any other interest in real property recognized by law, to the management of the project,
and to such other purposes as may be necessary, incidental or convenient to the accomplishment of
said purposes. The articles of incorporation or by-laws of the corporation shall not contain any
provision contrary to or inconsistent with the provisions of this Act, the enabling or master deed, or
the declaration of restrictions of the project. Membership in a condominium corporation, regardless of
whether it is a stock or non-stock corporation, shall not be transferable separately from the
condominium unit of which it is an appurtenance. When a member or stockholder ceases to own a
unit in the project in which the condominium corporation owns or holds the common areas, he shall
automatically cease to be a member or stockholder of the condominium corporation.

The builder is therefore already in a co-ownership with other unit owners as members or stockholders
of the condominium corporation, whose legal relationship is governed by a special law, the
Condominium Act. It is a basic tenet in statutory construction that between a general law and a
special law, the special law prevails. Generalia specialibus non derogant.30 The provisions of the Civil
Code, a general law, should therefore give way to the Condominium Act, a special law, with regard to
properties recorded in accordance with Section 4 31 of said Act. Special laws cover distinct situations,
such as the necessary co-ownership between unit owners in condominiums and the need to preserve
the structural integrity of condominium buildings; and these special situations deserve, for practicality,
a separate set of rules.

Articles 448 and 546 of the Civil Code on builders in good faith are therefore inapplicable in cases
covered by the Condominium Act where the owner of the land and the builder are already bound
by specific legislation on the subject property (the Condominium Act), and by contract (the Master
Deed and the By-Laws of the condominium corporation). This Court has ruled that upon acquisition of
a condominium unit, the purchaser not only affixes his conformity to the sale; he also binds himself to
a contract with other unit owners.32

In accordance therefore with the Master Deed, the By-Laws of Legaspi Towers, and the
Condominium Act, the relevant provisions of which were already set forth above, Legaspi Towers is
correct that it has the right to demolish Concession 4 at the expense of LEMANS. Indeed, the
application of Article 448 to the present situation is highly iniquitous, in that an owner, also found to
be in good faith, will be forced to either appropriate the illegal structure (and impliedly be burdened
with the cost of its demolition) or to allow the continuance of such an illegal structure that violates the
law and the Master Deed, and threatens the structural integrity of the condominium building upon the
payment of rent. The Court cannot countenance such an unjust result from an erroneous application
of the law and jurisprudence.

We will no longer pass upon the issue of the validity of building permit for Concession 4 as the same
has no bearing on the right of Legaspi Towers to an abatement of Concession 4.

Finally, we are constrained to deny the Petition of LEMANS in view of our ruling that the doctrine
in Depra and Articles 448 and 546 of the Civil Code were improperly applied in these cases.

WHEREFORE, the Petition in G.R. No. 199353 is hereby DENIED for lack of merit. The Petition in
G.R. No. 199389 is GRANTED. The Decision dated May 26, 2011 and Resolution dated November
17, 2011 of the Court of Appeals in CA-G.R. CV No. 88082 are REVERSED and SET ASIDE. Leviste
Management System, Inc. is ORDERED to remove Concession 4 at its own expense.

No pronouncement as to costs.

SO ORDERED.

Quieting of Title (Arts. 476-481)

IGLESIA NI CRISTO, petitioner,
vs.
HON. THELMA A. PONFERRADA, in her capacity as Presiding Judge, Regional Trial Court, Br.
104, Quezon City, and HEIRS OF ENRIQUE G. SANTOS, respondents.

DECISION

CALLEJO, SR, J.:

This is a Petition for Review on Certiorari of the Decision 1 of the Court of Appeals (CA) in CA-G.R. SP
No. 72686 and its Resolution2 denying the motion for reconsideration of the said decision.

On October 24, 2001, Alicia, Alfredo, Roberto, Enrique and Susan, all surnamed Santos, and Sonia
Santos-Wallin, represented by Enrique G. Santos, filed a complaint 3 for Quieting of Title
and/or Accion Reinvindicatoria before the Regional Trial Court (RTC) of Quezon City against
the Iglesia Ni Cristo (INC), defendant therein.

Plaintiffs alleged therein that, during his lifetime, Enrique Santos was the owner of a 936-square-
meter parcel of land located in Tandang Sora, Quezon City covered by Transfer Certificate of Title
(TCT) No. 57272 issued by the Register of Deeds on July 27, 1961 which cancelled TCT No. 57193-
289. He had been in possession of the owner’s duplicate of said title and had been in continuous,
open, adverse and peaceful possession of the property. He died on February 9, 1970 and was
survived by his wife, Alicia Santos, and other plaintiffs, who were their children. Thereafter, plaintiffs
took peaceful and adverse possession of the property, and of the owner’s duplicate of said title. When
the Office of the Register of Deeds of Quezon City was burned on June 11, 1988, the original copy of
said title was burned as well. The Register of Deeds had the title reconstituted as TCT No. RT-
110323, based on the owner’s duplicate of TCT No. 57272. Sometime in February 1996, plaintiffs
learned that defendant was claiming ownership over the property based on TCT No. 321744 issued
on September 18, 1984 which, on its face, cancelled TCT No. 320898, under the name of the
Philippine National Bank, which allegedly cancelled TCT No. 252070 in the names of the spouses
Marcos and Romana dela Cruz. They insisted that TCT Nos. 321744, 320898 and 252070 were not
among the titles issued by the Register of Deeds of Quezon City and even if the Register of Deeds
issued said titles, it was contrary to law. Enrique Santos, during his lifetime, and his heirs, after his
death, never encumbered or disposed the property. In 1996, plaintiffs had the property fenced but
defendant deprived them of the final use and enjoyment of their property.

Plaintiffs prayed that, after due proceedings, judgment be rendered in their favor, thus:

WHEREFORE, it is respectfully prayed that, after due hearing, judgment be rendered quieting
the title of plaintiffs over and/or recover possession of their said property in the name of
deceased Enrique Santos, covered by said TCT No. RT-110323(57272) of the Register of
Deeds at Quezon City and that:

1. The title of defendant, TCT No. 321744 be ordered cancelled by the Register of
Deeds of Quezon City;

2. The defendant be ordered to pay plaintiffs’ claims for actual damages in the sum
of P100,000.00;

3. The defendant be ordered to pay plaintiffs’ claims for compensatory damages in the
sum of at least P1,000,000.00;

4. The defendant be ordered to pay plaintiffs’ claims for reimbursement of the lawyer’s
professional fees consisting of the aforesaid P50,000.00 acceptance fee and
reimbursement of the said success fee in par. 10 above; and lawyer’s expenses
of P2,000.00 for each hearing in this case;

5. The defendant be ordered to pay expenses and costs of litigation in the sum of at
least P200,000.00.

Other reliefs that are just and equitable in the premises are, likewise, prayed for. 4

As gleaned from the caption of the complaint, plaintiffs appear to be the heirs of Enrique Santos,
represented by Enrique G. Santos. The latter signed the Verification and Certificate of Non-Forum
Shopping which reads:

I, ENRIQUE G. SANTOS, of legal age, under oath, state that I am one of the children of the
late Enrique Santos and I represent the heirs of said Enrique Santos who are my co-plaintiffs
in the above-captioned case and that I directed the preparation of the instant complaint, the
contents of which are true and correct to the best of my knowledge and the attachments are
faithful reproductions of the official copies in my possession.

I hereby certify that I have not commenced any other action or proceeding involving the same
issues in the Supreme Court, the Court of Appeals, or different Divisions thereof, or any other
tribunal or agency, and to the best of my knowledge, no such action or proceeding is pending
in the Supreme Court, the Court of Appeals, or different Divisions thereof, or any other tribunal
or agency, and that I shall notify this Commission within three days from notice that a similar
action or proceeding has been filed or is pending thereat.
 IN WITNESS WHEREOF, I hereby affix my signature this 23rd day of October 2001 at Pasig
City, Metro Manila.

(Sgd.)

ENRIQUE G. SANTOS

SUBSCRIBED AND SWORN to before me this 23rd day of October 2001 at Pasig City, affiant
exhibiting to me his CTC No. 07303074 issued at Sta. Cruz, Laguna on April 16, 2001.

(Sgd.)

