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OBLIGATION AND CONTRACTS DIGESTED CASES

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Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-28770
January 21, 1928
DOROTEA DAIS, ET AL., petitioners,
vs.
THE COURT OF FIRST INSTANCE OF CAPIZ, ET AL., respondents.

Jose Y. Torres for petitioners.


Jose Altavas for respondents.
VILLA-REAL, J.:

This is a petition for a writ of certiorari filed by Dorotea Dais et al., against the Court of
First Instance of Capiz, Seventeenth Judicial District, Jose Altavas and Jose Morente, in
which it is prayed that an order be issued to the respondent judge requiring him to
certify and transmit to this court an exact and complete transcription of the record,
decision and proceedings in cadastral proceeding No. 18 (G. L. R. O. Record No. 714),
entitled the Director of Lands vs. Justo Abiertas et al., concerning the portion referring to
lots Nos. 626, 1132 and 1136, for review by this Supreme Court; and that after hearing
both parties, judgment rendered declaring the judicial orders of the Court of First
Instance of Capiz dated July 25, 1927, August 8, 1927, and September 22, 1927, as well
as the judgment rendered by the same court on September 29, 1927, and all other
proceedings had in connection therewith, void and of no effect.
The facts appearing from the pleadings and documentary evidence attached thereto,
presented in this case, are hereinafter set forth in the order of their concurrence.
In course of the intestate proceedings for the settlement of the estate of the deceased
Separion Dais, civil case No. 988 of the Court of First Instance of Capiz, Manuel Arnaldo
was appointed administrator of the estate. For the payment of some of the debts of the
deceased, said administrator was authorized to sell certain parcels of land of said estate;
whereupon he sold lots Nos. 1132 and 1136 in the form prescribed by the law, to
Antonio Habana, which sale was approved by the court of February 15, 1926. The herein
petitioners or some of them objected to such approval and filed a motion for
reconsideration on March 6, 1926, which was denied on March 10, 1926. They appealed
accordingly on April 6, 1927, and the same was denied on August 1, 1927, on the
ground that it was not presented within the time prescribed by section 783 of the Code
of Civil Procedure, because more than twenty days has elapsed since the orders
appealed from had been entered. It appears from the order denying said appeal that the
appellants contend that the time within which said appeal should be taken must be
counted from the date of the notification of said orders and not from the date on which
they were entered.
On May 20, 1926, Manuel Arnaldo filed an answer in the cadastral proceeding No. 18 (G.
L. R. O. Record No. 714), in the name of Separion Dais's heirs, claiming title to lots Nos.
626, 1132 and 1136 of said proceeding. Jose Morente also filed an answer claiming title,
lots Nos. 1132 and 1136. Jose Altavas also filed an answer claiming title to lot No. 626.
Before the hearing of the case, and in pursuant of a motion of the claimants Jose Altavas
and Jose Morente, respectively, with the consent of Manuel Arnaldo, as judicial
administrator of Serapion Dais's intestate estate, the respondent court ordered the
answers presented by said administrator in the name of Separion Dais's heirs with
respect to lots Nos. 626, and 1136 stricken out.

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Dissatisfied with this order striking out their answer, the heirs of Separion Dais
presented a motion for reconsideration, objecting to the motions to strike out their
answer and praying that the order of July 25, 1927, granting said motions, be annulled.
The motion for reconsideration being denied, the movants, heirs Separion Dais, took
formal exception to said order, and gave notice of their intention to appeal to this court,
and, to perfect their appeal, filed the proper bill of exceptions, which was disapproved by
the court on the motion of claimants Jose Altavas and Jose Morente.
After the aforementioned answers presented by the judicial administrator Manuel
Arnaldo on behalf of the heirs of Serapion Dais anent lots Nos. 626, 1132 and 1136, had
been stricken from the record of the cadastral proceeding, the court proceeded to the
hearing of the answers of Jose Altavas and Jose Morente in regard to the said lots, after
which the respondent court rendered a judgment on September 29, 1927, adjudicating
lot No. 626 to the spouses Jose Altavas and Socorro Laserna, and lots Nos. 1132 and
1136 to Jose Morente and Patria Altavas.
There are two principal questions to de determined in the present instance, to wit:
1. Have the petitioners the right to intervene in a cadastral proceeding for the purpose
of objecting to the striking out of an answer filed by the judicial administrator of the
intestacy of the petitioners' predecessor in interest, claiming several parcels of land as
the property of said estate, when the aforementioned administrator consents in its being
stricken out?
2. And in case they have, has the respondent judge exceeded his powers in ordering
that the answer be stricken from the record, over the objection of the said petitioners?
In relation to the first question, article 657 of the Civil Code provides:
ART. 657. The rights to the succession of a person are transmitted from the
moment of his death.
ART. 661. Heirs succeed to all the rights and obligations of the decedent by the
mere fact of his death.
Interpreting the above quoted legal provisions, this court has held in various decisions
that the right to the succession of a person are transmitted from the moment of his
death; in other words, the heirs immediately succeed to the dominion, ownership and
possession of the property of their predecessor. (Quison vs. Salud, 12 Phil., 109;
Ilustre vs. Alaras Frondosa, 17 Phil., 321; Malahacan vs. Ignacio, 19 Phil., 434;
Beltran vs. Doriano,
32
Phil.,
66;
Bondad vs. Bondad,
34
Phil.,
232;
Velazco vs. Vizmanos, 45 Phil., 675; Fule vs. Fule, 46 Phil., 317.) The fact that the law
provides for the appointment of a legal administrator for the liquidation of the
deceased's property, and the partition of his hreditas jacensamong his heirs, does not
deprive the heirs of the right intervene in the administration of said property for the
protection of their interests. On the contrary section 714 of the Code of Civil Procedure,
in connection with section 722 of the same Code, requires that the written consent and
approval of the heirs be obtained for the sale of the deceased's property in order to pay
his debts and the costs of administration. This provision shows that, notwithstanding the
appointment of a judicial administrator, the heirs have a right to intervene when they
believe the administrator's acts are prejudicial to their interest. And it cannot be said that
the administrator answers with his bond for any damage he may cause to the interests
of the estate, since such bond might not be sufficient to cover said damages.
For the reasons above stated, we are of opinion that the heirs have a right to intervene
in a cause involving certain property of the decedent's hreditas jacens whenever they
believe the legal administrator's acts are prejudicial to their interests.
The second question to determine is whether or not the respondent court exceeded its
jurisdiction in ordering that the answers filed by the legal administrator in the name of
the heirs be stricken out, said administrator having consented against the opposition of
said heirs.

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In determining the first questions, we have seen that the heirs have a right intervene
when they believe that the acts of the judicial administrator of the property of
the hreditas jacens of their predecessor in interest are prejudicial to their interests.
The petitioners have made use of this right in the present proceedings, opposing the
dismissal and taking exception to the order granting the motion filed that end.
The answers in cadastral proceedings partake of the character of an action to recover
title, as real rights are claimed therein. According to section 10 of Act No. 2347, the
provisions of the Code of Civil Procedure are of a suppletory nature in land registration
cases. Since Act No. 496, Known as Land Registration Act, contains no special rule as to
the procedure to be followed in impugning the sufficiency of the answers in cadastral
proceedings nor in determining whether or not they must be dismissed, the provisions of
the Code of Civil Procedure are applicable. According to the said Code, complaints can
only be dismissed by a failure to prosecute, by default, by abandonment, or by defects
provided by the law as grounds for a demurrer (Secs. 101 and 127, Act No. 190). When
two persons claim the ownership of one and the same cadastral lot, both of them are
claimants and opponents at the same time, and their respective answers cannot be
dismissed by the court without the presence of any of said circumstances; and a motion
for dismissal that is not based on any of said grounds does not confer jurisdiction on the
court to dismiss the complaint, and if it does so, it exceeds its powers.
In this case, the motion presented by Jose Altavas, claimant of lot No. 626, praying for
the dismissal of the answer filed by the judicial administrator, Manuel Arnaldo, on behalf
of the heirs of the deceased Serapion Dais, with reference to the same lot, is based on
the allegation that said lot never pertained to the mass of property of said decedent, and
that it had never been in the possession of said administrator. The motion presented by
Jose Morente for the dismissal of the answers presented by the judicial administrator of
the intestates estate of Serapion Dais on behalf of the latter's heirs, with reference to
lots Nos. 1132 and 1136, is based on the claim that said lots were sold by the said
administrator with the approval and authority of the court. Neither of these grounds is
found among those mentioned by the present law of civil procedure as causes for
dismissal. It is true that the judicial administrator agreed to the dismissal asked for, but
the heirs, in whose made he had presented said answers, objected to it, and presented
a motion for reconsideration in time, which was denied by the respondent court. In view
of such opposition of the heirs, who are interested parties in the case, the court should
not have ordered the dismissal of the said answers, but should have proceeded to the
trial on the merits of the lots in question with the intervention of said heirs. In ordering
the dismissal of the answers presented by the judicial administrator of the intestate
estate of Serapion Dais, in the name of the latter's heirs, notwithstanding their
opposition and for a cause not provided by law as a ground for dismissal, the respondent
court did really exceed its jurisdiction; because it is not enough that a court have
jurisdiction over the subject matter in litigation and the parties, but it is necessary that it
have authority in and over each and every one of the essential particulars of the case.
In the case of Larrobis vs. Wislizenus and Smith, Bell & Co. (42 Phil., 401), this court laid
down the doctrine that the erroneous exercise of interlocutory powers is irregular and
justifies the institution of certiorari proceedings.
And on page 104 of volume 11 of Corpus Juris, the following rule may be found:
* * * But it has been that any departure from the recognized and established
requirements of law, however the apparent adherence to mere form in method of
procedure, which has the effect to deprive one of a constitutional right is as
much an excess of jurisdiction as where is an inceptive lack of power.
In dismissing the answer presented by the judicial administrator, Manuel Arnaldo in the
name of the heirs of the deceased Serapion Dais, over their objection, and in finally
deciding the case on the merits awarding the controverted to their adversaries, without

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hearing said heirs, the court not only exceeded its jurisdiction, but also deprived them of
their constitutional right to be heard before being deprived of their property rights, and
its proceedings were in this sense, void and of no effect.
The appeals taken by the petitioners from the orders which are the subject of this
proceeding were denied by the respondent judge; hence, said petitioners have no other
adequate and speedy remedy in law to protect their rights other than a writ of certiorari.
It is, therefore, proper to grant, as we do hereby grant, the remedy sought, and the
decree of the Court of First Instance of Capiz of July 25, 1927, ordering the dismissal of
the answers concerning in cadastral proceeding No. 18 (G. L. R. O. Record No. 714) is
set aside, as well as the orders dated August 8, 197, and September 22, 1927, denying
the motion for reconsideration and the appeal respectively, and the judgment of the
same court dated September 29, 1927, awarding lot no. 626 to the spouses Jose Altavas
and Socorro Laserna and the lots Nos. 1132 and 1136 to the spouses Jose Morente and
Patria Altavas, with all the orders rendered in connection with said decision, without
costs. So ordered.

Johnson, Street, Malcolm, Ostrand, Johns and Romualdez, JJ., concur.

-----------------------------------------------------------------------------------------------------

FIRST DIVISION
[G.R. Nos. 88521-22. January 31, 2000]
HEIRS OF EULALIO RAGUA, namely, DOMINGO, MARCIANA, MIGUEL, FRANCISCO,
VALERIANA, JUANA, and REMEDIOS, all surnamed RAGUA; DANILO and CARLOS, both
surnamed LARA, petitioners, vs. COURT OF APPEALS, REPUBLIC OF THE PHILIPPINES,
NATIONAL HOUSING AUTHORITY, PHILIPPINE AMERICAN LIFE INSURANCE CO., INC.,
J. M. TUASON & CO., INC. and HEIRS OF D. TUASON, INC., respondents.
[G.R. Nos. 89366-67. January 31, 2000]
MARINO T. REGALADO and ELISA C. DUFOURT petitioners, vs. REGIONAL TRIAL
COURT, NATIONAL CAPITAL REGION, QUEZON CITY, (Branch 88) presided by Hon.
Tirso D. C. Velasco (formerly Court of First Instance, Quezon City, Branch 18, then
presided by Hon. Ernani Cruz Pao), and HONORABLE COURT OF APPEALS (Special
Ninth Division composed of the HONORABLE ASSOCIATE JUSTICES LUIS A. JAVELLANA
REGINA G. ORDONEZ-BENITEZ, AND LUIS L. VICTOR), respondents.
DECISION
PARDO, J.:
These consolidated cases involve a prime lot consisting of 4,399,322 square meters,
known as the Diliman Estate, situated in Quezon City. On this 439 hectares of prime land
now stand the following: the Quezon City Hall, Philippine Science High School, Quezon
Memorial Circle, Visayas Avenue, Ninoy Aquino Parks and Wildlife, portions of UP Village
and East Triangle, the entire Project 6 and Vasha Village, Veterans Memorial Hospital
and golf course, Department of Agriculture, Department of Environment and Natural
Resources, Sugar Regulatory Administration, Philippine Tobacco Administration, Land
Registration Authority, Philcoa Building, Bureau of Telecommunications, Agricultural
Training Institute building, Pagasa Village, San Francisco School, Quezon City Hospital,
portions of Project 7, Mindanao Avenue subdivision, part of Bago Bantay resettlement
project, SM City North EDSA, part of Phil-Am Life Homes compound and four-fifths of
North Triangle.[1] This large estate was the subject of a petition for judicial reconstitution
originally filed by Eulalio Ragua in 1964, which gave rise to protracted legal battles
between the affected parties, lasting more than thirty-five (35) years.
Re : G. R. Nos. 88521-22

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These cases are now before the Court for review via certiorari of the decision of the
Court of Appeals[2] that reversed and set aside the decision[3] of the Court of First
Instance of Rizal, Quezon City, Branch 18, ordering the Register of Deeds, Quezon City
to reconstitute Original Certificate of Title No. 632 in the name of Eulalio Ragua. Court
On August 31, 1964, Eulalio Ragua, claiming to be the registered owner, together with
co-owners Anatalio B. Acua, Catalina Dalawantan, and other co-owners, filed with the
Court of First Instance of Rizal, Caloocan City[4] a petition for reconstitution of Original
Certificate of Title (OCT) No. 632 of the Registry of Deeds of Rizal, covering a parcel of
land with an area of 4,399,322 square meters, as evidenced by plan bearing No. II4816, known as the Diliman Estate, situated in the municipality of Caloocan, province of
Rizal. Attached to the petition was a photostatic copy of OCT No. 632 and a photostatic
copy of the plan of the property as surveyed for Eulalio Ragua. OCT No. 632 covered a
large parcel of land bounded on the North by the Culiat Creek, a ditch, the Piedad
Estate; on the East by the property of Gregorio Tiburcio and Mahabang Gubat; on the
South by the property of Miguel Estanislao; on the West by the property of Segundo
Limoco, the Mariabelo Creek; and on the South by the San Francisco del Monte
Estate. Jlexj
On September 9, 1964, J. M. Tuason & Co., Inc. (Tuason) filed with the Court of First
Instance of Rizal, Caloocan City an opposition to the petition alleging that OCT No. 632
was fictitious and the land was covered by TCT No. 1356 in the name of Peoples
Homesite and Housing Corporation (PHHC). TCT No. 1356 originated from OCT No. 735
of the Registry of Deeds of Rizal, registered in the name of Tuasons predecessor-ininterest. Furthermore, the validity of OCT No. 735 had been declared as beyond judicial
review in the case of Maximo L. Galvez vs. Mariano Severo Tuason, 119 Phil. 612,
promulgated on February 29, 1964.
On September 10, 1964, the People Homesite and Housing Corporation (PHHC), later
succeeded by the National Housing Authority (NHA), filed with the same trial court its
opposition to Raguas petition for reconstitution of OCT No. 632. PHHC averred that
Raguas petition did not comply with the requirements of the law on judicial
reconstitution. PHHC likewise contended that OCT No. 632 in the name of Eulalio Ragua
was fictitious, and that the property was covered by TCT No. 1356 in the name of PHHC.
PHHC maintained that TCT No. 1356 was originally covered by OCT No. 735, the validity
of which had been declared by the Supreme Court as beyond judicial review in the
afore-cited case of Maximo L. Galvez vs. Mariano Severo Tuason, supra. Lexjuris
Also on September 10, 1964, petitioner Eulalio Ragua filed with the Court of First
Instance of Rizal, Branch VI, Pasig, Rizal another petition for reconstitution of OCT No.
632, G. L. R. O. No. 7984. Ragua alleged that he was the owner of a parcel of land
situated in Diliman, Quezon City, with an area of four million three hundred ninety nine
thousand three hundred twenty two (4,399,322) square meters, particularly bounded
and described as indicated on Plan II-4816 and that the owners duplicate of OCT No.
632 had been lost and destroyed many years ago when his personal effects and papers
were eaten by termites.
On September 23, 1964, the Court of First Instance of Rizal at Pasig, issued an order
directing the transfer of the record of G. L. R. O. No. 7984 to the Court of First Instance
of Rizal, Caloocan City as the land involved was situated in Caloocan City. Jurismis
On September 28, 1964, Eulalio Ragua filed with the Court of First Instance of Rizal,
Caloocan City a manifestation for the consolidation of G. L. R. O. Record No. 7984 with
Civil Case No. C-119. On November 24, 1964, the Court of First Instance of Rizal,
Caloocan City granted the manifestation and consolidated the two cases. Jjjuris
On January 29, 1965, during the pendency of the petition, Sulpicio Alix applied for, and
on the same date, obtained from the Register of Deeds of Quezon City, an administrative
reconstitution of OCT No. 632.

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On February 10, 1965, Tuason filed with the Court of First Instance of Quezon City,
Branch 18 a complaint for annulment of OCT No. 632[5] and subsequent transfer
certificates of titles (TCTs) originating therefrom, against the Register of Deeds of
Quezon City, Eulalio Ragua, J. Sulpicio R. Alix, Ramon S. Mendoza, Leocadio D. Santiago,
and others. Tuason alleged that he was the successor-in-interest of the parcels of land in
Quezon City originally covered by OCT 735 issued on July 8, 1914 in G.L.R.O. Case No.
7681, as evidenced by TCT No. 32001 and TCT Nos. 37676 to 37686 of the Register of
Deeds of Quezon City. Tuason averred that on January 29, 1965, Ragua and/or Alix
knowingly caused to be reconstituted administratively in the Register of Deeds of
Quezon City, a fake OCT No. 632 covering 4,399,322 square meters of land situated in
Diliman, Quezon City. Tuason maintained that OCT No. 632 in the name of Ragua was a
fake title since the records of the Registry of Deeds of Pasig, Rizal showed that OCT No.
632 was issued in the name of Dominga J. Oripiano, for a parcel of land covering 97
hectares situated in Taytay, Rizal. justice
On February 15, 1965, Eulalio Ragua filed with the Court of First Instance of Rizal,
Quezon City a "Motion to Confirm the Administrative Reconstitution of Original Certificate
of Title No. 632" alleging that on January 29, 1965, Sulpicio Alix filed the owners
duplicate copy of OCT No. 632 with the Register of Deeds of Quezon City for the
administrative reconstitution of said title. Alix secured the owners duplicate copy of OCT
No. 632 by virtue of a deed of sale executed in his favor by Eulalio Ragua. As a result,
the Register of Deeds issued OCT No. 88081 in the name of Eulalio Ragua.
Subsequently, Alix succeeded in having OCT No. 88081 cancelled and replaced with TCT
No. 88082 in his name, which, in turn, was replaced by 31 Transfer Certificates of Title
on the strength of deeds of absolute sale executed by Alix in favor of third parties.
On February 17, 1965, Tuason filed with the Court of First Instance of Rizal, Quezon City
an opposition to the motion of petitioners for the confirmation of the administrative
reconstitution of OCT No. 632. Tuason alleged that OCT No. 632 issued to Eulalio Ragua
was a fake title, reconstituted administratively by certain persons using surreptitious
means, without any notice to all parties concerned and without following the procedure
prescribed by law governing the administrative reconstitution of lost titles. Tuason
further stated that the court had no jurisdiction to confirm the administratively
reconstituted OCT No. 632 inasmuch as under RA 26, administrative reconstitution of
titles and judicial reconstitution are two different matters. Jksm
On February 24, 1965, the Republic of the Philippines[6] filed with the Court of First
Instance of Rizal, Caloocan City its opposition to the petition alleging that it was the
owner of the land including the buildings and improvements thereon, now known as the
Veterans Memorial Hospital (VMH), acquired from the PHHC. The VMH site was part of
the land acquired by PHHC from Tuason under TCT No. 1356, originally covered by
Tuasons OCT No. 735, the validity of which was judicially recognized by the Supreme
Court.[7] The Republic adopted the opposition of the PHHC and Tuason. It further
contended that it was a transferee in good faith, thereby barring any pretended right of
petitioners to the portion owned and possessed by it. Es m
In sum, the petition for reconstitution filed by Eulalio Ragua was opposed by several
parties, to wit: the Tuasons, the National Housing Authority (formerly PHHC),
Department of National Defense, Department of Agriculture and Natural Resources,
Parks and Wildlife, Philippine American Life Insurance Company, et. al., among other
parties, which claimed to have purchased portions of the Diliman Estate from the
Tuasons.
On April 18, 1968, Eulalio Ragua died, and on April 29, 1968, was substituted by his
heirs Domingo, Marciana, Miguel, Juana, Francisco, Valeriana, and Remedios, all
surnamed Ragua, and Carlito Ragua Lara, as petitioners. Es msc

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On January 10, 1972, petitioners and oppositors filed with the Court of First Instance of
Rizal, Quezon City a joint motion to transfer the proceedings in Case No. C-119 /G.L.R.O.
Rec. No. 7984 to Branch 18, Court of First Instance of Rizal, Quezon City for
consolidation with Civil Case No. Q-8559,[8] which consolidation was effected.
After due hearing, on March 24, 1980, the Court of First Instance of Rizal, Quezon City
rendered decision[9] the dispositive portion of which reads as follows:
"WHEREFORE, premises considered, the Court renders judgment
"1. In Case No. 119, the Quezon City Register of Deeds is ordered to reconstitute in the
name of Eulalio Ragua Original Certificate of Title No. 632, with the Technical
Description appearing in Plan II-4816 and Annexes A & B of the Petition, upon payment
of all lawful fees;
"2. In Case Q-8559, declaring null and void, and cancelling the administratively
reconstituted OCT 632 (88081) and Transfer Certificates of Title derived therefrom,
including TCT 88082, 88083, 88084, 88087, 88088, 88089, 88091, 88092, 88093,
88094, 88095, 88096, 88097, 88098, 88030, 88656, 88657, 88658, 88659, 88671,
88677, 88674, 88675, 88689, and all any transfer certificates of title derived therefrom.
"The claims in interventions in Case No. 119 of parties who upheld the validity of the
Ragua title, as well as any claims in Case 8559 against Sulpicio Alix may be prosecuted
in separate proceedings.
"No pronouncement as to costs.
"SO ORDERED.
"Quezon City, Philippines, March 24, 1980.
"(SGD) ERNANI CRUZ PAO
"ERNANI CRUZ PAO
"District Judge"[10]
In due time, oppositors, including the Republic, filed with the trial court a motion for
reconsideration of the decision. On August 29, 1980, the trial court denied the motion.
The Republic appealed the trial courts decision to the Court of Appeals.[11] Private
oppositors and the National Housing Authority filed separate appeals to the Court of
Appeals. Esmm is
After due proceedings on appeal, on May 30, 1989, the Court of Appeals promulgated its
decision, the dispositive portion of which reads:
"WHEREFORE, the judgment appealed from is reversed insofar as it orders the
reconstitution of OCT 632 in the name of Eulalio Ragua.
"Without pronouncement as to costs.
"SO ORDERED."[12]
The Court of Appeals held that the trial court had no jurisdiction over the petition for
reconstitution for failure to comply with the jurisdictional requirements of publication and
posting of notices provided under Republic Act No. 26, Sections 12 and 13. The Court of
Appeals ruled that assuming arguendo that the trial court had jurisdiction over the
petition, the evidence presented in court to support the application was dubious in
character and insufficient to justify the reconstitution. Esmso
The Court of Appeals held furthermore that the land in question was embraced in OCT
No. 735, issued in the name of Tuason, the validity of which was upheld by the Supreme
Court in several cases.[13] The trial court could not proceed with the reconstitution
proceedings without Tuasons title and those originating therefrom being annulled
first.[14] The Court of Appeals also ruled that petitioners were guilty of laches since it
took them nineteen (19) years from the end of World War II in 1945, wherein OCT 632
was lost, to file the petition for reconstitution. Mse sm
On July 22, 1989, petitioners filed this petition for review on certiorari assailing the Court
of Appeals decision.[15]
Re: G. R. Nos. 89366-67

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Petitioners Elisa G. Dufourt and Marino T. Regalado were owners of 45 and 55 hectares,
respectively, of the same parcel of land known as the Diliman Estate, which was subject
of the petition for judicial reconstitution of OCT No. 632, filed by Eulalio Ragua with the
Court of First Instance of Rizal, Caloocan City, later transferred to Court of First Instance
of Rizal, Quezon City. Sometime in 1972, petitioners acquired the property by virtue of
deeds of assignment executed by Eulalio Ragua in their favor. Petitioners rights and
interests over the above property have been confirmed by the Court of Appeals in CA-G.
R. CV No. 20701, promulgated on May 4, 1989. Ex sm
As heretofore stated, on March 24, 1980, the Court of First Instance of Rizal, Quezon
City rendered decision in favor of Ragua, ordering the Register of Deeds, Quezon City, to
reconstitute OCT 632 in the name of Ragua.
On October 28, 1980, petitioners filed with the Court of First Instance, Quezon City a
motion for execution of the judgment rendered by it, contending that the judgment had
become final after the Register of Deeds and Land Registration Commission failed to file
an appeal within the prescribed period. On January 5, 1981, the trial court denied the
motion for execution and approved the record on appeal filed by the Republic of the
Philippines. Kyle
On March 7, 1983, petitioners filed with the Court of Appeals, a motion to dismiss the
appeal, which the court denied.
As aforesaid, on May 30, 1989, the Court of Appeals rendered its decision.
On August 14, 1989, petitioners filed with this Court, a petition
for certiorari and mandamus, with prohibition and temporary restraining order[16] seeking
the execution of the trial courts order authorizing reconstitution of OCT No. 632. Kycalr
On August 21, 1989, we consolidated G. R. Nos. 89366-67 with G. R. Nos. 88521-22.[17]
On March 26, 1990, we required respondents in G. R. Nos. 88521-22 to comment on the
petition.[18] On June 28, 1990, the Solicitor General filed his comment.[19]
On November 23, 1992, we required respondents in G. R. Nos. 89366-67 to comment on
the petition.[20] On September 27, 1993, the Solicitor General filed his comment.[21]
In the course of this controversy, portions of the contested property had been the
subject of sales to different persons, some of whom moved to intervene in the cases, or
to substitute the parties therein, which further complicated the cases. Calrky
On October 7, 1997, the surviving heirs of Eulalio Ragua, assisted by judicial
administratrix Norma G. Aquino, filed with this Court a manifestation offering to execute
deeds of donations in favor of the government and its instrumentalities, of all portions of
the real property actually occupied by offices performing governmental functions,
including roads and parking areas.[22]
We give due course to the petitions and decide them jointly.
These cases present two (2) basic issues, namely, (1) whether the trial court acquired
jurisdiction over the proceedings for reconstitution of title due to non-compliance with
the jurisdictional requirements prescribed for reconstitution of titles, and (2) whether the
evidence of the sources of the title to be reconstituted was sufficient basis therefor.
With respect to the first issue, R. A. No. 26, Sections 12 and 13, provide for jurisdictional
requirements of petitions for reconstitution of titles filed on the basis of documents other
than the owners or co-owners duplicate certificates of title. The provisions are quoted
hereunder: Mesm
"SEC. 12. Petitions for reconstitution from sources enumerated in sections 2(c), 2(d),
2(e), 2(f), 3(c), 3(d), 3(e), and/or 3(f) of this Act, shall be filed with the proper Court of
First Instance, by the registered owner, his assigns, or any person having an interest in
the property. The petition shall state or contain, among other things, the following: (a)
that the owners duplicate of the certificate of title had been lost or destroyed; (b) that
no co-owners mortgagees or lessees duplicate had been issued, or if any had been
issued, the same had been lost or destroyed; (c) the location, area and boundaries of

OBLIGATION AND CONTRACTS

8|Pa g e

the property; (d) the nature and description of the buildings or improvements, if any
which do not belong to the owner of the land, and the names and addresses of the
owners of such building or improvements; (e) the name and addresses of the occupants
or persons in possession of the property, of the owners of the adjoining properties and
of all persons who may have any interest in the property; (f) a detailed description of
the encumbrances, if any, affecting the property; and (g) a statement that no deeds or
other instruments affecting the property have been presented for registration, or if there
be any, the registration thereof has not been accomplished, as yet. All the documents,
or authenticated copies thereof, to be introduced in evidence in support of the petition
for reconstitution shall be attached thereto and filed with the same: Provided, That in
case the reconstitution is to be made exclusively from sources enumerated in Section
2(f) or 3(f) of this Act, the petition shall be further accompanied with a plan and
technical description of the property duly approved by the Chief of the General Land
Registration Office, or with a certified copy of the description taken from a prior
certificate of title covering the same property.
"SEC. 13. The court shall cause a notice of the petition filed under the preceding section,
to be published, at the expense of the petitioner, twice in successive issues of the
Official Gazette, and to be posted on the main entrance of the municipality or city in
which the land is situated, at the provincial building and of the municipal building at least
thirty days prior to the date of hearing. The Court shall likewise cause a copy of the
notice to be sent, by registered mail or otherwise, at the expense of the petitioner, to
every person named therein whose address is among other things, the number of the
lost or destroyed certificate of title if known, the name of the registered owner, the
names of the occupants or persons in possession of the property, the owners of the
adjoining properties and all other interested parties, the location, area and boundaries of
the property, and the date on which all persons having any interest therein must appear
and file their claim or objections to the petition. The petition shall, at the hearing, submit
proof of the publication, posting and service of the notice as directed by the
court." Scslx
Petitioners admittedly did not comply with the requirements of Section 12 (d), (e) and
(g), namely, the petition did not state (1) the nature and description of the buildings or
improvements, if any, which do not belong to the owner of the land, and the names and
addresses of the owners of such buildings or improvements, (2) the names and
addresses of the occupants of the adjoining property and of all persons who may have
any interest in the property and (3) that no deeds or other instrument affecting the
property have been presented for registration. Neither do these data appear in the
notice of hearing. Besides, petitioners also did not comply with the notice and
publication requirement under Section 13 because the order directed that the notice be
posted at the Caloocan City Hall, not in Quezon City, where the land is situated. Slxs c
We have ruled that the failure to comply with the requirements of publication and
posting of notices prescribed in Republic Act No. 26, Sections 12 and 13 is fatal to the
jurisdiction of the court.[23] Hence, non-compliance with the jurisdictional requirements
renders its decision approving the reconstitution of OCT No. 632 and all proceedings
therein utterly null and void.[24]
The next issue to resolve is whether the documents of the sources of the title to be
reconstituted sufficed for reconstitution of Original Certificate of Title No. 632 in the
name of Eulalio Ragua, in the absence of genuine copies of the owners duplicate of the
certificate of title or certified copy thereof. slx mis
The trial court allowed reconstitution of OCT 632 on the basis of sources as follows:
a. Plan II-4816, as certified by the Bureau of Lands;
b. Tracing Cloth Plan, certified by the Bureau of Lands;
c. Microfilm of Plan II-4816;

OBLIGATION AND CONTRACTS

9|Pa g e

d. The application of Eulalio Ragua as certified to by Commissioner Noblejas on July 14,


1964;
e. Photographic copy of the Original Certificate of Title No. 632;
f. Decree No. 6970 certified to by the Land Registration Commission;
g. Technical Description of the Ragua Property duly certified to by both the Bureau of
Lands and Land Registration Commission;
h. Tax Declaration No. 8501 dated December 25, 1925 and made operative as of 1917.
The Court of Appeals held that the documents submitted were dubious in character and
could not be proper sources of reconstitution of OCT No. 632. This is a factual finding
that we cannot review in this review oncertiorari.[25]
First: Regarding Plan II-4816 and microfilm of Plan II-4816, the Court of Appeals found
that there were conflicting reports regarding their authenticity as there was showing of
splicing of the microfilm, which tainted its genuineness. Consequently, Plan II-4816 can
not be considered as genuine evidence for reconstitution. Missdaa
Second: the application for registration of title of Eulalio Ragua, duly certified by
Commissioner Noblejas did not indicate that the application was approved. Hence, it can
not constitute proof of the title supposedly issued subsequently. Neither was there proof
that such application was published in the Official Gazette as required by law.
Third: the photographic copy of OCT No. 632 was not authenticated by the Register of
Deeds.
Fourth: the copy of Decree No. 6970, can not be considered as competent evidence
because only the upper and lower parts of the document remain. The document does
not show to whom the decree was issued or the technical description of the property
covered.
Fifth: the tax declarations covering the property do not prove ownership over the
land.[26]
Consequently, we agree with the Court of Appeals that none of the source documents
presented was reliable. We are convinced that the factual findings of the Court of
Appeals are supported by sufficient evidence and, thus, binding on this Court. We will
not disturb these factual findings. Sda adsc
Moreover, petitioners filed the petition for reconstitution of OCT 632 nineteen (19) years
after the title was allegedly lost or destroyed. We thus consider petitioners guilty of
laches.[27] Laches 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.[28]
We find hypocritical and pharisaical petitioners manifestation expressing willingness to
donate to the government the portions of the 439 hectares of land presently occupied by
government offices. Nihil dat qui non habet He can not give what he does not have.[29]
Petitioners contend that the trial courts decision has become final and executory for
failure of the Register of Deeds and Land Registration Commission to appeal within the
prescribed period.
Petitioners submission can not be sustained.
Petitioners were not parties in the case before the trial court for the judicial
reconstitution of OCT 632. It was Eulalio Ragua, later succeeded by his heirs, who filed
the petition for reconstitution. Not being parties to the petition, petitioners have no
personality to file the motion for execution of judgment. In any event, the decision
cannot be executed as timely appeals therefrom were taken by the parties. Rtc spped
In a petition for judicial reconstitution of title, the Register of Deeds is merely a nominal
party. In fact, it is not even required to implead him. In the instant cases, the Republic
of the Philippines together with other intervenors and oppositors, interposed appeals to
the Court of Appeals within the prescribed period.

OBLIGATION AND CONTRACTS

10 | P a g e

There is no merit to petitioners argument that the Court of Appeals decision in CA-G. R.
CV No. 20701 is legally incompatible with its decision in CA-G. R. CV Nos. 00705-00706.
CA-G. R. CV No. 20701 confirmed the legal rights of petitioners over the parcels of land
ceded to them by virtue of the deeds of assignments executed by Eulalio Ragua. The
decision of the Court of Appeals in CA-G. R. CV No. 20701 did not involve the validity of
the Ragua title. Korte
On the other hand, the decision in CA-G. R. CV Nos. 00705-06 dealt with the petition for
judicial reconstitution of title filed by Eulalio Ragua and granted by the trial court.
"The reconstitution of a title is simply the reissuance of a new duplicate certificate of title
allegedly lost or destroyed in its original form and condition."[30] Consequently, as the
purported sources of the title to be reconstituted were dubious, the trial court erred in
making use of them for the reconstitution of the title in the name of Eulalio
Ragua. Sclaw
WHEREFORE, the Court hereby DENIES the petitions in G. R. Nos. 88521-22 and G. R.
Nos. 89366-67, for lack of merit. The Court AFFIRMS the decision of the Court of
Appeals in CA-G. R. CV Nos. 00705-00706, promulgated on May 30, 1989.
No costs.
SO ORDERED.
Davide, Jr., C.J., (Chairman), Puno, and Ynares-Santiago, JJ., concur.
Kapunan, J., took no part, appeared as counsel for respondent Republic of the
Philippines in an incident before the trial court when he was Asst. Sol. Gen.

[1]

G. R. Nos. 88521-22, Rollo, pp. 1042-1043.


In CA-G. R. CV Nos. 00705-06, promulgated on May 30, 1989.
[3]
In Case No. C-119 LRC (GLRO) Record No. 7984 and Civil Case No. Q-8559 dated
March 24, 1980, Judge Ernani Cruz Pao, presiding.
[4]
Branch 12, docketed as Civil Case No. C-119.
[5]
Docketed as Civil Case No. Q-8559.
[6]
The Republic of the Philippines appeared in behalf of the following government
agencies: Department of National Defense, Department of Agriculture and Natural
Resources, and Parks and Wildlife Office.
[7]
Tiburcio vs. PHHC, 106 Phil. 477 [1959] and Galvez vs. Mariano Severo Tuason, 119
Phil. 612 [1964].
[8]
Tuason Record on Appeal, pp. 121-123.
[9]
In Civil Case No. C-119 and Civil Case No. Q-8559.
[10]
G. R. No. 88521-22, Rollo, pp. 86-116.
[11]
Docketed as CA-G. R. CV Nos. 00705-00706.
[12]
G. R. Nos. 88521-22, Rollo, pp. 117-151.
[13]
J. M. Tuason & Co. v. Bolanos, 95 Phil 106 [1954]; J. M. Tuason & Co. v. de Guzman,
99 Phil. 281 [1956]; J. M. Tuason & Co. v. Santiago, 99 Phil. 615 [1956];
Tiburcio v. PHHC, supra, Note 7; J. M. Tuason & Co. v. Aguirre, 117 Phil. 110 [1963];
Galvezv. J. M. Tuason & Co., supra, Note 7.
[14]
Alabang Development Corporation v. Valenzuela, 116 SCRA 261 [1982].
[15]
Docketed as G. R. Nos. 88521-22.
[16]
G. R. Nos. 89366-67, Rollo, pp. 3-18.
[17]
G. R. Nos. 89366-67, Rollo, p. 202.
[18]
G. R. Nos. 88521-22, Rollo, p. 273.
[19]
G. R. Nos. 88521-22, Rollo, pp. 310-349.
[20]
G. R. Nos. 89366-67, Rollo, p. 598.
[21]
G. R. Nos. 89366-67, Rollo, pp. 630-634.
[2]

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11 | P a g e

[22]

G. R. Nos. 88521-22, Rollo, pp. 1031-1035.


Alabang Development Corporation v. Valenzuela, 116 SCRA 261 [1982]; Director of
Lands v. Court of Appeals, 102 SCRA 370, 435 [1981]; Republic v. Court of Appeals, 247
SCRA 551, 556 [1995]; Stilianopulos v. The City of Legaspi, G. R. No. 133913, October
12, 1999.
[24]
Stilianopulos v. The City of Legaspi, supra, citing Alabang Development
Corporation v. Valenzuela, supra; Republic v. Marasigan, 198 SCRA 219 [1991].
[25]
Alipoon v. Court of Appeals, G. R. No. 127523, March 22, 1999; National Steel
Corporation v. Court of Appeals, 283 SCRA 45, 67 [1997].
[26]
Rivera v. Court of Appeals, 244 SCRA 218, 222 [1995].
[27]
Alabang Development Corporation v. Valenzuela, supra.
[28]
Catholic Bishop of Balanga v. Court of Appeals, 264 SCRA 181 [1996].
[29]
Villaluz v. Neme, 7 SCRA 27, 30 [1963].
[30]
Strait Times, Inc. v. Court of Appeals, 294 SCRA 714, 726 [1998].
[23]

-----------------------------------------------------------------------------------------------------Republic
of
the
Philippines
SUPREME
COURT
Manila
SECOND DIVISION
G.R. No. L-45255 November 14, 1986
HEIRS
OF
MARCIANA
G.
AVILA, petitioners,
vs.
HON. COURT OF APPEALS, and ALADINO CH. BACARRISAS, respondents.

Ruben M. Orteza for petitioner.


Abeto D. Salcedo for private respondent.

PARAS, J.:
This is a petition for review on certiorari of the October 6, 1976 Decision of the Court of
Appeals in CA-G.R. No. SP-05598 (Aladino Ch. Bacarrisas vs. Hon. Benjamin K. Gorospe,
et al), granting certiorari and setting aside the Order of respondent Judge dated May 24,
1976.
In 1939, the Court of First Instance of Misamis Oriental, as a cadastral court, adjudicated
Lots 594 and 828 of the Cadastral Survey of Cagayan to Paz Chavez. But because Paz
Chavez failed to pay the property taxes of Lot 594, the government offered the same for
sale at a public auction. Marciana G. Avila, a teacher, wife of Leonardo Avila and the
mother of the herein petitioners, participated in and won the bidding. Despite the
provision of Section 579 of the Revised Administrative Code prohibiting public school
teachers from buying delinquent properties, nobody, not even the government
questioned her participation in said auction sale. In fact on February 20, 1940, after the
expiration of the redemption period, the Provincial Treasurer executed in her favor the
final bill of sale. (Rollo, pp. 10-11).
Sometime in 1947, OCT Nos. 100 and 101, covering said Lots 594 and 828, were issued
in favor of Paz Chavez. In opposition thereto, private respondents filed a petition for
review of the decrees on August 25, 1947 at the Court of First Instance of Misamis
Oriental, Branch II, in Cadastral Case No. 17, Lot No. 594 entitled "The Director of

Lands, Applicant v. Atanacia Abalde, et al., Claimants in Re: Petition for Review of
Decree, Marciana G. Avila, Petitioner vs. Paz Chavez, Respondents." After hearing on the
merits, the Cadastral Court promulgated a Decision, the dispositive portion of which
reads:
WHEREFORE, judgment is hereby rendered SETTING ASIDE the decision of this Court of
December 13, 1940, which adjudicated the lots in question in favor of respondent Paz

OBLIGATION AND CONTRACTS

12 | P a g e

Chavez, and declaring NULL and VOID Decrees Nos. 433 and 434 issued by the Chief of
Land Registration Office on June 19, 1947 as well as the certification of title covering
Lots Nos. 594 and 828 of the Cadastral Survey of Cagayan issued by the Register of
Deeds. Judgment is also hereby rendered adjudicating said Lot No. 594 to the heirs of
the late Marciana G. Avila, namely: ..., all residents of Malaybalay, Bukidnon, and Lot
828 of the same cadastre to Leonardo Avila, Sr., also of Malaybalay, subject to whatever
RIGHTS OF WAY or EASEMENTS which the government of the Philippines or any of its
instrumentalities may have acquire over said Lots.
The Clerk of Court is hereby directed to send copies of this decision to the Chief of the
Land Registration Commission, the Provincial Fiscal the Provincial Treasurer, and the
Director of Lands. Once this decision has become final, the Chief of Land Registration
Commission shall issue the corresponding decrees and certificate of title in favor of the
above-mentioned heirs of Marciana G. Avila and in favor of Leonardo Avila, Sr.
Paz Chavez appealed the said decision with the Court of Appeals, docketed therein as
CA-G.R. No. 38129-R. The Court of Appeals rendered a Decision on March 20, 1974, the
pertinent portion of which, reads:
The legal prohibition cited, therefore, would taint the title of Marciana G. Avila over Lot
594, with a flaw sufficient to make said title not proper for registration, specially as
against the government, who has not (sic) impleaded in the proceedings, on the petition
for review of the decree, to be heard as to whether it would resist the registration of
said lot in favor of Marciana G. Avila.
In view of the foregoing, judgment is hereby rendered modifying the decision appealed
from by disallowing the registration of Lot No. 594 in the name of Marciana G. Avila, but
affirming said decision in all other respects, with costs against appellant. Let a copy of
this decision be furnished the Solicitor General and the Provincial Fiscal of Misamis
Oriental for their information and guidance. (Rollo, pp. 11-12).
Upon remand of the records to the Court below, Avila moved for execution, and a writ of
possession which was opposed by Paz Chavez, who was succeeded by the herein private
respondent Aladino Ch. Bacarrisas on the alleged ground that he has the actual and
physical possession of Lot 594 where his residential house has stood since 1946.
Private respondent's Urgent Motion for Correction of Writ of Execution having been
denied, a certiorari and mandamus with preliminary injunction suit was filed with the
Court of Appeals, which was docketed therein as CA-SP-05598, alleging, among other
things, that inasmuch as the Court of Appeals in CA-G.R. No. 38129-R modified the trial
court's decision by disallowing the registration of Lot 594 in favor of the Avilas, the latter
have no interest, right, claims, title or participation in Lot No. 594 to which they could
claim possession. (Petitioner's Brief, Rollo, pp. 61-63). On said petition, the Court of
Appeals, in a Decision dated October 6, 1976, declared:
CONSIDERING: That decision of cadastral court adjudicating Lot 594 was "disallowed"
by this Court of Appeals, the fact that said decision had also annulled the decree and
title of Chavez to the same in the petition for review, in the mind of tills Court, did not
produce the effect of adjudicating, in categorical terms, the possession of Lot 594 in
favor of Avila, there is nothing in the dispositive part nor even in the body of the
decision of this CA-G.R. No. 38129-R that says that, and since the question here
presented is whether or not cadastral court should place Avila in possession thru a writ
of execution, and since the writ of execution is nothing more, nothing less, than a writ of
possession, and since that writ is given only to the party in the land registration or
cadastral case in whose favor decree had been issued, Manlapas v. Liorente, 48 Phil.
298, or if not a decree, at least, a judgment of confirmation of title, Director of Lands v.
CFI of Tarlac, 51 Phil. 806,-this must mean that when respondent Court herein issued
the writ of execution as to Lot 594, there really was no legal basis for the same; for Avila
had not secured a decree, nor a judgment of confirmation of title over said Lot 594,

OBLIGATION AND CONTRACTS

13 | P a g e

since from the fact that this Court of Appeals had affirmed the decision of cadastral court
annulling Chavez (Bacarrisas) to Lot 594, it would not follow that this Court of Appeals
had decreed, or in the least, adjudged, that it was Avila who was the owner entitled to
its possession, the conclusion can not follow from the premise; therefore the writ of
execution as to Lot 594 has to be ruled to have been improvidently issued, and there
being no other adequate relief available unto Bacarrisas, the remedy of certiorari by him
chosen was correct.
IN VIEW WHEREOF, this Court is constrained to grant as it now grants certiorari, order
sought to be annulled is set aside, with costs against respondent Avila. (Rollo, pp. 2728).
Petitioners filed a motion for reconsideration but the same was denied by the Court of
Appeals in a Resolution dated November 29, 1976.
Hence, this petition (Rollo, pp. 9-22).
Respondent filed his Comment on February 28, 1977 (Ibid, pp. 34-37) in compliance
with the resolution of the First Division of this Court dated January 31, 1977 (Ibid., p.
33).
In a Resolution dated March 7, 1977, the First Division of this Court resolved to give due
course to the petition (Ibid., p. 43).
On March 20, 1977, petitioners filed their Brief (Ibid., pp. 58-72) while respondent filed
his Brief on July 6, 1977 (Ibid., pp. 83-92) and petitioners their Reply Brief on August
17, 1977 (Ibid., pp. 100-107).
In a Resolution dated August 29, 1977, the First Division of this Court resolved to
declare this case submitted for decision (Ibid., p. 110.)
The petitioners assigned the following alleged errors of the Court of Appeals1. THE HON. COURT OF APPEALS IN CA-G.R. SP-05598, OCTOBER 6, 1976, THE
QUESTIONED DECISION, ERRED BECAUSE, WHEREAS SAID COURT PREVIOUSLY IN CAG.R. No. L-38129-R, MARCH, 1974, MODIFIED THE DECISION OF THE COURT OF FIRST
INSTANCE OF MISAMIS ORIENTAL BY DISALLOWING ONLY THE REGISTRATION OF
LOT 594 BUT AFFIRMED THE ADJUDICATION THEREOF TO THE PETITIONERS, IN THE
PRESENT QUESTIONED DECISION SAID COURT VIRTUALLY MODIFIED FURTHER THE
PREVIOUS DECISION WHICH HAD LONG BECOME FINAL BY DISALLOWING BOTH THE
REGISTRATION AND ADJUDICATION OF LOT 594;
2. THE HON. COURT OF APPEALS ERRED IN HOLDING THAT THE PETITIONERS ARE
NOT ENTITLED TO POSSESSION OF LOT 594 BECAUSE, SINCE PETITIONERS' TITLE
WAS RECOGNIZED BY SAID COURT PREVIOUSLY IN CA-G.R. NO. L-38129-R, MARCH,
1974, IT FOLLOWS THAT THEY ARE ENTITLED TO POSSESS LOT 594;
3. THE HON. COURT OF APPEALS ERRED IN THAT TO DENY POSSESSION OF LOT 594
TO THE PETITIONERS WHO WON IN CADASTRAL CASE NO. 17 OF THE COURT OF
FIRST INSTANCE OF MISAMIS ORIENTAL, IS TO MAKE THE LOSERS IN SAID CASE-THE
PREDECESSOR-IN-INTEREST OF PRIVATE RESPONDENT WHOSE DECREES NOS. 433
and 434 COVERING LOTS 594 AND 828 WERE ORDERED CANCELLED FOR BEING NULL
AND VOID, AS THE WINNER, A SITUATION MOST UNJUST AND UNFAIR; AND
4. THE HON COURT OF APPEALS ERRED IN HOLDING THAT PRIVATE RESPONDENT
CORRECTLY CHOSE THE REMEDY OF certiorari FOR THE REASON THAT THERE IS
NOTHING AT ALL IN THE RECORDS TO SHOW AN EXERCISE OF GRAVE ABUSE OF
DISCRETION OR WHIMSICAL AND ARBITRARY EXERCISE THEREOF.
The pivotal issue in this case is who has the right of possession of the land in question.
Petitioners seek to distinguish between registration and adjudication of land under the
Torrens System, claiming that in the March 20, 1974 Decision of the Court of Appeals in
CA-G.R. No. 38129-R, registration of Lot No. 594 in favor of the late Marciana G. Avila
was disallowed, but the adjudication thereof in her favor, was affirmed. In effect, it is
their view that ownership and possession are separated in aforesaid decision, so that

OBLIGATION AND CONTRACTS

14 | P a g e

they assert that they are entitled to the possession of Lot 594, although they are not
entitled to its registration in their names.
Such contention is without merit.
While it is true that Marciana Avila, their mother and predecessor-in-interest, purchased
the questioned property at a public auction conducted by the government; paid the
purchase price; and was issued a final bill of sale after the expiration of the redemption
period, it is however undisputed that such purchase was prohibited under Section 579 of
the Revised Administrative Code, as amended, which provides:
Section 579. Inhibition against purchase of property at tax sale.-Official and employees
of the Government of the Republic of the Philippines are prohibited from purchasing,
directly or indirectly, from the Government, any property sold by the Government for the
non-payment of any public tax. Any such purchase by a public official or employee shall
be void.
Thus, the sale to her of Lot 594 is void.
On the other hand, under Article 1409 of the Civil Code, a void contract is inexistent
from the beginning. It cannot be ratified neither can the right to set up the defense of its
illegality be waived. (Arsenal, et al. vs, The Intermediate Appellate Court. et al., G.R. No.
66696, July 14, 1986). Moreover, Marciana Avila was a party to an illegal transaction,
and therefore, under Art. 1412 of the Civil Code, she cannot recover what she has given
by reason of the contract or ask for the fulfillment of what has been promised her.
Furthermore, in a registration case, the judgment confirming the title of the applicant
and ordering its registration in his name necessarily carries with it the delivery of
possession which is an inherent element of the right of ownership. (Abulocion et al. v.
CFI of Iloilo, et al., 100 Phil. 553 [1956]). Hence, a writ of possession may be issued not
only against the person who has been defeated in a registration case but also against
anyone unlawfully and adversely occupying the land or any portion thereof during the
land registration proceedings up to the issuance of the final decree. It is the duty of the
registration court to issue said writ when asked for by the successful claimant. (Demorar
v. Ibaez, etc., et al., 97 Phil. 72 [1955]; Abulocion et al v. CFI of Iloilo, et al., supra).
Under the circumstances, possession cannot be claimed by petitioners, because their
predecessor-in-interest besides being at fault is not the successful claimant in the
registration proceedings and hence not entitled to a writ of possession. As correctly
stated by the Court of Appeals when respondent Court issued the writ of execution as to
Lot 594, there really was no legal basis for the same, for Avila had not secured a decree,
nor a judgment of confirmation of title over said lot.
Much less can possession be claimed by private respondents as it is undisputed that the
land in question has been the subject of a tax sale of delinquent property with a final bill
of sale.
Neither did the government file any claim for possession; nor appear to be impleaded in
any of the actions or petitions before the Courts, Its only interest in the land in question
appears to be in the collection of taxes.
Consequently, the situation is evidently one of failure of ownership because of the
violation of Section 579 of the Administrative Code. Otherwise stated, the property
apparently has no owner.
Under the principle that the State is the ultimate proprietor of land within its jurisdiction,
subject land may be escheated in favor of the government upon filing of appropriate
actions for reversion or escheat under Section 5, Rule 91 of the Rules of Court relative to
properties alienated in violation of any statute.
As to the last issue, it has already been ruled that certiorari is proper where the trial
court has already issued a writ of execution of the questioned judgment, the issuance
being a question of law. (Vda. de Sayman vs. Court of Appeals, 121 SCRA 650).

OBLIGATION AND CONTRACTS

15 | P a g e

PREMISES CONSIDERED, the October 6,1976 Decision of the Court of Appeals is hereby
AFFIRMED.
SO ORDERED.

Feria (Chairman), Fernan, Alampay, and Gutierrez, Jr., JJ., concur.

-----------------------------------------------------------------------------------------------------------FIRST DIVISION
[G.R. No. 113539. March 12, 1998]
CELSO R. HALILI and ARTHUR R. HALILI, petitioners, vs. COURT OF APPEALS, HELEN
MEYERS GUZMAN, DAVID REY GUZMAN and EMILIANO CATANIAG, respondents.
DECISION
PANGANIBAN, J.:
The factual findings of a trial court, when affirmed by the Court of Appeals, may no
longer be reviewed and reversed by this Court in a petition for review under Rule 45 of
the Rules of Court. The transfer of an interest in a piece of land to an alien may no
longer be assailed on constitutional grounds after the entire parcel has been sold to a
qualified citizen.
The Case

These familiar and long-settled doctrines are applied by this Court in denying this
petition under Rule 45 to set aside the Decision[1] of the Court of Appeals[2] in CA-GR CV
No. 37829 promulgated on September 14, 1993, the dispositive portion of which
states:[3]
WHEREFORE, and upon all the foregoing, the Decision of the court below dated March
10, 1992 dismissing the complaint for lack of merit is AFFIRMED without pronouncement
as to costs.
The Facts

The factual antecedents, as narrated by Respondent Court, are not disputed by the
parties. We reproduce them in part, as follows:
Simeon de Guzman, an American citizen, died sometime in 1968, leaving real properties
in the Philippines. His forced heirs were his widow, defendant appellee [herein private
respondent] Helen Meyers Guzman, and his son, defendant appellee [also herein private
respondent] David Rey Guzman, both of whom are also American citizens. On August 9,
1989, Helen executed a deed of quitclaim (Annex A-Complaint), assigning[,] transferring
and conveying to David Rey all her rights, titles and interests in and over six parcels of
land which the two of them inherited from Simeon.
Among the said parcels of land is that now in litigation, x x x situated in Bagbaguin,
Sta. Maria, Bulacan, containing an area of 6,695 square meters, covered by Transfer
Certificate of Title No. T-170514 of the Registry of Deeds of Bulacan. The quitclaim
having been registered, TCT No. T-170514 was cancelled and TCT No. T-120259 was
issued in the name of appellee David Rey Guzman.
On February 5, 1991, David Rey Guzman sold said parcel of land to defendant-appellee
[also herein private respondent] Emiliano Cataniag, upon which TCT No. T-120259 was
cancelled and TCT No. T-130721(M) was issued in the latters name.[4]
Petitioners, who are owners of the adjoining lot, filed a complaint before the Regional
Trial Court of Malolos, Bulacan, questioning the constitutionality and validity of the two
conveyances -- between Helen Guzman and David Rey Guzman, and between the latter
and Emiliano Cataniag -- and claiming ownership thereto based on their right of legal
redemption under Art. 1621[5]of the Civil Code.
In its decision[6] dated March 10, 1992,[7] the trial court dismissed the complaint. It
ruled that Helen Guzmans waiver of her inheritance in favor of her son was not contrary
to the constitutional prohibition against the sale of land to an alien, since the purpose of
the waiver was simply to authorize David Rey Guzman to dispose of their properties in
accordance with the Constitution and the laws of the Philippines, and not to subvert

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16 | P a g e

them. On the second issue, it held that the subject land was urban; hence, petitioners
had no reason to invoke their right of redemption under Art. 1621 of the Civil Code.
The Halilis sought a reversal from the Court of Appeals which, however, denied their
appeal. Respondent Court affirmed the factual finding of the trial court that the subject
land was urban. Citing Tejido vs. Zamacoma[8] and Yap vs. Grageda,[9] it further held
that, although the transfer of the land to David Rey may have been invalid for being
contrary to the Constitution, there was no more point in allowing herein petitioners to
recover the property, since it has passed on to and was thus already owned by a
qualified person.
Hence, this petition.[10]
Issues

The petition submits the following assignment of errors:


x x x the Honorable Court of Appeals 1. Erred in affirming the conclusion of the trial court that the land in question is urban,
not rural
2. Erred in denying petitioners right of redemption under Art. 1621 of the Civil Code
3. Having considered the conveyance from Helen Meyers Guzman to her son David Rey
Guzman illegal, erred in not declaring the same null and void[.][11]
The Courts Ruling

The petition has no merit.


First Issue: The Land Is Urban;
Thus, No Right of Redemption

The first two errors assigned by petitioners being interrelated -- the determination of the
first being a prerequisite to the resolution of the second -- shall be discussed together.
Subject Land Is Urban
Whether the land in dispute is rural or urban is a factual question which, as a rule, is not
reviewable by this Court.[12] Basic and long-settled is the doctrine that findings of fact of
a trial judge, when affirmed by the Court of Appeals, are binding upon the Supreme
Court. This admits of only a few exceptions, such as when the findings are grounded
entirely on speculation, surmises or conjectures; when an inference made by the
appellate court from its factual findings is manifestly mistaken, absurd or impossible;
when there is grave abuse of discretion in the appreciation of facts; when the findings of
the appellate court go beyond the issues of the case, run contrary to the admissions of
the parties to the case or fail to notice certain relevant facts which, if properly
considered, will justify a different conclusion; when there is a misappreciation of facts;
when the findings of fact are conclusions without mention of the specific evidence on
which they are based, are premised on the absence of evidence or are contradicted by
evidence on record.[13]
The instant case does not fall within any of the aforecited exceptions. In fact, the
conclusion of the trial court -- that the subject property is urban land -- is based on clear
and convincing evidence, as shown in its decision which disposed thus:
x x x As observed by the court, almost all the roadsides along the national ghighway
[sic] of Bagbaguin, Sta. Maria, Bulacan, are lined up with residential, commercial or
industrial establishments. Lined up along the Bagbaguin Road are factories of feeds,
woodcrafts [sic] and garments, commercial stores for tires, upholstery materials, feeds
supply and spare parts. Located therein likewise were the Pepsi-Cola Warehouse, the
Cruz Hospital, three gasoline stations, apartment buildings for commercial purposes and
construction firms. There is no doubt, therefore, that the community is a commercial
area thriving in business activities. Only a short portion of said road [is] vacant. It is to
be noted that in the Tax Declaration in the name of Helen Meyers Guzman[,] the subject
land is termed agricultural[,] while in the letter addressed to defendant Emiliano
Cataniag, dated October 3, 1991, the Land Regulatory Board attested that the subject

OBLIGATION AND CONTRACTS

17 | P a g e

property is commercial and the trend of development along the road is commercial. The
Boards classification is based on the present condition of the property and the
community thereat. Said classification is far more later [sic] than the tax declaration.[14]

No Ground to Invoke Right of Redemption

In view of the finding that the subject land is urban in character, petitioners have indeed
no right to invoke Art. 1621 of the Civil Code, which presupposes that the land sought to
be redeemed is rural. The provision is clearly worded and admits of no ambiguity in
construction:
ART. 1621. The owners of adjoining lands shall also have the right of redemption when
a piece of rural land, the area of which does not exceed one hectare, is alienated, unless
the grantee does not own any rural land.
xxx xxx
xxx
Under this article, both lands -- that sought to be redeemed and the adjacent lot
belonging to the person exercising the right of redemption -- must be rural. If one or
both are urban, the right cannot be invoked.[15] The purpose of this provision which is
limited in scope to rural lands not exceeding one hectare, is to favor agricultural
development.[16] The subject land not being rural and, therefore, not agricultural, this
purpose would not be served if petitioners are granted the right of redemption under
Art. 1621. Plainly, under the circumstances, they cannot invoke it.
Second Issue: Sale to Cataniag Valid

Neither do we find any reversible error in the appellate courts holding that the sale of
the subject land to Private Respondent Cataniag renders moot any question on the
constitutionality of the prior transfer made by Helen Guzman to her son David Rey.
True, Helen Guzmans deed of quitclaim -- in which she assigned, transferred and
conveyed to David Rey all her rights, titles and interests over the property she had
inherited from her husband -- collided with the Constitution, Article XII, Section 7 of
which provides:
SEC. 7. Save in cases of hereditary succession, no private lands shall be transferred or
conveyed except to individuals, corporations, or associations qualified to acquire or hold
lands of the public domain.
The landmark case of Krivenko vs. Register of Deeds[17] settled the issue as to who are
qualified (and disqualified) to own public as well as private lands in the
Philippines. Following a long discourse maintaining that the public agricultural lands
mentioned in Section 1, Article XIII of the 1935 Constitution, include residential,
commercial and industrial lands, the Court then stated:
Under section 1 of Article XIII [now Sec. 2, Art. XII] of the Constitution, natural
resources, with the exception of public agricultural land, shall not be alienated, and
with respect to public agricultural lands, their alienation is limited to Filipino citizens. But
this constitutional purpose conserving agricultural resources in the hands of Filipino
citizens may easily be defeated by the Filipino citizens themselves who may alienate
their agricultural lands in favor of aliens. It is partly to prevent this result that section 5
is included in Article XIII, and it reads as follows:
Sec. 5. Save in cases of hereditary succession, no private agricultural land will be
transferred or assigned except to individuals, corporations or associations qualified to
acquire or hold lands of the public domain in the Philippines.
This constitutional provision closes the only remaining avenue through which agricultural
resources may leak into aliens hands. It would certainly be futile to prohibit the
alienation of public agricultural lands to aliens if, after all, they may be freely so
alienated upon their becoming private agricultural lands in the hands of Filipino
citizens. Undoubtedly, as above indicated, section 5 [now Sec. 7] is intended to insure
the policy of nationalization contained in section 1 [now Sec. 2]. Both sections must,
therefore, be read together for they have the same purpose and the same subject

OBLIGATION AND CONTRACTS

18 | P a g e

matter. It must be noticed that the persons against whom the prohibition is directed in
section 5 [now Sec. 7] are the very same persons who under section 1 [now Sec. 2] are
disqualified to acquire or hold lands of the public domain in the Philippines. And the
subject matter of both sections is the same, namely, the non transferability of
agricultural land to aliens. x x x[18]
The Krivenko rule was recently reiterated in Ong Ching Po vs. Court of
Appeals,[19] which involves a sale of land to a Chinese citizen. The Court said:
The capacity to acquire private land is made dependent upon the capacity to acquire or
hold lands of the public domain. Private land may be transferred or conveyed only to
individuals or entities qualified to acquire lands of the public domain (II Bernas, The
Constitution of the Philippines 439-440 [1988 ed.]).
The 1935 Constitution reserved the right to participate in the disposition, exploitation,
development and utilization of all lands of the public domain and other natural
resources of the Philippines for Filipino citizens or corporations at least sixty percent of
the capital of which was owned by Filipinos. Aliens, whether individuals or corporations,
have been disqualified from acquiring public lands; hence, they have also been
disqualified from acquiring private lands.[20]
In fine, non-Filipinos cannot acquire or hold title to private lands or to lands of the public
domain, except only by way of legal succession.[21]
But what is the effect of a subsequent sale by the disqualified alien vendee to a qualified
Filipino citizen? This is not a novel question. Jurisprudence is consistent that if land is
invalidly transferred to an alien who subsequently becomes a citizen or transfers it to a
citizen, the flaw in the original transaction is considered cured and the title of the
transferee is rendered valid.[22]
Thus, in United Church Board of World Ministries vs. Sebastian,[23] in which an alien
resident who owned properties in the Philippines devised to an American non-stock
corporation part of his shares of stock in a Filipino corporation that owned a tract of land
in Davao del Norte, the Court sustained the invalidity of such legacy. However, upon
proof that ownership of the American corporation has passed on to a 100 percent
Filipino corporation, the Court ruled that the defect in the will was rectified by the
subsequent transfer of the property.
The present case is similar to De Castro vs. Tan.[24] In that case, a residential lot was
sold to a Chinese. Upon his death, his widow and children executed an extrajudicial
settlement, whereby said lot was allotted to one of his sons who became a naturalized
Filipino. The Court did not allow the original vendor to have the sale annulled and to
recover the property, for the reason that the land has since become the property of a
naturalized Filipino citizen who is constitutionally qualified to own land.
Likewise, in the cases of Sarsosa vs. Cuenco,[25] Godinez vs. Pak Luen,[26] Vasquez vs. Li
Seng Giap[27] and Herrera vs. Luy Kim Guan,[28] which similarly involved the sale of land
to an alien who thereafter sold the same to a Filipino citizen, the Court again applied the
rule that the subsequent sale can no longer be impugned on the basis of the invalidity of
the initial transfer.
The rationale of this principle was explained in Vasquez vs. Li Seng Giap thus:
x x x [I]f the ban on aliens from acquiring not only agricultural but also urban lands, as
construed by this Court in the Krivenko case, is to preserve the nations lands for future
generations of Filipinos, that aim or purpose would not be thwarted but achieved by
making lawful the acquisition of real estate by aliens who became Filipino citizens by
naturalization.[29]
Accordingly, since the disputed land is now owned by Private Respondent Cataniag, a
Filipino citizen, the prior invalid transfer can no longer be assailed. The objective of the
constitutional provision -- to keep our land in Filipino hands -- has been served.

OBLIGATION AND CONTRACTS

19 | P a g e

WHEREFORE, the petition is hereby DENIED. The challenged


AFFIRMED. Costs against petitioner.
SO ORDERED.
Davide, Jr. (Chairman), Bellosillo, Vitug and Quisumbing, JJ., concur.

[1]
[2]

Decision

is

Rollo, pp. 19-30.

Ninth Division, composed of JJ. Cezar D. Francisco, ponente; Gloria C. Paras


(chairman) and Buenaventura J. Guerrero, concurring.
[3]
Assailed Decision, p. 12; Rollo, p. 30.
[4]
Assailed Decision, p. 2; Rollo, p. 20.
[5]
ART. 1621. The owners of adjoining lands shall also have the right of redemption
when a piece of rural land, the area of which does not exceed one hectare, is alienated,
unless the grantee does not own any rural land.
This right is not applicable to adjacent lands which are separated by brooks, drains,
ravines, roads and other apparent servitudes for the benefit of other estates.
If two or more adjoining owners desire to exercise the right of redemption at the same
time, the owner of the adjoining land of smaller area shall be preferred; and should both
lands have the same area, the one who first requested the redemption.
[6]
CA Rollo, pp. 29-31.
[7]
Penned by Judge Valentin R. Cruz.
[8]
138 SCRA 78, August 7, 1985.
[9]
121 SCRA 244, March 28, 1983.
[10]
This case was considered submitted for resolution upon receipt by this Court of
petitioners memorandum on November 8, 1996.
[11]
Petition, p. 6; Rollo, p. 12.
[12]
First Philippine International Bank vs. Court of Appeals, 252 SCRA 259, January 24,
1996.
[13]
Fuentes vs. Court of Appeals, 268 SCRA 703, February 26, 1997; Geronimo vs. Court
of Appeals, 224 SCRA 494, July 5, 1993. See also Lacanilao vs. Court of Appeals, 262
SCRA 486, September 26, 1996; Verendia vs.Court of Appeals, 217 SCRA 417, January
22, 1993.
[14]
RTC decision, p. 3; CA Rollo, p. 31.
[15]
Tolentino, Ibid.; Cortes vs. Flores, 47 Phil 992, September 6, 1924.
[16]
Tolentino, Civil Code of the Philippines, 1992 ed., Vol. V, p. 182; Del
Pilar vs. Catindig, 35 Phil 263, November 4, 1916.
[17]
79 Phil 461, November 15, 1947, per Moran, CJ.
[18]
Ibid., pp. 473-474.
[19]
239 SCRA 341, December 20, 1994, per Quiason, J.
[20]
At p. 346.
[21]
Cf. Ramirez vs. Vda. de Ramirez, 111 SCRA 704, February 15, 1982.
[22]
United Church Board of World Ministries vs. Sebastian, 159 SCRA 446, 451-452,
March 30, 1988; per Cruz, J. See also Tejido vs. Zamacoma, 138 SCRA 78, August 7,
1985; Sarsosa vda. de Barsobia vs. Cuenco, 113 SCRA 547, April 16, 1982;
Godinez vs. Fong Pak Luen, 120 SCRA 223, January 27, 1983; Yap vs. Maravillas, 121
SCRA 244, March 28, 1983; De Castro vs. Tan, 129 SCRA 85, April 30, 1984.
[23]

Ibid.
Supra.
[25]
Supra.
[26]
Supra.
[24]

[27]

96 Phil 447, January 31, 1955, per Padilla, J.

OBLIGATION AND CONTRACTS

20 | P a g e

[28]

1 SCRA 406, January 31, 1961, per Barrera, J.


Supra, p. 453.
-----------------------------------------------------------------------------------------------------------THIRD DIVISION
[G.R. No. 113605. November 27, 1998]
ROMULO ROVILLOS, petitioner, vs. THE HONORABLE COURT OF APPEALS, FOURTH
DIVISION, THE HONORABLE RICARDO T. LINSANGAN, PRESIDING JUDGE IN BRANCH
38 OF THE REGIONAL TRIAL COURT OF NUEVA ECIJA, SAN JOSE CITY, AND PRIVATE
RESPONDENT MODESTO OBISPO, respondents.
DECISION
ROMERO, J.:
Petitioner, undaunted by his two previous setbacks, seeks the reversal of the decision of
the Court of Appeals dated January 26, 1994[1] in CA-G.R. No. 31771 affirming the
decision[2] of the Regional Trial Court, Branch 38 of San Jose City, in Civil Case No. C-41
which ruled that he was not a tenant of the private respondent, but was in fact a mere
farm laborer not entitled to the actual possession of the land in question.
Sometime in 1971, petitioner's predecessor started tilling and cultivating a portion of
private respondent's land situated in Carrangalan, Nueva Ecija under a "share-crop"
agreement. On December 30, 1979, petitioner and the private respondent entered into
a contract[3] which stipulated that the former was to be contracted as a farm laborer or
helper responsible for the cultivation of two (2) hectares of the four hectare land.
For the next five years, both parties complied with the provision of their
agreement. However, to the dismay of the private respondent, starting January 1984,
petitioner no longer cultivated the land in question in his capacity as a farm laborer but
as a tenant, with the corresponding right to exclude the private respondent from the
land. To protect his interest, private respondent demanded from the petitioner to desist
from further cultivation of the said land. These demands proved futile as petitioner
continued with his daily undertakings, unmindful of private respondent's protestations.
Exasperated, private respondent, on April 9, 1984, filed a complaint against the
petitioner for Recovery of Possession with Damages with Motion for Issuance of Writ of
Preliminary Injunction. In his Answer, petitioner maintained that on October 6, 1981, he
was granted a Certificate of Land Transfer No. 0-065683 by the then Ministry of Agrarian
Reform pursuant to Presidential Decree No. 27, hence, converting his status from a farm
laborer to that of a legitimate tenant of the private respondent.
On February 20, 1991, the trial court rendered its decision finding that petitioner was not
a tenant but a mere farm helper or laborer of the private respondent. The trial court
expounded its position in this wise:
"Defendant's contention that he is a tenant of plaintiff (as he tried to picture out in the
Terminal Survey, Exh. 8, the information of which he personally supplied to Eleonor
Quinto on June 14, 1977 that gave rise to the issuance of the CLT dated October 6,
1981, Exh. 1, which CLT was, however, cancelled on august 12, 1988, Exh. 10, by
Director Aligio Pacis because the subject land is never tenanted, Exh. 10-B); cannot be
sustained on the strength and wisdom of the KASUNDUAN, Exh. A, executed on
December 30, 1979, not only because of the reciprocal stipulations eloquently expressed
therein which must be given force and effect (National Rice and Corn Administration vs.
Court of Appeals, 91 SCRA 437), but also because of the well-settled rule that public
documents invested with the solemnities of the law cannot be set aside on light and
flimsy evidence. (Mercador vs. Ang, CA-G.R. No. 3940-R, March 31, 1951). The
Kasunduan being a bilateral contract, it necessary follows that the intention of the
parties at the time of the execution thereof must prevail (Reyes vs. Sierna, 93 SCRA
472), in much the same way that its validity be maintained even though one of the
[29]

OBLIGATION AND CONTRACTS

21 | P a g e

parties entered into it against his own wish and desires, or even against his better
judgment (Lagunsod vs. Vda de Guzman, 92 SCRA 476).
In fine, defendant's admission of being a fourth year in high school, and having
thoroughly read the contract, Exh. A, written out in a language he understood very well
before he affixed his signature thereto, and the same being a notarial document
guaranteed by public attestation in accordance with law where its provisions are clear
and not forged, their contents must be upheld (Sarayba vs. Reyes, CA-G.R. No. 4008-R,
Sept. 26, 1950; Navoa de Ramos vs. Yu Cochangco, CA-G.R. No. 25-R, July 9,
1947). The defendant having breached the contract, plaintiff is deserving to recover
actual damages. (Pamintuan vs. Court of Appeals, 94 SCRA 556)."
The above-quoted ruling of the trial court was affirmed by the Court of Appeals in its
decision dated January 26, 1994 which substantially adopted the trial court's finding,
thus:
"Through the agreement embodied in the "KASUNDUAN", the contention of appellant
that he is a tenant should be dismissed as a tenancy relationship is determined not by
the nature of the work involved but by the intention of the parties. (Gelos vs. Court of
Appeals, 208 SCRA 608).
Appellant also anchors his claim on the land on the fact that he is the grantee of a
Certificate of Land Transfer covering the land in question.
The Certificate of Land Transfer was, however, subsequently cancelled on August 12,
1988 precisely on the ground that the land in question is less than seven (7) hectares
thus not covered by the provisions of P.D. No. 27.
Although the law looks upon the lowly with favor, the same cannot be used as a shield
to perpetrate an injustice. The appellee herein cannot be said to belong to the landed
gentry. As in fact the appellee's only landholding is the four (4) hectares of riceland of
which half is being unjustly claimed by appellant."
Not satisfied with the decision, petitioner is now before this Court assailing the appellate
court's pronouncement. Stripped of inconsequential facts, the thrust of the petition is
that petitioner should have been recognized as an agricultural lessee of the land and
thus entitled to the security of tenure under existing agrarian laws.
On the outset, it should be borne in mind that whether the petitioner was indeed a
tenant or laborer is a question of fact.[4] In this regard, jurisprudence has provided the
following requisites for tenancy relationship: (1) the parties are the landowners and the
tenant; (2) the subject is agricultural land; (3) there is consent; (4) the purpose is
agricultural production; (5) there is personal cultivation; and (6) there is sharing of
harvest.[5]
With these precepts as guidelines, we are constrained to reverse the findings of both the
appellate court and the trial court.
First, petitioner was in actual possession of the land and resided in a farmhouse thereon
as a farm tenant would normally do. In Cruz v. Court of Appeals,[6] we stated:
"Finally, it is also undisputed that respondent lives on a hut erected on the
landholding. This fully supports the appellate court's conclusion, since only tenants are
entitled to a homelot where he can build his house thereon as an incident to his right as
a tenant."
Second, the land was devoted to the production of palay and other related
products. Third, there was the element of consent, for as early as 1971, private
respondent had not instituted an action against the petitioner or his predecessor. In
fact, he even allowed them and a certain Conrado Vergara to manage and till the
land. Fourth, the management of the land was for the sole purpose of producing rice or
palay. Fifth, cultivation and farm work were personally done by the petitioner and his
predecessor and Sixth, petitioner shared the harvest of the land under a "share-crop"
system. In Hernandez v. IAC,[7] we ruled that when an individual cultivates the land and

OBLIGATION AND CONTRACTS

22 | P a g e

did not receive salaries but a share of the produce, the relationship is one of tenancy
and not employment. Moreover, if private respondent's land was indeed non-tenanted,
he should have obtained a certification of non-tenancy from the then Ministry of Agrarian
Reform.[8]
From the foregoing, the ineluctable conclusion drawn is that a tenancy relationship exists
between the parties.
That having been said, it must be pointed out that the land in question is covered by
Presidential Decree No. 27, which, incidentally has not yet been repealed by Republic Act
No. 6657 or the Comprehensive Agrarian Reform Law of 1988.[9] Under the said law,
tenant-farmers of rice and corn lands were deemed owners of the land they till.[10] This
policy is intended to be given effect by the following provision of the law:
"The tenant farmer, whether in land classified as landed estate or not, shall be DEEMED
OWNER of a portion constituting a family size farm of five (5) hectares if not irrigated
and three (3) hectares if irrigated."[11]
However, it must be stressed that since the land in question is only four (4) hectares,
then the same cannot be subject to the Operation Land Transfer (OLT) program of P.D.
No. 27. This was to mitigate the impact of the decree on small land
owners.[12] consequently, no transfer of ownership can take place.
Notwithstanding the non-transfer of ownership of the landholding, it bears stressing that
when the land is seven hectares and below, the same is still covered by P.D. No. 27
under its Operation Land Leasehold (OL) program. This means that the landowners and
the tenants are placed in a leasehold relationship as of October 21, 1972,[13] under an
agricultural leasehold agreement.[14] It is worth mentioning that on two occasions, we
have already upheld the validity of this "automatic conversion" provision, from
agricultural share tenancy to agricultural leasehold, under our land reform laws.[15] Thus,
while owners of rice and corn lands seven (7) hectares or less are not covered by the
land transfer programs of P.D. No. 27, however, when there are tenants lands, the
arrangement immediately shifts to a leasehold relationship.[16]
Another notable development is the fact that to give more force to the policy of
automatic conversion of share tenancy to the leasehold system, Presidential Decree No.
1425[17] was enacted in 1978. This law covers tenant-farmers in rice and/or corn lands
not included in P.D. No. 27[18] land transfer program.
Moreover, under Section 12 of R.A. 6657, as implemented by the Department of
Agrarian Reform,[19] all tenanted agricultural lands retained under P.D. No. 27 shall
automatically be converted into agricultural leasehold as of June 15, 1988. However,
with respect to tenanted rice and corn lands, as in this case, the leasehold relationship
shall start on November 10, 1971.[20]
Also, private respondent cannot take comfort from the fact that petitioner had already
surrendered the land, and therefore, whatever tenancy relationship existed between the
parties was already severed. In this connection, it is worthwhile noting that under the
rules of the then Ministry of Agrarian Reform, (now Department of Agrarian Reform)
surrender or alleged abandonment of the land by the tenant does not automatically
terminate the tenancy relationship. There must be a proper court declaration of such
fact.[21]
Having settled the proper agricultural relationship of the parties, private respondent still
contends that petitioner expressly agreed to be hired as a farm laborer under the
contract they executed on December 30, 1979. As such, the contract must be respected
as a manifestation of the intention of the contracting parties.[22]
Private respondent's argument is unacceptable. Obviously, the purported contract
violates the provisions of the law providing for "automatic conversion" from agricultural
tenancy to agricultural leasehold. Thus, it is readily perceivable that it was a void or
inexistent contract from the inception.[23] The fact that both parties complied with the

OBLIGATION AND CONTRACTS

23 | P a g e

provisions of the contract is immaterial. It is a stipulation that is contrary to law and


public policy;[24] hence, it cannot be cured by ratification or even compliance by the
parties to the contract.[25]
Having reached the above conclusions, other incidental issues raised by the petitioner no
longer need to be passed upon.
WHEREFORE, in view of the foregoing, the instant petitioner is GRANTED. The decision
of the Court of Appeals in C.A. -G.R. CV No. 31771 dated January 26, 1994 is hereby
REVERSED and SET ASIDE. No costs.
SO ORDERED.
Narvasa, C.J. (Chairman), Kapunan, Purisima, and Pardo, JJ., concur.

