Civil

G.R. No.
197561 April 7, 2014

COCA-COLA BOTTLERS PHILIPPINES, INC., Petitioner,
vs.
CITY OF MANILA; LIBERTY M. TOLEDO, in her capacity as Officer-in-Charge (OIC),
Treasurer of the City of Manila; JOSEPH SANTIAGO, in his capacity as OIC, Chief License
Division of the City of Manila; REYNALDO MONTALBO, in his capacity as City Auditor of the
City of Manila, Respondents.
D E C I S I O N
PERALTA, J .:
Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court seeking to
reverse and set aside the Orders1 dated December 22, 2010 and June 21, 2011, respectively, of the
Regional Trial Court of Manila (RTC-Manila) in Civil Case No. 00-97081.
The factual and procedural antecedents follow:
This case springs from the Decision2 rendered by the RTC-Manila, dated September 28, 2001, in the case
entitled Coca-Cola Bottlers Philippines, Inc. v. City of Manila, et al., docketed as Civil Case No. 00-
97081, granting petitioners request for tax refund or credit assessed under Section 213 of the Revenue
Code of Manila upon finding that there was double taxation in the imposition of local business taxes. The
dispositive portion of said Decision reads:
WHEREFORE, premises considered, judgment is hereby rendered ordering defendants to either refund or
credit the tax assessed under Section 21 of the Revenue Code of Manila and paid for by plaintiff on the
first quarter of year 2000 in the amount of P3,036,887.33.
The defendants City of Manila, etc. are enjoined from collecting the tax from plaintiff Coca-Cola Bottlers
Phils., Inc. under Section 21 of the Revenue Code of Manila. The counterclaims [sic] of respondents is
hereby DENIED for lack of merit.
Accordingly, the Injunction bond posted by petitioner is hereby CANCELLED.
SO ORDERED.4
Aggrieved by the foregoing, respondents herein appealed to the Court of Appeals via an ordinary appeal.5
On April 9, 2003, the Court of Appeals issued a Resolution dismissing respondents appeal on the ground
that the same was improperly brought to the said Court pursuant to Section 2, Rule 50 of the Revised
Rules of Court. Despite respondents motion for reconsideration, the Court of Appeals affirmed its
decision in its Resolution dated February 28, 2005.6
On February 10, 2010, this Court promulgated a Resolution denying the Petition for Review filed by the
respondents, the dispositive portion of which reads:
WHEREFORE, the Court DENIES the petition. The Court AFFIRMS the 09 April 2003 and 28 February
2005 Resolutions of the Court of Appeals in CA-G.R. CV No. 74517.
SO ORDERED.7
On May 12, 2010, the Clerk of Court of this Court issued an Entry of Judgment8 relative to the aforesaid
Resolution and declared the same final and executory on March 10, 2010.
On June 3, 2010, petitioner filed with the RTC-Manila a Motion for Execution for the enforcement of the
Decision dated September 28, 2001 and the issuance of the corresponding writ of execution.9 Finding
merit therein, on June 11, 2010, the RTC-Manila issued an Order10 granting petitioners Motion for
Execution and directed the Branch Clerk of Court to issue the corresponding writ of execution to satisfy
the judgment.
On June 15, 2010, the Branch Clerk of Court, Branch 21 of the RTC Manila issued a Writ of Execution
directing the Sheriff to cause the execution of the Decision dated September 28, 2001, disposing as
follows:
NOW THEREFORE, you are hereby commanded to cause the execution of the aforesaid judgment,
including payment in full of your lawful fees for the service of this writ.11
Aggrieved, respondents filed a Motion to Quash Writ of Execution. In response, petitioner filed its
Opposition thereto on December 12, 2010.12
On December 22, 2010, the RTC-Manila issued an Order13 granting the Motion to Quash Writ of
Execution, ruling:
Finding the motion to be prejudicial to the defendants, if implemented, and considering that the projects
of the City will be hampered, the same is hereby GRANTED.
WHEREFORE, premises considered, the Motion to Quash the Writ of Execution is hereby GRANTED.
SO ORDERED.14
Herein petitioner filed a Motion for Reconsideration, but the same was denied by the RTC-Manila in its
Order dated June 21, 2011, reasoning that both tax refund and tax credit involve public funds. Thus,
pursuant to SC Administrative Circular No. 10-2000,15 the enforcement or satisfaction of the assailed
decision may still be pursued in accordance with the rules and procedures laid down in Presidential
Decree (P.D.) No. 1445, otherwise known as the Government Auditing Code of the Philippines.16
Hence, the present Petition for Review on Certiorari raising the following assignment of errors:
1. THE HONORABLE COURT A QUOSERIOUSLY ERRED WHEN IT FAILED TO
CONSIDER THAT THE WRIT OF EXECUTION (FOR SPECIAL JUDGMENT) ISSUED BY
THE BRANCH CLERK OF COURT DOES NOT INVOLVE THE LEVY OR GARNISHMENT
OF FUNDS AND PROPERTY USED OR BEING USED FOR PUBLIC
PURPOSE,ADMINISTRATIVE CIRCULAR NO. 10-2000 HAS THEREFORE NO
RELEVANCE IN THIS CASE.
CONSIDER THAT THE JUDGMENT IN THIS CASE REQUIRES EITHER TAX REFUND
(PAYMENT OF SUM OF MONEY) OR TAX CREDIT (ISSUANCE OF TAX CREDIT
CERTIFICATE).
CONSIDER THAT THE DEFENDANTS HAVE BEEN ISSUING TAX CREDIT
CERTIFICATES TO OTHER TAXPAYERS FOR ILLEGALLY COLLECTED TAXES EVEN
WITHOUT ANY APPROPRIATE MEASURE.
CONSIDER THAT THE REASON CITED IN THE ORDER IN QUASHING THE WRIT OF
EXECUTION IS NOT ONE OF THE GROUNDS LAID DOWN BY LAW. (GUTIERREZ VS.
VALIENTE, 557 SCRA 211)
CONSIDER THAT ITS ASSAILED ORDER HAS IN EFFECT REVERSED THE JUDGMENT
IN THIS CASE, THUS, DEPRIVING PETITIONER THE FRUITS OF ITS LABOR BEFORE
THE COURTS.17
At the onset, it bears stressing that while petitioner lays down various grounds for the allowance of the
petition, the controversy boils down to the propriety of the issuance of the writ of execution of the
judgment ordering respondents either to refund or credit the tax assessed under Section 2118 of the
Revenue Code of Manila in the amount of Php3,036,887.33.
After careful consideration of the facts and laws obtaining in this case, we find that the issuance of the
Writ of Execution was superfluous, given the clear directive of the RTC-Manila in its Decision dated
September 28, 2001. We do not, however, agree with respondents view that Administrative Circular No.
10-2000 is applicable to the instant case for reasons discussed hereinbelow.
In its first assigned error, petitioner argues that the writ of execution issued by the Branch Clerk of Court
does not involve the levy or garnishment of funds and property used or being used for public purpose
given that the writ was issued "For: Special Judgment." Thus, Administrative Circular No. 10-2000 has
no relevance in the instant case.
In its Decision dated September 28,2001, the RTC-Manila directs respondents to either refund or credit
the tax under Section 21 of the Revenue Code of Manila, which was improperly assessed but nevertheless
paid for by petitioner on the first quarter of year 2000 in the amount of P3,036,887.33. The judgment does
not actually involve a monetary award or a settlement of claim against the government.
Under the first option, any tax on income that is paid in excess of the amount due the government may be
refunded, provided that a taxpayer properly applies for the refund.19 On the other hand, the second option
works by applying the refundable amount against the tax liabilities of the petitioner in the succeeding
taxable years.20
Hence, instead of moving for the issuance of a writ of execution relative to the aforesaid Decision,
petitioner should have merely requested for the approval of the City of Manila in implementing the tax
refund or tax credit, whichever is appropriate. In other words, no writ was necessary to cause the
execution thereof, since the implementation of the tax refund will effectively be a return of funds by the
City of Manila in favor of petitioner while a tax credit will merely serve as a deduction of petitioners tax
liabilities in the future.
In fact, Section 252 (c) of the Local Government Code of the Philippines is very clear that "[i]n the event
that the protest is finally decided in favor of the taxpayer, the amount or portion of the tax protested shall
be refunded to the protestant, or applied as tax credit against his existing or future tax liability." It was not
necessary for petitioner to move for the issuance of the writ of execution because the remedy has already
been provided by law.
Thus, under Administrative Order No. 270 prescribing rules and regulations implementing the Local
Government Code, particularly Article 286 thereof, the tax credit granted a taxpayer shall be applied to
future tax obligations of the same taxpayer for the same business, to wit:
ARTICLE 286. Claim for Refund or Tax Credit. All taxpayers entitled to a refund or tax credit
provided in this Rule shall file with the local treasurer a claim in writing duly supported by evidence of
payment (e.g., official receipts, tax clearance, and such other proof evidencing overpayment)within two
(2) years from payment of the tax, fee, or charge. No case or proceeding shall be entertained in any court
without this claim in writing, and after the expiration of two (2) years from the date of payment of such
tax, fee, or charge, or from the date the taxpayer is entitled to a refund or tax credit.
The tax credit granted a taxpayer shall not be refundable in cash but shall only be applied to future tax
obligations of the same taxpayer for the same business. If a taxpayer has paid in full the tax due for the
entire year and he shall have no other tax obligation payable to the LGU concerned during the year, his
tax credits, if any, shall be applied in full during the first quarter of the next calendar year on the tax due
from him for the same business of said calendar year.
Any unapplied balance of the tax credit shall be refunded in cash in the event that he terminates operation
of the business involved within the locality.21
Accordingly, while we find merit in petitioners contention that there are two (2) ways by which
respondents may satisfy the judgment of the RTC-Manila: (1) to pay the petitioner the amount of
Php3,036,887.33 as tax refund; or (2) to issue a tax credit certificate in the same amount which may be
credited by petitioner from its future tax liabilities due to the respondent City of Manila,22 the issuance of
the Writ of Execution relative thereto was superfluous, because the judgment of the RTC-Manila can
neither be considered a judgment for a specific sum of money susceptible of execution by levy or
garnishment under Section 9,23 Rule 39 of the Rules of Court nor a special judgment under Section 11,24
Rule 39 thereof.
Moreover, given that Presidential Decree No. 1445 and Administrative Circular No. 10-2000 involve a
settlement of a claim against a local government unit, the same finds no application in the instant case
wherein no monetary award is actually awarded to petitioner but a mere return or restoration of
petitioners money, arising from an excessive payment of tax erroneously or illegally imposed and
received.
It could not have been the intention of the law to burden the taxpayer with going through the process of
execution under the Rules of Civil Procedure before it may be allowed to avail its tax credit as affirmed
by a court judgment. If at all, the City of Manila Local Treasury may be allowed to verify documents and
information relative to the grant of the tax refund or tax credit (i.e., determine the correctness of the
petitioner's returns, and the tax amount to be credited), in consonance with the ruling in San Carlos
Milling Co., Inc. v. Commissioner of Internal Revenue,25 which may be applied by analogy to the case at
bar, to wit:
It is difficult to see by what process of ratiocination petitioner insists on the literal interpretation of the
word "automatic." Such literal interpretation has been discussed and precluded by the respondent court in
its decision of 23 December1991 where, as aforestated, it ruled that "once a taxpayer opts for either a
refund or the automatic tax credit scheme, and signified his option in accordance with the regulation, this
does not ipso facto confer on him the right to avail of the same immediately. An investigation, as a matter
of procedure, is necessary to enable the Commissioner to determine the correctness of the petitioner's
returns, and the tax amount to be credited.
Prior approval by the Commissioner of Internal Revenue of the tax credit under then section 86 (now
section 69) of the Tax Code would appear to be the most reasonable interpretation to be given to said
section. An opportunity must be given the internal revenue branch of the government to investigate and
confirm the veracity of the claims of the taxpayer. The absolute freedom that petitioner seeks to
automatically credit tax payments against tax liabilities for a succeeding taxable year, can easily give rise
to confusion and abuse, depriving the government of authority and control over the manner by which the
taxpayers credit and offset their tax liabilities, not to mention the resultant loss of revenue to the
government under such a scheme.26
In its third assignment of error, petitioner postulates that the RTC Manila seriously erred when it failed to
consider that the respondents have been issuing tax credit certificates to other taxpayers for illegally
collected taxes even without any appropriate measure.1wphi1
On the other hand, respondents argue that the same raises a question of fact which would entail an
examination of probative value of documentary evidence which, in fact, were not introduced in the course
of the trial but only as a mere attachment to the Motion for Reconsideration of petitioner.27
Petitioners sweeping statement cannot hold water as the factual and legal milieu of the tax refund cases
submitted to the City of Manila, as well as the circumstances availing in each of those cases, vary,
requiring a different action from the City of Manila. As such, the case of Asian Terminals Inc. as well as
the case of Tupperware Brands Phils., Inc. and Smart Communications, Inc., as cited by petitioner,28
should not be compared to the instant case because it has not been proven that the factual and procedural
circumstances availing therein are similar to the instant case.
For its fourth assigned error, petitioner argues that the reason cited in the Order quashing the Writ of
Execution is not one of the grounds laid down by law.
Respondents aver, on the other hand, that in granting the Motion to Quash, the RTC-Manila plainly