PETER FRANCIS G. ZAGALA

Notary Public
Until December 31, 2002
PTR No. 0287069
Issued on 1-10-01
At Pasig City5

Defendant moved to dismiss plaintiffs’ complaint on the following grounds: (1) plaintiffs failed to
faithfully comply with the procedural requirements set forth in Section 5, Rule 7 of the 1997 Rules of
Civil Procedure; (2) the action (either Quieting of Title or Accion Reinvindicatoria) had prescribed, the
same having been filed only on October 24, 2001 beyond the statutory ten-year period therefor; and
(3) that the complaint is defective in many respects.6

Defendant asserted that the case involved more than one plaintiff but the verification and certification
against forum shopping incorporated in the complaint was signed only by Enrique Santos. Although
the complaint alleges that plaintiffs are represented by Enrique Santos, there is no showing that he
was, indeed, authorized to so represent the other plaintiffs to file the complaint and to sign the
verification and certification of non-forum shopping. 7 Thus, plaintiffs failed to comply with Section 5,
Rule 7 of the Rules of Court. Defendant cited the ruling of this Court in Loquias v. Office of the
Ombudsman.8

Defendant maintained that the complaint is defective in that, although there is an allegation that
Enrique Santos represents the other heirs, there is nothing in the pleading to show the latter’s
authority to that effect; the complaint fails to aver with particularity the facts showing the capacity of
defendant corporation to sue and be sued; and the pleading does not state the address of plaintiffs.
Defendant likewise averred that the complaint should be dismissed on the ground of prescription. It
argued that plaintiffs anchor their claim on quieting of title and considering that they are not in
possession of the land in question, their cause of action prescribed after ten years. On the other
hand, if the supposed right of plaintiffs is based on accion reinvindicatoria, prescription would set in
after 10 years from dispossession. In both cases, defendant asserts, the reckoning point is 1984
when defendant acquired TCT No. 321744 and possession of the land in question.

In their Comment9 on the motion, plaintiffs averred that the relationship of a co-owner to the other co-
owners is fiduciary in character; thus, anyone of them could effectively act for another for the benefit
of the property without need for an authorization. Consequently, Enrique Santos had the authority to
represent the other heirs as plaintiffs and to sign the verification and certification against forum
shopping.10 On the issue of prescription, plaintiffs argued that the prescriptive period for the actions
should be reckoned from 1996, when defendant claimed ownership over the property and barred
plaintiffs from fencing their property, not in 1984 when TCT No. 321744 was issued by the Register of
Deeds in the name of defendant as owner.
In its reply, defendant averred that absent any authority from his co-heirs, Enrique Santos must
implead them as plaintiffs as they are indispensable parties. In response, plaintiffs aver that a co-
owner of a property can execute an action for quieting of title without impleading the other co-owners.

The trial court issued an Order11 denying defendant’s motion to dismiss. It declared that since Enrique
Santos was one of the heirs, his signature in the verification and certification constitutes substantial
compliance with the Rules. The court cited the ruling of this Court in Dar v. Alonzo-Legasto.12 The
court, likewise, held that prescription had not set in and that failure to state the address of plaintiffs in
the complaint does not warrant the dismissal of the complaint.

Defendant filed a motion for reconsideration, which the court likewise denied in an Order 13 dated July
10, 2002.

Unsatisfied, defendant, as petitioner, filed a Petition for Certiorari and Prohibition with Prayer for the
Issuance of a Temporary Restraining Order and/or Preliminary Injunction 14 before the CA, raising the
following issues:

I.

WHETHER OR NOT RESPONDENT JUDGE GRAVELY ERRED AND ABUSED HER

DISCRETION WHEN SHE HELD THAT THE CERTIFICATION OF NON-FORUM SHOPPING
SIGNED BY ENRIQUE G. SANTOS ALONE IS A SUBSTANTIAL COMPLIANCE WITH
SECTION 5, RULE 7 OF THE 1997 RULES OF CIVIL PROCEDURE, IN CLEAR
CONTRAVENTION OF THE RULES OF COURT, AND THE RULING IN LOQUIAS V. OFFICE
OF THE OMBUDSMAN, G.R. NO. 1399396 (SIC), AUGUST 16, 2000, 338 SCRA 62, AND
ORTIZ V. COURT OF APPEALS, G.R. NO. 127393, 299 SCRA 708 (DECEMBER 4, 1998).

II.

WHETHER OR NOT RESPONDENT JUDGE GRAVELY ERRED AND ABUSED HER

DISCRETION IN APPLYING THE RULING IN DAR, ET. AL. V. HON. ROSE MARIE ALONZO-
LEGASTO, ET. AL., G.R. NO. 143016, AUGUST 30, 2000 TO THE INSTANT CASE.

III.

WHETHER OR NOT RESPONDENT JUDGE GRAVELY ERRED AND ABUSED HER

DISCRETION WHEN SHE HELD THAT THE AUTHORITY OF ENRIQUE G. SANTOS TO
REPRESENT HIS CO-HEIRS IN THE FILING OF THE COMPLAINT AGAINST THE "INC" IS
A MATTER OF EVIDENCE.

IV.

WHETHER OR NOT RESPONDENT JUDGE GRAVELY ERRED AND ABUSED HER

DISCRETION WHEN SHE HELD THAT THE ACTION FOR QUIETING OF TITLE AND/OR
ACCION REINVINDICATORIA (CIVIL CASE NO. Q-01-45415) HAS NOT YET
PRESCRIBED.15

Petitioner averred that, of the plaintiffs below, only plaintiff Enrique Santos signed the verification and
certification of non-forum shopping. Under Section 5, Rule 7 of the 1997 Rules of Civil Procedure, all
the plaintiffs must sign, unless one of them is authorized by a special power of attorney to sign for
and in behalf of the others. Petitioner argues that the bare claim of Enrique Santos that he signed the
verification and certification in his behalf and of the other plaintiffs who are his co-heirs/co-owners of
the property does not even constitute substantial compliance of the rule. Contrary to the ruling of the
trial court, the absence or existence of an authority of Enrique Santos to sign the verification and
certification for and in behalf of his co-plaintiffs is not a matter of evidence. The defect is fatal to the
complaint of respondents and cannot be cured by an amendment of the complaint. The trial court
erred in applying the ruling of this Court in Dar v. Alonzo-Legasto. 16

Petitioner maintained that the action of respondents, whether it be one for quieting of title or an accion
reinvindicatoria, had prescribed when the complaint was filed on October 24, 2001. Petitioner asserts
that this is because when respondents filed their complaint, they were not in actual or physical
possession of the property, as it (petitioner) has been in actual possession of the property since 1984
when TCT No. 321744 was issued to it by the Register of Deeds. This is evident from the nature of a
reinvindicatory action itself – which is an action whereby plaintiff alleges ownership over the subject
parcel of land and seeks recovery of its full possession. By their action, respondents thereby admitted
that petitioner was in actual possession of the property, and as such, respondents’ action for quieting
of title or accion reinvindicatoria may prescribe in ten (10) years from 1984 or in 1994, it appearing
that it acted in good faith when it acquired the property from the registered owner, conformably with
Article 555(4) of the New Civil Code.

On April 7, 2005, the CA rendered the assailed decision 17 dismissing the petition, holding that the
RTC did not commit grave abuse of its discretion amounting to lack or excess of jurisdiction in
denying petitioner’s motion to dismiss. As the Court held in DAR v. Alonzo-Legasto 18 and in Gudoy v.
Guadalquiver,19 the certification signed by one with respect to a property over which he shares a
common interest with the rest of the plaintiffs (respondents herein) substantially complied with the
Rules. As to the issue of prescription, the appellate court held that the prescriptive period should be
reckoned from 1996, when petitioner claimed ownership and barred respondents from fencing the
property.

Petitioner is now before this Court on petition for review on certiorari, raising the following issues:

I.

WHETHER OR NOT THE COURT OF APPEALS ERRED IN RULING THAT THE

CERTIFICATION OF NON-FORUM SHOPPING SIGNED BY RESPONDENT ENRIQUE G.
SANTOS ALONE IS A SUBSTANTIAL COMPLIANCE WITH SECTION 5, RULE 7 OF THE
1997 RULES OF CIVIL PROCEDURE AND IN APPLYING THE CASE OF GUDOY V.
GUADALQUIVER, 429 SCRA 723, WITHOUT REGARD TO MORE RECENT
JURISPRUDENCE.

II.