[1]

Penned by Justice Corona Ibay-Somera and concurred in by Justice Nathanael P. de


Pano, Jr. and Justice Asaali S. Isnani; Rollo, pp. 22-31.
[2]
Penned by Judge Ricardo T. Linsangan; Rollo, pp. 34-41.
[3]
The contract is entitled "Kasunduan."
[4]
Oarde v. Court of Appeals, 280 SCRA 258 (1997).
[5]
Nisnisan v. Court of Appeals, G.R. No. 126425, August 12, 1998; Sintos v. Court of
Appeals, 246 SCRA 223 (1995).
[6]
129 SCRA 223 (1984).
[7]
189 SCRA 758 (1990).
[8]
Ministry of Agrarian Reform Memorandum dated May 8, 1979.
[9]
Section 75 of Republic Act No. 6657.
[10]
Executive Order No. 228, July 17, 1987; Quiban v. Batulid, 189 SCRA 107 (1990),
Locsin v. Valenzuela, 194 SCRA 194 (1991).
[11]
Presidential Decree No. 27, third paragraph. Torres v. Ventura, 187 SCRA 96 (1990).
[12]
Circular No. 14, Ministry of Justice dated March 15, 1979.
[13]
Ministry of Agrarian Reform Circular No. 2-A, June 18, 1973.
[14]
Ministry of Agrarian Reform Memorandum Circular 4-80 as amended by Memorandum
Circular No. 10, Series of 1985.
[15]
David v. Court of Appeals, 161 SCRA 114 (1988); Dayrit v. Court of Appeals, 163
SCRA 256 (1988).
[16]
Ministry of Agrarian Reform Circular No. 5, March 5, 1973.
[17]
Amending Presidential Decree No. 1490 by Strengthening the Prohibition Against
Agricultural Share Tenancy and Providing Penalties For Violation Thereof, June 10, 1978.
[18]
Id., Section 1.
[19]
Administrative Order No. 04, Series of 1989 "Rules and Procedure Governing
Agricultural Leasehold and the Determination of Lease Rental for Tenanted Land."
[20]
Id., par. 4.
[21]
Memorandum Circular No. 10 Series of 1983.
[22]
Memorandum, Rollo, pp. 153-154.
[23]
Article 1409, Civil Code.
[24]
Article 1306, Civil Code.
[25]
Tolentino, Civil Code of the Philippines, Vol. IV, 1991, pp. 632-633.
-----------------------------------------------------------------------------------------------------------Republic
of
the
Philippines
SUPREME
COURT
Manila
FIRST DIVISION
G.R. No. L-62680 November 9, 1988

OBLIGATION AND CONTRACTS

24 | P a g e

THE REPUBLIC OF THE PHILIPPINES, represented by the Director of Lands, petitioner,


vs.
THE HONORABLE COURT OF APPEALS and ROMERICO CHAVEZ, respondents.

The Solicitor General for petitioner.


Sixto P. Demaisip for respondent Romerico Chavez.

CRUZ, J.:
It is the policy of the State to encourage and promote the distribution of alienable public
lands as a spur to economic growth and in line with the social justice Ideal enshrined in
the Constitution. At the same time, the law imposes stringent safeguards upon the grant
of such resources lest they fall into the wrong hands to the prejudice of the national
patrimony.
This policy is involved in the case at bar, which deals with the confirmation of an
imperfect title over a tract of land allegedly owned by the private respondent. The land
is situated in Barrio San Miguel, Municipality of Jordan, Sub-province of Guimaras, in the
Province of Iloilo, and consists of 181.4776 hectares. 1 On December 29, 1976, Romerico
Chavez filed an application for its registration 2 with the Court of Fast Instance of
Iloilo. 3 Only the Director of Lands opposed. After hearing, with the applicant as the lone
witness, the application was granted. 4 The petitioner then appealed to the Court of
Appeals 5which affirmed the decision but reduced the area of the grant to 144 hectares
as the maximum allowable. 6 Disagreeing, the petitioner has come to this Court in this
petition for certiorari under Rule 45 of the Rules of Court.
The Republic of the Philippines contends that: 1) the subject land was not sufficiently
Identified with indubitable evidence; and 2) the nature and length of possession required
by law had not been adequately established.
On the first challenge, the petitioner invokes the case of Director of Lands v.
Reyes, 7 where it was held that "the original tracing cloth plan of the land applied for
which must be approved by the Director of Lands" was "a statutory requirement of
mandatory character" for the Identification of the land sought to be registered. As what
was submitted in the case at bar to Identify the subject property was not the tracing
cloth plan but only the blueprint copy of the survey plan, the respondent court should
have rejected the same as insufficient.
We disagree with this contention. The Court of Appeals was correct when it observed
that in that case the applicant in effect "had not submitted anything at all to Identify the
subject property" because the blueprint presented lacked the approval of the Director of
Lands. By contrast
In the present case, there was considerable compliance with the requirement of the law
as the subject property was sufficiently Identified with the presentation of blueprint copy
of Plan AS-06-000002 (San Pedro v. Director of Lands, CA-G.R. No. 65332-R, May 28,
1981). It should be noted in this connection that the Bureau of Lands has certified to the
correctness of the blueprint copy of the plan including the technical description that go
with it. Hence, we cannot ignore the fact, absent in the Reyes case, that applicant has
provided ample evidence to establish the Identity of the subject property. 8
Such a view was affirmed by the Court in Republic of the Philippines v. Intermediate
Appellate Court, 9 where we held that while the best evidence to Identify a piece of land
for registration purposes was the original tracing cloth plan from the Bureau of Lands,
blueprint copies and other evidence could also provide sufficient Identification. This rule
was bolstered only recently in the case of Director of Lands v. Court of Appeals, 10 where
the Court declared through Chief Justice Marcelo B. Fernan:
We affirm. No reversible error was committed by the appellate court in ruling that Exhibit
"O", the true certified copy of the white paper plan, was sufficient for the purpose of
Identifying the land in question. Exhibit "O" was found by the appellate court to reflect

OBLIGATION AND CONTRACTS

25 | P a g e

the land as surveyed by a geodetic engineer. It bore the approval of the Land
Registration Commission, and was re-verified and approved by the Bureau of Lands on
April 25, 1974 pursuant to the provisions of P.D. No. 239 withdrawing from the Land
Registration Commission the authority to approve original survey plans. It contained the
following material data: the barrio (poblacion), municipality (Amadeo) and province
(Cavite) where the subject land is located, its area of 379 square meters, the land as
plotted, its technical descriptions and its natural boundaries. Exhibit "O" was further
supported by the Technical Descriptions signed by a geodetic surveyor and attested by
the Land Registration Commission. In fine, Exhibit "O" contained all the details and
information necessary for a proper and definite Identification of the land sought to be
registered, thereby serving the purpose for which the original tracing cloth plan is
required. The fact therefore that the original survey plan was recorded on white paper
instead of a tracing cloth should not detract from the probative value thereof. ....
The second ground will require a review of the findings of fact of the trial court which,
significantly, were not questioned in the Court of Appeals. The private respondent has
raised the objection that such findings are as a rule not reviewable on appeal and more
so, we might add, if as in the case at bar they were not disputed at all by the appellant.
Considering, that we deal here with the alienation of public land, which must be
permitted only after the most careful examination of the applicant's claim, the Court
dispenses with the general rules above-cited. As an exception thereto, it will address
itself to the evidence of the alleged possession of the subject property, reiterating that:
This case represents an instance where the findings of the lower court overlooked
certain facts of substance and value that if considered would affect the result of the case
(People v. Royeras, 130 SCRA 259) and when it appears that the appellate court based
its judgment on a misapprehension of facts (Carolina Industries, Inc. v. CMS Stock
Brokerage, Inc., et al., 97 SCRA 734; Moran, Jr. v. Court of Appeals, 133 SCRA 88;
Director of Lands v. Funtillar, et al., G.R. No. 68533, May 23, 1986). This case therefore
is an exception to the general rule that the findings of facts of the Court of Appeals are
final and conclusive and cannot be reviewed on appeal to this Court. 11
and
... in the interest of substantial justice this Court is not prevented from considering such
a pivotal factual matter that had been overlooked by the Courts below. The Supreme
Court is clothed with ample authority to review palpable errors not assigned as such if it
finds that their consideration is necessary in arriving at a just decision. 12
Testifying for himself, the private respondent declared that the land in dispute used to
form part of a huge tract of land covered by Plan Psu-13870 and owned by Miguel
Chavez, who was his great-grandfather. It was inherited and held for 23 years by his
grandfather, Hugo Chavez, who in 1941 passed it on to his father, Jose Chavez, from
whom he and his two brothers and a sister acquired it by virtue of a "Deed of Definite
Sale" on May 27, 1961. Thereafter, on September 24, 1975, he and the other vendees
executed a "Subdivision Agreement" under which Lot 2755, the property now sought to
be registered in his name, was assigned to him. 13
The private respondent further testified that he and his predecessors-in-interest had
been in peaceful, exclusive, continuous and open possession of the land "since time
immemorial" (being one of the multitude who favor this cliche).<re||an1w>He
added that he had been paying taxes on the property and had planted coconut and
mango trees thereon although they were not yet fruit-bearing. He had no co-owners and
there were no tenants on the land, which was also free of any lien or encumbrance. 14
The Court feels that the evidence presented on this requirement is not sufficient.
The private respondent can trace his own possession of the land only to 1961, when he
claims he (along with his brothers and sister) purchased the same from their father.
Assuming the purchase to be true, he would have possessed the property only for 15

OBLIGATION AND CONTRACTS

26 | P a g e

years at the time he applied for its registration in 1976. However, he would tack it to
that of his predecessors' possession, but there is not enough evidence of this except his
own unsupported declarations. The applicant must present specific acts of ownership to
substantiate the claim and cannot just offer general statements which are mere
conclusions of law than factual evidence of possession.
The private respondent showed that he had been paying taxes on the land only from
1972 and up to 1977. There was no showing of tax payments made on the same land
before 1972 by his predecessors-in-interest although they are supposed to have been in
possession thereof "since time immemorial.
Although he declared in 1977 that he had planted one thousand mango and five
thousand coconut trees on the land, he added that they were not yet productive. It
takes only ten years for mango trees and five years for coconut trees to begin bearing
fruit, which can only mean that they had been planted in less than these numbers of
years, or not earlier than 1967. This weakens his claim of possession which under P.D.
Nos. 1073 and 1529, amending Section 48 (b) of the Public Land Act, must commence
not later than June 12, 1945.
Furthermore, if it is true that his predecessors-in-interest were in possession "since time
immemorial," to use the tired phrase again, why had they not themselves introduced any
improvement on the land? And considering that the private respondent had himself
declared that there were no tenants on the land, it is also difficult to conceive how he
could by himself alone have possessed such a vast tract of land consisting of more than
181 hectares.
Finally, even assuming that he had really planted those trees, such an act will hardly
suffice to prove possession as this would constitute what this Court has called "a mere
casual cultivation" in a parcel of land of this vast area. As Justice Pacifico de Castro put it
in Republic of the Philippines v. Vera: 15
... It is to be noted that in the instant case evidence for the respondents tend to show
that only portions of the entire area applied for are cultivated. A mere casual cultivation
of portions of the land by the claimant does not constitute possession under claim of
ownership. In that sense, possession is not exclusive and notorious so as to give rise to
a presumptive grant from the state. The possession of public land however long the
period thereof may have extended, never confers title thereto upon the possessor
because the statute of limitations with regard to public land does not operate against the
state, unless the occupant can prove possession and occupation of the same under claim
of ownership for the required number of years to constitute a grant from the state.
It is worth noting that when the private respondent testified at the only two hearings on
December 8, 1977, and on February 17, 1978, the counsel for the petitioner was not
present. 16 While his absence did not vitiate the proceedings, they nevertheless became
in effect ex parte and left the government without any representative to protect its
interests. It is possible that if its counsel had been present, the testimonial and
documentary evidence submitted by the applicant would have been more carefully
examined.
In any event, the Court finds that although the subject property was sufficiently
Identified with the blueprint copy of the survey plan, the applicant has failed to prove
the peaceful, exclusive, continuous, and open possession necessary to support his claim
of ownership. For this reason, the registration sought should have been, as it is now,
denied.
ACCORDINGLY, the petition is GRANTED and the decision of the Court of Appeals dated
November 23, 1982 is REVERSED. No costs.
SO ORDERED.

Narvasa (Chairman), Gancayco, Grio-Aquino and Medialdea, JJ., concur.

OBLIGATION AND CONTRACTS

27 | P a g e

Footnotes
1 Rollo, pp. 52, 42.
2 Ibid., pp. 34-37.
3 Presided by Judge Josue N. Bellosillo.
4 Rollo, pp. 42-44.
5 Justice Jorge R. Coquia, ponente, with Justices Mama D. Busran and Mariano A. Zosa,
concurring.
6 Rollo, pp. 52-56.
7 68 SCRA 177, 188.
8 Rollo, p. 55.
9 144 SCRA 705.
10 G.R. No. 56613, March 14, 1988.
11 Carabot v. Court of Appeals, 145 SCRA 368, 377-378,
12 Perez v. Court of Appeals, 127 SCRA 636; Vda. de Javellana v. Court of Appeals, 123
SCRA 799; Fegurin v. NLRC, 120 SCRA 910.
13 Rollo, pp. 42-43; TSN, February 17, 1978, pp. 3-6.
14 Ibid., p. 43; TSN, February 17, 1978, p. 7.
15 120 SCRA 210.
16 TSN, December 8, 1977 & February 17, 1978, p. 1.
The Lawphil Project - Arellano Law Foundation
Republic
SUPREME
Manila
SECOND DIVISION

of

the

Philippines
COURT

G.R. No. 73246 March 2, 1993


DIRECTOR OF LANDS AND DIRECTOR OF FOREST DEVELOPMENT, petitioners,
vs.
INTERMEDIATE APPELLATE COURT AND J. ANTONIO ARANETA, respondents.

The Solicitor General for petitioners.


Jimenez, Leynes & Associates for private respondent.

NOCON, J.:
For review before Us is the decision of the Court of Appeals in the land registration case
entitled J. Antonio Araneta v. The Director of Lands and Director of Forest Development,
AC-G.R. CV. No. 00636, 1 affirming the lower court's approval of the application for
registration of a parcel of land in favor of applicant therein, J. Antonio Araneta.
Evidence show that the land involved is actually an island known as Tambac Island in
Lingayen Gulf. Situated in the Municipality of Bani, Pangasinan, the area consists of
187,288 square meters, more or less. The initial application for registration was filed for
Pacific Farms, Inc. under the provisions of the Land Registration Act, Act No. 496, as
amended.
The Republic of the Philippines, thru the Director of Lands opposed the application
alleging that the applicant, Pacific Farms, Inc. does not possess a fee simple title to the
land nor did its predecessors possess the land for at least thirty (30) years immediately
preceding the filing of application. The opposition likewise specifically alleged that the
applicant is a private corporation disqualified under the (1973) new Philippine
Constitution from acquiring alienable lands of the public domain citing Section 11, Article
14. 2

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28 | P a g e

The Director of Forest Development also entered its opposition alleging that the land is
within the unclassified public land and, hence, inalienable. Other private parties also filed
their oppositions, but were subsequently withdrawn.
In an amended application, Pacific Farms, Inc. filed a manifestation-motion to change
the applicant from Pacific Farms, Inc. to J. Antonio Araneta. Despite the supposed
amendment, there was no republication.
Evidence presented by the applicant include the testimony of Placido Orlando, fishery
guard of Pacific Farms, Inc., who said he has known the disputed land since he attained
the age of reason for some forty (40) years now; that when he first came to know the
property it was then owned by and in the possession of Paulino Castelo, Juan Ambrosio
and Julio Castelo, and later on the whole island was bought by Atty. Vicente Castelo who
in turn sold it to J. Antonio Araneta.
Deposition by oral examination of Araneta was also presented, together with documents
of sale, tax declarations and receipts, and survey of property. Applicant, however, failed
to present the tracing cloth plan and instead submitted to the court certified copies
thereof.
While this case is pending here in Court, respondent filed an Omnibus Motion for
Substitution of private respondent. 3Apparently, Antonio Araneta had assigned his rights
to and interest in Tambac Island to Amancio R. Garcia 4 who in turn assigned his rights
and interest in the same property to Johnny A. Khonghun whose nationality was not
alleged in the pleadings.
On October 4, 1979, the trial court rendered a decision adjudicating the subject property
to J. Antonio Araneta. On appeal to the then Intermediate Appellate Court, the decision
of the lower court was affirmed on December 12, 1985.
Petitioners raised the following errors:
I. The lower court erred in adjudicating the lands subject of registration to applicantappellee despite his failure to present the original tracing cloth plan the submission of
which is a statutory requirement of mandatory character.
II. The lower court erred in not denying registration in favor of J. Antonio Araneta since
the amendment of the application was simply an attempt to avoid the application of the
constitutional provision disqualifying a private corporation the Pacific Farms, Inc. in
this case from acquiring lands of public domain.
III. The lower court erred in not declaring the land known as the "Tambac Island" not
subject of registration it being an island formed on the seas.
IV. The lower court erred in adjudicating the land to the applicant under the provisions
of Presidential Decree No. 1529, otherwise known as the Property Registration Decree,
despite absence of any specific invocation of this law in the original and amended
application.
V. The lower court erred in not granting the government's motion for reconsideration at
least to enable it to present proof of the status of the land as within the unclassified
public forest, and hence beyond the court's jurisdiction to adjudicate as private property.
VI. The lower court erred in not declaring that the applicant has failed to overthrow the
presumption that the land is a portion of the public domain belonging to the Republic of
the Philippines.
From the foregoing it appears that the more important issues are: 1) whether the
presentation of the tracing cloth plan is necessary; and 2) whether the land known as
"Tambac Island" can be subject to registration.
By mere consideration of the first assignment of error, We can right away glean the
merit of the petition.
Respondent claims that the tracing cloth plan is with the files of the Land Registration
Commission, and the only evidence that can be presented to that fact is the request for
the issuance of a certified copy thereof and the certified copy issued pursuant to the

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request. 5 Respondent further argues that failure of the petitioners to object to the
presentation of the certified copy of the tracing cloth plan was the basis of the trial
court's denial of petitioner's motion for reconsideration.
In a very recent decision of this Court, entitled The Director of Lands v. The Honorable
Intermediate Appellate Court and Lino Anit, 6 We have ruled that the submission of the
tracing cloth plan is a mandatory requirement for registration. Reiterating Our ruling
in Director of Lands v. Reyes, 7 We asserted that failure to submit in evidence the
original tracing cloth plan is fatal it being a statutory requirement of mandatory
character.
It is of no import that petitioner failed to object to the presentation of the certified copy
of the said plan. What is required is the original tracing cloth plan of the land applied for
and objection to such requirement cannot be waived either expressly or impliedly. 8 This
case is no different from the case of Director of Lands v. Reyes, supra wherein We said
that if the original tracing cloth plan was indeed with the Land Registration Commission,
there is no reason why the applicant cannot easily retrieve the same and submit it in
evidence, it being an essential requirement for registration.
As to the second assignment of error, We are inclined to agree with petitioners that the
amendment of the application from the name of Pacific Farms Inc., as applicant, to the
name of J. Antonio Araneta Inc., was a mere attempt to evade disqualification. Our
Constitution,
whether
the
1973 9 or
10
1987, prohibits private corporations or associations from holding alienable lands of the
public domain except by lease. Apparently realizing such prohibition, respondent
amended its application to conform with the mandates of the law.
However, We cannot go along with petitioners' position that the absence of republication
of an amended application for registration is a jurisdictional flaw. We should distinguish.
Amendments to the application may be due to change in parties or substantial change in
the boundaries or increase in the area of the land applied for.
In the former case, neither the Land Registration Act, as amended, nor Presidential
Decree No. 1529, otherwise known as the Property Registration Decree, requires
republication and registration may be allowed by the court at any stage of the
proceeding upon just and reasonable terms. 11 On the other hand, republication is
required if the amendment is due to substantial change in the boundaries or increase in
the area of the land applied for.
As to the fourth assignment of error. We do not see any relevant dispute in the lower
court's application of Presidential Decree No. 1529, instead of Act No. 496, in
adjudicating the land to the then applicant, assuming that the land involved is
registrable. Both laws are existing and can stand together. P.D. 1529 was enacted to
codify the various laws relative to registration of property, in order to facilitate effective
implementation of said laws. 12
The third, fifth and sixth assignment of errors are likewise meritorious and shall be
discussed forthwith together.
Respondent asserts that contrary to the allegation of petitioners, the reports of the
District Land Officer of Dagupan City, Land Inspector Perfecto Daroy and Supervising
Land Examiner Teodoro P. Nieva show that the subject property is an unclassified public
land, not forest land. This claim is rather misleading. The report of Supervising Land
Examiner Nieva specifically states that the "land is within the unclassified forest land"
under the administrative jurisdiction of the then Bureau of Forest Development. 13 This
was based on the reports of Land Inspector Daroy and District Land Officer Feliciano
Liggayu.
Lands of the public domain are classified under three main categories, namely: Mineral,
Forest and Disposable or Alienable Lands. 14 Under the Commonwealth Constitution, only
agricultural lands were allowed to be alienated. Their disposition was provided for under

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Commonwealth Act No. 141 (Secs. 6-7), which states that it is only the President, upon
the recommendation of the proper department head, who has the authority to classify
the lands of the public domain into alienable or disposable, timber and mineral lands.
Mineral and Timber or forest lands are not subject to private ownership unless they are
first reclassified as agricultural lands and so released for alienation. 15 In the absence of
such classification, the land remains as unclassified land until released therefrom and
rendered open to disposition. Courts have no authority to do so. 16
This is in consonance with the Regalian doctrine that all lands of the public domain
belong to the State, and that the State is the source of any asserted right to ownership
in land and charged with the conservation of such patrimony. Under the Regalian
Doctrine, all lands not otherwise appearing to be clearly within private ownership are
presumed to belong to the State. Hence, a positive act of the government is needed to
declassify a forest land into alienable or disposable land for agricultural or other
purposes. 17
The burden of proof in overcoming the presumption of state ownership of the lands of
the public domain is on the person applying for registration that the land subject of the
application is alienable or disposable. 18
Unless the applicant succeeds in showing by convincing evidence that the property
involved was acquired by him or his ancestors either by composition title from the
Spanish Government or by possessory information title, or any other means for the
proper acquisition of public lands, the property must be held to be part of the public
domain. The applicant must present evidence and persuasive proof to substantiate his
claim. 19
In this particular case, respondent presented proof that as early as 1921, the subject
property has been declared for tax purposes with receipts attached, in the names of
respondent's predecessors-in-interest. Nevertheless, in that span of time there had been
no attempt to register the same either under Act 496 or under the Spanish Mortgage
Law. It is also rather intriguing that Vicente Castelo who acquired almost 90% of the
property from Alejo Ambrosia, et al. on June 18, 1958 and from Julio Castelo on June
19, 1958 immediately sold the same to applicant J. Antonio Araneta on 3 July 1958.
According to the report of Land Investigator Daroy, the land was declared for taxation
purposes in the name of Vicente Castelo only in 1958 and the purported old tax
declarations are not on file with the Provincial Assessor's Office.
In any case tax declarations and receipts are not conclusive evidence of ownership or of
the right to possess land when not supported by evidence. 20 The fact that the disputed
property may have been declared for taxation purposes in the names of the applicants
or of their predecessors-in-interest way back in 1921 does not necessarily prove
ownership. They are merely indicia of a claim of ownership. 21
Respondent's contention that the BFD, LC Map No. 681, certified on August 8, 1927
which was the basis of the report and recommendation of the Land Examiner, is too
antiquated; that it cannot be conclusively relied upon and was not even presented in
evidence, is not well taken. As We have said in the case of Director of Lands v. CA: 22
And the fact that BF Map LC No. 673 dated March 1, 1927 showing subject property to
be within unclassified region was not presented in evidence will not operate against the
State considering the stipulation between the parties and under the well-settled rule that
the State cannot be estopped by the omission, mistake or error of its officials or agents,
if omission there was, in fact.
Respondent even admitted that Tambac Island is still an unclassified public land as of
1927 and remains to be unclassified.
Since
the
subject
property
is
still
unclassified,
whatever
possession
the applicant may have had and however long, cannot ripen into private

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31 | P a g e

ownership. 23 The conversion of subject property does not automatically render the
property as alienable and disposable.
In effect what the courts a quo have done is to release the subject property from the
unclassified category, which is beyond their competence and jurisdiction. We reiterate
that the classification of public lands is an exclusive prerogative of the Executive
Department of the Government and not of the Courts. In the absence of such
classification, the land remains unclassified until released therefrom and rendered open
to disposition. 24
In fairness to respondent, the petitioners should seriously consider the matter of the
reclassification of the land in question. The attempt of people to have disposable lands
they have been tilling for generations titled in their name should not only be viewed with
understanding attitude, but as a matter of policy encouraged. 25
WHEREFORE, the petition is hereby GRANTED and the decisions of the courts a quo are
REVERSED.
SO ORDERED.
Narvasa, C.J., Padilla, Regalado and Campos, Jr., JJ., concur.
# Footnotes
1 Justice Ramon G. Gaviola, Jr., ponente; Justices Eduardo R. Caquioa and Ma. Rosario
Quetulio-Losa, concurring.
2 Now Section 3, Art. XII of the 1987 Constitution.
3 Rollo, p. 125.
4 Rollo, p. 128.
5 Rollo, p. 83.
6 G.R. No. 65663, October 16, 1992.
7 68 SCRA 177.
8 Director of Lands v. IAC and Anit, supra.
9 Sec. 11, Art. XIV.
10 Sec. 3, Art. XII.
11 Sec. 23 of the Land Registration Act; Sec. 19 of the Property Registration Decree.
12 Preamble, P.D. 1529.
13 Original Records, Par. 5, p. 78.
14 Sec. 6, Commonwealth Act 141.
15 Director of Forestry v. Villareal, G.R. No. 32266, 27 Feb. 89.
16 Manalo vs. Intermediate Appellate Court, G.R. No. 64753, 172 SCRA 795.
17 Director of Lands, et al. v. Aquino, G.R. No. 31688, 192 SCRA 296.
18 Director vs. Aquino, Ibid.
19 Republic v. Sayo, G.R. No. 60413, 191 SCRA 71.
20 Director of Lands v. Court of Appeals, G.R. No. L-50340, 133 SCRA 701; Baez v.
Court of Appeals, G.R. No. L-30351, 56 SCRA 15.
21 Municipality of Antipolo v. Zapanta, G.R. No. L-65334, 133 SCRA 820; Municipality of
Santiago Isabela v. Court of Appeals, 120 SCRA 734; Elumbaring v. Elumbaring, 12 Phil
384.
22 Director of Lands v. CA and Valeriano, G.R. No. 58867, 129 SCRA 689 (1984);
Republic v. Court of Appeals, 89 SCRA 648.
23 Dir. of Lands v. CA, 129 SCRA 689, Adorable v. Director of Lands, 107 Phil. 401,
Republic v. Court of Appeals, 89 SCRA 648.
24 Yngson v. Sec. of Agriculture and Natural Resources, 123 SCRA 441, Republic v.
Court of Appeals, 99 SCRA 742.
25 Director of Lands v. Funtillar, 142 SCRA 57.
The Lawphil Project - Arellano Law Foundation

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Republic
of
SUPREME
Manila
THIRD DIVISION
G.R. No. 71285 November 5, 1987
REPUBLIC
OF
vs.
THE INTERMEDIATE APPELLATE
PASAHOL, respondents.

the

THE
COURT,

Philippines
COURT

PHILIPPINES, petitioner,
ESTEBAN

MENDOZA

and

LEON

GUTIERREZ, JR., J.:


This petition for review by way of certiorari questions the decision of the then
Intermediate Appellate Court which affirmed the decision of the then Court of First
Instance of Bataan granting the private respondents' petition to reopen the cadastral
registration proceeding of the lot in dispute and ordering its registration in the names of
the respondents.
The facts are undisputed. As found by the appellate court, they are as follows:
On December 18, 1968, a petition was filed by Esteban Mendoza and Leon Pasahol with
the then Court of First Instance of Bataan, Branch I, alleging ownership of the land in
question (Lot 444) by purchase from its original owners (Annex "A") and thereafter,
actual, continuous, public and adverse possession by them tacked on to their
predecessors-in-interest for a period exceeding 30 years.
Petitioners' predecessors-in-interest failed to answer in the cadastral court for lack of
knowledge of the existence of an ongoing cadastral proceeding because of which Lot No.
444 was declared public land. Notwithstanding, admittedly it has not been alienated,
reserved, leased or otherwise disposed of by the government. Basic petition reopens
cadastral proceedings insofar as this lot is concerned and prays for issuance of a
decree/title in petitioners' name.
Traversing the foregoing, Solicitor General opposed denying adequate basis for grant of
prayer; that neither documentary evidence nor nature of possession would warrant; that
lot 444 is of public domain.
Evidence of ownership and possession show petitioner Esteban Mendoza and his copetitioner, his brother-in-law Leon Pasahol, bought Lot 444 from the heirs of Maria
Nunez and Feliciano Ignacio on December 1, 1957 as shown by a deed of sale (Exhibit
"A"); that after acquiring the land, they planted it to various fruit-bearing trees; that
from December 1, 1957, petitioners had possessed the land peacefully, openly and
continuously under claim of ownership, as had their predecessors-in-interest before
them; that before the purchase of the land, it had been declared for taxation purposes in
the name of Maria Nunez since 1932 (Exhibit "E"); that in 1962, he and Leon Pasahol
had agreed that the property was to be declared for taxation in Pasahol's name only
(Exhibit "F"); that petitioners were informed before the sale by their vendors that the
latter did not claim the land in the cadastral proceedings Rec. No. 1097, Cad. Case No.
19 because they were "totally ignorant" of said proceedings, not having been notified of
the same; and that the land subject of the petition was not covered by any government
or forest reservation.
Mendoza's testimony was corroborated by witnesses Arsenio Amante, Eliseo Reyes (one
of the vendors), and Cresencio Abuzman.
Petitioners likewise presented other documentary evidence namely:
Exhibit "B" Certification of the Land Registration Commission dated December 23,
1968 that the lot in question had been declared public land.

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Exhibit "C" Plan of Lot 444 of the Mariveles Cadastre prepared by Geodetic Engineer
Victor Clamor, Jr. and certified by Carlos G. Reyes, Chief of the Surveys Division of the
Bureau of Lands.
Exhibit "D" Technical description of Lot 444 certified as correct by the Surveys
Division Chief acting for the Director of Lands.
Exhibit "G" Certification dated December 10, 1968 by the Municipal Treasurer of
Mariveles, Bataan that payment of land taxes for Lot 444 was up to date.
Exhibit "H" Certification by the Acting District Land Officer dated April 15, 1969 that
the land had been cadastrally surveyed for the heirs of Feliciano Iglesia, predecessorsin-interest of the petitioners.
Exhibit "J" Report of the District Forester, Bureau of Forestry, Balanga, Bataan
recommending approval of the petition considering that the land being applied for was
not needed for forestry purposes.
On the part of the State, the Solicitor General did not present evidence of any kind but
relied only on the petitioners' own evidence.
Initially, the court a quo denied registration observing, that Exhibit "C", the plan of the
property sought to be registered, "does not appear to have been approved by the
Director of Lands." Furthermore, although Esteban Mendoza and Leon Pasahol were the
petitioners in the case, the latter had not appeared "to corroborate the oral testimony of
Mendoza that Pasahol has agreed with him to have the land declared for taxation
purposes only in the latter's name."
On motion for reconsideration, the court a quo reconsidered and ordered a new hearing
on the petition.
In the new trial, the previous deficiencies were rectified by the petitioners. Leon Pasahol
took the witness stand to corroborate Esteban Mendoza's testimony; Exhibit "C" was
presented anew in evidence, this time with the required approval of the Director of
Lands. As a consequence, the court a quo granted the petition for registration of Lot
444. (pp. 1-3, Decision-Intermediate Appellate Court)
On appeal, the Intermediate Appellate Court affirmed the trial court's decision and held:
In this appeal, the Solicitor General contests, alleging Exhibit "A" shows that petitioners'
possession began only in 1957, they could not tack their possession to their
predecessors-in-interest because of the failure of the latter to lay claim to the property in
question either during the cadastral survey of the area in 1927 or in the original
cadastral proceedings held thereafter.
We do not agree.
Record shows Feliciano Iglesia, original owner of the property, died before herein
cadastral proceedings were instituted. His heirs who succeeded to his rights over the
land lived in a remote part thereof and only infrequently visited the provincial capital
where the courts were located. Under these circumstances, it is quite credible
petitioners'predecessors-in-interest did not receive any notice of the cadastral
proceedings, Moreover, there is nothing in the record to show that either the petitioners'
possession or that of their predecessors was ever disrupted or interrupted by thirdparties, much less by the government. Petitioners after the sale had zealously cultivated
the property and religiously paid the taxes thereon for a good number of years. We find
possession of the land by both parties was in good faith and that petitioners herein
should not, as a consequence, be held strictly accountable for the lapse of their
predecessors to file a cadastral yo to the property. Petitioners may tack their period of
possession with that of their vendors totalling to more than thirty years.
The Solicitor General points out, however, that under Section 1 of Republic Act 391, as
amended by Republic Act 2061, reopening cadastral proceedings is allowable "only with
respect to such of said parcels of land as have not been alienated, reserved, leased,
granted, or otherwise provisionally or permanently disposed of by the Government."

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Applying said provision to the lot in question, it is claimed that registration is not possible
as said land is actually already forest land and/or part of a military reservation. In
support of this contention, the Solicitor General cites the Report of Forest Guard
Crescensio Abuzman to the District Forester (Exhibit "J") which states that "the area
involved is a portion of former Military Reservation (US) turned over to Philippine
government." Hence, not disposable under any circumstances.
We disagree.
The land may have been a military reservation in the past, but no longer. The same
report Exhibit "J" relied upon by the Solicitor General goes on to state that this "former
Military Reservation" had already been "delimited and classified by our bureau (Forestry)
as alienable and disposable block under the Proposed Land Classification Project No. 4-C
of Mariveles, Bataan." Additionally, the Report in fact recommended the titling of the
property in the petitioners' name as the same was no longer needed for forestry
purposes and the government would not be adversely affected.
Contributing to the view as to the disposable character of the land is the approval by the
Director of Lands himself of Exhibit "C", the plan of the land to be registered. Such
approval would hardly be forthcoming were the property really non-disposable as
claimed by the State.
Finally, We note from the record as well that all the other adjoining lots (Nos. 443, 447,
446, 438, etc.) were already registered and titled in the names of private individuals, a
circumstance hard to reconcile with the position of the Solicitor General that registration
of the area was simply not possible. (pp. 4-6, Decision-Intermediate Appellate Court).
In this instant petition, the petitioner challenges the decision of the appellate court as
being contrary to law on the ground that it held that the subject land is agricultural and
alienable land of the public domain and that the same can be subject to acquisitive
prescription of thirty (30) years of open, continuous and uninterrupted possession under
a bona fide claim of ownership by the private respondents as to entitle them to
registration and title over the land.
The petitioner maintains that Exhibit "J" which is the report of the District Forester
recommending approval of the private respondents' petition is a mere proposal
contained in the Proposed Land Classification Project No. 4 of Mariveles, Bataan, which
has not yet been approved by the President of the Philippines; and that unless the
President upon the recommendation of the Minister (Secretary) of Natural Resources,
reclassifies and declares a particular land as agricultural or disposable, its status as
military reservation or forest land remains unaltered and no amount of physical
occupation and cultivation thereof can change it to agricultural land and bring it within
the provisions of the Public Land Act. Therefore, it was error on the part of the appellate
court to rule that the land in dispute has been in the open, continuous and uninterrupted
possession of the private respondents for more than thirty years as to entitle them to
register the same and procure a title thereto because possession of an inalienable land,
however long, cannot ripen into private ownership.
On the other hand, the private respondents argue that even though Exhibit "J" was a
mere proposal, such proposal had been honored and implemented when the land in
dispute had been recommended for titling in their favor. Furthermore, the
recommendation for such titling was made by the same office or branch of the
government authorized and empowered to classify and dispose of the property.
Moreover, the subject property has no more use for any government purpose and for
which reason, the Bureau did not object but instead recommended that it be titled in
favor of the private respondents. In fact, the Director of Lands himself approved the plan
Exhibit "C" covering the land sought to be registered.
We find merit in the instant petition.

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While it may be true that as ruled by the appellate court, the private respondents could
tack their possession of the land to that of their predecessors-in-interest as a result of
which they now have more than thirty (30) years' possession of the same, the fact
remains that the subject land has not yet been released from its classification as part of
the military reservation zone and still has to be reclassified as alienable public land with
the approval of the President of the Philippines as required by the Public Land Act
(Commonwealth Act No. 141) and Republic Act No. 1275. As we have ruled in Republic
v. Court of Appeals (148 SCRA 480, 489):
Thus, even if the reopening of the cadastral proceedings was at all possible, private
respondents have not qualified for a grant under Sec- 48(b) of Commonwealth Act 141,
the facts being that private respondents could only be credited with 1 year, 9 months
and 20 days possession and occupation of the lots involved, counted from July 6, 1965,
the date when the land area in sitio San Jose, barrio Cabraban Mariveles, Bataan, known
as Bataan PMD No. 267, which includes the lots claimed by respondents, had been

segregated from the forest zone and released by the Bureau of Forestry as an
agricultural land for disposition under the Public Land Act (Record on Appeal, p. 19).

Consequently, under the above mentioned jurisprudence, neither private respondents


nor their predecessors-in-interest could have possessed the lots for the requisite period
of thirty (30) years as disposable agricultural land. (Emphasis supplied).
We, therefore, cannot sustain the appellate court's ruling that the land in dispute is no
longer part of the military reservation on the basis of a mere proposal to classify the
same as alienable and disposable land of the public domain. A proposal cannot take the
place of a formal act declaring forest land released for disposition as public agricultural
land. To sustain the appellate ruling would be to pre-empt the executive branch of the
government from exercising its prerogative in classifying lands of the public domain. We
ruled in the case of Director of Lands v. Court of Appeals, (129 SCRA 689, 692-693)
that:
In effect, what the Court a quo has done is to release the subject property from the
unclassified category, which is beyond their competence and jurisdiction. The
classification of public lands is an exclusive prerogative of the Executive Department of
the Government and not of the Courts. In the absence of such classification, the land
remains as unclassified land until it is released therefrom and rendered open to
disposition (Sec. 8, Commonwealth Act No. 141, as amended: Yngson v. Secretary of
Agriculture and Natural Resources, 123 SCRA 441 [1983]; Republic v. Court of Appeals,
99 SCRA 742 [1980]. This should be so under time-honored Constitutional precepts. This
is also in consonance with the Regalian doctrine that all lands of the public domain
belong to the State (Secs. 8 & 10, Art. XIV, 1973 Constitution), and that the State is the
source of any asserted right to ownership in land and charged with the conservation of
such patrimony (Republic v. Court of Appeals, 89 SCRA 648 [1979])
The recommendation of the District Forester for release of subject property from the
unclassified region is not the ultimate word on the matter. And the fact that BF Map LC
No. 637 dated March 1, 1927 showing subject property to be within the unclassified
region was not presented in evidence will not operate against the State considering the
stipulation between the parties and under the well-settled rule that the State Cannot be
estopped by the omission, mistake or error of its officials or agents. (Republic v. Court of
Appeals, 89 SCRA 648 [1979]) if omission there was, in fact.
While it may be that the Municipality of Obando has been cadastrally surveyed in 1961,
it does not follow that all lands comprised therein are automatically released as
alienable. A survey made in a cadastral proceeding merely Identifies each lot
preparatory to a judicial proceeding for adjudication of title to any of the lands upon
claim of interested parties. Besides, if land is within the jurisdiction of the Bureau of

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Forest Development, it would be beyond the jurisdiction of the Cadastral Court to


register it under the Torrens System.
Since the subject property is still unclassified, whatever possession Applicant may have
had, and, however long, cannot ripen into private ownership.
We are not unmindful, however of the plight of the private respondents who have in
good faith possessed and occupied the disputed land for more than (30) years. If what is
needed is only the formal release of the property from its classification as a military
reservation and its reclassification to disposable agricultural land, the petitioner should,
for equitable reasons, take the necessary steps towards the declassification of the same.
As we have held in the same case of Director of Lands v. Court of Appeals (supra):
The conversion of subject property into a fishpond by Applicants, or the alleged titling of
properties around it, does not automatically render the property as alienable and
disposable. Applicants' remedy lies in the release of the property from its present
classification. In fairness to Applicants, and it appearing that there are titled lands
around the subject property, petitioners-officials should give serious consideration to the
matter of classification of the land in question.
The attempts of humble people to have disposable lands they have been tilling for
generations titled in their names should not only be viewed with an understanding
attitude but should, as a matter of policy be encouraged. (Director of Lands v. Funtillar
142 SCRA 57, 69). Apart from strongly opposing an obviously improper method of
securing title to public land, the Solicitor General should also take positive steps to help
the private respondents remedy the situation in which they find themselves.
WHEREFORE, the petition is GRANTED and the decision of the respondent appellate
court is ANNULLED and SET ASIDE. The application for cadastral registration of title of
the private respondents is hereby DISMISSED, without prejudice to their recourse to the
proper administrative remedy.
SO ORDERED.

Fernan (Chairman), Bidin and Cortes, JJ., concur.


Feliciano, J., is on leave.
The Lawphil Project - Arellano Law Foundation
Oblicon Cases
Sources of Obligations
Leung Ben v O'Brien

G.R. No. L-13602


April 6, 1918
LEUNG
BEN, plaintiff,
vs.
P. J. O'BRIEN, JAMES A OSTRAND and GEO. R. HARVEY, judges of First Instance of city
of Manila, defendants.

Thos.
D.
Aitken
and
Kincaid & Perkins for defendants.
STREET, J.:

W.

A.

Armstrong

for

plaintiff.

This is an application for a writ of certiorari, the purpose of which is to quash an


attachment issued from the Court of First Instance of the City of Manila under
circumstances hereinbelow stated.
Upon December 12, 1917, an action was instituted in the Court of First Instance of the
city of Manila by P. J. O'Brien to recover of Leung Ben the sum of P15,000 alleged to
have been lost by the plaintiff to the defendant in a series of gambling, banking and
percentage games conducted ruing the two or three months prior to the institution of
the suit. In his verified complaint the plaintiff asked for an attachment, under section

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37 | P a g e

424, and 412 (1) of the Code of Civil Procedure, against the property of the defendant,
on the ground that the latter was about to depart from the Philippine islands with intent
to defraud his creditors. This attachment was issued; and acting under the authority
thereof, the sheriff attached the sum of P15,000 which had been deposited by the
defendant with the International Banking Corporation.
The defendant thereupon appeared by his attorney and moved the court to quash the
attachment. Said motion having dismissed in the Court of First Instance, the petitioner,
Leung Ben, the defendant in that action, presented to this court, upon January 8, 1918
his petition for the writ ofcertiorari directed against P. J. O'Brien and the judges of the
Court of First Instance of the city of Manila whose names are mentioned in the caption
hereof. The prayer is that the Honorable James A. Ostrand, as the judge having
cognizance of the action in said court be required to certify the record to this court for
review and that the order of attachment which had been issued should be revoked and
discharged. with costs. Upon the filing of said petition in this court the usual order was
entered requiring the defendants to show cause why the writ should not issue. The
response of the defendants, in the nature of a demurrer, was filed upon January 21,
1918; and the matter is now heard upon the pleadings thus presented.
The provision of law under which this attachment was issued requires that there should
be accuse of action arising upon contract, express or implied. The contention of the
petitioner is that the statutory action to recover money lost at gaming is that the
statutory action to recover money lost at gaming is no such an action as is contemplated
in this provision, and he therefore insists that the original complaint shows on its face
that the remedy of attachment is not available in aid thereof; that the Court of First
Instance acted in excess of its jurisdiction in granting the writ of attachment; that the
petitioner has no plain, speedy, and adequate remedy by appeal or otherwise; and that
consequently the writ of certiorari supplies the appropriate remedy for his relief.
The case presents the two following questions of law, either of which, if decided
unfavorably to the petitioner, will be fatal to his application:
(1) Supposing that the Court of First Instance has granted an attachment for which
there is no statutory authority, can this court entertain the present petition and grant the
desired relief?
(2) Is the statutory obligation to restore money won at gaming an obligation arising from
"contract, express or implied?"
We are of the opinion that the answer to the first question should be in the affirmative.
Under section 514 of the Code of Civil Procedure the Supreme Court has original
jurisdiction by the writ ofcertiorari over the proceedings of Courts of First Instance,
wherever said courts have exceeded their jurisdiction and there is no plaint, speedy, and
adequate remedy. In the same section, it is further declared that the proceedings in the
Supreme Court in such cases hall be as prescribed for Courts of First Instance in section
217-221, inclusive, of said Code. This Supreme Court, so far as applicable, the provisions
contained in those section to the same extent as if they had been reproduced verbatim
immediately after section 514. Turning to section 217, we find that, in defining the
conditions under which certiorari can be maintained in a Court of First Instance
substantially the same language is used as is the same remedy can be maintained in the
Supreme Court of First Instance, substantially the same language is used as is found in
section 514 relative to the conditions under which the same remedy can be maintained
in the Supreme Court, namely, when the inferior tribunal has exceeded its jurisdiction
and there is no appeal, nor any plain, speedy and adequate remedy. In using these
expressions the author of the Code of Civil Procedure merely adopted the language
which, in American jurisdictions at least, had long ago reached the stage of stereotyped
formula.

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In section 220 of the same Code, we have a provision relative to the final proceedings
in certiorari, and herein it is stated that the court shall determine whether the inferior
tribunal has regularly pursued its authority it shall give judgment either affirming
annulling, or modifying the proceedings below, as the law requires. The expression, has
not regularly pursued its authority as here used, is suggestive, and we think it should be
construed in connection with the other expressions have exceeded their jurisdiction, as
used in section 514, and has exceeded their jurisdiction as used in section 217. Taking
the three together, it results in our opinion that any irregular exercise of juridical power
by a Court of First Instance, in excess of its lawful jurisdiction, is remediable by the writ
of certiorari, provided there is no other plain, speedy, and adequate remedy; and in
order to make out a case for the granting of the writ it is not necessary that the court
should have acted in the matter without any jurisdiction whatever. Indeed the repeated
use of expression excess of jurisdiction shows that the lawmaker contemplated the
situation where a court, having jurisdiction should irregularly transcend its authority as
well as the situation where the court is totally devoid of lawful power.
It may be observed in this connection that the word jurisdiction as used in attachment
cases, has reference not only to the authority of the court to entertain the principal
action but also to its authority to issue the attachment, as dependent upon the existence
of the statutory ground. (6 C. J., 89.) This distinction between jurisdiction to issue the
attachment as an ancillary remedy incident to the principal litigation is of importance; as
a court's jurisdiction over the main action may be complete, and yet it may lack authority
to grant an attachment as ancillary to such action. This distinction between jurisdiction
over the ancillary has been recognized by this court in connection with actions involving
the appointment of a receiver. Thus in Rocha & Co. vs. Crossfield and Figueras (6 Phil.
Rep., 355), a receiver had been appointed without legal justification. It was held that the
order making the appointment was beyond the jurisdiction of the court; and though the
court admittedly had jurisdiction of the main cause, the order was vacated by this court
upon application a writ of certiorari. (See Blanco vs. Ambler, 3 Phil. Rep., 358, Blanco vs.
Ambler and McMicking 3 Phil. Rep., 735, Yangco vs. Rohde, 1 Phil. Rep., 404.)
By parity of reasoning it must follow that when a court issues a writ of attachment for
which there is no statutory authority, it is acting irregularly and in excess of its
jurisdiction, in the sense necessary to justify the Supreme Court in granting relief by the
writ of certiorari. In applying this proposition it is of course necessary to take account of
the difference between a ground of attachment based on the nature of the action and a
ground of attachment based on the acts or the conditions of the defendant. Every
complaint must show a cause of action some sort; and when the statue declares that the
attachment may issue in an action arising upon contract, the express or implied, it
announces a criterion which may be determined from an inspection of the language of
the complaint. The determination of this question is purely a matter of law. On the other
hand, when the stature declares that an attachment may be issued when the defendant
is about to depart from the Islands, a criterion is announced which is wholly foreign to
the cause of action; and the determination of it may involve a disputed question of fact
which must be decided by the court. In making this determination, the court obviously
acts within its powers; and it would be idle to suppose that the writ of certiorari would
be available to reverse the action of a Court of First Instance in determining the
sufficiency of the proof on such a disputed point, and in granting or refusing the
attachment accordingly.
We should not be understood, in anything that has been said, as intending to infringe
the doctrine enunciated by this court in Herrera vs. Barretto and Joaquin (25 Phil. Rep.,
245), when properly applied. It was there held that we would not, upon application for a
writ of certiorari, dissolve an interlocutory mandatory injunction that had been issued in
a Court of First Instance as an incident in an action of mandamus. The issuance of an

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39 | P a g e

interlocutory injunction depends upon conditions essentially different from those


involved in the issuance of an attachment. The injunction is designed primarily for the
prevention of irreparable injury and the use of the remedy is in a great measure
dependent upon the exercise of discretion. Generally, it may be said that the exercise of
the injunctive powers is inherent in judicial authority; and ordinarily it would be
impossible to distinguish between the jurisdiction of the court in the main litigation and
its jurisdiction to grant an interlocutory injunction, for the latter is involved in the former.
That the writ of certiorari can not be used to reverse an order denying a motion for a
preliminary injunction is of course not to cavil. (Somes vs. Crossfield and Molina, 8 Phil.
Rep., 284.)
But it will be said that the writ of certiorari is not available in this cae, because the
petitioner is protected by the attachment bond, and that he has a plain, speedy, and
adequate remedy appeal. This suggestion seems to be sufficiently answered in the case
of Rocha & Co vs. Crossfield and Figueras (6 Phil. Rep., 355), already referred to, and
the earlier case there cited. The remedy by appeal is not sufficiently speedy to meet the
exigencies of the case. An attachment is extremely violent, and its abuse may often
result in infliction of damage which could never be repaired by any pecuniary award at
the final hearing. To postpone the granting of the writ in such a case until the final
hearing and to compel the petitioner to bring the case here upon appeal merely in order
to correct the action of the trial court in the matter of allowing the attachment would
seem both unjust and unnecessary.
Passing to the problem propounded in the second question it may be observed that,
upon general principles,. recognize both the civil and common law, money lost in gaming
and voluntarily paid by the loser to the winner can not in the absence of statue, be
recovered in a civil action. But Act No. 1757 of the Philippine Commission, which defines
and penalizes several forms of gambling, contains numerous provisions recognizing the
right to recover money lost in gambling or in the playing of certain games (secs. 6, 7, 8,
9, 11). The original complaint in the action in the Court of First Instance is not clear as
to the particular section of Act No. 1757 under which the action is brought, but it is
alleged that the money was lost at gambling, banking, and percentage game in which
the defendant was banker. It must therefore be assumed that the action is based upon
the right of recovery given in Section 7 of said Act, which declares that an action may be
brought against the banker by any person losing money at a banking or percentage
game.
Is this a cause arising upon contract, express or implied, as this term is used in section
412 of the Code of Civil Procedure? To begin the discussion, the English version of the
Code of Civil Procedure is controlling (sec. 15, Admin. Code, ed. of 1917). Furthermore it
is universally admitted to be proper in the interpretation of any statute, to consider its
historical antecedents and its juris prudential sources. The Code of Civil Procedure, as is
well known, is an American contribution to Philippine legislation. It therefore speaks the
language of the common-law and for the most part reflects its ideas. When the
draftsman of this Code used the expression contract, express or implied, he used a
phrase that has been long current among writers on American and English law; and it is
therefore appropriate to resort to that system of law to discover the appropriate to
resort to that system of law to discover the meaning which the legislator intended to
convey by those meaning which the legislator intended to convey by those terms. We
remark in passing that the expression contrato tracito, used in the official translation of
the Code of Civil Procedure as the Spanish equivalent of implied contract, does not
appear to render the full sense of the English expression.
The English contract law, so far as relates to simple contracts is planted upon two
foundations, which are supplied by two very different conceptions of legal liability. These
two conceptions are revealed in the ideas respectively underlying (1) the common- law

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40 | P a g e

debt and (2) the assumptual promise. In the early and formative stages of the commonlaw the only simple contract of which the courts took account was the real contract or
contract re, in which the contractual duty imposed by law arises upon the delivery of a
chattle, as in the mutuum, commodatum, depositum, and the like; and the purely
consensual agreements of the Roman Law found no congenial place in the early
common law system.
In course of time the idea underlying the contract re was extended so as to include from
one person to another under such circumstances as to constitute a justa cuas debendi.
The obligation thereby created was a debt. The constitutive element in this litigation is
found in the fact that the debtor has received something from the creditor, which he is
bound by the obligation of law to return or pay for. From an early day this element was
denominated the quid pro quo, an ungainly phrase coined by Mediaeval Latinity.
The quid pro quo was primarily a materials or physical object, and its constituted the
recompense or equivalent acquired by the debtor. Upon the passage of the quid pro
quo from one party to the other, the law imposed that real contractual duty peculiar to
the debt. No one conversant with the early history of English law would ever conceive of
the debt as an obligation created by promise. It is the legal duty to pay or deliver a sum
certain of money or an ascertainable quantity of ponderable or measurable chattles.
The ordinary debt, as already stated, originates in a contract in which a quid pro
quo passes to the debtor at the time of the creation of the debt, but the term is equally
applicable to duties imposed by custom or statute, or by judgment of a court.
The existence of a debt supposes one person to have possession of thing (res) which
he owes and hence ought to turn over the owner. This obligation is the oldest
conception of contract with which the common law is familiar; and notwithstanding the
centuries that have rolled over Westminster Hall that conception remains as one of the
fundamental bases of the common-law contract.
Near the end of the fifteenth century there was evolved in England a new conception of
contractual liability, which embodied the idea of obligation resulting from promise and
which found expression in the common law assumpsit, or parol promise supported by a
consideration. The application of this novel conception had the effect of greatly
extending the filed of contractual liability and by this means rights of action came to be
recognized which had been unknown before. The action of assumpsit which was the
instrument for giving effect to this obligation was found to be a useful remedy; and
presently this action came to be used for the enforcement of common-law debts. The
result was to give to our contract law the superficial appearance of being based more or
less exclusively upon the notion of the obligation of promise.
An idea is widely entertained to the effect that all simple contracts recognized in the
common-law system are referable to a singly category. They all have their roots, so
many of us imagine, in one general notion of obligation; and of course the obligation of
promise is supposed to supply this general notion, being considered a sort
of menstruum in which all other forms of contractual obligation have been dissolved.
This a mistake. The idea of contractual duty embodied in the debt which was the first
conception of contract liability revealed in the common law, has remained, although it
was detained to be in a measure obscured by the more modern conception of obligation
resulting from promise.
What has been said is intended to exhibit the fact that the duty to pay or deliver a sum
certain of money or an ascertainable quantity of ponderable or measurable chattles
which is indicated by them debt has ever been recognized, in the common-law
system, as a true contract, regardless, of the source of the duty or the manner in which
it is create whether derived from custom, statue or some consensual transaction
depending upon the voluntary acts of the parties. the form of contract known as the
debt is of the most ancient lineage; and when reference is had to historical antecedents,

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41 | P a g e

the right of the debt to be classed as a contract cannot be questioned. Indeed when the
new form of engagement consisting of the parol promise supported by a consideration
first appeared, it was looked upon as an upstart and its right to be considered a true
contract was questioned. It was long customary to refer to it exclusively as an
assumpsit, agreement, undertaking, or parol promise, in fact anything but a contract.
Only in time did the new form of engagement attain the dignity of being classed among
true contract.
The term implied takers us into shadowy domain of those obligations the theoretical
classification of which has engaged the attention of scholars from the time of Gaius until
our own day and has been a source of as much difficulty to the civilian as to the
common-law jurist. There we are concerned with those acts which make one person
debtor to another without there having intervened between them any true agreement
tending to produce a legal bond (vinculum juris). Of late years some American and
English writers have adopted the term quasi-contract as descriptive of these obligations
or some of them; but the expression more commonly used is implied contract.
Upon examination of these obligations, from the view point of the common-law
jurisprudence, it will be found that they fall readily into two divisions according as they
bear an analogy to the common-law debt or to the common law assumpsit. To exhibit
the scope of these different classes of obligations is here impracticable. It is only
necessary in this connection to observe that the most conspicuous division is that which
comprises duties in the nature of debt. The characteristic feature of these obligations is
that upon certain states of fact the law imposes an obligation to pay a sum certain of
money; and it is characteristic of this obligation that the money in respect to which the
duty is raised is conceived as being equivalent of something taken or detained under
circumstances giving rise to the duty to return or compensate therefore. The proposition
that no one shall be allowed to enrich himself unduly at the expense of another
embodies the general principle here lying at the basis of obligation. The right to recover
money improperly paid (repeticion de lo indebido) is also recognized as belong to this
class of duties.
It will observed that according to the Civil Code obligations are supposed to be derived
either from (1) the law, (2) contracts and quasi-contracts, (3) illicit acts and omission, or
(4) acts in which some sort ob lame or negligence is present. This enumeration of
sources of obligations and the obligation imposed by law are different types. The learned
Italian jurist, Jorge Giorgi, criticises this assumption and says that the classification
embodied in the code is theoretically erroneous. His conclusion is that one or the other
of these categories should have been suppressed and merged in the other.
(Giorgi, Teoria de las Obligaciones, Spanish ed., vol. 5 arts. 5, 7, 9.) The validity of this
criticism is, we thin, self-evident; and it is of interest to note that the common law
makes no distinction between the two sources of liability. The obligations which in the
Code are indicated as quasi-contracts, as well as those arising ex lege, are in the
common la system, merged into the category of obligations imposed by law, and all are
denominated implied contracts.
Many refinements, more or less illusory, have been attempted by various writers in
distinguishing different sorts of implied contracts, as for example, the contract implied as
of fact and the contract implied as of law. No explanation of these distinctions will be
here attempted. Suffice it to say that the term contract, express or implied, is used to by
common-law jurists to include all purely personal obligations other than those which
have their source in delict, or tort. As to these it may be said that, generally speaking,
the law does not impose a contractual duty upon a wrongdoer to compensate for injury
done. It is true that in certain situations where a wrongdoer unjustly acquired something
at the expense of another, the law imposes on him a duty to surrender his unjust
acquisitions, and the injured party may here elect to sue upon this contractual duty

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instead of suing upon the tort; but even here the distinction between the two liabilities,
in contract and in tort, is never lost to sight; and it is always recognized that the liability
arising out of the tort is delictual and not of a contractual or quasi-contractual nature.
In the case now under consideration the duty of the defendant to refund the money
which he won from the plaintiff at gaming is a duty imposed by statute. It therefore
arises ex lege. Furthermore, it is a duty to return a certain sum which had passed from
the plaintiff to the defendant. By all the criteria which the common law supplies, this a
duty in the nature of debt and is properly classified as an implied contract. It is wellsettled by the English authorities that money lost in gambling or by lottery, if
recoverable at all, can be recovered by the loser in an action of indebitatus assumpsitfor
money had and received. (Clarke vs. Johnson. Lofft, 759; Mason vs. Waite, 17 Mass.,
560; Burnham vs. Fisher, 25 Vt., 514.) This means that in the common law the duty to
return money won in this way is an implied contract, or quasi-contract.
It is no argument to say in reply to this that the obligation here recognized is called an
implied contract merely because the remedy commonly used in suing upon ordinary
contract can be here used, or that the law adopted the fiction of promise in order to
bring the obligation within the scope of the action of assumpsit. Such statements fail to
express the true import of the phenomenon. Before the remedy was the idea; and the
use of the remedy could not have been approved if it had not been for historical
antecedents which made the recognition of this remedy at one logical and proper.
Furthermore, it should not be forgotten that the question is not how this duty but what
sort of obligation did the author of the Code of Civil Procedure intend to describe when
he sued the term implied contract in section 412.
In what has been said we have assumed that the obligation which is at the foundation of
the original action in the court below is not a quasi-contract, when judge by the
principles of the civil law. A few observations will show that this assumption is not by
any means free from doubt. The obligation in question certainly does not fall under the
definition of either of the two-quasi- contracts which are made the subject of special
treatment in the Civil Code, for its does not arise from a licit act as contemplated in
article 1895. The obligation is clearly a creation of the positive law a circumstance
which brings it within the purview of article 1090, in relation with article, 1089; and it is
also derived from an illicit act, namely, the playing of a prohibited game. It is thus seen
that the provisions of the Civil Code which might be consulted with a view to the correct
theoretical classification of this obligation are unsatisfactory and confusing.
The two obligations treated in the chapter devoted to quasi-contracts in the Civil Code
are (1) the obligation incident to the officious management of the affairs of other person
(gestion de negocios ajenos) and (2) the recovery of what has been improperly paid
(cabro de lo indebido). That the authors of the Civil Code selected these two obligations
for special treatment does not signify an intention to deny the possibility of the existence
of other quasi-contractual obligations. As is well said by the commentator Manresa.
The number of the quasi-contracts may be indefinite as may be the number of lawful
facts, the generations of the said obligations; but the Code, just as we shall see further
on, in the impracticableness of enumerating or including them all in a methodical and
orderly classification, has concerned itself with two only namely, the management of
the affairs of other person and the recovery of things improperly paid without
attempting by this to exclude the others. (Manresa, 2d ed., vol. 12, p. 549.)
It would indeed have been surprising if the authors of the Code, in the light of the
jurisprudence of more than a thousand years, should have arbitrarily assumed to limit
the quasi-contract to two obligations. The author from whom we have just quoted
further observes that the two obligations in question were selected for special treatment
in the Code not only because they were the most conspicuous of the quasi-contracts, but

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because they had not been the subject of consideration in other parts of the Code.
(Opus citat., 550.)
It is well recognized among civilian jurists that the quasi- contractual obligations cover a
wide range. The Italian jurist, Jorge Giorgi, to whom we have already referred, considers
under this head, among other obligations, the following: payments made upon a future
consideration which is not realized or upon an existing consideration which fails;
payments wrongfully made upon a consideration which is contrary to law, or opposed to
public policy; and payments made upon a vicious consideration or obtained by illicit
means (Giorgi, Teoria de las Obligaciones, vol. 5, art. 130.)
Im permitting the recovery of money lost at play, Act No. 1757 has introduced
modifications in the application of articles 1798, 180`, and 1305 of the Civil Code. The
first two of these articles relate to gambling contracts, while article 1305 treats of the
nullity of contracts proceeding from a vicious or illicit consideration. Taking all these
provisions together, it must be apparent that the obligation to return money lost at play
has a decided affinity to contractual obligations; and we believe that it could, without
violence to the doctrines of the civil law, be held that such obligations is an innominate
quasi-contract. It is, however, unnecessary to place the decision on this ground.
From what has been said it follows that in our opinion the cause of action stated in the
complaints in the court below is based on a contract, express or implied and is therefore
of such nature that the court had authority to issue writ of attachment. The application
for the writ of certiorari must therefore be denied and the proceedings dismissed. So
ordered.
Arellano, C.J., Torres, Johnson and Carson, JJ., concur.
Separate Opinions
MALCOLM, J., concurring:
As I finished reading the learned and interesting decision of the majority, the impression
which remained was that the court was enticed by the nice and unusual points
presented to make a hard case out of an easy one and unfortunately t do violence to the
principles of certiorari. The simple questions are : Di the Court of First Instance of city of
Manila exceed its jurisdiction in granting an attachments against the property of the
defendant, now plaintiff? Has this defendant, now become the plaintiff, any other plain,
speedy and adequate remedy? The answer are found in the decision of thinks court, in
Herrera vs. Barretto and Joaquin ([1913], 25 Phil., 245), from which I quote the
following:
It has been repeatedly held by this court that a writ of certiorari will not be issued unless
it clearly appears that the court to which it is to be directed acted without or in excess of
jurisdiction. It will not be issued to cure errors in the proceedings or to correct erroneous
conclusions of law or of fact. If the court has jurisdiction. It will not be issued to cure
errors in the proceedings to correct jurisdiction of the subject matter and f the person,
decisions upon all question pertaining to the cause are decisions within its jurisdiction
and, however irregular or erroneous they may be, cannot be corrected by certiorari. The
Code of Civil Procedure giving Courts of First Instance general jurisdiction in actions
formandamus, it goes without saying that the Court of First Instance had jurisdiction in
the present case to resolve every question arising in such an action and t decide every
question presented to it which pertained to the cause. It has already been held by this
court, that while it is a power to be exercised only in extreme case, a Court of First
Instance has power to issue a mandatory injunction t stand until the final determination
of the action in which it is issued. While the issuance of the mandatory injunction in this
particular case may have been irregular and erroneous, a question concerning which we
express no opinion, nevertheless its issuance was within the jurisdiction of the court and
its action is not reveiwable on certiorari. It is not sufficient to say that it was issued

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wrongfully and without sufficient grounds and in the absence of the other party. The
question is, Did the court act with jurisdiction?
It has been urged that the court exceeded its jurisdiction in requiring the municipal
president t issue the license, for the reason that he was not the proper person to issue it
and that, if he was the proper person, he had the right to exercise a discretion as to
whom the license should be issued. We do not believe that either of these questions
goes to the jurisdiction of the court to act. One of the fundamental question in
a mandamus against a public officer is whether or not that officer has the right to
exercise discretion in the performance of the act which the plaintiff asks him to perform.
It is one of the essential determinations of the cause. To claim that the resolution of that
question may deprive the court of jurisdiction is to assert a novel proposition. It is
equivalent to the contention that a court has jurisdiction if he decides right but no
jurisdiction if he decides wrong. It may be stated generally that it is never necessary to
decide the fundamental questions of a cause to determine whether the court has
jurisdiction. The question of jurisdiction is preliminary and never touches the merits of
the case. The determination of the fundamental questions of a cause are merely the
exercise of a jurisdiction already conceded. In the case at bar no one denies the power,
authority or jurisdiction of the Court of First Instance to take cognizance of an action
for mandamus and to decide very question which arises in that cause and pertains
thereto. The contention that the decision of one of those question, if wrong, destroys
jurisdiction involves an evident contradiction.
Jurisdiction is the authority to hear and determine a cause the right to act in a case.
Since it is the power to hear and determine, it does not depend either upon the
regularity of the exercise of that power or upon the rightfulness of the decision made.
Jurisdiction should therefore be distinguished from the exercise of jurisdiction. The
authority to decide a case at all, and not the decision rendered therein, is what makes
up jurisdiction. Where there is jurisdiction of the person and subject matter, as we have
said before, the decision of all other questions arising in the case an exercise of that
jurisdiction.
Then follows an elaborate citation and discussion of American authorities, including a
decision of the United States Supreme Court and of the applicable Philippine cases. The
decision continues"
The reasons givens in these cases last cited for the allowance of the writ of prohibition
are applicable only to the class of cases with which the decision deal and do not in any
way militate against the general proposition herein asserted. Those which relate to
election contest are based upon the principle that those proceedings, are special in their
nature and must be strictly followed, a material departure from the statute resulting a
loss, or in an excess of jurisdiction. The cases relating to receivers are based, in a
measure, upon the principle the appointment of a receiver being governed by the
statute; and in part upon the theory that the appointment of a receiver in an improper
case is in substance a bankruptcy proceeding, the taking of which is expressly prohibited
by law. The case relative to the allowance of alimony pendente lite when the answer
denies the marriage is more difficult to distinguish. The reasons in support of the
doctrine laid down in that case are given the opinion in full and they seem to place the
particular case to which they refer in a class by itself.
It is not alight things that the lawmakers have abolished writs of error and with
them certiorari and prohibition, in so far as they were methods by which the mere errors
of an inferior curt could be corrected. As instruments to that end they no longer exist.
Their place is no taken by the appeal. So long as the inferior court retains jurisdiction its
errors can be corrected only by that method. The office of the writ of certiorari has been
reduced to the correction of defects ofjurisdiction solely and cannot legally be used for
any other purpose. It is truly an extra ordinary remedy and in this jurisdiction, its use is

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restricted to truly extraordinary cases cases in which the action of the inferior court is
wholly void, where any further steps in the case would result in a waste of time and
money and would produce no result whatever; where the parties, or their privies, would
be utterly deceived; where a final judgment or decree would be nought but a snare and
a delusion, deciding nothing, protecting nobody, a juridical pretension, a recorded
falsehood, a standing menace. It is only to avoid such result as these that a writ
of certiorari is issuable; and even here an appeal will lie if the aggrieved party prefers to
prosecute it.

A full and thorough examination of all the decided cases in this court touching the
question of certiorari and prohibition fully supports the proposition already stated that,
where a Court of First Instance has jurisdiction of the subject matter and of the person,
its decision of any question pertaining to the cause, however, erroneous, cannot be
reviewed by certiorari, but must be corrected by appeal.
I see no reason to override the decision in Herrera vs. Barretto and Joaquin (supra).
Accordingly, I can do no better than to make the language of Justice Moreland my own.
applying these principles, it is self-evident that this court should no entertain the present
petition and should not grant the desired relief.

FISHER, J., dissenting:


I am in full accord with the view that the remedy of certiorari may be invoked in such
cases as this, but I am constrained to dissent from the opinion of the majority as regards
the meaning of the term implied contract.
Section 412 of the code of Civil Procedure in connection with section 424, authorizes the
preliminary attachment of the property of the defendant: "(1) In an action for the
recovery of money or damages on a cause of action arising upon contract, express or
implied, when the defendant is about to depart from the Philippine Islands, with intent
to defraud his creditors; (2) . . .; (3) . . .; (4) . . .; (5) When the defendant has removed
or disposed of his property, or is about to do so, with intent to defraud his creditors."
It is evident that the terms of paragraph five of the article cited are much broader than
those of the first paragraph. The fifth paragraph is not limited to action arising from
contract, but is by its terms applicable to actions brought for the purpose of enforcing
extra-contractual rights as well as contract rights. The limitation upon cases falling under
paragraph five is to be found, not in the character of the obligation for the enforcement
for which the action is brought, but in the terms of article 4265, which requires that the
affidavit show that the amount due the plaintiff . . . is as much as the sum for which the
order is granted.
That is to say, when application is made for a preliminary attachment upon the ground
that the plaintiff is about to dispose of his property with intent to defraud his creditors
thus bringing the case within the terms of paragraph five of the section it is not
necessary to show that the obligation in suit is contractual in its origin, but is sufficient
to show that the breach of the obligation, as shown by the facts stated in the complaint
and affidavit, imposes upon the defendant the obligation to pay a specific and definite
sum. For example, if it is alleged in the complaint that the defendant by negligence, has
caused the destruction by fire of a building belonging to plaintiff, and that such building
was worth a certain sum of money, these facts would show a definite basis upon which
to authorize the granting of the writ. But if it were averred that the defendant has
published a libel concerning the plaintiff, to the injury of his feeling and reputation, there
is no definite basis upon which to grant an attachment, because the amount of the
damage suffered, being necessarily uncertain and indeterminate, cannot be ascertained
definitely until the trail has been completed.
But it appears that the legislature although it has seen fit to authorize a preliminary
attachment in aid of action of all kinds when the defendant is concealing his property

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with intent to defraud his creditors, has provided is about to depart from the country
with intent to defraud his creditos, the writ will issue only when the action in aid of
which it is sought arises from a contract express or implied. If an attachment were
permitted upon facts bringing the application with the first paragraph of the section in
support of action of any kind, whether the obligation sued upon is contractual or not,
then paragraph five would by construction be made absolutely identical with paragraph
one, and this would be in effect equivalent to the complete eliminated of the last two
lines of the first paragraph. It is a rule of statutory construction that effect should be
given to all parts of the statue, if possible. I can see no reason why the legislature
should have limited cases falling within the firs paragraph to action arising from contract
and have refrained from imposing this limitation with respect to cases falling within the
terms of the fifth paragraph, but this should have no effect upon us in applying the law.
Whether there be a good reason for it or not the distinction exists.
Had the phrase express or implied not been used to qualify contract, there would be no
doubt whatever with regard to the meaning of the word. In the Spanish Civil law
contract are always consensual, and it would be impossible to define as a contract the
judicial relation existing between a person who has lost money at gaming and the
winner of such money, simple because the law imposes upon the winner the obligation
of making restitution. An obligation of this kind, far from being consensual in its origin,
arises against the will of the debtor. To call such a relation acontract is, from the
standpoint of the civil law, a contradiction in terms.
But is said that as the phase express or implied has been used to qualify the word
contract and these words are found in statue which speaks the language of the common
law, this implies the introduction into our law of the concept of the implied contract of
the English common-law, a concept which embraces a certain class of obligation
originating ex lege, which have been arbitrarily classified as contracts, so that they might
be enforced by one of the formal actions of the common law which legal tradition and
practice has reserved for the enforcement of contract. I cannot concur in this reasoning.
I believe that when a technical juridical term of substantive law is used in the adjective
law of these islands, we should seek its meaning in our own substantive law rather than
in the law of America or of England. The code of Civil Procedure was not enacted to
establish rules of substantive law, but upon the assumption of the existence of these
rules.
In the case of Cayce vs. Curtis (Dallam's Decisions Texas Reports, 403), it appears that
the legislature, at a time when that State still retained to a large extent the Spanish
substantive civil law, enacted a statue in which the word bonds is used. In litigation
involving the construction of that statute, one of the parties contended that the work
bond should be given the technical meaning which it had in the English Common Law.
The court rejected this contention saying
On the first point it is urged by counsel for the appellant that the word bond used in the
statute being a common law term, we must refer to the common law for its legal
signification; and that by that law no instrument is a bond which is not under seal. The
truth of the proposition that sealing is an absolute requisite to the validity of a bond at
common law is readily admitted; but the applicability of that rule of the case under
consideration is not perceived. This bond was taken at a time when the common law
afforded no rule of decision or practice in this country, and consequently that law cannot
be legitimately resorted to, even for the purpose for which it is invoked by the counsel
for the appellant, unless it be shown that the civil law had not term of similar import for
we regard it as a correct rule of construction, that where technical terms are used in a
statute they are to be referred for their signification to terms f similar import in the
system of laws which prevails in the country where the statues is passed, and not to

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another system which is entirely foreign t the whole system of municipal regulations by
which that country is governed. (Martin's Reports, vol. 3, 185; 7 Martin [N. S.], 162.)"
Consequently, I believe that in the interpretation of phase "contract, express or implied,"
we should apply the rules of our own substantive law. The phrase in itself offers no
difficulty. The concept of the contract, under the Civil Code, as a legal relation
of exclusively consensual origin, offers no difficulty. Nor is any difficulty encountered in
the gramatical sense of the words express and "implied". Express according to the New
International Dictionary is that which is directly and distinctly stated; expressed, not
merely implied or left to interference. Therefore, a contract entered into by means of
letters, in which the offer and the acceptance have been manifested by appropriate
words, would be an "express contract." The word "imply" according to the same
dictionary, is to involve in substance or essence, or by fair inference, or by construction
of law, when not expressly stated in words or signs; to contain by implication to include
virtually.
Therefore, if I enter a tailor shop and order a suit of clothes, although nothing is said
regarding payment, it is an inference, both logical and legal, from my act that is my
intention to pay the reasonable value of the garments. The contract is implied, therefore,
is that in which the consent of the parties is implied.
Manresa, commenting upon article 1262 of the Civil Code, says:
The essence of consent is the agreement of the parties concerning that which is to
constitute the contract . . . . The forms of this agreement may vary according to whether
it is expressed verbally or in writing, by words or by acts. Leaving the other differences
for consideration hereafter, we will only refer now to those which exist
between express consent and implied consent . . . . It is unquestionable that
implied consent manifested by act or conduct, produces a contract. . . .
If it were necessary to have recourse to the English common law for the purpose of
ascertaining the meaning of the phrase under consideration, we could find many
decisions which gave it the same meaning as that for which I contend.
An implied contract is where one party receives benefits from another party, under such
circumstances that the law presume a promise on the part of the party benefited to pay
a reasonable price for the same. (Jones vs. Tucker [Del.], 84 Atlantic, 1012.)
It is true that English courts have extended the concept of the term contract to include
certain obligations arising ex lege without consent, express or implied. True contracts
created by implied consent are designated in the English common law as contracts
implied in the fact, while the so-called contracts in which the consent is a fiction of law
are called contracts implied by law. But is evident that the latter are not real contracts.
They have been called contract arbitrarily by the courts of England, and those of the
Untied States in which the English common law is in force, in order that certain actions
arising ex lege may be enforced by the action of assumpsit. In the rigid formulism of the
English common law the substantive right had to be accommodated to the form of
action. As is stated in the monograph on the action of assumpsit in Ruling Case Law.
(volume 2, 743)
In theory it wan action to recover for the nonperformance f simple contracts, and the
formula and proceedings were constructed and carried on accordingly. . . . From the
reign of Elizabeth this action has been extended to almost every case where an
obligation arises from natural reason, . . . and it is now maintained in many cases which
its principles do not comprehend and where fictions and intendments are resorted to, to
fit the actual cause of action to the theory of the remedy. It is thus sanctioned where
there has been no . . . real contract, but where some duty is deemed sufficient to justify
the court in imputing the promise to perform its, and hence in bending the transaction to
the form of action.