conceded that the Writ of Execution was improvidently issued as it was prejudicial to the respondents.
Respondents also argue that the rule that government funds are generally exempt from execution is based
on obvious considerations of public policy; thus, the primary functions and devolved public welfare
services rendered by the respondent City of Manila cannot be interrupted or abandoned by the withdrawal
of its meager resources from their lawful and particular purpose based on the appropriation ordinance.29
Finding that the issuance of the Writ of Execution was superfluous in the first place, this Court finds the
foregoing issue inapt for discussion. Nevertheless, this Court disagrees with petitioners fifth contention
that the assailed decision of the RTC-Manila granting the Motion to Quash the Writ of Execution has, in
effect, reversed the judgment in the instant case.
What is at issue in the instant petition is merely the propriety of the enforcement of the writ of execution
issued by the RTC-Manila. Clearly, this Court has already ruled upon the validity of the tax refund or the
tax credit due to the petitioner and has rendered the same final and executory.
The lower court, therefore, has not effectively reversed the judgment in favor of petitioner. The court a
quos reason for quashing the Writ of Execution was to allow the parties to enforce the judgment by
complying first with the rules and procedures of P.D. No. 1445 and Administrative Circular No. 10-
2000.30
WHEREFORE, premises considered, the petition is GRANTED. Accordingly, petitioner Coca-Cola
Bottlers, Inc. is entitled to a tax refund or tax credit without need for a writ of execution, provided that
petitioner complies with the requirements set by law for a tax refund or tax credit, whichever is
applicable.
SO ORDERED.
G.R. No. 179800
REPUBLIC OF THE PHILIPPINES represented by the COMMISSIONER OF INTERNAL
REVENUE, Petitioner, v. PHILIPPINE AIRLINES, INC. (PAL), Respondent.
D E C I S I O N
PERALTA, J .:
Before this Court is a Petition for Review on Certiorari ,
1
cralaw under Rule 45 of the Revised Rules of
Court, seeking to set aside the August 9, 2007 Decision
2
cralaw and September 17, 2007
Resolution
3
cralaw of the Court of Tax Appeals (CTA) En Banc, in E.B. Case No. 273 (CTA Case No.
6962).
The facts, as culled from the record by the CTA En Banc:
[Respondent Philippine Airlines] (PAL) is a corporation duly organized and existing under and by virtue
of the laws of the Republic of the Philippines. It is engaged in the air transportation business with
principal address at the 9th Floor, PAL Center, Legaspi Village, Makati City.
[Petitioner] Commissioner of Internal Revenue [CIR] is the duly authorized government official
empowered, among others, to refund erroneously collected taxes under the 1997 National Internal
Revenue Code (NIRC), as amended, with office address at the BIR National Office Building, Agham
Road, Diliman, Quezon City.
To meet the exigencies of its daily business operations, [respondent] PAL availed [of] the communication
services of the Philippine Long Distance Company (PLDT). For the period January 1, 2002 to December
31, 2002, PAL allegedly paid PLDT the 10% [Overseas Communications Tax] OCT in the amount of
P134,431.95 on its overseas telephone calls.
On February 24, 2004, [respondent] PAL, through its AVP-Financial Planning and Analysis Ma. Stella L.
Diaz, filed with the Commissioner a claim for refund in the amount of P134,431.95 representing the total
amount of 10% OCT paid to PLDT from January to December 2002 citing as legal bases Section 13 of
Presidential Decree (P.D.) No. 1590
4
cralaw and BIR Ruling No. 97-94 dated April 13, 1994.
Due to the Commissioner's inaction on its claim for refund, PAL appealed before the CTA on April 22,
2004. The case was raffled to the Second Division of the CTA.
5
cralaw
Respondent PAL argued that since it incurred negative taxable income
6
cralaw for fiscal years 2002 and
2003 and opted for zero basic corporate income tax, which was lower than the 2% franchise tax,
respondent PAL had complied with the "in lieu of all other taxes" clause of Presidential Decree (P.D.) No.
1590.
7
cralaw Thus, it was no longer liable for all other taxes of any kind, nature, or description, including
the 10% OCT, and the erroneous payments thereof entitled it to a refund pursuant to its franchise.
8
cralaw
Petitioner CIR disagreed. It maintained that Section 120 of the 1997 NIRC, as amended, imposes 10%
OCT on overseas dispatch, message or conversion originating from the Philippines, which includes PLDT
communication services. It further stated that respondent PAL, in order for it to be not liable for other
taxes, in this case the 10% OCT, should pay the 2% franchise tax, since it did not pay any amount as its
basic corporate income tax.
9
cralaw
Ruling of CTA Second Division
The CTA Second Division rendered a Decision dated November 13, 2006, and ruled that respondent PAL
was not required to pay the 10% OCT and, therefore, was not entitled to the refund, based on the "in lieu
of all taxes" provision under Sec. 13 of P.D. No. 1590, respondent PAL's franchise.
The Second Division granted respondent PAL's claim for a refund of the OCT, albeit in the reduced
amount of P93,424.67.
10
cralaw The amounts of P2,424.16 and P38,583.12 were disallowed due to non-
verification and prescription, respectively.
11
cralaw
The Second Division reasoned that since respondent PAL chose to pay the basic corporate income tax for
January to December 2002, and given that for the same period respondent PAL incurred zero tax liability,
it was not required to pay the 2% franchise tax before it could avail itself of the "in lieu of all taxes"
provision under Sec. 13 of P.D. No. 1590.
12
cralaw It emphasized that the law simply states that PAL, in
order for it to be exempt from taxes, must only choose between two alternatives under Sec. 13 of P.D. No.
1590, namely: (1) the basic corporate income tax or (2) the 2% franchise tax.
13
cralaw And, having chosen
the first option, respondent PAL was under no obligation to pay the 2% franchise tax in order to avail
itself of the exemption.
Petitioner CIR filed a Motion for Partial Reconsideration of the Decision of the CTA Second Division.
However, the same was denied on February 7, 2007. Consequently, petitioner CIR filed a Petition for
Review with the CTA En Banc.
Ruling of the CTA En Banc
The CTA En Banc upheld the Decision of the CTA Second Division and pointed out that since
respondent PAL chose the first option, even if it incurred negative taxable income and consequently did
not pay any income tax, it could still avail itself of the exemption, and could not be held liable for the
10% OCT.
14
cralaw The operative act, in order for it to avail itself of exemption from all other taxes under
the "in lieu of all other taxes" clause of its Charter, is actual exercise by respondent PAL of the option to
avail itself either of the basic corporate income tax or the 2% franchise tax, and no actual payment is
required.
15
cralaw
Hence, the Commissioner of Internal Revenue, through the Office of the Solicitor General, filed before
this Court a Petition for Review on certiorari under Rule 45 of the Rules of Court assailing the CTA En
Banc Decision dated August 9, 2007.
Issue
The sole issue for consideration before this Court, as stated in the present petition, is:
WHETHER OR NOT RESPONDENT IS EXEMPT FROM THE PAYMENT OF THE 10%
OVERSEAS COMMUNICATIONS TAX UNDER ITS FRANCHISE, PD 1590, AND THEREFORE,
ENTITLED TO THE REFUND PRAYED FOR.
16
cralaw
The Court's Ruling
The petition is without merit.
Sec. 13 of P.D. No. 1590 states that:
In consideration of the franchise and rights hereby granted, the grantee shall pay to the Philippine
Government during the life of this franchise whichever of subsections (a) and (b) hereunder will result in
a lower tax:
(a) The basic corporate income tax based on the grantee's annual net taxable income computed in
accordance with the provisions of the National Internal Revenue Code; or
(b) A franchise tax of two percent (2%) of the gross revenues derived by the grantee from all sources,
without distinction as to transport or nontransport operations; provided, that with respect to international
air-transport service, only the gross passenger, mail, and freight revenues from its outgoing flights shall
be subject to this tax.
The tax paid by the grantee under either of the above alternatives shall be in lieu of all other taxes, duties,
royalties, registration, license, and other fees and charges of any kind, nature, or description, imposed,
levied, established, assessed, or collected by any municipal, city, provincial, or national authority or
government agency, now or in the future, including but not limited to the following:
x x x x
Petitioner firmly contends that the law uses the mandatory terms "shall pay whichever will result in a
lower tax"; and while these words clearly envision the payment of a lower tax, petitioner asserts that they
mandate payment, nonetheless. Hence, petitioner argues that since respondent PAL has not paid taxes
during the fiscal years subject of the refund, respondent PAL cannot claim exemption from paying other
taxes under the "in lieu of all taxes" provision.
Petitioner's contention does not hold water.
It is worthy to note that the sole issue raised by petitioner in this case has already been settled in a similar
case entitled Commissioner of Internal Revenue v. Philippine Airlines,
17
cralaw penned by then Chief
Justice Artemio Panganiban. This was the same case upon which the CTA En Banc Decision was based.
In said case, therein respondent PAL also sought the refund of the amount of P2,241,527.22, which
represented the total amount of 20% final withholding tax withheld by various withholding agent banks
for the period starting March 1995 through February 1997.
18
cralaw Therein respondent PAL's request for
a refund was also based on the "in lieu of all taxes" provision found under Sec. 13 of P.D. 1590.
Therein petitioner CIR argued that the "in lieu of all other taxes" proviso was a mere incentive that
applied only when therein respondent PAL actually paid something (emphasis supplied), that is, either the
basic corporate income tax or the franchise tax.
19
cralaw Because of the zero tax liability of respondent
under the basic corporate income tax system, it was not eligible for exemption from other taxes.
20
cralaw
Deciding in favor of therein respondent PAL, this Court enunciated:
A franchise is a legislative grant to operate a public utility. Like those of any other statute, the ambiguous
provisions of a franchise should be construed in accordance with the intent of the legislature. In the
present case, Presidential Decree 1590 granted Philippine Airlines an option to pay the lower of two
alternatives: (a) "the basic corporate income tax based on PAL's annual net taxable income computed in
accordance with the provisions of the National Internal Revenue Code" or (b) "a franchise tax of two
percent of gross revenues." Availment of either of these two alternatives shall exempt the airline from the
payment of "all other taxes," including the 20 percent final withholding tax on bank deposits.
x x x x
A careful reading of Section 13 rebuts the argument of the CIR that the "in lieu of all other taxes" proviso
is a mere incentive that applies only when PAL actually pays something. It is clear that PD 1590 intended
to give respondent the option to avail itself of Subsection (a) or (b) as consideration for its franchise.
Either option excludes the payment of other taxes and dues imposed or collected by the national or the
local government. PAL has the option to choose the alternative that results in lower taxes. It is not the fact
of tax payment that exempts it, but the exercise of its option. (Emphasis and underscoring supplied).
x x x x
The fallacy of the CIR's argument is evident from the fact that the payment of a measly sum of one peso
would suffice to exempt PAL from other taxes, whereas a zero liability arising from its losses would not.
There is no substantial distinction between a zero tax and a one-peso tax liability."
21
cralaw
It is clear from the foregoing that this Court had already settled the issue of whether or not there was a
need for the actual payment of tax, either the basic corporate income tax or the 2% franchise tax, before
therein respondent PAL could avail itself of the "in lieu of all other taxes" provision under its Charter.
This Court finds no cogent reason to deviate from the ruling in the said case.
This Court reiterates the pronouncement of the CTA that under the first option of Sec. 13 of P.D. No.
1590, the basis for the tax rate is PAL's annual net taxable income. By basing the tax rate on the annual
net taxable income, P.D. No. 1590 necessarily recognized the situation in which taxable income may
result in a negative amount and, thus, translate into a zero tax liability.
22
cralaw In this scenario,
respondent PAL operates at a loss and no taxes are due. Consequently, the first option entails a lower tax
liability than the second option.
Lastly, petitioner contends that since P.D. No. 1590 does not provide for an exemption from the payment
of taxes, any claim of exemption from the payment thereof must be strictly construed against the
taxpayer.
23
cralaw Said position is, however, dispelled by Commissioner of Internal Revenue v. Philippine
Airlines, where this Court ruled:
While the Court recognizes the general rule that the grant of tax exemptions is strictly construed against
the taxpayer and in favor of the taxing power, Section 13 of the franchise of respondent leaves no room
for interpretation. Its franchise exempts it from paying any tax other than the option it chooses: either the
"basic corporate income tax" or the two percent gross revenue tax.
Determining whether this tax exemption is wise or advantageous is outside the realm of judicial power.
This matter is addressed to the sound discretion of the lawmaking department of government.
24
cralaw
Given the foregoing, and the fact that the 10% OCT properly falls within the purview of the "all other
taxes" proviso in P.D. No. 1590, this Court holds that respondent PAL is exempt from the 10% OCT and,
therefore, entitled to the refund requested.
WHEREFORE, premises considered, the petition is DENIED. The August 9, 2007 Decision and
September 17, 2007 Resolution of the Court of Tax Appeals En Banc, in E.B. Case No. 273 (CTA Case
No. 6962), are hereby AFFIRMED.
SO ORDERED.