WHETHER OR NOT THE COURT OF APPEALS ERRED WHEN IT HELD THAT THE
AUTHORITY OF RESPONDENT ENRIQUE G. SANTOS TO REPRESENT HIS CO-HEIRS IN
THE FILING OF THE COMPLAINT AGAINST THE PETITIONER IS A MATTER OF
EVIDENCE.

III.

WHETHER OR NOT THE COURT OF APPEALS ERRED IN HOLDING THAT THE ACTION
FOR QUIETING OF TITLE AND/OR ACCION REINVINDICATORIA (CIVIL CASE NO. Q-01-
45415) HAS NOT YET PRESCRIBED.20
Petitioner reiterated its arguments in support of its petition in the CA as its arguments in support of its
petition in the present case.

Sections 4 and 5, Rule 7 of the Revised Rules of Court on verification and certification against forum
shopping read:

Sec. 4. Verification. – Except when otherwise specifically required by law or rule, pleadings
need not be under oath, verified or accompanied by affidavit.

A pleading is verified by an affidavit that the affiant has read the pleading and that the
allegations therein are true and correct of his personal knowledge or based on authentic
records.

A pleading required to be verified which contains a verification based on "information and

belief" or upon "knowledge, information and belief," or lacks a proper verification, shall be
treated as an unsigned pleading.

Sec. 5. Certification against forum shopping. – The plaintiff or principal party shall certify under
oath in the complaint or other initiatory pleading asserting a claim for relief, or in a sworn
certification annexed thereto and simultaneously filed therewith: (a) that he has not theretofore
commenced any action or filed any claim involving the same issues in any court, tribunal or
quasi-judicial agency and, to the best of his knowledge, no such other action or claim is
pending therein; (b) if there is such other pending action or claim, a complete statement of the
present status thereof; and (c) if he should thereafter learn that the same or similar action or
claim has been filed or is pending, he shall report that fact within five (5) days therefrom to the
court wherein his aforesaid complaint or initiatory pleading has been filed.

Failure to comply with the foregoing requirements shall not be curable by mere amendment of
the complaint or other initiatory pleading but shall be cause for the dismissal of the case
without prejudice, unless otherwise provided, upon motion and after hearing. The submission
of a false certification or non-compliance with any of the undertakings therein shall constitute
indirect contempt of court, without prejudice to the corresponding administrative and criminal
actions. If the acts of the party or his counsel clearly constitute willful and deliberate forum
shopping, the same shall be ground for summary dismissal with prejudice and shall constitute
direct contempt, as well as a cause for administrative sanctions.

The purpose of verification is simply to secure an assurance that the allegations of the petition (or
complaint) have been made in good faith; or are true and correct, not merely speculative. This
requirement is simply a condition affecting the form of pleadings, and noncompliance therewith does
not necessarily render it fatally defective. Indeed, verification is only a formal, not a jurisdictional
requirement.21

The issue in the present case is not the lack of verification but the sufficiency of one executed by only
one of plaintiffs. This Court held in Ateneo de Naga University v. Manalo,22 that the verification
requirement is deemed substantially complied with when, as in the present case, only one of the
heirs-plaintiffs, who has sufficient knowledge and belief to swear to the truth of the allegations in the
petition (complaint), signed the verification attached to it. Such verification is deemed sufficient
assurance that the matters alleged in the petition have been made in good faith or are true and
correct, not merely speculative.

The same liberality should likewise be applied to the certification against forum shopping. The general
rule is that the certification must be signed by all plaintiffs in a case and the signature of only one of
them is insufficient. However, the Court has also stressed in a number of cases that the rules on
forum shopping were designed to promote and facilitate the orderly administration of justice and thus
should not be interpreted with such absolute literalness as to subvert its own ultimate and legitimate
objective. The rule of substantial compliance may be availed of with respect to the contents of the
certification. This is because the requirement of strict compliance with the provisions merely
underscores its mandatory nature in that the certification cannot be altogether dispensed with or its
requirements completely disregarded.23

The substantial compliance rule has been applied by this Court in a number of cases: Cavile v. Heirs
of Cavile,24 where the Court sustained the validity of the certification signed by only one of petitioners
because he is a relative of the other petitioners and co-owner of the properties in dispute; Heirs of
Agapito T. Olarte v. Office of the President of the Philippines,25 where the Court allowed a certification
signed by only two petitioners because the case involved a family home in which all the petitioners
shared a common interest; Gudoy v. Guadalquiver,26 where the Court considered as valid the
certification signed by only four of the nine petitioners because all petitioners filed as co-owners pro
indiviso a complaint against respondents for quieting of title and damages, as such, they all have joint
interest in the undivided whole; and Dar v. Alonzo-Legasto,27 where the Court sustained the
certification signed by only one of the spouses as they were sued jointly involving a property in which
they had a common interest.

It is noteworthy that in all of the above cases, the Court applied the rule on substantial compliance
because of the commonality of interest of all the parties with respect to the subject of the controversy.

Applying the doctrines laid down in the above cases, we find and so hold that the CA did not err in
affirming the application of the rule on substantial compliance. In the instant case, the property
involved is a 936-square-meter real property. Both parties have their respective TCTs over the
property. Respondents herein who are plaintiffs in the case below have a common interest over the
property being the heirs of the late Enrique Santos, the alleged registered owner of the subject
property as shown in one of the TCTs. As such heirs, they are considered co-owners pro indiviso of
the whole property since no specific portion yet has been adjudicated to any of the heirs.
Consequently, as one of the heirs and principal party, the lone signature of Enrique G. Santos in the
verification and certification is sufficient for the RTC to take cognizance of the case. The commonality
of their interest gave Enrique G. Santos the authority to inform the RTC on behalf of the other
plaintiffs therein that they have not commenced any action or claim involving the same issues in
another court or tribunal, and that there is no other pending action or claim in another court or tribunal
involving the same issues. Hence, the RTC correctly denied the motion to dismiss filed by petitioner.

Considering that at stake in the present case is the ownership and possession over a prime property
in Quezon City, the apparent merit of the substantive aspects of the case should be deemed as a
special circumstance or compelling reason to allow the relaxation of the rule.

Time and again, this Court has held that rules of procedure are established to secure substantial
justice. Being instruments for the speedy and efficient administration of justice, they may be used to
achieve such end, not to derail it. In particular, when a strict and literal application of the rules on non-
forum shopping and verification will result in a patent denial of substantial justice, these may be
liberally construed.28 The ends of justice are better served when cases are determined on the merits –
after all parties are given full opportunity to ventilate their causes and defenses – rather than on
technicality or some procedural imperfections. 29

Indeed, this Court strictly applied the rules on verification and certification against forum shopping as
in the cases of Loquias v. Office of the Ombudsman30 and Tolentino v. Rivera.31 However, in both
cases, the commonality of interest between or among the parties is wanting. In Loquias, the co-
parties were being sued in their individual capacities as mayor, vice mayor and members of the
municipal board. In Tolentino, the lone signature of Tolentino was held insufficient because he had no
authority to sign in behalf of the Francisco spouses. In such case, the Court concluded that Tolentino
merely used the spouses’ names for whatever mileage he thought he could gain. It is thus clear from
these cases that the commonality of interest is material in the relaxation of the Rules.

Anent the issue of the authority of Enrique G. Santos to represent his co-heirs/co-plaintiffs, we find no
necessity to show such authority. Respondents herein are co-owners of the subject property. As such
co-owners, each of the heirs may properly bring an action for ejectment, forcible entry and detainer,
or any kind of action for the recovery of possession of the subject properties. Thus, a co-owner may
bring such an action, even without joining all the other co-owners as co-plaintiffs, because the suit is
deemed to be instituted for the benefit of all. 32

We uphold the validity of the complaint because of the following circumstances: (1) the caption of the
instant case is Heirs of Enrique Santos v. Iglesia ni Cristo;33 (2) the opening statement of the
complaint states that plaintiffs are the heirs of Enrique Santos and likewise names the particular heirs
of the latter who instituted the complaint below;34 (3) the case involves a property owned by the
predecessor-in-interest of plaintiffs therein;35 and (4) the verification signed by Enrique G. Santos
clearly states that he is one of the children of the late Enrique Santos and that he represents the heirs
of said Enrique Santos.36

On the issue of prescription of action, petitioner avers that the action of respondents is one to quiet
title and/or accion reinvindicatoria, and that respondents asserted ownership over the property and
sought the recovery of possession of the subject parcel of land. It insists that the very nature of the
action presupposes that respondents had not been in actual and material possession of the property,
and that it was petitioner which had been in possession of the property since 1984 when it acquired
title thereon. The action of respondent prescribed in ten years from 1984 when petitioner allegedly
dispossessed respondents, in accordance with Article 555(4) of the New Civil Code.