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In the ancient English common law procedure the form of the action was regarded as
being much more important than the substantive right to be enforced. If no form of
action was found in which the facts would fit, so much the worse for the facts! to avoid
the injustices to which this condition of affairs gave rise, the judges invented those
fictions which permitted them to preserve the appearance of conservatism and change
the law without expressly admitting that they were doing so. The indispensable
averment, that they were doing so. The indispensable avernment without which the
action of assumpsit would not lie, was that the defendant promised to pay plaintiff the
amount demanded. (Sector vs. Holmes, 17 Vs., 566.) In true contracts, whether express
or implied, this promise in fact exists. In obligations arising ex lege there is no such
promise, and therefore the action of assumpsit could not be maintained, and therefore
the action of assumpsit could not be maintained, although by reason of its relative
simplicity it was one of the most favored forms of action. In order to permit the litigant
to make use of this form of action for the enforcement of ascertain classes of obligations
arising ex lege, the judges invented the fiction of the promise of the defendant to pay
the amount of the obligation, and as this fictitious promise give the appearance of
consensuality to the legal relations of the parties, the name of implied contract is given
to that class of extra-contractual obligations enforcible by the action of assumpsit.
Now, it is not be supposed that it was the intention of the Legislature in making use in
the first paragraph of article 412 of the phrase contract, express or implied to corrupt
the logical simplicity of our concept of obligations by importing into our law the
antiquated fictions of the mediaeval English common law. If one of the concepts of the
term "implied contract" in the English common law, namely, that in which consent is
presume from the conduct of the debtor, harmonizes with the concept of the contract in
our law, why should we reject that meaning and hold that the Legislature intended to
use this phrase in the foreign and illogical sense of a contract arising without consent?
This is a civil law country. why should we be compelled to study the fictions of the
ancient English common law, in order to be informed as to the meaning of the word
contract in the law of the Philippine Islands? Much more reasonable to my mind was the
conclusion of the Texas court, under similar circumstances, to the effect to be referred
for their signification to terms of similar import in the system of laws which prevails in
the country where the statue is passed." (Cayce vs.Curtis, supra.)
My conclusion is that the phase contract, express or implied should be interpreted in the
grammatical sense of the words and limited to true contracts, consensual obligations
arising fromconsent, whether expressed in words, writing or signs, or presumed from
conduct. As it is evident that the defendant in the present case never promised, him in
the gambling game in question, his obligation to restor the amounts won, imposed by
the law, is no contractual, but purely extra-contractual and therefore the action brought
not being one arising upon contract express or implied, the plaintiff is not entitled to a
preliminary attachment upon the averment that the defendant is about to depart from
the Philippine Islands with with intent t defraud his creditors, no averment being made in
the compliant or in the affidavit that the defendant has removed or disposed of his
property, or is about to depart with intent to defraud his creditors, so as to bring the
case within the terms of the fifth paragraph of section 412.
I am unable to agree with the contention of the application (Brief, p. 39) here that the
phase in question should be interpreted in such a way as to include all obligations,
whether arising from consent or ex lege, because that is equivalent to eliminating all
distinction between the first and the fifth paragraphs by practically striking out the first
two lines of paragraph one. The Legislature has deliberately established this distinction,
and while we may be unable to see any reason why it should have been made, it is our
duty to apply and interpret the law, and we are not authorized under the guise of
interpretation to virtually repeal part of the statute.

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Nor can it be said that the relations between the parties litigant constitute a quasicontract. In the first place, quasi- contracts are "lawful and purely voluntary acts by
which the authors thereof become obligated in favor of a third person. . . ." The act
which gave rise to the obligation ex legerelied upon by the plaintiff in the court below
is illicit an unlawful gambling game. In the second place, the first paragraph of
section 412 of the Code of Civil Procedure does not authorize an attachment in actions
arising out of quasi contracts, but only in actions arising out of contract, express or
implied.
I am therefore of the opinion that the court below was without jurisdiction to issue that
writ of attachment and that the writ should be declared null and void.
Avancea, J., concurs.

Pelayo vs Lauron
G.R. No. L-4089
January 12, 1909
ARTURO
vs.
MARCELO LAURON, ET AL., defendants-appellees.

J.H.
Junquera,
Filemon Sotto, for appellee.
TORRES, J.:

PELAYO, plaintiff-appellant,

for

appellant.

On the 23rd of November, 1906, Arturo Pelayo, a physician residing in Cebu, filed a
complaint against Marcelo Lauron and Juana Abella setting forth that on or about the
13th of October of said year, at night, the plaintiff was called to the house of the
defendants, situated in San Nicolas, and that upon arrival he was requested by them to
render medical assistance to their daughter-in-law who was about to give birth to a
child; that therefore, and after consultation with the attending physician, Dr. Escao, it
was found necessary, on account of the difficult birth, to remove the fetus by means of
forceps which operation was performed by the plaintiff, who also had to remove the
afterbirth, in which services he was occupied until the following morning, and that
afterwards, on the same day, he visited the patient several times; that the just and
equitable value of the services rendered by him was P500, which the defendants refuse
to pay without alleging any good reason therefor; that for said reason he prayed that
the judgment be entered in his favor as against the defendants, or any of them, for the
sum of P500 and costs, together with any other relief that might be deemed proper.
In answer to the complaint counsel for the defendants denied all of the allegation
therein contained and alleged as a special defense, that their daughter-in-law had died
in consequence of the said childbirth, and that when she was alive she lived with her
husband independently and in a separate house without any relation whatever with
them, and that, if on the day when she gave birth she was in the house of the
defendants, her stay their was accidental and due to fortuitous circumstances; therefore,
he prayed that the defendants be absolved of the complaint with costs against the
plaintiff.
The plaintiff demurred to the above answer, and the court below sustained the
demurrer, directing the defendants, on the 23rd of January, 1907, to amend their
answer. In compliance with this order the defendants presented, on the same date, their
amended answer, denying each and every one of the allegations contained in the
complaint, and requesting that the same be dismissed with costs.

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As a result of the evidence adduced by both parties, judgment was entered by the court
below on the 5th of April, 1907, whereby the defendants were absolved from the former
complaint, on account of the lack of sufficient evidence to establish a right of action
against the defendants, with costs against the plaintiff, who excepted to the said
judgment and in addition moved for a new trial on the ground that the judgment was
contrary to law; the motion was overruled and the plaintiff excepted and in due course
presented the corresponding bill of exceptions. The motion of the defendants requesting
that the declaration contained in the judgment that the defendants had demanded
therefrom, for the reason that, according to the evidence, no such request had been
made, was also denied, and to the decision the defendants excepted.
Assuming that it is a real fact of knowledge by the defendants that the plaintiff, by virtue
of having been sent for by the former, attended a physician and rendered professional
services to a daughter-in-law of the said defendants during a difficult and laborious
childbirth, in order to decide the claim of the said physician regarding the recovery of his
fees, it becomes necessary to decide who is bound to pay the bill, whether the father
and mother-in-law of the patient, or the husband of the latter.
According to article 1089 of the Civil Code, obligations are created by law, by contracts,
by quasi-contracts, and by illicit acts and omissions or by those in which any kind of fault
or negligence occurs.
Obligations arising from law are not presumed. Those expressly determined in the code
or in special laws, etc., are the only demandable ones. Obligations arising from contracts
have legal force between the contracting parties and must be fulfilled in accordance with
their stipulations. (Arts. 1090 and 1091.)
The rendering of medical assistance in case of illness is comprised among the mutual
obligations to which the spouses are bound by way of mutual support. (Arts. 142 and
143.)
If every obligation consists in giving, doing or not doing something (art. 1088), and
spouses are mutually bound to support each other, there can be no question but that,
when either of them by reason of illness should be in need of medical assistance, the
other is under the unavoidable obligation to furnish the necessary services of a physician
in order that health may be restored, and he or she may be freed from the sickness by
which life is jeopardized; the party bound to furnish such support is therefore liable for
all expenses, including the fees of the medical expert for his professional services. This
liability originates from the above-cited mutual obligation which the law has expressly
established between the married couple.
In the face of the above legal precepts it is unquestionable that the person bound to pay
the fees due to the plaintiff for the professional services that he rendered to the
daughter-in-law of the defendants during her childbirth, is the husband of the patient
and not her father and mother- in-law, the defendants herein. The fact that it was not
the husband who called the plaintiff and requested his assistance for his wife is no bar to
the fulfillment of the said obligation, as the defendants, in view of the imminent danger,
to which the life of the patient was at that moment exposed, considered that medical
assistance was urgently needed, and the obligation of the husband to furnish his wife in
the indispensable services of a physician at such critical moments is specially established
by the law, as has been seen, and compliance therewith is unavoidable; therefore, the
plaintiff, who believes that he is entitled to recover his fees, must direct his action
against the husband who is under obligation to furnish medical assistance to his lawful
wife in such an emergency.
From the foregoing it may readily be understood that it was improper to have brought
an action against the defendants simply because they were the parties who called the
plaintiff and requested him to assist the patient during her difficult confinement, and
also, possibly, because they were her father and mother-in-law and the sickness

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occurred in their house. The defendants were not, nor are they now, under any
obligation by virtue of any legal provision, to pay the fees claimed, nor in consequence
of any contract entered into between them and the plaintiff from which such obligation
might have arisen.
In applying the provisions of the Civil Code in an action for support, the supreme court
of Spain, while recognizing the validity and efficiency of a contract to furnish support
wherein a person bound himself to support another who was not his relative, established
the rule that the law does impose the obligation to pay for the support of a stranger, but
as the liability arose out of a contract, the stipulations of the agreement must be held.
(Decision of May 11, 1897.)
Within the meaning of the law, the father and mother-in-law are strangers with respect
to the obligation that devolves upon the husband to provide support, among which is the
furnishing of medical assistance to his wife at the time of her confinement; and, on the
other hand, it does not appear that a contract existed between the defendants and the
plaintiff physician, for which reason it is obvious that the former can not be compelled to
pay fees which they are under no liability to pay because it does not appear that they
consented to bind themselves.
The foregoing suffices to demonstrate that the first and second errors assigned to the
judgment below are unfounded, because, if the plaintiff has no right of action against
the defendants, it is needless to declare whether or not the use of forceps is a surgical
operation.
Therefore, in view of the consideration hereinbefore set forth, it is our opinion that the
judgment appealed from should be affirmed with the costs against the appellant. So
ordered.
Mapa
and
Tracey,
JJ., concur.
Arellano,
C.J.,
and
Carson,
J., concurs
in
the
result.
Willard, J., dissents.
Ayala Corp vs Rosa Diana Realty
G.R. No. 134284, December 1, 2000.
AYALA
CORPORATION, petitioner.
vs.
ROSA-DIANA REALTY AND DEVELOPMENT CORPORATION,respondent.
DE LEON, J.:
Before us is a petition for review on certiorari seeking the reversal of a decision rendered
by the Court of Appeals in C.A. G.R. C.V. No. 4598 entitled "Ayala Corporation vs. RosaDiana Realty and Development Corporation, dismissing Ayala Corporations petition for
lack of merit.
The facts of the case are not in dispute:
Petitioner Ayala Corporation (herein-after referred to as Ayala) was the registration
owner of a parcel of land located in Alfaro Street, Salcedo Village, Makati City with an
area of 840 square meters, more or less and covered by Transfer Certificate of Title
(TCT) No. 233435 of the Register of Deeds of Rizal.
On April 20, 1976, Ayala sold the lot to Manuel Sy married to Vilma Po and Sy Ka Kieng
married to Rosa Chan. The Deed of Sale executed between Ayala and the buyers
contained Special conditions of sale and Deed Restrictions. Among the Special Conditions
of Sale were.

a.
The vendee shall build on the lot and submit the building plans to the vendor
before September 30, 1976 for the latters approval.

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b.
The construction of the building shall start on or before March 30, 1977 and
completed before 1979. Before such completion, neither no the title released even if the
purchase price shall have been fully paid.
c.
There shall be no resale of the property.

The Deed Restrictions, on the other hand, contained the stipulation that the gross floor
area of the building to be constructed shall not be more than five (5) times the lot area
and the total height shall not exceed forty two (42) meters. The restrictions were to
expire in the year 2025.
Manuel Sy and Sy Ka Kieng failed to construct the building in violation of the Special
Conditions of Sale. Notwithstanding the violation, Manuel Sy anf Sy Ka Kieng, in April
1989, were able to sell the lot to respondent Rosa-Diana Realty and Development
Corporation (hereinafter referred to as Rosa-Diana) with Ayalas approval. As a
consideration for Ayala to release the Certificate of title of the subject property, Rosa
Diana, on July 27, 1989 executed an Undertaking, together with the buildings plans for a
condominium project, known as "The Peak", Ayala released title to the lot, thereby
enabling Rosa-Diana t register the deed of sale in its favor and obtain Certificate of Title
No. 165720 in its name. The title carried as encumbrances the special conditions of sale
and the deed restrictions. Rosa-Dianas building plans as approved by Ayala were
subject to strict compliance of cautionary notices appearing on the building plans and to
the restrictions encumbering the Lot regarding the use and occupancy of the same.
Thereafter, Rosa-Diana submitted to the building official of Makati another set of
building plans for "The Peak" which Rosa-Diana submitted to Ayala for approval
envisioned a 24-meter high, seven (7) storey condominium project with a gross floor
area of 3,968.56 square meters, the building plans which Rosa-Diana submitted to the
building official of Makati, contemplated a 91.65 meter high, 38 storey condominium
building with a gross floor area of 23,305.09 square meters.1 Needless to say, while the
first set of building plans complied with the deed restrictions, the latter set seceded the
same.
During the construction of Rosa-Dianas condominium project, Ayala filed an action with
the Regional Trial Court (RTC) of Makati, Branch 139 for specific performance, with
application for a writ of preliminary injunction/temporary restraining order against RosaDiana Realty seeking to compel the latter to comply with the contractual obligations
under the deed of restrictions annotated on its title as well as with the building plans it
submitted to the latter. In the alternative, Ayala prayed for rescission of the sale of the
subject lot to Rosa-Diana Realty.
The lower court denied Ayalas prayer for injunctive relief, thus enabling Rosa-Diana to
complete the construction of the building. Undeterred, Ayala tried to cause the
annotation of a notice of lis pendens on Rosa-Dianas title. The Register of Deeds of
Makati, however, refused registration of the notice of lis pendens on the ground that the
case pending before the trial court, being an action for specific performance and/or
rescission, is an action in personal which does not involve the title, use or possession of
the property.2 The Land Registration Authority (LRA) reversed the ruling of the Register
of Deeds saying that an action for specific performance or recession may be classified as
a proceeding of any kind in court directly affecting title to the land or the use or
occupation thereof for which a notice of lis pendens may be held proper.3 The decision
of the LRA, however, was overturned by the Court of Appeals in C.A. G.R. S.P. No.
29157. In G.R. No. 112774, We affirmed the ruling of the CA on February 16, 1994
saying.

We agree with respondent court that the notice of lis pendens is not proper in this
instance. The case before the trial court is a personal action since the cause of action
thereof arises primarily from the alleged violation of the Deed of Restriction.

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In the meantime, Ayala completed its presentation of evidence before the trial court.
Rosa-Diana filed a Demurrer to Evidence averring that Ayala failed to establish its right
to the relief sought in-as much as (a) Ayala admittedly does not enforce the deed
restrictions uniformly and strictly (b) Ayala has lost its right/power to enforce the
restrictions due to its own acts and omissions; and (c) the deed restrictions are no
longer valid and effective against lot buyers in Ayalas controlled subdivision.
The trial court sustained Rosa-Dianas Demurrer to Evidence saying that Ayala was guilty
of abandonment and/or estoppel due to its failure to enforce the terms of deed of
restrictions and special conditions of sale against Manuel Sy and Sy Ka Kieng. The trial
court noted that notwithstanding the violation of the special conditions of sale, Manuel
Sy and Sy Ka Kieng were able to transfer the title to Rosa-Diana with the approval of
Ayala. The trial court added that Ayalas failure to enforce the restrictions with respect to
Trafalgar, Shellhouse, Eurovilla, LPL Plaza, Parc Regent, LPL Mansion and Leronville,
which are located within Salcedo Village, shows that Ayala discriminated against those
which it wants to have the obligation enforced. The trial court then concluded that for
Ayala to discriminatory choose which obligor would be made to follow certain conditions
and which should not, did not seem fair and legal.
The Court of Appeals affirmed the ruling of the trial court saying that the "appeal is
seated by the doctrine of the law of the case in C.A. G.R. S.P. No. 29157" where it was
stated that
xxx Ayala is bared from enforcing the Deed of Restriction in question pursuant to the
doctrine of waiver and estoppel. Under the terms of the deed of sale, the vendee Sy Ka
Kieng assumed faithful compliance with the special conditions of sale and with the
Salcedo Village Deed of Restrictions. One of the conditions was that a building would be
constructed within one year. However, Sy Ka Kieng failed to construct the building as
required under the Deed Sale. Ayala did nothing to enforce the terms of the contract. In
fact, it even agreed to the sale of the lot by Sy Ka Kieng in favor of petitioner Realty in
1989 or thirteen (13) years later. We, therefore, see no justifiable reason for Ayala to
attempt to enforce the terms of the conditions of sale against the petitioner.
xxx
The Court of Appeals also cited C.A. G.R. C.V. No. 46488 entitled, "Ayala Corporation vs.
Ray Burton Development Corporation which relied on C.A. G.R. S.P. No. 29157 in ruling
that Ayala is barred from enforcing the deed restrictions in dispute. Upon a motion for
reconsideration filed by herein petitioner, the Court of Appeals clarified that "the citation
of the decision in Ayala Corporation vs. Ray Burton Development Corporation, Ca G.R.
C.V. No. 46488, February 27, 1996, was made not because said decision is res
judicata to the case at bar but rather because it is precedential under the doctrine
of stare decisis."
Upon denial of said motion for reconsideration, Ayala filed the present appeal.
Ayala contends that the pronouncement of the Court of Appeals in C.A. G.R. S.P. No.
29157 that it is estopped from enforcing the deed restrictions is merely obiter
dictainasmuch as the only issue raised in the aforesaid case was the propriety of a lis
pendens annotation on Rosa-Dianas certificate of title.
Ayala avers that Rosa-Diana presented no evidence whatsoever on Ayalas supposed
waiver or estoppel in C.A. G.R. S.P. No. 29157. Ayala likewise pointed out that at the
time C.A. G.R. S.P. No. 29157 was on appeal, the issues of the validity and continued
viability of the deed of restrictions and their enforceability by Ayala were joined and then
being tried before the trial court.
Petitioners assignment of errors in the present appeal may essentially be summarized as
follows:

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I.
The Court of Appeals acted in manner
not in accord with law and the applicable decisions of the Supreme Court in holding that
the doctrine of the law of the case, or stare decisis,operated to dismiss Ayalas appeal.
II.
The Court of Appeals erred as a matter
of law and departed from the accepted and usual course of judicial proceedings when it
failed to expressly pass upon the specific errors assigned in Ayalas appeal.
A discussion on the distinctions between law of the case, stare decisis and obiter dicta is
in order.
The doctrine of the law of the case has certain affinities with, but is clearly
distinguishable from, the doctrines of res judicata and stare decisis, principally on the
ground that the rule of the law of the case operates only in the particular case and only
as a rule of policy and not as one of law.4 At variance with the doctrine of stare decisis,
the ruling adhered to in the particular case under the doctrine of the law of the case
need not be followed as a precedent in subsequent litigation between other parties,
neither by the appellate court which made the decision followed on a subsequent appeal
in the same case, nor by any other court. The ruling covered by the doctrine of the law
of the case is adhered to in the single case where it arises, but is not carried into other
cases as a precedent.5 On the other hand, under the doctrine of stare decisis, once a
point of law has been established by the court, that point of law will, generally, be
followed by the same court and by all courts of lower rank in subsequent cases where
the same legal issue is raised.6 Stare decisis proceeds from the first principle of justice
that, absent powerful countervailing considerations, like cases ought to be decided
alike.7
The Court of Appeals, in ruling against petitioner Ayala Corporation stated that the
appeal is sealed by the doctrine of the law of the case, referring to G.R. No. 112774
entitled "Ayala Corporation, petitioner vs. Courts of Appeals, et al., respondents".The
Court of Appeals likewise made reference to C.A. G.R. C.V. No. 46488 entitled, "Ayala
Corporation vs. Ray Burton Development Corporation, Inc." in ruling against petitioner
saying that it is jurisprudentially under the doctrine of stare decisis.
It must be pointed out that the only issue that was raised before the Court of Appeals in
C.A. G.R. S.P. No. 29157 was whether or not the annotation of lis pendens is proper.
The Court of Appeals, in its decision, in fact stated "the principal issue to be resolved is:
whether or not an action for specific performance, or in the alternative, rescission of
deed of sale to enforce the deed of restrictions governing the use of property, is a real
or personal action, or one that affects title thereto and its use or occupation thereof.8
In the aforesaid decision, the Court of Appeals even justified the cancellation of the
notice of lis pendens on the ground that Ayala had ample protection should it succeed in
proving its allegations regarding the violation of the deed of restrictions,without unduly
curtailing the right of the petitioner to fully enjoy its property in the meantime that there
is as yet no decision by the trial court.9
From the foregoing, it is clear that the Court of Appeals was aware that the issue as to
whether petitioner is estopped from enforcing the deed of restrictions has yet to be
resolved by the trial court. Though it did make a pronouncement that the petitioner is
estopped from enforcing the deed of restrictions, it also mentioned at the same time
that this particular issue has yet to be resolved by the trial court. Notably, upon appeal
to this Court, We have affirmed the ruling of the Court of Appeals only as regards the
particular issue of the propriety of the cancellation of the notice of lis pendens.
We see no reason then, how the law of the case or stare decisis can be held to be
applicable in the case at bench. If at all, the pronouncement made by the Court of
Appeals that petitioner Ayala is barred from enforcing the deed of restrictions can only
be considered as obiter dicta. As earlier mentioned the only issue before the Court of

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55 | P a g e

Appeals at the time was the propriety of the annotation of the lis pendens. The
additional pronouncement of the Court of Appeals that Ayala is estopped from enforcing
the deed of restrictions even as it recognized that this said issue is being tried before the
trial court was not necessary to dispose of the issue as to the propriety of the annotation
of the lis pendens. A dictum is an opinion of a judge which does not embody the
resolution or determination of the court, and made without argument, or full
consideration of the point, not the proffered deliberate opinion of the judge himself.10 It
is not necessarily limited to issues essential to the decision but may also include
expressions of opinion which are not necessary to support the decision reached by the
court. Mere dicta are not binding under the doctrine of stare decisis11.
While the Court of Appeals did not err in ruling that the present petition is not barred by
C.A. G.R. C.V. No. 46488 entitled "Ayala Corporation vs. Ray Burton Development Inc."
under the doctrine of res judicata, neither, however, can the latter case be cited as
presidential under the doctrine of stare decisis. It must be pointed out that at the time
the assailed decision was rendered, C.A. G.R. C.V. No. 46488 was on appeal with this
Court. Significantly, in the decision. We have rendered in Ayala Corporation vs. Ray
Burton Development Corporation12 which became final and executory on July 5, 1999 we
have clearly stated that "An examination of the decision in the said Rosa-Diana case

reveals that the sole issue raised before the appellate court was the propriety of the lis
pendens annotation. However, the appellate court went beyond the sole issue and made
factual findings bereft of any basis in the record to inappropriately rule that AYALA is in
estoppel and has waived its right to enforce the subject restrictions. Such ruling was
immaterial to the annotation of the lis pendens. The finding of estoppel was thus
improper and made in excess of jurisdiction."

Coming now to the merits of the case, petitioner avers that the Court of Appeals
departed from the usual course of judicial proceedings when it failed to expressly pass
upon the specific errors assigned in its appeal. Petitioner reiterates its contention that
law and evidence do not support the trial courts findings that Ayala has waived its right
to enforce the deed of restrictions.
We find merit in the petition.
It is basic that findings of fact of the trial court and the Court of Appeals are conclusive
upon the Supreme Court when supported by substantial evidence.13 We are constrained,
however, to review the trial court' findings of fact, which the Court of Appeals chose not
to pass upon, in as much as there is ample evidence on record to show that certain facts
were overlooked which would affect the disposition of the case.
In its assailed decision of February 4, 1994, the trial court, ruled in favor of respondent
Rosa-Diana Realty on the ground that Ayala had not acted fairly when it did not institute
an action against the original vendees despite the latters violation of the Special
Conditions of Sale but chose instead to file an action against herein respondent RosaDiana. The trial court added that although the 38-storey building of Rosa-Diana is
beyond the total height restriction, it was not violative of the National Building Code.
According to the trial court the construction of the 38 storey building known as "The
Peak" has not been shown to have been prohibited by law and neither is it against public
policy.
It bears emphasis that as complainant, Ayala had the prerogative to initiate an action
against violators of the deed restrictions. That Rosa-Diana had acted in bad faith is
manifested by the fact that it submitted two sets of building plans, one which was in
conformity with the deed restrictions submitted to Ayala and MACEA, and the other,
which exceeded the height requirement in the deed restrictions to the Makati building
official for the purpose of procuring a building permit from the latter. Moreover, the
violation of the deed restrictions committed by respondent can hardly be denominated
as a minor violation. It should be pointed out that the original building plan which was

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submitted to and approved by petitioner Ayala Corporation, envisioned a twenty four


(24) meter high, seven (7) storey condominium whereas the respondents building plan
which was submitted to and approved by the building official of Makati is that of a thirty
eight (38) storey, 91.65 meters high, building. At present, the Peak building of
respondent which actually stands at 133.65 meters with a total gross floor area of
23,305.09 square meters, seriously violates the dimensions indicated in the building
plans submitted by Rosa-Diana to petitioner Ayala for approval in as much as the Peak
building exceeds the approved height limit by about 109 meters and the allowable gross
floor area under the applicable deed restrictions by about 19,105 square meters. Clearly,
there was a gross violation of the deed restrictions and evident bad faith by the
respondent.
It may not be amiss to mention that the deed restrictions were revised in a general
membership meeting of the association of lot owners in Makati Central Business District
the Makati Commercial Estate Association, Inc. (MACEA).
Whereby direct height restrictions were abolished in lieu of floor area limits. Respondent,
however, did not vote for the approval of this revision during the General Membership
meeting, which was held on July 11, 1990 at the Manila Polo Clud Pavilion, Makati, and
Metro Manila. Hence, respondent continues to be bound by the original deed restrictions
applicable to Lot 7, Block 1 and annotated on its title to said lot. In any event,
assuming arguendo that respondent voted for the approval of direct height restrictions in
lieu of floor area limits, the total floor area of its Peak building would still be violative of
the floor area limits to the extent of about 9,865 square meters of allowable floor area
under the MACEA revised restrictions.
Respondent Rosa-Diana avers that there is nothing illegal or unlawful in the building
plans which it used in the construction of the Peak condominium inasmuch as it bears
the imprimatur of the building official of Makati, who is tasked to determine whether
building and construction plans are in accordance with the law, notably, the National
Building Code."
Respondent Rosa-Diana, however, misses the point inasmuch as it has freely consented
to be bound by the deed restrictions when it entered into a contract of sale with spouses
Manuel Sy and Sy Ka Kieng. While respondent claims that it was under the impression
that Ayala was no longer enforcing the deed restrictions, the Undertaking14 it executed
belies this same claim. In said Undertaking, respondent agreed to construct and
complete the construction of the house on said lot as required under the special
condition of sale." Respondent likewise bound itself to abide and comply with x x x the

condition of the rescission of the scale by Ayala Land, Inc. on the grounds therein stated
x x x.

Contractual obligations between parties have the force of law between them and absent
any allegation that the same are contrary to law, morals, good custom, public order or
public policy, they must be complied with in good faith. Hence, Article 1159 of the New
Civil Code provides.
"Obligations arising from contracts have the force of law between the contracting parties

and should be complied with in good faith."

Respondent Rosa-Diana insists that the trial court had already ruled that the undertaking
executed by its Chairman and President cannot validly bind Rosa-Diana and hence, it
should not be held bound by the deed restrictions.
We agree with petitioner Ayalas observation that respondent Rosa-Dianas special and
affirmative defenses before the trial court never mentioned any allegation that its
president and chairman were not authorized to execute the Undertaking. It was
inappropriate therefore for the trial court to rule that in the absence of any authority or
confirmation from the Board of Directors of respondent Rosa-Diana, its Chairman and
the President cannot validly enter into an undertaking relative to the construction of the

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building on the lot within one year from July 27, 1989 and in accordance with the deed
restrictions, Curiously, while the trial court stated that it cannot be presumed that the
Chairman and the President can validly bind respondent Rosa-Diana to enter into the
aforesaid Undertaking in the absence of any authority or confirmation from the Board of
Directors, the trial court held that the ordinary presumption of regularity of business
transactions is applicable as regards the Deed of Sale which was executed by Manuel Sy
and Sy Ka Kieng and respondent Rosa-Diana. In the light of the fact that respondent
Rosa-Diana never alleged in its Answer that its president and chairman were not
authorized to execute the Undertaking, the aforesaid ruling of the trial court is without
factual and legal basis and suppressing to say the least.
The fact alone that respondent Rosa-Diana conveniently prepared two sets of building
plans with one set which fully conformed to the Deed Restrictions and another in gross
violation of the same should have cautioned the trial court to conclude that respondent
Rose-Diana was under the erroneous impression that the Deed Restrictions were no
longer enforceable and that it never intended to be bound by the Undertaking signed by
its President and Chairman. We reiterate that contractual obligations have the force of
law between parties and unless the same is contrary to public policy morals and good
customs, they must be complied by the parties in good faith.
Petitioners, in its Petition, prays that judgement be rendered:
a.
ordering Rosa-Diana Realty and Development Corporation to comply with its
contractual obligations in the construction of the Peak by removing, or closing down and
prohibiting Rosa-Diana from using, selling, leasing or otherwise disposing, of the
portions of areas thereof constructed beyond or in excess of the approved height, as
shown by the building plans submitted to, and approved by, Ayala, including any other
portion of the building constructed not in accordance with the said building plans, during
the effectivity of the Deed Restrictions;
b.
Alternatively, in the event specific performance has become impossible;
1.
ordering the cancellation and recession of the April 20, 1976 Deed of Sale by Ayala
in favor of the original vendees thereof as well as the subsequent Deed of Sale executed
by such original vendees in favor of Rosa-Diana, and ordering Rosa-Diana to return
Ayala Lot 7, Block 1 of Salcedo Village;
2.
ordering the cancellation of Transfer Certificate of Title No. 165720 (in the name
of Rosa-Diana) and directing the office of the Register of Deeds of Makati to issue a new
title over the lot in the name of Ayala; and
3.
Ordering Rosa-Diana to pay Ayala attorneys fees in the amount of P500, 000.00,
exemplary damages in the amount of P5, 000,000.00 and the costs of suit.
It must be noted that during the trial respondent Rosa-Diana was able to complete the
construction of The Peak as a building with a height of thirty-eight (38) floors or 133.65
meters. Having been completed for a number of years already, it would be reasonable to
assume that it is now fully tenanted. Consequently, the remedy of specific performance
by respondent is no longer feasible. However, neither can we grant petitioners prayer
for the cancellation and rescission of the April 20, 1976 Deed of Sale by petitioner Ayala
in favor of respondent Rosa-Diana inasmuch as the resale of the property by the original
vendees, spouses Manuel Sy and Ka Kieng to comply with their obligation to construct a
building within one year from April 20, 1976, has effectively waived its right to rescind
the sale of the subject lot to the original vendees.
Faced with the same question as to the proper remedy available to petitioner in the case
of "Ayala Corporation vs. Ray Burton Development Inc., a case which is on all fours
with the case at bench, we ruled therein that the party guilty of violating the deed
restrictions may only be held alternatively liable for substitute performance of its
obligation, that is, for the payment of damages. In the aforesaid case it was observed
that the Consolidated and Revised Deed Restrictions (CRDR) imposed development

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charges on constructions which exceed the estimated Gross Limits permitted under the
original Deed Restrictions but which are within the limits of the CRDRs.1wphi1.nt
The pertinent portion of the Deed of Restrictions reads:
3. DEVELOPMENT CAHRGE For building construction within the Gross Floor Area limits

defined under Paragraphs C-2.1 to C-2.4 above, but which will result in a Gross Floor
Area exceeding certain standards defined in Paragraphs C-3.1-C below, the OWNER shall
pay MACEA, prior to the construction of any new building a DEVELOPMENT CHARGE as a
contribution to a trust fund to be administered by MACEA. This trust fund shall be used
to improve facilities and utilities in Makati Central District.
3.1 The amount of the development charge that shall be due from the OWNER shall be
computed as follows:
DEVELOPMENT
CAHRGE = A x (B-C-D)
Where:
A is equal to the a Area Assessment which shall be set at Five Hundred Pesos
(P500.00) until December 31, 1990. Each January 1st thereafter, such amount shall
increase by ten percent (10%) over the immediately preceding year; provided that
beginning 1995 and at the end of every successive five-year period thereafter, the
increase in the Area Assessment shall be reviewed and adjusted by the VENDOR to
correspond to the accumulated increase in the construction cost index during the
immediately preceding five years as based on the weighted average of wholesale price
and wage indices of the National Census and Statistics Office and the Bureau of Labor
Statistics.
B Is equal to the Gross Floor Area of the completed or expanded building in square
meters.
C is equal to the estimated Gross Floor Area permitted under the original deed
restrictions, derived by multiplying the lot area by the effective original FAR shown below
for each location.
We then ruled in the aforesaid case that the development; charges are a fair measure of
compensatory damages which therein respondent Ray Burton Development Inc. is liable
to Ayala Corporation. The dispositive portion of the decision in the said case, which is
squarely applicable to the case at bar, reads as, follows:

WHEREFORE, premises considered, the assailed Decision of the Court of Appeals dated
February 27, 1996, in CA G.R. C.V. No. 46488, and its Resolution dated October 7, 1996
are hereby REVERSED and SET ASIDE, and in lieu thereof judgement is hereby rendered
finding that:
1.
The Deed Restrictions are valid and petitioner AYALA is not estopped from
enforcing them against lot owners who have not yet adopted the Consolidated and
Revised Deed Restrictions.
2.
Having admitted that the Consolidated and Revised Deed Restrictions are the
applicable Deed Restrictions to Ray Burton Development Corporation, RBDC should be,
and is bound by the same.
3.
Considering that Ray Burton Development Corporations Trafalgar plaza exceeds
the floor area limits of the Deed Restrictions, RBDC is hereby ordered to pay
development charges as computed under the provisions of the consolidated and Revised
Deed Restrictions currently in force.
4.
Ray Burton Development corporation is further ordered to pay AYALA exemplary
damages in the amount of P2, 500,000.00 attorneys fees in the amount of P250,000.00
SO ORDERED:

There is no reason why the same rule should not be followed in the case at bar, the
remedies of specific performance and/or rescission prayed for by petitioner no longer
being feasible. In accordance with the peculiar circumstances of the case at bar, the

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59 | P a g e

development charges would certainly be a fair measure of compensatory damages to


petitioner Ayala.
Exemplary damages in the sum of P2, 500,000.00 as prayed for by petitioner are also in
order inasmuch as respondent Rosa-Diana was in evident bad faith when it submitted a
set of building plans in conformity with the deed restrictions to petitioner Ayala for the
sole purpose of obtaining title to the property, but only to prepare and later on submit
another set of buildings plans which are in gross violation of the Deed Restrictions.
Petitioner Ayala is likewise entitled to an award of attorneys fees in the sum of P250,
000.00.
WHEREFORE, the assailed Decision of the Court of Appeals dated December 4, 1997 and
its Resolution dated June 19, 1998, C.A. G.R. C.V. No. 4598, are REVERSED and SET
ASIDE. In lieu thereof, judgement is rendered.
a.
orderings respondent Rosa-Diana Realty and Development Corporation to pay
development charges as computed under the provisions of the consolidated and Revised
Deed Restrictions currently in force; and
b.
ordering respondent Rosa-Diana Realty and Development Corporation to pay
petitioner Ayala Corporation exemplary damages in the sum of P2,500,00.00, attorneys
fees in the sum of P250,000.00 and the costs of the suit.
SO ORDERED.

Bellosillo, Mendoza, Quisumbing, and Buena, JJ., concur.


Bricktown

Development

vs

Amor

Tierra

Development

G.R. No. 112182 December 12, 1994


BRICKTOWN
DEVELOPMENT
CORP.
(its
new
corporate
name
MULTINATIONAL REALTY DEVELOPMENT CORPORATION) and MARIANO Z.
VERALDE, petitioners,
vs.
AMOR TIERRA DEVELOPMENT CORPORATION and the HON. COURT OF
APPEALS, respondents.

Tabaquero, Dela Torre, Simando & Associates for petitioners.


Robles, Ricafrente & Aguirre Law Firm for private respondent.

VITUG, J.:
A contract, once perfected, has the force of law between the parties with
which they are bound to comply in good faith and from which neither one
may renege without the consent of the other. The autonomy of contracts
allows the parties to establish such stipulations, clauses, terms and conditions
as they may deem appropriate provided only that they are not contrary to
law, morals, good customs, public order or public policy. The standard norm
in the performance of their respective covenants in the contract, as well as in
the exercise of their rights thereunder, is expressed in the cardinal principle
that the parties in that juridical relation must act with justice, honesty and
good faith.
These basic tenets, once again, take the lead in the instant controversy.
Private respondent reminds us that the factual findings of the trial court,
sustained by the Court of Appeals, should be considered binding on this Court
in this petition. We concede to this reminder since, indeed, there appears to
be no valid justification in the case at bench for us to take an exception from
the rule. We shall, therefore, momentarily paraphrase these findings.
On 31 March 1981, Bricktown Development Corporation (herein petitioner

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60 | P a g e

corporation), represented by its President and co-petitioner Mariano Z.


Velarde, executed two Contracts to Sell (Exhs. "A" and "B") in favor of Amor
Tierra Development Corporation (herein private respondent), represented in
these acts by its Vice-President, Moises G. Petilla, covering a total of 96
residential lots, situated at the Multinational Village Subdivision, La Huerta,
Paraaque, Metro Manila, with an aggregate area of 82,888 square meters.
The total price of P21,639,875.00 was stipulated to be paid by private
respondent in such amounts and maturity dates, as follows: P2,200,000.00
on 31 March 1981; P3,209,968.75 on 30 June 1981; P4,729,906.25 on 31
December 1981; and the balance of P11,500,000.00 to be paid by means of
an assumption by private respondent of petitioner corporation's mortgage
liability to the Philippine Savings Bank or, alternatively, to be made payable in
cash. On even date, 31 March 1981, the parties executed a Supplemental
Agreement (Exh. "C"), providing that private respondent would additionally
pay to petitioner corporation the amounts of P55,364.68, or 21% interest on
the balance of downpayment for the period from 31 March to 30 June 1981,
and of P390,369.37 representing interest paid by petitioner corporation to the
Philippine Savings Bank in updating the bank loan for the period from 01
February to 31 March 1981.
Private respondent was only able to pay petitioner corporation the sum of
P1,334,443.21 (Exhs. "A" to "K"). In the meanwhile, however, the parties
continued to negotiate for a possible modification of their agreement,
although nothing conclusive would appear to have ultimately been arrived at.
Finally, on 12 October 1981, petitioner corporation, through its legal counsel,
sent private respondent a "Notice of Cancellation of Contract" (Exh. "D") on
account of the latter's continued failure to pay the installment due 30 June
1981 and the interest on the unpaid balance of the stipulated initial payment.
Petitioner corporation advised private respondent, however, that it (private
respondent) still had the right to pay its arrearages within 30 days from
receipt of the notice "otherwise the actual cancellation of the contract
(would) take place."
Several months later, or on 26 September 1983, private respondent, through
counsel, demanded (Exh. "E") the refund of private respondent's various
payments to petitioner corporation, allegedly "amounting to P2,455,497.71,"
with interest within fifteen days from receipt of said letter, or, in lieu of a
cash payment, to assign to private respondent an equivalent number of
unencumbered lots at the same price fixed in the contracts. The demand, not
having been heeded, private respondent commenced, on 18 November 1983,
its action with the court a quo. 1
Following the reception of evidence, the trial court rendered its decision, the
dispositive portion of which read:
In view of all the foregoing, judgment is hereby rendered as follows:
1. Declaring the Contracts to Sell and the Supplemental Agreement (Exhibits
"A", "B" and "C") rescinded;
2. Ordering the [petitioner] corporation, Bricktown Development Corporation,
also known as Multinational Realty Development Corporation, to return to the
[private respondent] the amount of One Million Three Hundred Thirty Four
Thousand Four Hundred Forty-Three Pesos and Twenty-One Centavos
(P1,334,443.21) with interest at the rate of Twelve (12%) percent per
annum, starting November 18, 1983, the date when the complaint was filed,
until the amount is fully paid;
3. Ordering the [petitioner] corporation to pay the [private respondent] the

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61 | P a g e

amount of Twenty-five Thousand (P25,000.00) Pesos, representing attorney's


fees;
4. Dismissing [petitioner's] counterclaim for lack of merit; and
5. With costs against the [petitioner] corporation.
SO ORDERED. 2
On appeal, the appellate court affirmed in toto the trial court's findings and
judgment.
In their instant petition, petitioners contend that the Court of Appeals has
erred in ruling that
(1) By petitioners' acts, conduct and representation, they themselves delayed
or prevented the performance of the contracts to sell and the supplemental
agreement and were thus estopped from cancelling the same.
(2) Petitioners were no justified in resolving the contracts to sell and the
supplemental agreement.
(3) The cancellation of the contract required a positive act on the part of
petitioners giving private respondent the sixty (60) day grace period provided
in the contracts to sell; and
(4) In not holding that the forfeiture of the P1,378,197.48 was warranted
under the liquidated damages provisions of the contracts to sell and the
supplemental agreement and was not iniquitous nor unconscionable.
The core issues would really come down to (a) whether or not the contracts
to sell were validly rescinded or cancelled by petitioner corporation and, in
the affirmative, (b) whether or not the amounts already remitted by private
respondent under said contracts were rightly forfeited by petitioner
corporation.
Admittedly, the terms of payment agreed upon by the parties were not met
by private respondent. Of a total selling price of P21,639,875.00, private
respondent was only able to remit the sum of P1,334,443.21 which was even
short of the stipulated initial payment of P2,200,000.00. No additional
payments, it would seem, were made. A notice of cancellation was ultimately
made months after the lapse of the contracted grace period. Paragraph 15 of
the Contracts to Sell provided thusly:
15. Should the PURCHASER fail to pay when due any of the installments
mentioned in stipulation No. 1 above, the OWNER shall grant the purchaser a
sixty (60)-day grace period within which to pay the amount/s due, and
should the PURCHASER still fail to pay the due amount/s within the 60-day
grace period, the PURCHASER shall have the right to ex-parte cancel or
rescind this contract, provided, however, that the actual cancellation or
rescission shall take effect only after the lapse of thirty (30) days from the
date of receipt by the PURCHASER of the notice of cancellation of this
contract or the demand for its rescission by a notarial act, and thereafter, the
OWNER shall have the right to resell the lot/s subject hereof to another buyer
and all payments made, together with all improvements introduced on the
aforementioned lot/s shall be forfeited in favor of the OWNER as liquidated
damages, and in this connection, the PURCHASER obligates itself to
peacefully vacate the aforesaid lot/s without necessity of notice or demand
by the OWNER. 3
A grace period is a right, not an obligation, of the debtor. When
unconditionally conferred, such as in this case, the grace period is effective
without further need of demand either calling for the payment of the
obligation or for honoring the right. The grace period must not be likened to
an obligation, the non-payment of which, under Article 1169 of the Civil

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62 | P a g e

Code, would generally still require judicial or extrajudicial demand before


"default" can be said to arise. 4
Verily, in the case at bench, the sixty-day grace period under the terms of the
contracts to sell became ipso facto operative from the moment the due
payments were not met at their stated maturities. On this score, the
provisions of Article 1169 of the Civil Code would find no relevance
whatsoever.
The cancellation of the contracts to sell by petitioner corporation accords with
the contractual covenants of the parties, and such cancellation must be
respected. It may be noteworthy to add that in a contract to sell, the
non-payment of the purchase price (which is normally the condition for the
final sale) can prevent the obligation to convey title from acquiring any
obligatory force (Roque vs. Lapuz, 96 SCRA 741; Agustin vs. Court of
Appeals, 186 SCRA 375).
The forfeiture of the payments thus far remitted under the cancelled
contracts in question, given the factual findings of both the trial court and the
appellate court, must be viewed differently. While clearly insufficient to justify
a foreclosure of the right of petitioner corporation to rescind or cancel its
contracts with private respondent, the series of events and circumstances
described by said courts to have prevailed in the interim between the parties,
however, warrant some favorable consideration by this Court.
Petitioners do not deny the fact that there has indeed been a constant
dialogue between the parties during the period of their juridical relation.
Concededly, the negotiations that they have pursued strictly did not result in
the novation, either extinctive or modificatory, of the contracts to sell;
nevertheless, this Court is unable to completely disregard the following
findings of both the trial court and the appellate court. Said the trial court:
It has been duly established through the testimony of plaintiff's witnesses
Marcosa Sanchez and Vicente Casas that there were negotiations to enter
into another agreement between the parties, after March 31, 1981. The first
negotiation took place before June 30, 1981, when Moises Petilla and Renato
Dragon, Vice-President and president, respectively, of the plaintiff
corporation, together with Marcosa Sanchez, went to the office of the
defendant corporation and made some proposals to the latter, thru its
president, the defendant Mariano Velarde. They told the defendant Velarde of
the plaintiff's request for the division of the lots to be purchased into smaller
lots and the building of town houses or smaller houses therein as these kinds
of houses can be sold easily than big ones. Velarde replied that subdivision
owners would not consent to the building of small houses. He, however,
made two counter-proposals, to wit: that the defendant corporation would
assign to the plaintiff a number of lots corresponding to the amounts the
latter had already paid, or that the defendant corporation may sell the
corporation itself, together with the Multinational Village Subdivision, and its
other properties, to the plaintiff and the latter's sister companies engaged in
the real estate business. The negotiations between the parties went on for
sometime but nothing definite was accomplished. 5
For its part, the Court of Appeals observed:
We agree with the court a quo that there is, therefore, reasonable ground to
believe that because of the negotiations between the parties, coupled with
the fact that the plaintiff never took actual possession of the properties and
the defendants did not also dispose of the same during the pendency of said
negotiations, the plaintiff was led to believe that the parties may ultimately

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63 | P a g e

enter into another agreement in place of the "contracts to sell." There was,
evidently, no malice or bad faith on the part of the plaintiff in suspending
payments. On the contrary, the defendants not only contributed, but had
consented to the delay or suspension of payments. They did not give the
plaintiff a categorical answer that their counter-proposals will not
materialize. 6
In fine, while we must conclude that petitioner corporation still acted within
its legal right to declare the contracts to sell rescinded or cancelled,
considering, nevertheless, the peculiar circumstances found to be extant by
the trial court, confirmed by the Court of Appeals, it would be
unconscionable, in our view, to likewise sanction the forfeiture by petitioner
corporation of payments made to it by private respondent. Indeed, in the
opening statement of this ponencia, we have intimated that the relationship
between parties in any contract must always be characterized and
punctuated by good faith and fair dealing. Judging from what the courts
below have said, petitioners did fall well behind that standard. We do not find
it equitable, however, to adjudge any interest payment by petitioners on the
amount to be thus refunded, computed from judicial demand, for, indeed,
private respondent should not be allowed to totally free itself from its own
breach.
WHEREFORE, the appealed decision is AFFIRMED insofar as it declares valid
the cancellation of the contracts in question but MODIFIED by ordering the
refund by petitioner corporation of P1,334,443.21 with 12% interest per
annum to commence only, however, from the date of finality of this decision
until such refund is effected. No costs.
SO ORDERED.

Bidin, Romero and Melo, JJ., concur.


Feliciano, J., is on leave.
Pilipinas Hino Vs CA

[G.R. No. 126570. August 18, 2000]


PILIPINAS HINO, INC., petitioner, vs. COURT OF APPEALS, FERNANDO V. REYES,
PONCIANO REYES, and TERESITA R. TAN, respondents.
DECISION
KAPUNAN, J.:
This petition for review on certiorari seeks to reverse and set aside the decision, dated
September 26, 1996, of the Court of Appeals in CA-G.R. CV NO. 48612 which
affirmed in toto the decision of the Regional Trial Court of Pasig, Branch 152 in Civil Case
No. 61266.
The antecedents of the case as found by the trial court and adopted by the appellate
court in its decision, are as follows:
This is an action for Sum of Money and Damages filed by Pilipinas Hino, Inc.,
thereinafter referred to as the plaintiff against Fernando V. Reyes, Ponciano V. Reyes,
and Teresita R. Tan, hereinafter referred to as the defendants.
The plaintiff is a corporation duly organized and existing under the laws of the
Philippines, with office address at PMI Building, EDSA, Mandaluyong, Metro
Manila: whereas, the defendants Fernando V. D. Reyes and Ponciano V. D. Reyes are
both of legal age, with residential or business address at 57 Xavierville Avenue, Loyola
Heights, Quezon City, Metro Manila, while defendant Teresita R. Tan is likewise of legal
age, with postal address at 39 Zalameda St., Corinthian Garden, Quezon City.

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64 | P a g e

The material allegations in plaintiff's Complaint are as follows:


ON THE FIRST CAUSE OF ACTION
That on or about 15 August 1989, a contract of lease was entered into between herein
parties, under which the defendants, as lessors, leased real property located at Bigaa,
Balagtas, Bulacan, to herein plaintiff for a term of two (2) years, from 16 August 1989 to
15 August 1991.
Pursuant to the contract of lease, plaintiff-lessee deposited with the defendants-lessors
the amount of Four Hundred Thousand (P400,000.00) Pesos to answer for repairs and
damages that may be caused by the lessee on the leased premises during the period of
the lease.
After the expiration of the lease contract, the plaintiff and defendants made a joint
inspection of the premises to determine the extent of the damages thereon, both agreed
that the cost of repairs would amount to P60,000.00 and that the amount of
P340,000.00 shall then be returned by the defendants to plaintiff. However, defendants
returned to plaintiff only the amount of P200,000.00, still having a balance
of P140,000.00.
Notwithstanding repeated demands, defendants unjustifiably refused to return the
balance of P140,000.00 holding that the true and actual damage on the lease premises
amounted to P298,738.90.
ON THE SECOND CAUSE OF ACTION
On August 10, 1990, plaintiff and defendants entered into a contract to sell denominated
as a Memorandum of Agreement to sell whereby the latter agreed to sell to the former
the leased property subject of this suit in the amount of P45,611,000.00.
The aforesaid Memorandum of Agreement to sell granted the owner (defendants) the
option to rescind the same upon failure of the buyer (plaintiff) to pay any of the first six
(6) installments with the corresponding obligation to return to the buyer any amount
paid by the buyer in excess of the downpayment as stated in paragraphs 7 and 9 of the
Memorandum of Agreement.
Pursuant to said Memorandum of Agreement, plaintiff remitted on August 10, 1990 to
the defendants the amount of P1,811,000.00 as downpayment. Subsequently, plaintiff
paid the first and second installments in the amount of P1,800,000.00 and
P5,250,000.00, respectively, thereby making the total amount paid by the plaintiff to the
defendants, on top of the downpayment, P7,050,000.00.
Unfortunately, plaintiff failed to pay the 3rd installment and subsequent
installments: and thereupon, defendants decided to, and in fact did, in a letter dated 20
November 1990, rescinded and terminated the contract and promised to return to the
plaintiff all the amounts paid in excess of the downpayment after deducting the interest
due from 3rd to 6th installments, inclusive.
Thus, from the amount of P7,050,000.00 due to be returned to the plaintiff, defendants
deducted P924,000.00 as interest and P220,000.00 as rent for the period from 15
February to 15 March 1991, thereby returning to the plaintiff the amount of
P5,906,000.00 only, as acknowledged by plaintiff in the letter dated 4 April 1991.
xxx
In their Answer, defendants interposed the following defenses, to wit:
ON THE FIRST CAUSE OF ACTION
There is absolutely no evidence of any agreement allegedly arrived at between plaintiff
and defendants upon which plaintiff can anchor its first cause of action.
Plaintiff avers that an estimate of P60,000.00 cost of repairs was agreed upon by the
parties after a joint inspection of the premises, to which defendant categorically asserted
that there was no such agreement arrived at, nor even an estimated amount was agreed
upon by the parties. No less than plaintiff's witness Atty. Yumang testified that there
was no such agreement.

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65 | P a g e

It was Atty. Yumang who, by himself and without the approval of the Board came up
with an amount of P60,000.00, which was turned down by the defendants as they were
incompetent to determine the actual cost of the repairs.
Granting that there was an agreement entered into by Atty. Yumang with the
defendants during the first inspection and thereafter as to the amount of damages, this
agreement, at that time, would not have been binding on the plaintiff-corporation as
Atty. Yumang was never authorized by the plaintiff-corporation at that time to enter into
any settlement with the defendants.
Aside from Atty. Yumang, Mr. Rene C. Sangalang was also presented by the plaintiff. He
testified that sometime in March 1991, Plaintiff (Pilhino) was moving out and he was
requested to inspect the premises. In the same vein, there is nothing in the testimony
to show that, at the time of the inspection or anytime thereafter, he was empowered or
authorized by the plaintiff-corporation to settle any transaction with defendants. He
merely prepared the cost of estimate on the repairs to be done and he forwarded it to
Mr. Arsenio Paez, the General Manager of the plaintiff, who in turn allegedly sent it to
the defendants. Unfortunately, however, said estimate never reached the hands of the
defendants.
Plaintiff's other witness, Mr. Arsenio Paez, testified that there were two (2) inspections
made on the premises and he categorically testified that he was present only in the
second inspection. He also affirmed that the 'estimated' amount of P60,000.00 was
allegedly arrived at by the parties and that plaintiff agreed that such amount should be
allegedly retained by the defendants. However, nobody among the defendants agreed
to the amount of P60,000.00. Indeed, this non-acceptance was corroborated by Mrs.
Teresita Tan when she testified that she rejected the offer because it was not
enough. Thus, there was no such agreement to speak of.
xxx
ON THE SECOND CAUSE OF ACTION
The defendants are entitled to the retention of the amount of P924,000.00 as payment
of interest stipulated in the contract.
The second cause of action pertains to the Memorandum of Agreement to sell entered
into by the parties. It is stated in paragraph 6 that an interest equivalent to three (3%)
percent per thirty days period shall be imposed on any installment due but not paid for
the duration of the delay. Paragraph 7 of the same documents also deserves a second
look.
Since plaintiff failed to pay the third and subsequent installments, defendants' right to
the 3% interest, therefore, readily accrued and became demandable at the time of the
non-payment. The grace period granted to the plaintiff likewise lapsed. Consequently,
the defendants decided to, and in fact did in a letter dated 20 November 1990,
terminate the contract to sell. The defendants as agreed upon returned to the plaintiff
the amount of P5,906,000.00 representing the amount due to the plaintiff as
reimbursement of the installments for the 1st and 2nd installments. Considering that the
plaintiff has failed to pay the installments due on time, the interest in the amount of
P924,000.00 was charged against the plaintiff (which interest, in turn, represents the
unproductive use of the money which should have been made by the defendants had
the payment been made on time). The amount of P220,000.00 was likewise deducted by
the defendants representing rentals for the period. Thus, only the amount of
P5,906,000.00 was rightfully returned by the defendants.
Plaintiff's request to return the amount of P924,000.00 to which defendants however
refused for reasons that the said amount represents interest due and demandable from
the plaintiff when it incurred the delay which by virtue of legal compensation, was set-off
by operation of law and the said amount was rightfully deducted from the amount of
P7,050,000.00.

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66 | P a g e

On 24 August 1994, the trial court rendered a decision ruling in favor of respondents
Reyes, et al. As to the first cause of action, the trial court found that petitioner was
unable to prove its claim that based on the joint ocular inspection of the leased
premises, the parties jointly agreed that petitioner would only be held liable in the
amount of P60,000.00 representing damages to the leased property. As to the second
cause of action, the trial court ruled that based on the contract to sell, petitioner is liable
for interest arising from its failure to pay the third and subsequent installments, hence
respondents were correct in withholding the amount representing these interest. The
dispositive portion of the trial courts decision reads:
WHEREFORE, judgment is hereby rendered:
1. Under the first cause of action, the plaintiff has no cause of action to demand the
return of the balance of the deposits in the amount of P140,000.00 pesos:
2. Under the second cause of action, the defendants have the legal right to
demand accrued interest on the unpaid installments in the amount of P924,000.00
pesos.
Defendants counterclaim has not been substantiated.
SO ORDERED.
Not satisfied with the trial courts decision, petitioner Pilipinas Hino elevated the case to
the Court of Appeals. The appellate court, however, sustained the findings of the trial
court:
WHEREFORE, the appealed decision of the lower court in Civil Case No. 61266 is hereby
AFFIRMED by this Court, with costs against plaintiff-appellant.[1][4]
Petitioner thus seeks recourse to this Court and raises the following assignment of
errors:
I
THE LOWER COURT ERRED IN NO[T] FINDING THAT THERE IS NO EVIDENCE ON
RECORD SUFFICIENT TO SHOW ANY RIGHT FROM DEFENDANT-APPELLANT TO REFUSE
THE RETURN OF THE BALANCE OF THE DEPOSITS AMOUNTING TO P140,000.00.
II
THE LOWER COURT ERRED IN NOT FINDING THAT THE ALLEGED DAMAGES ON THE
PREMISES WERE CAUSED BY WEAR AND TEAR AND NOT DUE TO THE FAULT OF THE
PLAINTIFF-APPELLANT.
III
THE LOWER COURT IN NOT FINDING THAT THE ESTIMATE OF REPAIRS MADE ON THE
PREMISES WERE SPECULATIVE.
IV
THE LOWER COURT ERRED IN NOT FINDING THAT THE MEMORANDUM OF
AGREEMENT (EXH. C) CLEARLY [U]NEQUIVOCABLY PROVIDES THAT PLAINTIFFAPPELLANT IS ENTITLED TO THE RETURN OF THE AMOUNT PAID IN EXCESS OF THE
DOWNPAYMENT AFTER THE DEFENDANT-APPELLEE EXERCISE[D] THE RIGHT TO
FORFEIT THE SAID DOWNPAYMENT.
V
THE LOWER COURT ERRED IN NOT FINDING THAT THE PROVISION FOUND IN
PARAGRAPH 6 OF THE MEMORANDUM OF AGREEMENT GRANTING THE DEFENDANTAPPELLEE THE RIGHT TO IMPOSE INTEREST IN CASE OF DELAY APPLIES ONLY IN
CASE PAYMENTS AS STIPULATED IN THE AGREEMENT ARE CONTINUED BUT NOT
WHEN THE AGREEMENT ITSELF IS RESCINDED.
VI
THE LOWER COURT ERRED IN NOT FINDING THAT INTEREST CANNOT BE
RECOVERABLE WHEN THE PRINCIPAL AMOUNT IS IN ITSELF NOT RECOVERABLE.
VII

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67 | P a g e

THE LOWER COURT ERRED IN NOT AWARDING THE SUM CLAIMED UNDER THE
COMPLAINT INCLUDING EXEMPLARY DAMAGES AND ATTORNEYS FEES.
The petition is partly meritorious.
The issues raised in this petition may be summed as follows:
(1)
Should the petitioner be held liable for alleged damages to the leased
property in an amount of more than P60,000.00?
(2)
Does private respondent have the right to retain the P924,000.00
representing the interest due for the unpaid installments, despite the fact that the
respondent has exercised his option to rescind the memorandum of agreement?
The first issue is undoubtedly a question of fact. Time and again, this Court has
pronounced that we do not review findings of fact by the Court of Appeals unless
findings of the appellate court are mistaken, absurd, speculative, conjectural, conflicting,
tainted with grave abuse of discretion, or contrary to the findings culled by the trial court
of origin. In the case bar, no such reason exist to warrant a review of the appellate
courts factual findings.
In support of his allegation, petitioner quotes the following portion of the decision of the
trial court:
A cursory perusal of the expediente as well as the documentary evidence presented by
the parties, it appears therefrom that there was no exact figures agreed upon by the
parties. Plaintiffs claimed that the amount of P60,000.00 was agreed by them which
defendants vehemently denied as there was no such agreement.
The estimate and appraisals made by the contractors hired by the defendants entailed
major repairs and renovation which was not fair, just and equitable on the part of the
plaintiff. Some of the damages pointed to by the defendants were caused by wear and
tear and thus not chargeable against the plaintiff (par. 7 of the lease contract).
Defendants should have secured first the consent/approval of the plaintiff whether they
are amenable or not to the amount charged, before engaging the services of Eduardo
Pascual (contractor). Otherwise, such actuations will cast doubt on the part of the
payor.
The reception of defendants evidence together with the testimonies of their witnesses
has indubitably proved that the amounts offered by the plaintiff was not enough to cover
the expenses of the repairs. In fact, after deducting the amount claimed by the plaintiff
from the total expenses incurred, the plaintiff is still obliged to pay the defendants the
amount of P184,732.50. However, since the defendants were also in bad faith in dealing
with the plaintiff, the difference of P184,732.50 may be dispensed with, and considering
the short span of the leased period, it is impossible that all the damages found on the
premises are attributable solely on the part of the plaintiff.
Based on the underlined portions above quoted, petitioner asserts that the trial court
found the following facts: (1) that the appraisals made entailed major repairs and
renovations which are not fair to be charged to petitioner; (2) there was bad faith on the
part of private respondents in presenting appraisal for repairs; and (3) the alleged
damage to the premises are not attributable to the petitioner.
Petitioner merely highlights certain portions of the trial courts decision, which should not
however be read in isolation with the rest of the decision. As mentioned earlier, the crux
of petitioners first cause of action is whether or not the damage to the leased property
amounted to more than P60,000.00. We find that the trial court correctly ruled that
petitioner failed to prove his first cause of action:
Upon consideration of all the allegations, issues and documentary [evidence] adduced by
the parties, the court, finds and so holds, that plaintiff has failed to establish by
preponderance of evidence that there is an agreement reached between the parties as
to the exact amount of the repairs to be done, so that it is barred to demand the return
of the balance of the deposits.

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We agree with the findings of the appellate court that such matter is factual in nature,
and that the findings of the trial court as to petitioners first cause of action are ably
supported by the records on hand:
The issue on plaintiff-appellants first cause of action is evidentiary as to whether or not
defendants-appellees refusal to return the amount of P140,000.00 is valid and in
accordance with the lease agreement. It is the contention of the plaintiff-appellant that
after the joint inspection was conducted on the subject premises it had been agreed
upon by the parties that the amount of damages for the repairs of the premises shall be
P60,000.00. Thus, plaintiff-appellant claims that the amount of P340,000.00 in excess of
the cost of the repairs should have been returned by the defendants-appellees to
plaintiff-appellant. Upon the other hand, defendants-appellees vehemently denied that
there was such an agreement of P60,000.00 as having been agreed upon by them.
We find defendants-appellees contention to be in accordance with the evidence in this
case. Plaintiff-appellants witness, Atty. Mauro Yumang when asked by the lower court
on the matter, testified that plaintiff and defendants did not come to an agreement as to
the exact cost of the repairs of the subject premises (pp. 8-9 tsn, April 22,
1993). Neither was it shown in the testimony of plaintiff-appellants other witness,
Arsenio Paez that there was an agreement between the parties on the said
P60,000.00. Thus, plaintiff-appellant, failed to prove its claim of P60,000.00 as costs of
repair with solid and convincing proof. It is, of course, a basic rule in evidence that a
party must prove his own affirmative allegations. In civil cases, the burden of proof is
on the plaintiff to establish his case by a preponderance of evidence. In affirmative
averment the onus probandi falls on pleaders shoulder.
In contrast, respondents were able to prove by clear and convincing evidence their
counterclaim that the damage to the leased property amounted to P384,732.50. This
petitioner failed to dispute:
Upon the other hand, defendants-appellees were able to prove that the amount of
P60,000.00 offered by the plaintiff-appellant was not sufficient to answer the damages
of the subject premises. It is highly improbable to believe that the alleged amount of
P60,000.00 can cover the entire expenses of the repairs considering the actual area of
the premises to be repaired was quite big with the building having broken door knobs,
windows, jalousies, toilet bowls, walls, flooring, among the other things, not to mention
the labor. As matter of fact, defendants-appellees witness Mr. Eduardo Pascual, an
experienced contractor, categorically testified that defendants-appellees expenses for
the repairs of the subject premises amounted to not only in P60,000.00 bit
P384,732.50. Thus, plaintiff-appellees even owed defendants-appellees the amount of
P184,732.50.
We take note of petitioners assertion that the trial court found the respondent to be in
bad faith in having the damage estimated without securing the consent of the petitioner
and that not all the damages are attributable to the petitioner. However, these findings
do not negate the correctness of the award by the trial court. Recognizing these facts,
the trial court did not hold the petitioner liable for the whole amount of P384,732.50, but
only for the amount of P200,000.00:
The defendants are likewise barred from demanding for the excess of the repairs as it
was due (sic) without the knowledge of the plaintiff.
Anent the petitioners second cause of action, we find the same to be meritorious. In
order to verify the soundness of petitioners claim, an examination of the pertinent
paragraphs of the memorandum of agreement between the parties is in order:
6. Where the buyer fails to deliver the check(s) due under paragraph 2 thereof, an
interest equivalent to three percent (3%) per thirty (30) days period shall be imposed on
the amount due for the duration of the delay.

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7. The owners shall have the right to terminate or rescind this agreement, and to forfeit
the downpayment where the buyer fails to pay any of the first six (6) installments. The
buyer shall have a grace period of sixty (60) days within which to pay the installments
and the interest due for the reason of the delay.
The owners may thereafter forfeit the downpayment and sell the property to other
parties without need of notice to the buyer, the owner shall not have other obligations to
the buyer relating to the property subject of the right of first refusal by the buyer, as
contained in the lease contract between the owner and the buyers.
x x x
9. When the owners exercise their option to forfeit the downpayment, they shall return
to the buyer any amount paid by the buyer in excess of the downpayment with no
obligation to pay interest thereon. This shall be done within a period not later than one
hundred twenty days (120) days from notice by the owner to the buyer of the forfeiture
of the downpayment.
In holding the petitioner liable for the amount of P924,000.00 representing interest
earned for the unpaid installments, the trial court rationalized:
For failure of the plaintiff to pay the installments on September 14, 1990, September 28,
1990, October 15, 1990 and October 30, 1990, the defendants were consequently
deprived of the productive use of the supposed money they should have received as per
contract. The Agreement of both parties leaves no room for further explanation. It
categorically states that in case of default, the defendant will charge interest for the
delay.
It is worthy of note to believe that when the defendants terminated their contract to sell
on November 20, 1990, the plaintiff was already in default from the September 14, 1990
to October 30, 1990. Thus, defendants have a valid reason to retain the amount of
P924,000.00 representing interest due of the unpaid installments.
As expressly provided for in Article 1159 of the Civil Code:
Obligation arising from contracts have the force of law between the contracting parties
and should be complied with in good faith.
The appellate court in upholding the above findings of the trial court pronounced, thus:
Clearly plaintiff-appellant should be held liable to pay for the corresponding three (3%)
percent interest on the unpaid installments in accordance with the above provisions of
paragraph 6 of the Memorandum of Agreement. Noteworthy to stress in this case that
plaintiff-appellant admits its failure to pay the installments. x x x.
We disagree.
In justifying the withholding of the amount of P924,000.00 representing interest due of
the unpaid installments, both the trial and the appellate court relied on paragraph 6 of
the memorandum of agreement entered into by the parties. Surprisingly, both courts
failed to consider paragraph 9 contained in the same memorandum of agreement. Said
paragraph provides in very clear terms that when the owners exercise their option to
forfeit the downpayment, they shall return to the buyer any amount paid by the buyer in
excess of the downpayment with no obligation to pay interest thereon. This should
include all amounts paid, including interest. Had it been the intention of the parties to
exclude interest from the amount to be returned to the buyer in the event that the
owner exercises its option to terminate or rescind the agreement, then such should have
been stated in categorical terms. We find no basis in the conclusion reached by the
lower courts that interest paid should not be returned to the buyer. It may be
conceded, as the trial court endeavored to rationalize, that for failure of the buyer to pay
the installments, private respondents were consequently deprived of the productive use
of the supposed money they should have received as per contract. However, the private
respondents withholding of the amount corresponding to the interest violated the
specific and clear stipulation in paragraph 9 of the memorandum of agreement that

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except for the downpayment, all amounts paid shall be returned to the buyer with no
obligation to pay interest thereon. The parties are bound by their agreement. Thus,
Article 1159 of the Civil Code expressly provides:
Obligation arising from contracts have the force of law between the contracting parties
and should be complied with in good faith.
Paragraph 9 of the memorandum of agreement between the parties, not being contrary
to law, morals, good customs, public policy, or public order has therefore the force of
law between the parties. Aside from equity considerations, the lower courts failed to
provide a basis for the retention by the respondent of the interest. Equity is applied only
in the absence of, and never against, statutory law or judicial rules of procedure.The
memorandum of agreement, being the law between the parties, must therefore, govern.
Both the private respondents and trial court quote our ruling in Luzon Brokerage
Company v. Maritime Building Inc.in order to justify retention of said interest:
The distinction between contracts of sale and contracts to sell with reserved title has
been recognized by this Court in repeated decisions upholding the power of promisors
under contracts to sell in case of failure of the other party to complete payment, to
extrajudicially terminate the operation of the contract, refuse conveyance and retain the
sums or installments already received, where such rights are expressly provided for, as
in the case at bar.
Sadly for private respondents, our ruling in the above case defeats rather than sustains
their claim. While this Court recognizes that in contracts to sell even if the contract is
terminated the seller can retain the sums already received or paid, such can be done
only if it is expressly provided for in the contract. Such proviso is not contained in the
memorandum of agreement, as what is merely provided for in paragraphs 7 and 9 is the
retention of the downpayment.
As regards the claim of exemplary damages and attorneys fees, petitioner fails to
present an iota of evidence why they are entitled to these awards. The petition before
this Court merely raises such assignment of error but does not even discuss the basis of
such claim.
WHEREFORE, the petition is hereby GIVEN DUE COURSE and the decision of the Court
of Appeals is MODIFIED in that private respondent is ordered to return to petitioner the
amount of P924,000.00 representing the accrued interest for the unpaid
installments. The decision appealed from is AFFIRMED in all other respects. However,
the pronouncement as to cost is hereby deleted.
SO ORDERED.
Davide, Jr., C.J., (Chairman), Puno, Pardo, and Ynares-Santiago, JJ., concur.

BPI

vs

Pineda

G.R. No. L-62441 December 14, 1987


BANK OF THE PHILIPPINE ISLANDS, as Successor to Peoples Bank and Trust
Company, petitioner,
vs.
BENJAMIN PINEDA, doing business under the name and style of PIONEER IRON
WORKS, respondent.
BIDIN, J.:

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This is a Petition for Review on certiorari, seeking the reversal of the Decision of the First
Division 1 of the Court of Appeals in CA- G.R. No. 66365-R entitled "Benjamin Pineda,
etc., plaintiff-appellee vs. Southern Industrial Projects Inc., Bacong Shipping Company,
S.A. Gacet Inc., Interocean Shipping Corporation and Peoples Bank and Trust Co.,
defendant-appellant, " affirming the decision of the trial court, the dispositive portion of
which reads:
Wherefore, the appealed decision being in accordance with the law and the evidence,
the same is hereby affirmed, with proportionate cost against appellant.
The facts of this case as found by the Court of Appeals are as follows:
Southern Industrial Project, Inc. (SIP for short) is a corporation the majority stockholder
of which is the Concon Family. Bacong Shipping Company, S.A. (Bacong, for short) is a
Panamanian corporation organized to operate vessels purchased by SIP under
Panamanian Flag and its president is Gregorio A. Concon.
SIP and/or Bacong purchased the vessels SS "Southern Comet," SS "Southern Express"
and SS "Southern Hope," thru financing furnished by defendant Peoples Bank and Trust
Company, now the Bank of the Philippine Islands. To secure the payment of whatever
amounts maybe disbursed for the aforesaid purpose, the said vessels were mortgaged to
Peoples Bank and Trust Company. For the operation of the said vessels, these were
placed under the booking agency of defendant Interocean Shipping Corporation, with
the undertaking that the freight revenues from their charter and operation shall be
deposited with the Trust Department of Peoples Bank and Trust Company and that
disbursements made therefrom shall be covered by vouchers bearing the approval of
SIP.
As Peoples Bank and Trust Company and SIP were not satisfied with the amount of
revenues being deposited with the said Bank, it being suggested that diversions thereof
were being made, Gregorio A. Concon of SIP and/or Bacong and Roman Azanza of
Peoples Bank and Trust Company, organized S.A. Gacet, Inc. to manage and supervise
the operation of the vessels with Ezekiel P. Toeg as the manager thereof. Accordingly,
on August 15, 1966, a Management Contract (Exh. A., Exh. 1-SIP and Exh. 3-Peoples
Bank) was entered into between SIP and GACET, Inc., placing the supervision and
management of the aforementioned vessels in the hands of GACET, Inc., which was to
run for a period of six (6) months, renewable at the will of the parties, without however,
terminating the booking agency of interocean Shipping Corporation.
The said Management Contract stipulates, among others, that
The agent GACET may not borrow money for the husbanding of vessels "without special
authority" from the appellant bank (5 [f])
All office records required as well as books of accounts" shall "be available for
inspection" by the appellant bank and "may at any time temporarily take possession of
such records and books to make a complete audit" (5 [h])
The appellant bank may-obtain copies of documents from any or all of GACET's booking
agents pertaining to transactions entered into by said booking agents" (5 (h)) [1]);
The appellant bank has the right "(t)o inquire and obtain information, by telephone, or
otherwise such data as the name of the shippers, nature of cargo, destination of cargo,
freight rates, etc. " (5 (h)) [2]); and,
The appellant bank has the right "(t)o check on remittances made by shipper to the
booking agent" etc. (5)[3]).
Likewise, under the terms of said Management Contract, the Peoples Bank and Trust
Company was designated as depository of all revenues coming from the operation of the
subject vessels thereby enabling it to control all expenses of GACET, Inc., since they win
all be drawn against said deposit.
During the period comprising March 16, 1967 and August 25, 1967, GACET and
Interocean in performing their obligations under said Management Contract, contracted

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the services of herein plaintiff-appellee, Benjamin Pineda doing business under the name
and style "Pioneer Iron Works," to carry out repairs, fabrication and installation of
necessary parts in said vessels in order to make them seaworthy and in good working
operation. Accordingly, repairs on the vessels were made. Labor and materials supplied
in connection therewith, amounted to P 84,522.70, P 18,141.75 of which was advanced
by Interocean, thereby leaving a balance of P 62,095.95. For this balance, Interocean
issued three checks (Exhibit I) and the third one for P 17,377.57 (Exh. J). When these
checks were however presented to the drawee, Peoples Bank and Trust Company, they
were dishonored as defendant Interocean stopped payment thereon (Exhs. H-2,I-2 & J2).
Meanwhile and by reason of the inability of SIP and/or Bacong to pay their mortgage
indebtedness which was past due since 1964, the mortgagee Peoples Bank and Trust
Company threatened to foreclose the mortgage on said vessels. In order to avoid the
inconvenience and expense of imminent foreclosure proceedings, SIP and/or Bacong
sold said vessels to Peoples Bank by way of dacion en pago. The sale is evidenced by
three (3) deeds of sale all dated January 19, 1968 (Exhs. C, D, & E). Immediately
preceding the execution of said deeds of sale, SIP, Bacong and Peoples Bank executed a
"Confirmation of Obligation" (Exh. "B") whereby SIP and Bacong (1) acknowledged being
indebted to defendant bank, the payment of which indebtedness was secured by chattel
mortgages on said vessels, (2) agreed to sell and convey to defendant bank the
aforementioned vessels by separate deed of sale for the total purchase price of P
3,038,000.00 to be applied as partial payment on account of their mortgage
indebtedness; and (3) expressly recognized that after such application, a substantial
balance will still remain unpaid and owing by SIP and Bacong which remaining balance
they have agreed to confirm and pay to the bank on demand with 12% interest per
annum. Likewise, listed in the "Confirmation of Obligation" were some of the accounts
acknowledged and confirmed by the parties to be outstanding at the time, in connection
with the subject vessels as followsa) Accrued Salaries and allotments........................ P180,687.04
b) National Shipyard ......................................................31,068.57
c) Pioneer Iron Works : ..................................................82,877.57
d) Pacific Engineering Corporation .............................152,094.85
e) Esso Standard Eastern Account ..........................1,693,913.25
f) Cost of bailing out of the vessels
in Japan crews, salaries, etc.................................... 328,692.50
TOTAL.................................................................. P 2,954 833,34
The Deed of "Confirmation of Obligation" also provides
That Southern and/or Bacong acknowledge that the total purchase price of "TSS
Southern Comet,
That Southern Hope" and "SS Southern Express" in the sum of THREE MILLION THIRTY
EIGHT THOUSAND PESOS (P 3,038,000.00), Philippine currency shall be applied on
account of their mortgage obligations, as they appear on the books of the BANK, and
whatever amount remains outstanding after application (or set off) is hereby
acknowledged to be owed to the BANK and shall be payable with interest at the rate of
12170 per annum." That part (sic) from the foregoing SOUTHERN and/or BACONG have
authorized the BANK to pay certain expenses, accounts of charges in connection with
the sold vessels, the principal items being those listed below." (These are the accounts
listed above). "It is agreed that this is not a final or complete listing and the above
expenses shall be subject to final adjustment after verification of the amounts actually
paid or advanced by the BANK under the said authority from SOUTHERN and/or
BACONG. It is further agreed that these expenses shall also be subject to the terms of
condition No. 1 above." (Those enclosed in parenthesis are supplied).