G.R. No. 180427 September 30, 2013
CRISANTA GUIDO-ENRIQUEZ, Petitioner,
vs.
ALICIA I. VICTORINO, HEIRS OF ANTONIA VDA. DE VICTORINO, and HON. RANDY A.
RUTAQUIO, in his capacity as Acting Register of Deeds of Rizal For Morong Branch, Respondents.
D E C I S I O N
PERALTA, J .:
Before the Court is a petition for review on certiorari under Rule 45) of the Rules of Court seeking to
reverse and set aside the Decision
1
and Resolution,
2
dated September 6, 2007 and October 25, 2007,
respectively, of the Court of Appeals (CA) in CA-G.R. SP No. 80534.
The factual and procedural antecedents, as narrated by the CA, are as follows:
In February 1980, Antonia Vda. De Victorino [Antonia Victorino] filed with the Court of First Instance
[CFI] of Rizal an Application for Registration of Title over a 10,603 square-meter lot, situated in
Binangonan, Rizal (subject lot). Antonia Victorino alleged that she is the owner in fee simple of the
subject lot which she and her late husband, Felixberto Victorino, acquired thru purchase. Antonia
Victorino asserted that she and her predecessor-in-interest "have been in open, continuous, exclusive,
notorious and adversed possession and occupation" of said land. Antonia Victorino presented the Tax
Declaration over the said lot issued under her late husband's name.
The Republic, thru the Director of Lands, opposed said application alleging that the subject lot belongs to
the Republic of the Philippines, thus, "not subject to private appropriation."
Per Report, dated July 17, 1981, of the Division of Original Registration [of the Office of the Acting
Commissioner of Land Registration], it appeared that the subject lot is a portion of a large parcel of land
covered by TCT No. M-2102, registered under the name of Antonia Guido, et al., and, at the same time,
overlapped with another lot which was also a subject of an application for registration. The Report
likewise disclosed that a case for annulment of TCT No. 23377, the mother title of TCT No. M-2102,
[was] filed by the Republic against [Guido, et. al., and] was pending before the CFI, Branch X, Pasig,
Metro Manila, docketed as Civil Case No. 34242 (Guido Case).
On September 18, 1987, the National Land Titles and Deeds Registration Administration
(Administration) submitted a Second Report alleging that a Decision was rendered in the Guido Case in
favor of [Guido, et. al.,] which was appealed by the Republic. The Administration prayed that the
decision in Antonia Victorino's application for registration "be held in abeyance until after Transfer
Certificate of Title No. 23377 and all derivative titles have been canceled by the Court, the discrepancy
has been corrected and the clearances requirements are complied with."
However, sometime in June 1988, the Chief of the Surveys Division of the [Office of the] Regional
Technical Director [of the Lands Management Sector, Region IV] informed the Administration that the
"coordinates" used by the Administration were actually erroneous and, per confirmation by the Regional
Director, the lot subject of Antonia Victorino's application does not overlap with any other parcel of land.
On August 11, 1988, the RTC-Pasig proceeded with the case and submitted the same for resolution.
On August 15, 1988, the RTC-Pasig issued a Decision granting Antonia Victorino's Application. The
RTC-Pasig found that the subject lot "is not within any forest reservation nor mortgaged or encumbered
in favor of any person or lending institution."
The dispositive portion of said Decision reads:
WHEREFORE, affirming the order of general default, decision is hereby rendered confirming the title of
the applicant to the parcel of land covered by plan PSU-04-000590, consisting of 10,603 sq. m. and
ordering the registration thereof in her name as follows:
ANTONIA VDA. DE VICTORINO, of legal age, widow, Filipino, residing at Malinao, Pasig, Metro
Manila.
x x x x
SO ORDERED.
On November 3, 1988, the RTC-Pasig issued an Order for the Issuance of the Decree directing the
Commissioner of the Land Registration Commission to implement the said Decision, considering the
same has become final.
However, pending the resolution of the Guido Case, the Land Registration Authority held in abeyance the
issuance of the decree in favor of Antonia Victorino.
Meanwhile, on November 21, 1991, the Supreme Court issued a Decision (Republic v. Court of Appeals,
G.R. No. 84966, November 21,1991, 204 SCRA 160) in the Guido Case in favor of (Antonia Guido,
et.al.) and declared TCT 23377 issued under the name of Guido, et. al. true and authentic. The Supreme
Court, however, took judicial notice of the fact that prior to the reconstitution of TCT 23377 in favor of
(Antonia Guido, et. al.), "certain portions of the area were in possession of occupants who successfully
obtained certificates of title over the area occupied by them and also of occupants who had not
obtained certificates of title over the area possessed by them but the lengths of their possession were long
enough to amount to ownership, had the land been in fact unregistered." The High Court, thus, ruled that
"although prescription is unavailing against (Antonina Guido, et. al.) because they are holders of a valid
certificate of title, the equitable presumption of laches may be applied against them for failure to assert
their ownership for such an unreasonable length of time." The dispositive portion of said Decision reads:
ACCORDINGLY, the decision of the Court of Appeals in CA-G.R. No. 12933 is AFFIRMED subject to
the herein declared superior rights of bona fide occupants with registered titles within the area covered by
questioned decree and bona fide occupants therein with length of possession which had ripened to
ownership, the latter to be determined in an appropriate proceeding.
SO ORDERED.
On May 21, 2001, Private Respondent Alicia Victorino filed a Manifestation and Motion for an Alias
Order for Issuance of a Decree in the Name of the New Owner-Transferee. Private Respondent alleged
that Antonia Victorino sold the subject lot in her favor on August 1, 1995.Private Respondent likewise
notified the RTC-Pasig of Antonia Victorino's death on December 7, 1995. Private Respondent prayed
that, considering the decision of the Supreme Court, dated November 21, 1991, adjudicating the subject
lot in favor of its lawful occupants, and the Decision of the RTC-Pasig, dated August 15, 1988, granting
Antonia's application for registration over said lot, the RTC-Pasig should issue an order annotating these
decisions of the Supreme Court and the RTC-Pasig in TCT M-2102 to segregate Antonia's portion.
Private Respondent also prayed that an Alias Order for the Issuance of decree of registration be issued in
her favor as the subject lot's new owner/transferee.
On August 8, 2002, the Land Registration Authority (LRA) manifested that the subject lot was
"deemed excluded from TCT No. 23377 of the Guidos." The LRA alleged that it was imperative that a
memorandum of the court's decision adjudicating ownership of the subject lot to Antonia Victorino be
annotated in TCT M-2102 to enable the LRA to comply with the issuance of the decree.
On November 19, 2002, the RTC-Pasig issued the 1st assailed Order granting Private Respondent's
Motion and directing the Land Registration Authority to issue the corresponding decree "in accordance
with the adjudication of (the Trial Court's) Decision dated August 15,1988 after payment of all taxes due
on the land." The RTC-Pasig likewise ordered the Register of Deeds of Rizal, Morong Branch, to
annotate on TCT M-2102 the following memorandum:
By virtue of the decision of the Court dated August15, 1988 in Land Reg. Case No. N-10371, LRC
Record No. N-55139, Antonia Vda. De Victorino, applicant, plan Psu-04-000590, has been adjudicated in
favor of applicant and pursuant to the decision of the Supreme Court in G.R. No.84966, promulgated on
November 21, 1991, entitled Republic of the Philippines vs. The Court of Appeals and Antonina Guido,
et. al. (204 SCRA 160), afore-said lots are excluded from this certificate of title.
On December 4, 2002, Petitioner Crisanta Guido-Enriquez filed a Motion for Clarification arguing that
the November 19, 2002 Order varies the terms of the August 15, 1988 Decision of the RTC-Pasig. The
August15, 1988 Decision did not order the segregation of the subject lot from the lot covered by TCT M-
2102, hence, the assailed Decision of November 19, 2002 ordering said segregation effectively modified
the previous decision. Petitioner sought to clarify whether the August 15, 1988Decision ordered the
segregation of the subject lot and whether the Land Registration Authority has the authority to move for
said segregation.
On March 6, 2003, in its 2nd assailed Order, the RTC-Pasig denied Petitioner's Motion for being moot
and ordered the issuance of the decree in the name of Antonia Vda. De Victorino. Consequently, on even
date, an Alias Order for the Issuance of the Decree which is the subject of the 3rd assailed Order was
issued.
Petitioner's Motion for Reconsideration thereof was denied by the RTC-Pasig in the 4th assailed
Order dated September 2, 2003.
3

Aggrieved, herein petitioner filed a special civil action for certiorari with the CA.
On September 6, 2007, the CA promulgated its assailed Decision, the dispositive portion of which reads
as follows:
WHEREFORE, the instant Petition for Certiorari is DENIED. The assailed Order, dated March 6, 2003,
and Order, dated September 2, 2003,of the Regional Trial Court of Pasig City, Branch 156, in Land Reg.
Case No. N-10371, are hereby AFFIRMED.
Accordingly, the Order, dated November 19, 2002, of the Regional Trial Court of Pasig City, Branch 156,
in Land Reg. Case No. N-10371, is hereby AFFIRMED with MODIFICATION in that Private
Respondent's Manifestation and Motion for An Alias Order of a Decree in the Name of the New
Owner/Transferee, dated May 18, 2001, is GRANTED IN PART. The prayer for the issuance of a Decree
in Private Respondent's name is DENIED. All other dispositions therein are hereby AFFIRMED in toto.
SO ORDERED.
4

The CA held that:
The Honorable Supreme Court acknowledged the right of the bonafide occupant of a portion of the lot
under TCT No. M-2102 and, in allowing said bona fide occupants to retain the portion of Guido's lot they
are in possession of, the Supreme Court effectively segregated, albeit constructively, and reserved said
occupied portions for the benefit of the occupants. The Supreme Court declared that the Guidos, et al.
waived their right over the property in favor of
"those who possessed certain specific portions for such lengths of time as to amount to full ownership."
Antonia Victorino, thru her predecessor-in-interest, was found to have possessed a certain specific
portion, PSU-04-000590, going as far back as 1933. The RTC-Pasig decreed Antonia Victorino to be a
lawful occupant of the subject lot. Hence as a lawful or bona fide occupant of a portion of a parcel of land
covered by TCT No. M-2102 of the Guidos, the annotation in TCT No. M-2102 and segregation of the
portion of the lot granted in favor of Antonia Victorino is proper.1wphi1
True, there was no categorical directive by the RTC-Pasig to segregate the subject lot from the rest of the
parcel of land covered by TCT No. M-2101 (sic). However, We agree with Private Respondent that the
segregation of the subject lot was the result of Antonia Victorino acquiring title over a portion of the said
property of the Guidos. The segregation was the consequence of the grant of Antonia Victorino's
application for registration.
x x x x
5