The contention of petitioner has no merit. The nature of an action is determined by the material
allegations of the complaint and the character of the relief sought by plaintiff, and the law in effect
when the action was filed irrespective of whether he is entitled to all or only some of such relief. 37 As
gleaned from the averments of the complaint, the action of respondents was one for quieting of title
under Rule 64 of the Rules of Court, in relation to Article 476 of the New Civil Code. The latter
provision reads:

Art. 476. Whenever there is a cloud on title to real property or any interest therein, by reason of
any instrument, record, claim, encumbrance or proceeding which is apparently valid or
effective but is, in truth and in fact, invalid, ineffective, voidable, or unenforceable, and may be
prejudicial to said title, an action may be brought to remove such cloud or to quiet the title.

An action may also be brought to prevent a cloud from being cast upon title to real property or
any interest therein.

A cloud is said to be a semblance of a title, either legal or equitable, or a cloud of an interest in land
appearing in some legal form but which is, in fact, unfounded, or which it would be inequitable to
enforce.38 An action for quieting of title is imprescriptible until the claimant is ousted of his
possession.39

The owner of a real property, as plaintiff, is entitled to the relief of quieting of title even if, at the time
of the commencement of his action, he was not in actual possession of real property. After all, under
Article 477 of the New Civil Code, the owner need not be in possession of the property. If on the face
of TCT No. 321744 under the name of plaintiff, its invalidity does not appear but rests partly in pais,
an action for quieting of title is proper. 40

In the present case, respondents herein, as plaintiffs below, alleged in their complaint, that their
father, Enrique Santos, was the owner of the property based on TCT No. 57272 issued on July 27,
1961; and that, after his death on February 9, 1970, they inherited the property; Enrique Santos,
during his lifetime, and respondents, after the death of the former, had been in actual, continuous and
peaceful possession of the property until 1994 when petitioner claimed ownership based on TCT No.
321744 issued on September 18, 1984 and barred respondents from fencing their property.

Petitioner’s claim that it had been in actual or material possession of the property since 1984 when
TCT No. 321744 was issued in its favor is belied by the allegations in the complaint that respondents
had been in actual and material possession of the property since 1961 up to the time they filed their
complaint on October 24, 2001.

Admittedly, respondents interposed the alternative reinvindicatory action against petitioner. An accion
reinvindicatoria does not necessarily presuppose that the actual and material possession of the
property is on defendant and that plaintiff seeks the recovery of such possession from defendant. It
bears stressing that an accion reinvindicatoria is a remedy seeking the recovery of ownership and
includes jus possidendi, jus utendi, and jus fruendi as well. It is an action whereby a party claims
ownership over a parcel of land and seeks recovery of its full possession. 41 Thus, the owner of real
property in actual and material possession thereof may file an accion reinvindicatoria against another
seeking ownership over a parcel of land including jus vindicandi, or the right to exclude defendants
from the possession thereof. In this case, respondents filed an alternative reinvindicatory action
claiming ownership over the property and the cancellation of TCT No. 321744 under the name of
petitioner. In fine, they sought to enforce their jus utendi and jus vindicandi when petitioner claimed
ownership and prevented them from fencing the property.

Since respondents were in actual or physical possession of the property when they filed their
complaint against petitioner on October 24, 2001, the prescriptive period for the reinvindicatory action
had not even commenced to run, even if petitioner was able to secure TCT No. 321744 over the
property in 1984. The reason for this is that

x x x one who is in actual possession of a piece of land claiming to be the owner thereof may
wait until his possession is disturbed or his title is attacked before taking steps to vindicate his
right, the reason for the rule being, that his undisturbed possession gives him a continuing right
to seek the aid of a court of equity to ascertain and determine the nature of the adverse claim
of a third party and its effect on his own title, which right can be claimed only by one who is in
possession.42

IN LIGHT OF ALL THE FOREGOING, the petition is DENIED. The decision of the Court of Appeals
in CA-G.R. SP No. 72686 is AFFIRMED. Costs against petitioner.

SO ORDERED.

Ruinous Buildings and Tress in Danger of Falling (Arts. 482-483)

HEIRS OF PACIFICO POCDO, namely, RITA POCDO GASIC, GOLIC POCDO, MARCELA
POCDO ALFELOR, KENNETH POCDO, NIXON CADOS, JACQUELINE CADOS LEE, EFLYN
CADOS, and GIRLIE CADOS DAPLIN, herein represented by their Attorney-in-Fact JOHN
POCDO, Petitioners,
vs.
ARSENIA AVILA and EMELINDA CHUA, Respondents.

RESOLUTION

CARPIO, J.:

This petition for review1 assails the 12 October 2011 Decision2 of the Court of Appeals in CA-G.R. CV
No. 91039. The Court of Appeals affirmed the 14 January 2008 Resolution of the Regional Trial Court
of Baguio City, Branch 61, in Civil Case No. 4710-R, dismissing the complaint for lack ofjurisdiction.

The Facts

In June 2000, Pacifico Pocdo, who was later substituted by his heirs upon his death, filed a complaint
to quiet title over a 1,728-square meter property (disputed property) located in Camp 7, Baguio City,
and covered by Tax Declaration 96-06008-106641. Pacifico claimed that the disputed property is part
of Lot 43, TS-39, which originally belonged to Pacifico’s father, Pocdo Pool. The disputed property is
allegedly different from the one- hectare portion alloted to Polon Pocdo, the predecessor-in-interest of
the defendants Arsenia Avila and Emelinda Chua, in a partition made by the heirs of Pocdo Pool.
Pacifico alleged that the defendants unlawfully claimed the disputed property, which belonged to
Pacifico.

The facts of the case were summarized by the Court of Appeals as follows:

As it appears, in 1894, Pocdo Pool, who died in 1942, began his occupation and claim on three lots
that were eventually surveyed in his name as Lot 43, TS 39-SWO-36431, Lot 44, TS 39-SWO-36420
and Lot 45 TS 39-SWO-36429 with an area of 144,623 [sq.m.], 64,112 [sq.m.], and 9,427 square
meters, respectively, and situated at Residence Section 4, Baguio City. These lots were the subject of
a petition to reopen judicial proceedings filed by the Heirs of Pocdo Pool with the CFI of Baguio City
in Civil Reservation Case No. 1, LRC Case 211. The registration of the lots in the names of the
petitioners were [sic] grantedin October 1964, but since the decision was not implemented within the
10 years [sic] prescribed period, the Heirs filed their ancestral land claims with the DENR. In August
1991, Certificates of Ancestral Lands Claims (CALS) were issued by the DENR for Lots 44 and 45,
but Lot 43 was not approved due to Memorandum Order 98-15 issued by the DENR Secretary in
September 199[8].

In the meantime, on September 14, 1960, Polon Pocdo, an heir of Pocdo Pool, ceded his rights over
the three lots to Pacifico Pocdo in exchange for a one hectare lot to be taken from Lot 43. However,
Pacifico entered into a contract with Florencio Pax and Braulio Yaranon on November 21, 1968
revoking the agreement with Polon. In the contract, the 4,875 square meters where Polon’s house
was located became part of the 1-hectare given to Pax and Yaranon in exchange for their services in
the titling of Pacifico’s lands.

Polon filed a complaint in August 1980 [with] the Office of the Barangay Captain at Camp 7, Baguio
City, which was settled by an amicable settlement dated September 3, 1980 between Pacifico and
Polon. They agreed that Polon would again retain the 4,875 square meters and Pacifico would give
the 5,125 square meter area, the remaining portion of the 1-hectare share of Polon, to be taken from
Lot 43 after a segregation.

On April 18, 1981, Polon entered into a Catulagan with Arsenia Avila authorizing the latter to
undertake the segregation of his one-hectare land from Lot 43 in accord with the amicable settlement
of September 3, 1980. In exchange, Polon would award to her 2,000 square meters from the 1-
hectare lot. After spending time, money and effort in the execution of the survey, Avila gave the
survey results to Polon prompting Polon to execute a Waiver of Rights dated January 21, 1987.
Accordingly, the subdivided lots were declared for tax purposes and the corresponding tax
declaration issued to Polon and Arsenia, with 8,010 square meters going to Polon and 1,993 square
meters to Avila.