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On October 1, 1968, plaintiff instituted the present action (Civil Case No. 74379) before
the Court of First Instance of Manila, seeking to recover from SIP, GACET, Interocean
and the Peoples Bank and 'Trust Company the principal sum of P62,095.92 with interests
thereon from the respective dates of each repair order until the same is fully paid, which
amount was allegedly the total unpaid balance of the cost of repairs, fabrication and
installation of necessary parts carried out by the said plaintiff on the aforenamed
vessels.
Answering the complaint, defendants Peoples Bank and Trust Co., now Bank of P.I. and
Southern Industrial Projects, Inc. (SIP) alleged that the abovementioned claim is the
personal responsibility of Interocean Shipping Corporation and/or Gacet, Inc. and deny
liability thereof Defendant Bacong Shipping Company, S.A. (Bacong on its part denies
knowledge of the obligation claiming it did not have any transaction whatsoever with the
plaintiff while defendant Interocean Shipping Corporation and GACET, Inc. also deny
liability contending that the obligation being lien on the vessels upon which services and
repairs were made by the plaintiff, defendant Peoples Bank & Trust Co., now Bank of
P.I., being the ultimate owners thereof should be the one liable therefor.
After trial, the court a quo rendered judgment the dispositive portion of which reads as
follows
WHEREFORE, in view of the foregoing, judgment is hereby rendered ordering
defendants Southern Industrial Projects, Inc. and Peoples Bank and Trust Company, now
Bank of P.I., to pay plaintiff Benjamin Pineda doing business under the name and style
of Pioneer Iron Works, jointly and severally, the amount of P62,095.92, with legal rate of
interest thereon from the date of the filing of the complaint, attorney's fees in the
amount of P10,000.00, and the costs of the suit. The complaint is dismissed against
defendants Interocean Shipping Corporation and Gacet, Inc.
SO ORDERED.
From the foregoing decision, defendants Bank of P.I. and Southern Industrial Projects,
Inc. appealed to the Court of Appeals but the latter, finding the aforequoted decision to
be in accordance with law and the evidence, affirmed the same, Hence, this petition.
Petitioner raised the following assignment of errors:
I. The Intermediate Appellate Court erred in affirming the findings of the lower court
that petitioner, in purchasing the vessels, assumed the obligations of Southern Industrial
Projects, Inc. and/or Bacong Shipping Company.
II. The Intermediate Appellate Court erred in affirming the ruling of the lower court that
petitioner is liable to private respondent when the same was based on an erroneous
interpretation of the "confirmation of obligation" in relation to the deeds of sale of the
vessels.
III. The findings of the lower court as affirmed by the Intermediate Appellate Court that
private respondent had a valid and subsisting repairer's lien is contrary to law as well as
the rulings set forth by this Honorable Court.
IV. The Intermediate Appellate Court erred in not holding that the lower court has no
jurisdiction over the subject matter of the action or suit which seeks to enforce a
statutory lien under paragraph 5 of Article 2241 of the Civil Code of the Philippines.
As correctly pointed out by the Court of Appeals in its decision, the various assigned
errors boil down to the issue of who should be liable for the cost of repairs undertaken
on the subject vessels.
Petitioner raised the following questions: (1) whether the findings of the lower court are
supported by facts and evidence; and (2) whether or not petitioner is liable to
respondent on the basis of the "Confirmation of Obligation. "
The general rule is that findings of facts of the Court of Appeals are not subject to
review by the Supreme Court. (Alaras vs. Court of Appeals, 64 SCRA 671; Perido vs.
Perido, 13 SCRA 97: Mendoza vs. Court of Appeals, 84 SCRA 67; Manlapaz vs. Court of

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Appeals, 147 SCRA 236 [1987]; Baniqued vs. Court of Appeals, 127 SCRA 50 [1984];
Moran vs. Court of Appeals, 133 SCRA 88 [1984]; Collector of Customs vs. Court of
Appeals, 137 SCRA 3 [1985]; Espiritu vs. Court of Appeals, 137 SCRA 50 [1985]; Premier
Insurance & Surety Corp. vs. Intermediate Appellate Court, et al., 141 SCRA 423 [1986]:
Director of Lands vs. Funtillar, 142 SCRA 57 [1986]; Republic vs. Intermediate Appellate
Court, 144 SCRA 705 [1986]: subject to the following exceptions; (1) when the
conclusion is a finding grounded entirely on speculation, surmises or conjectures
(Joaquin vs. Navarro, 93 Phil. 257); (2) when the inference made is manifestly mistaken,
absurd or impossible (Luna vs. Linatok 74 Phil. 15); (3) where there is a grave abuse of
discretion (Buyco vs. People, 51 O.G. 2927); (4) when the judgment is based on a
misapprehension of facts (Cruz vs. Sosing, L-4875, November 27, 1953; (5) when the
findings of fact are conflicting (Casica vs. Villaseca, L-9590, April 30, 1957); and (6)
when the Court of Appeals, in making its findings, went beyond the issues of the case
and the same is contrary to the admissions of both appellant and appellee (Evangelista
vs. Alto Surety & Ins. Co., L-11139, April 23, 1958; Ramos vs. Pepsi Cola, L-22533,
February 9, 1967, 19 SCRA 289)." (cited in Manlapaz vs. Court of Appeals, 147 SCRA
236 [1987]; Tolentino vs. de Jesus, 56 SCRA 167 [1974]; Carolina Industries, Inc. vs.
CMS Stock Brokerage, Inc., et al., 97 SCRA 734 [1980]; Manero vs. Court of Appeals,
102 SCRA 317 [1981]; Moran, Jr. vs. Court of Appeals, supra Sacay vs. Sandiganbayan,
142 SCRA 593 [1983]; Director of Lands vs. Funtillar, et al., supra)
The petitioner argued that the findings of the lower court are contrary to, and are not
supported by the evidence.
There is no question that at the time subject obligation was incurred, the vessels were
owned by defendant Southern industrial Projects, Inc. although mortgaged to People's
Bank and Trust Company. Hence, the former as owner is liable for the costs of repairs
made on the vessels. On the other hand, Interocean Shipping Corporation and S.A.
Gacet undeniably mere agents of the owner, a disclosed principal, cannot be held liable
for repairs made on the vessels to keep them in good running condition in order to earn
revenue, there being no showing that said agents exceeded their authority.
Ultimately therefore, the issue which remains is, whether or not People's Bank, now
Bank of P.I. being the purchaser of said vessels, is jointly and severally liable for the
outstanding balance of said repairs, admittedly a lien on the properties in question.
It appears that Bank of P.I. seeks shelter in a deed of "Confirmation of Obligation"
entered into between buyer and seller before the execution of a deed of sale between
them. Buyer, Bank of P.I., maintains that it has the option of whether or not to pay the
obligations listed thereunder, one of which is the repairs undertaken by private
respondent, as inferred from the phrase that the owner of the vessels merely authorized
petitioner bank to pay certain expenses and charges in connection with said vessels. The
latter stressed the fact that nowhere in said deed was the bank placed under obligation
to pay any of the listed indebtedness of the owner.
The cardinal rule in the interpretation of contracts is to the effect that the intention of
the contracting parties should always prevail because their will has the force of law
between them (Kasilag vs. Rodriguez, et al., 69 Phil. 217 [1939]; Sec. 10, Rule 130 of
the New Rules of Court). Thus, in order to judge the intention of the contracting parties,
regard must be had principally to their acts both contemporaneous and subsequent to
the contract (Atlantic Gulf Co. vs. Insular Government, 10 Phil. 166 [1908]), "the
circumstances under which it was made, including the situation of the subject thereof
and of the parties to it, may be shown, so that the judge may be placed in the position
of those whose language he is to interpret." (Sec. 11, Rule 130 of the New Rules of
Court). It has been held that once this intention of the parties has been ascertained, it
becomes an integral part of the contract as though it has been originally expressed
therein in unequivocal terms (Nielson & Co., Inc. vs. Lepanto Consolidated Mining Co.,

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18 SCRA 1040 [19661). Likewise, well settled is the fact that in construing a writing
particularly a written agreement, the reason behind the circumstances surrounding its
execution are of paramount importance to place the interpreter in the situation of the
parties concerned at the time the writing was executed (Vicente Gotamco Hermanos vs.
Shotwell 38 SCRA 107 [1971]),
It is undisputed that S.A. Gacet, Inc., the managing corporation, is only a creation of
Gregorio A. Concon of Southern Industrial Projects, Inc. and of Roman Azanza of
People's Bank and Trust Company obviously for the protection of their respective
interests on the properties in question, after both expressed dissatisfaction with the
amount of revenue being deposited with the said bank which suggests that diversions
thereof were being made. Thus, although it was SIP and GACET which entered into the
Management Contract, it was expressly stipulated thereunder, among others, that
GACET may not borrow money for the husbanding of vessels without special authority
from the petitioner bank. In addition, all office records were required to be subject to
inspection and complete audit by the latter, including all remittances made by the
Shipper to the booking agent. Otherwise stated, petitioner was already in control of the
vessels as early as August 15, 1966, the date the Management Contract was signed
(Decision, CA G.R No. 66365-R), (Rollo, p. 28). In fact, the contract itself for the repairs
of the vessels which is now the bone of contention, was entered into by GACET and
INTEROCEAN with private respondent Benjamin Pineda with the approval of petitioner
Bank. This lends credence to the claim of Pineda that he was led to believe that he will
be paid the corresponding amount for the repairs, as in fact he was paid with checks
which were later dishonored.
The records show that SIP incurred debts by reason of these vessels not only here in the
Philippines but also in Japan, notably ESSO Standard Eastern which attached said vessels
in Japan. As admitted by Gregorio A. Concon, fourteen banks were after the assets of
the corporation. Under this distressed financial condition and with People's Bank also
threatening to foreclose the mortgages on these vessels, SIP decided to sell the vessels
to People's Bank (Record on Appeal, pp. 55-56). But a deed of "Confirmation of
Obligation" was first entered into between SIP and/or Bacong Shipping and People's
Bank, confirming and acknowledging the obligations outstanding at the time, among
which is the obligation to private respondent in the amount corresponding to the repairs
in question.
Petitioner however insists on its theory based on a separate interpretation of the deed of
"Confirmation of Obligation" that on the authority granted thereunder by the seller (the
previous owner), responsibility to pay the listed obligation was not compulsory or
mandatory (Record on Appeal, pp. 59- 60).
Other fundamental rules in the interpretation of contracts no less important than those
already indicated are to the effect that where the terms are doubtful, the 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 (Art. 1374, Civil Code), and if
some stipulation of any contract should admit of several meanings, it shall be
understood as having that import which is most adequate to render it effectual (Art.
1373, Civil Code) and the words which may have different significations shall be
understood in that which is most in keeping with the nature and object of the contract
(Art. 1375, Civil Code). The reason for these rules is that it must be presumed that the
parties had intended an effective act and not one that is impracticable or illusory
(Caguioa Comments and Cases on Civil Law, p. 592,1983 Ed.).
It will be observed that the deed of "Confirmation of Obligation" is but a part or a
corollary to the deeds of sale of the three vessels. In fact, specific reference thereto was
made by said deeds of sale as to the settlement of obligations, among which are the
repairs in question. Said provision in the deeds of sale reads:

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Any amount or amounts that the Bank has voluntarily paid and/or has been compelled to
pay, or hereafter will voluntarily and/or will be compelled to pay for any encumbrance,
claim, lien or particular average in order to save the vessel from any legal seizure or
suits by third parties, and for any repair, supplies, provisions, accrued salaries and
allotment of crew, cost of bailing out of the vessel, and any other expenses or accounts
of the said vessel, shall be for the account of Southern and/or Bacong in accordance
with their agreement preceding this conveyance executed on January 19, 1968 ...
It will be observed that the above stipulation interpreted together with the deed of
"Confirmation of Obligation" leaves no room for doubt that while the bank may indeed
pay certain obligations voluntarily or by choice, there are those that the Bank will be
compelled to pay to save the vessel from any legal seizure or suits by third parties. In
other words, the primary purpose of the contracts is the protection of the vessels.
Among them are liens on the same under which the obligation to private respondent
properly belongs.
However, petitioner contends that assuming that such obligations are liens on said
vessels, they are deemed to have been waived and discharged when respondent
released and delivered said vessels to GACET and/or Interocean which ordered said
repairs prior to their sale and conveyance to petitioner (Rollo, p. 117).
Such contention is untenable.
It will be recalled that private respondent was paid the sum of P18,141.75 and for the
balance of P62,095.95 Interocean issued three checks. Under the circumstances, private
respondent has no basis or necessity at that time to exercise his right of retention under
Art. 1731 of the Civil Code. The fact that later said checks were dishonored, as correctly
argued by private respondent, cannot give validity to petitioner's argument that the
former has waived or abandoned his liens on the vessels. To pursue such view would
put a premium on an act of deception which led private respondent to believe that he
will be fully paid. Furthermore, when the checks were dishonored, it was impossible for
private respondent to enforce his lien because the vessels were already in Japan, outside
the territorial jurisdiction of the Philippine courts (Brief for Plaintiff-Appellee, p. 19, Rollo,
p. 128).
In view of the foregoing facts, it was aptly stated by the trial court and affirmed by the
Court of Appeals that when the parties executed the deed of "Confirmation of
Obligation" they really intended to confirm and acknowledge the existing obligations for
the purpose of the buyer assuming liability therefor and charging them to the seller after
proper accounting, verification and set offs have been made. Indeed, there is merit in
the trial court's view that if there was no intention on the part of People's Bank (now
Bank of P.I., to assume responsibility y for these obligations at the time of the sale of
the si it vessels, there is no sense in executing said Deed of Confirmation together with
the deeds of sale and the stipulations thereunder would be pointless (Record on Appeal,
pp. 61-62, Annex "C", Rollo, P. 33).
Finally, it is indisputable that the repairs made on the vessels ultimately redounded to
the benefit of the new owner for without said repairs, those vessels would not be
seaworthy. Under Art. 2142 of the Civil Code, such acts "give rise to the juridical relation
of quasi-contract to the end that no one shall be unjustly enriched or benefited at the
expense of another."
WHEREFORE, the petition is Denied and the decision appealed from is hereby
AFFIRMED.
SO ORDERED.

Gutierrez, Jr., Feliciano and Cortes, JJ., concur.


Fernan, J., took no part.
State Investment vs CA

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G.R. No. 89767 February 19, 1992


STATE
INVESTMENT
HOUSE,
INC., petitioner,
vs.
COURT OF APPEALS, SECURITIES AND EXCHANGE COMMISSION, EDGAR OBLIMAR,
ABE ESTRADA and the 2,081 complainants-laborers in NLRC Case No. 9-3296-84
represented by FLORANTE M. YAMBOT,respondents.
G. R. No. 96056 February 19, 1992
THE GOVERNMENT OF THE REPUBLIC OF THE PHILIPPINES, represented by the ASSET
PRIVATIZATION
TRUST, petitioner,
vs.
HONORABLE COURT OF APPEALS, HON. PEDRO N. LAGGUI, in his capacity as Presiding
Judge of the Regional Trial Court, Branch 60, Makati, Metro Manila, BIENVENIDO
HERMOGENES and SILVINO SANTOS, in their respective capacities as Labor Arbiter and
Sheriff of the National Labor Relations Commission, ALFREDO ASIBAR, RICARDO
ZURITA, FELIXBERTO ABARQUEZ, RODRIGO CELSO, and the other 31 complainants in
NLRC Case No. NCR-9-3296-84, respondents.
G.R. No. 96437 February 19, 1992
PHOENIX IRON AND STEEL CORPORATION and WILFREDO LABAYEN, petitioners,
vs.
HON. COURT OF APPEALS, HON. EUTROPIO MIGRINO, in his capacity as the Presiding
Judge of the Regional Trial Court of Pasig, Branch 151, and ALFREDO
ASIBAR, respondents.

Jardeleza, Sobrevinas, Diaz, Hayudini & Bodegon for petitioner SIHI.


Florante M. Yambot for private respondents Laborers of Phil. Blooming Mills, Inc. and
Zurita, et al.
Jose C. Sison, Florello E. Azura and Jose M. Suratos, Jr. for petitioner in G.R. No. 96056.
Jaime T. Capoquian for private respondent Alfredo Asibar.
Balgos and Perez for petitioning intervenors in G.R. 96056.
Feria, Feria, Lugtu and La'O for petitioners-movants in G.R. 96437

GUTIERREZ, JR., J.:


These consolidated petitions involve properties formerly owned by the Philippine
Blooming Mills, Inc. (PBM) which is now under the rehabilitation and receivership of the
Securities and Exchange Commission (SEC. Case No. 2250, "In the matter of the
Petitioner for Suspension of Payments").
In G.R. No. 89767, the petitioner questions the decision of the Court of Appeals which
affirmed the validity of the Order dated May 26, 1989 issued by the Securities and
Exchange Commission (SEC) in SEC Case No. 2250 granting the respondents' motion for
the issuance of a break-open Order for the purpose of implementing the Certificate of
Sale of November 23, 1987 in NLRC Case No. 9-3296-84 covering certain PBM
properties, located at the PBM Compound in Balintawak, Quezon City which were earlier
sold at a public auction sale on the ground that the same properties already belonged to
the petitioner before the auction sale.
In G.R. No. 96056, the petitioner questions the decision of the Court of Appeals which
affirmed the earlier decision of the Regional Trial Court (RTC) of Makati, Branch 60
validating the auction sale of some PBM properties by respondent deputy sheriff Silvino
Santos of the Department of Labor and Employment (DOLE) on the ground that the
same properties already belonged to the government before the auction sale.
In G.R. No. 96437, the petitioner questions the decision and resolution of the Court of
Appeals which also affirmed an earlier order of the Regional Trial Court of Pasig, Metro
Manila, Branch 151. The Pasig RTC denied the petitioner's motion to dismiss a complaint

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(with application for a writ of preliminary attachment) seeking compliance with the
provision of a deed of sale, the subject matter of which are some properties of the PBM
bought by respondent Alfredo E. Asibar (also a respondent in G.R. No. 96056) as highest
bidder in an auction sale executed between Asibar as vendor and petitioner Phoenix Iron
and Steel Corporation (Piscor) as vendee on the ground that the complaint states no
cause of action.
In 1981, the PBM stopped operations due to business losses and financial reverses. On
April 1, 1982, the PBM filed with the SEC a petition seeking for a declaration of a state of
suspension of payments. On April 6, 1982, the SEC assumed jurisdiction over the
petition. On July 9, 1982, the SEC placed the PBM under rehabilitation receivership and
appointed rehabilitation receivers. The employees of PBM then filed a complaint for
illegal dismissal with money claims against PBM with the National Labor Relations
Commission (NLRC). Those who filed belonged to the rank-and-file and
managerial/technical employees identified and categorized by groups. Common claims of
the employees were unpaid benefits under Wage Order No. 1, 15th month-pay, money
value of unearned vacation and sick leaves and holiday pay. The case was docketed as
NCR Case No. 3-1250-83.
On December 28, 1983, Labor Arbiter Bienvenido Hermogenes rendered a decision in
favor of the employees. The employees were granted monetary benefits including
separation pay.
On appeal, the Labor Arbiter's decision was modified by the NLRC, to wit:
WHEREFORE, except for the modification dismissing the claim for separation pay for lack
of merit, the Decision appealed from is hereby AFFIRMED in all other respects. The
injunction issued on 15 November 1984 is lifted. (Rollo G.R. No. 79202, p. 18)
In G.R. No. 79202, we affirmed the NLRC decision in a resolution dated November 18,
1987. Thus, we dismissed the petition for certiorari filed by the employees questioning
the deletion of the award of separation pay resulting from serious losses by PBM.
In the meantime, the employees of PBM numbering 2,081 filed another complaint for
illegal dismissal and money claims with the NLRC. The case was docketed as NCR Case
No. 9-3296-84.
On May 28, 1987, Labor Arbiter Bienvenido V. Hermogenes rendered a decision in favor
of the employees including separation pay.
On appeal, the Labor Arbiter's decision was affirmed by the NLRC in a decision dated
November 9, 1987. The NLRC ordered the remand of the records to the Labor Arbiter for
the issuance of a writ of execution.
On November 13, 1987, the Labor Arbiter issued a writ of execution.
On November 17, 1987, Deputy Sheriff Silvino Santos of the NLRC issued a "Notice of
Levy and Sale of Personal Properties On Execution" and scheduled a public auction of
PBM properties to the highest bidder for cash on November 23, 1987.
On November 19, 1987, PBM filed with us a petition to review the decision of the NLRC
on the ground that the November 9, 1987 decision did not take into account the fact
that as found by this Court in G.R. No. 71318 the NLRC had already denied claims for
separation pay of the employees. In addition, the petitioner prayed for the issuance of a
temporary restraining order enjoining the scheduled sale of the properties. The petition
was docketed as G.R. No. 80580.
In a resolution dated December 1, 1987, G.R. Nos. 79202 and 80580 were consolidated.
On May 2, 1988, we issued a resolution in the consolidated petitions, to wit:
On November 18, 1987, the Court issued a resolution dismissing the petition in G.R. No.
79202 for lack of merit. A motion for reconsideration was denied with finality on January
27, 1988. This Court has stated that in various and more appropriate cases involving
consortiums of banks trying to recover even only a percentage of the loans extended to
Philippine Blooming Mills (PBM), it was determined that PBM not only incurred serious

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losses but was in desperate straits leading to its collapse. This is a finding which remains
beyond serious dispute and it is pointless for the petitioners to keep on reiterating the
same arguments on this issue in any motion for reconsideration in this or other petitions.
Any claims of laborers, including those enjoying preference over other credits, will have
to be submitted in the course of the bankruptcy, liquidation or rehabilitation
proceedings.
xxx xxx xxx
In G.R. No. 80580, the Solicitor General has taken sides with the petitioner and adopted
the petitioner's reply to the private respondents' comment. No explanation is given and
no substantial distinctions are cited to explain why the National Labor Relations
Commission should take an action in G.R. No. 80580 which is different from and conflicts
with its stand in G.R. No. 79202. This being the case, the Court reiterates its ruling in
G.R. No. 79202.
xxx xxx xxx
Considering the foregoing, the COURT RESOLVED to SET ASIDE the decision of the
National Labor Relations Commission dated November 9, 1987 in G.R. No. 80580 and to
permanently enjoin the sale of properties in NLRC Case No. NCR-9-3296-84 until after
the Securities and Exchange Commission in SEC Case No. 2250 has determined the
procedures for settling the many claims, including the money claims for workers and
employees, against the Philippine Blooming Mills Co. Inc. (Rollo G.R. No. 80580, pp.
309-310).
The petitioners filed separate motions for clarification of the resolution as regards the
portion that permanently enjoins the sale of properties of PBM until after the SEC has
determined the procedures for settling the various money claims against PBM.
It turned out that during the pendency of G.R. No. 80580, deputy sheriff Silvino Santos
pushed through with the scheduled auction sale of PBM properties on November 23,
1987 in NCR Case No. 9-3296-84 as a result of which a certificate of sale dated
November 23, 1987 was issued in favor of the highest bidder, Alfredo Asibar, the
respondent in G.R. Nos. 96056 and 96437. We did not issue the prayed for temporary
restraining order to enjoin the scheduled auction sale on November 23, 1987.
On November 21, 1988, we issued a resolution, the pertinent portion of which reads:
xxx xxx xxx
The respondents claim that the injunction should not cover properties already sold
before May 2, 1988 or more particularly the certificate of sale of November 23, 1987. On
the other hand, the petitioner states that the sale of properties in G.R. No. 71318 is not
the same as the sale of properties in the instant case.
The issues raised by the respondents call for ascertainment of facts. This Court is not a
trier of facts. The question of exactly what properties may no longer be included in the

liquidation proceedings but should be given to the workers pursuant to the decision of
the National Labor Relations Commission is, therefore, referred to the Securities and
Exchange Commission which is directed to hold hearings on the matter. This petition has

been decided. A motion for reconsideration has been denied with finality. Entry of
judgment has been effected. No further motions of the same nature as the one before
the Court will be entertained.
CONSIDERING THE FOREGOING, THE COURT RESOLVED to REFER the respondents'
motion for clarification to the Securities and Exchange Commission for resolution.
Counsel of the parties are warned to follow regular procedures regarding their respective
claims and not indiscriminately pass on to this Court questions which call for
determination or action by other agencies or Tribunals. (Rollo G.R. No. 96056, pp.
345-346, Emphasis supplied)
II
G.R. NO. 89767

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On July 20, 1983, the petitioner filed with the Regional Trial Court of Pasig a complaint
for foreclosure of mortgage with receivership against PBM, Four Seas Trading
Corporation (Four Seas) and Alfredo Ching. The case was docketed as C.C. No. 49997.
On August 29, 1986, the court rendered a partial summary judgment, the dispositive
portion of which read:
WHEREFORE, premises considered, this Court hereby resolves to GRANT plaintiff SIHI's
motion for Partial Summary Judgment dated January 15, 1986 and hereby orders
defendants Philippine Blooming Mills Co., Inc. and Alfredo Ching to pay plaintiff State
Investment House, Inc. jointly and severally their unpaid obligations in the undisputed
amount of P53,000,000.00 plus the stipulated attorney's fees in the amount equivalent
to 25% thereof, as well as the costs of suit; and in the event the said defendants are
unable to satisfy said judgment within the period prescribed by law, this Court hereby
orders plaintiff State Investment House, Inc., as the court-appointed receiver, to apply
the proceeds of the Receiver's sale of the mortgaged steel inventories, including any
earnings thereon, if any, in partial satisfaction of said judgment and the Branch Sheriff
of this Court is likewise ordered to sell at public auction the real properties mortgages
(Annexes "E", "E-1" to "E-9" and "F" and "F-1", Complaint) and that the proceeds
thereof be applied in satisfaction of said judgment and costs of suit, accordingly. (Rollo,
p. 5)
On October 5, 1987, the court issued an Order granting the petitioner's Motion to Order
Sale of Mortgaged Real Properties. Accordingly, Deputy Sheriff Mario J. Tamang sold at
public auction said mortgaged properties belonging to PBM and Four Seas. The highest
bidder was the petitioner as evidence by two (2) separate certificates of sale executed
by the sheriff in its favor on November 9, and 10, 1987, respectively.
In response to the notice of levy and sale of personal properties on execution issued by
Deputy Sheriff Silvino Santos in connection with the writ of execution in NCR Case No. 93296-84, setting for sale at public auction, among others, some properties of PBM
located at PBM Compound Balintawak, Quezon City, the petitioner filed in Civil Case No.
49997 a motion for issuance of a writ of preliminary injunction to restrain Silvino Santos
from selling at public auction the said properties. The petitioner contended that the said
properties are among the mortgaged properties of Four Seas which were sold to the
petitioner on November 9 and 10, 1987.
On November 20, 1987, the court issued an Order temporarily enjoining Silvino Santos
from selling at public auction the questioned properties. Despite this temporary
restraining order, Silvino Santos proceeded with the auction sale prompting the
petitioner to file a motion to cite the sheriff guilty of contempt of court and declaring null
and void the certificate of sale executed by him covering the properties located at PBM
compound in Balintawak, Quezon City. The lower court granted the motion.
Silvino Santos tried unsuccessfully to have the contempt order set aside in both the
Court of Appeals and this Court. The case docketed as G.R. No. 85242 will be discussed
later. Suffice it to say at this point that the Court dismissed the petition
forcertiorari questioning the affirmance by the Court of Appeals of the contempt Order
issued by the Regional Trial Court of Pasig.
As a result of our Resolution dated November 21, 1988 issued in G.R. Nos. 79202 and
80580 the private respondents filed an urgent motion with the SEC in SEC Case No.
2250 seeking clarification on the question of the scope of injunction referred to said
agency by the Court.
On February 9, 1989, the SEC issued an Order ruling that the said injunction "does not
cover properties already sold before May 2, 1988 or more particularly, the certificate of
sale on November 23, 1987 in NLRC Case No. NCR-9-3296-84" (p. 100, Rollo, G.R. No.
89767)

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On May 26, 1989, the SEC issued another Order granting the private respondent's
motion for the issuance of a break-open Order, the dispositive portion of which reads:
WHEREFORE, the Urgent Motion For The Issuance of a Break-Open Order dated April
12, 1989 should be, as it is hereby GRANTED, for the purpose of implementing and
carrying into effect the Certificate of Sale of November 23, 1987 in NLRC Case No. 93296-84 involving the properties subject-matter of such sale located at the PBM
Compound in Balintawak, Quezon City, and Manggahan, Pasig, Metro Manila (Rollo, p.
11)
The petitioner questioned the SEC Order by filing a petition for certiorari with the Court
of Appeals.
In a decision dated June 29, 1989, the appellate court denied due course and dismissed
the petition. A motion for reconsideration was denied.
Hence, this petition.
G.R. NO. 96056
One of the creditors of PBM was the Philippine National Bank (PNB). When PBM failed to
pay its obligations secured by mortgages, PNB extrajudicially foreclosed the real estate
mortgages executed in its favor. Thus, on November 2, 1983, the mortgaged properties
a) seven [7] registered lots in Rosario, Pasig, Metro Manila, and b) seven [7] buildings
and machineries and equipment, were publicly auctioned by the Sheriff and sold to PNB.
The lots were sold for P21,930,000.00 (Exhibits B, B-1, and B-2), the buildings for
P4,192,250.00 (Exhibits C and C-1), and the machineries and equipment (Exhibits A to
A-17), inclusive for P76,720,800.00 (Exhibit A).
In accordance with Administrative Order No. 14 implementing Proclamation No. 50 of
the President dated December 8, 1986 (Exhibit F-1-B), PNB transferred to the national
government through the Asset Privatization Trust (APT) the assets acquired from PBM as
evidenced by the deed of transfer dated June 5, 1987.
The APT in turn sold machineries and equipment for P45,000,000.00 to Phoenix Iron and
Steel Corporation and the others for P65 million to Killer Realty.
When respondent sheriff Silvino Santos issued the notice of levy and sale of the personal
properties of PBM, and scheduled the public auction sale on November 23, 1987 in NCR
Case No. 9-3296-84, the PNB filed with the NLRC a "NOTICE OF THIRD PARTY CLAIM"
on November 20, 1987 (Exhibit F-3).
As stated earlier, deputy sheriff Santos proceeded with the scheduled auction sale on
November 23, 1987. The highest bidder was respondent Asibar. His bid was
P5,950,000.00. On the same day, Santos issued the corresponding Certificate of Sale in
favor of Asibar.
On November 24, 1987, Labor Arbiter Hermogenes issued a "break open" order,
ordering the "Sheriff assigned in the case and his assistance (sic)" to gain access to the
place (PBM Compound). Between November 24 and November 28, 1987, some persons
hauled and carried away personal properties from the compound. The guards listed the
properties and the lists were given to the guards' supervisor. (Rollo G.R. No. 96056,
p. 31)
On November 27, 1987, the national government through APT filed an action for
damages with preliminary injunction and/or temporary restraining order against Labor
Arbiter Hermogenes, Deputy Sheriff Silvino Santos, Asibar and all the complainants in
NCR Case No. 9-3296-84 with the Regional Trial Court of Makati, Metro Manila. The case
was raffled to Branch 60 and was docketed as Civil Case No. 18426.
After due trial, the trial court on December 29, 1989 rendered a decision dismissing the
complaint, to wit:
xxx xxx xxx
WHEREFORE, the Court hereby renders judgment as follows:
The complaint dated November 25, 1987 is DISMISSED;

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The Order dated December 16, 1987 (pp. 87-90, Records) as clarified in the Order dated
July 19, 1988 granting the plaintiffs' application for a writ of preliminary injunction (pp.
286-289, Id.) is LIFTED and SET ASIDE; and
The COUNTERCLAIMS of the defendants (other than SILVINO SANTOS and BIENVENIDO
HERMOGENES) are DISMISSED. (Rollo, P. 42)
A motion for reconsideration filed by the petitioner APT was denied.
Petitioner APT then filed a petition for certiorari and prohibition with the Court of
Appeals. The appellate court, however, dismissed the petition.
Hence, the instant petition.
On November 29, 1990, we issued a temporary restraining order enjoining respondent
Asibar from taking the machineries, engines, and equipment (foreclosed chattels of the
Philippine Blooming Mills, Co., Inc.) which were transferred and assigned by the
Philippine National Bank in favor of the National Government as well as those already
sold by the National Government to Phoenix Iron and Steel Corporation.
On January 10, 1991 Phoenix Iron and Steel Corporation and the Rehabilitation
Receivers of PBM filed a motion for intervention alleging that its intervention is
imperative because its possession of the chattels sold to it by the National Government
and which are being used in the rehabilitation of PBM are being threatened to be taken
by the private respondent. We granted the motion in a Resolution dated January 24,
1991.
The petition was given due course in the Resolution dated April 16, 1991.
In another Resolution dated November 26, 1991, we granted the intervenors' motion for
leave to submit Additional Comment And/Or Argument.
G.R. NO. 96437
On February 10, 1988, a Deed of Sale was executed between respondent Alfredo Asibar
as vendor and petitioner Phoenix Iron and Steel Corporation (co- petitioner Wilfredo
Labayen is the vice-president of the corporation) as vendee involving machineries and
equipment inside all the buildings at PBM compound in Manggahan, Pasig, Metro Manila.
These properties were among the properties bought by Alfredo Asibar in the auction sale
conducted by Deputy Sheriff Silvino Santos on November 23, 1987.
On December 26, 1988, respondent Asibar filed with the Regional Trial Court of Pasig,
Metro Manila, Branch 151, a complaint with application for a writ of preliminary
attachment, seeking the payment by the petitioners, jointly and severally of the amount
of P8.5 million which he alleged was the balance already due at the time based on the
terms of the contract, including penalty for late payment, moral, exemplary damages,
litigation expenses, attorney's fees and costs of suit. The case was docketed as Civil
Case No. 56806. On February 10, 1989, the petitioner filed a motion to dismiss on the
ground that the complaint fails to state a cause of action.
On May 10, 1989, the trial court issued an order denying the motion. The petitioners
were given ten (10) days from receipt within which to file their answers to the
complaint.
The petitioners then filed with the Court of Appeals a petition for certiorari with prayer
for the issuance of a writ of preliminary injunction questioning the May 10, 1989 order.
The Court of Appeals, however, dismissed the petition and ordered the return or remand
of the records to the trial court for trial of the case on the merits.
A motion for reconsideration filed by the petitioners was denied. Hence, the instant
petition.
On January 28, 1991, we issued a temporary restraining order enjoining the Regional
Trial Court of Pasig, Metro Manila, Branch 151, from further proceeding with Civil Case
No. 56806.
III
In G.R. No. 89767, the petitioner contends that:

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a) By upholding the questioned Order of respondent SEC of 26 May 1989, the


respondent Court of Appeals has in effect reversed the ruling of this Honorable Court in
G.R. No. 85242.
b) By allowing respondent SEC to seize from petitioner SIHI the properties in dispute for
the purpose of satisfying the money judgment obtained by the laborers of PBM despite
the adverse claim of petitioner SIHI over the said properties, the respondent Court of
Appeals has completely disregarded the right of petitioner SIHI to due process of law.
c) By permitting respondent SEC to execute the money judgment obtained against PBM
by its laborers pending liquidation of PBM, the respondent Court of Appeals has in effect
granted the PBM-Laborers undue preference contrary to the ruling of this Honorable
Court. (Rollo, p. 16)
In G.R. NO. 96056, the petitioner raises the following issues:
I. WHETHER OR NOT THE CA ACTED WITH GRAVE ABUSE OF DISCRETION
AMOUNTING TO LACK OF JURISDICTION IN NOT FINDING THAT THE AUCTION SALE
CONDUCTED BY SANTOS IS VOID.
II. WHETHER OR NOT THE CA ACTED WITH GRAVE ABUSE OF DISCRETION
AMOUNTING TO LACK OF JURISDICTION IN NOT FINDING THAT THE PROPERTIES
SOLD TO ASIBAR ARE THE SAME AS THOSE FORECLOSED BY PNB AND NOW
BELONGING TO THE NATIONAL GOVERNMENT. (Rollo G.R. No. 96056, p.9)
These petitions are discussed jointly as the issues raised are interrelated.
In response to our directive in the November 21, 1988 resolution in G.R. No. 80580
which referred the respondents' motion for clarification as to whether or not the

certificate of sale of November 23, 1987 is included in the order of permanent injunction
to sell PBM properties in NLRC Case No. NCR-9-3296-84 until after the SEC in SEC Case
No. 2250 (PBM liquidation proceedings) has determined the procedures for settling all
the money claims against PBM ordered in the resolution dated December 2, 1987 in
G.R. Nos. 79202 and 80580, the SEC issued an order dated February 9, 1989 in SEC
Case No. 2250, to wit:
Acting upon the Urgent Motion To Resolve Clarification dated August 22, 1988 in G.R.
No. 80580 which the Supreme Court referred to this Honorable Commission For
Resolution, as per Order of the Supreme Court in its Resolution in G.R. No. 80580 dated
November 21, 1988, filed by the counsel for the 2,081 laborers of PBM in NLRC Case No.
NCR 9-3296-84, and considering the Manifestation dated February 2, 1989, filed by the
petitioner and the rehabilitation receiver in the above-entitled case, the Hearing Panel

hereby rules that the injunction issued therein, does not cover properties already sold
before May 2, 1988 or more particularly the certificate of sale on November 23, 1987 in
NLRC Case No. NCR-9-3296-84. (Rollo G.R. No. 85242, p. 330; Emphasis Supplied)

Another order dated May 26, 1989, was issued in SEC Case No. 2250 involving PBM
properties claimed by the State Investment House, Inc. wherein the SEC reiterated its
February 9, 1989 clarificatory order regarding the certificate of sale dated November 23,
1987. This order was the subject matter in CA-G.R. SP No. 17698. The Court of Appeals
affirmed the order prompting SIHI to challenge the appellate court's decision by filing a
petition for certiorari with this Court. The case is docketed as G.R. No. 89767.
In G.R. No. 96056, the appellate court is of the view that the February 9, 1989 order of
the SEC clarified the issue as to what properties are excluded from the liquidation
proceedings but which should be given to the workers pursuant to the decision of the
NLRC in Case No. NCR 9-3296-84 by ruling that "the hearing Panel hereby rules that the
injunction issued therein does not cover properties already sold before May 2, 1988
more particularly the certificate of sale in November 23, 1987 in NLRC Case No. NCR 93296-84" (Rollo G.R. No. 96056, p.25). With this finding, the appellate court, among
others, dismissed the petition.

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In this regard, we take note of another case (G.R. No. 85242 entitled "Sheriff Silvino
Santos, et al. v. Court of Appeals, et al."). In this petition, SIHI filed an action before the
Regional Trial Court of Pasig, Metro Manila, Branch 168 presided by Judge Benjamin
Pelayo, to enjoin the implementation of a writ of execution issued in NLRC Case NCR No.
9-3296-84. Specifically, SIHI asked the court to enjoin Deputy Sheriff Silvino Santos from
selling at the public auction sale on November 23, 1987 PBM properties which were
allegedly owned by SIHI.
On November 20, 1987, Judge Pelayo issued an order, enjoining Sheriff Santos to desist
from selling the properties being claimed by SIHI.
Sheriff Santos, however, ignored the order and went ahead with the November 23, 1987
auction sale. Judge Pelayo, then issued another order dated February 22, 1988 nullifying
the sale and finding Sheriff Santos guilty of contempt.
Sheriff Santos then filed a petition for certiorari and prohibition with preliminary
injunction with the Court of Appeals alleging that Judge Pelayo committed grave abuse
of discretion and lack of jurisdiction in blocking the NLRC's writ of execution. The petition
was dismissed.
Ricardo Zurita and 2,080 other laborers (complainants in NLRC Case No. 9-3296-84) in
whose favor the writ of execution was issued by the NLRC filed with the Court a motion
for leave to intervene as co-petitioners.
In a resolution dated March 15, 1989, we denied the petition for lack of merit. We
stated:
xxx xxx xxx
Insofar as the money claims of the co-petitioners-intervenors are concerned., the law on
the case is that announced in G.R. No. 71318,Philippine Blooming Mills, Co.,
Inc. v. National Labor Relations Commission, et al., January 20, 1986, where this Court
ruled:
Considering all the foregoing, the Court Resolved to DISMISS the petition insofar as it
seeks to nullify the decision of the National Labor Relations Commission on benefits due
the respondent laborers and to restrain the disposition of properties in the satisfaction of
the various obligations of the petitioner. However, the awards made by the Commission

shall be referred to the Securities and Exchange Commission to determine the


preference or priority under the law in the settlement of all claims. The restraining order

dated July 22, 1985 which reads in part:


xxx xxx xxx
ENJOINING the respondents from enforcing the alias writ of execution and the sale of
the properties of petitioner, and if already enforced, from turning over to the private
respondents the proceeds of the auction sale in NLRC Case No. 3-1250-83, entitled
"Pedro Ablaza, et al., Complainants, v. Philippine Blooming Mills Company, Inc.,
Respondent" of the National Labor Relations Commission, Ministry of Labor and
Employment.'
is clarified as not covering the certificate of sale issued on July 19, 1985. However, all

proceeds of that sale and earlier sales must be turned over to the Securities and
Exchange Commission to be distributed according to law. This Court's temporary
restraining order shall be lifted and set aside once the Securities and Exchange
Commission has taken over the control of funds and assets as above indicated."
Any execution of the NLRC decision awarding benefits to the PBM workers and any
disposition of PBM properties arising from the NLRC awards must be referred to the
Securities and Exchange Commission pursuant to the above resolution.

Any attempt to execute on properties not belonging to PBM is properly a concern of civil
courts and not of the NLRC. Either way, the action of the petitioner sheriff is premature
or improper. (Rollo G.R. No. 85242, pp. 271-272; Emphasis supplied)
xxx xxx xxx

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The petitioner sheriff filed a motion for reconsideration. The movant-intervenors also
filed a separate motion for reconsideration with clarification. The movant-intervenors
specifically mentioned the February 9, 1989 order of the SEC in SEC Case No. 2250
clarifying the issue as to whether or not the certificate of sale dated November 23, 1987
in NLRC Case NCR No. 9-3296-84 is included in the permanent injunction of the sale of
PBM properties under the resolution dated November 21, 1988 in G.R. No. 80580. The
movant-intervenors contended:
It is an admitted fact that the properties subject of this controversy are included in the
certificate of sale of November 23, 1987 and not by another execution which, this
Honorable Court might misunderstand, and which the same was already clarified by this
Honorable Court through its delegated authority, the Honorable Securities and Exchange
Commission. It is very apparent and very important then, that in so far as the certificate
of sale of November 23, 1987 is concerned, (which includes subject properties in
controversy) be finally laid to rest as this Honorable Court said in that particular
resolution . . . (Rollo G.R. No. 85242, p. 306)
We denied the motions. We said in our resolution dated April 5, 1989:
The motion for reconsideration cites the Court's resolution dated March 15, 1989 out of
context. The movant-intervenors play up paragraph 2, page 3 of the resolution but
ignore the first paragraph on the same page which is more important.

The resolution of this Court rules that if, as the petitioners and the movant-intervenors
insist, the disputed properties really belong to the Philippine Blooming Mills, then the
execution must be referred to the Securities and Exchange Commission pursuant to the
earlier resolution of this Court. On the other hand, if the properties belong to persons
other than the Philippine Blooming Mills, the National Labor Relations Commission has no
jurisdiction because the matters falls within the jurisdiction of the civil courts.
Therefore, if the movant-intervenors are correct and the disputed properties belong to
the Philippine Blooming Mills, their action is premature and must await a determination
by the Securities and Exchange Commission pursuant to the earlier resolutions in the
Philippine Blooming Mills cases. Once the SEC has decided the cases, the execution shall
issue from it and not from the NLRC.
The Court further reiterates its resolution in G.R. No. 80580 and G.R. No. 79202 that the
claims of the Philippine Blooming Mills laborers are not denied. The Court simply rules
that all valid claims including those of the laborers must be submitted in the course of
bankruptcy, liquidation and rehabilitation proceedings. This is a function of the Securities
and Exchange Commission for appropriate action. (Rollo G.R. No. 85242, p. 335;
Emphasis supplied).
xxx xxx xxx
From the different resolutions in all the cases involving PBM properties in relation to SEC
Case No. 2250 (liquidation proceedings of PBM) we reiterate the following: 1) all PBM
properties including the proceeds of the various sales undertaken by the NLRC to
implement its final decision in NCR 9-3296-84 should be turned over to the SEC for
disposition according to law, and 2) for purposes of executing the NLRC final decision
awarding monetary benefits to the former workers of PBM, the NLRC has no jurisdiction
over properties belonging to persons other than PBM.
As far as the Sheriff's sale dated November 23, 1987 is concerned, the SEC issued the
Order dated February 9, 1989, pursuant to our directive in our resolution of November
21, 1988 clarifying that the injunction against the sale of PBM properties does not
include the November 23, 1987 certificate of sale. However, it does not necessarily
follow from the auction sale of PBM properties conducted by Sheriff Santos resulting in
the issuance of the certificate of sale dated November 23, 1987 in favor of the highest
bidder, respondent Asibar, that all properties sold therein fall within the clarificatory
order of the Securities and Exchange Commission (SEC). A distinction as to the

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ownership of these properties must be made. Thus, if some properties were sold which
belonged to other persons over whom the NLRC does not have jurisdiction, necessarily,
such properties must be considered not to fall within the February 9, 1989 order of the
SEC. These should be returned to their rightful owners.
Under these circumstances, the pivotal issue to be resolved hinges on whether or not
the disputed properties sold by Sheriff Santos belong to petitioner SIHI in G.R. No.
89767 and APT in G.R. No. 96056.
In G.R. No. 89767, the questioned Order dated May 26, 1989 of the SEC which was
affirmed by the Court of Appeals states:
We found the grounds invoked by SIHI in its comment untenable and without
merit. Firstly, the urgent motion for a break-open order is but an implementation of our
final order of February 9, 1989 wherein it clearly states that "the injunction issued

therein, does not cover properties already sold before May 2, 1988 or more particularly
the certificate of sale on November 23, 1987 in NLRC Case No. NCR-9-3296-84;"

secondly, this Commission is legally authorized and duly empowered by the Supreme
Court pursuant to its Resolutions dated November 21, 1988 (G.R. No. 80580 and 79202)
and April 5, 1989 (G.R. No. 86242) to determine the valid claims of subject laborers in all
these cases; and thirdly, it is the function of this Commission to implement the
Certificate of Sale on November 23, 1987 in NLRC Case No.NCR.-9-3296-84 for the
reason above-stated and to issue forthwith any writ of execution, if necessary, to fully
satisfy the valid claims of these complainants-laborers, as clearly mandated in the
aforestated Resolution of the Supreme Court. (Emphasis supplied, Rollo, p. 32)
In affirming the Order, the appellate court said:
The SEC issued the "Break-Open Order" contained in the Order now being assailed for

the purpose of implementing and carrying into effect the certificate of sale of properties
involved in NLRC Case No. 9-3296-84 wherein the claims against PBM of private
respondents The 2,081 complainants former PBM laborers were resolved. The

authority of the SEC to act on this particular matter emanates from the Supreme Court
Resolutions of November 21, 1988, March 15, 1989 and April 5, 1989. The first abovenamed Resolution was issued by the Supreme Court upon private respondents' motion
for clarification of the scope of the injunction which the Court issued to stop the
enforcement of the writ of execution already mentioned, which had been issued by the
NLRC, against properties foreclosed by PBM creditors. In very certain terms, the
Supreme Court in said Order states that it "cannot supervise the liquidation of PBM
assets and declare what portion goes to laborers, what portion to creditor banks, etc."
and that this is a function of the SEC; referred to the SEC the question of exactly what
properties should be given to the workers pursuant to the decision of the NLRC; and
directed the SEC "to hold hearings on the matter." The other two Resolutions (of March
15, 1989 and April 5, 1989) were issued by the Supreme Court precisely on the petition
for review of the order of the RTC of Pasig in C.C. No. 49997, inter alia declaring null
and void the certificate of sale executed by the NLRC Deputy sheriff covering the
properties located at the PBM compound in Balintawak, Quezon City. In the March 15,
1989 order, the Supreme Court categorically stated that "any execution of the NLRC
decision awarding benefits to the PBM workers and any disposition of PBM properties
arising from the NLRC awards must be referred to the Securities and Exchange
Commission." And in reiteration of said pronouncement, the Supreme Court in the April
5, 1989 Order, explicitly "REFERRED" the matter to the SEC "for appropriate action" after
stating that all valid claims against PBM including those of the laborers "must be
submitted" in the course of the bankruptcy, liquidation and rehabilitation proceedings"
which is a function of the Securities and Exchange Commission. (Rollo, pp. 33-34)
Obviously, the SEC's May 26, 1989 Order has for its basis, the certificate of sale covering
the Balintawak properties of PBM issued by Sheriff Silvino Santos as a result of the

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auction sale Santos held on November 23, 1989 pursuant to the writ of execution issued
by the NLRC in NCR Case No. 9-3296-84. It is to be noted, however, that the certificate
of sale issued to the highest bidder on the Balintawak properties of PBM was declared
null and void in Civil Case No. 49997 and such declaration was affirmed by us in G.R. No.
85242.
Under these circumstances, the SEC had no authority to order the implementation of a
certificate of sale which was earlier declared null and void. True, the SEC pursuant to our
Resolution in the other related PBM cases has jurisdiction over all properties of the PBM
which should be distributed among valid claimants including the private respondents in
the liquidation proceedings. Such jurisdiction, however, does not include the power to
reverse and set aside our own resolutions. It cannot issue a "break-open order"
arbitrarily and to the prejudice of third persons seize PBM properties which were earlier
in the lawful possession of third persons.
In the instant case, the Balintawak properties of PBM covered by the certificate of sale
were earlier sold to the petitioner in an auction sale involving the said properties. Thus,
in Civil Case No. 49997, the trial court issued an Order dated May 3, 1988, the pertinent
portion of which reads:
In the light of the foregoing facts, the pertinent question is whether plaintiff, as
purchaser at the auction sale of the aforementioned mortgaged properties, acquired
valid titles not only to the land, subject of the mortgage of defendant Four Seas Trading
Corporation, but also to all the buildings, improvements and machineries existing
thereon. The answer to this question is determinative of the question of whether this
court had the jurisdiction to issue the restraining order, and subsequently the writ of
preliminary injunction, under consideration whereby this court enjoined Sheriff Santos
from proceeding with the execution sale of the buildings, machineries and equipment
located on the land of defendant Four Seas Trading Corporation in satisfaction of the
judgment rendered against defendant Philippine Blooming Mills Co., Inc. in NLRC Case
no. NCR-9-3296-84.
It is an admitted fact that the land, on which the buildings, machineries and equipment
in question are located, are registered land in the name of defendant Four Seas Trading
Corporation. It is also an admitted fact that no reservation of title in the name of
defendant Philippine Blooming Mills Co., Inc. is noted in the certificates of title of
defendant Four Seas Trading Corporation with respect to the buildings, machineries and
equipment existing on the land covered by the said titles.
Such being the case, this court finds no cogent reason to disturb its findings contained in
its Order, dated December 10, 1987, ordering the issuance of a writ of preliminary
injunction against Sheriff Santos. For under the law and existing jurisprudence, plaintiff,
as an innocent mortgagee and purchaser for value, acquires good and valid titles to the
properties in question.
As long as this decision is not set aside or modified in proper legal proceedings, the SEC
has no jurisdiction over the Balintawak properties, much less, to issue a break-open
Order to implement a voided certificate of sale covering the said properties.
The trial court has the competence to identify and to secure properties and interests
therein held by the judgment debtor for the satisfaction of a money judgment rendered
against him. (Section 15, Rule 39, Revised Rules of Court). The exercise of its authority
is premised on one important factor: that the properties levied upon, or sought to be
levied upon, are properties unquestionably owned by the judgment debtor and are not
exempt by law from execution, For the power of the Court in the execution of its
judgment extends only over properties belonging to the judgment debtor. (See Reyes v.
Grey, 21 Phil. 73 [1911], Misut v. West Coast San Francisco Life Insurance Co., 41 Phil.
258. [1920], Herald Publishing Co. v. Ramos, 88 Phil. 94 [1951]; and Bayer Philippines,

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Inc. v. Agana, 63 SCRA 355 [1975]; Consolidated Bank and Trust Corp. v. Court of
Appeals, 193 SCRA 158 [1991])
In G.R. No. 96056 the petitioner contends that the appellate court committed grave
abuse of discretion amounting to lack of jurisdiction in dismissing its petition for
certiorari accusing the trial court of grave abuse of discretion in ruling that there is no
identity between the PBM properties sold to the petitioner's predecessor PNB in 1983
and the PBM properties sold to respondent Asibar in the auction sale of November 23,
1987 on the ground that the appellate court did not consider the petitioner's allegations
and evidence.
Petitioner APT contends that what took place was a simulated auction sale of properties
already owned by PNB and transferred to the APT and that the Sheriff sold for
P5,950,000.00 properties for which PNB had bid P76,720,800.00.
The petitioner claims that the Certificate of Sale (Exhibit "A", Annex "C", Petition) issued
in favor of PNB shows that the chattels which were sold later by Sheriff Santos to Asibar
in the questioned auction sale are housed at the following: (1) Oxygen Plant No. 2; (2)
Carpentry Shop; (3) Electrical Shop and Instrumentation Building; (4) Machine Shop; (5)
Scale house; (6) Wire Drawing Plant; (7) Nail Plant; (8) Bolt and Nut Making Plant; (9)
Motorpool and Rebuilding Section; (10) Repair and Shifting Maintenance Section; (11)
General Utility and Fire Section; (12) Oxygen Plant No. 1; (13) Topy Mill (Rolling Mill #
1); (14) Rolling Mill # 2; (15) Rolling Mill No. 3; (16) Wire Rod Mill; (17) Open Hearth
Furnace; (18) and those at Building Nos. 24, 25, 26, 28 , 31, and 33 (Electric Arc
Furnace), 34, 35, and 37 (Bailing Press Machine Building, Press Machine Building, Scale
House No. 2 and Pump House No. 2). According to the petitioner, all the buildings,
plants, shops, sections, and mills acquired in 1983 are located at the PBM Compound,
Pasig, Metro Manila. All these chattels were transferred, assigned and conveyed by PNB
in favor of the national government thru the Deed of Transfer dated February 27, 1987.
The petitioner claims that the Certificate of Sale issued to Asibar by Sheriff Santos
conclusively shows that chattels inside nine (9) buildings which PNB bought, namely:
Oxygen Plant No. 2, Carpentry Shop, Electrical Shop and Instrumentation Building,
Machine Shop, Scale House, Wire Drawing Plant, Nail Plant, Bolt and Nut Making Plant,
Motorpool and Rebuilding Section, Repair and Shifting Maintenance Section, General
Utility and Fire Section, Oxygen Plant No. 1, Topy Mill (Rolling Mill No. 1), Rolling Mill No.
2, Rolling Mill No. 3, Wire Rod Mill, Open Hearth Furnace, and Bailing Press Machine
Building all located at PBM compound, Manggahan, Pasig, Metro Manila were also sold to
Asibar by Sheriff Santos.
It is to be noted that the appellate court's decision has no specific findings of facts
regarding the issue as to whether or not the properties sold to Asibar are different from
the properties previously sold to the PNB. Instead, the decision in a sweeping statement
stated that the lower court did not commit grave abuse of discretion as the trial court's
findings are duly supported by substantial evidence.
The lower court said:
PROPERTIES
SOLD TO PNB
13. The plaintiff does not question in this case the auction sale of PBM's properties in
Balintawak, Quezon City to ASIBAR. What it questions only is the auction sale of PBM's
properties located in its Compound in Manggahan, Pasig. It is therefore necessary to
determine what are the properties sold to PNB per the certificates of sales (Exhs. A to A147 inclusive; and Exhs. C and CO1) and the properties of PBM at its Manggahan, Pasig,
Compound sold to Asibar per the certificate of sale (Exhs. H, G-1 to H-4 or Exhs. 1, 1-A
to 1-E- Asibar)
14. The properties which PNB bought are:

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14.1. The machineries and equipments in sixteen (16) Buildings Building Nos. 6 (Exhs.
A-20 to A-32); 10 (Exh. A-32), 12 (Exhs. A-33 to A-43), 13 (Exhs. A-6; Exhs. A-43 to A59), 16 (A-43 to A-59), 21 (Exhs. A-59 to A-85), 22 (Exhs. A-86 to A-108), 24 (Exhs. A108 to A-112), 25 (Exhs. A-109 to A-112), 26 (Exhs. A-112-A to A-114), 28 (Exh. A-114)
13 (Exhs. A-114 and A-115), 33 (Exhs. A-125 to A-133); A-138 to A-140), 34 (Exhs. A132 and A-133), 35 (Exhs. A-140 to A-147) and 37 (Exhs. A-134 to A-138) per Exhs. A,
A-1 to A-147.
14.2. Four (4) buildings (sic) erected on the lots covered by TCT Nos. 43445, 853, 30196
and 32897, Registry of Deeds of Rizal; namely: (a) a CANTEEN 2-storey semi-concrete;
(b) one-storey electrical shop; (c) OPEN WAREHOUSE and carpentry shop; and (d) scale
house (wood and masonry) per Exhs. C and C-1.
PROPERTIES
SOLD
TO ASIBAR
15. On the other hand, Asibar bought the following properties per Exhs. 1 to 1-E-Asibar
or Exhs. H to H-4;
15.1. Thirty four (34) buildings and fixtures, embedded pipes and metals obtained from
the total demolition thereof;
15.2. The mill plant machineries, equipment, materials supplies, and all movable
properties found in each of the thirty-four (34) buildings; and
15.3. Scrap iron and other metals, discarded or detached machine or equipment parts
found in open areas and diggings.
NO
IDENTITY
OF
PROPERTIES
SOLD
TO
PNB AND TO ASIBAR
16. The question then is: were the properties sold to PNB as described in paragraph 14,
the same properties sold to Asibar as described in paragraph 15 hereof? The evidence
does not show that the properties sold to PNB are the same properties sold to Asibar.
This is clear from the following considerations.
16.1. Exhs. A and A-1 to A-177 do not show that the material and equipments found in
the sixteen (16) buildings are located at the PBM Compound in Manggahan, Pasig. They
do not state where these buildings are located. Exh. A simply states that the auction sale
of the properties listed in the "attached Annexes" took place on November 23, 1983 at
10:00 o' clock in the morning "at the compound of the mortgagors, located at Barrio
Rosario, PBM Compound, Pasig, Metro Manila." Exh. T however shows that PBM has
machineries and equipments in 12 buildings, namely Building Nos. 6, 12, 14 , 16, 18, 20,
21, 22, 23, 25, 26 and 31, at the PBM Compound in Manggahan, Pasig. Even if it were
assumed that the twelve (12) buildings are the same buildings bearing the same number
referred to in Exhs. A to A-147 the fact remains that the machineries and the
equipments found in these twelve (12) buildings have not been shown to be the same
machineries and equipments that may be found in the thirty four (34) buildings
described in Exhs. 1-C and 1-D-Asibar. For there is even no proof that the twelve (12)
buildings are among the thirty-four (34) buildings listed in Exhibits 1-C and 1-D-Asibar.
16.2. The four (4) buildings sold to PNB under Exhibits C and C-1 have not been shown
to be among the same thirty-four (34) buildings. These four (4) buildings are (note: not
legible) lots covered by TCT Nos. 43445, 853, 30196 and of Deeds of Rizal. This then
suggests that the (not legible) the Province of Rizal. However, their . . . (not legible)
Rizal has not been established much less does the evidence show that they are within
the PBM Compound in Manggahan, Pasig, or that they are among the said thirty-four
(34) buildings.
16.2.1. True it is that among the thirty-four (34) are: (a) scale house (No. 5, Exh. 1-CAsibar); (b) a canteen (No. 27, Exh. 1-D-Asibar); (c) a carpentry/electrical shop (No. 30,

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Exh. 1-D-Asibar). However there is absolutely no proof that they are the same four (4)
buildings described in Exhs. C and C-1.
16.3. PNB did not acquire any "scrap iron and other metals, discarded or detached
machine parts found in open areas and diggings" from PBM. They are not among the
properties which PNB acquired under the certificates of sale (Exhs. A, A-1 to A-147), B
and B-1, C and C-1). PNB did not transfer any such property to the RP under the deed of
transfer (Exhs. D to D-3). Obviously, these properties belonged to PBM when they were
sold to Asibar.
17. In brief, RP failed to prove by any competent and satisfactory evidence that the
properties which it acquired from PNB are the same properties levied upon and sold at
public auction to ASIBAR. (Rollo G.R. No. 96056, pp. 31-33; Decision-Civil Case No.
18426, pp. 5-7)
In an order dated June 6, 1990, the trial court amended "14.2" and "16.2" of the
decision to read as follows:
xxx xxx xxx
14.2. Seven (7) buildings erected on the lots covered by TCT Nos. 43445, 853, 30196
and 32897, Registry of Deed of Rizal, namely: (a) a CANTEEN 2-storey semi-concrete;
(b) one-storey electrical shop; (c) OPEN WAREHOUSE and carpentry shop; (d) scale
house (wood and masonry); (e) Wire and Nail Plant (industrial) one-storey steel frame
with an area of 6,489 erected on the lots covered by TCT Nos. 43445, 43338, 853 and
30196, land records of Rizal; (f) office building (commercial two-storey, wood and
masonry, with an area of 240 square meters, first floor erected a lot covered by TCT No.
32343, Land records of Rizal; and (g) Mess Hall and dormitory, with a total area of 250
square meters, erected on the same above-mentioned lot (TCT No. 322843-Rizal) per
Exhs. C and C-1.
19.3 The first sentence of paragraph 16.2 of the DECISION is AMENDED to read as
follows:
16.2. The seven (7) buildings sold to PNB under Exhs. C and C-1 have not been shown
to be among the said thirty-four (34) buildings.
xxx xxx xxx
(Rollo G.R. No. 96056, p. 237)
Obviously, the trial court assumed that there are two (2) PBM compounds in Pasig,
Metro Manila, one at Manggahan and one at Rosario. Under this premise, the trial court
ruled that since the petitioner did not adduce evidence to prove that the buildings
housing the chattels sold to PNB are located at the PBM Compound in Manggahan where
the building machinery and equipment sold to Asibar were located, then there is no
identity of properties between those sold earlier to PNB and later to Asibar. Such
conclusion has no factual basis.
Asibar, himself, in his "Answer with Counterclaim" never raised the issue as regards the
location of the buildings, machinery and equipment sold to him. Under his Answer with
Counterclaim, captioned as "SPECIAL AND AFFIRMATIVE DEFENSES" Asibar alleged:
Assuming without admitting that the plaintiff's acquisition of the properties of the PBM in
the alleged auction sale on November 23, 1983 by virtue of a foreclosure proceedings
under a mortgage contract is true, its ownership is only limited to its rights as
mortgagee and subject to other superior liens. It cannot affect the lien of the defendants
Ricardo Zurita, et al. (complainants in NLRC Case No. 9-3296-84) over the properties of
PBM already attached and existing to it at the time of the foreclosure and/or the
plaintiff's acquisition of the PBM properties being said lien is a laborer's lien;
10. The lien of the defendants Ricardo Zurita, et al. and other laborers numbering 2,081
in all, complainants in the NLRC Case No. 9-3296-84 was already attached and existing
over the PBM properties since 1981 the time when the said laborers were illegally

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dismissed or when PBM ceased its operations allegedly due to bankruptcy, and at the
time when the PNB or the plaintiff allegedly acquired the PBM properties;
11. Said lien of the defendants Ricardo Zurita, et al. (complainants in NLRC Case No.
NCR-9-3296-84) is superior and enjoys preference over the lien of the plaintiff as
mortgagee and constitute an automatic first lien above all other earlier encumbrances on
the PBM properties pursuant to the doctrine laid down by the Supreme Court in G.R. No.
68819-20, Ferrer, et al, v. Romillo, Jr., et al. promulgated on February 7, 1985; PCIB v.
NAMAWU, 115 SCRA 873 and G.R. No. L-39742, Air Manila, Inc., et al. v. CIR;
12. The judgment award to the defendants Ricardo Zurita, et al. in NLRC Case No. NCR.
9-3296-84 which is in the nature of separation pay from PBM a corporation that had
ceased operation due to bankruptcy, is superior to the rights of PNB as mortgagee and
that of the plaintiff who just step into the shoes of the former over the properties of PBM
pursuant to the doctrine laid down by the Supreme Court in G.R. No. 75161-62, PNB v.
Delta Workers Union, et al., promulgated on April 1, 1987, that the rights of workers to
separation pay from a bankrupt corporation is superior to a mortgagee's credit in
the foreclosed property and considering further that Art. 110 of the Labor Code is
constitutional because Police Power prevails over non-impairment of the obligation and
contract clause in the Constitution;
13. So that what the PNB can rightfully claim on the PBM properties is only the residue
after the lien of the laborers of PBM (defendants Ricardo Zurita, et al., complainants
against the PBM in NLRC Case No. NCR 9-3296-84) has been fully satisfied. Thus, this
residue, if there is any, is the only thing that the plaintiff can rightfully claim, and it
cannot further claim that the properties are already exempt from execution the fact that
the plaintiff is the government as it merely steps into the shoes of the PNB. It is
elementary that water cannot rise higher than its source;
14. Herein defendant being the purchaser of the properties of PBM transferred on
account of the exercise of a superior and automatic first lien above all earlier
encumbrances attached to the properties, evidenced by a certificate of sale, is therefore
the rightful and legal owner of the properties subject hereof over and above and
superior and paramount from the claim of ownership of the plaintiff; (Rollo, p. 215-217)
In fine, Asibar's defense to the complaint of the petitioner centered on his allegation that
his right to the properties is superior to the right of the petitioner. The issue as to the
proper disposition of the PBM properties has already been decided earlier by this court in
the other PBM cases. The jurisprudence on the matter is now final and Asibar cannot
resurrect the issue as to which is superior, the PNB foreclosure and purchase of the
properties in 1983 or the claims of various creditors, including the workers, which we
decided in 1985.
Moreover, it is worthy to note that respondent Sheriff Santos in itemizing the properties
which he sold during the auction sale identified them as "Properties Located at PBM
Compound, Pasig Metro Manila" (p. 194, Rollo, G.R. No. 96056) which signifies that
there is only one PBM compound in Pasig, Metro Manila.
That there is only one PBM compound in Pasig is confirmed by the certification of Mayor
Mario S. Raymundo of Pasig (Annex "B", Additional Argument filed by intervenor Phoenix
Inc. and Steel Corporation [PISCOR]), to wit:
CERTIFICATION
TO WHOM IT MAY CONCERN:
THIS IS TO CERTIFY that since 1981 up to the present time there is only one facility
referred to as the Philippine Blooming Mills (P.B.M.) Compound in the Municipality of
Pasig, Metro Manila.
The above-mentioned facility is located at the boundary of Barangay Rosario and
Manggahan. And, therefore, the P.B.M. Compound is sometimes part of the Barangay

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Manggahan. In any case, there is only one facility known as the P.B.M. Compound in the
Municipality of Pasig.
This certification is issued at the request of the Phoenix Iron and Steel Corporation
(PISCOR) for location reference purposes.
Given this 5th day of March 1991 at Pasig, Metro Manila.
(Sgd.)
MARIO
S.
RAYMUNDO
Municipal Mayor
(Rollo G.R. No. 96056, p. 797)
Another certification issued by the Assessor's Office through Senior Taxmapper Bonifacio
C. Maceda, Jr. clears the confusion as regards the address of the PBM Compound in
Pasig which is referred to as Manggahan by some and Rosario by others, to wit:
October 30, 1991
TO WHOM IT MAY CONCERN:
This is to certify that as per Real Property Tax Records of this office, the properties of
the former facility known as the Philippine Blooming Mills Co., Inc., located in the
Municipality of Pasig, are officially part of Manggahan and not part of Rosario based on
the Tax Declaration of the said property.
Furthermore, although the Pasig facility of the Philippine Blooming Mills Co., Inc. since
existence carried the address of Rosario; the tax mapping of the Municipality of Pasig
initiated by this office in the period between 1987-1988 officially pegged the boundary of
Rosario and Manggahan to be the point where the Litton Mills property end and where
the former Philippine Blooming Mills Co., Inc. begins.
This certification is issued for whatever purpose it may serve.
(Sgd.)
BONIFACIO
C.
MACEDA,
JR.
Sr. Taxmapper
(Rollo G.R. No. 96056, p. 798)
Any doubts regarding the existence of only one PBM Compound located at Pasig instead
of two (2) as implied by the trial court is dispelled by Volume 2 of the 1989-1990 Metro
Manila Citiguide (The Encyclopedic Map of Metro Manila) where Map 130 shows the PBM
Compound, and Map 131 a portion thereof which indicates that the PBM compound in
Pasig is only one and not made of two (2) parts, one in Rosario and another in
Manggahan. (Annex "D", Additional Argument filed by PISCOR).
The location of the PBM Compound was never in issue before the trial court. It appears
from the records that it was assumed to be a matter known to all the parties, that the
parties were aware of the exact whereabouts of the compound in Pasig.
From the sole fact that some documents bore the address PBM, Rosario, Pasig, while
other documents carried the address PBM, Manggahan, Pasig, the trial court jumped to
the conclusion that there are two (2) PBM compounds in the same town, in two
barangays adjacent to each other, with each compound containing identical sets of
buildings and the buildings containing identical but separate sets of extremely expensive
machineries and equipment.
It was relatively easy for the trial court, if it wanted to decide the case on matter not
fully litigated by the parties, to ascertain the correct factual bases for its conclusion.
The PBM compound is at the boundary of the two barangays. This explains why in some
documents, it used Rosario as an address while in others it used Manggahan. It is not
logical for a steel company to establish two huge industrial complexes in two adjacent
barangays of the same town and to treat them, as the trial court did, as two separate
and distinct industrial complexes. The court should have received evidence to clearly
establish what now appears from the records of these and earlier cases to be a wrong
conclusion.
The chattels are clearly identified and numbered in the PNB and APT records of
ownership. Conveniently for the private respondent, properties acquired by PNB for

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P76,720,800.00 in the 1983 were sold to Asibar for only P5,950,000.00 as scrap and
machineries in lots, each lot being the contents of one entire building, with no specifying
details and no identification as to what types of machineries, serial numbers, etc. were
sold for a nominal sum.
The well-entrenched principle that findings of facts of the Court of Appeals are
conclusive and binding upon this Court is not without exceptions. Such exceptions
include the following: when the findings are not supported by the record, glaringly
erroneous as to constitute grave abuse of discretion or when the findings are grounded
entirely on speculation, surmise or conjecture. (See Chan v. Court of Appeals, 33 SCRA
737 [1970]; Baniqued v. Court of Appeals, 127 SCRA 596 [1984]; Moran, Jr. v. Court of
Appeals, 133 SCRA 88 [1984]; Collector of Customs of Manila v. Intermediate Appellate
Court, 137 SCRA 3 [1985]; Premier Insurance and Surety Corporation v. Intermediate
Appellate Court, 141 SCRA 423 [1986]; Director of Lands, et al. v. Funtilar, et al., 142
SCRA 57 [1986]; Manlapaz v. Court of Appeals, 147 SCRA 236 [1987]; Chua Giok Ong v.
Court of Appeals, 149 SCRA 115 [1987] Francisco v. Mandi, 152 SCRA 711 [1987];
Knecht v. Court of Appeals, 158 SCRA 80 [1988]; Garcia v. Court of Appeals, 33 SCRA
623 [1970]; Tolentino v. De Jesus, 56 SCRA 167 [1974]; Ramos v. Court of Appeals, 63
SCRA 331 [1975]; Rizal Cement Co., Inc. v. Villareal, 135 SCRA 15 [1985]; Municipality
of Meycauayan v. Intermediate Appellate Court, 157 SCRA 640 [1988]; Remalante v.
Tibe, et al., 158 SCRA 138 [1988]; Bunag v. Court of Appeals, 158 SCRA 306 [1988];
Santa Ana, Jr. v. Hernandez, 18 SCRA 973 [1986]; Joaquin v. Navarro, 93 Phil. 257
[1953]; Cruz v. Court of Appeals, G.R. No. 85685, September 11, 1991)
Certainly, the trial court's ruling that there is no identity as between the PBM properties
sold to PNB and those sold to Asibar because the petitioners did not prove the location
of the same, whether they are at the PBM compound located at Manggahan or at the
PBM Compound located at Rosario on the premise that there are two (2) PBM
Compounds in Pasig is patently and glaringly erroneous amounting to a grave abuse of
discretion.
Moreover, the trial court's finding that the petitioner failed to show that the machineries
and equipment sold to PNB found inside twelve (12) buildings inside the PBM compound
are the same as those sold to Asibar found in the thirty four (34) buildings and that the
twelve (12) buildings are the same twelve buildings forming part of thirty four (34
buildings) in which machineries and equipment were sold to Asibar is patently erroneous
and not supported by the record.
The record shows that the petitioner mentions at least nine (9) buildings which are
among the thirty four (34) buildings and that the machineries and equipment inside the
said nine buildings were also sold to Asibar as indicated by Exhibits 1 to 1-"D", Annex
"D" Petition). These are: (1) Scale House which is Bid Item No. 5; (2) Machine Shop
which is Bid Item No. 8; (3) Open Hearth Furnace which is Bid Item No. 12; (4) Oxygen
Plant which is Bid Item No. 14; (5) Rolling Mills which is Bid Item No. 19; (6) Boiling
Press Machine Building which is Bid Item No. 24; (7) Carpentry and Electrical Shop which
is Bid Item No. 30; (8) Nail Plant which is Bid Item No. 30; and (9) Motor Pool which is
Bid Item No. 33. The certificate of sale (Annex "C" Petition) issued to PNB indicates that
the chattels inside these buildings found at PBM Compound, Barrio Rosario, Pasig Metro
Manila were sold to PNB. The certificate of sale describes with particularity the chattels
found in these buildings. For example, citing only one building:

Nail Plant

Nail Making Machine "Yamamura" built 1950, weight 420, type YA, 500 rpm, Serial No.
244.
9 Nail Making Machine "Yamamura" built 1950, weight 550, type YB, 400 rpm, Serial
Nos. 252, 246, 245, 217, 218, 251, 250, and 249. (Rollo G.R. No. 96056, p.80)
xxx xxx xxx

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On the other hand, the certificate of sale issued to Asibar by Sheriff Santos referred to
the chattels found in the thirty four (34) buildings which include the aforesaid nine (9)
buildings sold to Asibar as follows:
. . . building materials and fixtures including imbedded pipes and metals and all kinds of
materials obtained from the total demolition of each buildings, structure, or bid item
described below; and all MILL/PLANT MACHINERY, EQUIPMENT, MATERIALS AND
SUPPLIES and all movable properties found inside each building/structure described
below.
Undoubtedly, the foregoing description of properties includes all chattels found inside
the thirty four (34) buildings including those already sold to PNB in the nine (9)
buildings.
Under these circumstances, the appellate court committed a reversible error in ruling
that the lower court did not commit a grave abuse of discretion in its finding that there is
no identity of PBM properties sold to PNB and Asibar.
With these findings, the inevitable conclusion is that the auction sale conducted by
Sheriff Santos is null and void. As discussed earlier the NLRC has no jurisdiction over
PBM properties which are already owned by third persons. As revealed by the records,
the questioned PBM properties which were levied under a writ of execution dated
November 13, 1987 issued in NLRC Case NO. 9-3296-84 and subsequently sold in a
public auction sale were already owned by PNB as evidenced by a certificate of sale
dated November 23, 1983. The validity of the sale was not challenged by the
respondents at the time of the said properties' levy. We ruled in a long line of cases that
the power of the court to execute its judgment extends only to properties
unquestionably owned by the judgment debtor. (See Consolidated Bank and Trust
Corporation(solid Bank) supra.
IV
The main issue in G.R. No. 96437 centers on whether or not the complaint filed by
respondent Asibar against the petitioner states a cause of action.
In the lower court, the petitioner contended that the complaint is premature since
paragraph 2 of the Deed of Sale states that the balance shall be payable only upon the
dismissal of Civil Case No. 18426 (subject of the petition in G.R. No. 96056) and the
same shall be secured within two (2) weeks from the signing of the Deed of Sale on
February 10, 1988. In other words, the balance would be paid only when it is finally
ascertained as to who between the APT and Asibar owns the properties sold by the
latter. According to the petitioner, the private respondent still has to present proof of the
dismissal of Civil Case No. 18426. Hence, the petitioner argues that based on the Deed
of Sale, the contract between the two (2) parties, the private respondent possessed no
demandable right arising from the Deed of Sale.
The appellate court dismissed the petition on the ground that it has become moot and
academic in view of the December 29, 1989 decision of the Regional Trial Court of
Makati, Branch 60 in Civil Case No. 18426. The dispositive portion of the decision reads:
WHEREFORE, the Court hereby renders judgment as follows:
The COMPLAINT dated November 25, 1987 is DISMISSED;
The Order dated December 16, 1987 (pp. 87-90, Records) as clarified in the Order dated
July 19, 1988 granting the plaintiffs application for a writ of preliminary injunction (pp.
288-289, Id.) is LIFTED and SET ASIDE; and
The COUNTERCLAIMS of the defendants (other than SILVINO SANTOS and BIENVENIDO
HERMOGENES) are DISMISSED. (Rollo G.R. No. 96056, p. 42)
The appellate court ruled that the decision dismissing Civil Case No. 18426 and lifting the
injunction rendered the petition moot and academic.
The petitioner now contends that the appellate court committed grave abuse of
discretion in dismissing its petition for certiorari for being moot and academic. It argues

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that the dismissal of Civil Case No. 18426 provided in the Deed of Sale refers to a
decision which is final and executory considering that Civil Case No. 18426 is for the
annulment of the auction sale and certificate of sale from which respondent Asibar
derived the properties which he sold to the petitioner. Until, therefore, the sale of these
properties are declared valid by a final and executory decision, the respondent has no
right and interest in the same properties which he could transfer and sell to the
petitioner.
The well-settled rule is that when a party files a motion to dismiss the complaint for lack
of cause of action he is deemed to hypothetically admit the allegations thereof. (Nicanor
G. De Guzman, Jr. v. Court of Appeals, G.R. Nos. 92029-30, December 20, 1990)
It is clear from the Deed of Sale which was attached to the complaint and in fact the
basis for the complaint, that the vendee, the petitioner herein, is obligated under that
contract to pay the amount of P9,500,000.00 as follows:
xxx xxx xxx
b. Fourteen (14) days from the date Civil Case No. 18426 pending in Branch 60, is
dismissed, the VENDEE shall pay the amount of Four Million Pesos (P4,000,000.00) to
the VENDOR;
xxx xxx xxx
. . . In the event the restraining order is lifted, the payments under the above-schedule
shall be resumed; (pp. 1-4, Deed of Sale, Annex "B", Petition)
When, therefore, the trial court rendered its decision and dismissed Civil Case No. 18426
and at the same time lifted the injunction issued therein, the vendor, respondent Asibar,
acquired a demandable right against the petitioners in relation to their contract, the
Deed of Sale.
The cause of action must always consist of two elements: (1) the plaintiff's primary right
and the defendant's corresponding primary duty, whatever may be the subject to which
they relate person, character, property or contract; and (2) the delict or wrongful act
or omission of the defendant, by which the primary right and duty have been violated.
The cause of action is determined not by the prayer of the complaint but by the facts
alleged. (R.C.L. 489 21; Section 126, C.C.P.I.; Cagibao v. Lim, 50 Phil. 844
[1924]; See Martin, supra) (De Guzman, Jr. v. Hon. Court of Appeals, et al. supra)
Under the facts as they then stood, the Court of Appeals did not commit grave abuse of
discretion in dismissing the petition for being moot and academic.
Whether or not the Regional Trial Court's dismissal of Civil Case No. 18426 refers to a
dismissal that is final and executory was a defense which should be raised in the answer
and determined in the course of the proceedings of the case.
However, the issue in G.R. No. 96437 are inextricably intertwined with the issues in G.R.
No. 96056. Since we have found that the Sheriff's sale to Asibar was null and void, it
follows that Asibar could not have sold to Phoenix Iron and Steel Corporation the
properties which did not lawfully belong to him.
This case started as a complaint seeking the payment to Asibar by petitioner Phoenix
Iron and Steel Corporation (PISCOR) and Wilfredo Labayen, vice-president of PISCOR of
the alleged balance based on the deed of sale executed by respondent Asibar in favor of
PISCOR. The deed of sale covers PBM properties which Asibar acquired in the auction
sale which is the subject matter in G.R. No. 96056 to wit:
WHEREAS, the VENDOR is the purchaser at an auction sale conducted in NLRC Case No.
9-3296-84 of machineries and equipment located inside all the buildings in the realty
covered by TCT No. (11486) 41183, per certificate of sale dated November 23, 1987,
executed and issued by Silvino S. Santos, as an incident in the execution of the decision
in the aforementioned case entitled Ricardo Zurita, et al. v. Philippine Blooming Mills,
Co., Inc., (PBM) and BPI Investment Corporation, . . . (Rollo G.R. No. 96437, p. 38)

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Considering our ruling in G.R. No. 96056 where we annulled that auction sale of
February 23, 1987 conducted by Sheriff Silvino Santos, respondent Asibar has no rights
and/or interest over the PBM properties, the same properties of which are concededly
subject of the deed of sale between Asibar as vendor and petitioner PISCOR as vendee.
In view of this development Asibar's complaint against the petitioner to recover the
payment of the balance of the consideration agreed upon by the parties in the deed of
sale has no more legal basis and should now be dismissed.
WHEREFORE, the Court renders judgment as follows:
1. In G.R. No. 89767, the petition is GRANTED. The questioned decision and resolution
of the Court of Appeals are hereby reversed and set aside. The May 26, 1989 Order of
the Securities and Exchange Commission is declared null and void;
2. In G.R. No. 96056, the petition is GRANTED. The questioned decision of the Court of
Appeals is hereby SET ASIDE. The questioned auction sale conducted by Sheriff Silvino
Santos is declared null and void and the certificate of sale issued to respondent Alfredo
Asibar is cancelled. The Temporary Restraining Order issued on November 29, 1990 is
made PERMANENT; and
3. In G.R. No. 96437, the petition is declared MOOT and ACADEMIC. The Regional Trial
Court of Pasig Branch 151 is ordered to DISMISS Civil Case No. 56806.
SO ORDERED.
Narvasa, C.J., Melencio-Herrera, Cruz, Paras, Feliciano, Bidin, Grio-Aquino, Medialdea,

Regalado, Davide, Jr., Romero and Nocon, JJ., concur.