Herein petitioner filed a Motion for Reconsideration, but the CA denied it in its assailed Resolution dated
October 25, 2007.
Hence, the instant petition with the following assignment of errors:
1. THE HONORABLE COURT OF APPEALS COMMITTEDSERIOUS AND REVERSIBLE
ERROR WHEN IT DISMISSED THEPETITION FOR CERTIORARI AND PROHIBITION IN
CA-G.R. SP NO. 80534 AND, AT THE SAME TIME, AFFIRMING WITHMODIFICATION
THE NOVEMBER 19, 2002 ORDER ISSUED BYTHE HONORABLE PRESIDING JUDGE
OF BRANCH 156 OF THEREGIONAL TRIAL COURT OF PASIG CITY THAT DIRECTED
THEREGISTER OF DEEDS FOR RIZAL, MORONG BRANCH, TOANNOTATE ON
TRANSFER CERTIFICATE OF TITLE NO. M-2102 OF THE REGISTRY OF DEEDS FOR
RIZAL, MORONG BRANCH, AMEMORANDUM WHICH, IN EFFECT, DEPRIVES
PETITIONER AND THE OTHER CO-OWNERS, WITHOUT DUE PROCESS OFLAW, OF
10,603 SQUARE METERS OF THEIR LAND.
ERROR WHEN IT SUSTAINED THEHONORABLE PRESIDING JUDGE OF BRANCH 156
OF THEREGIONAL TRIAL COURT OF PASIG CITY IN HIS ISSUANCE OFTHE MARCH
6, 2003 ORDER UPHOLDING THE NOVEMBER 19, 2002 ORDER; THE MARCH 6, 2003
ALIAS ORDER FOR THE ISSUANCE OF THE DECREE; AND, THE SEPTEMBER 2, 2003
ORDER, WHICH VARIED THE TENOR OF THE AUGUST 15, 1988DECISION IN LAND
REG. CASE NO. N-10371 AND LRC CASE NO. N-55139, ENTITLED IN RE: APPLICATION
FOR REGISTRATION OFLAND TITLE, ANTONIA VDA. DE VICTORINO, APPLICANT.
ERROR WHEN IT UPHELD THE FOUR (4) ORDERS ISSUED BY THE HONORABLE
PRESIDING JUDGE OFBRANCH 156 OF THE REGIONAL TRIAL COURT OF PASIG
CITY, NOTWITHSTANDING THE FACT THAT THESE ORDERS ALTERED, CHANGED,
MODIFIED AND DIMINISHED IN A PROCEEDINGTHAT IS IMPROPER FOR ALTERING,
CHANGING, MODIFYINGAND DIMINISHING A CERTIFICATE OF LAND TITLE.
ERROR WHEN IT RULED THAT THEPROCEEDING THAT WAS HELD IN CONNECTION
WITH LANDREG. CASE NO. N-10371 AND LRC CASE NO. N-55139 , ENTITLEDIN RE:
APPLICATION FOR REGISTRATION OF LAND TITLE,ANTONIA VDA. DE VICTORINO,
APPLICANT, AND RESULTING INTHE RENDITION OF THE AUGUST 15, 1988
DECISION RENDEREDBY BRANCH 156 OF THE REGIONAL TRIAL COURT OF
PASIGCITY IS THE APPROPRIATE PROCEEDING CONTEMPLATED BYTHE
HONORABLE COURT IN ITS NOVEMBER 21, 1991 DECISIONIN G.R. NO. 84966
ENTITLED REPUBLIC OF THE PHILIPPINES VS.COURT OF APPEALS.
ERROR THAT DEPRIVED THEPETITIONER OF DUE PROCESS WHEN IT ALLOWED
THEPRESIDING JUDGE WHO RENDERED THE AUGUST 15, 1988 DECISION IN LAND
REG. CASE NO. N-10371 AND LRC CASE NO. N-55139 TO PARTICIPATE IN THE
DECISION-MAKING PROCESSTHAT RESULTED IN A DECISION THAT HELD THAT
THEPROCEEDING IN THE REGIONAL TRIAL COURT IS THEAPPROPRIATE
PROCEEDING ENVISIONED IN THE NOVEMBER 21, 1991 DECISION OF THE
HONORABLE COURT IN G.R. NO. 84966 ENTITLED REPUBLIC OF THE PHILIPPINES
VS. COURT OFAPPEALS.
6

The petition lacks merit.
In her first assigned error, petitioner reiterates her argument raised before the CA that the August 15,
1988 Decision of the RTC in LRC Case No. 10371 is null and void for lack of jurisdiction as well as for
denial of petitioner's right to due process.
The Court is not persuaded. As the CA had correctly ruled, the assailed August 15, 1988 Decision of the
RTC had already become final and executory and under the doctrine of finality of judgment or
immutability of judgment, a decision that has acquired finality becomes immutable and unalterable, and
may no longer be modified in any respect, even if the modification is meant to correct erroneous
conclusions of fact and law, and whether it be made by the court that rendered it or by the Highest Court
of the land.
7
Any act which violates this principle must immediately be struck down.
8
While there are
recognized exceptions to this doctrine,
9
petitioner failed to prove that the instant case is among them.
Moreover, as the CA had observed, petitioner did not raise any issue regarding the supposed nullity of the
subject Decision of the RTC in her Motion for Clarification
10
filed on December 4, 2002. It was only in
her petition for certiorari filed with the CA that petitioner posited the argument that the said Decision is
void.
This Court is not, likewise, persuaded by petitioner's argument, in her second and third assignment of
errors, that the assailed Decision and Orders of the RTC are in derogation of the established laws and
principles on land registration. More particularly, petitioner postulates that the RTC, acting as a land
registration court, had no jurisdiction to entertain Antonia Victorino's application for registration of title
because the lot subject of application is entirely within the boundaries of a larger tract of land which is
already covered by Transfer Certificate of Title (TCT) No. M-2102. Petitioner contends that TCT No. M-
2102 has become indefeasible.
This Court has already ruled in the abovementioned Guido case
11
that while TCT No. 23377 and its
derivative titles, which include TCT No. M-2102, serve as evidence of an indefeasible title to the property
in favor of the persons whose names appear therein, this Court took judicial notice of the fact that certain
portions of the land covered by TCT No. 23377 either "were in possession of occupants who successfully
obtained certificates of titles over the area occupied by them" or were occupied by persons "who had not
obtained certificates of titles over the area possessed by them but the lengths of their possession were long
enough to amount to ownership, had the land been in fact unregistered." This Court then proceeded to rule
that while prescription is unavailing against the owners of the land covered by TCT No. 23377, on the
ground that they are holders of a valid certificate of title, the equitable presumption of laches may be
applied against them for failure to assert their ownership for such an unreasonable length of time. This
prohac vice ruling of the Court was further based on the established fact that the abovementioned owners,
by agreement with the Office of the Solicitor General, have actually waived their rights over the property
subject of the said case in favor of "those who possessed and actually occupied specific portions and
obtained Torrens Certificates of Titles, and those who possessed certain specific portions for such length
of time as to amount to full ownership."
12
This Court, thus, held that it is imperative for those possessors,
whose alleged bona fide occupancy of specific portions of TCT No. 23377 is not evidenced by Torrens
Titles, to prove their claims in an appropriate proceeding. Among these occupants was, respondents'
predecessor-in-interest, Antonia Victorino who, as found by the RTC in its assailed decision has duly
proven that, together with her predecessor-in-interest, she has been in public, peaceful, continuous,
adverse possession against the whole world and in the concept of an owner of the subject lot for a period
of more than thirty (30) years.
13

As to the alleged denial of petitioner's right to due process due to Antonia Victorino's failure to identify
petitioner as indispensable party in her application for registration, as well as to serve her with actual and
personal notice, Section 15 of Presidential Decree No. 1529 simply requires that the application for
registration shall "state the full names and addresses of all occupants of the land and those of the
adjoining owners, if known, and, if not known, it shall state the extent of the search made to find them." A
perusal of Antonia Victorino's Application
14
shows that she enumerated the adjoining owners. She also
indicated therein that, to the best of her knowledge, no person has any interest or is in possession of the
subject land. The fact that she did not identify petitioner as an occupant or an adjoining owner is not
tantamount to denial of petitioner's right to due process and does not nullify the RTC Decision granting
such application.
Besides, the CA was correct in holding that a land registration case, like the one at bar, is a proceeding in
rem. This Court has already ruled that in land registration proceedings, being in rem, there is no necessity
to give personal notice to the owners or claimants of the land sought to be registered in order to vest the
courts with power and authority over the res.
15

Moreover, since no issue was raised as to Antonia Victorino's compliance with the prerequisites of notice
and publication, she is deemed to have followed such requirements. As a consequence, petitioner is
deemed sufficiently notified of the hearing of Antonia's application. Hence, she cannot claim that she is
denied due process.
As to the fourth assigned error, the Court notes that there is nothing repugnant between this Court's
Decision in the Guido case and the August15, 1988 Decision of the RTC. In fact, the former is, in effect,
a ratification of the latter. The bona fide occupancy, which this Court, in the Guido case, requires to be
proven in appropriate proceedings, has already been established by Antonia Victorino during the
proceedings leading to the promulgation of the August 15, 1988 Decision of the RTC. To undergo
another process for the purpose of proving anew the bona fide occupancy of Antonia Victorino, as
insisted by petitioner, would be redundant and a waste of the court's as well as of the parties' precious
time and resources.
In regard to the above disquisition, it bears to revisit this Court's ruling in E. Rommel Realty and
Development Corporation v. Sta. Lucia Realty Development Corporation,
16
as correctly cited by
respondents. The case involves a parcel of land in the possession of the respondent therein which, like the
subject property in the instant case, is part of the larger tract of land covered by the same mother title,
TCT No. 23377. The respondent contested the writ of possession issued by the RTC awarding possession
of the subject property in favor of herein petitioner and her co-heirs. The respondent in the said case
argued that its predecessors-in-interest had already proven their bona fide occupancy thereof during the
proceedings in their application for registration of title. Adverting to this Court's ruling in the
abovementioned Guido case, this Court held thus:
x x x x
We agree that respondent had already proven its claim in an appropriate proceeding. In L.R.C. No. 049-B,
initiated by the heirs of de la Cruz (the predecessors of respondent), it was shown that the possession of
applicant heirs had already ripened to ownership as of March 29, 1976.This ruling inured to respondent's
benefit.
The records do not show that respondent ever obtained a certificate of title over the disputed property.
Nevertheless, the right of ownership of respondent's predecessors-in-interest had been recognized. As the
purchaser of the property, respondent became the owner of the property and acquired the right to exercise
all the attributes of ownership, including the right to possession (jus possidendi). Respondent, who was in
actual possession of the property before the writ of possession was implemented, possessed it as owner of
the property. It can thus rightfully assert its right of possession which is among the bundle of rights
enjoyed by an owner of a property under Art. 428 of the New Civil Code.
Hence, respondent can rightfully claim the superior rights we acknowledged in Republic v. CA and the
CA correctly nullified petitioner's writ of possession insofar as it affected the property in the possession
of respondent.
x x x x
17

It is evident from the above discussion that this Court gave primary importance to the fact that the
respondent in the abovequoted case was able to adequately prove its claim of bona fide occupancy over
the subject lot, during the proceedings in an application for registration of title filed by its predecessors-
in-interest. In the same manner, respondents have proven their bona fide occupancy through the
application for registration of title filed by their predecessor-in-interest. Hence, there is no need for
another proceeding to prove that respondents and their predecessor-in-interest have occupied the subject
lot honestly, openly and in good faith.
With respect to the last assignment of error, this Court does not agree with petitioner's contention that she
was further denied due process when then CA Associate Justice Martin S. Villarama, Jr., who is now a
member of this Court, was allowed to participate and vote as a member of the CA Division which
rendered the presently assailed Decision, considering that he rendered the August 15, 1988 Decision of
the RTC which granted Antonia Victorino's application for registration. This Court quotes, with approval,
the disquisition of the CA in its October 25, 2007 Resolution, to wit:
x x x x
Anent Petitioner's Motion for Clarification, Petitioner asked if the Hon. Justice Martin S. Villarama, Jr.,
Chairman of this Division, was the presiding Judge of the Regional Trial Court of Pasig, Branch 156, who
rendered the August 15, 1988 Decision. Petitioner, thus, alleged that "there is something seriously amiss"
which affects this Court's Decision, dated September 6, 2007.
There is nothing seriously amiss whether legally, morally or ethically about the participation of Justice
Villarama, Jr.
True, Justice Villarama, Jr. was the ponente of the August 15, 1988Decision of the RTC. Indeed, We
indicated the same in Our Decision, footnote number 15, page 5 of the Decision. It is likewise true that
Justices under Section 1, Rule 137 of the Rules of Court , are prohibited from sitting "in any case in
which he has presided in any inferior court when his ruling or decision is the subject of review."
However, a careful review of the records of this case will show that although Justice Villarama, Jr.
penned the August 15, 1988 RTC Decision, said Decision had already attained finality on or before
November 3, 1988 and was not the subject of review in this Petition. Said August 15, 1988 decision,
which is a final judgment, was merely incidental or part of the "history" of the case. Attention is invited to
the fact that the issues raised by Petitioner in this case revolved only on the alleged invalidity of said
Alias Decree and the annotation. It is the issuance of the Decree in the name of the Private Respondent
and the annotation thereof to Petitioner's title which initiated this Petition for Certiorari, or the Orders
dated November 19, 2002, dated March 6, 2003 and dated September 2, 2003. Said orders, however, were
no longer penned by then Judge Villarama, Jr. but by respondent Judge Alex L. Quiroz, Justice Villarama,
Jr.'s successor. Clearly, the August 15, 1988 Decision penned by then Judge Villarama, Jr. was not in
issue or under review in this Petition for which a judicial officer is prohibited from participating.
The fact alone that the issuances under review in this Petition, in effect, affirms the final and executory
RTC decision, dated August 15,1988, does not mean that this Court acted with partiality and without the
necessary prudence in rendering Our Decision, dated September 6, 2007. Our Decision was rendered after
judicious review of the law, the records and the jurisprudence.
x x x x
18

Noting that Justice Villarama no longer took part in the abovequoted Resolution of the CA, this Court
finds nothing erroneous or irregular in the above ruling of the appellate court.
WHEREFORE, the instant petition for review on certiorari is DENIED. The Decision and Resolution of
the Court of Appeals in CA-G.R.SP No. 80534, dated September 6, 2007 and October 25, 2007,
respectively, are AFFIRMED.
SO ORDERED.