On March 10, 2000, finding the amicable settlement, the Catulagan and Waiver of Rights in order, the
CENRO of Baguio City issued in favor of Avila a Certificate of Exclusion of 993 square meters from
the Ancestral Land Claim of the Heirs of Pocdo Pool over Lot 43.

On April 27, 2000, however, the Heirs of Polon Pocdo and his wife Konon filed an affidavit of
cancellation with OIC-CENRO Teodoro Suaking and on that basis, Suaking cancelled the Certificate
of Exclusion. On May 8, 2000, Avila complained to the Regional Executive Director or RED the
unlawful cancellation of her Certificate of Exclusion, and on June 1, 2000, the RED issued a
memorandum setting aside the revocation and restoring the Certificate of Exclusion. On August 13,
2001, Avila filed an administrative complaint against Suaking, and on July 16, 2002, the RED
dismissed the letter-complaint of Avila and referred the administrative complaint to the DENR Central
Office.

Acting on the motion for reconsideration by Avila[against oppositors Pacifico Pocdo, et al.], the RED
in an Order on October 28, 2002 set aside the July 16, 2002 order. The Affidavit of Cancellation dated
April 27, 2002 filed by the heirs of Polon Pocdo was dismissed for lack of jurisdiction and the validity
of the Amicable Settlement, Catulagan and Deed of Waiver of Rights were recognized. The letter
dated April 28, 2000 and certification issued on May 31, 2000 by Suaking were ordered cancelled.
Accordingly, the RED held that the TSA applications of Arsenia Avila and others under TSA
Application 15313, 15314, 15409 and 15410 should be given due course subject to compliance with
existing laws and regulations.

The DENR Secretary affirmed his Order in [his] Decision of May 14, 2004 in DENR Case 5599, with
the modification that the TSAs fo[r] the appellee Avila could now be made the basis of disposition
through public bidding and the appellant may participate in the bidding if qualified.

Pacifico Pocdo, as the appellant, went on appeal to the Office of the President which resulted in an
affirmance of DENR Secretary’s decision on April 19, 2005 in OP Case 04-H-360.

As mentioned, having exhausted administrative remedies, the Heirs of Pacifico Pocdo challenged the
OP resolution before the Court of Appeals, but this petition was dismissed for having been filed late.
The Supreme Court dismissed the Heirs’appeal from this decision.

The instant case, Civil Case 4710-R, before the Regional Trial Court of Baguio City, Branch 61 was
filed by Pacifico Pocdo against Arsenia Avila and Emelinda Chua in June 2000, just after the RED set
aside Suaking’s revocation on April 28, 2000 and ordered the restoration of Avila’s Certificate of
Exclusion. Since then, the judicial proceedings have run parallel to the administrative case. 3

In a Resolution4 dated 14 January 2008, the Regional Trial Court dismissed the case for lack of
jurisdiction. The trial court held that the DENR had already declared the disputed property as public
land, which the State, through the DENR, has the sole power to dispose. Thus, the claim of
petitioners to quiet title is not proper since they do not have title over the disputed property. The trial
court agreed with the DENR Secretary’s ruling that petitioner may participate in the public bidding of
the disputed property if qualified under applicable rules.
Petitioners appealed to the Court of Appeals, asserting that the case is not limited to quieting of title
since there are other issues not affected by the DENR ruling, particularly the validity of the Waiver of
Rights and the Catulagan. Petitioners maintained that the DENR’s ruling that the disputed property is
public land did not preclude the court from taking cognizance of the issues on who is entitled
possession to the disputed property and whether the questioned documents are valid and
enforceable against Pacifico and his heirs.

The Ruling of the Court of Appeals

The Court of Appeals ruled that petitioners, in raising the issue of quieting of title, failed to allege any
legal or equitable title to quiet. Under Article 477 of the Civil Code, in an action to quiet title, the
plaintiff must have legal or equitable title to, or interest in the real property which is the subject matter
of the action. Instead of an action to quiet title or accion reivindicatoria, the Court of Appeals stated
that petitioners should have filed an accion publiciana based merely on the recovery of
possession de jure.

On the validity of the Catulagan and the Waiver of Rights, the Court of Appeals held that petitioners
have no right to question these since they were not parties to said documents had not participated in
any manner in their execution. The Court of Appeals ruled that only the contracting parties are bound
by the stipulations of the said documents. Those not parties to the said documents, and for whose
benefit they were not expressly made, cannot maintain an action based on the said documents.

Thus, the Court ofAppeals affirmed the trial court’s resolution, subject to the right of petitioners to file
the appropriate action.

The Issues

Petitioners raise the following issues:

THE COURT OF APPEALS ERRED IN RULING THAT THE PETITIONERS SHOULD JUST FILE
THE NECESSARY ACTION FOR RECOVERY OF POSSESSION BECAUSE SAID COURT HAS
FAILED TO TAKE INTO CONSIDERATION THAT RECOVERY OF POSSESSION IS PRECISELY
ONE OF THE CAUSES OF ACTION IN THE PRESENT CASE.

THE COURT OF APPEALS ERRED IN RULING THAT THE RTC HAD NO JURISDICTION SINCE IT
IS THE COURTS, NOT THE DENR, THAT HAS JURISDICTION OVER ACTIONS INVOLVING
POSSESSION OF LANDS, EVEN ASSUMING WITHOUT ADMITTING, THAT THE LAND
ISAPUBLIC LAND.

THE COURT OFAPPEALS ERRED IN UPHOLDING THE DISMISSAL OF THE CASE BECAUSE
THERE ARE OTHER CAUSES OF ACTION OVER WHICH THE RTC HAS
JURISDICTION, i.e. RECOVERY OF POSSESSION, DECLARATION OF NULLITY OF
DOCUMENTS.

THE COURT OF APPEALS ERRED IN FINDING THAT THE PETITIONERS HAVE NO TITLE TO
THE PROPERTY THAT WOULD SUPPORT AN ACTION FOR QUIETING OF TITLE WHEN TRIAL
HAD NOT YET COMMENCED. NONETHELESS, THE RECORD IS REPLETE OF PROOF THAT
THE PETITIONERS HAVE RIGHTS/TITLE OVER THE SUBJECT PROPERTY. 5

The Ruling of the Court

We find the petition without merit.

In the administrative case involving the disputed property,which forms part of Lot 43, the DENR ruled
that Lot 43 is public land located within the Baguio Townsite Reservation. In his Decision dated 14
May 2004 in DENR Case No. 5599, the DENR Secretary stated:

Lot 43 is public land and part of the Baguio Townsite Reservation. This has already been settled by
the decision of the Court of First Instance of Benguet and Mountain Province dated 13 November
1922 in Civil Reservation Case No. 1. The fact that the heirs of Pocdo Pool were able to reopen Civil
Reservation Case No. 1, LRC Case No. 211 and secure a decision in their favor for registration of Lot
43 is of no moment.As held in Republic v. Pio R. Marcos (52 SCRA 238), the Court of First Instance
of Baguio and Benguet had no jurisdiction to order the registration of lands already declared public in
Civil Reservation Case No. 1. Lot 43 being part of the Baguio Townsite Reservation, disposition
thereof is under Townsite Sales Application ("TSA"). Precisely on this bone [sic] that Lot 43 was not
awarded a Certificate of Land Ancestral Claim [sic] under DENR Circular No. 03, series of 1990,
because it is within the Baguio Townsite Reservation. 6

The DENR Decision was affirmed by the Office of the President which held that lands within the
Baguio Townsite Reservation belong to the public domain and are no longer registrable under the
Land Registration Act.7 The Office of the President ordered the disposition of the disputed property in
accordance with the applicable rules of procedure for the disposition of alienable public lands within
the Baguio Townsite Reservation, particularly Chapter X of Commonwealth Act No. 141 on Townsite
Reservations and other applicable rules.