Padilla, J., took no part.
People vs Sia

G.R. No. 137457


November 21, 2001
PEOPLE
OF
THE
PHILIPPINES, plaintiff-appellee,
vs.
ROSAURO SIA y DICHOSO, JOHNNY BALALIO y DEZA, JIMMY PONCE y TOL and JOHN
DOE @ PEDRO MUOZ (at large), accused-appellants.
YNARES-SANTIAGO, J.:
Christian Bermudez was beaten to death and the taxicab he was driving was taken by
the assailants. His lifeless body, wrapped in a carton box, was recovered several days
later in a fishpond in Meycauayan, Bulacan. For the felonies, the above-named accused
were indicted for violation of R.A. 6539, otherwise known as the Anti-Carnapping Law,
and Murder in two (2) separate Informations, to wit:
Criminal Case No. Q-95-63962 for Violation of the Anti-Carnapping Law:
That on or about August 23, 1995, in the City of Quezon, Metro Manila, Philippines and
within the jurisdiction of this Honorable Court, herein accused, conspiring, confederating
and mutually helping one another did then and there willfully, unlawfully and feloniously
take, steal, and carry away one (1) motor vehicle described as Toyota Tamaraw FX;
Motor No. 2C-2983302; Chassis No. CF50-0014375; Plate No. NYT-243, owned by
BIENVENIDO CRUZ, killing the driver Christian Bermudez in the process, to the damage
and prejudice of the registered owner thereof and the heirs of Christian Bermudez.
CONTRARY TO LAW.1
Criminal Case No. Q-95-63963 for Murder:
That on or about 23 August 1995, in the City of Quezon, Metro Manila, Philippines, and
within the jurisdiction of this Honorable Court, the above-named accused with intent to
kill qualified by treachery, evident premeditation, taking advantage of superior strength,
employing means to weaken the defense or of means of persons to insure or afford

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impunity, conspiring, confederating and mutually helping one another, did then and
there willfully, unlawfully and feloniously attack, assault and use violence upon the
person of CHRISTIAN BERMUDEZ by beating him on the head and other parts of the
body, thereby causing his death.
CONTRARY TO LAW.2
At the arraignment, only Johnny Balalio y Deza and Jimmy Ponce y Tol appeared and
pleaded "Not Guilty."3 The third accused, Rosauro Sia y Dichoso, escaped from police
custody while on the way to the hospital for treatment.4 As a consequence, the two (2)
cases were subsequently consolidated and jointly tried against accused Johnny Balalio
and Jimmy Ponce only.
After trial, the court a quo rendered judgment against both accused imposing upon them
the supreme penalty of Death, thus:
WHEREFORE, premises considered, judgment is hereby rendered finding the accused
Johnny Balalio and Jimmy Ponce GUILTY beyond reasonable doubt as principals by
conspiracy of violation of R.A. No. 6539, as amended and hereby sentences them to
suffer the penalty of DEATH.
Accused are likewise adjudged jointly and severally [liable] to pay to Agripina Bermudez,
the mother of the deceased Christian Bermudez the sums of:
a. P50,000.00 as compensatory damages for the death of Christian Bermudez;
b. P200,000.00 as burial and other expenses incurred in connection with the death of
Christian; and
c. P3,307,199.60 (2/3 x [80-27] x 300 per day x 26 days (excluding Sundays) x 12
months) representing the loss of earning capacity of Christian Bermudez as taxi driver.
Costs against accused.
The cases of accused Rosauro Sia who escaped from custody before he was arraigned
and as against Peter Doe who was never apprehended and whose identity has never
been known are hereby ordered ARCHIVED, subject to activation when they are arrested
and brought before the bar of justice.
SO ORDERED.5itc-alf
On automatic review before this Court, accused-appellants raised the lone assigned error
that:
THE COURT A QUO ERRED IN CONVICTING THE ACCUSED-APPELLANTS FOR
VIOLATION OF RA 6539 (ANTI-CARNAPPING LAW) SOLELY ON THE BASIS OF THE
EXTRA-JUDICIAL CONFESSIONS OF ACCUSED ROSAURO SIA AND JIMMY PONCE
(EXHIBITS C AND D, RESPECTIVELY) WHICH ARE INADMISSIBLE IN EVIDENCE.6
The facts as summed up by the trial court are as follows:itc-alf
The vehicle claimed as carnapped is registered in the name of complainant Bienvenido C.
Cruz of No. 1125 Primero de Mayo Street, Tondo, Manila7 and operated as a taxi being
Unit 2 of KIRBEE TAXI and bearing the following description:
Toyota
Tamaraw FX
Make/Type : Wagon
Motor
Number

2-C 2983302

Chassis No. :

CF
0014375

Plate No.

NYT-243

50-

Color
: Maroon
The said taxi was taken from the garage and driven by its regular driver, Christian
Bermudez, the alleged murder victim at about 6:00 a.m. on August 23, 1995. The taxi

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98 | P a g e

was last seen at the vicinity of the Pegasus Night Club in Quezon City at about 10:30
p.m. on the said date with an unidentified passenger who surfaced later as the accused
Rosauro Sia, whose true name is allegedly Antonio Labrador (Mang Tony) and who
resides at San Francisco Del Monte. Accused Rosauro Sia appears to have gypped driver
Christian Bermudez to service him the following day (August 24, 1995) in the morning
and to be paid P150.00 per hour which was apparently accepted because Rosauro gave
instructions to accused Johnny Balalio and Jimmy Ponce to wait for him (Christian) that
following morning. When Christian returned to Sia's residence in San Francisco Del
Monte that morning, he was told to come back in the afternoon because that was the
instruction given him by accused Rosauro Sia. When Christian returned in the afternoon
in the Sia residence, he was asked to get inside. As soon as he alighted from the
Tamaraw FX taxi he was driving, his hands were tied by Johnny Balalio and was handed
to a certain "Pedro", the accused Peter Doe who has not been arrested and who told
Johnny Balalio and Johnny (sic) Ponce "Ako na'ng bahala dito". Christian was taken to
accused Rosauro and shortly afterwards, the latter was seen lugging with him a big
carton box from which blood was dripping. Accused Jimmy Ponce saw Rosauro hand the
carton-wrapped lifeless body of Christian inside the carnapped FX taxi. Before leaving
with the lifeless body of Christian loaded in the taxi, accused Sia gave P3,000.00 each to
Jimmy Ponce, Johnny Balalio and "Pedro" and admonished them not to say anything
about what happened. The ring taken from Christians8 was given to accused Jimmy
Ponce by Rosauro Sia.
On August 26, 1995, the lifeless body of Christian Bermudez was found and retrieved
from a fishpond in Meycauayan, Bulacan. This fact was broadcast over the radio and,
after hearing the same, Agripina Bermudez went to see the lifeless body retrieved from
the fishpond and confirmed it to be that of Christian, whom she claims is her eldest son
who was earning about P650.00 a day as a taxi driver.
Photographs were taken on the carton-wrapped body of Christian including one position
which shows the latter's body.9
Dr. Benito Caballero, Medico Legal Officer of Bulacan, conducted a postmortem
examination of the deceased body of Christian and found that the latter's death was due
to shock caused by massive external and intracranial hemorrhage on account of multiple
lacerations on the head and fracture of the skull due to use of hard object, possibly iron,
for which he issued certificates of death and postmortem death certificate.10
In the meantime, Bienvenido Cruz, the owner of the carnapped vehicle, reported to the
police authorities in Camp Crame the loss of his taxi.11On September 21, 1995, at about
10:30 p.m., the carnapped taxi was intercepted being driven by accused Rosauro Sia,
who was immediately placed in custody of the anti-carnapping authorities. While in
custody, Rosauro Sia managed to escape but he was recaptured on November 15, 1995
by the manhunt team created for that purpose. As accused Rosauro Sia claimed that he
bought the hot car from his co-accused Johnny Balalio and Jimmy Ponce, the latter were
picked up from their residence in Baseco, Isla Tawid, Port Area, Tondo, Manila and
investigated. Sworn Statement of the accused Rosauro Sia and Jimmy Ponce were
taken12 narrating their respective participations such as Sia's instruction to Jimmy to
guard his (Sia's) gate to deter passersby from snooping around and describing what
transpired inside Sia's residence at San Francisco Del Monte when Christian was tied and
killed. The Sworn Statement of Bienvenido Cruz, owner of the missing vehicle, was
likewise taken. On the basis of the sworn statements of accused Rosauro Sia and Jimmy
Ponce, Dr. Benito Caballero, Provincial Health Officer of Bulacan, together with the
Certificate of Registration of the FX Taxi and the Death and Postmortem Certificates
mentioned heretofore, the Special Operations Unit, Traffic Management Command, PNP,
Camp Crame, referred the matter to the authorities of the Department of Justice who,
after finding probable cause in the preliminary investigation, filed these cases of

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99 | P a g e

Violation of R.A. 6539, as amended, and of Murder against the above-named accused
which were consolidated together in this Branch for joint trial.13
In their lone assigned error, accused-appellants contend in sum that the extra-judicial
confessions of accused Rosauro Sia and Johnny Balalio, which the trial court heavily
relied upon, are inadmissible in evidence since they were executed in violation of their
right to counsel. Specifically, accused-appellants argue that the said extra-judicial
statements are inadmissible because they were obtained without compliance with the
requirements of the law for their admissibility.14
The Solicitor General agrees, stating that during the custodial investigation, Ponce and
Sia were not assisted by counsel as required by the Constitution. The trial court's finding
that Sia and Ponce were assisted by Prosecutor Pormento when they executed their
extra-judicial confessions did not meet the requirement of the law. The Solicitor General
further contends that, during his testimony, Ponce vehemently denied having voluntarily
executed his alleged statement; rather, he maintained that he was coerced to sign the
same and that he did not even know its contents.
Extra-judicial
confessions
must
conform
to
the
requirements
of
the
Constitution.15Indeed, a suspect's confession, whether verbal or non-verbal when taken
without the assistance of counsel without a valid waiver of such assistance regardless of
the absence of such coercion or the fact that it had been voluntarily given,16 is
inadmissible in evidence,17 even if appellant's confession were gospel truth.18
Be that as it may, the inadmissibility of the extra-judicial statements of Sia and Ponce
will not absolve accused-appellants from criminal liability because, as pointed out by the
Solicitor General, there still is independent evidence to establish their authorship of the
victim's killing on the occasion of the carnapping. The Solicitor General asserts that while
there was no prosecution witness who positively identified accused-appellants
asparticeps criminis, their culpability was nonetheless proven through circumstantial
evidence.
We agree.
Direct evidence of the commission of the crime is not the only matrix wherefrom a court
may draw its conclusions and findings of guilt.19 The rules on evidence20 and case law
sustain the conviction of the accused through circumstantial evidence when the following
requisites concur: (1) there must be more than one circumstance; (2) the facts from
which the inferences are derived are proven; and (3) the combination of all
circumstances is such as to produce a conviction beyond reasonable doubt of the guilt of
the accused.21
A circumspect scrutiny of the testimonies of the witnesses of both prosecution and
defense shows adequate evidentiary bases to establish the aforementioned
circumstances.@lawphil.net
First, when the police apprehended accused Rosauro Sia while he was in possession of
the carnapped vehicle, he immediately pointed to accused-appellants as his accomplices
in taking away the victim's vehicle.22 Notably, accused-appellants claimed to have met
Sia for the first time on August 24, 1995, when Sia supposedly passed by them looking
for a certain person. They saw Sia for the second time on November 15, 1995, when Sia
and some policemen came to their place to arrest them. If accused-appellants did not
actually participate in the perpetration of the crime, it certainly defies reason why Sia
would implicate them in so serious an offense when they were practically strangers to
him. In this regard, it must be borne in mind that the fact that a witness may have been
a co-conspirator in the commission of the offense is not in itself sufficient to dilute the
credibility of or, much less, be a ground to disregard altogether his testimony.23 Indeed:
By way of exception, the testimony of a co-conspirator may, even if uncorroborated, be
sufficient as when it is shown to be sincere in itself, because given unhesitatingly and in

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100 | P a g e

a straightforward manner, and is full of details which by their nature could not have
been the result of deliberate afterthought.24
Second, defense witness Porferio Fernando testified that accused-appellants were with
Rosauro Sia from August 25-28, 1995.25 When accused-appellants came back on August
28, 1995; they informed him that they were to guard a bodega owned by Sia, which
contained a carnapped vehicle.26 This testimony of Fernando confirms the fact that
accused-appellants were in the company of Rosauro Sia during that critical period when
the crime was perpetrated.
Third, upon his arrest, accused-appellant Jimmy Ponce voluntarily surrendered to the
police authorities a ring,27 admittedly belonging to the victim.28 It is a well-settled rule
that when a person is found in possession of a thing taken in the doing of a recent
wrongful act, he is presumed to be the taker and doer of the whole act.29 Thus, when
property stolen is found in the possession of a person who is unable to give a
satisfactory explanation of his possession thereof, he may be deemed to have committed
the crime of theft of said property.30 More apropos to the peculiar facts prevailing herein
is the case of People v. Prado,31 where we stated:
In the absence of an explanation of how one has come into the possession of stolen
effects belonging to a person wounded and treacherously killed, he must necessarily be
considered the author of the aggression and death of the said person and of the robbery
committed on him.
The application of this presumption validly applies to a case of carnapping for, indeed,
the concept of unlawful taking in theft, robbery and carnapping is the same and, had it
not been for the enactment of the Anti-Carnapping Act, the unlawful taking of the motor
vehicle would certainly fall within the purview of either theft or robbery.32
All told, the Court finds no reason to reverse the ruling of the court a quo insofar as the
crimes were committed. What remains to be determined is the propriety of the penalty
imposed on accused-appellants.@lawphil.net
In connection with the penalty imposed, the Solicitor General invites the Court's
attention to the erroneous imposition by the trial court of death on the accusedappellants. He points out that while the sentence was meted upon a finding that the
aggravating circumstances of treachery, abuse of superior strength and evident
premeditation attended the commission of the crime, these were not duly established in
the case at bar.
The observation is well-taken. Qualifying and aggravating circumstances which are taken
into consideration for the purpose of increasing the degree of the penalty imposed must
be proven with equal certainty as the commission of the act charged as criminal
offense.33
With regard to alevosia, there is treachery when the offender commits any of the crimes
against persons, employing means, methods or forms in the execution thereof which
tend directly and specially to insure its execution, without risk to himself arising from the
defense which the offended party might make.34 Treachery is considered present when:
(1) there is employment of means of execution that gives the person attacked no
opportunity to defend himself or to retaliate; and (2) the means or method of execution
was deliberately or consciously adopted by the culprit.35 For treachery to be appreciated,
it must be present and seen by the witness right at the inception of the attack.36 Where
no particulars are known as to how the killing began, its perpetration with treachery
cannot merely be supposed.37
In this case, there was neither a description of how the attack was commenced
whether it was sudden, unexpected and whether the victim was caught totally unaware
nor has there been a showing that the method of execution in the commission of the
crime was consciously or deliberately adopted by the malefactors. To
reiterate,alevosia cannot be established where no particulars are known regarding the

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manner in which the aggression was carried out or how it developed.38 It must be based
on positive or conclusive proof, not mere suppositions or speculations,39 and must be
proved as clearly and as convincingly as the killing itself.40
Similarly, the elements of evident premeditation must be established with equal certainty
as the criminal act itself before it can be appreciated as a qualifying
circumstance.41These elements are: (1) the time when the accused determined to
commit the crime; (2) an overt act manifestly indicating that they clung to their
determination to commit the crime; and (3) a sufficient lapse of time between the
decision to commit the crime and the execution thereof to allow the accused to reflect
upon the consequences of their act.42 The essence of evident premeditation is that the
execution of the criminal act is preceded by cool thought and reflection upon the
resolution to carry out the criminal intent within a space of time sufficient to arrive at a
calm judgment.43
In this case, there is no showing that the killing of Christian Bermudez was the product
of cool thought and reflection. There is absolutely no showing how and when the plan
was hatched or how long a time had elapsed before the crime was carried out. On the
contrary, what appears very much evident is that he was killed on the occasion of the
carnapping itself. Without such evidence, mere presumptions and inferences, no matter
how logical and probable, will not suffice to warrant the appreciation of this qualifying
circumstance of evident premeditation.44
Abuse of superior strength cannot likewise be appreciated. In People v. Flores,45 this
Court pointed out that this aggravating circumstance necessitates the showing of the
relative disparity in physical characteristics, usually translating into the age, gender, the
physical size and the strength of the aggressor and the victim. There is no proof that
accused-appellant utilized any notorious inequality to his advantage. In other words,
mere superiority in number is not enough to constitute superior strength.46
To be appreciated as a qualifying circumstance, what should be considered is not that
there were three or more assailants of one victim, but whether the aggressors purposely
took advantage of their combined strength in order to consummate the offense.47 In this
case, the prosecution did not present any direct proof that there was a deliberate intent
on the part of accused-appellants to take advantage of the obvious inequality of force
between them and the victim.
In the absence of any qualifying or aggravating circumstances which would merit the
imposition of death, the proper imposable penalty should be reclusion perpetua,
pursuant to Section 14 of R.A. No. 6539, viz:
Penalty for Carnapping Any person who is found guilty of carnapping, as the term is
defined in Section Two of this Act, shall, irrespective of the value of the motor vehicle
taken, be punished by imprisonment of not less than fourteen years and eight months
and not more than seventeen years and four months, when the carnapping is committed
without violence or intimidation of persons, or force upon things; and by imprisonment
for not less than seventeen years and four months and not more than thirty years, when
the carnapping is committed by means of violence against or intimidation of any person,
or force upon things; and the penalty of reclusion perpetua to death shall be imposed

when the owner, driver or occupant of the carnapped motor vehicle is killed or raped in
the course of the commission of the carnapping or on the occasion thereof. (Italics ours)
On the other hand, Article 63 (2) of the Revised Penal Code states:itc-alf
Rules for the application of indivisible penalties. In all cases in which the law
prescribes a single indivisible penalty, it shall be applied by the courts regardless of any
mitigating or aggravating circumstances that may have attended the commission of the
deed.@lawphil.net
In all cases in which the law prescribes a penalty composed of two indivisible penalties,
the following rules shall be observed in the application thereof:

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xxx
xxx
xxx
2. When there are neither mitigating nor aggravating circumstances in the commission
of the deed, the lesser penalty shall be applied.itc-alf
Anent the civil indemnity award, this Court finds the amount of P50,000.00 as death
indemnity proper, following prevailing jurisprudence,48 and in line with controlling
policy.49 The award of civil indemnity may be granted without any need of proof other
than the death of the victim.50 Though not awarded by the trial court, the victim's heirs
are likewise entitled to moral damages, pegged at P50,000.00 by controlling case
law,51 taking into consideration the pain and anguish of the victim's family52 brought
about by his death.53
However, the award of P200,000.00 as burial and other expenses incurred in connection
with the death of the victim must be deleted. The records are bereft of any receipt or
voucher to justify the trial court's award of burial and other expenses incurred in
connection with the victim's death. The rule is that every pecuniary loss must be
established by credible evidence before it may be awarded.54 Credence can be given only
to claims which are duly supported by receipts or other credible evidence.55
The trial court was correct in awarding damages for loss of earning capacity despite the
non-availability of documentary evidence.56 Damages representing net earning capacity
have been awarded by the Court based on testimony in several cases.57 However, the
amount of the trial court's award needs to be recomputed and modified accordingly.
In determining the amount of lost income, the following must be taken into account: (1)
the number of years for which the victim would otherwise have lived; and (2) the rate of
the loss sustained by the heirs of the deceased. The second variable is computed by
multiplying the life expectancy by the net earnings of the deceased, meaning total
earnings less expenses necessary in the creation of such earnings or income less living
and other incidental expenses. Considering that there is no proof of living expenses of
the deceased, net earnings are computed at fifty percent (50%) of the gross
earnings.58The formula used by this Court in computing loss of earning capacity is:
Net Earning = [2/3 x (80 - age at time
Capacity
of death) x (gross annual
income - reasonable and
necessary
living
expenses)]59
In this case, the Court notes that the victim was 27 years old at the time of his death
and his mother testified that as a driver of the Tamaraw FX taxi, he was earning P650.00
a day.60 Hence, the damages payable for the loss of the victim's earning capacity is
computed thus:
Gross
= P650 x 261 working days
Annual
= in
a
year
Earnings
P169,650.00
Net Earning = 2/3
x
(80-27)
x
Capacity
= [P169,650.00
= P84,825.00]
35.33
x
84,825.00
P2,996,867.20
Based on the foregoing computation, the award of the trial court with regard to lost
income is thus modified accordingly.
WHEREFORE, the decision of the Regional Trial Court of Quezon City, Branch 85, in
Criminal Cases No. Q-95-63963, finding accused-appellant guilty beyond reasonable
doubt of violation of Republic Act No. 6539 (The Anti-Carnapping Law) is AFFIRMED with
MODIFICATIONS. Accused-appellants are SENTENCED to suffer the penalty of reclusion

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perpetua; and are ORDERED, jointly and severally, to pay the heirs of the victim
Christian Bermudez the sum of P50,000.00 as civil indemnity, the sum of P50,000.00 as
moral damages, and the sum of P2,996,867.20 representing lost earnings. The award of
P200,000.00 as burial and other expenses is DELETED for lack of substantial proof.
SO ORDERED.itc-alf

Davide, Jr., C.J., Bellosillo, Melo, Puno, Vitug, Kapunan, Mendoza, Panganiban,
Quisumbing, Pardo, Buena, De Leon, Jr., Sandoval-Gutierrez, and Carpio, JJ.,concur.
People vs Doctolero

G.R. No. 131866, August 20, 2001


EOPLE OF THE PHILIPPINES, PLAINTIFF-APPELLEE, VS. CARLOS DOCTOLERO, SR.,
ACCUSED-APPELLANT.
DECISION
BUENA, J.:
Carlos Doctolero Sr. appeals from the decision dated 10 September 1997 in Criminal
Case No. 14735-R of the Regional Trial Court of Baguio City, Branch VI, finding him
guilty beyond reasonable doubt of the crime of murder.
The information against Doctolero statesThat on or about the 20th day of November, 1996, in the City of Baguio, Philippines,
and within the jurisdiction of the Honorable Court, the above-named accused, with intent
to kill and with treachery, did then and there willfully, unlawfully and feloniously shoot
one VICENTE GANONGAN JR. with a gun, thereby inflicting upon the latter gunshot
wounds of the trunk which caused hemorrhage, and as a result thereof, the said Vicente
Ganongan, Jr. died.
That in the commission of the offense the qualifying aggravating circumstance of
treachery attended the same considering that the accused suddenly attacked the victim
who did not have any means to defend himself because of the suddenness of the attack.
CONTRARY TO LAW.[1]
Upon arraignment, Doctolero entered a plea of not guilty. Thereafter, trial ensued.
Prosecution evidence showed that on November 20, 1996 at around 7:00 in the evening,
Vicente Ganongan Jr. and Roderick Litorco went to their friends boarding house on
Honeymoon Road, Baguio City. Thereat, Vicente Ganongan, Roderick Litorco, Regie
Daodaoan, Rex Tabanganay, Jeffrey Alimani and Florencio Dagson agreed to drink gin in
Sangatan Store, which is about 20 meters from the boarding house. After two (2) hours,
the group decided to go home. They went down Honeymoon road towards Rimando
road to get a taxi for Litorco. Upon noticing that Litorco could not carry himself, they
decided to bring him to their boarding house. Dagson assisted Litorco and walked ahead
of Ganongan, Daodaoan, Tabanganay and Alimani. As the latter four neared the Garcia
store along Honeymoon road, Carlos Garcia, with three companions, told them to stop,
pointing a gun at them. Hearing the commotion, Dagson who was walking about 5 to 7
meters ahead with Litorco rushed to the boarding house and sought help. When Dagson
came back, he was with Oliver Alimani, Arman Alimani and Dexter Daggay. When they
arrived, they saw Garcia pointing a gun at the group of Ganongan, Daodaoan,

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Tabanganay and Jeffrey Alimani. Oliver Alimani approached Garcia who in turn pointed
his gun at Oliver and identified himself as barangay kagawad. At this time, Carlos
Doctolero Sr. was standing at the edge of Honeymoon road. He then put his arm over
Daodaoans shoulder. Daoadaoan shoved Doctoleros hand and retreated. Doctolero
stepped back and fired twice at Daodaoan but missed. Tabanganay asked Daodaoan if
he was hit and upon answering that he was not, Tabanganay shouted at his friends to
run. When Ganongan turned around to run, Doctolero fired at him, hitting him twice.
Oliver Alimani came to Ganongans aid when the latter yelled that he was hit. Thereafter,
they hailed a taxi and rushed Ganongan to Saint Louis University Hospital where he
expired.
In his defense, accused-appellant denied the accusation against him. He testified that
while he was in his house watching a television program, the telephone rang. His wife
answered the phone and it turned out that it was Carlos Garcias wife asking for help.
When he opened his window and looked outside, he saw several men running and
shouting. Sensing trouble, he went out, took his licensed handgun and tucked it in his
waist. His wife followed. Arriving at the scene of the incident, he saw the group of young
men, drunk, shouting and holding stones poised to strike at the group of Carlos Garcia.
He tried to pacify the contending parties but the group of young men did not heed his
plea to stop the trouble and instead advanced towards him with stones held in their
hands. He then pulled his gun and fired a warning shot directed upwards. The group of
men continued to approach him. Thus, he was forced to fire another warning shot
directed towards the ground. As the group of young men approached him, he retreated
and his right foot slipped into the canal at the edge of the road where he fell. The
handgun that he was holding fell to the ditch. At this juncture, he heard two (2) more
shots coming from the direction of Carlos Garcia. Thereafter, he declared that a taxi
coming from upper Honeymoon road passed by. Upon reaching the Garcia store, one of
the passengers shouted and blamed Garcia in shooting one of their companions. He
claimed that he confronted Garcia about what he heard from the passengers of the taxi
but Garcia told him just to ignore what he heard. After the incident, he proceeded to
Garcias house. After a while, he went home and entered through the back door of his
house. He cleaned his gun, threw the spent shells, changed his soiled clothes and
narrated to his wife what happened. After some time, both he and his wife fell asleep.
As aforestated, accused-appellant was convicted of murder after appreciating the
aggravating circumstance of treachery. He was sentenced to suffer the penalty of
reclusion perpetua and was ordered to indemnify the heirs of Ganongan the amounts of
P50,000.00 as civil indemnity, P227,808.80 as actual damages, and P300,000.00 as
moral damages plus costs, to witWHEREFORE, the Court finds the accused Carlos Doctolero, Sr. guilty beyond
reasonable doubt of the offense of Murder, qualified by treachery defined and penalized
under Article 248 of the Revised Penal Code as charged in the Information, and hereby
sentences him to Reclusion Perpetua; to indemnify the heirs of deceased Vicente
Ganongan, Jr. the sum of P50,000.00 as indemnity for his death; the sum of
P227,808.80 as actual damages for expenses incurred for hospitalization, doctors fees,
funeral expenses, vigil and burial as a result of his death, and P300,000.00 as Moral
damages for the pain and mental anguish suffered by the heirs by reason of his death,
all indemnifications being without subsidiary imprisonment in case of insolvency, and to
pay the costs.

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The accused being a detention prisoner is entitled to be credited 4/5 of his preventive
imprisonment in the service of his sentence in accordance with Article 29 of the Revised
Penal Code.
The Court directs that the Prosecutors Office of Baguio conduct a preliminary
investigation on the participation of Carlos Garcia in the shooting incident resulting in the
death of Vicente Ganongan, Jr. on November 20, 1996, informing the latter accordingly
of the same and if warranted by the evidence, to file the appropriate Information.
SO ORDERED.[2]
In his appeal, accused-appellant contends that the trial court erred [3]
I. in disregarding the physical, testimonial and documentary evidence which, if
appreciated, would have exonerated the accused.
II. in anchoring its decision entirely on and giving full credence to the testimony of the
prosecutions purported eyewitness.
III. in giving primacy to, and basing its decision, on supposed weakness of the defense.
IV. in disregarding the unrebutted evidence of part of res gestae.
V. in completely disregarding the testimony of defense witness Zoilo Estolas.
VI. in disregarding the unrebutted evidence on the character and reputation of the
accused.
VII. in finding the existence of the aggravating circumstance of treachery.
VIII. in convicting the accused and disregarding the principle of proof beyond
reasonable doubt.
Accused-appellant professes his innocence and seeks an acquittal on the ground that the
prosecution failed to prove his guilt beyond reasonable doubt. He maintains that it was
Carlos Garcia who fired the fatal shots.[4]
Records reveal that Oliver Alimani[5] and Jeffrey Alimani[6] positively identified accusedappellant as the one who shot Ganongan when the latter was about to run. They were
present at the incident and saw at close range when accused-appellant fired his gun.
Their testimonies are consistent with the findings of the medico-legal officer who
conducted the autopsy on the cadaver that Ganongan sustained four (4) gunshot
wounds, consisting of two (2) points of entry and two (2) points of exit[7] such that the
first gunshot wound was the one located at the back.[8] Notably, a witness testimony
which is corroborated by the autopsy report is credible.[9] Accused-appellant insists that
the trial court erred in disregarding the testimonies of disinterested witnesses who
corroborated his defense. He stakes his appeal on the assertion that the testimonies of
prosecution witnesses were biased and inconsistent which should not be relied upon.
These allegations of inconsistent testimonies that it was impossible for Litorco, being
so drunk to be carried by just one man; that Litorco and Dagson, being so drunk, could
not walk faster than the rest of his friends who were following, about 5 to 7 meters,
behind;[10] that Dagson was inconsistent on the place where he left Litorco, whether in

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Sangatan store or in the boarding house;[11] or the incompatible testimony that the
boarding house was lighted or not when Dagson arrived and woke up his friends[12]
merely refer to minor details which do not negate the fact that the prosecution witnesses
saw the fatal shooting. Although there may be inconsistencies on minor details, the
same do not impair the credibility of the witness where there is consistency in relating
the principal occurrence and positive identification of the assailant.[13] As a whole,
prosecution witnesses were unanimous in identifying accused-appellant as the person
who killed Ganongan.
Accused-appellant avers that the trial court erred in not giving probative weight to the
testimony of defense witness Zoilo Estolas who testified that xxx he was in front of his store smoking cigarette at about 9:00 in the evening of
November 20, 1996. His store is between Garcias Store and Annabels Store. While
smoking, he heard chasing, shouting and stoning about 15 meters away from him. They
were familiar to him as the group of Kalinga students and they were chasing two male
persons who went down to the house of Engr. Genove. He did not recognize the two
male persons being chased. The group of Kalinga students were stopped by Garcia, a
barangay kagawad, and his three companions. Garcia shouted, You stop and raise your
hands, while pointing a gun at them. And the group of young men answered back.,
Why? What is our fault? Why do you point your gun at us? And Garcia insisted saying
he is a barangay official. At that time the young men were noisy and in a drunken state.
Suddenly, the 3 companions of Garcia engaged the young men in a street fight using
fists and feet. The rumble lasted about two minutes when one of the group of Kalinga
students ran away shouting, I will call the police! That was when the group of Garcia
and the group of Kalinga students parted ways. He saw again chasing and running. He
ran back to his store and it was then that he heard two successive gunshots. He did not
see who fired the successive gunshots. But he looked towards the source of the
gunshots and saw Doctolero and Garcia each holding a gun. And it was then that the
group of young men advanced towards Doctolero. The young men advanced towards
Doctolero with their hands poised to throw stones they were holding. Doctolero
retreated and fell to the canal. It was then that Garcia fired his gun. Apprehensive,
Estolas returned to his house. But while going towards his yard, he heard another burst
of gunfire. He did not see anymore who fired the last shot. He saw Garcia and Doctolero
going near the store of Garcia after which a taxicab came and one of the passengers
shouted, Vulva of your mother, Garcia. Why did you shoot one of our companions? We
will be back.[14]
Proceeding from Estolas testimony, even if admitted, will not reinforce the defense of
denial advanced by accused-appellant considering that he admitted that he did not see
who actually killed Ganongan. Moreover, his testimony that he heard the passenger of
the taxi shouting at Garcia and blaming him for shooting Ganongan suffers a fatal
defect. It has been established that prosecution witnesses do not know Garcia and
accused-appellant by name but merely refer to them as barangay kagawad. This,
nonetheless, does not affect the admissibility of the identification because one need not
identify the assailant by name. What is important is that he is positive as to the physical
identification of the accused.[15] Prosecution witnesses declared that they could identify
the person responsible in the shooting incident if ever they would see them again.[16]
They were able to immediately identify accused-appellant on the basis of the
photographs shown to them at the Barangay Affairs Office on November 21, 1996.

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In sum, accused-appellants appeal hinges on the credibility of the prosecution


witnesses. The trial court found the eyewitness account to be spontaneous, consistent
and credible.[17] Time and again, we have ruled that appellate courts will generally not
disturb the assessment of the trial court on matters of credibility, considering that the
latter was in a better position to appreciate the same, having heard and observed the
witnesses themselves and observed their deportment, as well as their manner of
testifying, during the trial.[18] We see no reason to depart from the well-entrenched
doctrine that findings of facts of the lower court are accorded due respect and weight
unless it has overlooked material and relevant points that would have led it to rule
otherwise.[19] Accused-appellants conviction was grounded on the strength of the
evidence of the prosecution positively establishing his presence at the scene of the crime
and identifying him as the one who fired the fatal shots. It is true that the prosecution
witnesses are friends of the deceased. Even so, other witnesses, who are relatives and
friends of the deceased, would not just indiscriminately impute the crime to anybody but
would necessarily identify and seek the conviction of the real culprit to attain justice.[20]
Relationship by itself does not give rise to the presumption of bias or ulterior motive, nor
does it ipso facto impair the credibility or tarnish the testimony of the witness.[21] No ill
motive was attributed to these witnesses that could make them falsely testify against
accused-appellant.
The trial court concluded that treachery attended the commission of the crime and
rationalizes in this wise xxx, given the circumstances above discussed that at the time Ganongan was shot he
was already on the run with his back turned towards Doctolero, there was no danger or
risk to the latter when he fired at Ganongan. Nor was there any necessity for it for
Ganongan was drunk, unarmed and on the run and could not possibly harm Doctolero.
In that situation there was no way Ganongan could defend himself. He was not armed.
He was drunk. He was running away. He could not see who was going to fire from
behind him. He would not know to whom and what direction the shots will be fired. He
cannot dodge or avoid the shots which he cannot see nor know when fired.
And since Honeymoon Road is an ascending road, literally Doctolero and Garcia had a
turkey shot. Doctolero was like shooting turkey. Ganongan was a sitting duck. Firing
once at Ganongan and the Kalinga students may be considered accidental even casual
impelled by the moments necessity. But firing at Ganongan once, twice, thrice, four
times and even five times would indicate already a method deliberately adopted to pick
anyone from the group to shoot at like in target practice. And if you consider that
Doctolero and Garcia both fired their guns simultaneously if not in rapid succession as
shown by the evidence, the treacherous manner in which Ganongan was shot can
readily be appreciated in that the Kalinga students running away were being shot at like
animals with the blazing guns of Doctolero and Garcia. There was completely no reason
to shoot them as they were simply drunk, noisy and unruly but unarmed.[22]
After a close scrutiny of the records, we are not fully persuaded that treachery qualified
the crime. Circumstances qualifying a killing to murder such as treachery must be proven
as indubitably as the crime itself.[23] For treachery to be appreciated, two conditions
must concur: (1) the employment of means of execution that gives the person attacked
no opportunity to defend himself or to retaliate; and (2) the said means of execution be
deliberately or consciously adopted.[24] In the instant case, the victim was shot at his
back while attempting to run. While the initial shooting that hit Ganongan at his back
appears to have been sudden and unexpected, suddenness of attack does not, of itself,

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suffice to support a finding of treachery, so long as the decision to kill was made at that
instant and the victims helpless position was accidental.[25] In the instant case,
prosecution witness Florencio Dagson testified that he was walking ahead of his friends
and he was not able to witness how the altercation started. The failure of the
prosecution to present evidence as to the manner in which the altercation started
precludes a finding that the killing was qualified by treachery.[26] Here, Dagsons
attention was caught by the loud voices coming from behind and seeing his friends
being stopped by a group of men, he hurriedly sought the help of his friends in the
boarding house. Arriving at the scene, Jeffrey Alimani, Oliver Alimani and Florencio
Dagson saw that both Carlos Garcia and accused-appellant were holding their respective
guns. Significantly, they testified that accused-appellant fired at Ganongan. To establish
treachery, the evidence must show that the accused has made some preparations to kill
the victim in such a manner as to ensure the execution of the crime or to make it
impossible or hard for the person attacked to defend himself. A killing done at the spur
of the moment is not treacherous.[27] What was clear was the fact that prosecution
witnesses saw accused-appellant shot Ganongan. No more, no less. The prosecution
failed to show by clear and convincing evidence that accused-appellant deliberately
adopted such means of execution to ensure the killing of Ganongan. Any doubt as to the
existence of treachery must be resolved in favor of the accused.[28] Hence, absent clear
and convincing proof of treachery, accused-appellant can only be convicted of homicide.
Under Article 249 of the Revised Penal Code, homicide is punishable by reclusion
temporal. When there are neither aggravating nor mitigating circumstances, the penalty
shall be imposed in its medium period.[29] Applying the Indeterminate Sentence Law
and there being no modifying circumstance, the minimum of the imposable penalty shall
be taken from the penalty next lower in degree, or more specifically prision mayor.
Accordingly, appellant shall suffer the indeterminate penalty of eight (8) years and one
(1) day of prision mayor, as minimum, to fourteen years (14) years, 8 months and one
(1) day of reclusion temporal, as maximum.
With respect to the damages awarded by the trial court, we deem it proper to reduce
the award to P112,413.40 representing funeral expenses, which were duly proven and
covered by receipts. Expenses relating to the 9th day, 40th day and 1st year
anniversaries cannot be considered in the award of actual damages as these were
incurred after a considerable lapse of time from the burial of the victim.[30] With respect
to the award of moral damages,[31] the same is reduced to P50,000.00 in accordance
with existing jurisprudence.
WHEREFORE, the decision appealed from is AFFIRMED with the MODIFICATION that,
instead of murder the Court finds accused-appellant, Carlos Doctorlero, Sr., guilty
beyond reasonable doubt of HOMICIDE and imposes upon him an indeterminate prison
term of eight (8) years and one (1) day of prision mayor, as minimum, to fourteen years
(14) years, 8 months and one (1) day of reclusion temporal, as maximum, and orders
him to pay the heirs of Vicente Ganongan Jr., P112,413.40 as actual damages,
P50,000.00 as civil indemnity, and P50,000.00 as moral damages plus costs.
SO ORDERED.
Bellosillo, (Chairman), Mendoza, Quisumbing, and De Leon, Jr., JJ., concur.
Calalas

vs

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CA

109 | P a g e

SECOND DIVISION
[G.R. No. 122039. May 31, 2000]
VICENTE CALALAS, petitioner, vs. COURT OF APPEALS, ELIZA JUJEURCHE SUNGA and
FRANCISCO SALVA, respondents.
D E C I S I ON
MENDOZA, J.:
This is a petition for review on certiorari of the decision of the Court of Appeals, dated
March 31, 1991, reversing the contrary decision of the Regional Trial Court, Branch 36,
Dumaguete City, and awarding damages instead to private respondent Eliza Jujeurche
Sunga as plaintiff in an action for breach of contract of carriage.
The facts, as found by the Court of Appeals, are as follows:
At 10 oclock in the morning of August 23, 1989, private respondent Eliza Jujeurche G.
Sunga, then a college freshman majoring in Physical Education at the Siliman University,
took a passenger jeepney owned and operated by petitioner Vicente Calalas. As the
jeepney was filled to capacity of about 24 passengers, Sunga was given by the
conductor an "extension seat," a wooden stool at the back of the door at the rear end of
the vehicle. Sclaw
On the way to Poblacion Sibulan, Negros Occidental, the jeepney stopped to let a
passenger off. As she was seated at the rear of the vehicle, Sunga gave way to the
outgoing passenger. Just as she was doing so, an Isuzu truck driven by Iglecerio Verena
and owned by Francisco Salva bumped the left rear portion of the jeepney. As a result,
Sunga was injured. She sustained a fracture of the "distal third of the left tibia-fibula
with severe necrosis of the underlying skin." Closed reduction of the fracture, long leg
circular casting, and case wedging were done under sedation. Her confinement in the
hospital lasted from August 23 to September 7, 1989. Her attending physician, Dr.
Danilo V. Oligario, an orthopedic surgeon, certified she would remain on a cast for a
period of three months and would have to ambulate in crutches during said period.
On October 9, 1989, Sunga filed a complaint for damages against Calalas, alleging
violation of the contract of carriage by the former in failing to exercise the diligence
required of him as a common carrier. Calalas, on the other hand, filed a third-party
complaint against Francisco Salva, the owner of the Isuzu truck. Korte
The lower court rendered judgment against Salva as third-party defendant and absolved
Calalas of liability, holding that it was the driver of the Isuzu truck who was responsible
for the accident. It took cognizance of another case (Civil Case No. 3490), filed by
Calalas against Salva and Verena, for quasi-delict, in which Branch 37 of the same court
held Salva and his driver Verena jointly liable to Calalas for the damage to his jeepney.
Rtcspped
On appeal to the Court of Appeals, the ruling of the lower court was reversed on the
ground that Sungas cause of action was based on a contract of carriage, not quasidelict, and that the common carrier failed to exercise the diligence required under the
Civil Code. The appellate court dismissed the third-party complaint against Salva and
adjudged Calalas liable for damages to Sunga. The dispositive portion of its decision
reads:
WHEREFORE, the decision appealed from is hereby REVERSED and SET ASIDE, and
another one is entered ordering defendant-appellee Vicente Calalas to pay plaintiffappellant:
(1) P50,000.00 as actual and compensatory damages;
(2) P50,000.00 as moral damages;
(3) P10,000.00 as attorneys fees; and

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(4) P1,000.00 as expenses of litigation; and


(5) to pay the costs.
SO ORDERED.
Hence, this petition. Petitioner contends that the ruling in Civil Case No. 3490 that the
negligence of Verena was the proximate cause of the accident negates his liability and
that to rule otherwise would be to make the common carrier an insurer of the safety of
its passengers. He contends that the bumping of the jeepney by the truck owned by
Salva was a caso fortuito. Petitioner further assails the award of moral damages to
Sunga on the ground that it is not supported by evidence. Sdaadsc
The petition has no merit.
The argument that Sunga is bound by the ruling in Civil Case No. 3490 finding the driver
and the owner of the truck liable for quasi-delict ignores the fact that she was never a
party to that case and, therefore, the principle of res judicata does not apply. Missdaa
Nor are the issues in Civil Case No. 3490 and in the present case the same. The issue in
Civil Case No. 3490 was whether Salva and his driver Verena were liable for quasi-delict
for the damage caused to petitioners jeepney. On the other hand, the issue in this case
is whether petitioner is liable on his contract of carriage. The first, quasi-delict, also
known as culpa aquiliana or culpa extra contractual, has as its source the negligence of
the tortfeasor. The second, breach of contract or culpa contractual, is premised upon the
negligence in the performance of a contractual obligation.
Consequently, in quasi-delict, the negligence or fault should be clearly established
because it is the basis of the action, whereas in breach of contract, the action can be
prosecuted merely by proving the existence of the contract and the fact that the obligor,
in this case the common carrier, failed to transport his passenger safely to his
destination. In case of death or injuries to passengers, Art. 1756 of the Civil Code
provides that common carriers are presumed to have been at fault or to have acted
negligently unless they prove that they observed extraordinary diligence as defined in
Arts. 1733 and 1755 of the Code. This provision necessarily shifts to the common carrier
the burden of proof. Slxmis
There is, thus, no basis for the contention that the ruling in Civil Case No. 3490, finding
Salva and his driver Verena liable for the damage to petitioners jeepney, should be
binding on Sunga. It is immaterial that the proximate cause of the collision between the
jeepney and the truck was the negligence of the truck driver. The doctrine of proximate
cause is applicable only in actions for quasi-delict, not in actions involving breach of
contract. The doctrine is a device for imputing liability to a person where there is no
relation between him and another party. In such a case, the obligation is created by law
itself. But, where there is a pre-existing contractual relation between the parties, it is the
parties themselves who create the obligation, and the function of the law is merely to
regulate the relation thus created. Insofar as contracts of carriage are concerned, some
aspects regulated by the Civil Code are those respecting the diligence required of
common carriers with regard to the safety of passengers as well as the presumption of
negligence in cases of death or injury to passengers. It provides: Slxsc
Art. 1733. Common carriers, from the nature of their business and for reasons of public
policy, are bound to observe extraordinary diligence in the vigilance over the goods and
for the safety of the passengers transported by them, according to all the circumstances
of each case.
Such extraordinary diligence in the vigilance over the goods is further expressed in
articles 1734, 1735, and 1746, Nos. 5,6, and 7, while the extraordinary diligence for the
safety of the passengers is further set forth in articles 1755 and 1756.
Art. 1755. A common carrier is bound to carry the passengers safely as far as human
care and foresight can provide, using the utmost diligence of very cautious persons, with
due regard for all the circumstances.

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Art. 1756. In case of death of or injuries to passengers, common carriers are presumed
to have been at fault or to have acted negligently, unless they prove that they observed
extraordinary diligence as prescribed by articles 1733 and 1755.
In the case at bar, upon the happening of the accident, the presumption of negligence
at once arose, and it became the duty of petitioner to prove that he had to observe
extraordinary diligence in the care of his passengers. Scslx
Now, did the driver of jeepney carry Sunga "safely as far as human care and foresight
could provide, using the utmost diligence of very cautious persons, with due regard for
all the circumstances" as required by Art. 1755? We do not think so. Several factors
militate against petitioners contention. Slx
First, as found by the Court of Appeals, the jeepney was not properly parked, its rear
portion being exposed about two meters from the broad shoulders of the highway, and
facing the middle of the highway in a diagonal angle. This is a violation of the R.A. No.
4136, as amended, or the Land Transportation and Traffic Code, which provides:
Sec. 54. Obstruction of Traffic. - No person shall drive his motor vehicle in such a
manner as to obstruct or impede the passage of any vehicle, nor, while discharging or
taking on passengers or loading or unloading freight, obstruct the free passage of other
vehicles on the highway.
Second, it is undisputed that petitioners driver took in more passengers than the
allowed seating capacity of the jeepney, a violation of 32(a) of the same law. It
provides: Mesm
Exceeding registered capacity. - No person operating any motor vehicle shall allow more
passengers or more freight or cargo in his vehicle than its registered capacity.
The fact that Sunga was seated in an "extension seat" placed her in a peril greater than
that to which the other passengers were exposed. Therefore, not only was petitioner
unable to overcome the presumption of negligence imposed on him for the injury
sustained by Sunga, but also, the evidence shows he was actually negligent in
transporting passengers. Calrky
We find it hard to give serious thought to petitioners contention that Sungas taking an
"extension seat" amounted to an implied assumption of risk. It is akin to arguing that the
injuries to the many victims of the tragedies in our seas should not be compensated
merely because those passengers assumed a greater risk of drowning by boarding an
overloaded ferry. This is also true of petitioners contention that the jeepney being
bumped while it was improperly parked constitutes caso fortuito. A caso fortuito is an
event which could not be foreseen, or which, though foreseen, was inevitable. This
requires that the following requirements be present: (a) the cause of the breach is
independent of the debtors will; (b) the event is unforeseeable or unavoidable; (c) the
event is such as to render it impossible for the debtor to fulfill his obligation in a normal
manner, and (d) the debtor did not take part in causing the injury to the creditor.
Petitioner should have foreseen the danger of parking his jeepney with its body
protruding two meters into the highway. Kycalr
Finally, petitioner challenges the award of moral damages alleging that it is excessive
and without basis in law. We find this contention well taken.
In awarding moral damages, the Court of Appeals stated: Kyle
Plaintiff-appellant at the time of the accident was a first-year college student in that
school year 1989-1990 at the Silliman University, majoring in Physical Education.
Because of the injury, she was not able to enroll in the second semester of that school
year. She testified that she had no more intention of continuing with her schooling,
because she could not walk and decided not to pursue her degree, major in Physical
Education "because of my leg which has a defect already."
Plaintiff-appellant likewise testified that even while she was under confinement, she
cried in pain because of her injured left foot. As a result of her injury, the Orthopedic

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Surgeon also certified that she has "residual bowing of the fracture side." She likewise
decided not to further pursue Physical Education as her major subject, because "my left
leg x x x has a defect already."
Those are her physical pains and moral sufferings, the inevitable bedfellows of the
injuries that she suffered. Under Article 2219 of the Civil Code, she is entitled to recover
moral damages in the sum of P50,000.00, which is fair, just and reasonable.
As a general rule, moral damages are not recoverable in actions for damages predicated
on a breach of contract for it is not one of the items enumerated under Art. 2219 of the
Civil Code. As an exception, such damages are recoverable: (1) in cases in which the
mishap results in the death of a passenger, as provided in Art. 1764, in relation to Art.
2206(3) of the Civil Code; and (2) in the cases in which the carrier is guilty of fraud or
bad faith, as provided in Art. 2220.
In this case, there is no legal basis for awarding moral damages since there was no
factual finding by the appellate court that petitioner acted in bad faith in the
performance of the contract of carriage. Sungas contention that petitioners admission in
open court that the driver of the jeepney failed to assist her in going to a nearby hospital
cannot be construed as an admission of bad faith. The fact that it was the driver of the
Isuzu truck who took her to the hospital does not imply that petitioner was utterly
indifferent to the plight of his injured passenger. If at all, it is merely implied recognition
by Verena that he was the one at fault for the accident. Exsm
WHEREFORE, the decision of the Court of Appeals, dated March 31, 1995, and its
resolution, dated September 11, 1995, are AFFIRMED, with the MODIFICATION that the
award of moral damages is DELETED.
SO ORDERED.
Bellosillo, (Chairman), and Buena, JJ., concur.
Quisumbing, and De Leon, Jr., JJ., on leave.
Ludo and Luym Corp vs CA
G.R. No. 125483
February 1, 2001
LUDO
AND
LUYM
CORPORATION, petitioner,
vs.
COURT OF APPEALS, GABISAN SHIPPING LINES, INC. and/or ANSELMO
OLASIMAN, respondents.
QUISUMBING, J.:
This petition for review1 under Rule 45 of the Revised Rules of Court seeks to annul and
set aside the decision2 dated January 10, 1996 of the Court of Appeals which reversed
and set aside the decision of the Regional Trial Court of Cebu City, Branch IX, and the
resolution3 dated
June
11,
1996,
denying
petitioner's
motion
for
reconsideration.1wphi1.nt
Petitioner Ludo & Luym Corporation is a domestic corporation engaged in copra
processing with plant and business offices in Cebu City. Private Respondent Gabisan
Shipping Lines was the registered owner and operator of the motor vessel MV Miguela,
while the other private respondent, Anselmo Olasiman, was its captain.
Petitioner owns and operates a private wharf used by vessels for loading and unloading
of copra and other processed products. Among its wharf's facilities are fender pile
clusters for docking and mooring.
On May 21, 1990, at around 1:30 P.M., while MV Miguela was docking at petitioner's
wharf, it rammed and destroyed a fender pile cluster. Petitioner demanded damages
from private respondents. The latter refused. Hence, petitioner filed a complaint for
damages before the Regional Trial Court of Cebu.

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Petitioner's evidence during trial showed that on May 21, 1990, at 1:30 P.M., MV
Miguela came to dock at petitioner's wharf. Ireneo Naval, petitioner's employee, guided
the vessel to its docking place. After the guide (small rope) was thrown from the vessel
and while the petitioner's security guard was pulling the big rope to be tied to the
bolar, MV Miguela did not slow down. The crew did not release the vessel's anchor.
Naval shouted "Reverse" to the vessel's crew, but it was too late when the latter
responded, for the vessel already rammed the pile cluster. The impact disinclined the
pile cluster and deformed the cable wires wound around it. Naval immediately informed
the vessel's captain and its chiefmate of the incident, and instructed the guard-on-duty,
Alfredo Espina, to make a spot report. The incident was reported to Atty. Du, petitioner's
vice-president for legal and corporate affairs. Atty. Du in turn sent formal demand letters
to private respondents. Marine surveyor Carlos Degamo inspected the damage on the
pile cluster and found that one post was uprooted while two others were loosened and
that the pile cluster was leaning shoreward. Degamo hired skin diver Marvin Alferez, who
found that one post was broken at about 7 inches from the seabed and two other posts
rose and cracked at the bottom. Based on these findings, Degamo concluded that the
two raised posts were also broken under the seabed and estimated the cost of repair
and replacement at P95,000.00.
Private respondents denied the incident and the damage. Their witnesses claimed that
the damage, if any, must have occurred prior to their arrival and caused by another
vessel or by ordinary wear and tear. They averred that MV Miguela started to slow down
at 100 meters and the crew stopped the engine at 50 meters from the pier; that Capt.
Anselmo Olasiman did not order the anchor's release and chief mate Manuel Gabisan did
not hear Naval shout "Reverse". Respondents claimed that Naval had no business in the
vessels' maneuvering. When Naval informed the vessel's officers of the incident,
Olasiman sent their bodega man, Ronilo Lazara, to dive on the same afternoon to check
on the alleged damage. Lazara told Olasiman that there was no damage. However,
during direct examination, Lazara testified that he found a crack on the side of the pile
cluster, one post detached from the seabed at a distance of about 7 inches, and
seashells and seaweeds directly underneath the uprooted post. There were scattered
pieces of copra at the place where MV Miguela docked, which indicated the prior docking
by other vessels. After MV Miguela left, another vessel docked in the same area.
Petitioner did not prevent MV Miguela from departing. When chiefmate Gabisan went to
Atty. Du, the latter told him not to mind the incident.
On rebuttal, petitioner presented Atty. Du who testified that Gabisan never went to his
office after receiving the letter-complaint; that petitioner never received any reply to its
demand letters; and that the first time Atty. Du saw Gabisan was during the pre-trial.
On May 14, 1993, the trial court disposed the case in favor of petitioner, thus:
WHEREFORE, premises considered, this court hereby renders judgment in favor of the
plaintiff, ordering the defendants, jointly and severally, to pay the plaintiff the following:
1) Php 70,000.00 actual damages, plus interest at the rate of 12% per annum from the
time the decision is received by defendants until fully paid;
2) Php 15,000.00 exemplary damages;
3) Php 15,000.00 attorney's fees;
4) Php 10,000.00 litigation expenses.
COSTS AGAINST THE DEFENDANTS.
SO ORDERED.4
In finding in favor of petitioner, the trial court found that it was able to prove by
preponderance of evidence that MV Miguela rammed and damaged the pile cluster; that
petitioner's witnesses, Naval and Espina, actually saw the incident; that respondents
failed to refute the testimony of marine surveyor Degamo and skin diver Alferez on the

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damages; that the officers and crew of MV Miguela were negligent; and that
respondents are solidarily liable for the damages.
Upon private respondent's appeal, the Court of Appeals reversed the trial court on
January 10, 1996, in its decision that reads:
WHEREFORE, in view of the foregoing, judgment is rendered REVERSING and SETTING
aside the decision of the Court a quo, hereby entering a new one DISMISSING the
Complaint for lack of merit.
No pronouncement as to costs.
SO ORDERED.5
The CA found that petitioner's eyewitness Naval was incompetent to testify on the
negligence of the crew and officers of MV Miguela; that there were other vessels that
used the wharf for berthing the petitioner's evidence did not positively prove that it
wasMV Miguela that rammed the pile cluster; that the photographs of the pile cluster
taken after the incident showed no visible damages; that, as shown by private
respondents' witness, there were seashells and seaweeds directly under the uprooted
post, which indicated that the breaking happened a long time ago.
The CA denied the motion for reconsideration. Hence, this petition for review where
petitioner assigns the following errors:
A. THE COURT OF APPEALS ACTED IN EXCESS OF ITS JURISDICTION WHEN IT WENT
BEYOND THE ISSUES RAISED IN THE ASSIGNMENT OF ERRORS OF PRIVATE
RESPONDENT.
B. THE DECISION OF THE COURT OF APPEALS IS GROUNDED ON SPECULATION,
SURMISES AND CONJECTURES AND HAS DEPARTED FROM THE RULES ON EVIDENCE.
C. THE COURT OF APPEALS MISAPPREHENDED THE FACTS AND ITS FINDINGS IS
TOTALLY NOT IN ACCORD WITH THE EVIDENCE ON RECORD.
D. THE COURT OF APPEALS DEPARTED FROM THE RULE OF RES IPSA LOQUITUR.6
The issues for resolution can be reduced into three:
1. Did the CA go beyond the issues raised?
2. Can this Court review factual questions in this case?
3. Is the doctrine of res ipsa loquitur applicable to this case?
On the first issue, petitioner argues that private respondents did not assign as an error
eyewitness Ireneo Naval's incompetence to testify on the negligence of MV Miguela's
officers and crew. Private respondent's brief contained nothing but general statements
and reproductions of excerpts of the transcript of stenographic notes (TSN) which could
not pass for a valid assignment of errors.
We note that Naval's incompetence was not one of the assigned errors in private
respondents' brief.7 However, private respondents raised it in connection with the issue
of their negligence, which appeared in the second assigned error. In reproducing the
portion of the TSN consisting of Naval's cross examination, private respondents' counsel
was indirectly attacking Naval's competence and invoking it vis a vis the trial court's
finding, based on Naval's testimony, that MV Miguela was sailing at a speed unusual for
a docking vessel.8 The CA did not err in addressing the matter. An appellate court can
consider an unassigned error on which depends the determination of the question in the
properly assigned error.9 The issue of negligence of MV Miguela's officers and crew
depends significantly on the determination of whether Naval is competent to testify on
the maneuvering of a docking vessel.
The second issue is whether or not we can review questions of fact. Petitioner, in its
second and third assigned errors, claims that the appellate court relied on speculations
and conjectures when it ruled that MV Miguela could not have rammed the pile cluster
because of the presence of other vessels; that petitioner's evidence, corroborated by
those of private respondents, is positive and sufficient to prove respondents' liability;

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that evidence on record showed the negligence and recklessness of MV Miguela's officers
and crew; and that the crew were grossly incompetent and incapable to man the vessel.
Private respondents claim that the above are conclusions of fact which this Court may
not review.
While the rule is that this Court is limited only to questions of law in a petition for
review, there are exceptions, among which are when the factual findings of the Court of
Appeals and the trial court conflict, and when the appellate court based its conclusion
entirely on speculations, surmises, or conjectures.10
Our review of the records constrains us to conclude that indeed MV Miguela rammed and
damaged petitioner's fender pile cluster. Naval and Espina witnessed the incident, saw
the impact and heard cracking sounds thereafter. The trial court found them credible.
We respect this observation of the trial court, for in the appreciation of testimonial
evidence and attribution of values to the declaration of witnesses, it is the trial judge
who had the chance to observe the witnesses and was in a position to determine if the
witnesses are telling the truth or not.11 Further, private respondents' witnesses,
Olasiman and Gabisan, acknowledged that Naval was at the pier waving a handkerchief
to direct them to their berthing place.12
Private respondents' claim that they could not have rammed and damaged the pile
cluster because other vessels used the same area for berthing is a mere speculation
unworthy of credence.
Petitioner's witnesses, marine surveyor Degamo and diver Alferez, confirmed the
damage. Degamo had eighteen years of experience as marine surveyor and belonged to
an independent survey company. Alferez was hired and directly supervised by Degamo
for the task.13 The latter testified during trial that he examined the pile cluster at the
portion above the water line by going near it and found that one cluster pile was
moving, two were loose, and the whole pile cluster was leaning shoreward and
misalligned.14Alferez, under oath, testified that he dived two or three times and saw one
broken post and two slightly uprooted ones with a crack on each.15
On the other hand, private respondents' evidence on this matter was contradictory. As
testified by Olasiman, when he asked Lazara on the result of his diving, the latter said
that there was no damage.16 However, when Lazara testified in court, he said he found a
crack on the side of the pile cluster, with one pile no longer touching the seabed and
directly underneath it were seashells and seaweeds. Further, he said that he informed
the captain about this.17 We find Lazara's testimony as an afterthought, lacking
credibility. In addition, Leonilo Lazara, was a mere bodegero of MV Miguela. He could
not possibly be a competent witness on marine surveys.18
Finally, is the doctrine of res ipsa loquitur applicable to this case? Petitioner argues that
the Court of Appeals erred when it reversed the trial court for the latter's heavy reliance
on Naval's testimony. The appellate court overlooked the fact that aside from Naval's
testimony, the trial court also relied on the principle of res ipsa loquitur to establish
private respondents' negligence.
The doctrine of res ipsa loquitur was explained in Batiquin vs. Court of Appeals, 258
SCRA 334 (1996), thus:
Where the thing which causes injury is shown to be under the management of the
defendant, and the accident is such as in the ordinary course of things does not happen
if those who have the management use proper care, it affords reasonable evidence, in
the absence of an explanation by the defendant, that the accident arose from want of
care.
The doctrine recognizes that parties may establish prima facie negligence without direct
proof and allows the principle to substitute for specific proof of negligence. This is
invoked when under the circumstances, direct evidence is absent and not readily
available.19

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In our view, all the requisites for recourse to this doctrine exist. First, MV Miguela was
under the exclusive control of its officers and crew. Petitioner did not have direct
evidence on what transpired within as the officers and crew maneuvered the vessel to its
berthing place. We note the Court of Appeals' finding that Naval and Espina were not
knowledgeable on the vessel's maneuverings, and could not testify on the negligence of
the officers and crew. Second, aside from the testimony that MV Miguela rammed the
cluster pile, private respondent did not show persuasively other possible causes of the
damage.
Applying now the above, there exists a presumption of negligence against private
respondents which we opine the latter failed to overcome. Additionally, petitioner
presented tangible proof that demonstrated private respondents' negligence. As testified
by Capt. Olasiman, from command of "slow ahead" to "stop engine", the vessel will still
travel 100 meters before it finally stops. However, he ordered "stop engine" when the
vessel was only 50 meters from the pier. Further, he testified that before the vessel is
put to slow astern, the engine has to be restarted. However, Olasiman can not estimate
how long it takes before the engine goes to slow astern after the engine is restarted.
From these declarations, the conclusion is that it was already too late when the captain
ordered reverse. By then, the vessel was only 4 meters from the pier,20 and thus
rammed it.
Respondent company's negligence consists in allowing incompetent crew to man its
vessel. As shown also by petitioner, both Captain Olasiman and Chief Mate Gabisan did
not have a formal training in marine navigation. The former was a mere elementary
graduate21 while the latter is a high school graduate. Their experience in navigation22was
only as a watchman and a quartermaster, respectively.1wphi1.nt
WHEREFORE, the petition is GRANTED. The decision and resolution of the Court of
Appeals are ANNULLED AND SET ASIDE, and the decision of the Regional Trial Court of
Cebu City, Branch IX, is hereby REINSTATED.
Costs against private respondents.
SO ORDERED.
Bellosillo, Mendoza, Buena, and De Leon, Jr., JJ., concur.
-------------------------------------------------------------------------------------------------------

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G.R. No. , 198 SCRA


Republic
of
the
Philippines
SUPREME
COURT
Manila
EN BANC
DECISION
June 30, 1991
G.R.
No. ,
,
vs.
,.
, J.:
p
This is a petition for review on certiorari of the decision of respondent court,
promulgated on September 20, 1988 in CA-G.R. CV Nos. 07824-88, ordering the
registration of Lot No. 2880 of the Cadastral Survey of Norzagaray, Bulacan in the name
of petitioner Republic Cement Corporation but excluding the portions thereof described
in Plans PSU 229592, 227659 and 225872 of the Norzagaray Cadastre which were
ordered registered in the name of private respondent Moises Correa. 1
As found by respondent court, petitioner Republic Cement Corporation filed a petition in
the then Court of First Instance of Bulacan, Branch V at Sta. Maria, docketed therein as
Land Registration Case No. (SM) N-093, for the registration in its name of a parcel of
land identified as Lot No. 2880 of the Cadastral Survey of Norzagaray, Bulacan, Plan Ap16404, located in barrio Minuyan, Norzagaray, Bulacan, with an area of 207,996 square
meters, more or less. It is alleged that said applicant purchased the parcel of land from
persons who, by themselves or through their predecessors in interest, had occupied and
cultivated it continuously since the Spanish regime to the present and had been in open,
continuous, exclusive and notorious possession and occupation of said parcel of land
under a bona fide claim of ownership, except against the Government, since July 26,
1894.
The application was opposed by spouses Jose Rayo and Susana Mangahas and one
Pedro Legaspi. According to the oppositor spouses, they are the owners of the east
central portion of the parcel of land, title to which is sought to be registered by
petitioner, covered by Plans PSU 229592 and 227659, with a total area of 68,389 square
meters, having been in actual, open, public, adverse, peaceful and uninterrupted
possession and occupation thereof in the concept of owner for a period of over sixty (60)
years and having acquired ownership thereof by donation on the occasion of their
marriage from the parents of Jose Rayo. Oppositor Pedro Legaspi claims that he is the
owner of the eastern portion of the same parcel of land covered by Plan PSU-225872,
with a total area of 31,887 square meters, having been in actual, open, public, adverse,
peaceful and uninterrupted possession and occupation thereof in the concept of owner
for a period of over sixty (60) years and having acquired ownership thereof by purchase
from its original owner.
Accordingly, the spouses Jose Rayo and Susana Mangahas and Pedro Legaspi sought to
register title to the respective portions of the parcel of land in question subject of and
based on the allegations in their respective oppositions to the application of petitioner,
which counter-applications were docketed therein as Land Registration Cases Nos. (SM)
N-146 and (SM) N-147. Petitioner duly filed an opposition to said applications on the
grounds alleged in its application and the Solicitor General likewise opposed said
applications.
Applicants/oppositors Pedro Legaspi and the spouses Jose Rayo and Susana Mangahas
were later substituted by private respondent Moises Correa as subsequent purchaser of
the aforesaid portions of said parcel of land.

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118 | P a g e

By agreement of the parties the three cases were jointly tried. On August 25, 1982, the
lower court, acting on eleven (11) land registration cases the applicants wherein were
corporations and one of which was the application of petitioner in Land Registration Case
No. (SM) N-093, issued an order the pertinent part of which reads:
In view of the recent ruling of the Honorable Supreme Court in G.R. No. L-49623(Manila
Electric Company, Petitioner-Appellant vs. Judge Floreliana Castro-Bartolome of the
Court of First Instance of Rizal, Makati, Br. XV, & Republic of the Philippines,
Respondents-Appellees) promulgated on June 29, 1982 affecting applications for land
registration by juridical entities and it appearing that in the above-cited cases juridical
parties are involved and therefore falling under the same category, said cases are
hereby dismissed. 2
On August 29, 1983, judgment was rendered in Land Registration Cases Nos. (SM) N146 and (SM) N-147, the dispositive portion of which provides:
WHEREFORE, confirming the Order of Special default entered on September 16, 1971
for these two registration cases, the Court hereby orders the registration of Psu-225872,
Norzagaray Cadastre, depicted in the plan which was surveyed for Pedro Legaspi on
March 13, 1977 and Psu-229592 and Psu-227659 as depicted in the plan which was
surveyed for spouses Jose Rayo and Susana Mangahas on March 12, 1966 and May 15,
1966, respectively, together with its corresponding technical description and all
improvements existing thereon, in the name of substituted applicant Moises Correa, of
legal age, Filipino citizen, married to Rosario N. Correa, with residence at Poblacion,
Norzagaray, Bulacan.
After this decision shall have become final, the corresponding decree shall issue. 3
Herein petitioner appealed from the order of dismissal of its application, the denial of its
motion for the reconsideration thereof and the judgment rendered by the trial court. The
Solicitor General, in behalf of the Director of Lands, also appealed from the aforesaid
judgment.
On August 13, 1984, herein private respondent Correa filed an action for recovery of
possession and damages (accion publiciana) against petitioner in the Regional Trial
Court of Bulacan, Branch XVII, involving the same parcel of land subject of the aforesaid
three cases for registration of title, which action was docketed therein as Civil Case No.
7678-M.
Petitioner moved to dismiss the complaint against it on the ground that the order of
dismissal of its application and the judgment rendered in the land registration cases
have not yet become final as they were the subject of its appeal.
The court below granted petitioner's motion and dismissed the complaint on February 1,
1985. The motion for reconsideration of the order of dismissal having been denied, on
July 1, 1985, herein respondent Correa took an appeal therefrom to respondent Court of
Appeals where it was docketed as CA-G.R. CV No. 07088.
In its own appeal to respondent court, herein petitioner charges that the trial court erred
?
1) in ordering the registration of the three (3) parcels of land covered by PSU-225872,
PSU-229592 and PSU-227659 in the name of Correa;
2) in not declaring Jose Rayo, Susana Mangahas, and Pedro Legaspi as usurpers of the
lot applied for by petitioner;
3) in holding that petitioner surveyed, encroached upon, and developed the disputed
three (3) parcels of land to the prejudice of Correa;
4) in holding that petitioner through its workers and employees, forcibly entered into the
disputed three (3) parcels of land in 1970;
5) in not recognizing petitioner's vested rights to the land and dismissing motu
proprioLRC Case No. (SM) N-093; and

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6) in not allowing petitioner to submit an "amended petition to conform to evidence" or


to file the proper motion for substitution by the qualified assignee of petitioner. 4
On his part, the Solicitor General faults the trial court with error (in CA-G.R. CV No.
07825) for ?
1) not denying the application for registration for failure of the applicant to adduce clear
and convincing evidence of possession and occupation of the nature and for the length
of time required by law;
2) granting the application for registration despite the failure of the appellee to submit in
evidence the original tracing cloth plan; and
3) finding that appellee has a registerable title over the subject property.
and (in CA-G.R. No. 07826) for ?
1) confirming applicant-appellee's alleged title over the two parcels of land shown in
Plans PSU-229592 and PSU-227659, consisting of 38,290 and 30,099 square meters,
respectively, despite absence of proof that said lands have been released as alienable
and disposable;
2) confirming applicant-appellee's alleged title over the above two parcels of land despite
absence of adequate proof that applicant-appellee and his predecessors-in-interest have
been in open, continuous, exclusive and notorious possession thereof since June 12,
1945 or earlier;
3) confirming applicant-appellee's alleged title over the subject parcels of land despite
absence of the requisite reports of the Commissioner of Land Registration and the
Director of Lands pursuant to Section 29 of PD 1529; and
4) granting the application despite the failure of applicant to submit the original tracing
cloth plan of the lands applied for, the submission of which is a statutory requirement of
mandatory character. 5
On September 20, 1988, respondent Court of Appeals rendered a decision upholding the
right of herein petitioner to file an application for registration of the land in question
pursuant to the doctrine in The Director of Lands vs. Intermediate Appellate Court, et
al., 6 which overruled the holding in Manila Electric Company vs. Castro-Bartolome relied
upon and cited by the trial court, supra; and ordering the registration of Lot No. 2880 in
the name of petitioner, but excluding portions thereof as described in Plans PSU-229592,
227659 and 225872 which were ordered registered in the name of private respondent
Correa, more particularly as follows:
WHEREFORE, the orders dated August 25, 1982 and February 8, 1984, appealed from by
Republic Cement Corporation (Land Registration Case No. SM-093, now CA-G.R. CV No.
07824) are REVERSED; the judgment rendered on August 29, 1983, appealed from by
Republic Cement Corporation (Land Registration Cases Nos. SM-146 and SM-147, now
CA-G.R. CV Nos. 07825 and 07826) is MODIFIED in the manner as hereafter provided;
and the orders dated February 1, 1985 and July 1, 1985, appealed from by Moises R.
Correa (Civil Case No. 7678-M, now CA-G.R. CV No. 07088), are AFFIRMED.
Title to the parcels of land covered by Plans PSU-229592 and PSU-227659 (Exhibits 1
and 1-A, Rayo-Mangahas, pp. 10-11, rec., Vol. IV), the technical description of which are
on pages 7 and 8, rec., supra, and the parcel of land covered by Plan PSU-225872
(Exhibit 1-Legaspi, p. 9, rec., Vol. III), the technical description of which are on pages 6
and 7, rec.,supra, is confirmed in the name of Moises R. Correa. Said parcels of land
excluded from Lot No. 2280, Norzagaray Cadastre, Plan AP-16404 (Exhibit D, p. 10, rec.,
Vol. I), the technical description of which are on pages 7 and 8, rec., supra, title to the
remaining portion thereof (Lot No. 2280) is confirmed in the name of Republic Cement
Corporation. Accordingly, upon finality of this judgment, the corresponding adjustment in
the technical description of Lot No. 2280 shall be made before issuance of the
corresponding decrees and certificates of title to and in the names of the proper parties.
No pronouncement as to costs in these instances.