SPOUSES MARCOS R. ESMAQUEL and
VICTORIA SORDEVILLA,
Petitioners,

- versus -

MARIA COPRADA,
Respondent.
G.R. No. 152423

Present:

CARPIO, J., Chairperson,
NACHURA,
PERALTA,
ABAD, and
MENDOZA, JJ.

Promulgated:

December 15, 2010
x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x

D E C I S I O N

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[1] and the Resolution2[2] 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[3] against respondent Maria V. Coprada before the 2
nd
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 P2,000.00 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[4] 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 MCTCs 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[5]

Respondent filed a Motion for Reconsideration, which was denied by the RTC in an Order6[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[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[8] dated February 15, 2002. Hence, the instant petition
raising the following grounds:

I
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[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[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[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 letter12[12] to the respondent,
demanding her to vacate the subject property, the respondent, in reply13[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[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[15]

In Rodriguez v. Rodriguez,16[16] citing the case of Co v. Militar,17[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[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[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[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[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[22] It is well settled that both Article 44823[23] and Article 54624[24] 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[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[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[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 2
nd
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.

MANUEL CATINDIG, represented by his legal
representative EMILIANO CATINDIG-
RODRIGO,
Petitioner,

- versus -

AURORA IRENE VDA. DE MENESES,
Respondent.
G.R. No. 165851

x-----------------------------------------------x
SILVINO ROXAS, SR., represented G.R. No. 168875
by FELICISIMA VILLAFUERTE
ROXAS, Present:
Petitioner,
CARPIO, J., Chairperson,
- versus - NACHURA,
PERALTA,
ABAD, and
COURT OF APPEALS and MENDOZA, JJ.
AURORA IRENE VDA. DE
MENESES, Promulgated:
Respondents.
February 2, 2011
x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x

D E C I S I O N

PERALTA, J .:

Before this Court are two consolidated cases, namely, (1) Petition for Review on Certiorari under
Rule 45 of the Rules of Court, docketed as G.R. No. 165851, filed by petitioner Manuel Catindig,
represented by Emiliano Catindig-Rodrigo, assailing the Decision28[1] of the Court of Appeals (CA) in
CA-G.R. CV No. 65697, which affirmed the Decision of the Regional Trial Court of Malolos, Bulacan in
Civil Case No. 320-M-95; and (2) Petition for Certiorari under Rule 65 of the Rules of Court, docketed
as G.R. No. 168875, filed by petitioner Silvino Roxas, Sr., represented by Felicisima Villafuerte Roxas,
seeking to set aside the Decision29[2] and Resolution30[3] of the CA in CA-G.R. CV No. 65697, which
affirmed the decision of the Regional Trial Court of Malolos, Bulacan in Civil Case No. 320-M-95.

The property subject of this controversy pertains to a parcel of land situated in Malolos, Bulacan,
with an area of 49,139 square meters, titled in the name of the late Rosendo Meneses, Sr., under Transfer
Certificate of Title (TCT) No. T-1749 (hereinafter referred to as the Masusuwi Fishpond). Respondent
Aurora Irene C. Vda. de Meneses is the surviving spouse of the registered owner, Rosendo Meneses, Sr..
She was issued Letters of Administration over the estate of her late husband in Special Proceedings Case
No. 91498 pending before the then Court of First Instance of the City of Manila, Branch 22. On May 17,
1995, respondent, in her capacity as administratrix of her husband's estate, filed a Complaint for Recovery
of Possession, Sum of Money and Damages against petitioners Manuel Catindig and Silvino Roxas, Sr.
before the Regional Trial Court of Malolos, Bulacan, to recover possession over the Masusuwi Fishpond.

Respondent alleged that in September 1975, petitioner Catindig, the first cousin of her husband,
deprived her of the possession over the Masusuwi Fishpond, through fraud, undue influence and
intimidation. Since then, petitioner Catindig unlawfully leased the property to petitioner Roxas.
Respondent verbally demanded that petitioners vacate the Masusuwi Fishpond, but all were futile, thus,
forcing respondent to send demand letters to petitioners Roxas and Catindig. However, petitioners still
ignored said demands. Hence, respondent filed a suit against the petitioners to recover the property and
demanded payment of unearned income, damages, attorney's fees and costs of suit.

In his Answer, petitioner Catindig maintained that he bought the Masusuwi Fishpond from
respondent and her children in January 1978, as evidenced by a Deed of Absolute Sale. Catindig further
argued that even assuming that respondent was indeed divested of her possession of the Masusuwi
Fishpond by fraud, her cause of action had already prescribed considering the lapse of about 20 years
from 1975, which was allegedly the year when she was fraudulently deprived of her possession over the
property.

Petitioner Roxas, on the other hand, asserted in his own Answer that respondent has no cause of
action against him, because Catindig is the lawful owner of the Masusuwi Fishpond, to whom he had paid
his rentals in advance until the year 2001.

After trial, the trial court ruled in favor of respondent, thus:

WHEREFORE, judgment is hereby rendered in favor of the plaintiff [respondent
herein],

(a) Ordering the defendants [petitioners herein] to vacate the Masusuwi Fishpond
and turn over the possession/occupancy thereof to plaintiff [respondent herein];

(b) Ordering the defendants [petitioners herein] to pay and/or reimburse plaintiff
[respondent herein] the amount of P90,000.00 per year since 1985 up to the time
possession of the fishpond is surrendered to plaintiff [respondent herein];

(c) Ordering the defendants [petitioners herein] jointly and severally to pay
plaintiff [respondent herein] the amount of P100,000.00 as attorney's fees, and to pay the
costs of suit.

The counterclaims of defendants [petitioners herein] are ordered dismissed, for
lack of merit.

SO ORDERED.31[4]

The trial court found that the Deed of Absolute Sale executed between respondent and petitioner
Catindig was simulated and fictitious, and therefore, did not convey title over the Masusuwi Fishpond to
petitioner Catindig. It gave due credence to the testimony of respondent that petitioner Catindig
convinced her to sign the said deed of sale, because it was intended to be a mere proposal subject to the
approval of the trial court wherein the proceedings for the settlement of the estate of Rosendo Meneses,
Sr. was still pending. The court a quo was further convinced that the Deed of Absolute Sale lacked
consideration, because respondent and her children never received the stipulated purchase price for the
Masusuwi Fishpond which was pegged at PhP150,000.00. Since ownership over the property never
transferred to Catindig, the trial court declared that he has no right to lease it to Roxas. The court also
found that petitioner Roxas cannot claim good faith in leasing the Masusuwi Fishpond, because he relied
on an incomplete and unnotarized Deed of Sale.

Aggrieved, petitioners separately challenged the trial court's Decision before the CA. The CA
dismissed both the petitioners' appeals and affirmed the RTC. The CA ruled that the trial court properly
rejected petitioners' reliance on the deed of absolute sale executed between respondent and petitioner
Catindig. The CA also found that since it is settled that a Torrens title is a constructive notice to the whole
world of a property's lawful owner, petitioner Roxas could not invoke good faith by relying on the Deed
of Absolute Sale in favor of his lessor, petitioner Catindig.

Hence, petitioner Catindig filed this Petition for Review on Certiorari under Rule 45, raising the
following issues:

1. WHETHER THE COURT OF APPEALS SERIOUSLY ERRED IN
UPHOLDING THE TRIAL COURT'S DECISION IN NOT HOLDING THAT
RESPONDENT'S CAUSE OF ACTION IS IN REALITY, ONE FOR ANNULMENT
OF CONTRACT UNDER ARTICLES 1390 AND 1391 OF THE NEW CIVIL CODE.

2. WHETHER THE COURT OF APPEALS SERIOUSLY ERRED IN
UPHOLDING THE TRIAL COURT'S DECISION IN NOT HOLDING THAT
RESPONDENT'S CAUSE OF ACTION IS BASED ON ALLEGED FRAUD AND/OR
INTIMIDATION, HAS NOT PRESCRIBED.

3. WHETHER THE COURT OF APPEALS SERIOUSLY AND GRAVELY
ERRED IN DISREGARDING THE GENUINENESS AND DUE EXECUTION OF
THE DEED OF ABSOLUTE SALE.

On the other hand, petitioner Silvino Roxas, Sr. filed a Petition for Certiorari under Rule 65,
raising this lone issue:

WHETHER THE HONORABLE COURT OF APPEALS HAS ACTED WITH
GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF
JURISDICTION IN FINDING THAT THE PETITIONER IS JOINTLY AND
SOLIDARILY LIABLE WITH HIS CO-DEFENDANT; AND IN NOT
CONSIDERING THAT HE WAS A LESSEE IN GOOD FAITH OF THE SUBJECT
PROPERTY.

The issues raised by petitioner Catindig could be reduced into whether the Deed of Sale was
genuine or simulated.

Petitioner Catindig maintains that the deed of sale was voluntarily signed by respondent and her
children, and that they received the consideration of PhP150,000.00 stipulated therein. Even on the
assumption that they were defrauded into signing the agreement, this merely makes the deed voidable, at
most, due to vitiated consent. Therefore, any cause of action respondent may have, had already
prescribed, and the contract was already ratified by respondent's failure to file any action to annul the
deed within four years from 1978, the year when respondent discovered the fraud.
Respondent, on the other hand, insists that the deed of sale is not merely voidable, but void for
being simulated. Hence, she could not have filed an action for annulment of contract under Articles 1390
and 1391 of the Civil Code, because this remedy applies to voidable contracts. Instead, respondent filed
an action for recovery of possession of the Masusuwi Fishpond.

The issue on the genuineness of the deed of sale is essentially a question of fact. It is settled that
this Court is not duty-bound to analyze and weigh again the evidence considered in the proceedings
below. This is especially true where the trial court's factual findings are adopted and affirmed by the CA
as in the present case. Factual findings of the trial court, affirmed by the CA, are final and conclusive and
may not be reviewed on appeal.32[5]

The Court finds that there exists no reason for Us to disturb the trial court's finding that the deed
of sale was simulated. The trial court's discussion on the said issue is hereby quoted:

After evaluating the evidence, both testimonial and documentary, presented by
the parties, this court is convinced that the Deed of Absolute Sale relied upon by the
defendants [petitioners herein] is simulated and fictitious and has no consideration.

On its face, the Deed of Absolute sale (Exh. G, Exh. 1) is not complete and
is not in due form. It is a 3-page document but with several items left unfilled or left
blank, like the day the document was supposed to be entered into, the tax account
numbers of the persons appearing as signatories to the document and the names of the
witnesses. In other words, it was not witnessed by any one. More importantly, it was not
notarized. While the name Ramon E. Rodrigo, appeared typed in the Acknowledgement,
it was not signed by him (Exhs. G, G-1, G-4).

The questioned deed was supposedly executed in January, 1978. Defendant
[petitioner herein] Catindig testified that his brother Francisco Catindig was with him
when plaintiff [respondent herein] signed the document. The evidence, however, shows
that Francisco Catindig died on January 1, 1978 as certified to by the Office of the
Municipal Civil Registrar of Malolos, Bulacan and the Parish Priest of Sta. Maria
Assumpta Parish, Bulacan, Bulacan.