Having established that the disputed property is public land, the trial court was therefore correct in
dismissing the complaint to quiet title for lack of jurisdiction.1âwphi1 The trial court had no jurisdiction
to determine who among the parties have better right over the disputed property which is admittedly
still part of the public domain. As held in Dajunos v. Tandayag:8

x x x The Tarucs’ action was for "quieting of title" and necessitated determination of the respective
rights of the litigants, both claimants to a free patent title, over a piece of property, admittedly public
land. The law, as relied upon by jurisprudence, lodges "the power of executive control, administration,
disposition and alienation of public lands with the Director of Lands subject, of course, to the control
of the Secretary of Agriculture and Natural Resources."

In sum, the decision rendered in civil case 1218 on October 28, 1968 is a patent nullity. The court
below did not have power to determine who (the Firmalos or the Tarucs) were entitled to an award of
free patent title over that piece of property that yet belonged to the public domain. Neither did it have
power to adjudge the Tarucs as entitled to the "true equitable ownership" thereof, the latter’s effect
being the same: the exclusion of the Firmalos in favor of the Tarucs. 9

In an action for quieting of title, the complainant is seeking for "an adjudication that a claim of title or
interest in property adverse to the claimant is invalid, to free him from the danger of hostile claim, and
to remove a cloud upon or quiet title to land where stale or unenforceable claims or demands
exist."10 Under Articles 47611 and 47712 of the Civil Code, the two indispensable requisites in an action
to quiet title are: (1) that the plaintiff has a legal or equitable title to or interest in the real property
subject of the action; and (2) that there is a cloud on his title by reason of any instrument, record,
deed, claim, encumbrance or proceeding, which must be shown to be in fact invalid or inoperative
despite its prima facie appearance of validity.13 In this case, petitioners, claiming to be owners of the
disputed property, allege that respondents are unlawfully claiming the disputed property by using void
documents, namely the "Catulagan" and the Deed of Waiver of Rights. However, the records reveal
that petitioners do not have legal or equitable title over the disputed property, which forms part of Lot
43, a public land within the Baguio Townsite Reservation. It is clear from the facts of the case that
petitioners’ predecessors-in-interest, the heirs of Pocdo Pool, were not even granted a Certificate of
Ancestral Land Claim over Lot 43, which remains public land. Thus, the trial court had no other
recourse but to dismiss the case.

There is no more need to discuss the other issues raised since these are intrinsically linked to
petitioners' action to quiet title. WHEREFORE, we DENY the petition. We AFFIRM the 12 October
2011 Decision of the Court of Appeals in CA-G.R. CV No. 91039. SO ORDERED.

HEIRS OF DELFIN and MARIA TAPPA, Petitioners,

vs.
HEIRS OF JOSE BACUD, HENRY CALABAZARON and VICENTE MALUPENG, Respondents.

DECISION

JARDELEZA, J.:

This is a Petition for Review on Certiorari1 under Rule 45 of the Revised Rules of Court assailing the
Decision2 dated February 19, 2009 and Resolution3 dated April 30, 2009 of the Court of Appeals (CA)
in CA-G.R. CV No. 90026, which reversed and set aside the Decision4 dated July 6, 2007 of Branch
5, Regional Trial Court (RTC) ofTuguegarao City, Cagayan in Civil Case No. 5560 for Quieting of
Title, Recovery of Possession and Damages.

The Facts

On September 9, 1999, petitioners Delfin Tappa (Delfin) 5 and Maria Tappa (Spouses Tappa) filed a
complaint6 for Quieting of Title, Recovery of Possession and Damages (Complaint) against
respondents Jose Bacud (Bacud),7 Henry Calabazaron (Calabazaron), and Vicente Malupeng
(Malupeng).8 The property subject of the complaint is a parcel of land identified as Lot No. 3341, Pls-
793 with an area of 21,879 square meters, located in Kongcong, Cabbo, Pefiablanca, Cagayan (Lot
No. 3341).9

In their complaint, Spouses Tappa alleged that they are the registered owners of Lot No. 3341,
having been issued an Original Certificate of Title No. P-69103 (OCT No. P-69103) on September 18,
1992, by virtue of Free Patent No. 021519-92-3194. 10 Delfin allegedly inherited Lot No. 3341 from his
father, Lorenzo Tappa (Lorenzo). Spouses Tappa claimed that both Delfin and Lorenzo were in open,
continuous, notorious, exclusive possession of the lot since time immemorial. 11

In their Answer, 12 respondents Bacud, Calabazaron and Malupeng claimed that the original owner of
Lot No. 3341 was Genaro Tappa (Genaro) who had two children, Lorenzo and Irene. Upon Genaro's
death, the property passed on to Lorenzo and Irene by operation of law; and they became ipso
facto co-owners of the property. As co-owners, Lorenzo and Irene each owned 10,939 square meters
of the lot as their respective shares. Lorenzo had children namely, Delfin, Primitiva, and Fermina.
Upon the death of Irene, her share in tum passed to her heirs, Demetria, Juanita, Pantaleon and Jose
Bacud. 13
Respondents presented before the RTC a joint affidavit dated April 29, 1963 (1963 Affidavit) signed
by Delfin, his sisters, Primitiva and Fermina, and their mother, Modesta Angoluan. 14 The 1963
affidavit stated that Genaro originally owned Lot No. 3341. It further stated that one-half (Yz) of the
property was owned by Lorenzo; but that the whole property was declared as his, only for taxation
purposes.

Calabazaron claimed that he became the owner of 2,520 square meters of Lot No. 3341 by virtue of
two Deeds of Sale executed in his favor, one dated October 12, 1970 executed by Demetria, and
another dated August 22, 1971 executed by Juanita. 15 After the sale, Calabazaron entered into
possession of his portion and paid the real property taxes. 16 He remains in possession up to this
date. 17

Malupeng, on the other hand, claimed that he became the owner of 210 square meters of Lot No.
3341 by virtue of a Deed of Sale executed on November 30, 1970 by Pantaleon in his favor. 18 After
the sale, Malupeng entered into possession of his porcion of propeny and paid the real property
taxes. 19 He remains in possession up to this date. 20

Bacud claimed ownership over 1,690 square meters of Lot No. 3341 in his own right as heir of
Irene.21

Respondents started occupying their respective portions after the sale made to each of them. They
continued to occupy them despite several demands to vacate from Spouses Tappa. 22

Spouses Tappa claimed that the 1963 Affidavit was executed through force and intimidation. 23 Bacud
and Malupeng denied this allegation.24

The Ruling of the RTC

The RTC issued its Decision,25 the decretal portion of which reads:

WHEREFORE, judgment is hereby rendered in favor of the plaintiffs and the Court hereby orders:

1. Plaintiffs to be the owners of Lot 3341, Pls 793 and unqualifiedly vests in them the full and
untrammeled rights of ownership:

2. All the defendants must, if still in possession of portions of the lot in issue, convey the same
to the plaintiffs;

3. No pronouncement as to costs.

SO ORDERED.26

The R TC ruled that the basic requirement of the law on quieting of title under Article 447 of the Civil
Code was met, thus:

Delfin and Maria's title is clear and unequivocal, and its validity has never been assailed by the
defendants – nor has any evidence been adduced that successfully overcomes the
presumption of validity and legality that the title of Delfin and Maria enjoys. 27 (Emphasis in the
original.)
The RTC ruled that there was no document in the hands of respondents as strong and persuasive as
the title in the name of the Spouses Tappa that will support respondents' claim of ownership and
Irene's antecedent ownership.28 The RTC stated that the 1963 Affidavit contains nothing more than
the allegations of the affiants and does not, by itself, constitute proof of ownership of land, especially
as against documents such as titles.29

Respondents appealed to the CA, raising the following arguments:

First, respondents alleged that Spouses Tappa fraudulently applied for, and were issued a free patent
over Lot No. 3341, and eventually OCT No. P-69103 dated September 18, 1992. 30 They alleged that
Spouses Tappa committed fraud because they were not in possession of the lot since 1963, which
possession was required for an applicant for a free patent under the law. 31

Second, respondents argued that the complaint should be dismissed because both extinctive and
acquisitive prescription have already set in.32 Respondents claimed that both ordinary acquisitive
prescription of 10 years, and extraordinary acquisitive prescription of 30 years in claiming ownership
of immovable property apply in the case.33 They argued that more than 30 years have already lapsed
from the time they entered possession of the subject lot in 1963 up to the filing of the complaint on
September 9, 1999.34 They also pointed out that Spouses Tappa admitted in their complaint that
respondents were in possession of the lot since 1963. 35

Particularly, Calabazaron argued that the 10-year prescriptive period under Article 1134 of the Civil
Code applies to him by virtue of the two duly executed Deeds of Sale in his favor. 36 It was never
alleged that he had any participation in the alleged duress, force and intimidation in the execution of
the 1963 Affidavit.37 Hence, he is a purchaser in good faith and for value. Calabazaron entered
possession of the lot after the sale to him in 1970, thus, the prescriptive period of l0 years had long
lapsed. 38

Bacud and Malupeng claimed that, even assuming that the execution of the 1963 Affidavit was
attended with force and intimidation, the complaint against them should have been dismissed
because the extraordinary acquisitive prescriptive period of 30 years under Article 1137 of the Civil
Code applies to them.39 They also argued that the action for quieting of title had already prescribed
since the possession of Bacud and Malupeng started in 1963, which fact was allegedly admitted by
Spouses Tappa in their complaint. 40 Thus, Spouses Tappa had only until 1993 to file a complaint,
which they failed to do.