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SO ORDERED. 7
Herein petitioner then filed a motion for reconsideration, which was denied by
respondent Court of Appeals in its resolution dated November 22, 1988. In its aforesaid
resolution, respondent court expressly noted therein that the Solicitor General did not
file a motion for reconsideration of its judgment nor a petition for its review before this
Court. 8 Hence, the present recourse is now of petitioner by itself.
Before us, petitioner contends that respondent Court of Appeals erred in ordering the
registration of the three parcels of land covered by Plans PSU-225872, 229592, and
227659 in the name of private respondent Correa, as purchaser of the properties from
Jose Rayo, Susana Mangahas and Pedro Legaspi, allegedly because:
1. Private respondent failed to prove the genuineness of his title and the identity of the
lands he claims for his own in the manner and with the degree of evidence required by
law;
2. Jose Rayo, Susana Mangahas and Pedro Legaspi have not proven exclusive,
continuous, open and adverse possession of these parcels of land to justify a finding of
ownership;
3. The whole of Lot No. 2280 is duly covered by deeds of sale in petitioner's favor and
amply supported by surveyor's certificates, the contents of which prevail over private
respondent's doubtful allegations; and
4. The disputed parcels of land are specifically described by boundaries, putting their
identity and extent beyond doubt. 9
We find the petition at bar to be without merit.
It may readily be seen that the issues raised by herein petitioner are questions of fact
which are not within the province of the present recourse. Settled is the rule that
findings of fact of the Court of Appeals are final and binding upon the Supreme Court if
borne out by the evidence on record. 10 A review of the factual findings of the Court of
Appeals is not a function ordinarily undertaken by the Supreme Court, the rule admitting
of only a few exceptions recognized under decisional law, which exceptions are not
obtaining in the case at bar. 11
Contrary to the claim of petitioner, private respondent, through his predecessors in
interest, was able to establish the identity of and title to the land sought to be registered
in his name. The technical description and the survey plan duly approved by the Director
of Lands submitted in evidence by private respondent fully describes the metes and
bounds of the parcels of land involved, thus:
Psu-229592
(Jose Rayo)
A parcel of land (as shown on plan Psu-229592, L.R.C. Record No.), situated in
the Barrioof Minuyan, Municipality of Norzagaray, Province of Bulacan. Bounded on the
W., along line 1-2 by property of the Heirs of Felix Mangahas (Lot 2880, Norzagaray
Cadastre); on the N., along line 2-3 by property of Amado Enriquez and Pedro Rayo (Lot
2881, Norzagaray Cadastre); on the NE., along line 3-4 by property of Pedro Legaspi
(Lot 8019, Norzagaray Cadastre); and on the SE., along line 4-1 by property of Susana
Mangahas (Lot 7300, Norzagaray Cadastre), . . .; containing an area of THIRTY EIGHT
THOUSAND TWO HUNDRED NINETY (38,290) square meters. All points referred to are
indicated on the plan and are marked on the ground as follows: Point 1 by cross marked
on stone boulder, point 2 by Old Cross on Cupang tree, point 3 by Cross on natural
stone, and point 4 by Old Cross on Balite tree; Bearings true; date of survey, March 12,
1966 and that of the approval, February 6,1967. 12
Psu-227659
(Susana Mangahas)

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A parcel of land (as shown on plan Psu-227659, L.R.C. Record No.), situated in
the Barrioof Minuyan, Municipality of Norzagaray, Bulacan. Bounded on the S., SW., and
NW., along lines 1-2-3-4-5 by property of the Heirs of Felix Mangahas; and on the NE.,
along line 5-1 by property of Pedro Legaspi (Psu-225872). . . .; containing an area of
THIRTY THOUSAND NINETY NINE (30,099) Square Meters. All points referred to are
indicated on the plan and are marked on the ground as follows: Point 1 by Old cross on
natural stone, point 2 by Cross marked on boulder, point 3 by Cross marked on boulder
stone, point 4 by Cross marked on stone, and point 5 by Old cross with nail on Balite
tree; Bearings true; date of survey, May 15,1966 and that of the approval, December 5,
1966. 13
Psu-225872
(Pedro Legaspi)
A parcel of land (as shown on plan Psu-225872, L.R.C. Record No.), situated in
the Barrioof Alagae, Municipality of Norzagaray, Province of Bulacan. Bounded on the
NE., along line 1-2 by property of Camilo Legaspi (Lot 8016, Norzagaray Cadastre); on
the SE., along line 2-3 by property of Andres San Pedro (Lot 2877, Norzagaray
Cadastre); on the SW., along lines 3-4-5 by property of the Heirs of Felix Mangahas (Lot
2880, port. Norzagaray Cadastre); on the N., along line 5-6 by property of Pedro Rayo
and Amado Enriquez (Lot 2881, Norzagaray Cadastre); on the NE., along line 6-7 by
property of Amado Banez (Lot 2883, Norzagaray Cadastre); and on the E., along lines 78-1 by property of Camilo Legaspi (Lot. 8016, Norzagaray Cadastre). . . .; containing an
area of THIRTY ONE THOUSAND EIGHT HUNDRED EIGHTY SEVEN (31,887) Square
Meters. All points referred to are indicated on the plan and are marked on the ground as
follows: Points 2 and 7 by Old nail on Alibangbang trees, point 1 by Old B.L. on Natural
stone; point 3 by cross on natural stone, point 4 by Cross on nail on Balite tree, point 5
by cross on Boulder stone, point 6 by Old cross on Malacamias tree, and point 8 by Old
nail on Daling lalaki tree; Bearings true; date of survey, March 13, 1966 and that of the
approval, September 2, 1966. 14
As we ruled in Director of Lands, et al. vs. Funtillar, et al.: 15
. . . Survey Plan Psu-215779 of the property, showing its boundaries and total area,
clearly identifies and delineates the extent of the land. The petitioners overlook the fact
that no survey would at all be possible where the identity of the land is not first properly
established. More importantly, without such identification, no opposition, even its own,
to the application for registration could be interposed. Encroachment on or adverse
possession of property could not be justly claimed.
Regarding petitioner's title over the said parcels of land, the trial court. made the
following factual findings, which are also the bases of the decision of respondent Court
of Appeals, to wit:

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It appears that parcel of land (Psu-225872) under LRC No. 146 consisting of 31,887
square meters was originally in open, peaceful, adverse, exclusive and uninterrupted
possession of Silverio Tolentino in the concept of owner since 1934 who cleared the
land, and planted thereon trees and upland rice. That in October, 1943 he sold the same
to his nephew Pedro Legaspi (Exh. I) who took immediate possession thereof and
introduced additional improvements thereon by building his house and planting palay
and other fruit-bearing trees. That said Pedro Legaspi declared the land for taxation
purposes in 1967 and had paid the real estate taxes from 1962 to 1967 (Exhibit J-1);
and caused the property to be surveyed preparatory to the filing of an application for
registration (Exhibit D). That from October 1943 to January 1970, said original applicant
Pedro Legaspi continued with the same kind of possession as his predecessor-in-interest
until January 1970 when oppositor Republic Cement Corporation through its workers and
employees forcibly entered his property and dispossessed him thereof; and the same
later became the subject of a forcible entry case before the Municipal Court of
Norzagaray, but was dismissed on the ground of jurisdiction since the question of
ownership was put in issue. That on September 30, 1972 said Pedro Legaspi sold his
rights and interests over the parcel of land to and in favor of substituted applicant
Moises Correa (Exhibit L) who concentrated his efforts to recover the land already the
subject of a registration case. The oral testimony of original applicant Pedro Legaspi,
insofar as concerns location, character and continuity of possession, was corroborated
by the testimony of witnesses Silverio Tolentino and Amado Enriquez both of them
claiming to have known this parcel of land for more than 30 years, as the former owner
and the adjoining owner thereof, respectively.
With respect to the parcels of land (Psu-229592 and Psu-227659) under LRC No. 147
consisting of 38,290 and 30,099 square meters, respectively, it appears that the same
were originally in open, peaceful, adverse, exclusive, continuous and uninterrupted
possession by Fidel Enriquez in the concept of owner since 1932, who introduced
improvements thereon by planting fruit-bearing trees, That in 1943 said Fidel Enriquez
donated the two parcels of land to his grandson Jose Rayo and his spouse Susana
Mangahas on occasion of their marriage. That the document evidencing the transfer was
burned during the second world war. That applicant-donees took immediate possession
of the donated property and introduced additional improvements by building their house
and planting palay and other fruit-bearing trees on the land. That said spouses declared
the property for taxation purposes since 1962 and had been paying the real estate taxes
until 1974 (Exhibit 12), and caused the parcels of land to be surveyed preparatory to the
filing of an application for registration (Exhibits 3 and 3-a). That from 1943 to January
1970, the original applicant-spouses continued with the same kind of possession as their
predecessor-in-interest until in January 1970, when oppositor Republic Cement
Corporation, through its workers and employees forcibly entered their property and
dispossessed them of their land. That the same later became the subject of a forcible
entry case, but was dismissed since the question of ownership was put in issue before
the Municipal Court of Norzagaray. That on September 30, 1972 said spouses sold their
rights and interests over said parcels of land to and in favor of substituted applicant
Moises Correa (Exhibit LL) who sought to recover the property already the subject of a
registration case. The oral testimony of original applicant-spouses Jose Rayo and Susana
Mangahas insofar as concerns the location, character and continuity of possession, was
corroborated by the testimony of witnesses Pedro Legaspi and Amado Enriquez, both
claiming to have known these parcels of land for more than 30 years as the adjoining
owners thereof. 16
We defer to the above factual findings, there being no showing that it was arrived at
with grave abuse of discretion or without sufficient basis. We have carefully scrutinized
and reviewed the records and we find ample evidentiary support for the above findings.

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The contention of petitioner that it has the right it claims over Lot No. 2880 in its
entirety, on the bases of the deeds of sale executed in its favor and the surveyor's
certificate, is untenable and cannot be upheld.
As found by respondent Court of Appeals, the land under consideration, now known as
Lot No. 2880, was previously owned by spouses Felix and Maria Mangahas. After the
death of Felix Mangahas, one-half (1/2) of said land was adjudicated and partitioned
among his five (5) daughters, namely, Francisca, Oliva, Susana, Agatona and Remedios,
in a deed of extrajudicial partition. Later, the shares of each of said heirs was transferred
to herein petitioner by virtue of deeds of absolute sale executed either by the heirs
themselves or their successors in interest.
Based on said transfers, petitioner is now seeking the registration of the whole of Lot
No. 2880 in its name. This we cannot allow. The deeds of sale relied upon by petitioner
do not constitute sufficient legal justification for petitioner's claim over all of Lot No.
2880. Petitioner's title over said lot, as the successor in interest of said heirs, is limited
only to whatever rights the latter may have had therein. It is elementary that a grantor
can convey no greater estate than what he has or in which he has an alienable title or
interest.
As aptly and correctly observed by respondent court:
It might be that what Republic Cement had actually acquired out of the one-half portion
pertaining to Felix Mangahas was more than 34,804 square meters (the totality of what
had been adjudicated to Francisco, Oliva, Susana, Agatona and Remedios), because the
said parcel of land was still unregistered, their exact boundaries still undetermined. But
what it must have acquired out of Felix Mangahas' one-half portion cannot be the whole
of the property that he owned in common with his wife Maria de la Cruz with a total area
of 207,996 square meters (20.7996 hectares), now known as Lot No. 2880, Plan Ap16404, title to which it seeks to register. To uphold Republic Cement's claim to the entire
portion of Lot No. 2880 would be to include the portions pertaining to Felix Mangahas'
two sons Marcelo and Jose, as well as the portion pertaining to his wife Maria de la Cruz,
which do not appear to have been the subject of an extrajudicial settlement and/or sale.
17
Petitioner's claim over the excess area is premised on the survey allegdly made by
private surveyor Arsenio Villaruz, but the resultant areas depicted in said survey do not
tally with, but supposedly consist of expanded areas very much larger than, those
indicated for the lots involved in their respective tax declarations, viz: Tax Declaration
No. 6831 of the spouses Esmeraldo Reyes and Esperanza Balagtas, successors in
interest of Agatona Mangahas; Tax Declaration No. 6829 of the spouses Francisco Reyes
and Magdalena Joaquin, successors in interest of Susana Mangahas; and Tax Declaration
No. 6830 of Oliva, Francesca and Remedios Mangahas. These facts are expressly stated
by the foregoing parties in the deeds of sale they executed in favor of petitioner over the
lots covered by the aforestated tax declarations. 18 We do not find satisfactory the
stilted explanation advanced to justify the glaringly excessive disparity of areas resulting
after the supposed survey.
Moreover, it does not appear from our scrutiny of the records, despite petitioner's
representations in its written offer of evidence filed in the court a quo, that the
purported survey plans of the lots involved were actually submitted in evidence therein.
Neither was it alleged and proved that they were approved by the Director of Lands. It
has long been held that unless a survey plan is duly approved by the Director of Lands,
the same is of dubious value and is not acceptable as evidence. 19 Indubitably,
therefore, the reputed survey and its alleged results are not entitled to credit and should
be rejected.

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An applicant for registration of land, if he relies on a document evidencing his title


thereto, must prove not only the genuineness of said title but also the identity of the
land therein referred to. If he only claims a portion of what is included in his title, he
must clearly prove that the property sought to be registered is included in that title. 20
With respect to the appeal of private respondent Correa in CA-G.R. CV No. 07088,
respondent Court affirmed the order of the lower court dismissing said private
respondent's complaint for recovery of possession of the parcels of land in question as
being premature in view of the pendency before respondent court of the appeals subject
of CA-G.R. CV Nos. 07825 and 07826. With this decision in the latter two cases, there is
no need for us to pass upon the case first mentioned.
WHEREFORE, the instant petition is DENIED for lack of merit. The challenged decision of
respondent Court of Appeals is hereby AFFIRMED.
SO ORDERED.
Melencio-Herrera, Paras, Padilla and Sarmiento, JJ., concur.
Footnotes
1 Penned by Justice Pedro A. Ramirez, with Justices Serafin E. Camilon and Minerva P.
Gonzaga-Reyes concurring.
2 Original Record, Vol. II, 664.
3 Ibid., Vol. IV, 197-198.
4 Rollo, 199.
5 Ibid., 199-200.
6 146 SCRA 509 (1986).
7 Ibid., 209-210.
8 Ibid., 212-214.
9 Ibid., 33-34.
10 Alsua-Betts, et al. vs. Court of Appeals, et al., 92 SCRA 332 (1979); Baliwag Transit,
Inc. vs. Court of Appeals, et al., 147 SCRA 82 (1987); Solis, et al. vs. Court of Appeals,
et al., 176 SCRA 678 (1989).
11 Ramos, et al. vs. Pepsi-Cola Bottling Co. of the P.I., et al., 19 SCRA 289 (1967);
Manlapaz vs. Court of Appeals, et al., 177 SCRA 1 (1989).
12 Original Record, Vol. IV, 7.
13 Ibid., 8.
14 Ibid., Vol. III, 6.
15 142 SCRA 57 (1986).
16 Ibid., Vol. II, 705-707.
17 Rollo, 206. 18 Original Record, Vol. II, 517-596. 19 See Flores vs. Director of
Lands, 17 Phil. 512 (1910). 20 Lasam vs. Director of Lands, et al., 65 Phil. 367 (1938).
---------------------------------------------THIRD DIVISION
[G.R. No. 112567. February 7, 2000]
THE DIRECTOR, LANDS MANAGEMENT BUREAU, petitioner vs. COURT OF APPEALS and
AQUILINO L. CARIO, respondents.
DECISION
PURISIMA, J.:
At bar is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, seeking to set
aside the decision of the Court of Appeals, dated November 11, 1993, in CA-G.R. No. 29218,

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which affirmed the decision, dated February 5, 1990, of Branch XXIV, Regional Trial Court of
Laguna, in LRC NO. B-467, ordering the registration of Lot No. 6 in the name of the private
respondent.
The facts that matter are as follows:
On May 15, 1975, the private respondent, Aquilino Cario, filed with the then Branch I, Court of
First Instance of Laguna, a petition[1] for registration of Lot No. 6, a sugar land with an area of
forty-three thousand six hundred fourteen (43,614) square meters, more or less, forming part of
a bigger tract of land surveyed as Psu-108952 and situated in Barrio Sala, Cabuyao, Laguna.
Private respondent declared that subject land was originally owned by his mother, Teresa
Lauchangco, who died on February 15, 1911,[2] and later administered by him in behalf of his five
brothers and sisters, after the death of their father in 1934.[3]
In 1949, private respondent and his brother, Severino Cario, became co-owners of Lot No. 6 by
virtue of an extra-judicial partition of the land embraced in Plan Psu-108952, among the heirs of
Teresa Lauchangco. On July 26, 1963, through another deed of extrajudicial settlement, sole
ownership of Lot No. 6 was adjudicated to the private respondent.[4]
Pertinent report of the Land Investigator of the Bureau of Lands (now Bureau of Lands
Management), disclosed:
"x x x
1. That the land subject for registration thru judicial confirmation of imperfect title is situated in
the barrio of Sala, municipality of Cabuyao, province of Laguna as described on plan Psu-108952
and is identical to Lot No. 3015, Cad. 455-D, Cabuyao Cadastre; and that the same is agricultural
in nature and the improvements found thereon are sugarcane, bamboo clumps, chico and mango
trees and one house of the tenant made of light materials;
2. That the land subject for registration is outside any civil or military reservation, riverbed, park
and watershed reservation and that same land is free from claim and conflict;
3. That said land is neither inside the relocation site earmarked for Metro Manila squatters nor
any pasture lease; it is not covered by any existing public land application and no patent or title
has been issued therefor;
4. That the herein petitioner has been in continuous, open and exclusive possession of the land
who acquired the same thru inheritance from his deceased mother, Teresa Lauchangco as
mentioned on the Extra judicial partition dated July 26, 1963 which applicant requested that said
instrument will be presented on the hearing of this case; and that said land is also declared for
taxation purposes under Tax Declaration No. 6359 in the name of the petitioner;
x x x"[5]
With the private respondent as lone witness for his petition, and the Director of Lands as the
only oppositor, the proceedings below ended. On February 5, 1990, on the basis of the evidence
on record, the trial court granted private respondent's petition, disposing thus:
"WHEREFORE, the Court hereby orders and declares the registration and confirmation of title to
one (1) parcel of land identified as Lot 6, plan Psu-108952, identical to Cadastral Lot No. 3015,
Cad. 455-D, Cabuyao Cadastre, situated in the barrio of Sala, municipality of Cabuyao, province
of Laguna, containing an area of FORTY THREE THOUSAND SIX HUNDRED FOURTEEN (43,614)

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Square Meters, more or less, in favor of applicant AQUILINO L. CARINO, married to Francisca
Alomia, of legal age, Filipino with residence and postal address at Bian, Laguna.
After this decision shall have become final, let an order for the issuance of decree of registration
be issued.
SO ORDERED."[6]
From the aforesaid decision, petitioner (as oppositor) went to the Court of Appeals, which, on
November 11, 1993, affirmed the decision appealed from.
Undaunted, petitioner found his way to this Court via the present Petition; theorizing that:
I.
THE COURT OF APPEALS ERRED IN NOT FINDING THAT PRIVATE RESPONDENT HAS NOT
SUBMITTED PROOF OF HIS FEE SIMPLE TITLE OR PROOF OF POSSESSION IN THE MANNER AND
FOR THE LENGTH OF TIME REQUIRED BY THE LAW TO JUSTIFY CONFIRMATION OF AN
IMPERFECT TITLE.
II.
THE COURT OF APPEALS ERRED IN NOT DECLARING THAT PRIVATE RESPONDENT HAS NOT
OVERTHROWN THE PRESUMPTION THAT THE LAND IS A PORTION OF THE PUBLIC DOMAIN
BELONGING TO THE REPUBLIC OF THE PHILIPPINES.[7]
The Petition is impressed with merit.
The petition for land registration[8] at bar is under the Land Registration Act.[9] Pursuant to said
Act, he who alleges in his petition or application, ownership in fee simple, must present
muniments of title since the Spanish times, such as a titulo real or royal grant, a concession
especial or special grant, a composicion con el estado or adjustment title, or a titulo de
compra or title through purchase; and informacion possessoria or possessory information
title, which would become a titulo gratuito or a gratuitous title.[10]
In the case under consideration, the private respondents (petitioner below) has not produced a
single muniment of title to substantiate his claim of ownership.[11] The Court has therefore no
other recourse, but to dismiss private respondent's petition for the registration of subject land
under Act 496.
Anyway, even if considered as petition for confirmation of imperfect title under the Public land
Act (CA No. 141), as amended, private respondents petition would meet the same fate. For
insufficiency of evidence, its denial is inevitable. The evidence adduced by the private
respondent is not enough to prove his possession of subject lot in concept of owner, in the
manner and for the number of years required by law for the confirmation of imperfect title.
Section 48 (b) of Commonwealth Act No. 141,[12] as amended by R.A. No. 1942 and R.A. No.
3872, the law prevailing at the time the Petition of private respondent was filed on May 15,
1975, provides:
"Sec. 48. The following described citizens of the Philippines, occupying lands of the public domain
or claiming to own any such lands or an interest therein, but whose titles have not been
perfected or completed, may apply to the Court of first Instance of the province where the land is
located for confirmation of their claim and the issuance of title therefor, under the Land
Registration Act, to wit:

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x.................x.................x
(b) Those who by themselves or through their predecessors-in-interest have been in open,
continuous, exclusive, and notorious possession and occupation of agricultural lands of the public
domain, under a bona fide claim of acquisition or ownership, for at least thirty years immediately
preceding the filing of the application for confirmation of title except when prevented by war or
force majeure. These shall be conclusively presumed to have performed all the conditions
essential to a Government grant and shall be entitled to a certificate of title under the provisions
of this chapter." (Emphasis supplied)
Possession of public lands, however long, never confers title upon the possessor, unless the
occupant can prove possession or occupation of the same under claim of ownership for the
required period to constitute a grant from the State.[13]
Notwithstanding absence of opposition from the government, the petitioner in land registration
cases is not relieved of the burden of proving the imperfect right or title sought to be confirmed.
InDirector of Lands vs. Agustin,[14] this Court stressed that:
" x x x The petitioner is not necessarily entiled to have the land registered under the Torrens
system simply because no one appears to oppose his title and to oppose the registration of his
land. He must show, even though there is no opposition, to the satisfaction of the court, that he
is the absolute owner, in fee simple. Courts are not justified in registering property under the
Torrens system, simply because there is no opposition offered. Courts may, even in the absence
of any opposition, deny the registration of the land under the Torrens system, upon the ground
that the facts presented did not show that petitioner is the owner, in fee simple, of the land
which he is attempting to have registered."[15]
There is thus an imperative necessity of the most rigorous scrutiny before imperfect titles over
public agricultural lands may be granted judicial recognition.[16]
The underlying principle is that all lands that were not acquired from the government, either by
purchase or by grant, belong to the state as part of the public domain. As enunciated in Republic
vs. Lee:"[17]
"x x x Both under the 1935 and the present Constitutions, the conservation no less than the
utilization of the natural resources is ordained. There would be a failure to abide by its command
if the judiciary does not scrutinize with care applications to private ownership of real estate. To
be granted, they must be grounded in well-nigh incontrovertible evidence. Where, as in this case,
no such proof would be forthcoming, there is no justification for viewing such claim with favor. It
is a basic assumption of our polity that lands of whatever classification belong to the state.
Unless alienated in accordance with law, it retains its right over the same as dominus. x x x"[18]
In order that a petition for registration of land may prosper and the petitioners may savor the
benefit resulting from the issuance of certificate of title for the land petitioned for, the burden is
upon him (petitioner) to show that he and/or his predecessor-in-interest has been in open,
continuous, exclusive, and adverse possession and occupation of the land sought for
registration, for at least thirty (30) years immediately preceding the filing of the petition for
confirmation of title.[19]
In the case under consideration, private respondent can only trace his own possession of subject
parcel of land to the year 1949, when the same was adjudicated to him by virtue of an extrajudicial settlement and partition. Assuming that such a partition was truly effected, the private
respondent has possessed the property thus partitioned for only twenty-six (26) years as of
1975, when he filed his petition for the registration thereof. To bridge the gap, he proceeded to

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tack his possession to what he theorized upon as possession of the same land by his parents.
However, other than his unilateral assertion, private respondent has not introduced sufficient
evidence to substantiate his allegation that his late mother possessed the land in question even
prior to 1911.
Basic is the rule that the petitioner in a land registration case must prove the facts and
circumstances evidencing his alleged ownership of the land applied for. General statements,
which are mere conclusions of law and not factual proof of possession are unavailing and cannot
suffice.[20]
From the relevant documentary evidence, it can be gleaned that the earliest tax declaration
covering Lot No. 6 was Tax Declaration No. 3214 issued in 1949 under the names of the private
respondent and his brother, Severino Carino. The same was followed by Tax Declaration No.
1921 issued in 1969 declaring an assessed value of Five Thousand Two Hundred Thirty-three
(P5,233.00) Pesos and Tax Declaration No. 6359 issued in 1974 in the name of private
respondent, declaring an assessment of Twenty-One Thousand Seven Hundred Seventy
(P21,770.00) Pesos.[21]
It bears stressing that the Exhibit "E" referred to in the decision below as the tax declaration for
subject land under the names of the parents of herein private respondent does not appear to
have any sustainable basis. Said Exhibit "E" shows that it is Tax Declaration 1921 for Lot No. 6 in
the name of private respondent and not in the name of his parents.[22]
The rule that findings of fact by the trial court and the Court of Appeals are binding upon this
Court is not without exceptions. Where, as in this case, pertinent records belie the findings by
the lower courts that subject land was declared for taxation purposes in the name of private
respondent's predecessor-in-interest, such findings have to be disregarded by this Court.
In Republic vs. Court of Appeals,[23] the Court ratiocinated thus:
"This case represents an instance where the findings of the lower court overlooked certain facts
of substance and value that if considered would affect the result of the case (People v. Royeras,
130 SCRA 259) and when it appears that the appellate court based its judgment on a
misapprehension of facts (Carolina Industries, Inc. v. CMS Stock Brokerage, Inc., et al., 97 SCRA
734; Moran, Jr. v. Court of Appeals, 133 SCRA 88; Director of Lands v. Funtillar, et al., G.R. No.
68533, May 3, 1986). This case therefore is an exception to the general rule that the findings of
facts of the Court of Appeals are final and conclusive and cannot be reviewed on appeal to this
Court.
andx x x in the interest of substantial justice this Court is not prevented from considering such a
pivotal factual matter that had been overlooked by the Courts below. The Supreme Court is
clothed with ample authority to review palpable errors not assigned as such if it finds that their
consideration is necessary in arriving at a just decision."[24]
Verily, the Court of Appeals just adopted entirely the findings of the trial court. Had it examined
the original records of the case, the said court could have verified that the land involved was
never declared for taxation purposes by the parents of the private respondent. Tax receipts and
tax declarations are not incontrovertible evidence of ownership. They are mere indicia of claim
of ownership.[25] In Director of Lands vs. Santiago:[26]
"x x x if it is true that the original owner and possessor, Generosa Santiago, had been in
possession since 1925, why were the subject lands declared for taxation purposes for the first
time only in 1968, and in the names of Garcia and Obdin? For although tax receipts and

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declarations, of ownership for taxation purposes are not incontrovertible evidence of ownership,
they constitute at least proof that the holder had a claim of title over the property."[27]
As stressed by the Solicitor General, the contention of private respondent that his mother had
been in possession of subject land even prior to 1911 is self-serving, hearsay, and inadmissible in
evidence. The phrase "adverse, continuous, open, public, peaceful and in concept of owner", by
which characteristics private respondent describes his possession and that of his parents, are
mere conclusions of law requiring evidentiary support and substantiation. The burden of proof is
on the private respondent, as applicant, to prove by clear, positive and convincing evidence that
the alleged possession of his parents was of the nature and duration required by law. His bare
allegations without more, do not amount to preponderant evidence that would shift the burden
of proof to the oppositor.[28]
In a case,[29] this Court set aside the decisions of the trial court and the Court of Appeals for the
registration of a parcel of land in the name of the applicant, pursuant to Section 48 (b) of the
Public Land Law; holding as follows:
"Based on the foregoing, it is incumbent upon private respondent to prove that the alleged
twenty year or more possession of the spouses Urbano Diaz and Bernarda Vinluan which
supposedly formed part of the thirty (30) year period prior to the filing of the application, was
open, continuous, exclusive, notorious and in concept of owners. This burden, private respondent
failed to discharge to the satisfaction of the Court. The bare assertion that the spouses Urbano
Diaz and Bernarda Vinluan had been in possession of the property for more than twenty (20)
years found in private respondent's declaration is hardly the 'well-nigh incontrovertible' evidence
required in cases of this nature. Private respondent should have presented specific facts that
would have shown the nature of such possession. x x x"[30]
In Director of Lands vs. Datu,[31] the application for confirmation of imperfect title was likewise
denied on the basis of the following disquisition, to wit:
"We hold that applicants' nebulous evidence does not support their claim of open, continuous,
exclusive and notorious occupation of Lot No. 2027-B en concepto de dueno. Although they
claimed that they have possessed the land since 1950, they declared it for tax purposes only in
1972. It is not clear whether at the time they filed their application in 1973, the lot was still
cogon land or already cultivated land.
They did not present as witness their predecessor, Peaflor, to testify on his alleged possession
of the land. They alleged in their application that they had tenants on the land. Not a single
tenant was presented as witness to prove that the applicants had possessed the land as owners.
xxx
On the basis of applicants' insubstantial evidence, it cannot justifiably be concluded that they
have an imperfect title that should be confirmed or that they had performed all the conditions
essential to a Government grant of a portion of the public domain."[32]
Neither can private respondent seek refuge under P.D. No. 1073,[33] amending Section 48(b) of
Commonwealth Act No. 141, under which law a certificate of title may issue to any occupant of a
public land, who is a Filipino citizen, upon proof of open, continuous, exclusive, and notorious
possession and occupation since June 12, 1945, or earlier. Failing to prove that his predecessorsin-interest occupied subject land under the conditions laid down by law, the private respondent
could only establish his possession since 1949, four years later than June 12, 1945, as set by law.

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The Court cannot apply here the juris et de jure presumption that the lot being claimed by the
private respondent ceased to be a public land and has become private property.[34] To reiterate,
under the Regalian doctrine all lands belong to the State.[35] Unless alienated in accordance with
law, it retains its basic rights over the same as dominus.[36]
Private respondent having failed to come forward with muniments of title to reinforce his
petition for registration under the Land Registration Act (Act 496), and to present convincing and
positive proof of his open, continuous, exclusive and notorious occupation of Lot No. 6 en
concepto de dueno for at least 30 years immediately preceding the filing of his petition,[37] the
Court is of the opinion, and so finds, that subject Lot No. 6 surveyed under Psu-108952, forms
part of the pubic domain not registrable in the name of private respondent.
WHEREFORE, the Petition is GRANTED; the Decision of the Court of Appeals, dated November
11, 1993, in CA-G.R. No. 29218 affirming the Decision, dated February 5, 1990, of Branch XXIV,
Regional Trial Court of Laguna in LRC No. B-467, is SET ASIDE; and Lot No. 6, covered by and
more particularly described in Psu-108952, is hereby declared a public land, under the
administrative supervision and power of disposition of the Bureau of Lands Management. No
pronouncement as to costs.
SO ORDERED.
Melo, (Chairman), Vitug, Panganiban, and Gonzaga-Reyes, JJ., concur.

[1]

Original Records (O.R.), p. 4-6.

[2]

Direct Examination of Aquilino Cario, August 23, 1977; O.R., p. 36.

[3]

Id., pp. 40-41.

[4]

Id., p. 36.

[5]

Original Records, p. 26.

[6]

O.R. p. 54.

[7]

Petition, Rollo, p. 12.

[8]

O. R. p. 4.

[9]

Act No. 496.

[10]

Javellana vs. Court of Appeals, G.R. No. L-40353, December 13, 1999.

[11]

Tsn., p. 10, Cross-examination of Aquilino Cario, August 23, 1977.

[12]

Further amended by P.D. No. 1073, issued on January 25, 1977.

[13]

Republic vs. Vera, 120 SCRA 210, p. 218, citing Director of Lands vs. Reyes, 68 SCRA 177, 195.

[14]

42 Phil. 227.

[15]

Ibid.

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131 | P a g e

[16]

Republic vs. Marcos, 52 SCRA 238, pp. 244-245.

[17]

Republic vs. Lee, 197 SCRA 13, p. 20, citing Santiago vs. De los Santos, 61 SCRA 146.

[18]

Ibid.

[19]

Javellana vs. Court of Appeals, G.R. No. L-40353, December 13, 1999.

[20]

Republic vs. Court of Appeals, 167 SCRA 150, p. 156.

[21]

O.R., pp. 34 and 41.

[22]

O. R., p. 41.

[23]

167 SCRA 150, p. 155.

[24]

Id., p. 155, citing Carabot v. Court of Appeals, 145 SCRA 368, 377-378; Perez v. Court of
Appeals, 127 SCRA 636; Vda De Javellana v. Court of Appeals, 123 SCRA 799; and Fegurin v.
NLRC, 120 SCRA 910.
[25]

Director of Lands vs. Santiago, 160 SCRA 186, p. 194, citing Director of Lands vs. Reyes, 68
SCRA 177; Director of Lands vs. Intermediate Appellate Court, 219 SCRA 339, p. 348.
[26]

160 SCRA 186.

[27]

Id., p. 194.

[28]

Republic vs. Lee, 197 SCRA 13, p. 21.

[29]

Supra.

[30]

Id., p. 21.

[31]

115 SCRA 25.

[32]

Id., p. 28.

[33]

Issued on January 25, 1977.

[34]

Republic vs. Sayo, 191 SCRA 71, p. 74.

[35]

Lee Hong vs. David, 48 SCRA 372; Piero vs. Director of Lands, 57 SCRA 386.

[36]

Republic vs. Lee, 197 SCRA 13, p. 20; citing: Santiago vs .de los Santos, 61 SCRA 146.

[37]

Director of Lands vs. Datu, supra.

-----------------------------------------------------------------------------------------------------------------------Republic of the Philippines


SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L-43203 July 29, 1977

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JOSE C. CRISTOBAL, plaintiff-appellant,


vs.
ALEJANDRO MELCHOR and FEDERICO ARCALA, defendants-appellees.

MUOZ PALMA, J:
Jose C. Cristobal appeals from a decision dated May 18, 1972 of the Court of First Instance of
Manila in Civil Case No. 83962 which dismissed this complaint for declaratory relief and
reinstatement in the government service. 1
The incidents which led to this suit are set forth in the decision of the court a quo, thus:
The plaintiff was formerly employed as a private secretary in the President's Private Office,
Malacaang, Manila, having been appointed to that position on July 1, 1961 with a salary of
P4,188.00 per annum. He is a third grade civil service eligible. On or about the second week of
January, 1962, the then Executive Secretary Amelito R. Mutuc, by means of a letter dated
January 1, 1962, informed the plaintiff that his services as private secretary in the President's
Private Office were "terminated effective today." A similar letter was addressed by Secretary
Mutuc to some other employees in the Office of the President. The dismissed employees
appealed to the President by means of letters dated January 3, 1962 and January 26, 1962 for a
reconsideration of their separation from the service. In a letter dated February 27, 1962, their
request for reconsideration was denied by Secretary Mutuc, acting by authority of the President.
On March 24, 1962, five of the employees who were separated (not including the herein
plaintiff) filed a civil action before the Court of First Instance of Manila against Secretary Mutuc
and the cash disbursing officer of the Office of the President praying for reinstatement and the
payment of their salaries effective as of January 1, 1962, entitled "Raul R. Ingles. et al vs. Amelito
R. Mutuc et als." Civil Case No. 49965. From a judgment dismissing their complaint, the said
employees appealed to the Supreme Court which rendered a decision promulgated on
November 29, 1968 reversing the dismissal of their complaint and declaring their removal from
office as illegal and contrary to law, and ordering their reinstatement and the payment of their
salaries from January 1, 1962 up to the date of their actual reinstatement (G.R. No. L-20390).
Sometime in Ma 1962, when the civil action filed by Raul R. Ingles, et als. was still pending in the
Court of First Instance of Manila. the dismissed employees who filed said action were recalled to
their positions in the Office of the President, without prejudice to the continuation of their civil
action, With respect to the other employees who were not reinstated, efforts were exerted by
Secretary Mutuc to look for placements outside of Malacaang so that they may be reemployed. The herein plaintiff was one of those who had not been fortunate enough to be
reappointed to any positions as befits his qualifications.
He waited for Secretary Mutuc to make good his assurance that he would be recalled to the
service, until Secretary Mutuc was replaced by other executive secretaries who likewise assured
the plaintiff of assistance to be reemployed at "the opportune time."
After the decision of the Supreme Court in G.R. No. L-20390 was promulgated on November 29,
1968, the plaintiff addressed a letter to the Office of the President dated January 19, 1969,
requesting reinstatement to his former position and the payment of salary from January 1, 1962
up to the time of actual reinstatement, supposedly in accordance with the decision of the
Supreme Court in the aforementioned case. This request was denied repeatedly by the Office of
the President in successive letters addressed to the plaintiff dated September 1, 1969, January

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19, 1970, April 23, 1970, May 23, 1970, and May 19, 1971, the last of which declared the matter
"definitely closed." (pp. 151-153, CFI Record)
Having received the letter of May 19, 1971, from the Office of the President, Jose Cristobal filed
on August 10, 1971, with the Court of First Instance of Manila a complaint naming then
Executive Secretary, Alejandro Melchor and Federico Arcala, cash disbursing officer, Office of the
President of the Philippines, as defendants, and praying for the following:
1. Declaring plaintiff's dismissal as illegal and contrary to law;
2. Ordering defendant Executive Secretary Alejandro Melchor to certify the name of plaintiff in
the payroll of the Office of the President of the Philippines, to be retroactive as of January 1,
1962. the effective date that the plaintiff was illegally dismissed from the service;
3. Ordering defendant Federico Arcala to pay all the emoluments and/or salary to which the
plaintiff is entitled effective as of January 1, 1962, the date of his illegal termination from the
service; and
4. Ordering the defendants to allow plaintiff to continue with the performance of hi duties in the
Secretary Office Staff, Office of the President of the Philippines.
Plaintiff prays for such other relief or remedy as this Honorable Court may deem just and
equitable under the premises. (pp. 1-3, Ibid.)
Answering the complaint, the defendants represented by the Office of the Solicitor General
alleged that plaintiff Jose Cristobal had no cause of action as he is deemed to have abandoned
his office for failure to institute the proper proceedings to assert his right within one year from
the date of separation pursuant to Sec. 16, Rule 66 of the Rules of Court, he having come to
court only after the lapse of more than nine years, thereby in effect acquiescing to his
separation, and therefore he is not entitled to any salary from termination of his employment.
(pp. 38-40, Ibid.)
On October 16, 1971, an amended complaint was submitted to the trial court to include as
additional defendants Leticia B. Nonato who was allegedly appointed to the position of Jose
Cristobal and Simplicio Nonato, husband of Leticia B. Nonato, and to invoke the additional relief
for reinstatement to the position occupied by defendant Leticia B, Nonato. (pp. 55-58,Ibid.)
The Nonato's were served with summons but did not file an answer to the complaint, hence, on
motion of the plaintiff Cristobal, they were declared in default in an order dated January 15,
1972. (p. 94, Ibid.)
A pre-trial was held after which parties submitted "a partial stipulation of facts" dated February
26, 1976. (pp. 102-104,Ibid.)
Trial on the merits was held during which plaintiff Cristobal submitted his documentary evidence
marked respectively as Exhibits "A" to "P" inclusive all of which were admitted by the trial court.
Counsel for the defendants then manifested that no Evidence was being presented for the
government.
On May 18, 1972, as already adverted to above, the trial court then presided by the Honorable
Conrado Vasquez, now Justice of the Court of Appeals, rendered its decision dismissing the
complaint reasoning in the following manner:
Section 16 of Rule 66 of the Rules of Court expressly provides that an action against a public
office or employee may not be filed for the plaintiff's ouster from office unless the same is

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commenced within one year after the cause of the ouster, or the right of the plaintiff to hold
such office or position arose. This period of one year is a condition precedent for the existence
of the cause of action for quo warranto (Bumanlag vs. Fernandez, G.R. No. L-11482, November
29, 1960). The rationale of this doctrine is that the Government must be immediately informed
or advised if any person claims to be entitled to an office or position in the civil service, as
against another actually holding, it, so that the Government may not be faced with the
predicament of having to pay two salaries, one for the person actually holding the office
although illegally, and another for one not actually rendering service although entitled to do so
(Madrid vs. Auditor General, G.R. No. L-12523, May 31, 1960). The fact that the petitioner
sought to pursue administrative remedies to secure his reinstatement does not excuse the
failure to file the action within the one year period.
'The pendency of administrative remedies does not operate to suspend the period of one year
within which a petition for quo warranto should be filed. While it may be desirable that
administrative remedies be first resorted to, no one is compelled or bound to do so, and as said
remedies neither are pre-requisite to nor bar the institution of quo warranto proceedings, they
should not be allowed to suspend the period of one year. Public interest requires that the right
to a public office should be determined as speedily as practicable' (3 Moran, 1963 Ed., p. 207,
citing Torres vs. Quintos G.R. No. L-3304, April 5, 1951). (pp. 154-155, Ibid.)
We are now confronted with the following assignment of errors in appellant Cristobal's brief, to
wit:
I
THE LOWER COURT ERRED IN DECLARING PLAINTIFF-APPELLANT GUILTY OF ABANDONMENT OF
ACTION FOR MORE THAN ONE YEAR.
II
THE LOWER COURT ERRED IN NOT DECLARING THAT THIS CASE BEING BASED O ACT OF THE
GOVERNMENT THAT HAS BEEN DECLARED BY THE SUPREME COURT AS ILLEGAL AND CONTRARY
TO LAW SHOULD BE GOVERNED BY THE SUBSTANTIATE LAW ON PRESCRIPTION OF ACTION. (p.
26, rollo)
The primary question to be resolved in this appeal is whether or not Appellant Cristobal his right
to seek judicial relief for not having filed his complaint within the one-year period provided for in
Section 16, Rule 66 of the Rules of Court. In short, is the principle of laches or non-compliance
with the "Statute of Limitations" applicable against appellant?
The Government holds fast to Section 16, Rule 66 of the Rules of Court and so did the court a
quo in upholding the dismissal of appellant's complaint which according to both is essentially
a quo warranto proceeding.
We agree with defendants-appellees that in this jurisdiction the consistent doctrine followed by
this Court is that in actions of quo warranto involving right to an office, the action must be
instituted within the period of one Near from the time the cause of action arose. 2
Verily, this Court has stated in Unabia vs. City Mayor, et al., 99 Phil. 253, 257:
... This has been the law in the Island since 1901, the period having been originally fixed in
section 216 of the Code of Civil Procedure (Act No. 190). We find this provision to be an
expression of policy on the part of the State that persons claiming a right to an office of which
they are illegally dispossessed should immediately take steps to recover said office and that if

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they do not do so within a period of one year, they shall be considered as having lost their right
thereto by abandonment. There are weighty reasons of public policy and convenience that
demand the adoption of a similar period for persons claiming rights to positions in the civil
service. There must be stability in the service so that public business may not be unduly
retarded; delays in the statement of the right to positions in the service must be discouraged. ...
xxx xxx xxx
Further, the Government must be immediately informed or advised if any person claims to be
entitled to an office or a position in the civil service as against another actually holding it, so that
the Government may not be faced with the predicament of having to pay two salaries, one, for
the person actually holding the office, although illegally, and another, for one not actually
rendering service although entitled to do so. We hold that in view of the policy of the State
contained in the law fixing the period of one year within which actions for quo warranto may be
instituted, any person claiming right to a position in the civil service should also be required to
file his petition for reinstatement with the period of one year, otherwise he is thereby
considered as having abandoned his office.
In effect, it is the doctrine of laches which is invoked to defeat Jose Cristobal's suit, for not only
did Cristobal fail to file his complaint within one year from the date of separation but, it is
claimed, he allowed almost nine years to pass before coming to court by reason of which he is
deemed to have acquiesced to his removal.
In Tijam vs. Sibonghanoy, this Court stated that in a general sense, laches is failure or neglect, for
an unreasonable and unexplained length of time, to do that which, by exercising due diligence,
could or should have been done earlier; it is negligence or omission to assert a right within a
reasonable time, warranting a presumption that the party entitled to assert it either has
abandoned it or declined to assert it.3
However, as will be indicated below, there are certain exceptional circumstances attending
which take this case out of the rule enunciated above and lead Us to grant relief to appellant.
Thus
1. There was no acquiescence to or inaction on the part of Jose Cristobal amounting to
abandonment of his right to reinstatement in office.
We lay stress on the findings of the trial court based on the uncommitted evidence of plaintiff
Cristobal that upon receipt of the letter or January 1, 1962, advising him of his separation from
the service, Cristobal, with the other dismissed employees, sought reconsideration in a letter
dated January 3, 1962, calling inter alia the attention of then Executive Secretary Amelito Mutuc
that he (Cristobal) was a civil eligible employee with eight years of service in the government
and consequently entitled to security of tenure under the Constitution. This was followed by
another letter of January 26, 1962. 4
Reconsideration having been denied, a complaint was filed on March 24, 1062, with the Court of
First Instance of Manila entitled "Raul R. Ingles, et al. vs. Amelito R. Mutuc, et al.", (Civil Case
49965) which prayed for reinstatement and payment of salaries as of January 1, 1962. The trial
court dismiss this complaint but upon appeal to the Supreme Court the judgment was reversed
in a Decision promulgated on November 29, 1968, in G.R. L-20390, the Court holding that the
removal of the plaintiff-employees was illegal and contrary to law and that they were entitled to
be reinstated with payment of their salaries from January 1, 1962 up to the date of their actual
reinstatement.5

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136 | P a g e

Cristobal was not one of the plaintiffs in the civil case, it is true, but his non-participation is not
fatal to his cause of action. During the pendency of the civil case Cristobal continued to press his
request for reinstatement together with the other employees who had filed the complaint and
was in fact promised reinstatement as will be shown more in detail later.
More importantly, Cristobal could be expected without necessarily spending time and money
by going to court to relied upon the outcome of the case filed by his co-employees to protect
his interests considering the similarity of his situation to that of the plaintiffs therein and the
Identifical relief being sought. On this point, We find a statement of justice Louis Brandeis of the
United States Supreme Court in Southern Pacific vs. Bogert, relevant and persuasive, and We
quote:
The essence of laches is not merely lapse of time. It is essential that there be also acquiescence
in the alleged wrong or lack of diligence in seeking a remedy. Here plaintiffs, or others
representing them, protested ... and ever since they have ... persisted in the diligent pursuit of a
remedy ... Where the cause of action of such a nature that a suit to enforce it would be brought
on behalf, not only the Plaintiff, bit of all persons similarly situated, it is not essential that etch
such person should intervened in the suit brought order that the be deemed thereafter free from
the laches which bars those no sleep on the rights. (250 U.S. 483, 39 S. Ct. 536, 63 L. Ed. 1099,
1106-1107; Emphasis supplied. See also Overfield vs. Pennroad Corporation, et al.. 42 Fed. Supp.
586, 613)
2. It was an act of the government through its responsible officials more particularly then
Executive Secretary Amelito Mutuc and his successors which contributed to the alleged delay in
the filing of Cristobal's present complaint for reinstatement.
The evidence of Cristobal establish the following: After the Ingles suit was filed in court, the
dismissed employees, Cristobal included, continued to seek reconsideration of their dismissal. It
was then that Executive Secretary Mutuc assured the employees that without prejudice to the
continuation of the civil action, he would work for their reinstatement. Accordingly, some f the
dismissed employees were recalled to their respective positions in the Office of the President
among whom were the plaintiffs in the civil case and several others who were not parties
therein.' Secretary Mutuc even tried to place the others outside of the Malacaang Office. An
affidavit of Emiliano Punzal, retired Presidential Records Officer, attests to the fact that Jose C.
Cristobal "was among those in the list of separated employees ordered for placement to a
position commensurate to his qualification and experience." In the meantime, however,
Secretary Mutuc was replaced by other Executive Secretaries to whom Cristobal over and over
again presented his request for reinstatement and who gave the same assurance that Cristobal
would be recalled and re-employed at "the opportune time." 8
It was this continued promise of the government officials concerned which led Cristobal to bide
his time and wait for the Office of the President to comply with its commitment. Furthermore,
he had behind him the decision of the Supreme Court in Ingles vs. Mutuc which he believed
should be applied in his favor. But when Cristobal, in answer to his various letters, received the
letter of May 19, 1971 from the Office of the President denying his reinstatement and declaring
the matter "definitely closed" because of his failure to file an action in court within one year
from his separation, 9 it was only then that he, set the necessity of seeking redress from the
courts.
Surely, it would now be the height of inequity and cutting a deep wound in Our sense of justice,
if after Cristobal relied and reposed his faith and trust on the word and promises of the former
Executive Secretaries who dealt with him and who preceded the herein respondent Executive
Secretary Melchor, We are to hold that he lost his right to seek relief because of lapse of time.

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The doctrine of laches is an equitable principle applied to promote but never to defeat
justice.10 Thus, where laches is invoked against a plaintiff by reason of the latter's failure to come
to court within the statutory period provided in the law, the doctrine of laches will not be taken
against him where the defendant is shown to have promised from time to time to grant the
relief sought for.11 Again, We have jurisprudence that where a defendant or those claiming
under him recognized or directly or impliedly acknowledged existence of the right asserted by a
plaintiff, such recognition may be invoked as a valid excuse for a plaintiff's delay in seeking to
enforce such right.12 In brief, it is indeed the better rule that courts, under the principle of
equity, will not be guided or bound strictly by the statute of limitations or the doctrine of laches
when to do so, manifest wrong and injustice would result. 13
3. The dismissal of appellant Cristobal was contrary to law on the strength of this Court's
Decision in Ingles vs. Mutuc.
In Ingles the defendants-appellees maintained before this Court that the principal issue in the
case was whether or not the plaintiffs- employees were occupying positions primarily
confidential in nature and therefore subject to removal at the pleasure of the appointing power,
and that this issue was to be resolved in the affirmative. The Court speaking through then
Justice, later Chief Justice, Roberto Concepcion, held inter alia that one holding in the
government a primarily confidential position is "in the Civil Service" and that "officers or
employees in the unclassified" as well as "those in the classified service" are protected by the
provision in the organic law that "no officer or employee in the Civil Service shall be removed or
suspended except for cause as provided by law" (Section 4, Article XII, 1935 Constitution); that
while the incumbent of a primarily confidential position holds office at the pleasure only of the
appointing power and such pleasure turns into displeasure, the incumbent is not "removed" or
"dismissed" but that his term merely "expires"; that there was no evidence to indicate that the
respective positions of the dismissed plaintiffs were "primarily confidential" in nature and on the
contrary the compensation attached and the designation given thereto suggest the purely or at
least mainly clerical nature of their work; and consequently,, considering that the plaintiffs were
admittedly civil service eligibles with several years of service in the Government, their removal
from office was "illegal and contrary to law". 14
The Court's Decision in Ingles vs. Mutuc constitutes the law of the case now before Us.
Appellant herein, Jose Cristobal, is a civil service eligible with eight (8) years of service in the
government. He was holding "Item 9" "Private Secretary I" in the Budget for the
"President's Private Office" with annual compensation of P4,188.00. No evidence was adduced
by the government to show that Cristobal's position was "primarily confidential".15On the
contrary as stated by this Court in Ingles vs. Mutuc the compensation attached to this item and
the other items except for one and the designation of the position indicate the purely nature of
the functions of the employees dismissed from the service. In fact, none of the letters sent to
the herein appellant from the Office of the President ever indicated that he was holding his
position at the pleasure of the appointing power or that his services were terminated because
his term of office had "expired". The only reason given and this appears in the letter of
September 1, 1969 from the Office of the President was that he failed to institute the proper
proceeding to assert his right, if any, to the position within the period of one year from the date
of termination and under settled jurisprudence he is deemed to have abandoned his right to said
office or acquiesced in his removal.16
To summarize, with the circumstances thus surrounding this particular case, viz: (a) Jose
Cristobal consistently pressed for a reconsideration of his separation from the service; (b) he was
give n assurance that would be recalled at the opportune time; and (c) that he sudden
termination of his employment without cause after eight years of service in the government

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is contrary to law following the ruling Ingles vs, Mutuc which inures to the benefit of Cristobal
who is similarly situated as the plaintiffs in said case and who merely desisted from joining the
suit because of the assurance given him that he would be recalled to the service - with all these
factors, We repeat, there is justification for not applying existing jurisprudence to his case.
This Court, applying the principle of equity, need not be bound to a rigid application of the law,
but rather its action should conform to the conditions or exigencies to a given problem or
situation in order to grant a relief that will serve the ends of justice.
To paraphrase then Chief Justice John Edwin Marshall of the United States Supreme Court, let us
to complete justice and not do justice by halves. 17 Just as in Ingles vs. Mutuc this Court gave
justice to plaintiffs, so shall We do justice to Jose Cristobal.
In granting relief to the herein appellant on the matter of back salaries. We note, however, that
there is no proof to show that during all these years from January 1, 1962, to the present,
appellant at no time worked or was employed at some other office. In fairness to the
Government We cannot ignore t e probability of Cristobal's having sought employment
elsewhere during that period to support himself and his family.
Applying by analogy the rulings of this Court in the matter of fixing backwages to employees who
were victims of unfair labor practices of their employers so as to obviate the necessity of a
hearing on the point and avoid further delay, and considering the lapse of almost nine years
before appellant filed this suit, We resolve, to grant back salaries at the rate last received by
him only for a period of five (5) years without qualification and deduction.18
IN VIEW OF THE ABOVE CONSIDERATIONS, the decision of the court a quo is set aside.
Defendants-appellees or the Public Officials concerned are directed:
1. To reinstate Jose Cristobal, either in the Office of the President or in some other government
office, to any position for which he is qualified by reason of his civil service eligibility, subject to
present requirements of age and physical fitness; and
2. To pay appellant Cristobal back salaries for a period of FIVE YEARS at the rate of Four
Thousand, One Hundred Eighty-eight Pesos (P4,188.00) per annum without qualification and
deduction.
So Ordered.
Teehankee (Chairman) Martin, Fernandez and Guerrero, JJ., concur.
Footnotes
1 This appeal originally was with the Court of Appeals, but in a resolution of February 2, 1976, it
was certified to this Tribunal as it involved purely a question of law. On March 12, 1976, the
appeal was accepted and the case declared submitted for decision on the basis of ht brief file
with the Court of Appeals.
2 Villegas vs. De la Cruz, 1965,15 SCRA 720 citing; Unabia v. City Mayor, et al., 99 Phil. 253, 257;
Pinullar v. President of the Senate, L11667, June 30, 1958; Roque v. President of the Senate, L10949, July 25, 1958; Madrid v. Auditor General, et al, L- 13523, May 31, 1960; Mesias v. Jover,
L-8543, November 22, 1955; Abella v. Rodriguez, L10512, November 29, 1957; Eranda v. Del
Rosario, L-10552, April 28, 1958; Quingco v. Rodriguez, L-12144, September 17, 1958; Tabora v.
City of Cebu, L-11574, October 31, 1958; De la Cerna v. Osmena L-12492, May 23, 1959; Argos v.
Veloso, 83 Phil. 929; Tumulak v. Egay, 82 Phil. 828; Bumanglag v. Fernandez, et al., L-11482,

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November 29. 1960: Cui v. Cui, L-17278, August 31, 1964. See also Villaluz vs, Zaldivar, 15 SCRA
710.
3 April 15, 1968, 23 SCRA 35.
4 pp. 108-109, CFI records
5 26 SCRA 171
6 Exhibits L, M, N, 0, pp. 181-185 CFI records
7 Exhibit J, p. 197, Ibid.
8 Exhibit P, p. 186, Ibid.
9 pp. 14-18, Ibid.
10 Bunch, et al. vs. 'United States, et al., 1918, 252 Fed. 673, 678
11 Backus vs, Backus 1919, 175 NW 400, 207 Mich. 690. This is an action filed b one against his
brother to recover corporate stocks bought by the defendant with plaintiffs money which was
filed after the ears from the time his cause of action arose. The defense of laches was not upheld
b the Supreme Court of Michigan, it appearing that defendant promised from time to time to
transfer the stocks to plaintiff.
12 Browning vs. Browning et all 100 SE 860, 85 W. Va. 46,(1919)
13 Fogg vs. St. Louis, H &- K. R. Co. (C.C) 17 Fed 871, American, Digest, 165 to l896, Century
Edition Vol. 19, p, 462.
14 Supra, pp. 177-178.
15 p. 3, CFI records. See also Ingles vs. Mutuc, supra, p. 177, where the Court stated that except
for "item 2" (one private secretary to the President P9,000.00) there is nothing in the other
items in the budget for "the Office of the President" to indicate that the respective positions are
primarily confidential ln nature.
16 p. 14, CFI records.
17 "The court of equity in all cases delights to do complete justice, and not by halves." Marshall,
C.J. Knight vs. Knight, 3 P. Wms. 331, 334; Corbet vs. Johnson, 1 Brock 77, 81 both cited in
Hefner et al. s Northwestern Mutual Life Insurance Co., 123 U.S., 309, 313.
18 Mercury Drug Co., Inc., et al. vs. Court of Industrial Relations, et al., L-23357, April 30, 1974,
per Makasiar. J.
Feati University Club vs, Feati University, L-31503, August 15, 1974, per Teehankee, J. NASSCO
vs. CIR, L-31852 and L-32724, June 28, 1974, per Teehankee, J.
Almira, et al. vs. B.F. Goodrich Phil., Inc., L-34974, July 25, 1974, per Fernando, J.
Insular Life Assurance Co., Ltd. Employees Association vs. Insular Life Assurance Co., Ltd., L25291, January 30, 1971, per Castro, J March 10, 1977 (Resolution on motion Jr. reconsideration
of respondents) per Castro, C.J.
--------------------------------------------------------------------------------------------------------------------------------

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Republic of the Philippines


SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 50422 February 8, 1989
NICOLAS ARRADAZA, MARCELINO ARRADAZA, OPRECILO ARRADAZA, CATALINA ARRADAZA,
MIGUELA ARRADAZA, LILIA ARRADAZA, MELCHOR ARRADAZA and CERLITO
ARRADAZA, petitioners
vs.
HONORABLE COURT OF APPEALS and MELCHOR LARRAZABAL, respondents.
Cleto P. Evangelista for petitioners.
Herman B. de Leon for respondents.
PARAS, J.:
This is a petition for review on certiorari seeking to reverse and set aside; (a) the decision of the
Court of Appeals 1promulgated on January 19, 1979 in CA-G.R. No. 57473-R affirming the
decision of the then Court of First Instance of Leyte, Branch V, Ormoc City 2 in Civil Case No.
13970 dismissing plaintiffs' (herein petitioners') complaint and adjudicating the land in litigation
in favor of defendant (herein private respondent), and (b) resolution of the Court of Appeals
dated February 10, 1979 denying petitioners' motion for reconsideration.
As found by the Court of Appeals and the trial court, the facts of the case are as follows:
The petitioners are the legitimate children of spouses Ignacio Arradaza and Marcelina Quirino
who died on August 31, 1974 and sometime in July 1944, respectively, with the exception of Lilia
Arradaza and Carlito Mopon who are their grandchildren.
In 1941, Ignacio Arradaza and Marcelina Quirino purchased from spouses Gervacio Villas and
Jovita Tabudlong a piece of land located in Ormoc, Leyte with an area of 52,956 square meters,
more or less, in the amount of P300.00. The deed of sale was lost during the war and all efforts
to recover it proved futile. The Arradazas paid the taxes thereon pre-war, but in the cadastral
hearings, the land was adjudicated to the vendor spouses for failure of the vendee spouse to
claim it. Original Certificate of Title No. 35901 was therefore issued in the name of Gervacio
Villas and Jovita Tabudlong but they recognized the vendee spouses as the real owners of the
land.
In 1944 while Marcelina Quirino was still living, Ignacio Arradaza mortgaged the land for P250.00
to Estelita Magalona for a period of five (5) years. On October 21, 1947, after the death of
Marcelina Quirino, Ignacio Arradaza sold the same land to mortgagee Estelita Magalona Bangloy
who was then married. Consequently she took over possession of the land, declared it for
taxation purpose and paid taxes thereon.
On February 13, 1963 while the land was still in the name of spouses Villas, private respondent
Larrazabal purchased the property from Estelita Magalona Bangloy in the amount of P800.00.
This was evidenced by a "Deed of Sale of a Parcel of Land" dated February 13, 1963 executed by
Bangloy in favor of Larrazabal and Bangloy, together with a "Deed of Sale" dated 4 October 21,
1947 executed by Arradaza in favor of Bangloy, as well as the "Deed of Quitclaim" executed by
the registered owners spouses Villas on March 8, 1963 whereby the spouses renounced their
rights, participation, title and ownership in favor of Ignacio Arradaza, which quitclaim was

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141 | P a g e

further affirm firmed by Villas in an affidavit on November 27, 1974, that he sold the land to him
for P300.00. These documents were registered on April 18, 1963 in the Office of the Register of
Deeds. As a consequence, Original Certificate of Title No. 35901 was cancelled and Transfer
Certificate of Title No. 4581 was issued in the name of private respondent Melchor Larrazabal
and the land was declared for taxation purposes.
On January 18, 1975, appellants filed an action against private respondent before the then Court
of First Instance of Leyte to recover their pro-indiviso one-half (1/2) share of the land as heirs of
Ignacio Arradaza and Marcelina Quirino, and to exercise the right of legal redemption over onehalf (1/2) of the property sold by their deceased father while he was already a widower on
October 21, 1947.
On March 14, 1975, the Court rendered a Summary Judgment (Record on Appeal, pp. 51-109,
Rollo, p. 29) in favor of the defendant (herein private respondent) and against plaintiffs (herein
petitioners) adjudicating the land in litigation in favor of the defendant.
The decision was appealed to the Court of Appeals which on January 19, 1979 rendered a
decision (Rollo, pp. 19-22) affirming with costs against the petitioners the judgment appealed
from. The petitioners' motion for reconsideration was likewise denied.
Hence, this instant petition (Rollo, pp. 7-18) filed on May 21, 1979.
The grounds relied upon for this petition are as follows:
I
THE COURT OF APPEALS ERRED IN NOT SUSTAINING THE CONTENTION OF THE PETITIONERSAPPELLANT'S THAT THE DECISION OF THE TRIAL COURT WAS IRREGULAR, UNAUTHORIZED AND
ILLEGAL BECAUSE THERE WERE MATERIAL ISSUES OF FACT IN ISSUE BETWEEN THE PARTIES,
HENCE A SUMMARY JUDGMENT WAS IMPROPER AND INAPPROPRIATE.
II
THE COURT OF APPEALS ERRED IN HOLDING THAT THE ACTION OF THE PETITIONER-APPELLANTS
HAS PRESCRIBED AND IS BARRED BY THE STATUTE OF LIMITATIONS.
III
THE COURT OF APPEALS LIKEWISE ERRED IN IT'S FINDING THAT RESPONDENT, MELCHOR
LARRAZABAL, WAS A PURCHASER IN GOOD FAITH AND FOR VALUE.
IV
THE COURT OF APPEALS ALSO ERRED IN ITS HOLDING THAT PETITIONERS-APPELLANTS ARE
GUILTY OF LACHES.
V
THE COURT OF APPEALS AGAIN ERRED WHEN IT DENIED THE RIGHT TO LEGAL REDEMPTION BY
THE APPELLANTS AS WELL AS THEIR CLAIMS FOR DAMAGES AND ATTORNEY'S FEES.
VI
THE COURT OF APPEALS LASTLY ERRED WHEN IT DENIED THE PETITIONERS, MOTION FOR
RECONSIDERATION WITHOUT A JUSTIFIED RATIONALIZATION. (Rollo, p. 53)

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In the resolution of October 3, 1979, the petitioner was given due course (Rollo, p. 46).
The main issue in this case is whether or not the action of petitioners has prescribed and is
barred by the statute of limitations.
This petition is devoid of merit.
Petitioners allege in their petition that they seek the recovery of one-half (1/2) of the land in
dispute as their share for being the children of the late Ignacio Arradaza by his wife Marcelina
Quirino. They reason out in their brief (Rollo, p. 53) that under the factual milieu of the case
which involves registered land, title to which was issued on March 12, 1941, the sale made by
Ignacio Arradaza on October 21, 1947 when he was already a widower and with no liquidation of
the conjugal partnership ever made was invalid, null and void ab initio and inexistent insofar as it
included the shares of the petitioners who are the children of Marcelina Quirino who died on
July 19, 1944. He could not have legally and validly sold the whole of the land, for one-half
thereof pro-indiviso had automatically passed by succession to the heirs of Marcelina Quirino.
They concluded that the defect of inexistence of a contract, like that of the sale by Ignacio
Arradaza who could not have transmitted any title of ownership over the other half belonging to
his wife for it had already passed to her heirs who are the petitioners, is permanent and
incurable. Hence, it could not be cured by ratification or prescription. Furthermore, petitioners
contend that legal redemption lies in their favor over the other half as the sale to Estelita M.
Bangloy in 1947 was never registered and no notice was served upon them by their father who
requested petitioners who were then minors and scattered to allow him to possess and enjoy
the conjugal property in a state of indivision. As petitioners thought that the property was only
mortgaged and not sold until their father's death on July 31, 1974, laches finds no ready and
strict application due to relationship. Moreover, petitioners charge respondent with bad faith as
the latter bought the property from one who is not the registered owner, the seller being
Estelita M. Bangloy and not spouses Gervacio Villas and Jovita Tabudlong in whose names the
property was registered.
Private respondent on the other hand, maintains in his brief (Rollo, pp- 62-71) that prescription
has set in because the predecessors-in-interest of petitioners were not registered owners
protected by Act 496, He asserts that when the transaction that gave rise to the present action
occurred on October 21, 1947 the Code of Civil Procedure was still in force. The prescriptive
period was only ten (10) years irrespective of the good or bad faith of Estelita M. Bangloy who
took possession of the land as of that date, She then completed the period of ten (10) years in
1957 and acquired absolute title by prescription pursuant to Article 1116 of the New Civil Code.
Private respondent claims that he can avail himself of such prescription acquired by his
predecessor. He charges petitioners with deep lethargy without bothering to inquire into the
status of the land which was transferred to him as early as 1963 or twelve (12) years before the
filing of the instant case or more than twenty seven (27) years after private respondent and his
predecessor-in-interest Estelita M. Bangloy had possessed the land openly, publicly and
peacefully. It was in fact the private respondent who caused the transfer of title from the Villas
spouses to his name and that of his wife. Moreover, the alleged deed of sale in favor of
petitioners' predecessors-in-interest from the Villas spouses is not a shield against prescription
since it was not registered and is not therefore protected by Act 496.
Private respondent's contention is well taken.
As correctly appreciated by the Court of Appeals, the defenses of prescription and laches lie. The
pertinent portion of the decision reads:

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The deed of sale of Ignacio Arradaza in favor of Estelita M. Bangloy was executed on October 21,
1947 (Exhibit "D"). This transaction occurred before the effectivity of the New Civil Code. Under
the law then in force, the prescriptive period is only ten (10) years, irrespective of the good or
bad faith of the possessor. Inasmuch as under the transitory provision of the New Civil Code,
prescription already running before the effectivity thereof shall be governed by the laws
previously in force, the prescriptive period in the present case was completed on October 21,
1957, Melchor Larrazabal having derived his title from Estelita M. Bangloy may avail himself of
such defense. The alleged deed of sale in favor of plaintiffs' predecessors-in-interest is not a
shield against prescription since the said document from the Villas uses was not registered and is
not therefore protected by Act 496.
In the case at bar, both the legal defense of prescription and the equitable defense of laches
clearly lie against the plaintiff's right, if any, to recover the ownership and possession of the
land. They admit that the land was sold by Ignacio Arradaza to Estelita M. Bangloy on October
21, 1947. The time-honored rule anchored on public policy is that relief will be denied to a
litigant whose claim or demand has become 'stale' or who has acquiesced for an unreasonable
length of time, or who has not been vigilant or who has slept on his rights either by negligence,
folly or inattention.
It is strange why it took appellants twenty-seven (27) years (October 21, 1947 January 18, 1975)
within which to definitely pursue a legal action to enforce their alleged claim. This delay and
indifference, which have not been satisfactorily explained by them militate against the validity of
the alleged right that they are seeking to enforce in the case at bar. The assertion of a doubtful
claim after a long delay cannot be forwarded by the courts. (Decision, pp. 3-4; Rollo, pp. 21-22)
On the issue of prescription, this Court has invariably ruled in numerous decisions that an action
for recovery of title, or possession of, real property or an interest therein can only be brought
within ten (10) years after the cause of action accrues. (Alcos et al. v. IAC et al., G.R. No. 79317,
June 28, 1988; Canete et al. v. Benedicto, G.R. No. 55222, March 14, 1988). In the instant case,
the cause of action for reconveyance must be deemed to have occurred on October 21, 1947
when the deed of sale in favor of Estelita M. Bangloy who immediately took possession of the
land was executed.
In the same manner, petitioners' action is inevitably barred by the equitable principle of laches.
Petitioners were aware that the land was in the actual possession of private respondent and his
predecessor-in-interest (Brief for Petitioners-Appellants, p. 10; Rollo, p. 63), but did nothing to
immediately claim it or verify the status of their possession.
As observed by this Court under similar circumstances, there is evidently a failure or neglect for
an unreasonable and unexplained period of time to do what they claimed they were entitled to
do, where petitioners failed to institute any action for reconveyance nor did they seek
reconveyance until about twenty five (25) years from the execution of the Deed of Sale. Such
negligence or failure warrants the assumption that the Parties claiming to be entitled to assert it,
either had abandoned it, or had decided that they were not entitled to assert it and thus,
acquiesced in it (Alcos v. IAC, supra). More specifically, this Court finds it unbelievable that in the
span of more than twenty-seven (27) years, the petitioners would not have taken any step to
verify the status of the land of their father which had been in the possession of private
respondents during all that time Pangadil v. CFI of Cotabato, 116 SCRA 353 [1982]).
The principle of laches is a creation of equity. It is applied, not really to penalize neglect or
sleeping upon one's right, but rather to avoid recognizing a right when to do so would result in a
clearly inequitable situation (Asuncion v. CA et al., 150 SCRA 353 (1987]).

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144 | P a g e

Petitioners contend that the procedure of summary judgment is not warranted as the material
averments of fact of the petitioners' complaint are traversed by private respondent's answer.
They argue that the trial court, to do justice to them and to satisfy its conscience, should have
received evidence in a full dressed trial.
The facts of this case are undisputed. Summary judgment procedure is a method for promptly
disposing of action in which there is no genuine issue as to the existence of any material fact (De
Leon v. Faustino, 110 Phil. 249 [1961]). The trial court may render summary judgment as justice
may require, if at the pre-trial it finds that facts exist which would warrant such judgment
(Taleon v. Secretary of Public Works and Communications, 20 SCRA 69 [1967]). The normal
processes employed to support or deny the facts stated in the pleadings by the parties to an
action, and from which it may clearly be drawn that certain facts pleaded by either party are
certain, undisputed and indubitable which dispense with the hearing or trial of the case are
depositions, admissions, and affidavits (Singleton v. Philtrust Co., 99 Phil. 91 [1956]). The Record
on Appeal (Rollo, p. 29) clearly shows that petitioners and respondents submitted their
respective lists of witnesses and their affidavits, and exhibits during the pre-trial, and
memoranda (Record on Appeal, pp. 22-51). Private respondent, in particular, submitted among
others, exhibits, Transfer Certificate of Title No. 4581 in his name and that of his wife dated April
18, 1963, and tax declarations in his name and that of his predecessors-in-interests. From these
affidavits, exhibits and other evidence, the trial court rendered its Summary Judgment (Ibid., pp.
51-109). An examination of the record clearly and readily shows that the statute of limitation has
stepped in and that the petitioners are guilty of laches and that the property has been in
possession of private respondent who is a purchaser in good faith and for value. There is
therefore, no genuine triable issue of fact.
IN VIEW OF THE FOREGOING, the instant petition is DENIED for lack of merit and the assailed
decision of the Court of Appeals is AFFIRMED.
SO ORDERED.
Melencio-Herrera, (Chairman), Padilla, Sarmiento and Regalado JJ., concur.

Footnotes
1 Penned by Justice Andres Reyes, concurred in by Justices Alampay and Milagros A. German.
2 Presided over by Judge Numeriano G. Estenzo.
The Lawphil Project - Arellano Law Foundation

Republic of the Philippines


SUPREME COURT
Manila
SECOND DIVISION

G.R. No. 50422 February 8, 1989


NICOLAS ARRADAZA, MARCELINO ARRADAZA, OPRECILO ARRADAZA, CATALINA ARRADAZA,
MIGUELA
ARRADAZA,
LILIA
ARRADAZA,
MELCHOR
ARRADAZA
and
CERLITO
ARRADAZA, petitioners

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145 | P a g e

vs.
HONORABLE COURT OF APPEALS and MELCHOR LARRAZABAL, respondents.
Cleto P. Evangelista for petitioners.
Herman B. de Leon for respondents.
PARAS, J.:
This is a petition for review on certiorari seeking to reverse and set aside; (a) the decision of the Court of
Appeals 1promulgated on January 19, 1979 in CA-G.R. No. 57473-R affirming the decision of the

then Court of First Instance of Leyte, Branch V, Ormoc City 2 in Civil Case No. 13970 dismissing
plaintiffs' (herein petitioners') complaint and adjudicating the land in litigation in favor of defendant
(herein private respondent), and (b) resolution of the Court of Appeals dated February 10, 1979
denying petitioners' motion for reconsideration.
As found by the Court of Appeals and the trial court, the facts of the case are as follows:
The petitioners are the legitimate children of spouses Ignacio Arradaza and Marcelina Quirino who died on
August 31, 1974 and sometime in July 1944, respectively, with the exception of Lilia Arradaza and Carlito
Mopon who are their grandchildren.
In 1941, Ignacio Arradaza and Marcelina Quirino purchased from spouses Gervacio Villas and Jovita
Tabudlong a piece of land located in Ormoc, Leyte with an area of 52,956 square meters, more or less, in
the amount of P300.00. The deed of sale was lost during the war and all efforts to recover it proved futile.
The Arradazas paid the taxes thereon pre-war, but in the cadastral hearings, the land was adjudicated to the
vendor spouses for failure of the vendee spouse to claim it. Original Certificate of Title No. 35901 was
therefore issued in the name of Gervacio Villas and Jovita Tabudlong but they recognized the vendee
spouses as the real owners of the land.
In 1944 while Marcelina Quirino was still living, Ignacio Arradaza mortgaged the land for P250.00 to Estelita
Magalona for a period of five (5) years. On October 21, 1947, after the death of Marcelina Quirino, Ignacio
Arradaza sold the same land to mortgagee Estelita Magalona Bangloy who was then married. Consequently
she took over possession of the land, declared it for taxation purpose and paid taxes thereon.
On February 13, 1963 while the land was still in the name of spouses Villas, private respondent Larrazabal
purchased the property from Estelita Magalona Bangloy in the amount of P800.00. This was evidenced by a
"Deed of Sale of a Parcel of Land" dated February 13, 1963 executed by Bangloy in favor of Larrazabal and
Bangloy, together with a "Deed of Sale" dated 4 October 21, 1947 executed by Arradaza in favor of Bangloy,
as well as the "Deed of Quitclaim" executed by the registered owners spouses Villas on March 8, 1963
whereby the spouses renounced their rights, participation, title and ownership in favor of Ignacio Arradaza,
which quitclaim was further affirm firmed by Villas in an affidavit on November 27, 1974, that he sold the land
to him for P300.00. These documents were registered on April 18, 1963 in the Office of the Register of
Deeds. As a consequence, Original Certificate of Title No. 35901 was cancelled and Transfer Certificate of
Title No. 4581 was issued in the name of private respondent Melchor Larrazabal and the land was declared
for taxation purposes.
On January 18, 1975, appellants filed an action against private respondent before the then Court of First
Instance of Leyte to recover their pro-indiviso one-half (1/2) share of the land as heirs of Ignacio Arradaza
and Marcelina Quirino, and to exercise the right of legal redemption over one-half (1/2) of the property sold
by their deceased father while he was already a widower on October 21, 1947.
On March 14, 1975, the Court rendered a Summary Judgment (Record on Appeal, pp. 51-109, Rollo, p. 29)
in favor of the defendant (herein private respondent) and against plaintiffs (herein petitioners) adjudicating
the land in litigation in favor of the defendant.
The decision was appealed to the Court of Appeals which on January 19, 1979 rendered a decision (Rollo,
pp. 19-22) affirming with costs against the petitioners the judgment appealed from. The petitioners' motion
for reconsideration was likewise denied.
Hence, this instant petition (Rollo, pp. 7-18) filed on May 21, 1979.