The document mentions 49,130 square meters, as the area sold by plaintiff
[respondent herein] and her two (2) children to defendant [petitioner herein] Catindig. But
this is the entire area of the property as appearing in the title and they are not the only
owners. The other owner is Rosendo Meneses, Jr. [stepson of herein respondent] whose
name does not appear in the document. The declaration of defendant [petitioner herein]
Catindig that Rosendo Meneses, Jr. likewise sold his share of the property to him in
another document does not inspire rational belief. This other document was not presented
in evidence and Rosendo Meneses, Jr., did not testify, if only to corroborate defendant's
[petitioner herein] claim.33[6]

The Court also finds no compelling reason to depart from the court a quo's finding that
respondent never received the consideration stipulated in the simulated deed of sale, thus:

Defendant [petitioner herein] Catindig declared that plaintiff [respondent herein] and
her children signed the instrument freely and voluntarily and that the consideration of
P150,000.00 as so stated in the document was paid by him to plaintiff [respondent
herein]. However, it is not denied that the title to this property is still in the name of
Rosendo Meneses, Sr., and the owner's duplicate copy of the title is still in the possession
of the plaintiff [respondent herein]. If defendant [petitioner herein] Catindig was really a
legitimate buyer of the property who paid the consideration with good money, why then
did he not register the document of sale or had it annotated at the back of the title, or
better still, why then did he not have the title in the name of Rosendo Meneses, Sr.
canceled so that a new title can be issued in his name? After all, he claims that Rosendo
Meneses, Jr. [stepson of herein respondent] also sold his share of the property to him.
This will make him the owner of the entire property. But the owner's duplicate copy of
the title remains in the possession of the plaintiff [respondent herein] and no evidence was
presented to show that at anytime from 1978, he ever attempted to get it from her. Equally
telling is defendant's (Catindig) failure to pay the real estate taxes for the property from
1978 up to the present. x x x34[7]

It is a well-entrenched rule that where the deed of sale states that the purchase price has been paid
but in fact has never been paid, the deed of sale is null and void ab initio for lack of consideration.
Moreover, Article 1471 of the Civil Code, provides that if the price is simulated, the sale is void, which

applies to the instant case, since the price purportedly paid as indicated in the contract of sale was
simulated for no payment was actually made.35[8]

Since it was well established that the Deed of Sale is simulated and, therefore void, petitioners
claim that respondent's cause of action is one for annulment of contract, which already prescribed, is
unavailing, because only voidable contracts may be annulled. On the other hand, respondent's defense for
the declaration of the inexistence of the contract does not prescribe.36[9]

Besides, it must be emphasized that this case is one for recovery of possession, also known as
accion publiciana, which is a plenary action for recovery of possession in an ordinary civil proceeding, in
order to determine the better and legal right to possess, independently of title.37[10] The objective of the
plaintiffs in accion publiciana is to recover possession only, not ownership. However, where the parties
raise the issue of ownership, the courts may pass upon the issue to determine who between the parties has
the right to possess the property. This adjudication, however, is not a final and binding determination of
the issue of ownership; it is only for the purpose of resolving the issue of possession where the issue of
ownership is inseparably linked to the issue of possession. The adjudication of the issue of ownership,
being provisional, is not a bar to an action between the same parties involving title to the property.38[11]

Thus, even if we sustain petitioner Catindig's arguments and rule that the Deed of Sale is valid,
this would still not help petitioners' case. It is undisputed that the subject property is covered by TCT No.
T-1749, registered in the name of respondent's husband. On the other hand, petitioner Catindig's claim of

ownership is based on a Deed of Sale. In Pascual v. Coronel,39[12] the Court held that as against the
registered owners and the holder of an unregistered deed of sale, it is the former who has a better right to
possess. In that case, the court held that:

Even if we sustain the petitioner's 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 respondents. x x x

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. x x x40[13]

There is even more reason to apply this doctrine here, because the subject Deed of Sale is not
only unregistered, it is undated and unnotarized.

Further, 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.41[14] It is conclusive evidence with respect to the ownership of the land described
therein.42[15] Moreover, the age-old rule is that the person who has a Torrens title over a land is entitled
to possession thereof.43[16]

In addition, as the registered owner, respondent's right to evict any person illegally occupying her
property is imprescreptible. In the recent case of Gaudencio Labrador, represented by Lulu Labrador
Uson, as Attorney-in-Fact v. Sps. Ildefonso Perlas and Pacencia Perlas and Sps. Rogelio Pobre and
Melinda Fogata Pobre,44[17] the Court held that:

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.45[18]

Petitioner Roxas assailed the Decision and the Resolution of the CA via Petition for Certiorari
under Rule 65, when the proper remedy should have been the filing of a Petition for Review on Certiorari
under Rule 45.

While petitioner Roxas claims that the CA committed grave abuse of discretion, this Court finds
that the assailed findings of the CA, that Roxas is jointly and severally liable with petitioner Catindig and
in not considering him as a lessee in good faith of the subject property, amount to nothing more than
errors of judgment, correctible by appeal. When a court, tribunal, or officer has jurisdiction over the
person and the subject matter of the dispute, the decision on all other questions arising in the case is an
exercise of that jurisdiction. Consequently, all errors committed in the exercise of said jurisdiction are
merely errors of judgment. Under prevailing procedural rules and jurisprudence, errors of judgment are

not proper subjects of a special civil action for certiorari.46[19] Where the issue or question involved
affects the wisdom or legal soundness of the decision, and not the jurisdiction of the court to render said
decision, the same is beyond the province of a special civil action for certiorari.47[20]

Settled is the rule that where appeal is available to the aggrieved party, the special civil action for
certiorari will not be entertained remedies of appeal and certiorari are mutually exclusive, not
alternative or successive.48[21] Under Rule 45, decisions, final orders or resolutions of the Court of
Appeals in any case, i.e., regardless of the nature of the action or proceedings involved, may be appealed
to us by filing a petition for review, which would be but a continuation of the appellate process over the
original case. On the other hand, a special civil action under Rule 65 is an independent action based on
the specific ground therein provided and, as a general rule, cannot be availed of as a substitute for the lost
remedy of an ordinary appeal, including that to be taken under Rule 45.49[22] One of the requisites of
certiorari is that there be no available appeal or any plain, speedy and adequate remedy. Where an appeal
is available, certiorari will not prosper, even if the ground therefor is grave abuse of discretion.
Accordingly, when a party adopts an improper remedy, his petition may be dismissed outright.50[23]

In the present case, the CA issued its Decision and Resolution dated October 22, 2004 and May
20, 2005, respectively, dismissing the appeal filed by petitioner Roxas. Records show that petitioner
Roxas received a copy of the May 20, 2005 Resolution of the CA denying the motion for reconsideration
on May 30, 2005. Instead of filing a petition for review on certiorari under Rule 45 within 15 days from

receipt thereof,51[24] petitioner, in addition to his several motions for extension, waited for almost four
months before filing the instant petition on September 22, 2005. Indubitably, the Decision and the
Resolution of the CA, as to petitioner Roxas, had by then already become final and executory, and thus,
beyond the purview of this Court to act upon.52[25]

It is settled that a decision that has acquired finality becomes immutable and unalterable and may
no longer be modified in any respect, even if the modification is meant to correct erroneous conclusions
of fact or law and whether it will be made by the court that rendered it or by the highest court of the
land.53[26] When a decision becomes final and executory, the court loses jurisdiction over the case and
not even an appellate court will have the power to review the said judgment. Otherwise, there will be no
end to litigation and this will set to naught the main role of courts of justice to assist in the enforcement of
the rule of law and the maintenance of peace and order by settling justifiable controversies with
finality.54[27]

Finally, while it is true that this Court, in accordance with the liberal spirit which pervades the
Rules of Court and in the interest of justice, may treat a Petition for Certiorari as having been filed under
Rule 45, the instant Petition cannot be treated as such, primarily because it was filed way beyond the 15-
day reglementary period within which to file the Petition for Review.55[28] Though there are instances

when certiorari was granted despite the availability of appeal,56[29] none of these recognized exceptions
were shown to be present in the case at bar.

WHEREFORE, the petition in G.R. No. 165851 is DENIED. The Decision of the Court of
Appeals dated October 22, 2004 in CA-G.R. CV No. 65697, which affirmed the decision of the Regional
Trial Court of Malolos, Bulacan in Civil Case No. 320-M-95, is AFFIRMED. The petition in G.R. No.
168875 is DISMISSED. The Decision and the Resolution of the Court of Appeals, dated October 22,
2004 and May 20, 2005, respectively, in CA-G.R. CV No. 65697, which affirmed the Decision of the
Regional Trial Court of Malolos, Bulacan in Civil Case No. 320-M-95, are AFFIRMED.

SO ORDERED.

JOSEPH ANTHONY M. ALEJANDRO,
FIRDAUSI I.Y. ABBAS, CARMINA A.
ABBAS and MA. ELENA GO
FRANCISCO,
Petitioners,

versus -

ATTY. JOSE A. BERNAS, ATTY.
MARIE LOURDES SIA-BERNAS,
FERNANDO AMOR, EDUARDO
AGUILAR, JOHN DOE and PETER
DOE,
Respondents.
G.R. No. 179243

Present:

CORONA,* C.J.,
LEONARDO-DE CASTRO,**
PERALTA, J., Acting Chairperson,
ABAD, and
VILLARAMA, JR.,*** JJ.

Promulgated:

September 7, 2011
x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION

PERALTA, J .:

This is a petition for review on certiorari under Rule 45 of the Rules of Court seeking to reverse
and set aside the Court of Appeals (CA) Decision57[1] dated May 23, 2007 and Resolution58[2] dated
August 8, 2007 in CA-G.R. SP No. 94229.

The facts of the case follow.

Petitioner Joseph Anthony M. Alejandro (Alejandro) is the lessee-purchaser of condominium unit
No. 2402 (the Unit), 4
th
Floor, Discovery Center Condominium in Pasig City under the Contract of Lease
with Option to Purchase59[3] with the lessor-seller Oakridge Properties, Inc. (OPI). On October 15, 2000,
Alejandro sub-leased the Unit to the other petitioners Firdausi I.Y. Abbas (Firdausi), Carmina M.
Alejandro-Abbas (Carmina) and Ma. Elena Go Francisco (Ma. Elena) to be used as a law office.60[4]
However, a defect in the air-conditioning unit prompted petitioners to suspend payments until the
problem is fixed by the management.61[5] Instead of addressing the defect, OPI instituted an action for
ejectment before the Metropolitan Trial Court (MeTC) of Pasig City,62[6] against Alejandro for the
latters failure to pay rentals. The case was docketed as Civil Case No. 9209. Alejandro, for his part,
interposed the defense of justified suspension of payments.63[7]

In the meantime, the Discovery Center Condominium Corporation (DCCC) was organized to
administer the Discovery Center Condominium independent of OPI. Respondent Fernando Amor (Amor)
was appointed as the Property Manager of DCCC.

During the pendency of the ejectment case or on June 10, 2004, OPI, allegedly through
respondent Atty. Marie Lourdes Sia-Bernas (Sia-Bernas), ordered that the Unit be padlocked. In an

Order64[8] dated June 11, 2004 the MeTC directed OPI to remove the padlock of the Unit and
discontinue the inventory of the properties. The order was reiterated when the MeTC issued a Temporary
Restraining Order in favor of Alejandro. However, on August 11, 2004, at 8:00 in the evening, OPI,
allegedly through respondent Atty. Jose Bernas, again padlocked the Unit. The padlocking was allegedly
executed by Amor, as Property Manager and respondent Eduardo Aguilar (Aguilar) as head of the
security unit, together with security officers John Doe and Peter Doe. Respondents, likewise, cut off the
electricity, water and telephone facilities on August 16, 2004.65[9]

On August 17, 2004, the MeTC rendered a Decision66[10] in the ejectment case in favor of
Alejandro and against OPI. The court found Alejandros suspension of payment justified. The decision
was, however, reversed and set aside by the Regional Trial Court67[11] whose decision was in turn
affirmed68[12] by the CA.

On October 27, 2004, petitioners filed a criminal complaint69[13] for grave coercion against
respondents Bernas, Sia-Bernas, Amor, Aguilar, Peter Doe and John Doe with the Office of the City
Prosecutor (OCP) of Pasig. The case was docketed as I.S. No. PSG 04-10-13650. In their Joint Affidavit-

Complaint,70[14] petitioners claimed that the padlocking of the Unit was illegal, felonious and unlawful
which prevented them from entering the premises.71[15] Petitioners also alleged that said padlocking and
the cutting off of facilities had unduly prejudiced them and thus constituted grave coercion.72[16]

In their Counter-Affidavit73[17], Bernas and Sia-Bernas averred that the elements of grave
coercion were not alleged and proven by petitioners. They also claimed that nowhere in petitioners
complaint was it alleged that respondents employed violence which is an essential element of grave
coercion.

In addition to the above defenses, Amor and Aguilar maintained that petitioners did not allege
that the former actually prevented the latter to enter the Unit. They added that petitioners in fact gained
access to the Unit by forcibly destroying the padlock.74[18]

On March 22, 2005, the OCP issued a Resolution,75[19] the pertinent portion of which reads:

Wherefore, respondents Fernando Amor and Eduardo Aguilar are charged with
unjust vexation and the attached information be filed with the Metropolitan Trial Court of
Pasig City. Bail is not necessary unless required by the Court.