All respondents claimed that from the start of their possession, they (1) have paid real taxes on the
lot, (2) have planted crops, and (3) have continued to possess the lot in the concept of owners. 41

Third, respondents alleged that Spouses Tappa failed to prove their right over the subject lot because
they cannot rely on the certificate of title issued to them on September 18, 1992 by virtue of a free
patent.42 They asserted that Spouses Tappa fraudulently obtained the free patent on Lot No. 3341 by
concealing material facts; specifically the fact of not being in possession of the lot since 1963. 43

The Ruling of the CA

The CA set aside the decision of the RTC. 44 The relevant dispositive portion of the CA decision reads:

WHEREFORE, premises considered, the appeal is hereby GRANTED. The assailed decision dated

July 6, 2007 is hereby REVERSED and SET ASIDE, and another one entered DISMISSING the
complaint.
SO ORDERED.45

On the issue of prescription, the CA ruled in favor of respondents and explained that their possession
over Lot No. 3341 already ripened into ownership through acquisitive prescription. 46 The CA noted
that Spouses Tappa acknowledged in their complaint that they have not been in possession of the lot,
and that respondents have been continuously occupying portions of it since 1963. 47 It explained:

The substantial length of time between 1963, up to the time of filing of the present complaint on
September 9, 1999, which is more than 30 years, should be considered against [S]pouses Tappa,
and in favor of defendants-appellants. Settled is the rule that an uninterrupted adverse possession of
the land for more than 30 years could ripen into ownership of the land through acquisitive
prescription, which is a mode of acquiring ownership and other real rights over immovable property.
Hence, appellants' possession of the land has ripened into ownership by virtue of acquisitive
prescription.48 (Citation omitted.)

On the merits of the case, the CA ruled that the two indispensable requisites for an action to quiet title
under Articles 476 and 477 of the Civil Code were not met. 49

The first requisite is absent because Spouses Tappa do not have a legal or an equitable title to or an
interest in the property. The CA explained that the free patent granted to Spouses Tappa produced
no legal effect because Lot No. 3341 was a private land, thus:

As heretofore discussed, the open, continuous, exclusive, and notorious possession by appellants of
the subject parcel of land within the period prescribed by law has effectively converted it into a private
land. Consequently, the registration in the name of Maria Tappa on September 18, 1992 under OCT
[No.] P-69103, by vi1iue of Free Patent No. 021519-92-3194, produces no legal effect. Private
ownership of land-as when there is a prima facie proof of ownership like a duly registered possessory
information or a clear showing of open, continuous, exclusive, and notorious possession, by present
or previous occupants-is not affected by the issuance of a free patent over the same land, becam,e
the Public Land [L]aw applies only to lands of the public domain. 50 (Citation omitted.)

The CA further stated that while Spouses Tappa were able to obtain a free patent over the property,
and were able to register it under the Torrens system, they have not become its owners. The CA said
that "[r]egistration has never been a mode of acquiring ownership over immovable prope1ty---it does
not create title nor vest one but it simply confirms a title already vested, rendering it forever
indefeasible."51

The second requisite that the deed, claim, encumbrance or proceeding claimed to be casting cloud
on the title must be shown to be in fact invalid or inoperative despite its prima facie appearance of
validity is likewise unavailing. The CA ruled that no other evidence (aside from Delfin's own
testimony) was presented to prove the allegation of fraud and intimidation, making the testimony self-
serving.52 The CA further noted that Delfin's own sister, Fermina, one of the signatories of the 1963
Affidavit, belied his testimony. Fermina testified that they went to the house of one Atty. Carag to sign
the affidavit and they did so, on their own. 53

Spouses Tappa filed a Motion for Reconsideration, 54 which the CA denied.55

Hence, spouses Tappa filed a petition for review on certiorari before this court, raising the following
issues:

I. Whether the CA erred in dismissing Spouses Tappa's complaint for quieting of title against
respondents;56
 II. Whether the CA erred in not finding that Spouses Tappa's certificate of title cannot be
collaterally attacked in this case;57 and

III. Whether the CA erred in finding that respondents have acquired the property through
acquisitive prescription. 58

The Ruling of the Court

We affirm the decision of the CA.

The action for quieting of title

should not prosper.

The action filed by Spouses Tappa was one for quieting of title and recovery of possession.
In Baricuatro, Jr. v. Court of Appeals,  59 an action for quieting of title is essentially a common law
remedy grounded on equity, to wit:

x x x Originating in equity jurisprudence, its purpose is to secure"... an adjudication that a claim of title
to or an interest in property, adverse to that of the complainant, is invalid, so that the complainant and
those claiming under him may be forever afterward free from any danger of hostile claim." In an
action for quieting of title, the competent court is tasked to determine the respective rights of the
complainant and other claimants, "... not only to place things in their proper place, to make the one
who has no rights to said immovable respect and not disturb the other, but also for the benefit of
both, so that he who has the right would see every cloud of doubt over the property dissipated, and
he could afterwards without fear introduce the improvements he may desire, to use, and even
to abuse the property as he deems best. x x x. "60 (Emphasis in the original.)

In our jurisdiction, the remedy is governed by Article 476 and 477 of the Civil Code, which state:

Art. 476. Whenever there is a cloud on title to real property or any interest therein, by reason of any
instrument, record, claim, encumbrance or proceeding which is apparently valid or effective but is in
truth and in fact invalid, ineffective, voidable, or unenforceable, and may be prejudicial to said title, an
action may be brought to remove such cloud or to quiet the title.

An action may also be brought to prevent a cloud from being cast upon title to real property or any
interest therein.

Art. 477. The plaintiff must have legal or equitable title to, or interest in the real property which is the
subject-matter of the action. He need not be in possession of said property.

From the foregoing provisions, we reiterate the rule that for an action to quiet title to prosper, two
indispensable requisites must concur, namely: (1) the plaintiff or complainant has a legal or an
equitable title to or interest in the real property subject of the action; and (2) the deed, claim,
encumbrance or proceeding claimed to be casting cloud on his title must be shown to be in fact
invalid or inoperative despite its prima facie appearance of validity or legal efficacy.61

Spouses Tappa failed to meet these two requisites.

First, Spouses Tappa's claim of iegal title over Lot No. 3341 by virtue of the free patent and the
certificate of title, OCT No. P-69103 issued in their name cannot stand. The certificate of title
indjcates that it was issued by virtue of Patent No. 021519-92-3194. We agree with the CA that at the
time of the application for free patent, Lot No. 3341 had already become private land by virtue of the
open, continuous, exclusive, and notorious possession by respondents. Hence, Lot No. 3341 had
been removed from the coverage of the Public Land Act, 62 which governs public patent applications.