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The grounds relied upon for this petition are as follows:


I
THE COURT OF APPEALS ERRED IN NOT SUSTAINING THE CONTENTION OF THE
PETITIONERS-APPELLANT'S THAT THE DECISION OF THE TRIAL COURT WAS
IRREGULAR, UNAUTHORIZED AND ILLEGAL BECAUSE THERE WERE MATERIAL
ISSUES OF FACT IN ISSUE BETWEEN THE PARTIES, HENCE A SUMMARY
JUDGMENT WAS IMPROPER AND INAPPROPRIATE.
II
THE COURT OF APPEALS ERRED IN HOLDING THAT THE ACTION OF THE
PETITIONER-APPELLANTS HAS PRESCRIBED AND IS BARRED BY THE STATUTE
OF LIMITATIONS.
III
THE COURT OF APPEALS LIKEWISE ERRED IN IT'S FINDING THAT RESPONDENT,
MELCHOR LARRAZABAL, WAS A PURCHASER IN GOOD FAITH AND FOR VALUE.
IV
THE COURT OF APPEALS ALSO ERRED IN ITS HOLDING THAT PETITIONERSAPPELLANTS ARE GUILTY OF LACHES.
V
THE COURT OF APPEALS AGAIN ERRED WHEN IT DENIED THE RIGHT TO LEGAL
REDEMPTION BY THE APPELLANTS AS WELL AS THEIR CLAIMS FOR DAMAGES
AND ATTORNEY'S FEES.
VI
THE COURT OF APPEALS LASTLY ERRED WHEN IT DENIED THE PETITIONERS,
MOTION FOR RECONSIDERATION WITHOUT A JUSTIFIED RATIONALIZATION.
(Rollo, p. 53)
In the resolution of October 3, 1979, the petitioner was given due course (Rollo, p. 46).
The main issue in this case is whether or not the action of petitioners has prescribed and is barred by the
statute of limitations.
This petition is devoid of merit.
Petitioners allege in their petition that they seek the recovery of one-half (1/2) of the land in dispute as their
share for being the children of the late Ignacio Arradaza by his wife Marcelina Quirino. They reason out in
their brief (Rollo, p. 53) that under the factual milieu of the case which involves registered land, title to which
was issued on March 12, 1941, the sale made by Ignacio Arradaza on October 21, 1947 when he was
already a widower and with no liquidation of the conjugal partnership ever made was invalid, null and void ab
initio and inexistent insofar as it included the shares of the petitioners who are the children of Marcelina
Quirino who died on July 19, 1944. He could not have legally and validly sold the whole of the land, for onehalf thereof pro-indiviso had automatically passed by succession to the heirs of Marcelina Quirino. They
concluded that the defect of inexistence of a contract, like that of the sale by Ignacio Arradaza who could not
have transmitted any title of ownership over the other half belonging to his wife for it had already passed to
her heirs who are the petitioners, is permanent and incurable. Hence, it could not be cured by ratification or
prescription. Furthermore, petitioners contend that legal redemption lies in their favor over the other half as
the sale to Estelita M. Bangloy in 1947 was never registered and no notice was served upon them by their
father who requested petitioners who were then minors and scattered to allow him to possess and enjoy the
conjugal property in a state of indivision. As petitioners thought that the property was only mortgaged and not
sold until their father's death on July 31, 1974, laches finds no ready and strict application due to

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relationship. Moreover, petitioners charge respondent with bad faith as the latter bought the property from
one who is not the registered owner, the seller being Estelita M. Bangloy and not spouses Gervacio Villas
and Jovita Tabudlong in whose names the property was registered.
Private respondent on the other hand, maintains in his brief (Rollo, pp- 62-71) that prescription has set in
because the predecessors-in-interest of petitioners were not registered owners protected by Act 496, He
asserts that when the transaction that gave rise to the present action occurred on October 21, 1947 the
Code of Civil Procedure was still in force. The prescriptive period was only ten (10) years irrespective of the
good or bad faith of Estelita M. Bangloy who took possession of the land as of that date, She then completed
the period of ten (10) years in 1957 and acquired absolute title by prescription pursuant to Article 1116 of the
New Civil Code. Private respondent claims that he can avail himself of such prescription acquired by his
predecessor. He charges petitioners with deep lethargy without bothering to inquire into the status of the
land which was transferred to him as early as 1963 or twelve (12) years before the filing of the instant case
or more than twenty seven (27) years after private respondent and his predecessor-in-interest Estelita M.
Bangloy had possessed the land openly, publicly and peacefully. It was in fact the private respondent who
caused the transfer of title from the Villas spouses to his name and that of his wife. Moreover, the alleged
deed of sale in favor of petitioners' predecessors-in-interest from the Villas spouses is not a shield against
prescription since it was not registered and is not therefore protected by Act 496.
Private respondent's contention is well taken.
As correctly appreciated by the Court of Appeals, the defenses of prescription and laches lie. The pertinent
portion of the decision reads:
The deed of sale of Ignacio Arradaza in favor of Estelita M. Bangloy was executed on
October 21, 1947 (Exhibit "D"). This transaction occurred before the effectivity of the New
Civil Code. Under the law then in force, the prescriptive period is only ten (10) years,
irrespective of the good or bad faith of the possessor. Inasmuch as under the transitory
provision of the New Civil Code, prescription already running before the effectivity thereof
shall be governed by the laws previously in force, the prescriptive period in the present
case was completed on October 21, 1957, Melchor Larrazabal having derived his title from
Estelita M. Bangloy may avail himself of such defense. The alleged deed of sale in favor of
plaintiffs' predecessors-in-interest is not a shield against prescription since the said
document from the Villas uses was not registered and is not therefore protected by Act
496.
In the case at bar, both the legal defense of prescription and the equitable defense of
laches clearly lie against the plaintiff's right, if any, to recover the ownership and
possession of the land. They admit that the land was sold by Ignacio Arradaza to Estelita
M. Bangloy on October 21, 1947. The time-honored rule anchored on public policy is that
relief will be denied to a litigant whose claim or demand has become 'stale' or who has
acquiesced for an unreasonable length of time, or who has not been vigilant or who has
slept on his rights either by negligence, folly or inattention.
It is strange why it took appellants twenty-seven (27) years (October 21, 1947 January 18,
1975) within which to definitely pursue a legal action to enforce their alleged claim. This
delay and indifference, which have not been satisfactorily explained by them militate
against the validity of the alleged right that they are seeking to enforce in the case at bar.
The assertion of a doubtful claim after a long delay cannot be forwarded by the courts.
(Decision, pp. 3-4; Rollo, pp. 21-22)
On the issue of prescription, this Court has invariably ruled in numerous decisions that an action for recovery
of title, or possession of, real property or an interest therein can only be brought within ten (10) years after
the cause of action accrues. (Alcos et al. v. IAC et al., G.R. No. 79317, June 28, 1988; Canete et al. v.
Benedicto, G.R. No. 55222, March 14, 1988). In the instant case, the cause of action for reconveyance must
be deemed to have occurred on October 21, 1947 when the deed of sale in favor of Estelita M. Bangloy who
immediately took possession of the land was executed.
In the same manner, petitioners' action is inevitably barred by the equitable principle of laches. Petitioners
were aware that the land was in the actual possession of private respondent and his predecessor-in-interest
(Brief for Petitioners-Appellants, p. 10; Rollo, p. 63), but did nothing to immediately claim it or verify the
status of their possession.

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As observed by this Court under similar circumstances, there is evidently a failure or neglect for an
unreasonable and unexplained period of time to do what they claimed they were entitled to do, where
petitioners failed to institute any action for reconveyance nor did they seek reconveyance until about twenty
five (25) years from the execution of the Deed of Sale. Such negligence or failure warrants the assumption
that the Parties claiming to be entitled to assert it, either had abandoned it, or had decided that they were not
entitled to assert it and thus, acquiesced in it (Alcos v. IAC, supra). More specifically, this Court finds it
unbelievable that in the span of more than twenty-seven (27) years, the petitioners would not have taken any
step to verify the status of the land of their father which had been in the possession of private respondents
during all that time Pangadil v. CFI of Cotabato, 116 SCRA 353 [1982]).
The principle of laches is a creation of equity. It is applied, not really to penalize neglect or sleeping upon
one's right, but rather to avoid recognizing a right when to do so would result in a clearly inequitable situation
(Asuncion v. CA et al., 150 SCRA 353 (1987]).
Petitioners contend that the procedure of summary judgment is not warranted as the material averments of
fact of the petitioners' complaint are traversed by private respondent's answer. They argue that the trial
court, to do justice to them and to satisfy its conscience, should have received evidence in a full dressed
trial.
The facts of this case are undisputed. Summary judgment procedure is a method for promptly disposing of
action in which there is no genuine issue as to the existence of any material fact (De Leon v. Faustino, 110
Phil. 249 [1961]). The trial court may render summary judgment as justice may require, if at the pre-trial it
finds that facts exist which would warrant such judgment (Taleon v. Secretary of Public Works and
Communications, 20 SCRA 69 [1967]). The normal processes employed to support or deny the facts stated
in the pleadings by the parties to an action, and from which it may clearly be drawn that certain facts pleaded
by either party are certain, undisputed and indubitable which dispense with the hearing or trial of the case
are depositions, admissions, and affidavits (Singleton v. Philtrust Co., 99 Phil. 91 [1956]). The Record on
Appeal (Rollo, p. 29) clearly shows that petitioners and respondents submitted their respective lists of
witnesses and their affidavits, and exhibits during the pre-trial, and memoranda (Record on Appeal, pp. 2251). Private respondent, in particular, submitted among others, exhibits, Transfer Certificate of Title No. 4581
in his name and that of his wife dated April 18, 1963, and tax declarations in his name and that of his
predecessors-in-interests. From these affidavits, exhibits and other evidence, the trial court rendered its
Summary Judgment (Ibid., pp. 51-109). An examination of the record clearly and readily shows that the
statute of limitation has stepped in and that the petitioners are guilty of laches and that the property has been
in possession of private respondent who is a purchaser in good faith and for value. There is therefore, no
genuine triable issue of fact.
IN VIEW OF THE FOREGOING, the instant petition is DENIED for lack of merit and the assailed decision of
the Court of Appeals is AFFIRMED.
SO ORDERED.
Melencio-Herrera, (Chairman), Padilla, Sarmiento and Regalado JJ., concur.

Footnotes
1 Penned by Justice Andres Reyes, concurred in by Justices Alampay and Milagros A.
German.
2 Presided over by Judge Numeriano G. Estenzo.

The Lawphil Project - Arellano Law Foundation

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SECOND DIVISION
G.R. No. L-25605 June 20, 1977
FERNANDO MAPA III, Plaintiff-Appellee, vs. CRISPINA GUANZON, RAYMUNDO
BAYETA, VALENTIN BAYETA, LUCIANA BAYETA, AGUSTIN BAYETA, DOLOROSA
BAYETA, and THE PROVINCIAL TREASURER OF NEGROS OCCIDENTAL,
defendants. CRISPINA GUANZON, RAYMUNDO BAYETA, VALENTIN BAYETA,
LUCIANA BAYETA, AGUSTIN BAYETA and DOLOROSA BAYETA, DefendantsAppellants.

Antonio T. de Jesus for appellants.chanrobles virtual law library


Jose M. Estacion for appellee.
ANTONIO, J.:chanrobles virtual law library
Direct appeal to this Court by defendants-appellants, Crispina Guanzon, Raymundo,
Valentin, Luciana, Agustin and Dolorosa, all surnamed Bayeta, from the decision of the
Court of First Instance of Negros Occidental in Civil Case No. 279 (6616). 1 This appeal
was instituted before Section 17 of Republic Act No. 296 was amended by Republic Act
No. 5440, which took effect on September 9, 1968.chanroblesvirtualawlibrarychanrobles
virtual law library
The basic question of law, however, is whether or not the question of ownership over
Lot No. 2636 could still be relitigated in said Civil Case No. 279 (6616), in view of the
final dismissal on the merits of Civil Cases Nos. 4666 and 5557, which were actions
instituted by herein defendants-appellants to recover the ownership and possession of
the same property from plaintiff appellee.chanroblesvirtualawlibrarychanrobles virtual
law library
The records show that Isidoro Bayeta was the grantee of a homestead of fourteen (14)
hectares, eighty-two (82) centaares and seventy-nine (79) centares (subject matter of
this case and hereinafter referred to as Lot No. 2636), located in Barrio Langub,
Municipality of Escalante, Province of Negros Occidental, under Homestead Patent No.
8105, dated August 2, 1925 2 and by virtue of which he was issued, on September 21,
1925, Original Certificate of Title No. 268 3 over said property. On September 7, 1928, or
three (3) years after the issuance of the aforesaid title, Isidoro Bayeta and his wife,
Crispina Guanzon, one of the defendants-appellants herein, sold the said land to
Spouses John Roemer and Julia Roemer for the consideration of P1,482.00. It is not
clear, however, whether the original certificate of title over the property in the name of
Isidoro Bayeta was delivered to the Roemers, but in the private instrument evidencing
the sale the vendors stated that "(w)e make as integral part of this instrument the

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documents that show our ownership


sale." 4chanrobles virtual law library

over

the

immovable

subject

of

this

On March 11, 1935, the Roemers sold, by means of a public instrument, the land to
Lucas Guirnela for P862.50 5, Guirnela, in turn, sold said land on November 10, 1936 to
Fernando Mapa, Jr., who immediately took possession thereof, 6 and paid taxes therefor
in the name of Isidoro Bayeta as the title and assessment of the land remained in his
(Isidoro's) name. 7chanrobles virtual law library
On January 31, 1950, Fernando Mapa Jr. leased said land to Vicente Omarementaria and
Fermin Ballesteros for a period of eight (8) years, that is, from the agricultural year
1950-1951 to 1957-1958. 8 The contract of lease was registered with the Danao Sugar
Central for sugar cane milling purposes. 9 chanrobles virtual law library
On January 26, 1953, said land was sold at public auction for non-payment of taxes and
was bought by the Province of Negros Occidental there being no bidders. 10 It was
repurchased by Fernando Mapa, Jr. on January 26, 1954 in the total amount of
P684.60.11 On December 28, 1956, said land was again sold at public auction for nonpayment of taxes and the Province of Negros Occidental again bought the same, there
being also no bidders. 12 The final bill of sale in favor of the Province of Negros
Occidental was issued on March 4, 1959, and registered in the Register of Deeds on
March 25, 1959. 13 chanrobles virtual law library
Meanwhile, or on January 13, 1958, the original certificate of title in the name of Isidoro
Bayeta was reconstituted administratively and the reconstituted title in the name of
Isidoro Bayeta was given the number, to wit: Certificate of Title No. RP-1019 (268). 14On
the same date, January 13, 1958, the heirs of Isidoro Bayeta, namely, Crispina Guanzon,
his widow; and Raymundo, Valentin, Luciana, Agustin and Dolorosa, all surnamed
Bayeta, defendants-appellants herein, filed an action against Fernando Mapa for
recovery of ownership of Lot No. 2636 (docketed as Civil Case No. 4666 of the Court of
First Instance of Negros Occidental) 15 alleging, among other things, that Isidoro Bayeta
during his lifetime acquired aforesaid property from the government as homestead; that
sometime in 1950, Isidoro Bayeta entered into a verbal agreement with the defendant
Fernando Mapa whereby the former leased to the latter said land at an agreed yearly
rental of P2,000.00; that the lease agreement expired on December 31, 1955 without
the defendant's paying any rental, notwithstanding repeated demands made by Isidoro
Bayeta that shortly after the death of Isidoro Bayeta on April 17, 1956, the plaintiffs
demanded of the defendant that said property be returned to them, but the defendant
refused to return the said property in spite of repeated demands; that the defendant
claimed and asserted interest therein adverse to the plaintiffs. They prayed therein that
they be declared owners of the said property and the defendant be ordered to restore
them to its possession. The complaint, however, was dismissed on October 5, 1959 for
lack of interest.chanroblesvirtualawlibrarychanrobles virtual law library
On November 29, 1959, the same heirs of Isidoro Bayeta filed with the Court of First
Instance of Negros Occidental another complaint against Fernando Mapa, docketed as
Civil Case No. 5557, 16 also for recovery of ownership and possession of the same parcel

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of land subject of Civil Case No. 4666. They alleged therein that the deed of sale in favor
of Lucas Guirnela is "null and void for lack of consideration and consent, and for being
contrary to the express provisions of the public land law." Upon motion of the defendant
Mapa to dismiss the complaint, the Court of First Instance of Negros Occidental
dismissed the same on February 16, 1960 on the ground of res judicata as the dismissal
of Civil Case No. 4666 is with prejudice and had the effect of adjudicating the case on
the merits. When their motion for reconsideration was denied by the court, the plaintiffs
therein appealed to the Court of Appeals, but the Court of Appeals certified the case to
this Court stating that the issue involved therein was "solely on the interpretation of the
order of the Court a quo, dated October 5, 1959, particularly the dispositive portion
thereof which is a legal question." This Court in its decision promulgated on February 28,
1963, in G.R. No. L-19249, 17 sustained the ruling of the lower court, to wit:
The only issue we are called upon to determine in this proceedings, is the import of the
Order of October 5, 1959. It will be noted that the lower court made a clear
interpretation of the Order, when it said: ... The first sentence of the dispositive part of
the order in question refers to the dismissal of the complaint, which is without any
condition at all, and under Section 3, Rule 30 of the Rules of Court, it is understood to
be with prejudice, and shall have the effect of an adjudication on the merits.' We share
the view of the court a quo. No other reasonable interpretation could have been meant.
And considering the fact that the judge who issued the controversial order, was also the
one who interpreted or clarified the same, it becomes apparent that what the court
really ordered when it dismissed the complaint was a dismissal with prejudice. If he had
meant what the appellants want Us to understand, his Honor could have likewise
suffixed the dismissal of the complaint with the phrase 'without prejudice', in the same
way he did with the dismissal of the defendant's counterclaim. The argument of
appellants that the word 'likewise', refers or modified both the complaint and
counterclaim, is, to Our mind, untenable. Even under ordinary rules of grammar, the
phrase 'without prejudice' appearing on the second sentence of the dispositive portion of
the decision, should modify or refer only to the counterclaim. Had the two sentences
been separated by a comma, there would have been no doubt that the phrasewithout
prejudice had modified and/or referred to the dismissal of both the complaint and the
counterclaim. But there were two different and distinct sentences, containing different
subjects, predicates and modifiers.
As a consequence of the dismissal by the Court of Civil Case No. 4666 and provided now
with the deed of sale between Isidoro Bayeta and the Roemers and the confirmation of
Lucas Guirnela of the sale of Lot No. 2636 to him, Fernando Mapa, Jr. wrote to the
Provincial Board of Negros Occidental on October 15, 1959, praying that he be allowed
to repurchase Lot No. 2636 from the province. The Provincial Board, acting upon the
request of Mr. Mapa, passed and approved Resolution No. 1742A on December
16,1960,18 to wit:
In view of the petition of Mr. Fernando Mapa, III, Actual Occupant and owner of Lot No.
2636 of Cadastral Survey of Escalante requesting to be allowed to purchase the said lot
(Lot No. 2636) which had been adjudicated to the Province of Negros Occidental for non

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payment of land taxes due on the land and due to the decision of the Court of First
Instance of this Province dated October 5, 1959 and February 16, 1960, deciding the
ownership of said land in his favor in Civil Cases Nos. 4666 and
5557.chanroblesvirtualawlibrarychanrobles virtual law library
On motion by Hon. Mario M. Pea, Member, THE BOARD RESOLVED, To authorize the
Provincial Treasurer to sell said land, Lot No. 2636 to said Fernando Mapa III for the
value of the taxes due on the land.
On January 3, 1961, plaintiff-appellee Fernando Mapa III, who by that time had already
bought the land from his father, Fernando Mapa, Jr., on the basis of the aforementioned resolution of the Provincial Board, went to the Office of the Provincial
Treasurer of Negros Occidental and offered to repurchase the land, but Acting Provincial
Treasurer
A.
S.
Narboneta
refused
to
receive
the
payment.chanroblesvirtualawlibrarychanrobles virtual law library
In view of his refusal, plaintiff-appellee Fernando Mapa Ill filed, on March 11, 1961, a
special civil action for mandamus against Acting Provincial Treasurer A. S. Narboneta
with the Court of First Instance of Negros Occidental and docketed therein as Special
Proceedings No. 6068. 19 On March 13, 1961, counsel for the plaintiff filed a notice of lis
pendens with the Register of Deeds of Negros Occidental. 20 chanrobles virtual law
library
In the meantime, or on January 27, 1961, the heirs of Isidoro Bayeta, the defendantsappellants herein, executed an Extrajudicial Partition 21 whereby they divided and
adjudicated among themselves the afore-mentioned Lot No. 2636 in the proportion
described therein. In that agreement of partition, Agustin Bayeta purchased all the
rights, interests and participations of his co-heirs on said property for a consideration of
P1,000.00. By virtue of said extrajudicial partition which was inscribed on the
reconstituted Certificate of Title No. RP-1019 (268), on March 22, 1961, said
reconstituted title was cancelled and Transfer Certificate of Title No. T-29483 in the
name of Agustin Bayeta was issued in lieu thereof. 22 On the basis of the extrajudicial
partition and sale, Acting Provincial Treasurer A. S. Narboneta allowed Agustin Bayeta to
repurchase said Lot No. 2636 and was issued the Certificate of Repurchase on March 23,
1961, that is, two (2) days before the two-year period expired, upon paying the total
amount of P816.41. 23 In allowing Agustin Bayeta to repurchase the property, the Acting
Provincial Treasurer believed that on the basis of the tax records of his office, the heirs
of Isidoro Bayeta, not Fernando Mapa, were the persons entitled to repurchase the
property within the two-year period from the date of registration of the final deed of
sale. 24 chanrobles virtual law library
Because the Acting Provincial Treasurer allowed the repurchase of the land by Agustin
Bayeta notwithstanding the pendency of the mandamus case, plaintiff Fernando Mapa
III, successor-in-interest of Fernando Mapa, Jr., filed on May 18, 1962, the present case
against the heirs of Isidoro Bayeta and the Provincial Treasurer of Negros Occidental for
cancellation of Transfer Certificate of Title No. T-29483 in the name of Agustin Bayeta
and the Certificate of Repurchase issued by the Provincial Treasurer in favor of Agustin

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Bayeta, and the issuance of an order requiring the Provincial Treasurer to execute the
deed of sale in favor of said plaintiff, after payment of all taxes due on said property.
Thereafter, or on June 23, 1962, the mandamus case, on petition of plaintiff, was
dismissed in view of the filing of the case at bar. 25 chanrobles virtual law library
In their answer to the complaint, defendants- appellants asserted that there is no
sufficient cause of action against them as they are the legitimate heirs of Isidoro Bayeta
and that Agustin Bayeta is a successor-in-interest of Isidoro Bayeta and a purchaser in
good faith and for value of a property sold under auction sale from a registered owner,
which is the Province of Negros Occidental, and that title to the lot in question was
transferred to him by the Province of Negros Occidental upon payment of taxes and
Pealties amounting to P861.41. Appellants further alleged that Lot No. 2636 in question
had been acquired by their father, Isidoro Bayeta, by homestead which was approved
and patented on August 28, 1925 and was inscribed in the registration book of the
Register of Deeds for the Province of Negros Occidental on September 21, 1925.
Moreover, appellants maintained that since under Section 118 of Commonwealth Act No.
141, from the date of the approval of the application (homestead) and for a term of five
(5) years from and after the date of issuance of the patent or grant, lands acquired
under free patent or homestead cannot be subject to encumbrances or alienations nor
shall they become liable to the satisfaction of any debt contracted prior to the expiration
of said period, plaintiff's contention under paragraph 7 of his complaint to the effect that
his ownership proceeded from a sale purportedly dating back to the year 1928, is
without legal basis and is unenforceable being contrary to law. 26 chanrobles virtual law
library
In reply thereto, plaintiff-appellee contended that Lot No. 2636 of the Escalante
Cadastre has been sold by Isidoro Bayeta father of the defendants-appellants, on
September 7, 1928 and "for more than 30 years thereafter, no person, much less the
defendant Agustin Bayeta who had been living within the vicinity of said lot, made any
claim of ownership or of possession of the same, Any demand, therefore, on the part of
Agustin Bayeta for the title or possession of said lot is stale and
unenforceable." 27 chanrobles virtual law library
On November 4, 1965, the lower court rendered judgment in favor of the plaintiffappellee and against the defendants appellants. According to the trial court, the question
of ownership over the said property (Lot No. 2636) "was ventilated in Civil Cases Nos.
4666 and 5557 in the Court of First Instance of Negros Occidental which dismissed both
and affirmed by the Supreme Court in G. R. No. L-19249. The decisions in the two cases
were already final and an adjudiciation on the merits." chanrobles virtual law library
Thus, the lower court stated:
The question of ownership of this property, as indicated above, at the time of the sale at
public auction is the crux of the case. This question was ventilated in Civil Cases Nos.
4666 and 5557 in the Court of First Instance of Negros Occidental which dismissed both
and affirmed by the Supreme Court in G.R. No. L-19249. The decisions in the two cases
were already final and an adjudication on the merits .... In the complaint in Civil Case

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No. 5557 ... the plaintiffs alleged partnership and prayed the Court to be declared as
such. This case, having been disposed of by a final decision, the issues involved therein
cannot be passed upon in the present case as the same have already been barred by
prior judgment. In effect the defendants in said cases Nos. 4666 and 5557 were
declared the owners of the property. The conclusion, therefore, is inescapable and clear
that as of February 28, 1963 (date of decision in G. R. No. L-19249), Fernando Mapa, Jr.
was declared the owner of the property and this decision retroacts as of the date the
same was sold by Isidoro Bayeta to Mr. Roemer. As such, Mr. Fernando Mapa, Jr. had
the better right than the heirs of Isidoro Bayeta to repurchase the property. The
certificate of repurchase issued by the Assistant Provincial Treasurer cannot affect or
divest him of his right to repurchase the property as it was done during the pendency of
the mandamus case and after the notice of lis pendens was sent to the Register of
Deeds. Therefore, Agustin Bayeta cannot be considered as a buyer in good faith and for
value.chanroblesvirtualawlibrarychanrobles virtual law library
However, this Court is of the opinion and so holds that the then Assistant Provincial
Treasurer, Mr. A. S. Narboneta, cannot held guilty of bad faith as he acted upon the
opinion of the provincial fiscal and upon his honest belief that the heirs of Isidoro Bayeta
were entitled to repurchase the property, considering that the question of ownership
was finally resolved only in 1963.28
Consequently, the lower court declared the Certificate of Repurchase, dated March 23,
1961, in favor of Agustin Bayeta and Transfer Certificate of Title No. T-29483 in his
name as null and void and ordered their cancellation. Plaintiff, however, was ordered to
pay, by way of reimbursement, Agustin Bayeta the sum of P816.41, as well as the
payments he made for taxes, both with interest at the legal rate until the amounts were
paid.chanroblesvirtualawlibrarychanrobles virtual law library
Believing that the decision of the lower court was contrary to law, the defendants
appealed to this Court, assigning the following errors, to wit:
I. THE LOWER COURT ERRED IN HOLDING THAT THE JUDGMENT OF THIS HONORABLE
COURT DATED FEBRUARY 28, 1963, ENTITLED 'CRISPINA GUANZON, ET AL. VS.
FERNANDO MAPA' IN G.R. NO. L-19249, INVOLVING THE SAME LOT 2636 of
ESCALANTE CADASTRE VESTED TITLE ON THE PLAINTIFF-APPELLEE OVER SAID LOT,
AND SAID JUDGMENT RETROACTS AS OF THE DATE WHEN SAID PROPERTY LOT 2636
WAS SOLD BY ISIDRO BAYETA TO JOHN ROEMER.chanroblesvirtualawlibrarychanrobles
virtual law library
II. THE LOWER COURT ERRED IN NOT HOLDING THAT LOT 2636 IS A HOMESTEAD
LOT AND ANY CONVEYANCE THEREOF BEFORE THE LAPSE OF FIVE-YEARS PERIOD
FROM THE DATE OF THE ISSUANCE OF PATENT TO ANY PRIVATE PERSON MORE
ESPECIALLY WHERE THE DOCUMENT OF CONVEYANCE IS JUST A MERE PRIVATE
DOCUMENT AND NOT RATIFIED BY A NOTARY PUBLIC IS VOID AB
INITIO.chanroblesvirtualawlibrarychanrobles virtual law library

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III. THE LOWER COURT ERRED IN NOT HOLDING THAT REGISTRATION IS THE
OPERATIVE ACT TO CONVEY AND EFFECT THE LAND, AND SINCE THE APPELLANT
AGUSTIN BAYETA HAD PURCHASED THE LAND LOT 2636 AT PUBLIC AUCTION SALE
FROM THE DEFENDANT PROVINCE OF NEGROS OCCIDENTAL, HE IS THEREFORE
CONSIDERED A PURCHASER IN GOOD FAITH AND FOR VALUABLE CONSIDERATION,
AND HENCE ENTITLED TO THE PAYMENT OF RENTALS AND DAMAGES FOR THE LAND
UNTIL HE IS PUT IN POSSESSION.chanroblesvirtualawlibrarychanrobles virtual law
library
IV. THE LOWER COURT ERRED IN NOT HOLDING THAT A COURT OF EQUITY MUST BE
VIGILANT TO THOSE WHO EXPLOIT IGNORANT PEOPLE ESPECIALLY WHERE THE
POLICY OF THE GOVERNMENT IS TO GIVE LAND TO THE LANDLESS.
1. We agree with the lower court that the basic question is the ownership over Lot No.
2636 which cannot be litigated anew in this case, in view of the dismissal of the
complaint in Civil Case No. 4666 which, in Guanzon, et al. v. Mapa 29 this Court declared
to be a dismissal with prejudice and had the effect of an adjudication of the case on the
merits. Thus, this Court sustained the order of the trial court in Civil Case No 5557,
dismissing the complaint therein for the recovery of the ownership and possession of Lot
No. 2636, on the ground that such action is already barred by the prior judgment of the
Court in Civil Case No. 4666.chanroblesvirtualawlibrarychanrobles virtual law library
We have examined the answer of defendants-appellants in the case at bar (Civil Case
No. 279 [66161) and found that its special and affirmative defenses are substantially the
same as the allegations of the complaint filed by the same parties in the prior case (Civil
Case No. 5557). The subject matter, the cause of action in the first and the special and
affirmative defenses in the case at bar, as well as the parties are the same. Thus, in
both the complaint in Civil Case No. 5557 and in their answer in this case, the
defendants-appellants predicated their right to recover the ownership and possession of
Lot No. 2636 on the alleged nullity of the conveyance made by Isidoro Bayeta, their
predecessor-in-interest, in favor of Spouses John C. Roemer and Julia Roemer and,
therefore plaintiff-appellee being the successor-in-interest of the Roemers could not
have acquired any title over said property. In both pleadings, defendants appellants
claim that the sale is not valid because it was made within the prohibited period of five
(5) years provided by the Public Land Law. 30 Since in Guanzon et al. v. Mapa, supra,
this Court ruled that the action of the herein defendants-appellants, who were then the
plaintiffs- appellants in said Civil Case No. 5557, to recover the ownership and
possession of Lot No. 2636, is barred by the prior and final judgment in Civil Case No.
4666, there is no question now that their attempt to recover the ownership and
possession of the same property from plaintiff appellee is equally barred under the
principle of res judicata. Under the doctrine of res judicata an adjudication is final and
conclusive not only as to the matter actually determined, but as to every other matter
which the parties might have litigated and have had decided as incident to or essentially
connected with the subject matter of the litigation, and every matter coming within the
legitimate purview of the original action, both in respect to matters of claim and of
defense." 31 It cannot be denied that the title and possession over the property was a

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matter in issue in the previous case.chanroblesvirtualawlibrarychanrobles virtual law


library
By virtue of the previous judgment, the defendants appellants are now precluded not
only from questioning in this action the validity of the sale of Lot No. 2636 from Isidoro
Bayeta to the Roemer spouses but also the right of ownership and possession of
plaintiff-appellee over the said property.chanroblesvirtualawlibrarychanrobles virtual law
library
2. But Agustin Bayeta, one of the defendants-appellants, insists that when the Province
of Negros Occidental acquired the property on December 28, 1956 at the tax auction
sale, a certificate of title was issued to the aforestated province "free from all liens and
encumbrances subject only to two (2) years period of redemption in accordance with the
assessment law, and, therefore, when he purchased the lot in question from the
Province of Negros Occidental and said sale was registered with the Register of Deeds of
said province and Transfer Certificate of Title No. T-29483 issued to him, he was a
purchaser in good faith and for value and entitled to the ownership and possession of
the property. He argues that it is the act of registration that operates to convey or affect
this registered property.chanroblesvirtualawlibrarychanrobles virtual law library
It should be remembered, however, that when Agustin Bayeta repurchased the property
from the provincial government of Negros Occidental on March 23, 1961, the action of
Agustin Bayeta and his co-heirs to recover the ownership and possession of the same
property from Fernando Mapa, Jr. in Civil Case No. 5557 was dismissed by the Court of
First Instance of Negros Occidental on February 16, 1960 on the ground of res judicata.
It must be noted also that plaintiff-appellee and his predecessors-in-interest have been
in continuous possession of this parcel of land since 1928 until 1958 under claim of
ownership adverse to all others, without defendants-appellants or their predecessors
questioning the former's adverse possession. As a result of their inaction, the property
was sold by the Roemers to Lucas Guirnela on March 11, 1935. Guirnela in turn, sold it
to Fernando Mapa, Jr. on November 10, 1936, and later, it was conveyed to plaintiffappellee who is now in possession of said property and the one paying the realty taxes
thereon. While it cannot be denied that no title to registered land in derogation to that of
the registered owner shall be acquired by prescription or adverse possession, this legal
guarantee may in appropriate cases yield to the right of a third person in the equitable
principle of laches. 32 Moreover, at the time of the sale at public auction of the lot in
question on December 28, 1956 for non-payment of taxes or tax delinquency, it was
Fernando Mapa, Jr. who was in possession of the property "en concepto de
dueno". 33Being the taxpayer of the land, communications from the Municipal Treasurer
of Escalante, Negros Occidental and the Provincial Treasurer of said province regarding
the taxes thereon were addressed to him. 34 Tax receipts for taxes paid on said lot,
although issued in the name of Isidoro Bayeta, contained the notation that the payments
were made by Fernando Mapa. 35 As a matter of fact, when the same property was first
sold at public auction for nonpayment of taxes on January 26, 1953 and the same was
awarded to the Province of Negros Occidental there being no bidders, it was Fernando
Mapa, Jr. who was allowed to repurchase the property on January 26, 1954. Since it

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cannot be disputed that Fernando Mapa, Jr. was the taxpayer of the property and the
one who defaulted in the payment of those taxes, He is, therefore, the party called upon
by the law to exercise the right of redemption or repurchase within two (2) years from
the date of the registration of the sale, that is, up to March 25, 1961. 36, Thus, the law
specifically authorizes only the "delinquent taxpayer" who, in this case, at the time of the
sale at public auction on December 28, 1956, was no other than Fernando Mapa, Jr. or
any other person in his behalf, to repurchase the property.
SEC. 38. Repurchase of real property after sale. - Within the term of two years from the
date of the sale, the delinquent taxpayer or any other person in his behalf shall have the
right to repurchase the property sold by paying to the provincial treasurer or his deputy
the total amount of taxes and Pealties due up to the date of repurchase. ... (Emphasis
supplied. ) 37
Indeed, not one of the defendants-appellants as heirs of Isidoro Bayeta, could have
validly exercised the right of redemption or repurchase of the property. They were
already barred by the prior judgment of the Court of First Instance of Negros Occidental
in Civil Case No. 4666 from asserting any right of ownership or title over said property.
They could not also exercise the right to repurchase as the "delinquent taxpayer" since
they were never the taxpayer of said property. Considering, therefore, that the
repurchase made by Agustin Bayeta was in contravention of the final judgment of the
Court of First Instance of Negros Occidental in Civil Case No. 5557, which was affirmed
by this Court, and of the specific provision of Section 38 of Commonwealth Act No. 470,
as amended, which confers the right to repurchase only to the "delinquent taxpayer" or
any person in his behalf, such repurchase although registered with the Register of
Deeds, is ineffectual as a basis of title over the property. Agustin Bayeta could not also
invoke the alleged indefeasibility of the transfer certificate of title issued to him, since he
is precluded from doing so being a holder in bad faith of said certificate. 38 It did create,
however, a lien in his favor for the price of the repurchase. 39 This should be so, for in
redeeming, or repurchasing the land in question, Bayeta had prevented its loss which
should
have
been
to
the
prejudice
of
the
plaintiffappellee.chanroblesvirtualawlibrarychanrobles virtual law library
WHEREFORE, the judgment appealed from is hereby AFFIRMED, with costs against the
defendants-appellants,

Fernando (Chairman), and Martin, JJ., concur.chanroblesvirtualawlibrarychanrobles


virtual law library
Barredo and Aquino, JJ., concurs in the result.chanroblesvirtualawlibrarychanrobles
virtual law library
Concepcion, Jr., J, is on leave.chanroblesvirtualawlibrarychanrobles virtual law library
Martin, J., was designated to sit in the second Division.

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Endnotes:
1 Entitled "Fernando Mapa III, Plaintiff, vs Crispina Guanzon, Raymundo Bayeta, Valentin
Bayeta, Luciana Bayeta, Agustin Bayeta, Dolorosa Bayeta, and the Provincial Treasurer
of Negros Occidental, Defendants, for Cancellation of Certificate of Repurchase and
Title".chanrobles virtual law library
2 In the preliminary paragraph of reconstituted Certificate of Title No. RP-1019 (268),
Exhibit "4", it is stated that the patent was issued by the President of the Philippines,
dated at Manila on August 28, 1925. The quoted contents of the homestead patent,
however, appears to have been signed by Leonard Wood, Governor General of the
Philippines, on August 2, 1925. In the Deed of Sale, Exhibits "F" and "F-1", between
Isidoro Bayeta and the Roemers, it is stated that the patent was issued on August 2,
1925.chanrobles virtual law library
3 In the reconstituted title, Exhibit "4", it is indicated that the original number is "268".
The Deed of Sale, Exhibits "F" and "F-1", states the number as "208", while in the
pleadings of the Bayetas in Civil Cases Nos. 4666 and 5557, as well as in the
Extrajudicial Partition, Exhibit "Q", it appears that the number is "298".chanrobles virtual
law library
4 Exhibits "F" and "F-1" The Spanish text of the quoted statement reads" "Hacese parte
integrante de esta escritura los documentos que acreditan nuestra propieded sobre el
inmueble objeto de esta venta."
5 Exhibit "E".chanrobles virtual law library
6 Exhibit "D"; Testimony of Fernando Mapa, Jr., t.s.n., February 7, 1963, p.
24.chanrobles virtual law library
7 Exhibits "M" and "N".chanrobles virtual law library
8 Exhibits "K", "K-1" and "K-2".chanrobles virtual law library
9 Brief for Plaintiff-Appellee, p. 4.chanrobles virtual law library
10 Exhibits "V" and "W".chanrobles virtual law library
11 Exhibits "V-1" and "W".chanrobles virtual law library
12 Exhibit "T".chanrobles virtual law library
13 Exhibit "U".chanrobles virtual law library
14 Exhibit "4".chanrobles virtual law library
15 Exhibit "CC".chanrobles virtual law library
16 Exhibit "EE".chanrobles virtual law library

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17 7 SCRA 457, 459-460.chanrobles virtual law library


18 Exhibit "Y".chanrobles virtual law library
19 Exhibit "A".chanrobles virtual law library
20 Exhibit "B".chanrobles virtual law library
21 Exhibit "Q" of plaintiff, which is Exhibit "1" of the defendants.chanrobles virtual law
library
22 Exhibit "4", page B.chanrobles virtual law library
23 Exhibit "R", of plaintiff, which is Exhibit "2" of the defendants.chanrobles virtual law
library
24 Record on Appeal, p. 28.chanrobles virtual law library
25 Exhibit "5".chanrobles virtual law library
26 Brief for the Appellants, pp. 6-8.chanrobles virtual law library
27 Record on Appeal, p. 46.chanrobles virtual law library
28 Record on Appeal, pp. 81-82.chanrobles virtual law library
29 7 SCRA 457.chanrobles virtual law library
30 Sections 116 and 122, Act No. 2874, otherwise known as the Public Land
Law.chanrobles virtual law library
31 Freeman on Judgments, pp- 1421-1422. Yusingco v. Ong Hing Lian, L-26523,
December 24, 1971, 42 SCRA 589; De Goma v. De Goma, L-18739, December 28, 1964,
12 SCRA 674.chanrobles virtual law library
32 Mejia de Lucas v. Gamponia, 100 Phil. 277. In this case, this Court, citing Penn
Mutual Life Ins. Co., et al., vs. City of Austin, et al., U. S. 962, said:
The reason upon which the rule is based is not alone the lapse of time during which the
neglect to enforce the right has existed, but the changes of condition which may have
arisen during the period in which there has been neglect. In other words, where a court
of equity finds that the position of the Parties has to change that equitable relief cannot
be afforded without doing injustice, or that the intervening rights of third persons may
be destroyed or seriously impaired, it will not exert its equitable powers in order to save
one from the consequences of his own neglect.' (Penn Mutual Life Ins. Co., et al., vs.
City of Austin, et al., U. S. 962.)
In effect, the principle is one of estoppel because it prevents people who have slept on
their rights of the third parties who have placed their reliance on the inaction of the
original patentee and his successors in interest." (pp. 282-283.)

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In Heirs of Batiog Lacamen v. Heirs of Laruan, 65 SCRA 605, We found the occasion to
discuss the equity of laches and had compared it with prescription, to wit:
Lacheshas been defined as 'such neglect or omission to assert a right, taken in
conjunction with lapse of time and other circumstances causing prejudice to an adverse
party, as will operate as a bar in equity.' It is a delay in the assertion of a right 'which
works disadvantage to another' because of the 'inequity founded on some change in the
condition or relations of the property or parties.' It is based on public policy which, for
the peace of society, ordains that relief will be denied to a stale demand which otherwise
could be a valid claim. It is different from and applies independently of prescription.
While prescription is concerned with the fact of delay, laches is concerned with the effect
of delay. Prescription is a matter of time; laches is principally a question of inequity
being founded on some change in the condition of the property or the relation of the
parties. Prescription is statutory, laches is not. Laches applies in equity whereas
prescription applies at law. Prescription is based on a fixed time, laches is not. (at pp.
609-610.)
33 See Exhibits "K" and "K-2", Lease Contract, par. II.chanrobles virtual law library
34 Exhibit "O", Statement of Real Estate Tax Delinquency; Exhibit "P", Notice of Sale at
Public Auction of Delinquent Real Property; Exhibit "AA", Letter of the Provincial
Treasurer, re Tax Delinquency for the Year 1954-1955; Exhibit "AA-1", Statement of Real
Estate Tax Delinquency from the Provincial Treasurer; Exhibits "BB", "BB-1", "CC" and
"CC-1", Statements of Real Estate Tax Delinquency from the Municipal Treasurer of
Escalante.chanrobles virtual law library
35 Exhibits "M", "N", "AA-1", "AA-2" and "AA-III"
36 The period of redemption of registered lands sold for tax delinquency commences to
run not from the date of the auction or tax sale but from the day the sale was registered
in the Office of the Register of Deeds. (Techico vs. Serrano, 105 Phil. 956, See
also Santos v. RFC, et al., 101 Phil. 980.)
37 Section 38, of Commonwealth Act No. 4710, as amended by Republic Act No. 1275,
approved on June 14, 1955.chanrobles virtual law library
38 Ignacio v. Chua Hong, 52 Phil. 940.chanrobles virtual law library
39 Borja v. Addison, 44 Phil. 895; 105 Phil. 1051.
---------------------------------------------------------------------------------------------------------------------------

EN BANC

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G.R. No. L-19249 February 28, 1963


CRISPINA
GUANZON,
MAPA, Defendant-Appellee.

ET

AL., Plaintiffs-Appellants,

Jaguros,
Velasco
&
Jaguros
Francisco Astilla for defendant-appellee.

for

vs. FERNANDO

plaintiffs-appellants.

PAREDES, J.:chanrobles virtual law library


On October 31, 1961, the Court of Appeals certified the case to this Court, stating that
the issue involved herein is "solely on the interpretation of the order of the court a quo,
dated October 5, 1959, particularly the dispositive portion thereof, which is a legal
question."chanrobles virtual law library
The Order issued in Civil Case No. 4666, CFI, Negros Occidental, between the same
parties, subject of this proceeding, reads as follows When this case was called for trial today, the defendant and his counsel appeared but
the plaintiffs filed a motion for postponement in lieu of appearance. The record shows,
however, that since the original complaint was filed, the counsel for the plaintiffs had
asked for no less than five (5) postponements of the trial without the defendant having
asked for any single postponement, and after the motion to amend the complaint was
denied by this Court, the plaintiffs again asked for at least three other
postponements.chanroblesvirtualawlibrarychanrobles virtual law library
WHEREFORE, the plaintiffs' motion for postponement is denied and this case is hereby
dismissed for lack of interest. The defendant's counterclaim is likewise dismissed,
without prejudice.
On November 29, 1959, plaintiffs-appellants presented another complaint with the CFI of
Negros Occidental, against appellee herein for the recovery of a parcel of land, Civil Case
No. 5557, which was the object of the previous complaint, dismissed on October 5,
1959.chanroblesvirtualawlibrarychanrobles virtual law library
Under date of February 1, 1960, defendant-appellee interposed a Motion to Dismiss,
contending that the cause of action of plaintiffs is already barred by a prior judgment.
The decision quoted above was reproduced in the motion to dismiss and submitted in
support of the said motion. The motion to dismiss was opposed by plaintiffs, arguing in
the main, that the dismissal of the previous complaint, was without prejudice and,
therefore, the second complaint, is not barred.chanroblesvirtualawlibrarychanrobles
virtual law library
On February 16, 1960, the court a quo handed down an Order, the pertinent portions of
which state A perusal of the dispositive part of the order of this Court, above-quoted, shows the
contention of the defendant that the dismissal of the complaint in Civil Case No. 4666 is
with prejudice to be well-taken. The first sentence of the dispositive part of the order in

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question refers to the dismissal of the complaint, which is without any condition at all,
and under Section 3, Rule 30, of the Rules of Court, it is understood to be with
prejudice, and shall have the effect of an adjudication upon the merits. It is the second
sentence of the dispositive part of the order in question, referring to the counterclaim of
the defendant, which was dismissed "without prejudiced," meaning, that the defendant's
right to prosecute his counterclaim in a separate action is thereby reserved.
Wherefore, the parties respectfully pray that the foregoing stipulation of facts be
admitted and approved by this Honorable Court, without prejudice to the parties
adducing other evidence to prove their case not covered by this stipulation of
facts.chanroblesvirtualawlibrarychanrobles virtual law library
The ruling laid down by the Supreme Court to the effect that a dismissal upon plaintiff's
failure to appear at the trial does not constitute res adjudicata, is no longer good under
the new Rules except where dismissal is made expressly without prejudice. (Comments
on the Rules of Court, by Moran, Vol. 1, p. 636)chanrobles virtual law library
In view of the foregoing, the Court finds the motion to dismiss filed by the defendant to
be well-founded, and the plaintiffs' complaint dated November 25,1959, is hereby
dismissed.
Plaintiffs-appellants filed with the lower court a Motion for Reconsideration, on three (3)
grounds, to wit 1. That the order of October 5, 1959, dismissing Civil Case No. 4666 is vague and as
such should be interpreted in favor of the preservation of the right of the
plaintiffs;chanrobles virtual law library
2. That plaintiffs have a meritorious case, and if given due course, will eventually
prosper; andchanrobles virtual law library
3. That the dismissal of the present case will work an injustice and inequity to the
plaintiffs.
Full discussion of the above grounds was made by counsel for the appellants. Liberal
interpretation of the rules was invoked, in view of the supposed vagueness of the order.
As for the merits of the case, appellants pointed out that the alleged sale of the property
to the appellee's predecessors-in-interest was made before the expiration of the 5 years
period provided for by the Public Land Act. The motion for reconsideration was
denied.chanroblesvirtualawlibrarychanrobles virtual law library
The only issue We are called upon to determine in this proceedings, is the import of the
Order of October 5, 1959. It will be noted that the lower court made a clear
interpretation of the Order, when it said: "... The first sentence of the dispositive part of
the order in question refers to the dismissal of the complaint, which is without any
condition at all, and under Section 3, Rule 30 of the Rules of Court, it is understood to
be with prejudice, and shall have the effect of an adjudication on the merits". We share
the view of the court a quo. No other reasonable interpretation could have been meant.

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And considering the fact that the judge who issued the controversial order, was also the
one who interpreted or clarified the same, it becomes apparent that what the court
really ordered when it dismissed the complaint was a dismissal with prejudice. If he had
meant what the appellants want Us to understand, his Honor could have likewise
suffixed the dismissal of the complaint with the phrase "without prejudice", in the same
way he did with the dismissal of the defendant's counterclaim. The argument of
appellants that the word "likewise" refers or modifies both the complaint and
counterclaim, is, to Our mind, untenable. Even under ordinary rules of grammar, the
phrase without prejudice appearing on the second sentence of the dispositive portion of
the decision, should modify or refer only to the counterclaim. Had the two sentences
been separated by a comma, there would have been no doubt that the phrase without
prejudice had modified and/or referred to the dismissal of both the complaint and the
counterclaim. But there were two different and distinct sentences, containing different
subjects, predicates and modifiers.chanroblesvirtualawlibrarychanrobles virtual law
library
CONFORMABLY WITH ALL THE FOREGOING, the Order appealed from should be, as it is
hereby affirmed. Costs taxed against plaintiffs-appellants.

Bengzon, C.J., Padilla, Bautista Angelo, Labrador, Concepcion, Reyes, J.B.L., Barrera,
Dizon, Regala and Makalintal, JJ., concur.
-------------------------------------------------------------------------------------------------------Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION

G.R. No. L-48322 April 8, 1987


FELIPE DAVID and ANTONIA G. DAVID, petitioners,
vs.
EULOGIO BANDIN (substituted by his legal heirs, namely: JUANA SILVERIO, JOSE, GABRIEL,
ANICETA, VIRGINIA and FELIX, all surnamed Bandin); GREGORIO BANDIN, RAYMUNDA
BANDIN, VALENTIN BRIONES, SOFIO BRIONES and AGAPITA RAMOS. respondents.

No. L-49712 April 8, 1987


MAGNO DE LA CRUZ, petitioner,
vs.
HONORABLE COURT OF APPEALS; EULOGIO BANDIN (substituted by his legal heirs, namely:
JUANA, SILVERIO, JOSE, GABRIEL, ANICETA, VIRGINIA and FELIX, all surnamed Bandin);
GREGORIO BANDIN, RAYMUNDA BANDIN, SOFIO BRIONES and AGAPITA RAMOS; respondents.
No. L-49716 April 8, 1987

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JUANITA MARTIN VDA. DE LUCENA MAXIMINA MARTIN VDA. DE COSME, VICTORIA MARTIN
VDA. DE OMANBAC, NEMESIO A. MARTIN, LEONORA DE LA CRUZ and AQUILINA DE LA CRUZ,
petitioners,
vs.
EULOGIO BANDIN (substituted by his legal heirs, namely: JUANA, SILVERIO, JOSE, GABRIEL,
ANICETA, VIRGINIA and FELIX, all surnamed Bandin);, VALENTIN BRIONES, AGAPITA RAMOS
and COURT OF APPEALS, respondents.
No. L-49687 April 8,1987
JOSE RAMIREZ and HEIRS OF AMBROCIA P. VDA. DE SOTERO RAMIREZ, petitioners,
vs.
COURT OF APPEALS and EULOGIO BANDIN (substituted by his legal heirs, namely: JUANA,
SILVERIO, JOSE, GABRIEL, ANICETA, VIRGINIA and FELIX, all surnamed BANDIN); GREGORIO
BANDIN, RAYMUNDA BANDIN, VALENTIN BRIONES, SOFIO BRIONES and AGAPITA RAMOS,
respondents.
Benito P. Fable for petitioners in G.R. No. L-48322.
Pedro R. de la Cruz for petitioner in G.R. No. L-49712.
David R. Advincula for petitioners in G.R. No. L-49716.
Antonio S. Reyes for petitioners in G. R. No. L-49687.
Enrique C Villanueva for respondents.

YAP, J.:
These petitions, which were consolidated by resolution of this Court dated February 20, 1980,
stemmed from a complaint filed by the herein respondents with the Court of First Instance of
Rizal Branch VII, Pasay City, on June 14, 1963, for the recovery and partition of property. The
complaint was amended twice to reflect additional pertinent and material facts, such as
transfers, partitions, subdivisions and registration of portions of the properties involved, and
to bring in other indispensable parties to the case.
On April 12, 1975, a decision was rendered by the trial court, in favor of the plaintiffs,
declaring, however, that certain properties could no longer be reconveyed to plaintiffs since
they had been transferred to purchasers who bought them in good faith for value. Not
satisfied with the decision, both plaintiffs and defendants appealed to the Court of Appeals.
The plaintiffs' appeal was docketed as CA-G.R. No. 58647-R, while that of defendants as CAG.R. No. 60511-R. . Both appeals were consolidated, and a decision was rendered by the Court
of Appeals on May 19, 1978, which modified the decision of the trial court in that it nullified
the transfers made to the defendants who were declared by the trial court as purchasers in
good faith.
From the decision of the Court of Appeals, an appeal was taken by the parties adversely
affected thereby to this Court. Except for petitioners in G.R. No. L-49716 who seek restoration
of the status quo ante, all other petitioners pray that the decision of the trial court be
reinstated.
The facts antecedent of this petition, as may be gathered from the decision, are as follows:

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During their lifetime, the spouses Juan Ramos, who died on March 5, 1919, and Fortunate
Calibo, who died before 1919, were the owners of two parcels of land situated in Las Pinas,
Rizal: 1) A parcel of land situated in Barrio Talon, with an area of 39,887 square meters, under
Tax Declaration No. 9614 (Talon property for short); and 2) A parcel of land situated in Barrio
Laong, with an area of 15,993 square meters, under Tax Declaration No. 4005, although the
actual area when surveyed was 22,285 square meters (Laong property for short).
Both spouses died intestate, leaving as heirs two legitimate children, Candida and Victorians
Ramos, and grand-daughter, Agapita Ramos, daughter of their deceased sora Anastacio. Upon
the death of the said spouses, their daughter, Candida Ramos, assumed administration of the
properties until her death on February 16, 1955. Victorians Ramos died on December 12,1931.
Both Candida and Victoriana Ramos died intestate. Candida Ramos was survived by the
following heirs: 1) Victoria Martin-Omanbac, 2) Antonio Martin, 3) Juanita Martin Vda. de
Lucena, 4) Maximina Martin Vda. de Cosme, 5) Raymundo Martin, 6) Aquilina de la Cruz, and
7) Leonora de la Cruz. Victoriana's heirs are her children from her two marriages, namely: 1)
Eulogio Bandin, 2) Gregorio Bandin, 3) Raymunda Bandin, 4) Valentin Briones, and 5) Sofio
Briones.
The record shows that sometime in 1943, Candida Ramos prevailed upon her niece, Agapita
Ramos, and her nephew, Eulogio Bandin, to sell a portion of the Talon property to the spouses
Rufino 0. Miranda and Natividad Guinto. This portion was divided into three lots: Parcel 1,
containing an area of 24,363 square meters, declared under Tax Declaration No. 2996 (1948).
The spouses Rufino Miranda and Natividad Guinto subsequently sold the said lot to Narciso
Velasquez and Albino Miranda. These two later sold the same property to Velasquez Realty
Company, Inc., which registered the property and obtained OCT No. 1756 (later cancelled and
replaced by TCT No. 165335); Parcel 2, containing an area of 752 square meters, declared
under Tax Declaration No. 3358 (1949); and Parcel 3, containing an area of 516 square meters
under Tax Declaration No. 3359 (1949). Parcels 2 and 3 were subsequently sold by Rufino
Miranda and Natividad Guinto to Jose Ramirez and Sotero Ramirez (survived by Ambrocia Vda.
de Martin), respectively, who registered these properties and obtained OCT Nos. 2027 and
2029 in their respective names.
The remaining portion of the Talon property was extrajudicially partitioned on September 17,
1955 among the heirs of Candida Ramos, namely: Juanita Martin, Victoria Martin, Maximina
M. Vda. de Cosme, Antonio Martin and Raymundo Martin. In 1959, this property was
subdivided (Subdivision Plan PSU-173299) into seven lots and adjudicated as follows:
1) To the heirs of Raymundo Martin, namely, Juan, Antonio, Rodrigo, Norma, Bernards, Rufina
and Nieves, all surnamed Martin, and Trinidad Bunag Vda. de Martin Lot 1, containing an
area of 774 square meters, declared under Tax Declaration No. 5588 (1960). This lot was
subsequently sold to Consolacion de la Cruz who was able to register the property in her name
under OCT No. 4731 (later cancelled and replaced by TCT Nos. 227470 and 227471).
2) To Juanita Martin Lot 2, containing an area of 774 square meters, declared under Tax
Declaration No. 4831, and subsequently titled in her name under OCT No. 10002, issued on
December 18, 1973.
3) To Leonora de la Cruz, granddaughter of Candida Ramos by her son Meliton de la Cruz by
her first husband Lot 3, containing an area of 346 square meters, declared under Tax
Declaration No. 5526 (1960) and subsequently registered under OCT No. 6102, issued on
January 29, 1967.

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4) To Antonio Martin Lot 4, containing an area of 774 square meters, declared under Tax
Declaration No. 4833. The property was subsequently sold by the heirs of Antonio Martin to
Nemesio Martin.
5) To Victoria Martin Lot 5, containing an area of 773 square meters, declared under Tax
Declaration No. 5590. This lot was later registered by Victoria, to whom OCT No. 3706 was
issued on August 22, 1963. She subsequently sold a portion of 300 square meters to Magno de
la Cruz on September 25,1963, to whom was issued TCT No. 116450.
6) To Maximina Martin Lot 6, containing an area of 773 square meters, under Tax
Declaration No. 5591 (1960). Maximina was able to register the land and was issued OCT No.
3707 on August 22, 1963. She later sold a portion of 300 square meters to Magno de la Cruz, to
whom was issued TCT No. 116450.
7) To Aquiline de la Cruz Lot 7, with an area of 428 square meters, declared under Tax
Declaration No. 5592 (1960). Aquilina is the granddaughter of Candida Ramos by her son
Meliton de la Cruz by her first marriage. Aquilina registered the land in her name in 1967 and
was issued OCT No. 6103.
The Laong property was sold by Candida Ramos and her children on December 19, 1943 to
Hermogenes Lucena, husband of Juanita Martin, one of the daughters of Candida. On
September 23, 1959, Juanita (then widowed) sold the property to the spouses Gregorio and
Mary Venturanza for P43,236.00 of which P10,000 was paid as down payment, the balance to
be paid upon the vendor obtaining Torrens title to the land. On January 21, 1965, the
Venturanzas, in a deed of sale also signed by Juanita Martin, conveyed a portion of the
property with an area of 15,000 square meters to the spouses Felipe and Antonia David, in
liquidation of the latter's investment in the joint real estate venture which they had entered
into with the Venturanzas in April 1959. Juanita Martin Vda. de Lucena was able to register the
property in her name and was issued OCT No. 8916 on July 1, 1971. The portion sold to the
spouses Felipe and Antonia David is presently covered by TCT No. 372092.
From the foregoing facts as established by the evidence, the trial court held that the Talon and
Laong properties formed part of the estate of the spouses Juan Ramos and Fortunate Calibo,
which after their death devolved by right of succession upon their heirs, namely, Candida
Ramos, Victorians Ramos and Agapita Ramos, each of whom was entitled to one-third (1/3)
pro-indiviso share of the properties. The estate of the deceased spouses was never judicially
or extra-judicialy settled among their heirs, who, therefore, remained pro-indiviso co-owners
of the said properties, and upon the death of Victorians and Candida, their respective shares in
turn passed to their heirs. Accordingly, the trial court declared the plaintiffs, Agapita Ramos,
and the heirs of Victorians Ramos, entitled to two- thirds (2/3) pro-indiviso share of the Talon
and Laong properties, and ordered the defendants heirs of Candida Ramos to reconvey to
plaintiffs their shares in those properties. However, such reconveyance was no longer possible
with respect to the portions which, in the meantime, had been sold and disposed of to third
parties who were purchasers in good faith and for value.
The following parties were held to be purchasers in good faith. 1) defendants Rufino Miranda,
Narciso Velasquez, Albina Miranda and Velasquez Realty Co., with respect to 24,636 square
meters (Parcel 1) of the Talon property sold by Candida Ramos, Eulogio Bandin and Agapita
Ramos in 1943; 2) defendants Jose Ramirez and Ambrocia Vda. de Ramirez (widow of Sotero
Ramirez), with respect to 752 square meters (Parcel 2) and 516 square meters (Parcel 3),
respectively, of the Talon property, 3) defendant Consolacion de la Cruz, with respect to 774
square meters (Lot 1 of Subdivision Plan PSU-173299); 4) defendant Nemesio Martin, with
respect to 774 square meters (Lot 2 of Subdivision Plan); 5) defendant Magno de la Cruz, with

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respect to 300 square meters sold by Victoria Martin and 300 square meters sold by Maximina
Martin (portions of Lots 5 and 6 of Subdivision Plan); 6) defendant spouses Felipe and Antonia
David, with respect to 15,000 square meters of the Laong property. Since the foregoing
properties could not be reconveyed to the plaintiffs, the defendants heirs who sold them were
ordered to pay the plaintiffs two-thirds (2/3) of the present value of such properties.
As stated heretofore, the trial court's decision was upheld by the respondent Court of Appeals,
except with respect to the finding that third parties who bought portions of the properties
from the defendants heirs were purchasers in good faith This finding was reversed by the
respondent appellate court. In fine, the appellate court: a) nullified the sale of the Laong
property by Candida Ramos Vda. de Martin and her children in 1943 in favor of Hermogenes
Lucena, the husband of Juanita Martin, one of the daughters of Candida, as wen as an
subsequent sales, transfers and conveyances of said property, insofar as they affected the
two-thirds (2/3) pro-indiviso share of Agapita Ramos and the heirs of Victorians Ramos; b)
nullified the sale of portions of the Talon property by Candida Ramos, Eulogio Bandin and
Agapita Ramos in 1943 in favor of the spouses Rufino Miranda and Natividad Guinto, and all
the subsequent transfers of said properties, insofar as the four-fifteenth (4/15) share of
Gregorio Bandin, Raymundo Bandin, Sofio Briones and Valentin Briones were affected; and c)
invali dated the deed of extrajudicial partition among the heirs of Candida Ramos over the
remaining portion of the Talon property in 1955 and the subdivision thereof into individual
lots among said heirs, as well as all subsequent transfers and conveyances of some of said lots,
or portions thereof, to third parties, insofar as they affected the two-third (2/3) pro- indiviso
share pertaining to Agapita Ramos and the heirs of Victorians Ramos.
From the above decision of the Court of Appeals, the petitioners have come to us on separate
petitions for review by certiorari.
G.R. No. L-49716.:
The petitioners are the heirs of Candida Ramos, led by Juanita Martin Vda. de Lucena and
joined in by her brothers and sisters who are the children of Candida by her first and second
marriages. Primarily, petitioners alleged that the Court of Appeals erred in not declaring that
private respondents' claim if any, is barred by prescription; and in annulling and ordering the
cancellation of Original Certificate of Title No. 8916 issued in the name of Juanita Martin
pursuant to a decision by the land registration court, affirmed by the Court of Appeals in CA
G.R. No. 35191-R, which had already become final and executory.
Petitioners claim in their brief, apparently referring to the Laong property only, that Juanita
Martin, widow of Hermogenes Lucena and daughter of Candida Ramos, had been in
possession of the property since 1943 to the exclusion of private respondents. The trial court,
however, found that Candida Ramos, until her death on February 15, 1955, administered the
Laong property, and that plaintiffs- appellants were given their shares of the fruits thereof,
though irregular and at times little, depending on the amount of the harvest. Under Article
494 of the new Civil Code (Article 400 of the old Civil Code), prescription generally does not
run in favor of a co-heir or co-owner as long as, he expressly or impliedly recognizes the coownership. While an implied or constructive trust prescribes in ten years, the rule does not
apply where a fiduciary relation exists and the trustee recognizes the trust. 1
In the case at bar, there is no showing that the rights of the plaintiffs as co-owners were
repudiated by Candida Ramos in her lifetime; in fact, the evidence as found by the trial court
show the contrary.

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The court a quo did not sustain the defense of laches and prescription put up by the
defendants (herein petitioners) since it was not shown that the plaintiffs were guilty of
negligence or slept on their rights. They sent a letter of demand to the heirs of Candida Ramos
on April 23, 1963, and filed their complaint against them on June 14, 1963, or within a period
of approximately eight (8) years from Candida's death.
In sustaining the findings of the trial court, the Court of Appeals did not commit any reversible
error.
Petitioners further invoke the doctrine of res judicata in that the decree of registration of the
property in the name of Juanita Martin as owner by the land registration court was affirmed
by the Court of Appeals in its decision dated July 16, 1969 in CA G.R. No. 35191-R, which had
already become final and executory. Both the respondent Court of Appeals and the trial court
correctly rejected the petitioners' contention. There can be no res judicata since private
respondents were not parties to the above case. Neither can it be claimed that the decree of
registration vested ownership in Juanita Martin. The appellate court, citing jurisprudence
established by this Court, held that the purpose of the Land Registration Act is not to create or
vest title, but to confirm and register title already vested and existing in the applicant for a
title. 2
G.R. No. L-48322.:
The petitioners spouses Felipe David and Antonia G. David purchased portions of the Laong
property, consisting of 15,000 square meters, on February 21, 1965 from the spouses Gregorio
and Mary Venturanza, who, in turn, purchased the property from Juanita Martin Vda. de
Lucena, on September 23, 1959. At the time both purchases took place, the property in
question was still an unregistered land. The land was registered in the name of Juanita Martin
only on July 1, 1971, to whom was issued OCT No. 8916.
Petitioners contend that the Court of Appellee erred in holding that they are buyers in bad
faith, in ordering the cancellation of OCT No. 8916 and all subsequent transfer certificates of
title derived therefrom, and in ordering petitioners - to reconvey to respondents their twothird (2/3) pro-indiviso share of the land and to segregate therefrom 10,000 square meters for
reconveyance to respondents.
In assailing the decision of the appellate court, petitioners invoke the doctrine of
incontrovertibility of the decree of registration after one year from issuance, and the doctrine
of conclusiveness and indivisibility of titles issued under the Torrens system. Petitioners might
have stood on solid ground in invoking the above doctrines if they had purchased the property
from the registered owner after the issuance of the decree of registration and the
corresponding certificate of title in his name. 3
As the record shows, petitioners bought the property when it was still unregistered land. The
defense of having purchased the property in good faith may be availed of only where
registered land is involved and the buyer had relied in good faith on the clear title of the
registered owner. One who purchases an unregistered land does so at his peril His claim of
having bought the land in good faith, i.e. without notice that some other person has a right to,
or interest in, the property, would not protect him if it turns out that the seller does not
actually own the property. This is what happened in the case at bar.
G.R.No. L-49867:
In this petition, petitioners Jose Ramirez and the heirs of Ambrocia P. Vda. de Ramirez (widow
of Sotero Ramirez), assail the decision of the respondent Court of Appeals declaring them

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purchasers in bad faith and ordering them to reconvey to the plaintiffs Gregorio Bandin,
Raymunda Bandin&A Valentin Briones and Soto Briones, four-fifteenth (4/15) share proindiviso of the properties they purchased from the spouses Rufino Miranda and Natividad
Guinto. The land in question, containing an area of 516 square meters, more or less, was
purchased by Jose Ramirez on June 4, 1949. Sotero Ramirez purchased his land, with an area
of 752 square meters on July 9, 1948 and May 10, 1949. These parcels of land purchased by the
Ramirezes were part of the portion of the Talon property bought by the spouses Rufino and
Natividad Miranda from Candida Ramos, Eulogio Bandin and Agapita Ramos in 1943.
The appellate court held that Jose Ramirez and his father Sotero Ramirez were not purchasers
in good faith, not having made diligent investigation of the true ownership of the properties
they bought, but relied merely on the tax declaration shown to them by the seller, Rufino
Miranda. We have no reason to disturb the foregoing findings of the respondent appellate
court. Besides, as mentioned earlier, the issue of good faith or bad faith of the buyer is
relevant only where the subject of the sale is registered land and the purchaser is buying the
same from the registered owner, whose title to the land is clean. In such case, the purchaser
who relies on the clean title of the registered owner is protected if he is a purchaser in good
faith for value. However, this is not the situation before us in the instant case, What
petitioners bought were unregistered lands.
Petitioners contend that the respondents are barred by estoppel and laches from recovering
the property in question We have already dealt with this issue above. We find the contention
without merit.
Petitioners suggest that the portion ordered to be taken from the properties of Jose and
Sotero Ramirez should be taken instead from the shares which pertain to and are held by the
heirs of Candida Ramos. We do not find the suggestion meritorious. The respondents are
entitled to their pro- indiviso share of the property unlawfully sold by Candida Ramos, Agapita
Ramos and Eulogio Bandin to the Miranda spouses from whom the petitioners bought the
parcels of land in question. Hence, it would not be proper for the court to respondents' right
to recover their pro-indiviso share of the property only from the remaining portion still in the
possession of the heirs of Candida Ramos.
G.R. No. L-49712:
The case of Magno de la Cruz stands on different footing from the other petitions. The
property purchased by him from Victoria Martin and Maximina Martin were registered lands,
covered by Torrens title. Being a purchaser in good faith for value, Magno de la Cruz is
protected by the law. In the absence of a showing that he had actual notice of the defect in
the title of the vendors or that he is a buyer in bad faith the deed of sale in his favor and the
corresponding certificate of title issued in his name can not be nullified and cancelled. Hence,
it was error for the respondent court to invalidate the sale made by Victoria and Maximina
Martin in favor of Magno de la Cruz to the extent that it prejudiced the two-third (2/3) proindiviso share of respondents in the property and to order petitioner to reconvey said share to
respondents. The petition of Magno de la Cruz is meritorious, and the decision appealed from
should be modified accordingly.
WHEREFORE, in view of all the foregoing, judgment is hereby rendered:
1. Dismissing the petitions in G.R. Nos. L-48322, L-49716 and L-49687;
2. Granting the petition in G.R. No. L-49712, declaring valid the deeds of sale executed by
Victoria Martin (Exh. 8-Magno de la Cruz) and Maximina Martin (Exh. 4-Magno de la Cruz) in
favor of petitioner Magno de la Cruz, as well as Transfer Certificate of Title No. 116450 issued

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in the latter's name, ordering Victoria Martin and Maximina Martin to pay the respondents
two-third (2/3) of the present value of the property sold by them to Magno de la Cruz, and
modifying the appealed decision accordingly; and
3. Affirming the appealed decision, except as modified above.
No pronouncement as to costs.
SO ORDERED.
Narvasa, Melencio-Herrera, Cruz, Feliciano and Sarmiento, JJ., concur.
Gancayco, J., took no part.

Footnotes
1 De Buencamino vs. De Matias, 16 SCRA 849; Heirs of Candelaria vs. Romero, 109 Phil. 500.
2 Angeles vs. Samia, 66 Phil. 444.
3 Cui and Joven vs. Henson, 51 Phil 612.
The Lawphil Project - Arellano Law Foundation

Republic of the Philippines


SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L-67742 October 29, 1987
MELITON GALLARDO and TERESA VILLANUEVA, petitioners,
vs.
HONORABLE INTERMEDIATE APPELLATE COURT, MARTA VILLANUEVA VDA. DE AGANA,
VISITACION AGANA KIPPING, PEDRO V. AGANA, MARCELO V. AGANA, JR., TERESITA AGANA
SANTOS and JESUS V. AGANA,respondents.

PARAS, J.:
This is a petition for review on certiorari seeking to set aside or reverse the decision * of the
Intermediate Appellate Court (now Court of Appeals) promulgated on May 22, 1984 in AC-G.R.
CV No. 69946 entitled Meliton Gallardo and Teresa Villanueva v. Marta Villanueva vda. de
Agana, et al. (Rollo, p. 37) affirming the decision ** of the Court of First Instance of Laguna 8th
Judicial District, Branch II, Sta. Cruz, Laguna (now Regional Trial Court, Sta. Cruz, Laguna) dated
January 20, 1982, which dismissed the complaint for Quieting of Title in Civil Case No. SC-1492
and declared the plaintiff's (petitioner's herein) Re-constituted Transfer Certificate of Title RT6293 (No. 23350) as null and void (Record on Appeal, pp. 215-216).
The dispositive portion of the questioned decision reads as follows:

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WHEREFORE, the appealed judgment is in full accord with the evidence and the law and is
hereby therefore affirmed in all its part. Costs against plaintiff -appellants
SO ORDERED.
The subject matter of this controversy involves a parcel of land situated in Cavinti, Laguna
consisting of 81,300 square meters, more or less, initially covered by an original Certificate of
Title No. 2262, issued on April 2, 1924 owned and registered in the name of the late Pedro
Villanueva (former Justice of the Peace of the Municipal Court, Cavinti, Laguna), pursuant to
Decree No. 150562 issued in L.R.C. Cadastral Record No. 136, Cad. Case No. 1 (Record on
Appeal; Answer, p. 28).
Petitioners were nephew and niece of the late Pedro Villanueva and first cousin of the private
respondent Marta Villanueva vda. de Agana, the latter being the daughter of Pedro
Villanueva.
On August 10, 1937, petitioner claimed that the aforestated land was sold to them in a private
document, an unnotarized deed of sale written in Tagalog (Annex "B" of the complaint) that
was allegedly signed by the late Pedro Villanueva conveying and transfering the property in
question in favor of the petitioners (Record on Appeal, Exhibit "B", pp. 9-10) which deed is
reproduced as follows.
Ako, Pedro Villanueva, 66 taong gulang, balo at nananahanan sa municipio ng Cavinti,
lalawigang Laguna at Kapuluang Pilipinas, alang-alang sa halagang LIMANG DAANG PISO
(P500.00) salaping filipino, na sa akin ibinayad ng mag-asawa ni Meliton Gallardo at Teresa
Villanueva, tagarito rin sa nasabing municipio, lalawigang at kapulwan sa hinaharap ng
kasulatan ay sinasaysay ko na aking inilillwat at pinagbili ng biling patuluyan sa nasabing magasawa Meliton Gallardo at Teresa Villanueva, sampo na sa kanilay mangagmamana at hahalili,
ang aking isang palagay na lupa na nabubuo sa limang luang na tubigan, punlang kalahating
kabang palay at saka dalatan o katihan na may isang kabang palay na hasik, tumatayo sa
nayon ng Kanlurang Talaongan, sakop nitong municipio ng Cavinti at napapaloob sa mga
hangganang sumusunod:
HILAGAAN, Braulio Villanueva at Modesto Ribera
SILANGAN, Braulio Villanueva.
TIMUGAN, Braulio Villanueva, Ilog Kaliraya at Jacinto Toque
KANLURAN, Jacinto Toque.
Ang pagaaring ito ay tunay kong pananarili sapagkat aking nabili sa magkakapatid na Aniano
Gallardo, Zacarias Gallardo at Perfecto Gallardo at natatala sa Registro ng Amillarmiento dito
sa Cavinti sa ilalim ng Blg. 22888, at walang ano mang ipinagkakautang ni pinanagutan kaya at
magagamit na nitong aking pinagbilhan ang kanilang matuwid na maipamana at mailiwa sa
iba. Gayon ding sinasaysay ko na akoy umaakong mananagutan dito sa aking pinagbilhan,
tungkol sa pagaaring ito na ang katibay ay aking ipagsasanggalang laban sa kanino mang
maghahabol.
Dapat tantoin, gayon man, na ang pagaaring ito ay registrado na sa Registro de la Propiedad
nitong lalawigang Laguna, subalit at sa isang kamalian ng pagkakasukat tungkol sa lawak at
laki, ay hindi pa natutubos ang kanyang titulo, kaya at kung maisaayos na ang nasabing titulo
ay saka na ipatatala sa pangalan nitong aking pinagbilhan upang lalong malagay sa
katahimikan itong aking pinagbilhan.