The charges against respondents Jose Bernas and Marie Lourdes Sia-Bernas is
dismissed for insufficiency of evidence.76[20]

The OCP held that respondents could not be charged with grave coercion as no violence was employed by
the latter. In padlocking the leased premises and cutting off of facilities, respondents Amor and Aguilar
were found to be probably guilty of the crime of unjust vexation.77[21]

Aggrieved, petitioners appealed to the Secretary of the Department of Justice (DOJ) but the
appeal was dismissed78[22] for their failure to comply with Section 12, paragraph (b) of Department
Circular No. 70. The DOJ Secretary, acting through Undersecretary Ernesto L. Pineda, explained that
petitioners failed to submit a legible true copy of the joint counter-affidavit of some of the respondents.
Petitioners motion for reconsideration79[23] was likewise denied in a Resolution80[24] dated April 3,
2006. He denied the motion after a careful re-evaluation of the record of the case vis--vis the issues and
arguments raised by petitioners.

Undaunted, petitioners elevated the matter to the CA that rendered the assailed decision81[25] on
May 23, 2007. The appellate court recognized the DOJs authority to dismiss the petition on technicality
pursuant to its rules of procedure. The CA explained that while the DOJ dismissed the petition on mere

technicality, it re-evaluated the merits of the case when petitioners filed their motion for reconsideration.
On whether or not there was probable cause for the crime of grave coercion, the CA answered in the
negative. It held that the mere presence of the security guards was insufficient to cause
intimidation.82[26] The CA likewise denied petitioners motion for reconsideration on August 8,
2007.83[27]

Hence, this petition based on the following grounds:

WHETHER OR NOT THE RULING IN THE CASE OF SY VS. DEPARTMENT OF
JUSTICE (G.R. NO. 166315, DECEMBER 14, 2006), WHEREIN THE HIGHEST
COURT OF THE LAND DEVIATED FROM THE NON-INTERFERENCE POLICY
WITH THE PROSECUTORIAL ARM OF THE GOVERNMENT BY HOLDING
THAT THERE IS GRAVE ABUSE OF DISCRETION IF THE RECORDS CLEARLY
SHOW PRIMA FACIE EVIDENCE OF THE CRIME CHARGED, IS APPLICABLE
TO INSTANT CASE,

1. given that there is more than ample evidence of the padlocking;
2. the padlocking has been admitted in no uncertain terms by
Respondents;
3. the padlock was ordered removed by the court

WHETHER OR NOT THERE WAS GRAVE ABUSE OF DISCRETION,
TANTAMOUNT [TO] LACK OF OR EXCESS OF JURISDICTION WHEN THE
COURT OF APPEALS DENIED THE PETITION DESPITE SHOWING OF PRIMA
FACIE CASE OF GRAVE COERCION.

WHETHER OR NOT SUBJECT RESOLUTION OF THE DOJ IS ANOMALOUS
BECAUSE THE GROUND OF DISMISSAL WAS FABRICATED WHICH
NECESSITATES A JUDICIAL REVIEW OF SAID RESOLUTION.

WHETHER OR NOT GRAVE COERCION CAN BE COMMITTED THROUGH
INTIMIDATION ALONE WITHOUT VIOLENCE.84[28]

Petitioners claim that there is sufficient evidence on record to prove the fact of padlocking and
cutting off of facilities thereat.85[29] They insist that the allegations and evidence presented in the Joint
Affidavit-Complaint are sufficient to sustain a finding of probable cause for grave coercion irrespective of
any defense that may be put up by respondents.86[30] Finally, petitioners maintain that although violence
was not present during the commission of the acts complained of, there was sufficient intimidation by the
mere presence of the security guards.87[31]

In their Comment,88[32] respondents aver that petitioners raise issues of grave abuse of
discretion which are improper in a petition for review on certiorari under Rule 45. They also argue that
the CA aptly held that petitioners failed to establish probable cause to hold them liable for grave coercion.
They do not agree with petitioners that the mere presence of security guards constituted intimidation
amounting to grave coercion. Finally, they insist that there is no legal impediment to cause the padlocking
and repossession of the Unit as a valid exercise of proprietary right under the contract of lease.

In their Reply,89[33] petitioners assail the propriety of the dismissal of their appeal before the
DOJ Secretary on technicality.

The petition must fail.

The propriety of the dismissal of petitioners appeal before the DOJ Secretary has been
thoroughly explained by the CA. We quote with approval the CA ratiocination in this wise:

It was also incorrect for petitioners to claim that the dismissal was on mere
technicality, and that the Department of Justice no longer studied the appeal on the
merits. The motion for reconsideration shows that the records were carefully re-
evaluated. However, the same conclusion was reached, which was the dismissal of the
appeal. The first resolution was a dismissal on technicality but the motion for
reconsideration delved on the merits of the case, albeit no lengthy explanation of the
DOJs dismissal of the appeal was inked on the resolution. It was already a demonstration
of the DOJs finding that no probable cause exists x x x90[34]

Besides, petitioners failure to attach the required documents in accordance with the DOJ rules
renders the appeal insufficient in form and can thus be dismissed outright.91[35] Moreover, when the
case was elevated to the CA, the latter ruled not only on the procedural aspect of the case but also on the
merit of the determination of probable cause.

The next question then is whether the CA correctly sustained the DOJs conclusion that there was
no probable cause to indict respondents of grave coercion. We answer in the affirmative.

It is settled that the determination of whether probable cause exists to warrant the prosecution in
court of an accused should be consigned and entrusted to the DOJ, as reviewer of the findings of public
prosecutors.92[36] To accord respect to the discretion granted to the prosecutor and for reasons of
practicality, this Court, as a rule, does not interfere with the prosecutors determination of probable cause
for otherwise, courts would be swamped with petitions to review the prosecutors findings in such
investigations.93[37] The courts duty in an appropriate case is confined to the determination of whether

the assailed executive or judicial determination of probable cause was done without or in excess of
jurisdiction or with grave abuse of discretion amounting to want of jurisdiction.94[38]

Probable cause for purposes of filing a criminal information is defined as such facts as are
sufficient to engender a well-founded belief that a crime has been committed and the respondent is
probably guilty thereof, and should be held for trial.95[39] As held in Sy v. Secretary of Justice,96[40]
citing Villanueva v. Secretary of Justice:97[41]

[Probable cause] is such a state of facts in the mind of the prosecutor as would lead a
person of ordinary caution and prudence to believe or entertain an honest or strong
suspicion that a thing is so. The term does not mean actual or positive cause; nor does it
import absolute certainty. It is merely based in opinion and reasonable belief. Thus, a
finding of probable cause does not require an inquiry into whether there is sufficient
evidence to procure a conviction. It is enough that it is believed that the act or omission
complained of constitutes the offense charged. Precisely, there is a trial for the reception
of evidence of the prosecution in support of the charge.98[42]

For grave coercion to lie, the following elements must be present:

1. that a person is prevented by another from doing something not prohibited by law,
or compelled to do something against his will, be it right or wrong;

2. that the prevention or compulsion is effected by violence, threats or intimidation;
and
3. that the person who restrains the will and liberty of another has no right to do so, or
in other words, that the restraint is not made under authority of law or in the exercise
of any lawful right.99[43]

Admittedly, respondents padlocked the Unit and cut off the electricity, water and telephone
facilities. Petitioners were thus prevented from occupying the Unit and using it for the purpose for which
it was intended, that is, to be used as a law office. At the time of the padlocking and cutting off of
facilities, there was already a case for the determination of the rights and obligations of both Alejandro, as
lessee and OPI as lessor, pending before the MeTC. There was in fact an order for the respondents to
remove the padlock. Thus, in performing the acts complained of, Amor and Aguilar had no right to do so.

The problem, however, lies on the second element. A perusal of petitioners Joint Affidavit-
Complaint shows that petitioners merely alleged the fact of padlocking and cutting off of facilities to
prevent the petitioners from entering the Unit. For petitioners, the commission of these acts is sufficient to
indict respondents of grave coercion. It was never alleged that the acts were effected by violence, threat or
intimidation. Petitioners belatedly alleged that they were intimidated by the presence of security guards
during the questioned incident.

We find that the mere presence of the security guards is insufficient to cause intimidation to the
petitioners.

There is intimidation when one of the parties is compelled by a reasonable and well-grounded
fear of an imminent and grave evil upon his person or property, or upon the person or property of his
spouse, descendants or ascendants, to give his consent. 100[44] Material violence is not indispensable for
there to be intimidation. Intense fear produced in the mind of the victim which restricts or hinders the
exercise of the will is sufficient.101[45]

In this case, petitioners claim that respondents padlocked the Unit and cut off the facilities in the
presence of security guards. As aptly held by the CA, it was not alleged that the security guards
committed anything to intimidate petitioners, nor was it alleged that the guards were not customarily
stationed there and that they produced fear on the part of petitioners. To determine the degree of the
intimidation, the age, sex and condition of the person shall be borne in mind.102[46] Here, the petitioners
who were allegedly intimidated by the guards are all lawyers who presumably know their rights. The
presence of the guards in fact was not found by petitioners to be significant because they failed to mention
it in their Joint Affidavit-Complaint. What they insist is that, the mere padlocking of the Unit prevented
them from using it for the purpose for which it was intended. This, according to the petitioners, is grave
coercion on the part of respondents.

The case of Sy v. Secretary of Justice,103[47] cited by petitioners is not applicable in the present
case. In Sy, the respondents therein, together with several men armed with hammers, ropes, axes,
crowbars and other tools arrived at the complainants residence and ordered them to vacate the building
because they were going to demolish it. Intimidated by respondents and their demolition team,
complainants were prevented from peacefully occupying their residence and were compelled to leave
against their will. Thus, respondents succeeded in implementing the demolition while complainants
watched helplessly as their building was torn down. The Court thus found that there was prima facie
showing that complainants were intimidated and that there was probable cause for the crime of grave
coercion.

On the contrary, the case of Barbasa v. Tuquero104[48] applies. In Barbasa, the lessor, together
with the head of security and several armed guards, disconnected the electricity in the stalls occupied by

the complainants-lessees because of the latters failure to pay the back rentals. The Court held that there
was no violence, force or the display of it as would produce intimidation upon the lessees employees
when the cutting off of electricity was effected. On the contrary, the Court found that it was done
peacefully and that the guards were there not to intimidate them but to prevent any untoward or violent
event from occurring in the exercise of the lessors right under the contract. We reach the same
conclusion in this case.

In the crime of grave coercion, violence through material force or such a display of it as would
produce intimidation and, consequently, control over the will of the offended party is an essential
ingredient.105[49]

Probable cause demands more than suspicion; it requires less than evidence that would justify
conviction.106[50] While probable cause should be determined in a summary manner, there is a need to
examine the evidence with care to prevent material damage to a potential accuseds constitutional right to
liberty and the guarantees of freedom and fair play, and to protect the State from the burden of
unnecessary expenses in prosecuting alleged offenses and holding trials arising from false, fraudulent or
groundless charges.107[51] It is, therefore, imperative upon the prosecutor to relieve the accused from
the pain of going through a trial once it is ascertained that no probable cause exists to form a sufficient
belief as to the guilt of the accused.108[52]

A preliminary investigation is conducted for the purpose of securing the innocent against hasty,
malicious and oppressive prosecution, and to protect him from an open and public accusation of a crime,
from the trouble, expense and anxiety of a public trial.109[53]

Notwithstanding the DOJs conclusion that respondents cannot be charged with grave coercion, it
ordered the filing of information for unjust vexation against Amor, the Property Manager of DCCC and
Aguilar as head of the security division. We find the same to be in order.

Petitioners Joint Affidavit-Complaint adequately alleged the elements of unjust vexation. The
second paragraph of Article 287 of the Revised Penal Code which defines and provides for the penalty of
unjust vexation is broad enough to include any human conduct which, although not productive of some
physical or material harm, could unjustifiably annoy or vex an innocent person.110[54] Nevertheless,
Amor and Aguilar may disprove petitioners charges but such matters may only be determined in a full-
blown trial on the merits where the presence or absence of the elements of the crime may be thoroughly
passed upon.111[55]

WHEREFORE, premises considered, the petition is DENIED for lack of merit. The Court of
Appeals Decision dated May 23, 2007 and Resolution dated August 8, 2007 in CA-G.R. SP No. 94229,
are AFFIRMED.

SO ORDERED.

MANILA INTERNATIONAL AIRPORT
AUTHORITY,
Petitioner,

versus

AVIA FILIPINAS INTERNATIONAL, INC.,
Respondent.
G.R. No. 180168

Present:

VELASCO, JR., J., Chairperson,
PERALTA,
ABAD,
MENDOZA, and
PERLAS-BERNABE, JJ.

Promulgated:

February 27, 2012
x-----------------------------------------------------------------------------------------x

DECISION

PERALTA, J .

Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court, seeking the
reversal and setting aside of the June 19, 2007 Decision
1
and the October 11, 2007 Resolution
2
of the
Court of Appeals (CA) in CA-G.R. CV No. 79325. The assailed CA Decision affirmed with modification
the Decision
3
dated March 21, 2003 of the Regional Trial Court (RTC) of Quezon City, Branch 224, in
Civil Case No. Q-98-34395, while the CA Resolution denied petitioner's Motion for Reconsideration.
The factual and procedural antecedents are as follows:

In September 1990, herein petitioner Manila International Airport Authority (MIAA) entered into a
contract of lease with herein respondent Avia Filipinas International Corporation (AFIC), wherein MIAA
allowed AFIC to use specific portions of land as well as facilities within the Ninoy Aquino International
Airport exclusively for the latter's aircraft repair station and chartering operations. The contract was for
one (1) year, beginning September 1, 1990 until August 31, 1991, with a monthly rental of P6,580.00.

In December 1990, MIAA issued Administrative Order No. 1, Series of 1990, which revised the rates of
dues, charges, fees or assessments for the use of its properties, facilities and services within the airport
complex. The Administrative Order was made effective on December 1, 1990. As a consequence, the
monthly rentals due from AFIC was increased to P15,996.50. Nonetheless, MIAA did not require AFIC
to pay the new rental fee. Thus, it continued to pay the original fee of P6,580.00.

After the expiration of the contract, AFIC continued to use and occupy the leased premises giving rise to
an implied lease contract on a monthly basis. AFIC kept on paying the original rental fee without protest
on the part of MIAA.

Three years after the expiration of the original contract of lease, MIAA informed AFIC, through a billing
statement dated October 6, 1994, that the monthly rental over the subject premises was increased to
P15,966.50 beginning September 1, 1991, which is the date immediately following the expiration of the
original contract of lease. MIAA sought recovery of the difference between the increased rental rate and
the original rental fee amounting to a total of P347,300.50 covering thirty-seven (37) months between
September 1, 1991 and September 31, 1994. Beginning October 1994, AFIC paid the increased rental fee.
However, it refused to pay the lump sum of P347,300.50 sought to be recovered by MIAA. For the
continued refusal of AFIC to pay the said lump sum, its employees were denied access to the leased
premises from July 1, 1997 until March 11, 1998. This, notwithstanding, AFIC continued paying its
rentals. Subsequently, AFIC was granted temporary access to the leased premises.

AFIC then filed with the RTC of Quezon City a Complaint for damages with injunction against MIAA
and its General Manager seeking uninterrupted access to the leased premises, recovery of actual and
exemplary damages, refund of its monthly rentals with interest at the time that it was denied access to the
area being rented as well as attorney's fees.

In its Answer with Counterclaim, MIAA contended that under its lease contract with AFIC, MIAA is
allowed to either increase or decrease the monthly rental; AFIC has rental arrears in the amount of
P347,300.50; AFIC was wrong in claiming that MIAA took the law into its own hands in denying AFIC
and its employees access to the leased premises, because under the lease contract, in case of failure on the
part of AFIC to pay rentals for at least two (2) months, the contract shall become automatically terminated
and canceled without need of judicial action or process and it shall be lawful for MIAA or any person or
persons duly authorized on its behalf to take possession of the property either by padlocking the premises
or posting its guards to prevent the entry of any person. MIAA prayed for the award of exemplary
damages as well as attorney's fees and litigation expenses.

On March 21, 2003, the RTC rendered its Decision, the dispositive portion of which reads as follows:

WHEREFORE, in view of the foregoing, judgment is hereby rendered in favor of
the plaintiff [AFIC] and as against the defendants [MIAA] ordering the latter to pay
plaintiff the following:
a) the amount of P2,000,000.00 as actual damages;
b) the amount of
P
200,000.00 as exemplary damages;
c) to refund the monthly rental payments beginning July 1, 1997 up [to]
March 11, 1998 with interest at twelve (12%) percent;
d) the amount of P100,000.00 as attorney's fees;
e) cost of suit.
IT IS SO ORDERED.
4

MIAA filed an appeal with the CA contending that the RTC erred in: (1) finding that MIAA is not
entitled to apply the increase in rentals as against AFIC; (2) finding that MIAA is not entitled to padlock
the leased premises or post guards to prevent entry of AFIC therein; and (3) awarding actual and
exemplary damages and attorney's fees.

On June 19, 2007, the CA rendered its assailed Decision, the dispositive portion of which reads, thus:

WHEREFORE, premises considered, the decision of the Regional Trial Court of Quezon
City in Civil Case No. Q-98-34395 is hereby AFFIRMED with MODIFICATION. The
awards of actual/compensatory damages and exemplary damages are deleted. The refund
of monthly rental payments from July 1, 1997 to March 11, 1998 shall earn interest of six
percent (6%) per annum from the date of the filing of the complaint until the finality of
this decision. An interest of twelve percent (12%) per annum shall be imposed upon any
unpaid balance from such finality until the judgment amount is fully satisfied.

The award of attorney's fees stands.

SO ORDERED.
5

MIAA filed a Motion for Reconsideration, but the CA denied it via its Resolution dated October 11,
2007.

Hence, the present petition for review on certiorari raising the following issues:

WHETHER THE HONORABLE COURT OF APPEALS CORRECTLY
INTERPRETED THE PROVISIONS OF THE LEASE CONTRACT IN LINE WITH
THE PROVISIONS OF THE CIVIL CODE AND EXISTING JURISPRUDENCE ON
CONTRACTS.

WHETHER THE PRINCIPLE OF UNJUST ENRICHMENT IS APPLICABLE TO THE
INSTANT CASE.

WHETHER RESPONDENT IS ENTITLED TO ATTORNEY'S FEES.
6

Petitioner MIAA contends that, as an administrative agency possessed of quasi-legislative and quasi-
judicial powers as provided for in its charter, it is empowered to make rules and regulations and to levy
fees and charges; that its issuance of Administrative Order No. 1, Series of 1990 is pursuant to the
exercise of the abovementioned powers; that by signing the lease contract, respondent AFIC already
agreed and gave its consent to any further increase in rental rates; as such, the provisions of the lease
contract being cited by the CA which provides that any amendment, alteration or modification [of the
lease contract] shall not be valid and binding, unless and until made in writing and signed by the parties
thereto is deemed complied with because respondent already consented to having any subsequent
amendments to Administrative Order No. 1 automatically incorporated in the lease contract; that the
above-quoted provisions should not also be interpreted as having the effect of limiting the authority of
MIAA to impose new rental rates in accordance with its authority under its charter.

Petitioner also argues that it is not guilty of unjust enrichment when it denied respondent access to the
leased premises, because there is nothing unlawful in its act of imposing sanctions against respondent for
the latter's failure to pay the increased rental.
Lastly, petitioner avers that respondent is not entitled to attorney's fees, considering that it was not
compelled to litigate and incur expenses to protect its interest by reason of any unjustified act on the part
of petitioner. Petitioner reiterates that it was merely exercising its right as the owner and administrator of
the leased property and, as such, its acts may not be deemed unwarranted.

The petition lacks merit.

Article 1306 of the Civil Code provides that [t]he contracting parties may establish such stipulations,
clauses, terms and conditions as they may deem convenient, provided they are not contrary to law,
morals, good customs, public order, or public policy.

Moreover, Article 1374 of the Civil Code clearly provides that [t]he various stipulations of a contract
shall be interpreted together, attributing to the doubtful ones that sense which may result from all of them
taken jointly. Indeed, in construing a contract, the provisions thereof should not be read in isolation, but
in relation to each other and in their entirety so as to render them effective, having in mind the intention
of the parties and the purpose to be achieved.
7
In other words, the stipulations in a contract and other
contract documents should be interpreted together with the end in view of giving effect to all.
8

In the present case, the Court finds nothing repugnant to law with respect to the questioned provisions of
the contract of lease between petitioner and respondent. It is true that Article II, Paragraph 2.04 of the
Contract of Lease states that [a]ny subsequent amendment to Administrative Order No. 4, Series of
1982, which will effect a decrease or escalation of the monthly rental or impose new and additional fees
and charges, including but not limited to government/MIAA circulars, rules and regulation to this effect,
shall be deemed incorporated herein and shall automatically amend this Contract insofar as the monthly
rental is concerned.
9
However, the Court agrees with the CA that the abovequoted provision of the lease
contract should not be read in isolation. Rather, it should be read together with the provisions of Article
VIII, Paragraph 8.13, which provide that [a]ny amendment, alteration or modification of th[e] Contract
shall not be valid and binding, unless and until made in writing and signed by the parties thereto.
10
It is
clear from the foregoing that the intention of the parties is to subject such amendment to the conformity of
both petitioner and respondent. In the instant case, there is no showing that respondent gave his
acquiescence to the said amendment or modification of the contract.

The situation is different with respect to the payments of the increased rental fee made by respondent
beginning October 1994 because by then the amendment to the contract was made in writing through a
bill sent by petitioner to respondent.
11
The fact that respondent subsequently settled the said bill proves
that he acceded to the increase in rental fee. The same may not be said with respect to the questioned
rental fees sought to be recovered by petitioner between September 1991 and September 1994 because no
bill was made and forwarded to respondent on the basis of which it could have given or withheld its
conformity thereto.

It may not be amiss to point out that during the abovementioned period, respondent continued to pay and
petitioner kept on receiving the original rental fee of P6,580.00 without any reservations or protests from
the latter.
12
Neither did petitioner indicate in the official receipts it issued that the payments made by
respondent constitute only partial fulfillment of the latter's obligations. Article 1235 of the Civil Code
clearly states that [w]hen the obligee accepts the performance knowing its incompleteness or irregularity,
and without expressing any protest or objection, the obligation is deemed fully complied with. For
failing to make any protest or objection, petitioner is already estopped from seeking recovery of the
amount claimed.

Anent the second issue, since it has been established that petitioner has no legal basis in requiring
respondent to pay additional rental fees from September 1, 1991 to September 30, 1994, it, thus, follows
that petitioner's act of denying respondent and its employees access to the leased premises from July 1,
1997 until March 11, 1998, by reason of respondent's non-payment of the said additional fees, is likewise
unjustified.

Under Paragraph 3, Article 1654 of the Civil Code, the lessor is obliged [t]o maintain the lessee in the
peaceful and adequate enjoyment of the lease for the entire duration of the contract.

Moreover, Article 1658 of the same Code provides that [t]he lessee may suspend the payment of the rent
in case the lessor fails to make the necessary repairs or to maintain the lessee in peaceful and adequate
enjoyment of the property leased.

Furthermore, as correctly cited by the RTC, Article 19 of the Civil Code provides that [e]very person
must, in the exercise of his rights and in the performance of his duties, act with justice, give everyone his
due, and observe honesty and good faith.

Article 22 of the same Code also states that [e]very person who through an act of performance by
another, or any other means, acquires or comes into possession of something at the expense of the latter
without just or legal ground, shall return the same to him. In accordance with jurisprudence, there is
unjust enrichment when a person unjustly retains a benefit to the loss of another, or when a person retains
money or property of another against the fundamental principles of justice, equity and good conscience.
13

The principle of unjust enrichment essentially contemplates payment when there is no duty to pay, and
the person who receives the payment has no right to receive it.
14

In the instant case, it is clear that petitioner failed to maintain respondent in the peaceful and adequate
enjoyment of the leased premises by unjustifiably preventing the latter access thereto. Consequently, in
accordance with Article 1658 of the Civil Code, respondent had no duty to make rent payments. Despite
that, respondent still continued to pay the rental fees agreed upon in the original contract. Thus, it would
be the height of inequity and injustice as well as unjust enrichment on the part of petitioner if the rental
fees paid by respondent during the time that it was denied access to and prevented from using the leased
premises be not returned to it.

With respect to attorney's fees, the Court finds no error on the part of the CA in sustaining such award on
the ground that petitioner's act of denying respondent and its employees access to the leased premises has
compelled respondent to litigate and incur expenses to protect its interest.
15
The Court likewise agrees
with the CA that, under the circumstances prevailing in the present case, attorney's fees may be granted
on grounds of justice and equity.
16

Finally, the Court deems it proper to reiterate the provisions of Supreme Court Administrative Circular
No. 10-2000 which enjoins all judges of lower courts to observe utmost caution, prudence and
judiciousness in the issuance of writs of execution to satisfy money judgments against government
agencies and local government units.

WHEREFORE, the petition is DENIED. The June 19, 2007 Decision and October 11, 2007
Resolution of the Court of Appeals in CA-G.R. CV No. 79325 are AFFIRMED. The Regional Trial
Court of Quezon City, Branch 224 is ORDERED to comply with the directives of Supreme Court
Administrative Circular No. 10-2000.

SO ORDERED.

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197561 April 7, 2014

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