The settled rule is that a free patent issued over a private land is null and void, and produces no legal
effects. whatsoever.1awp++i1 Private ownership of land-as when there is a prima facie proof of
ownership like a duly registered possessory information or a clear showing of open, continuous,
exclusive, and notorious possession, by present or previous occupants-is not affected by the
issuance of a free patent over the same land, because the Public Land Law applies only to lands of
the public domain. The Director of Lands has no authority to grant free patent to lands that have
ceased to be public in character and have passed to private ownership. 63

In Magistrado v. Esplana,  64 we cancelled the titles issued pursuant to a free patent after finding that
the lots involved were privately owned since time immemorial. A free patent that purports to convey
land to which the Government did not have any title at the time of its issuance does not vest any
title in the patentee as against the true owner. 65

In this case, the parties were able to show that Lot No. 3341 was occupied by, and has been in
possession of the Tappa family, even before the 1963 Affidavit was executed. After the execution of
the 1963 Affidavit, respondents occupied their respective portions of the property. Delfin testified that
before his father, Lorenzo, died in 1961, Lorenzo had been occupying the lot since before the war,
and that Delfin was born there in 1934.66

Records show that Lorenzo declared Lot No. 3341 for taxation purposes as early as 1948, and paid
the real property taxes (evidenced by real property tax payment receipts in the name of Lorenzo from
1952 until his death in 1961).67 Spouses Tappa were likewise shown to pay the real property taxes
from 1961 to 2000.68 Similarly, respondents also declared their respective portions of Lot No. 3341 for
taxation in their names in 1994, and paid real property taxes on those portions from 1967 to
2004.69 Although tax declarations or realty tax payment of property are not conclusive evidence of
ownership, they are good indicia of possession in the concept of owner, for no one in his right mind
would be paying taxes for a property that is not in his actual or constructive possession. They
constitute at least proof that the holder has a claim of title over the property. 70

Spouses Tappa also admitted in their complaint that sometime in 1963, Bacud and Malupeng started
occupying portions of Lot No. 3341 and planted crops on the property, while Calabazaron did the
same on another portion of the lot in the 1970's. 71 The complaint stated further that since 1963. the
respondents "continuously occupied portion of the subject land." 72

In view of the foregoing circumstances that show open, continuous, exclusive and notorious
possession and occupation of Lot No. 3341, the property had been segregated from the public
domain. 73 At the time the patent and the certificate of title were issued in 1992, Spouses Tappa and
their predecessors-in-interest were already in possession, at least to the half of the lot, since 1934;
and respondents were also in possession of the other half since 1963. Therefore, the free patent
issued covers a land already segregated from the public domain.

In Heirs of Simplicio Santiago v. Heirs of Mariano E. Santiago, 74 we ruled, thus:

Considering the open, continuous, exclusive and notorious possession and occupation of the land by
respondents and their predecessors in interests, they are deemed to have acquired, by operation of
law, a right to a government grant without the necessity of a certificate of title being issued. The land
was thus segregated from the public domain and the director of lands had no authority to issue a
patent. Hence, the free patent covering Lot 2344, a private land, and the certificate of title issued
pursuant thereto, are void.75

Records also show that Spouses Tappa were aware of respondents' possession of the disputed
portions of Lot No. 3341. They even admitted such possession (since 1963) by respondents in their
complaint filed in 1999. Despite this, Spouses Tappa were able to obtain a free patent of
the whole property even if they were not in possession of some of its portions. Therefore, Free Patent
No. 021519-92-3194 and OCT No. P-69103 are void not only because it covers a private land, but
also because they fraudulently included76 respondents' portion of the property. In Avila v.
Tapucar,  77 we held that "[i]f a person obtains a title under the Torrens system, which includes by
mistake or oversight land which can no longer be registered under the system, he does not, by virtue
of the said certificate alone, become the owner of the lands illegally included." 78

In an action to quiet title, legal title denotes registered ownership, while equitable title means
beneficial ownership. 79 As discussed, the free patent and the certificate of title issued to Spouses
Tappa could not be the source of their legal title.

The second requisite for an action to quiet title is likewise wanting. We find that although an
instrument (the 1963 Affidavit) exists, and which allegedly casts cloud on Spouses Tappa's title, it
was not shown to be in fact invalid or ineffective against Spouses Tappa's rights to the property.

A cloud on a title exists when (1) there is an instrument (deed, or contract) or record or claim or
encumbrance or proceeding; (2) which is apparently valid or effective; (3) but is, in truth and in fact,
invalid, ineffective, voidable, or unenforceable or extinguished (or terminated) or barred by extinctive
prescription; and (4) and may be prejudicial to the title. 80

The 1963 Affidavit it is no doubt an instrument, which appears to be valid. It is dated and appears to
be executed and signed by Delfin, his mother, and sisters. It is also notarized by a public notary. It
states that Genaro originally owns the land described, and that one-half (l/2) of which is actually
owned by Irene as a co-heir. This is contrary to the claim of

Spouses Tappa that the property was solely Lorenzo's. Respondents' argue that this affidavit
evidences the title of their predecessor-in-interest over Lot No. 3341 and effectively, theirs. 81

The 1963 Affidavit however, was not proven to be, in fact, invalid, ineffective, voidable, or
unenforceable, or extinguished (or terminated) or barred by extinctive prescription. The CA correctly
found that Spouses Tappa's claim of force and intimidation in the execution of the 1963 Affidavit was
"unsubstantiated."82 The CA pointed out that, "[a]side from the testimony of Delfin Tappa, no other
evidence was presented to prove the claim of force and intimidation, hence, it is at most, self-
serving."53 Also, the 1963 Affidavit was duly notarized and, as such, is considered a public document,
and enjoys the presumption of validity as to its authenticity and due execution.

Thus, we affirm the ruling of the CA that the requisites for an action to quiet title are wanting in this
case.84

There is no collateral attack

on the Certificate of Title.

Spouses Tappa argue that respondents collaterally attacked the certificate of title of Lot No. 3441
when they raised the issue of its validity. Spouses Tappa used the same argument against the CA
when it declared the certificate of title to be without legal effect. 85
Spouses Tappa's argument is without merit. The certificate of title was not collaterally attacked.
Section 48 of PD 1529,86 provides that "[a] certificate of title shall not be subject to collateral attack. It
cannot be altered, modified, or canceled except in a direct proceeding in accordance with law." This
rule is not applicable in this case.

We reiterate our ruling in Lee Tek Sheng v. Court of Appeals,87 where we stated that, "[ w ]hat cannot
be collaterally attacked is the certificate of title and not the title. The certificate referred to is that
document issued by the Register of Deeds x x x. By title, the law refers to ownership which is
represented by that document."88 Ownership is different from a certificate of title, the latter being only
the best proof of ownership of a piece of land. 89 Title as a concept of ownership should not be
confused with the certificate of title as evidence of such ownership although both are interchangeably
used.90

In Vda. de Figuracion v. Figuracion-Gerilla,  91 citing Lacbayan v. Samay, Jr.,  92 we reaffirm this ruling,
and stated that:

Mere issuance of a certificate of title in the name of any person does not foreclose the possibility that
the real property may be under co-ownership with persons not named in the certificate, or that the
registrant may only be a trustee, or that other parties may have acquired interest over the property
subsequent to the issuance of the certificate of title. Stated differently, placing a parcel of land under
the mantle of the Torrens system does not mean that ownership thereof can no longer be disputed.
The certificate cannot always be considered as conclusive evidence of ownership. 93

In this case, what respondents dispute, as raised in their Answer, is Spouses Tappa's claim of sole
ownership over Lot No. 3341. As affirmative defense, respondents claimed that Spouses Tappa were
owners of only one-half (1/2) of the lot since it was originally owned by Genaro, the father of Lorenzo
and Irene. 94 Respondents claim that Lorenzo and Irene became ipso facto co-owners of the
lot. 95 Thus, respondents claim that, by virtue of a valid transfer from Irene's heirs, they now have
ownership and title over portions of Lot No. 3341, and that they have been in continuous, exclusive,
and uninterrupted possession of their occupied portions. 96 Malupeng and Calabazaron claim
ownership and title over their respective portions by virtue of a valid sale. Bacud claims ownership
and title by virtue of succession. Therefore, it is the ownership and title of Spouses Tappa which
respondents ultimately attack. OCT No. P-69103 only serves as the document representing Spouses
Tappas' title.

Respondents cannot likewise argue that the certificate of title of Spouses Tappa is indefeasible. 97 We
have already ruled that the one-year prescriptive period does not apply when the person seeking
annulment of title or reconveyance is in possession of the property. 98 This is because the action
partakes of a suit to quiet title, which is imprescriptible. 99 In this case, respondents have been proved
to be in possession of the disputed portions of Lot No. 3341. Thus, their claim against Spouses
Tappa cannot be barred by the one-year prescriptive period.

WHEREFORE, in view of the foregoing, the petition is DENIED and the Decision of the Court of
Appeals in CA-G.R. CV No. 90026 is AFFIRMED.

SO ORDERED.