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At sa katunayan ay nilagdaan ko ang kasulatang ito dito sa municipio ng Cavinti, Laguna,


ngayong ika sampung araw ng Agosto taong isanglibo siyam na daan at tatlompu at pito
(1937).
(LGD) PEDRO VILLANUEVA
Nagfirma sa hinaharap ni
(LGD) BALTAZAR VILLANUEVA
JUAN VILLANUEVA
Subsequently, the Original Certificate of Title was cancelled on the basis of the private
document of sale (Exhibit "B") and a new certificate of title was issued in the name of the
petitioners covered by Transfer Certificate of Title No. RT- 6293 (No. 23350) on January 4,
1944, particularly describing the land as follows:
A parcel of land (Lot No. 401 of the Cadastral Survey of Cavinti) with the improvements
thereon, situated in the municipality of Cavinti, Bounded on the N and NE., by Lot No. 403; on
the SE by Lot No. 393 and the Caliraya River; and on the SW by Lot No. 515. Area Eighty One
Thousand and Three Hundred (81,300) Square Meters, more or less. (Record on Appeal, Annex
"A," pp. 7 and 9).
During the Second World War, the records as well as the Office of the Register of Deeds of
Laguna, where the original of their new transfer certificate of title was kept, were completely
burned. Accordingly, by virtue of an Affidavit of Reconstitution dated December 2, 1958
(Record on Appeal, Annex "DD," pp. 41-42) and upon presentation of the Owner's Duplicate
Certificate of Title, the title was administratively reconstituted and the Register of Deeds of
Laguna issued Transfer Certificate of Title No. RT-6293 (No. 23350) in the name of the
petitioners (Record on Appeal, Annex "B", pp. 7).
On November 17, 1976, defendant Marta Villanueva together with Pedro Villanueva, Jr., and
Restituto R. Villanueva executed and filed an Affidavit of Adverse Claim with the Office of the
Register of Deeds of Laguna (Record on Appeal, Annex "C", pp. 10-13). However, on December
6, 1976 a joint affidavit was filed by Pedro G. Villanueva, Jr. and Restituto Villanueva
withdrawing their adverse claim on the said parcel of land, with the Office of the Register of
Deeds of Laguna (Record on Appeal, Annex " D, " pp. 13-14).
When petitioners learned of this Affidavit of Adverse Claim, attempt was made to settle said
controversy amicably. Several demands made by herein petitioners upon private respondents
Marta Vda. de Agana to withdraw her adverse claim, failed.
On December 9, 1976, said private respondent executed a Deed of Conveyance and Release of
Claim (Record on Appeal and Annex "AA", p. 35) wherein the parties agreed, among other
things, to the following:
That in consideration of the said transfer and conveyance over a 1,000 square meter portion
mentioned in the next preceding paragraph, the VENDEE (Marta V. Agana) does hereby
withdraw the adverse claim mentioned above; (Rollo, p. 119).
However, when private respondent Marta Villanueva vda. de Agana refused to sign an
Affidavit of Quit-claim (Exhibit "9; " Record on appeal, p. 195), petitioners instituted court suit
against the private respondent and her husband, Dr. Marcelo S. Agana, Sr. by filing a
complaint for Quieting of Title and Damages with the Court of First Instance of Laguna on
February 3, 1977, demanding that their title over the questioned land be fortified by a

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declaration of ownership in their favor and avoiding the af/recited Deed of Conveyance and
Release of Claim (Record on Appeal, pp. 1-7). Accordingly, private respondents in their answer
countered that the Deed of Sale in Tagalog and petitioners' title over the land be declared
void ab initio, among other demands (Record on Appeal, pp. 16-35).
On January 20, 1982, the Court of First Instance of Laguna rendered its decision declaring the
deed of sale of August 10, 1937, as well as the reconstituted transfer certificate of title of
petitioners, void ab initio Record on Appeal, pp. 208-216).
The dispositive portion of said decision (Record on Appeal, pp. 215-216) reads as follows:
WHEREFORE, judgment is hereby rendered in favor of the defendants and against the
plaintiffs, as follows:
a. declaring as null and void the private document dated August 10, 1937 written in Tagalog
(Exhibit B);
b. declaring as null and void plaintiffs' reconstituted Transfer Certificate of Title RT-6293 (No.
23350) (Exhibit F) and ordering the Register of Deeds of Laguna to issue a new reconstituted or
to reinstate Original Certificate of Title No. 2262 issued on April 2, 1924 in the name of Pedro
Villanueva within thirty (30) days from the finality of this decision;
c. declaring the heirs of Pedro Villanueva as the owners of the property in litigation and
ordering the plaintiffs and her agents and those acting for in their behalf to vacate the land in
question and surrender the possession of the same to the heirs of the late Pedro Villanueva
thru Marta V. Agana;
d. declaring all buildings; plantings and improvements introduced by the plaintiffs forfeited in
favor of' the defendants:
e. ordering plaintiffs, jointly and severally, to pay the defendants the sum of P10,000.00 as
moral and exemplary damages;
f. ordering plaintiffs, jointly and severally, to pay defendants the sum of P5,000.00 as and for
attorney's fees: and
g. ordering plaintiffs, jointly and severally, to pay defendants the sum of P5,000.00 as litigation
expenses; and costs of suit.
SO ORDERED.
Thus, petitioners filed notice of appeal on February 10, 1982, followed by an appeal made to
the Intermediate Appellate Court. However, the Intermediate Appellate Court, on May 22,
1984, affirmed in toto the decision of the trial court.
Hence, this petition.
On August 30, 1984, the Court in its Resolution without giving due course to the petition
required the respondents to comment on the said petition (Rollo, p. 50). However, the counsel
for private respondents failed to file comment on the petition for review on certiorari within
the period which expired on September 17, 1984. Thus, in the Resolution of January 7, 1985
the Court, required counsel for petitioners to show cause why disciplinary action should not
be taken against him (Rollo, p. 51).

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On February 23, 1985 respondents filed their comment (Rollo, p. 57). Considering respondents'
comment as answer the petition was given due course and the parties were required to
submit their respective memoranda (Rollo, p. 104).
Private respondents and petitioners filed their respective memoranda on May 18, 1985 (Rollo,
p. 117) and on June 7, 1985 (Rollo, p. 143) respectively. On July 1, 1985, the Court resolved to
consider the case submitted for deliberation (Rollo, p. 168).
Petitioners, however filed a Supplemental Memorandum, with leave of court on May 18, 1987
(Rollo, p. 169) which was noted by the court in its resolution dated June 19, 1987 (Rollo, p.
188).
In its petition petitioners raised the following assignment of errors, to wit:
I
THE TRIAL COURT ERRED IN HOLDING THAT EXHIBIT B DOES NOT TRANSFER OWNERSHIP, THE
SAME BEING NULL AND VOID.
II
THE TRIAL COURT ERRED IN HOLDING THAT DEFENDANTS-APPELLANTS ARE NOT GUILTY OF
LACHES.
III
THE TRIAL COURT ERRED IN HOLDING THAT PLAINTIFF- APPELLANTS CANNOT ACQUIRE
OWNERSHIP OF SUBJECT LAND BY PRESCRIPTION UPON THE PRINCIPLE THAT NO TITLE TO
REGISTERED LAND IN DEROGATION OF THAT OF THE REGISTERED OWNER SHALL BE ACQUIRED
BY PRESCRIPTION.
IV
THE TRIAL COURT ERRED IN NOT HOLDING THAT STATUTE OF LIMITATION HAS SET INTO THIS
CASE; AND,
V
THE TRIAL COURT ERRED IN DECLARING TRANSFER CERTIFlCATE OF TITLE NO. RT-6293 AS NULL
AND VOID.
The pivotal issue in this case is whether or not there was a valid reconstitution of Transfer
Certificate of Title No. RT-6293 (No. 23350) issued in the names of petitioners.
It is admitted that the land in question is formerly covered by Original Certificate of Title No.
2262, issued in the name of Pedro Villanueva and that the cancellation of said OCT No. 2262
and the issuance of the reconstituted Transfer Certificate of Title No. RT-6293 (No. 23350) are
based either on the Affidavit for Reconstitution of Teresa Villanueva and not of Pedro
Villanueva, or the unnotarized deed of sale of August 10, 1937 (Annex "B" for plaintiffs), held
void by the lower court and by the Court of Appeals. As a consequence TCT No. RT-6293 (No.
23350) was likewise held void ab initio. (Record on Appeal, p. 20).
As to the validity of the Affidavit for Reconstitution, affiant Teresa Villanueva testified on
December 19, 1980, that she did not know anything about the reconstitution of their title as it
was their children who took charge of the same and that she never participated in the said
reconstitution. In fact she never appeared before the Notary Public and this testimony was

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corroborated by the testimony of Eleuterio Rebenque, entry clerk in the Office of the Register
of Deeds who never made any categorical affirmation that said Teresa Villanueva appeared at
said office. (Rollo, p. 43).
Consequently, the crux of the matter now centers on whether or not the unnotarized deed of
sale purportedly executed on August 10, 1937 by the primitive owner Pedro Villanueva, in
favor of petitioners, can be considered as a valid instrument for effecting the alienation by
way of sale of a parcel of land registerd under the Torrens System. Corollary thereto, it
becomes necessary to examine other matters surrounding the execution of the alleged
document of sale (Exhibit B).
Petitioners claim that the sale although not in a public document, is nevertheless valid and
binding citing this Court's rulings in the cases of Cauto v. Cortes, 8 Phil. 459, 460; Guerrero v.
Miguel, 10 Phil. 52, 53; Bucton v. Gabar 55 SCRA 499 wherein this Court ruled that even a
verbal contract of sale of real estate produces legal effects between the parties.
The contention is unmeritorious.
As the respondent court aptly stated in its decision:
True, as argued by appellants, a private conveyance of registered property is valid as between
the parties. However, the only right the vendee of registered property in a private document is
to compel through court processes the vendor to execute a deed of conveyance sufficient in
law for purposes of registration. Plaintiffs-appellants' reliance on Article 1356 of the Civil Code
is unfortunate. The general rule enunciated in said Art. 1356 is that contracts are obligatory, in
whatever form they may have been entered, provided all the essential requisites for their
validity are present. The next sentence provides the exception, requiring a contract to be in
some form when the law so requires for validity or enforceability. Said law is Section 127 of
Act 496 which requires, among other things, that the conveyance be executed "before the
judge of a court of record or clerk of a court of record or a notary public or a justice of the
peace, who shall certify such acknowledgment substantially in form next hereinafter stated."
Such law was violated in this case. The action of the Register of Deeds of Laguna in allowing
the registration of the private deed of sale was unauthorized and did not lend a bit of validity
to the defective private document of sale.
With reference to the special law, Section 127 of the Land Registration Act, Act 496 (now Sec.
112 of P.D. No. 1529) provides:
Sec. 127. Deeds of Conveyance, ... affecting lands, whether registered under this act or
unregistered shall be sufficient in law when made substantially in accordance with the
following forms, and shall be as effective to convey, encumber, ... or bind the lands as though
made in accordance with the more prolix forms heretofore in use: Provided, That every such
instrument shall be signed by the person or persons executing the same, in the presence of
two witnesses, who shall sign the instrument as witnesses to the execution thereof, and shall
be acknowledged to be his or their free act and deed by the person or persons executing the
same, before the judge of a court of record or clerk of a court of record, or a notary public, or a
justice of the peace, who shall certify to such acknowledgement substantially in the form next
hereinafter stated. (Emphasis supplied).
It is therefore evident that Exhibit " E " in the case at bar is definitely not registerable under
the Land Registration Act.

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176 | P a g e

Likewise noteworthy is the case of Pornellosa and Angels v. Land Tenure Administration and
Guzman, 110 Phil. 986, where the Court ruled:
The deed of sale (Exhibit A), allegedly executed by Vicente San Jose in favor of Pornellosa is a
mere private document and does not conclusively establish their right to the parcel of land.
WhiIe it is valid and binding upon the parties with respect to the sale of the house erected
thereon, yet it is not sufficient to convey title or any right to the residential lot in litigation.
Acts and contracts which have for their object the creation, transmission, modification or
extinguishment of real rights over immovable property must appear in a public document.
Upon consideration of the facts and circumstances surrounding the execution of the assailed
document, the trial court found that said private document (Exhibit "B") was null and void and
that it was signed by somebody else not Pedro Villanueva. Such findings of fact besides being
based on the records, were sustained by the Court of Appeals.
The contention that ownership over registered property may be acquired by prescription or
adverse possession is absolutely without merit. No title to registered land in derogation of
that of the registered owner shall be acquired by prescription or adverse possession.
Prescription is unavailing not only against the registered owner but also against his hereditary
successors (Umbay vs. Alecha, 135 SCRA 427 [1985]). The right to recover possession of
registered land is imprescriptible because possession is a mere consequence of ownership
(Umbay vs. Alecha, supra, citing Atun v. Nuuz 97 Phil. 762; Manlapas and Tolentino v.
Llorente, 48 Phil. 298, 308: J.M. Tuazon & Co., Inc. v. Aguirre, 117 Phil. 110, 113-114) where
land has been registered under the Torrens System (Alarcon v. Bidin, 120 SCRA 390; Umbay v.
Alecha, supra) because the efficacy and integrity of the Torrens System must be protected
(Director of Lands v. CA, 120 SCRA 370). As prescription is rightly regarded as a statute of
repose whose objective is to suppress fraudulent and stale claims from springing up at great
distances of time and suprising the parties or their representatives when the facts have
become obscure from the lapse of time or the defective memory or death or removal of
witnesses ( Senoan v. Sorongon, 136 SCRA 407 [1985]).
In the matter of laches, the Court aptly stated in the case of Marcelo Sotto v. Pilar Teves, et
al., 86 SCRA 155 [1978] that "in determining whether a delay in seeking to enforce a right
constitutes laches, the existence of a confidential relationship between the parties is an
important circumstance for consideration. A delay under such circumstance is not as strictly
regarded as where the parties are strangers to each other. The doctrine of laches is not strictly
applied between near relatives, and the fact that the parties are connected by ties of blood or
marriage tends to excuse an otherwise unreasonable delay."
In the case of Esso Standard Eastern, Inc. v. Alfonso Lim, 123 SCRA 464, 480 [1983]), the Court
ruled that laches cannot be asserted by a mere possessor without claim of title, legal or
equitable because for laches to exist, there should be a showing of delay in asserting the
complainant's right. The complainant should have knowledge or notice of the defendant's
conduct and an opportunity to institute a suit. Delay is not counted from the date the lot was
sold to the buyer but from the time of entry of the defendant or from the time the
complainant came to know of the occupancy for that is the only time it could possibly have
demanded that he get out of the premises or could have instituted a suit. In the case at bar, it
will be noted that what transpired was an administrative reconstitution, essentially exparte and without notice, thereby lending credence to the claim that private respondent
Marta Agana was unaware of such reconstitution and possession until she discovered the
same in the Office of the Register of Deeds in 1976. As such it cannot be claimed that she slept
on her right as from that time on, it is undeniable that she filed her adverse claim on the said
lot.

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After a careful perusal of the case, there appears to be no cogent reason to disturb the
findings of fact of the Court of Appeals which affirmed the findings of the trial court.
PREMISES CONSIDERED, the petition is DENIED and the assailed decision of the Intermediate
Appellate Court is AFFIRMED.
SO ORDERED.
Teehankee, C.J., Narvasa, Cruz and Gancayco, JJ., concur.

Footnotes
* Penned by Justice Porfirio V. Sison, with Justices Abdulwahid A. Bidin, Marcelino R. Veloso
and Desiderio P. Jurado.
** Written by Judge Maximiano C. Asuncion.
The Lawphil Project - Arellano Law Foundation

Republic of the Philippines


SUPREME COURT
Manila
THIRD DIVISION

G.R. No. 50837 December 28, 1992


NARCISO BUENAVENTURA and MARIA BUENAVENTURA, Petitioners,
vs.
HON. COURT OF APPEALS and MANOTOK REALTY, INC. Respondents.

MELO, J.:
Before Us is a petition for review on certiorari of a Decision of the Special Former Ninth Division of the Court
of Appeals rendered on February 19, 1979, in CA-G.R. No. 08249-SP (Reyes, Sundiam [P], and Cortez, JJ;
Rollo, [pp. 22-28) ordering the dismissal of the complaint in Civil Case No. C-6095 filed by herein petitioners
against Lorenzo Caia. Francisco Caia-Rivera, the National Housing Authority (formerly PHHC). Francisco
M. Custodio, and respondent Manotok Realty, Inc., before then Court of First Instance of Rizal, Branch
XXXIII, Caloocan City.
The relevant antecedents, as narrated by respondent court, are as follows:
(1) During his lifetime, Julian Caia, was the occupant and tenant of a parcel of land,
owned by the Republic of the Philippines but administered at first by the then Rural
Progress Administration and later by the Peoples Homesite and Housing Corporation
(PHHC) described as Lot 20 of Consolidated Sub-division plan LRC Pcs-1828, and in
Transfer Certificate of Title No. 365557 of the Registry of Deeds of Caloocan City, with an
area of 25,776 square meters;
(2) The Republic of the Philippines acquired the aforesaid lot, together with other lots in
the Gonzales Estate by Expropriation to be resold to qualified and bonafide tenantsoccupants and, to achieve this end, the President of the Philippines, on August 30, 1961,

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designated the PHHC with the task of selling and transferring the said lots to qualified
tenants concerned and/or their lawful heirs;
(3) Julian Caia had a brother, Justo Caia. The latter had three children, namely,
Emeteria Caia Buenaventura, Lorenzo Caia and Francisca Caia. Emeteria Caia
Buenaventura died as early as July 11, 1937 and was survived by Maria Buenaventura
and Narciso Buenaventura, the Private Respondents in this case;
(4) However the Gonzales Estate still had to be sub-divided into lots; but before the
subdivision of the property and the subdivision plan thereof could be approved and said lot
transferred to Julian Caia, the latter died on December 17, 1961. Justo Caia, the
brother, died later on May 3, 1962;
(5) Thus, at the time Julian Caia died, he was survived as his sole heirs, by his brother,
Justo Caia and the latter's children, Lorenzo Caia and Francisca Caia: also surviving
him were the private respondents Narciso Buenaventura and Maria Buenaventura, the
children of Emeteria Buenaventura who died earlier in 1937;
(6) On November 4, 1965, the People Homesite and Housing Corporation executed a
'Deed of Absolutes Sale' over the said lot to Lorenzo Caia and Francisca Caia-Rivera,
as the sole heirs and successor-in-interest of Julian Caia for and in consideration of the
purchase price of P96,048.80 (a certified xerox copy of the aforesaid Deed is hereto
attached as Annex 'A' hereof):
(7) By virtue of the said sale, Lorenzo Caia and Francisca Caia-Rivera were issued, on
November 5, 1965. Transfer Certificate of Title No. 21013 over the said lot by the Registry
of Deeds of Caloocan City (certified xerox copy of the aforesaid title is hereto attached as
Annex "B" hereof);
(8) On January 26, 1966, Lorenzo Caia and Francisca Caia-Rivera executed a 'Deed of
Absolutes Sale' over the said lot in favor of Francisco M. Custodio after which the latter
was issued on January 26, 1966. Transfer Certificate of Title No. 21484 of the Registry of
Deeds of Caloocan City (a certified xerox copy of the aforesaid Deed of Absolute Sale and
Transfer Certificate of tile are hereto attached as Annexes "C" and ''D" hereof
respectively);
(9) On January 26, 1966, Francisco Custodio executed a 'Deed of Absolute Sale' over the
said lot in favor of the Petitioner for which the latter was issued on January 26, 1966.
Transfer Certificate of Title No. 2145 of the Registry of Deeds of Caloocan City (a certified
xerox copy of the said Deed of Absolute Sale and Title are hereto attached as Annexes
"E" and "F" hereof respectively);
(10) On December 24, 1976, Private Respondents [now petitioners] filed a complaint with
the respondent court docketed as Civil Case No. C-6095 entitled 'Narciso Buenaventura
and Maria Buenaventura vs. Lorenzo Caia, Francisca Caia, National Housing Authority
(formerly PHHC). Francisco M. Custodio. Manotok Realty, Inc.' for Annulment of Titles,
Contracts and/or Sales. Reconveyance and Damages (a copy of the aforesaid complaint
attached hereto as Annex "G" hereof);
(11) The Petitioner [now private respondent Manotok Realty] subsequently filed with the
Respondent Court a 'Motion to Dismiss' the aforesaid complaint on the ground of, inter
alia, prescription (a copy of the aforesaid motion is hereto attached as Annex "H" hereof);
(12) The Private Respondents, however filed their Opposition to the aforesaid motion of
the Petitioner (a copy of the aforesaid opposition is hereto attached as Annex "'1"' hereof);
(13) On July 28, 1977, the Respondent Court issued an Order denying the aforesaid
Motion of the Petitioner (a certified xerox copy of the aforesaid order is hereto attached as
Annex "J" hereof);
(14) The Petitioner thereafter filed a 'Motion for Reconsideration' of the aforesaid Order, to
which the private respondents filed their opposition. The petitioner however, filed its Reply
to the aforesaid opposition of the private respondents despite which the respondent court,

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179 | P a g e

on July 21, 1978 issued an order denying the aforesaid motion of the petitioner (a copy of
each aforesaid motion, opposition and reply are hereto attached as Annexes "K","'L" and
"M", hereof respectively; while a certified xerox copy of the aforesaid Order is hereto
attached as Annex 'N' hereof). Decision, pp. 1-3: rollo, pp. 22-24.).
Aggrieved by the rules of the trial court, herein private respondents filed a petitioner with the Court of
Appeals which later granted the petitioner and ordered the dismissal of the complaint of then private
respondents, now herein petitioners, on the ground that their action has already prescribed. A subsequent
motion for reconsideration was to no avail.
Hence, the instant petition.
Both sides offer conflicting opinions on the applicability of Article 1410 of the Civil Code of the Philippines.
The Court of Appeals, in directing the dismissal of the complaint filed by they petitioners in the court of origin,
held that Article 1410 of the Civil Code on imprescriptibility of actions is not applicable because fraud in the
transfer of the property was alleged in petitioner's complaint. The Court of Appeals was, of course, referring
to paragraph 20 of the Complaint which reads:
20. That in executing the said 'Deed of Absolute Sale' over Lot 20 in favor of defendants
Lorenzo Caia and Francisca Caia-Rivera, defendant NHA acted with evident bad faith,
gross negligence and carelessness, while defendants Lorenzo Caia and Francisca Caia
acted with false representations, fraud and deceit and the three defendants connived,
conspired and schemed to deprive the plaintiffs of their rights over 1/3 portion of Lot 20 of
the Gonzales Estate administered by defendant NHA, to the damage and prejudice of the
herein plaintiffs; (Rollo, p. 17).
Respondent court further stated that due to the allegation that fraud was supposedly employed in the
execution of the deed of sale and thereafter in the issuance of Transfer Certificate of Title No. 21484, there
was created in favor of then private respondents, now petitioners, an implied or constructive trust, such that
the action for reconveyance must be filed by the defrauded party within the a period of ten (10) years from
the date of issuance of the title, otherwise, the action prescribed. Consequently, respondent court held that
because the complaint in Civil Case No. C-6095 was filed only on December 28, 1976 or after more than ten
years from the issuance of the transfer certificate of title on January 26, 1966, the assertion for recovery of
property based on fraudulent transfer and registration can no longer be entertained (Rollo, pp. 27-28).
Petitioners, on the other hand, argue otherwise. They claim that the action for reconveyance is based both
on the grounds of fraud and simulation of contracts, hence, it cannot be made subject to the rule on
prescription of action. (Rollo, p. 15).
We agree with respondent court.
Petitioners' allegation in their complaint filed in the court of origin, that fraud was employed in the execution
of a deed of sale and subsequently, in the issuance of a transfer certificate of title, renders their action for
reconveyance susceptible to prescription either within 4 years or 10 years. In the present case, even if one
bends backwards and considers the circumstances alleged as having created an implied or constructive
trust, such that the action for reconveyance would prescribed in the longer period of 10 years (Duque vs.
Doming, 80 SCRA 654 [1977]; Cerantes vs. Court of Appeals, 76 SCRA 514 [1977]; Jaramil vs. Court of
Appeals 78 SCRA 420 [1977]), still petitioners' action is plainly time-barred. Considering that the deed of
sale executed by the Philippine Homesite and Housing Corporation in favor of Lorenzo Caia and Francisca
Caia-Rivera was executed on November 4, 1965 and on the following day, Transfer Certificate of Title No.
21484 was issued in favor of the vendees (private respondents), the party allegedly defrauded in the
transaction, herein petitioners, had only 10 years or until September 5, 1975 within which to file the
appropriate action. In the instant case, the action was filed only on December 28, 1976, which was beyond
the prescribed period set by law.
Verily, the principle on prescription of actions is designed to cover situations such as the case at bar, where
there have been a series of transfers to innocent purchasers for value. To set aside these transactions only
to accommodate a party who has slept on his rights is anathema to good order.
Independently of the principal of prescription of actions working against petitioners, the doctrine of laches
may further be counted against them, which latter tenet finds application even to imprescriptible actions.
Thus, in Rafols vs. Barba (199 SCRA 146 [1982]), We find the following words of wisdom:

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180 | P a g e

In the least, plaintiffs-appellants are already guilty of laches as would effectively derail
there cause of action. While it is true that technically, the action to annul a void or
inexistent contract does not prescribe, it may nonetheless be barred by laches. As was
stated in Nielson & Co. v. Lepanto Consolidated Mining Co., L-21601. December 17, 1966,
18 SCRA [1040]:
The defense of laches applied independently of prescription. Laches is
different from the statute of limitations. Prescription is concerned with
the fact of delay, whereas laches is concerned with the effect of delay.
Prescription is a matter of time; laches is principally a question of
inequity of permitting a claim to be enforced, this inequity being founded
on the same change in the condition of the property or the relation of the
parties. Prescription is statutory; laches is not. Laches applies in equity,
whereas prescription is based on fixed time; laches is not.
The essential elements of the principle of laches are all present herein, to wit:
... (1) conduct on the part of the defendant, or one
under whom he claims, giving rise to the situation that
led to the complaint for which the complaint seeks a
remedy: (2) delay in asserting the complainant's
rights, the complainant having had knowledge or
notice of the defendant's conduct and having been
afforded an opportunity to institute a suit; (3) lack of
knowledge or notice on the part of the defendant that
the complainant would assert the right on which he
bases his suit; and (4) injury or prejudice to the
defendant in the event relief is accorded to the
complainant or the suit is not held barred. (Yusingco
vs. Ong Hing Lian, 42 SCRA 589.)
The defendant-appellee purchased the parcel of land in question giving rise to the
complaint of herein plaintiffs-appellants. The latter delayed the assertion of their supposed
right to annul the sale for a period of over fifteen (15) years despite knowledge or notice of
such sale. They had all the opportunity within that period of time to take action to set aside
or annul the sale. Defendant-appellee was never apprised of any intention on the part of
plaintiffs-appellants to annul the sale until this action was filed. Finally, the defendantappellee stands to lose the property in question if the suit filed against him by plaintiffsappellants shall be deemed barred. (at pp. 154-155.)
WHEREFORE, premises considered,. the judgment appealed from is hereby AFFIRMED in toto.
SO ORDERED.
Gutierrez, Jr., (Chairman), Bidin, Davide, Jr., and Romero, JJ., concur.

The Lawphil Project - Arellano Law Foundation

Republic of the Philippines


SUPREME COURT
Manila
FIRST DIVISION

G.R. No. L-37682 March 29, 1974

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REPUBLIC OF THE PHILIPPINES, Represented by the DIRECTOR OF LANDS, petitioner,


vs.
HON. PEDRO SAMSON ANIMAS, in his capacity as Judge of CFI South Cotabato, Branch I,
General Santos City, ISAGANI DU TIMBOL and the REGISTER OF DEEDS OF GENERAL SANTOS
CITY, respondent.

Office of the Solicitor General Estelito P. Mendoza, Assistant Solicitor General Santiago M. Kapunan and
Solicitor Patricio M. Patajo for petitioner.
Quitain Law Office for private respondent.

ESGUERRA, J.:p
Petition to review the order of the Court of First Instance of South Cotabato, Branch I, General Santos City,
dated June 22, 1973, dismissing the complaint in its Civil Case No. 1253, entitled "Republic of the
Philippines, Plaintiff, vs. Isagani Du Timbol and the Register of Deeds of General Santos City, Defendants",
instituted by the plaintiff to declare null and void Free Patent No. V-466102 and Original Certificate of Title
(O.C.T.) No. P-2508 based thereon issued in the name of defendant Isagani Du Timbol; to order the
aforesaid defendant to surrender the owner's duplicate of O.C.T. No. P-2508 and the defendant Register of
Deeds to cancel the same; to decree the reversion of the land in question to the mass of public domain, and
granting such further relief as may be just and equitable in the premises.
The land covered by the free patent and title in question was originally applied for by Precila Soria, who on
February 23, 1966, transferred her rights to the land and its improvements to defendant Isagani Du Timbol
who filed his application therefor on February 3, 1969, as a transferee from Precila Soria.
On December 12, 1969, free Patent No. V-466102 was issued by the President of the Philippines for the land
in question, and on July 20, 1970, after transmittal of the patent to the Register of Deeds of General Santos
City, Original Certificate of Title (O.C.T.) No. P-2508 was issued in the name of defendant Isagani Du
Timbol.
On August 5, 1971, the Republic of the Philippines, at the instance of the Bureau of Forestry, filed a
complaint in the Court of First Instance of Cotabato, Branch I, General Santos City (Civil Case No. 1253), to
declare free patent No. V-466102 and Original Certificate of Title No. P-2508 in the name of defendant
Isagani Du Timbol null and void ab initio and to order the reversion of the land in question to the mass of
public domain. The action is based on the ground that the land covered thereby is a forest or timber land
which is not disposable under the Public Land Act; that in a reclassification of the public lands in the vicinity
where the land in question is situated made by the Bureau of Forestry on March 7, 1958, the said land was
plotted on Bureau of Forestry map L.C. 700 to be inside the area which was reverted to the category of
public forest, whereas the application for free patent by Isagani Du Timbol was filed on June 3, 1969, or
more than eleven years thereafter; that the said patent and title were obtained fraudulently as private
respondent Isagani Du Timbol never occupied and cultivated the land applied for.
Invoking the case of Ramirez vs. Court of Appeals (G.R. No. L-28591, 30 SCRA 207-301), holding that a
certificate of title fraudulently secured is not null and void ab initio, unless the fraud consisted in
misrepresenting that the land covered by the application is part of the public domain when it is not, the
respondent court dismissed the complaint on the ground that Certificate of Title based on the patent had
became indefeasible in view of the lapse of the one-year period prescribed under Section 38 of the Land
Registration Act for review of a decree of title on the ground of fraud. From this order of June 22, 1973,
dismissing the complaint, plaintiff Republic of the Philippines has appealed to this Court for review.
After careful deliberation, this Court grants the petition on the ground that the area covered by the patent
and title is not disposable public land, it being a part of the forest zone and, hence the patent and title
thereto are null and void.
The defense of indefeasibility of a certificate of title issued pursuant to a free patent does not lie against the
state in an action for reversion of the land covered thereby when such land is a part of a public forest or of a
forest reservation. As a general rule, timber or forest lands are not alienable or disposable under either the
Constitution of 1935 or the Constitution of 1973. Although the Director of Lands has jurisdiction over public

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lands classified as agricultural under the constitution, or alienable or disposable under the Public Land Act,
and is charged with the administration of all laws relative thereto, mineral and timber lands are beyond his
jurisdiction. It is the Bureau of Forestry that has jurisdiction and authority over the demarcation, protection,
management, reproduction, occupancy and use of all public forests and forest reservations and over the
granting of licenses for the taking of products therefrom, including stone and earth (Section 1816 of the
Revised Administrative Code). That the area in question is a forest or timber land is clearly established by
the certification made by the Bureau of Forest Development that it is within the portion of the area which
was reverted to the category of forest land, approved by the President on March 7, 1958. When the
defendant Isagani Du Timbol filed his application for free patent over the land in question on June 3, 1969,
the area in question was not a disposable or alienable public land but a public forest. Titles issued to private
parties by the Bureau of Lands when the land covered thereby is not disposable public land but forest land
are void ab initio. In Gatchalian vs. Pavilen, et al., L-17619, Oct. 31, 1962, 6 SCRA p. 508, 512, this Court
said:
And if it be true that the Bureau of Lands had no jurisdiction to issue a patent because the
land involved was still inalienable forest land when granted, then it may be plausibly
contended that the patent title would be ab initio void, subject to attack at any time by
any party adversely affected. (Gatchalian vs. Pavilen, et al., L-17619, Oct. 31, 1962, supra,
citing Civil Code Arts. 1409 and 1421; Vao vs. Insular Gov't., 41 Phil. 161; Aderable vs.
Director of Forestry, L-13663, March 25, 1960).
A patent is void at law if the officer who issued the patent had no authority to do so (Knight vs. Land Ass.,
142 U.S. 161, 12 Sup. Ct., 258, 35L ED. 974; emphasis supplied). If a person obtains a title under the Public
Land Act which includes, by mistake or oversight, lands which cannot be registered under the Torrens
System, or when the Director of Lands did not have jurisdiction over the same because it is a public forest,
the grantee does not, by virtue of said certificate of title alone, become the owner of the land illegally
included. (See Ledesma vs. Municipality of Iloilo, 49 Phil. 769)
The case of Ramirez vs. Court of Appeals, G. R. No. L-28591, Oct. 31, 1969, 30 SCRA 297, relied upon by
respondent Court in dismissing this case, is not controlling. In that case no forest land was involved but
agricultural public land which was first covered by a patent issued to one party and later registered under
the Torrens System by the other party. The litigation was between private parties where the party who
registered it under Act No. 496 sought the nullity of the title of the patentee under the Public Land Act. In
the case at bar the party seeking the nullity of the title and reversion of the land is the state itself which is
specifically authorized under Section 101 of the Public Land Act to initiate such proceedings as an attribute
of sovereignty, a remedy not available to a private individual.
The complaint alleges in its paragraph 8 that applicant Isagani Du Timbol was never in possession of the
property prior to his filing the application, contrary to the provisions of law that the applicant must have
been in possession or cultivation thereof for at least 30 years; that the applicant, after diligent search by the
Acting Chief of the Survey-Party, Francisco R. Alcones, in South Cotabato, could not be contacted because
he is a resident of Davao City; that there are no existing signs of improvements found in the area in
question as it is not under cultivation but covered with grasses, bushes and small trees; that it is being used
as ranch for grazing cows by the heirs of Hermogenes Chilsot; that no monuments were placed on the area
surveyed which goes to show that there was no actual survey thereof; that the property in question is inside
the ranch of the heirs of Hermogenes Chilsot under Pasture Lease Agreement No. 1244 and, therefore,
inside the forest zone; and that said ranch has a fence around it to show that other persons could not enter
and cultivate the same, and that the signature of then Acting District Land Officer Elias de Castro of South
Cotabato has been forged to facilitate the issuance of patent in favor of Isagani Du Timbol.
The above alleged circumstances are indicative of fraud in the filing of the application and obtaining title to
the land, and if proven would override respondent Judge's order dismissing the case without hearing. The
misrepresentations of the applicant that he had been occupying and cultivating the land and residing
thereon are sufficient grounds to nullify the grant of the patent and title under Section 91 of the Public Land
Law which provides as follows:
That statements made in the application shall be considered as essential conditions or
parts of any concession, title or permit issued on the basis of such application, and any
false statement thereon or omission of facts, changing, or modifying the consideration of
the facts set forth in such statement, and any subsequent modification, alteration, or
change of the material facts set forth in the application shall ipso factoproduce the
cancellation of the concession, title or permit granted. ...

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183 | P a g e

A certificate of title that is void may be ordered cancelled. A title will be considered void if it is procured
through fraud, as when a person applies for registration of the land under his name although the property
belongs to another. In the case of disposable public lands, failure on the part of the grantee to comply with
the conditions imposed by law is a ground for holding such title void (Director of Lands vs. Court of Appeals,
et al., G.R. No. L-17696, May 19, 1966, 17 SCRA, 71, 79-80; emphasis supplied). The lapse of the one year
period within which a decree of title may be reopened for fraud would not prevent the cancellation thereof,
for to hold that a title may become indefeasible by registration, even if such title had been secured through
fraud or in violation of the law, would be the height of absurdity. Registration should not be a shield of fraud
in securing title. (J. M. Tuason & Co., Inc. vs. Macalindog, L-15398, December 29, 1962, 6 SCRA 938, page
38).
Considering that it is the state is seeking the cancellation of the title of respondent Isagani Du Timbol, said
title has not become indefeasible for prescription cannot be invoked against the state. A title founded on
fraud may be cancelled, notwithstanding the lapse of one year from the issuance thereof, through a petition
filed in court by the Solicitor General, (Sumail vs. Court of First Instance of Cotabato, 51 O.G. p. 2414 Phil.
L-8278. 96 Phil. 946: Eugenio, et al., vs. Perdido, et al., G. R. No. L-7083, May 19, 1955; De los Santos vs.
Roman Catholic Church of Midsayap G.R. No. L-6088, Feb. 24, 1954, 94 Phil. 405).
Public land fraudulently included in patents or certificates of title may be recovered or reverted to the state
in accordance with Section 101 of the Public Land Act (Director of Lands vs. Jugado et al., G.R. No. L-14707,
May 23, 1961). Prescription does not lie against the state in such cases for the Statute of Limitations does
not run against the state (Article 1108, paragraph 4 of the New Civil Code). The right of reversion or
reconveyance to the state is not barred prescription (Republic of the Philippines vs. Ramona Ruiz, et al., G.R.
No. L-23712, April 29, 1968, 23 SCRA 348. People vs. Ramos, G.R. No. L-15484, Jan. 31, 1963, 47 SCRA 12;
Government of the Philippines vs. Monte de Piedad 35 Phil. 728; 751-753).
Even granting that the title of private respondent Isagani Du Timbol can no longer be reopened under the
Land Registration Act, the land covered thereby may be reconveyed to the state in an action for
reconveyance under Section 101 of Commonwealth Act 141 (Public Land Act), for the remedy of
reconveyance is adequately covered by the prayer of the complaint for the grant of such other relief as may
be just and equitable in the premises.
FOR ALL THE FOREGOING, the order of the respondent court, dated June 22, 1973, dismissing the
complaint, and that of September 29, 1973, denying the motion for its reconsideration, both issued in Civil
Case No. 1253 of the respondent court, are hereby annulled and set aside. The respondent court shall
proceed to hear said Civil Case and render judgment thereon accordingly.
Costs against respondent Isagani Du Timbol.

Makalintal, C.J., Castro, Makasiar, Muoz Palma, JJ., concur.

Separate Opinions

TEEHANKEE, J., concurring:


I concur in the judgment setting aside respondent court's orders which erroneously dismissed petitioner's
complaint on the ground of purported indefeasibility of private respondent's torrens certificate of title under
section 38 of Act 496 and ordering the remand of the case for trial and disposition on the merits. Petitioner's
complaint is not barred by the cited Act since it duly alleges that respondent's torrens title was issued
pursuant to a free patent covering forest or timber land which is not disposable under the Public Land Act
and if these factual allegations are duly established at the trial, petitioner would be entitled to a judgment
that the patent and title of respondent, being part of the forest zone, are null and void.

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184 | P a g e

Separate Opinions
TEEHANKEE, J., concurring:
I concur in the judgment setting aside respondent court's orders which erroneously dismissed petitioner's
complaint on the ground of purported indefeasibility of private respondent's torrens certificate of title under
section 38 of Act 496 and ordering the remand of the case for trial and disposition on the merits. Petitioner's
complaint is not barred by the cited Act since it duly alleges that respondent's torrens title was issued
pursuant to a free patent covering forest or timber land which is not disposable under the Public Land Act
and if these factual allegations are duly established at the trial, petitioner would be entitled to a judgment
that the patent and title of respondent, being part of the forest zone, are null and void.

The Lawphil Project - Arellano Law Foundation

EN BANC
[G.R. No. 102232. March 9, 1994.]
VIOLETA ALDOVINO, ALI ALIBASA, FELIX BALINO, DIONISIO BALLESTEROS, JOSE N. BALEIN, JR., FREDDIE
CAUTON, JANE CORROS, ROBERTO CRUZ, TRINIDAD DACUMOS, ANGELITA DIMAPILIS, ANDREA ESTONILO,
EFREN FONTANILLA, MARY PAZ FRIGILLANA, MANUEL HENSON, SAMUEL HIPOL, MERLENE IBALIO,
MAGDALENA JAMILLA, ALEXANDER JUSTINIANI, ROMULO MIRADOR, JULIO MIRAVITE, DANTE NAGTALON,
CLARITA NAMUCO, ALICIA ORBITA, ANGELITA PUCAN, MYRNA P. SALVADOR, LIBRADA TANTAY, and ARACELI
J. DE VEYRA, Petitioners, v. SECRETARY RAFAEL ALUNAN III, DEPARTMENT OF TOURISM and SECRETARY
GUILLERMO M. CARAGUE, DEPARTMENT OF BUDGET AND MANAGEMENT,Respondents. JOSEPHINE G.
ANDAYA, ROSALINDA T. ATIENZA, JOSE M. BALDOVINO, JR., ASUNCION C. BRIONES, RIZALINA P. ESPIRITU,
MARIBELLE A. GARCIA, ABDULIA T. LANDINGIN, FLORITA O. OCAMPO, ROLANDO SISON, LOURDES V.
TAMAYO, and ROLANDO VALDEZ, intervenors. ERLINDA PIZA, ELEONOR SAGNIT, FIDEL SEVIDAL,
CONCEPCION TIMARIO, ELOISA ALONZO, ANGELITO DELA CRUZ, ROLANDO C. CAGASCA, LYNIE ARCENAS,
MARIA EMMA JASMIN, ALFONSO ANGELES, MACACUNA PANGANDAMAN, ROSALITA MAUNA, ROMEO PADILLA,
ASCENSION PADILLA, CRISPULO PADILLA, VIRGILIO DEJERO, MEDARDO ILAO, ROSITA SOMERA, ARMANDO
CRUZ, CATALINO DABU, FRANCISCO VILLARAIZ, NORMA JUMILLA, KENNEDY BASA, and ARMANDO MENDOZA,
intervenors. ANICITA S. BALUYUT, ANTONINO D. EDRALIN, EVELYN A. ENRIQUEZ, MA. VICTORIA L. JACOBO,
DANIEL M. MANAMTAM, JESSIE C. MANRIQUE, ENCARNACION T. RADAZA, and MARIO P. RUIVIVAR,
intervenors. AMOR T. MEDINA and FELIX L. POLIQUIT, intervenors.

DECISION

BELLOSILLO, J.:

ASSERTING that their plight is similar to petitioners in Mandani v. Gonzales, 1 and in the consolidated cases of Abrogar v.
Garrucho, Jr., and Arnaldo v. Garrucho, Jr., 2 herein petitioners and intervenors seek reinstatement and payment of back
wages.
chan roble s law li bra ry : red

Section 29 of Executive Order No. 120, which took effect upon its approval on 30 January 1987, reorganizing the then
Ministry of Tourism, provides that incumbents whose positions are not included in the new position structure and staffing
pattern or who are not reappointed are deemed separated from the service. Pursuant thereto, the then Ministry of
Tourism (MOT, now Department of Tourism, DOT) issued various office orders and memoranda declaring all positions
thereat vacant, 3 and effecting the separation of many of its employees, 4 which lead to the Mandani, Abrogar and
Arnaldo cases, as well as the instant petition.
In Mandani, we declared null and void all office orders and memoranda issued pursuant to E.O. 120 and directed "public
respondents or their successors . . . to immediately restore the petitioners to their positions without loss of seniority
rights and with back salaries computed under the new staffing pattern from the dates of their invalid terminations at rates
not lower than their former salaries." 5

OBLIGATION AND CONTRACTS

185 | P a g e

In Abrogar and Arnaldo, we ordered the reinstatement of petitioners "to their former positions without loss of seniority
rights and with back salaries computed under the new staffing pattern from the dates of their invalid dismissals at rates
not lower than their former salaries, provided, however, that no supervening event shall have occured which would
otherwise disqualify them for such reinstatement, and provided, further, that whatever benefits they may have received
from the Government by reason of their termination shall be reimbursed through reasonable salary deduction." 6
Herein petitioners and intervenor claiming that they should not be deprived of the relief granted to their former coemployees plead for reinstatement "without loss of seniority rights and with back salaries computed under the new
staffing pattern from dates of their invalid termination at rates not lower than their former salaries." 7
Decisive in this recourse is the determination of whether the separation of herein petitioners and intervenors from service
was pursuant to office orders and memoranda declared void in Mandani.
Except for petitioners Samuel Hipol, Jane Corros and Myrna Salvador, intervenors Concepcion Timario, Efren Fontanilla,
Ascension Padilla and Evelyn Enriquez, public respondents do not dispute that petitioners and intervenors were unseated
from the then Ministry of Tourism, pursuant to office orders and memoranda issued under E.O. No. 120. Public
respondents nevertheless pray for the denial of the petition not only because petitioners and intervenors failed to exhaust
administrative remedies and that their claims are barred by laches, but also in view of the disruption of the present
organizational set-up if reinstatement is directed.
cha nrob les vi rtua lawlib rary chan roble s.com:cha nro bles.c om.ph

The Solicitor General argues that while petitioners and intervenors (except petitioners Samuel Hipol, Jane Corros and
Efren Fontanilla) were dismissed contemporaneously with their colleagues in Mandani (filed 3 June 1987 and decided 4
June 1990), Abrogar (filed 31 October 1990 and decided 6 August 1991) and Arnaldo (filed 7 January 1991 and decided 6
August 1991), they filed this petition and the interventions only in October 1991, and February, March, May and July
1992, or more than four (4) years later, hence, laches has set in. In reply, petitioners and intervenors explain
. . . since the time these DOT employees were illegally dismissed in May, 1987, most of them returned to the far away
provinces of their origin because they became jobless. It was only by the slow and unreliable communication of word of
mouth that they came to know much later on that they are (sic) entitled to be reinstated to the DOT. . . . 8
The doctrine of laches is "principally a question of inequity of permitting a claim to be enforced, this inequity being
founded on some change in . . . the relation of parties." 9 In the case at bar, equity, if ever invoked, must lean in favor of
petitioners and intervenors who were unjustly injured by public respondents unlawful acts. The prejudice from the highhanded violation of the rights of petitioners and intervenors resulting in their loss of employment is far more serious than
the inconvenience to public respondents in rectifying their own mistakes.
Moreover, petitioners and intervenors cannot be deemed to have slept on their rights considering, as we should, the
following unrebutted allegations in the main petition:
cha nrob 1es vi rtua l 1aw lib ra ry

7. Petitioners protested their illegal termination from the DOT. Many of them questioned their termination with the
Department of Labor and Employment where they filed a Complaint against the DOT and its top officials for illegal
dismissal . . Some of them questioned their illegal termination before the Civil Service Commission.
8. Many of petitioners joined a picket and demonstration held by illegally terminated employees of the DOT before its
office at the DOT building at the Luneta Park.
9. Petitioners were forced to receive their separation or retirement benefits from the DOT, but all under protest. The
others continued to fight their cases with the Department of Labor and Employment even if they got their separation
and/or retirement benefits.
x

11. After the finality of this Decision (Mandani) . . . many other terminated employees of the DOT wrote to then DOT
Secretary Peter D. Garrucho, Jr., as the successor-in-interest of former Sec. Jose U. Gonzales, and DBM Secretary
Guillermo Carague, asking that following the Decision in this Mandani v. Gonzales case and being similarly situated as the
twenty-eight (28) petitioners therein, that they be reinstated to their former or equivalent positions in the DOT and/or to
be paid their back wages. Then DOT Secretary Garrucho and DBM Sec. Carague never responded to these letters and did
not reinstate and/or pay any of their back wages.
chan roble s virtual lawlib rary

16. Following the Decision of this Honorable Court in the Mandani v. Gonzalez case and its Resolution in the consolidated
cases of Abrogar v. Garrucho and Arnaldo v. Garrucho, petitioners made representations with the DOT to be reinstated
and/or paid their back wages. . . . 10
Neither could petitioners and intervenors be faulted for not joining in the previous petitions because, as we held in
Cristobal v. Melchor (No. L- 43203, 29 July 1977; 78 SCRA 175, 183, 187)
More importantly, Cristobal could be expected without necessarily spending time and money by going to court to
relie upon the outcome of the case filed by his co-employees to protect his interests considering the similarity of his
situation to that of the plaintiffs therein and the identical relief being sought. On this point, We find a statement of Justice
Louis Brandeis of the United States Supreme Court in Southern Pacific v. Bogert, relevant and persuasive, and We quote;
The essence of laches is not merely lapse of time. It is essential that there be also acquiescence in the alleged wrong or
lack of diligence in seeking a remedy. Here plaintiffs, or others representing them, protested . . . and ever since they
have . . . persisted in the diligent pursuit of a remedy . . . Where the cause of action is of such a nature that a suit to
enforce it would be brought on behalf, not only of the plaintiff, but of all persons similarly situated, it is not essential that

OBLIGATION AND CONTRACTS

186 | P a g e

each such person should intervened (sic) in the suit brought in order that he be deemed thereafter free from the laches
which bars those who sleep on their rights (Citations omitted).
x

This Court, applying the principle of equity, need not be bound by the rigid application of the law, but rather its action
should conform to the conditions or exigencies to a given problem or situation in order to grant a relief that will serve the
ends of justice.
To paraphrase then Chief Justice John Edwin Marshall of the United States Supreme Court, let us to (do) complete justice
and not do justice by halves ("The court of equity in all cases delights to do complete justice and not by halves."
Marshall, C.J. Knight v. Knight, 3 P. Wms. 331, 334; Corbet v. Johnson, 1 Brock, 77, 81 both cited in Hefner, Et. Al.
v. Northwestern Mutual Life Insurance Co., 123 U.S., 309, 313).
We emphasize that prescription was never raised here as an issue; at most, it is deemed waived. In Fernandez v. Grolier
International, Inc., 11 we stated:
cha nrob 1 es virt ual 1aw li bra ry

In the case of Director of Lands v. Dano (96 SCRA 161, 165), this Court held that "inasmuch as petitioner had never
pleaded the statute of limitations, he is deemed to have waived the same."
c ralaw vi rtua 1aw lib rary

In the cited case of Directors of Lands v. Dano, the Director of Lands, who was similarly situated as public respondents
herein who represent the Government, was deemed to have waived the defense of prescription "inasmuch as petitioner
had never pleaded the statute of limitations."
cra law virt ua1aw li bra ry

The matter of prescription, we reiterate, may not be considered at this late stage, not only because it was never raised
and therefore now foreclosed, but more importantly, because it must yield to the higher interest of justice. Incidentally, it
is only in the dissent that the question of prescription is introduced. Not even the Government raised it.
In 1977, we in fact relaxed the rule on prescription in Cristobal v. Melchor 12 to give way to a determination of the case
on the merits where, like in this case," [i]t was an act of the government through its responsible officials . . . which
contributed to the alleged delay in the filing of . . . complaint for reinstatement." But, we need not go back that far. On 15
August 1991, the Court En Banc granted the related petition in intervention of Alberto A. Peralta, Et Al., 13 in the
consolidated cases of Abrogar v. Garrucho, and Arnaldo v. Garrucho, even if filed on 1 August 1991 or two months after
the four-year prescriptive period, which lapsed on the 14th and 28th of May 1991. As we ruled in Cristobal v. Melchor, 14
"it is indeed the better rule that courts, under the principle of equity, will not be guided or bound strictly by the statute of
limitations or the doctrine of laches when to do so manifest wrong and injustice would result."
c han robles v irt ual lawl ibra ry

The principle that prescription does not run against the State, which contemplates a situation where a private party
cannot defeat the claim of the State by raising the defense of prescription, is inapplicable because in this case the private
parties are the ones filing a suit against the State. Consequently, we reiterate our pronouncement in Fernandez v. Grolier
International, Inc., 15 that" [i]t is true that there are exceptions to the rule that an action will not be declared to have
prescribed if prescription is not expressly invoked (Garcia v. Mathis, 100 SCRA 250). However, where considerations of
substantial justice come in (as in this case when the very employment, and therefore the lifeblood, of each
petitioner/intervenor is involved), it is better to resolve the issues on the basic merits of the case instead of applying the
rule on prescription which the private respondent waived when it was not pleaded." Anyhow, it was public respondents
who created the problem of petitioners and intervenors by illegally abolishing their positions and terminating their
services in outrageous disregard of the basic protection accorded civil servants, hence our repeated pronouncement that it
was unconstitutional.
An unconstitutional act is not a law; it confers no rights; it imposes no duties; it affords no protection; it creates no office;
it is, in legal contemplation, inoperative, as if it had not been passed. It is therefore stricken from the statute books and
considered never to have existed at all. Not only the parties but all persons are bound by the declaration of
unconstitutionality which means that no one may thereafter invoke it nor may the courts be permitted to apply it in
subsequent cases. It is, in other words, a total nullity. 16 Plainly, it was as if petitioners and intervenors were never
served their termination orders and, consequently, were never separated from the service, The fact that they were not
able to assume office and exercise their duties is attributable to the continuing refusal of public respondents to take them
in unless they first obtained court orders, perhaps, for government budgetary and accounting purposes. Under the
circumstances, the more prudent thing that public respondents could have done upon receipt of the decision in Mandani, if
they were earnest in making amends and restoring petitioners and intervenors to their positions, was to inform the latter
of the nullification of their termination orders and to return to work and resume their functions. After all, many of them
were supposed to be waiting for instructions from the DOT because in their termination orders it promised to directly
contact them by telephone, telegram or written notice as soon as funds for their separation would be available. 17
Furthermore, the representations to DOT made by petitioners and intervenors for their reinstatement partook of the
nature of an administrative proceeding, and public respondents also failed to raise the issue of prescription therein. As
already adverted to, that issue was never raised before us. In reciting the alleged instances of delay in bringing up this
suit, the Solicitor General simply referred to laches, not prescription. Since this case is an original action, and if we treat
the petition and interventions as ordinary complaints, the failure of public respondents to raise the issue of prescription in
their comments cannot be interpreted any less than a waiver of that defense. For, defenses and objections not pleaded
either in a motion to dismiss or in the answer are deemed waived, except the failure to state a cause of action which may
be alleged in a later pleading, if one is permitted. 18
Above all, what public respondents brought up was the doctrine of laches, not prescription; and laches is different from
prescription. The defense of laches applies independently of prescription. While prescription is concerned with the fact of
delay, laches is concerned with the effect of delay. Prescription is a matter of time; laches is a question of inequity of
permitting a claim to be enforced, this inequity being founded on some change in the condition of the property or the
relation of the parties. Prescription is statutory; laches is not. Laches applies in equity, whereas prescription applies at
law. Prescription is based on fixed time, laches is not. 19 In any case, it can be said that the prescriptive period was tolled
with the filing of the termination cases before the Department of Labor and Employment and the Civil Service
Commission, the pendency of which is acknowledged in the Comment and Memorandum of public respondents.

OBLIGATION AND CONTRACTS

187 | P a g e

Incidentally, even the picketing of the premises and the placards demanding their immediate reinstatement could not be
any less than written demands sufficient to interrupt the period of prescription. As we noted earlier," [a]fter the finality of
this Decision (Mandani) . . . many other terminated employees of the DOT wrote to then DOT Secretary Peter D.
Garrucho, Jr. . . . and DBM Secretary Guillermo Carague asking that following the Decision in this Mandani v. Gonzales
case and being similarly situated as the twenty-eight (28) petitioners therein . . . they be reinstated to their former or
equivalent positions in the DOT and/or to be paid their back wages." But" [t]hen . . . DOT Secretary Garrucho and DBM
Sec. Carague never responded to these letters," 20 so that it may be said that the period that was interrupted never
started to run again against petitioner and intervenors.
c hanro bles vi rt ual lawli bra ry

The requirement of prior resort to administrative remedies is not an absolute rule and this did not bar direct access to this
Court in the analogous cases of Dario v. Mison, 21 and Mandani v. Gonzalez, 22 thus
The Court disregards the questions raised as to procedure, failure to exhaust administrative remedies, the standing of
certain parties to sue (this was raised by the Civil Service Commission in G.R. No. 86241, and failure to exhaust
administrative remedies was raised in G.R. Nos. 81954 and 81917 by the Solicitor General), and other technical
objections, for two reasons," [b]ecause of the demands of public interest, including the need for stability in the public
service" (Sarmiento III v. Mison, G.R. No. 79974, December 17, 1987, 153 SCRA 549, 551-552) and because of the
serious implications of these cases on the administration of the Philippine civil service and the rights of public servants.
On the arguments that existing organizational set-up would be disrupted if reinstatement be directed, we need only
reiterate our 18 October 1990 Resolution in Mandani that
An erring head of a Department, Bureau, or Office cannot avoid reinstatement, payment of back pay, and other acts of
compliance with the orders of this Court by interposing changes effected subsequent to his unlawful acts and claiming
that such changes make it difficult to obey this Courts orders.
The basic principle to be applied whenever the Court declares an administrative official to have acted in an unlawful
manner is for that official to undo the harmful effects of his illegal act and to accord to the aggrieved parties restoration or
restitution in good faith to make up for the deprivations which may have been suffered because of his act. 23
Petitioners and intervenors, who are similarly situated as their counterparts in Mandani, Abrogar and Arnaldo, deserve no
less than equal treatment.
The Solicitor General takes exception to petitioner Samuel Hipol who was separated from the service under an order of 19
May 1986 issued pursuant to Sec. 2, Art. III, of Proclamation No. 3, and not under E.O. No. 120. 24 In reply, petitioner
Hipol admits that he was "in the process of working for his reinstatement/reappointment at the DOT when . . . all
positions thereat were declared vacant . . ." 25 Since his separation from service was not under void orders issued
pursuant to E.O. No. 120 and, worse, he was not even an incumbent when E.O. No. 120 was issued, Hipol could not be
considered as in the same situation as the petitioners in Mandani, Abrogar and Arnaldo.
A parallel case is that of intervenor Concepcion Timario who, according to the Solicitor General, resigned effective 28 May
1987 and was not separated under any of the invalid orders. 26 Intervenor Timario however contends that she is entitled
to relief because her courtesy resignation was accepted on 9 June 1987 or during the period positions were declared
vacant pursuant to MOT Office Order No. 9-87. 27 It is significant to note that Timarios letter of resignation cited
"professional reasons" as cause for her abdication 28 which, obviously, pertains to the nature of her work. However,
conspicuously absent is the customary order requiring the filing of courtesy resignations. Timario may not be permitted to
characterize, by way of self-serving assertions, that her resignation was merely a courtesy resignation pursuant to any of
the voided office orders or memoranda.
The claim of the Solicitor General that petitioners Jane Corros and Efren Fontanilla were not employees of the Ministry of
Tourism because their names did not appear in the regular plantilla of the Ministry of Tourism, 29 is specious since the
listing of names in the plantilla is not a conclusive evidence of employment. Nonetheless, in view of the incessant
allegation of the Solicitor General that Corros and Fontanilla were not employees of the Ministry, and considering the
photocopies of Fontanillas appointment papers and termination order submitted by him, 30 as well as the bare assertion
of petitioner Corros that she was for 11 years PRO I in the Licensing Division of the Ministry and that her name could not
be found in the plantilla because she is now Jane Ombawa in view of her marriage, 31 the fact of employment should be
threshed out first in a proper forum as this Court is not a trier of facts.
chan rob les law li bra ry : red

The Solicitor General contends that since petitioner Myrna Salvador was a casual employee, 32 intervenor Ascension
Padilla was a temporary appointee whose appointment expired 20 February 1987, 33 and intervenor Evelyn Enriquez was
also a temporary appointee, 34 their appointments are terminable at the pleasure of the appointing authority. Considering
however that the office orders and memoranda which directed the separation of petitioners and intervenors were
annulled, hence in legal contemplation did not exist, the effect is, as if the terminations did not occur. However, since the
determination in this case is limited only to the extent of the nullity of said orders and memoranda, the reinstatement of
Salvador, Padilla and Enriquez cannot be ordered in the instant proceeding.
The Solicitor General also seeks dismissal of the petition and intervention against intervenors Rizalina T. Espiritu, Abdulia
T. Landingin, Medardo Ilao, Rosita Somera, Armando Cruz, Catalino Dabu, Francisco Villaraiz, Norma Jumilla, Kennedy
Basa, Rolando G. Cagasca and Alfonso Angeles because they were already reinstated. However, because of the unrefuted
allegation that these employees were not yet paid their respective back wages, then to that extent, their petitions must
be granted.
In computing back wages, we cannot blindly accept the allegation of petitioners and intervenors that since their
separation from the service in 1987, or about seven (7) years ago, they have been jobless hence entitled to full back
wages. Conformably with existing jurisprudence, the award of back wages should not exceed a period of five (5) years.
35
In the final analysis, the dissent admits that petitioners and intervenors truly deserve the reliefs they pray for except that
their cause of action has allegedly prescribed. Shall we now frustrate their rightful claims on a ground that was never
raised, nor even hinted at, by public respondents in the entire proceeding? That would be antithetic to our concept of
social justice; at the very least, it is subversive of the rudiments of fairplay.

OBLIGATION AND CONTRACTS

188 | P a g e

WHEREFORE, the instant petition is GRANTED. Petitioners Violeta Aldovino, Ali Alibasa, Felix Balino, Dionisio Ballesteros,
Jose N. Balein, Jr., Freddie Cauton, Roberto Cruz, Trinidad Dacumos, Angelita Dimapilis, Andrea Estonilo, Mary Paz
Frigillana, Manuel Henson, Merlene Ibalio, Magdalena Jamilla, Alexander Justiniani, Romulo Mirador, Julio Miravite, Dante
Nagtalon, Clarita Namuco, Alicia Orbita, Angelita Pucan, Myrna P. Salvador, Librada Tantay, and Araceli De Veyra, and
intervenors Josephine G. Andaya, Rosalinda T. Atienza, Jose M. Baldovino, Jr., Asuncion C. Briones, Maribelle A. Garcia,
Florita O. Ocampo, Rolando Sison, Lourdes B. Tamayo, Rolando Valdez, Erlinda Piza, Eleonor Sagnit, Fidel Sevidal, Eloisa
Alonzo, Angelito Dela Cruz, Lynie Arcenas, Maria Emma Jasmin, Macacuna Pangandaman, Rosalia Mauna, Romeo Padilla,
Ascencion Padilla, Crispulo Padilla, Virgilio Dejero, Armando Mendoza, Anicita S. Baluyut, Antonio D. Edralin, Evelyn A.
Enriquez, Ma. Victoria L. Jacobo, Daniel M. Manamtam, Jessie C. Manrique, Encarnacion T. Radaza, Mario P. Ruivivar,
Amor T. Medina, and Felix L. Poliquit, are ordered REINSTATED immediately to their former positions without loss of
seniority rights and with back salaries computed under the new staffing pattern from the dates of their invalid dismissals
at rates not lower that their former salaries but not to exceed a period of five (5) years, provided, however, that no
supervening event shall have occured which would otherwise disqualify them from such reinstatement, and provided,
further, that whatever benefits they may have received from the Government by reason of their termination shall be
reimbursed through reasonable salary deductions.
cha nrob les vi rtua l lawlib rary

Public respondents are likewise ordered to pay intervenors Rizalina P. Espiritu, Abdulia T. Landingin, Medardo Ilao, Rosita
Somera, Armando Cruz, Catalino Dabu, Francisco Villaraiz, Norma Jumilia, Kennedy Basa, Rolando G. Cagasca and
Alfonso Angeles their back salaries similarly under the above-quoted conditions.
As regards petitioners Samuel Hipol, Jane Corros and Efren Fontanilla, their petition is DISMISSED, as well as the petition
in intervention of Concepcion Timario.
SO ORDERED.
Padilla, Bidin, Romero, Nocon, Melo, Quiason, Vitug and Kapunan, JJ., concur.
Regalado and Puno, JJ., took no part.
Separate Opinions
NARVASA, C.J., dissenting:

chan rob1e s virtual 1aw l ibra ry

I dissent on the same ground I did in Mison (176 SCRA 84, 132) & Mandani (186 SCRA 108, 156).
FELICIANO, J., dissenting:

c hanro b1es vi rt ual 1aw li bra ry

I dissent on the same ground that I dissent in the Mison and Mandani cases with Herrera, J.
DAVIDE, JR., J., dissenting:

c hanro b1es vi rtua l 1aw li bra ry

I fully agree with the majority opinion that the separation from the service of petitioners and intervenors (save petitioners
Samuel Hipol, Jane Corros, and Efren Fontanilla) was made pursuant to the office orders and memoranda declared void in
Mandani v. Gonzales (186 SCRA 108 [1990]). Said case and the subsequent consolidated cases of Abrogar v. Garrucho,
Jr. and Arnaldo v. Garrucho, Jr. (G.R. Nos. 95773 and 96533, 6 August 1991) would have necessarily benefited
petitioners and intervenors and made their reinstatement inevitable were it not for their failure to bring the action within
the prescriptive period. It is on this point that I am constrained to disagree with the majority opinion.
I gather from the majority opinion that, as admitted by petitioners and intervenors, the illegal dismissal took place in May
1987. This petition was filed only in October 1991. The interventions were filed in February, April, May and July, 1992
(Ponencia, 5, last paragraph) or more than four years after the cause of action had accrued. The petitions in Mandani,
Abrogar and Arnaldo were filed on 3 June 1987, 31 October 1990, and 7 January 1991, respectively, or all before the
expiration of the four-year period. An illegal dismissal is an injury to a persons rights. Accordingly, pursuant to Article
1146 of the Civil Code, an action for reinstatement and back salaries must be filed within four years from the accrual of
the cause of action or from the illegal dismissal. Since the instant petition and the interventions were filed long after the
lapse of the four-year period, this Court is left with no other choice except to dismiss this case. The Office of the Solicitor
General is correct on this point.
Another obstacle to this petition is that it is for mandamus (Petition, 2) which must be filed within one year after
dismissal. In Madrigal v. Lecaroz (191 SCRA 20, 25-16 [1990], this Court, through Mr. Justice Leo Medialdea, held:

jgc:c hanro bles. com.ph

"The unbending jurisprudence in this jurisdiction is to the effect that a petition for quo warranto and mandamus affecting
titles to public office must be filed within one (1) year from the date the petitioner is ousted from his position (Galano, Et.
Al. v. Roxas, G.R. No. L-31241, September 12, 1975, 67 SCRA 8; Cornejo v. Secretary of Justice, G.R. No. L-32818, June
28, 1974, 57 SCRA 663; Sison v. Pangramuyen, etc. Et. Al., G.R. No. L-40295, July 31, 1978, 84 SCRA 364; Cui v. Cui,
G.R. No. L-18727, August 31, 1964, 11 SCRA 755; Villaluz v. Zaldivar, G.R. No. L-22754, December 31, 1965, 15 SCRA
710; Villegas v. De la Cruz, G.R. No. L-23752, December 31, 1965, 15 SCRA 720; De la Maza v. Ochave, G.R. No. L22336, May 23, 1967, 20 SCRA 142; Alejo v. Marquez, G.R. No. L-29053, February 27, 1971, 37 SCRA 762). The reason
behind this ruling was expounded in the case of Unabia v. City Mayor, etc., 99 Phil. 253 where We said:
chan rob1e s vi rtual 1aw lib rary

. . . [W]e note that in actions of quo warranto involving right to an office, the action must be instituted within the period
of one year. This has been the law in the island since 1901, the period having been originally fixed in Section 216 of the
Code of Civil Procedure (Act No. 190). We find this provision to be an expression of policy on the part of the State that
persons claiming a right to an office of which they are illegally dispossessed should immediately take steps to recover said
office and that if they do not do so within a period of one year, they shall be considered as having lost their right thereto
by abandonment. There are weighty reasons of public policy and convenience that demand the adoption of a similar
period for persons claiming rights to positions in the civil service. There must be stability in the service so that public
business may (sic) be unduly retarded; delays in the statement of the right to positions in the service must be
discouraged. The following considerations as to public officers, by Mr. Justice Bengzon, may well be applicable to

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employees in the civil service:

j gc:cha nrob les.com .ph

"Furthermore, constitutional rights may certainly be waived, and the inaction of the officer for one year could be validly
considered as waiver, i.e., a renunciation which no principle of justice may prevent, he being at liberty to resign his
position anytime he pleases.
And there is good justification for the limitation period; it is not proper that the title to public office should be subjected to
continued uncertainly (sic), and the peoples interest requires that such right should be determined as speedily as
practicable." (Tumulak v. Egay, 46 Off. Gaz., [8], 3693, 3695.)
Further, the Government must be immediately informed or advised if any person claims to be entitled to an office or a
position in the civil service as against another actually holding it, so that the Government may not be faced with the
predicament of having to pay two salaries, one, for the person actually holding the office, although illegally, and another,
for one not actually rendering service although entitled to do so. We hold that in view of the policy of the State contained
in the law fixing the period of one year within which actions for quo warranto may be instituted, any person claiming right
to a position in the civil service should also be required to file his petition for reinstatement within the period of one year,
otherwise he is thereby considered as having abandoned his office."
The principle of equity which the majority opinion invokes is inapplicable. Equity is available only in the absence of
positive law. As beautifully expressed by this Court through Mr. Justice Isagani A. Cruz in Aguila v. Court of First Instance
of Batangas (160 SCRA 352, 359-360 [1988]):
jgc: chan roble s.com.p h

"For all its conceded merits, equity is available only in the absence of law and not as its replacement. Equity is described
as justice outside legality, which simply means that it cannot supplant although it may, as often happens, supplement the
law. We said it in an earlier case [Zabat Jr. v. CA, 142 SCRA 587], and we repeat it now, that all abstract arguments
based only on equity should yield to positive rules, which preempt and prevail over such persuasions. Emotional appeals
for justice, while they may wring the heart of the Court, cannot justify disregard of the mandate of the law as long as it
remains in force. The applicable maxim, which goes back to the ancient days of the Roman jurists and is now still
reverently observed is aequetas nunquam contravenit legis."
c ralaw virtua1aw l ibra ry

In my view, petitioners and intervenors only desire to take advantage of our rulings in Mandani, Abrogar and Arnaldo.
Initially, they had no interest, or had lost any, in seeking judicial remedy after their dismissal. They really did not care
much about their separation from the service. Otherwise, they would not have wasted precious time waiting for a herald
to bring them good tidings. In short, they chose to sleep on their rights. The laws aid those who are vigilant, not those
who sleep upon their rights.
To meet the above disquisition, the modified majority opinion now claims that since the defense of prescription was never
raised by the respondents, it is deemed waived; and that the following unrebutted allegations in the main petition bring
them within our ruling in Cristobal v. Melchor (78 SCRA 175 [1977]):
red:c hanro bles. com.ph

"7. Petitioners protested their illegal termination from the DOT. Many of them questioned their termination with the
Department of Labor and Employment where they filed a Complaint against the DOT and its top officials for illegal
dismissal . . . Some of them questioned their illegal termination before the Civil Service Commission.
8. Many of petitioners joined a picket and demonstration held by illegally terminated employees of the DOT before its
office at the DOT building at the Luneta Park.
9. Petitioners were forced to receive their separation or retirement benefits from the DOT, but all under protest. The
others continued to fight their cases with the Department of Labor and Employment even if they got their separation
and/or retirement benefits.
cha nrob les vi rtua l lawlib rary

11. After the finality of this Decision (Mandani) . . . many other terminated employees of the DOT wrote to then DOT
Secretary Peter D.Garrucho, Jr., as the successor-in-interest of former Sec. Jose U. Gonzalez, and DBM Secretary
Guillermo Carague, asking that following the Decision in this Mandani v. Gonzalez case and being similarly situated as the
twenty-eight (28) petitioners therein, that they be reinstated to their former or equivalent positions in the DOT and/or to
be paid their back wages. Then . . . DOT Secretary Garrucho and DBM Sec. Carague never responded to these letters and
did not reinstate and/or pay any of their back wages.
x

16. Following the Decision of this Honorable Court in the Mandani v. Gonzalez case and its Resolution in the consolidated
cases of Abrogar v. Garrucho and Arnaldo v. Garrucho, petitioners made representations with the DOT to be reinstated
and/or paid their back wages. . . . (Ponencia, 6-7)
While it may be true that the public respondents, through the Office of the Solicitor General, did not raise the defense of
prescription, it cannot be denied that the allegations in the petition clearly show that the petitioners cause of action has
indeed prescribed. In Gulang v. Nadayag (214 SCRA 355, 362-363 [1992], citing Philippine National Bank v. Pacific
Commission House (27 SCRA 766 [1969]; Garcia v. Mathis (100 SCRA 250 [1980]; and Aznar III v. Bernad (161 SCRA
276 [1988]), we held:
jgc:c hanrobles. com.ph

"There is also authority to the effect that the defense of prescription is not deemed waived, even if not pleaded in a
motion to dismiss or in the answer, if plaintiffs allegation in the complaint or the evidence he presents shows clearly that
the action has prescribed."
cra law virt ua1aw li bra ry

Cristobal v. Melchor has a very peculiar factual backdrop which justified an exception to the general rule. In the said case,
this Court found the following:
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"2. It was an act of the government through its responsible officials more particularly then Executive Secretary Amelito
Mutuc and his successors which contributed to the alleged delay in the filing of Cristobals present complaint for
reinstatement.
The evidence of Cristobal establish the following: After the Ingles suit was filed in court, the dismissed employees,
Cristobal included, continued to seek reconsideration of their dismissal. It was then that Executive Secretary Mutuc
assured the employees that without prejudice to the continuation of the civil action, he would work for their
reinstatement. Accordingly, some of the dismissed employees were recalled to their respective positions in the Office of
the President among whom were the plaintiffs in the civil case and several others who were not parties therein. Secretary
Mutuc even tried to place the others outside of the Malacaang Office. An affidavit of Emiliano Punzal, retired Presidential
Records Officer, attests to the fact that Jose C. Cristobal "was among those in the list of separated employees ordered for
replacement to a position commensurate to his qualification and experience." In the meantime, however, Secretary Mutuc
was replaced by other Executive Secretaries to whom Cristobal over and over again presented his request for
reinstatement and who gave the same assurance that Cristobal would be recalled and re-employed at "the opportune
time" .
It was this continued promise of the government officials concerned which led Cristobal to bide his time and wait for the
Office of the President to comply with its commitment. Furthermore, he had behind him the decision of the Supreme
Court in Ingles v. Mutuc which he believed should be applied in his favor. But when Cristobal, in answer to his various
letters, received the letter of May 19, 1971 from the Office of the President denying his reinstatement and declaring the
matter "definitely closed" because of his failure to file an action in court within one year from his separation, it was only
then that he saw the necessity of seeking redress from the courts."
cra law vi rtua1aw l ibrary

In the instant case, the petitioners, as shown in the aforequoted paragraphs in their main petition, explicitly admit that
they protested their illegal termination from the DOT; many of them questioned their termination with the Department of
Labor and Employment (DOLE); and some of them questioned such illegal termination before the Civil Service
Commission (CSC). Considering that they ultimately took this recourse after four years, it would be safe to presume that
the decisions of the DOLE and the CSC were adverse to them; they took no further action thereon, and allowed the
decisions to become final. The petitioners then should not be permitted to belatedly re-litigate the matter by way of
mandamus.
WHEREFORE, I vote to DENY the petition for want of merit.
Cruz and Feliciano, JJ., concur.
Endnotes:

1. G.R. No. 78525, 4 June 1990, and related cases; 186 SCRA 108.
2. Resolution, G.R. No. 95773 & G.R. No. 96533, 6 August 1991.
3. Office Order No. 9-87, 19 March 1987; Annex "A," Petition; Rollo, p. 20.
4. Annexes "B" and "C," Petition; Rollo, pp. 21-22.
5. See Note 1, at p. 155.
6. See Note 2, at p. 5.
7. Petition, p. 17; Rollo, p. 18.
8. Rollo, p. 148; see also pp. 60-61, 155, 160, and 167.
9. Maneclang v. Baun, No. L-27876, 22 April 1992; 208 SCRA 179, 193.
10. Petition, pp. 7-11, Rollo, pp. 8-12; see also Memorandum of Petitioners and Intervenors, pp. 6-10; Rollo, pp. 226230.
11. G.R. No. 55312, 29 December 1987; 156 SCRA 830, 833.
12. No. L-43203, 29 July 1977; 78 SCRA 175, 183.
13. G.R. No. 95733, 15 August 1991; Rollo, p. 212.
14. See Note 12, at 185, citing Fogg v. St. Louis, H & K. R. Co. (C.C.) 17 Fed. 871, American Digest 1658 to 1869,
Century Edition, Vol. 19, p. 462.
15. See Note 11.
16. Norton v. Shellby, 118 U.S. 425, cited in Isagani Cruz, Philippine Political Law, 1987 ed., pp. 233-234.
17. Annex "C," Petition; Rollo, p. 22.
18. Sec. 2, Rule 9, Rules of Court.
19. Nielson 7 Co., Inc., v. Lepanto Consolidated Mining Co., No. L-21601, 17 December 1966, 18 SCRA 1040, citing 30
C.J.S. 522; Pomeroys Equity Jurisprudence, Vol. 2, 5th ed., 177; See also Note 9. 20 Par. 11 , Petition, pp. 8-9; Rollo,
pp. 9-10.

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20. Par. 11, Petition, pp. 8-9; Rollo, pp. 9-10.


21. G.R. No. 81954, 8 August 1989, and related cases; 176 SCRA 84, 108-109.
22. See Note 1, at pp. 138-139.
23. See Note 1; Rollo, p. 534-C.
24. Comment, pp. 6-7; Rollo, pp. 177-178; Memorandum, p. 9; Rollo, p. 201.
25. Reply to Comment, p. 2; Rollo, p. 59.
26. Comment (Re: Petition for Intervention), pp. 4-5; Rollo, pp. 103-104; Memorandum, pp. 11-12; Rollo, pp. 203-204.
27. Reply to Comment, p. 3; Rollo, p. 166.
28. Annex "9", Comment (Re: Petition for Intervention); Rollo, p. 118.
29. Citing certification of the Chief, Personnel Division, Department of Tourism, Comment, pp. 8-9; Rollo, pp. 179-180;
Memorandum, p. 8; Rollo, p. 200.
30. Annexes "A" and "B", Reply to Comment; Rollo, pp. 65-66.
31. Reply to Comment, pp. 1-2; Rollo, pp. 58-59; and Memorandum, p. 1; Rollo, p. 221.
32. Comment, pp. 7-8; Rollo, pp. 178-179; Memorandum, pp. 7-8; Rollo, pp. 199-200.
33. Comment Re: Petition for Intervention, pp. 3-4; Rollo, pp. 102-103; Memorandum, p. 11; Rollo, p. 203.
34. Comment Re: Petition for Intervention, pp. 4-5; Rollo, pp. 130-131; Memorandum, pp. 12-13; Rollo, pp. 204-205.
35. Regis, Jr., v. Osmea, Jr., G.R. No. 26785, 23 May 1991; 197 SCRA 308, 321, citing Cristobal v. Melchor, L-43202, 29
July 1977, 78 SCRA 175, 187; Balquidra v. CFI, L-40490, 28 October 1977, 80 SCRA 123; Laganapan v. Asedillo, L28353, 30 September 1987, 154 SCRA 377, 387; Ginson v. Municipality of Murcia, L-46585, 8 February 1988, 158 SCRA
1, 8; Antiporda v. Ticao, L-30796, 15 April 1988, 160 SCRA 40, 42; San Luis v. Court of Appeals, G.R. No. 80160, 26
June 1989, 174 SCRA 258, 273.

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